WSFS
WSFS Financial Corporation (Nasdaq: WSFS), the parent company of WSFS Bank, today announced its financial results for the first quarter of 2024.
Selected financial results and metrics are as follows:
(Dollars in millions, except per share data)
1Q 2024
4Q 2023
1Q 2023
Net interest income
$
175.3
$
178.1
$
182.5
Fee revenue
75.9
87.2
63.1
Total net revenue
251.1
265.3
245.7
Provision for credit losses
15.1
24.8
29.0
Noninterest expense
149.1
147.6
133.0
Net income attributable to WSFS
65.8
63.9
62.4
Pre-provision net revenue (PPNR)(1)
102.1
117.7
112.6
Earnings per share (EPS) (diluted)
1.09
1.05
1.01
Return on average assets (ROA) (a)
1.28
%
1.25
%
1.27
%
Return on average equity (ROE) (a)
10.7
11.1
11.2
Fee revenue as % of total net revenue
30.2
32.8
25.6
Efficiency ratio
59.3
55.6
54.0
See “Notes”
GAAP results for the quarterly periods shown included items that are excluded from core results. Below is a summary of the financial effects of these items. Refer to the "Non-GAAP Reconciliation" at the end of the press release for further detail.
1Q 2024
4Q 2023
1Q 2023
(Dollars in millions, except per share data)
Total (pre-tax)
Per share (after-tax)
Total (pre-tax)
Per share (after-tax)
Total (pre-tax)
Per share (after-tax)
Fee revenue
$
(0.6
)
$
(0.01
)
$
9.2
$
0.11
$
(0.6
)
$
(0.01
)
Noninterest expense
1.5
0.02
7.9
0.09
—
—
Income tax(2)
(0.5
)
(0.01
)
7.1
0.12
(0.1
)
—
(1) As used in this press release, PPNR is a non-GAAP financial measure that adjusts net income determined in accordance with GAAP to exclude the impacts of (i) income tax provision and (ii) provision for credit losses. 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.
(2) Income tax impacts are presented on an after-tax basis.
CEO Commentary
Rodger Levenson, Chairman, CEO and President, said, "Despite a challenging operating environment, we are pleased to report first quarter earnings of a core EPS(3) of $1.11 and accompanying core ROA(3) of 1.31%. Our results were highlighted by annualized loan growth of 7% across both Commercial and Consumer business lines and continued solid, diversified core fee revenue(3) of $76.5 million. Deposit levels remained essentially flat excluding the reduction of corporate trust deposits, which can vary from quarter to quarter, and the net interest margin of 3.84% reflects continued competitive market conditions.
"Overall asset quality metrics remained stable and included reductions in both NPAs and net charge-offs. In light of the continued uncertain economic and interest rate environment, we remain very focused on prudently strengthening our balance sheet. This includes ongoing proactive credit risk management and a continued build of our ACL reserves which stood at 1.48% of total loans and leases at quarter end. Bank capital levels remain strong with CET1 at 14.00% and total risk based capital at 15.25% and above "well-capitalized" including the full impact of AOCI.
"During the quarter, we were honored to be named a recipient of both the Gallup Exceptional Workplaces for the eighth time since 2016 and Forbes America's Best Banks 2024. These recognitions are a direct result of our over 2,200 associates who continue to live our mission of 'We Stand for Service'."
(3) As used in this press release, core EPS, core ROA and core fee revenue are non-GAAP financial measures. These non-GAAP financial measures exclude 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.
Highlights for 1Q 2024:
(4) As used in this press release, TBV per share 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 this and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.
First Quarter 2024 Discussion of Financial Results
Balance Sheet
The following table summarizes loan and lease balances and composition at March 31, 2024 compared to December 31, 2023 and March 31, 2023:
Loans and Leases
(Dollars in millions)
March 31, 2024
December 31, 2023
March 31, 2023
Commercial & industrial (C&I)
$
4,489
35
%
$
4,443
35
%
$
4,443
37
%
Commercial mortgage
3,877
30
3,801
30
3,473
29
Construction
1,056
8
1,036
8
1,024
8
Commercial small business leases
634
5
624
5
577
5
Total commercial loans and leases
10,056
78
9,904
78
9,517
79
Residential mortgage
888
7
882
7
801
6
Consumer
2,066
17
2,012
16
1,868
16
Gross loans and leases
13,010
102
%
12,798
101
%
12,186
101
%
ACL
(193
)
(2
)
(186
)
(1
)
(169
)
(1
)
Net loans and leases
$
12,817
100
%
$
12,612
100
%
$
12,017
100
%
At March 31, 2024, WSFS’ gross loan and lease portfolio increased $212.0 million, or 2% (7% annualized), when compared with December 31, 2023 primarily due to increases of $75.7 million in commercial mortgage, $53.7 million in consumer loans (primarily from Spring EQ home equity loans) and $45.5 million in C&I.
The C&I portfolio (including owner-occupied real estate) continued to be our largest portfolio at 35% of net loans and leases. Additionally, our total commercial loan and lease portfolio continues to represent a majority of our lending portfolio at 78% of net loans and leases.
Gross loans and leases at March 31, 2024 increased $823.9 million, or 7%, when compared with March 31, 2023. The increase was driven by increases of $403.8 million in commercial mortgage, $197.4 million in consumer loans (primarily from Spring EQ home equity loans), $87.0 million in residential mortgage, $57.2 million in commercial small business leases, and $45.8 million in C&I.
The following table summarizes customer deposit balances and composition at March 31, 2024 compared to December 31, 2023 and March 31, 2023:
Customer Deposits
(Dollars in millions)
March 31, 2024
December 31, 2023
March 31, 2023
Noninterest demand
$
4,653
29
%
$
4,917
30
%
$
5,299
33
%
Interest-bearing demand
2,856
18
2,936
18
3,159
20
Savings
1,577
10
1,610
10
1,967
13
Money market
5,206
31
5,175
31
4,002
25
Total core deposits
14,292
88
14,638
89
14,427
91
Customer time deposits
1,895
12
1,784
11
1,453
9
Total customer deposits
$
16,187
100
%
$
16,422
100
%
$
15,880
100
%
Total customer deposits decreased $235.2 million, or 1% (6% annualized), when compared with December 31, 2023, primarily driven by a $207.4 million decrease in expected trust deposit activity and $81.9 million from a short-term commercial deposit.
Customer deposits increased by $306.8 million from March 31, 2023 primarily due to short-term deposit increases in the Wealth and Trust business lines.
Our deposit base remains highly diverse, with more than half of our customer deposits, or 52%, coming from our Commercial, Small Business, Wealth and Trust business lines. The loan-to-deposit ratio(5) was 79% at March 31, 2024, reflecting continued capacity to fund future loan growth.
Core deposits were a strong 88% of total customer deposits. While customer deposits continue to shift into higher interest-bearing accounts, no- and low-cost checking accounts represented 47% of total customer deposits at March 31, 2024, with a weighted average cost of 39bps for the quarter.
(5) Ratio of net loans and leases to total customer deposits.
Net Interest Income
Three Months Ending
(Dollars in millions)
March 31, 2024
December 31, 2023
March 31, 2023
Net interest income before purchase accretion
$
173.1
$
174.8
$
179.1
Purchase accounting accretion
2.2
3.3
3.4
Net interest income
$
175.3
$
178.1
$
182.5
Net interest margin before purchase accretion
3.79
%
3.92
%
4.17
%
Purchase accounting accretion
0.05
0.07
0.08
Net interest margin
3.84
%
3.99
%
4.25
%
Net interest income decreased $2.8 million, or 2% (not annualized), compared to 4Q 2023 and decreased $7.3 million, or 4%, compared to 1Q 2023, primarily driven by lagging increases in deposit pricing following rate hikes in 2023.
Total loan yields were 7.02%, and remained flat when compared to 4Q 2023. Total customer deposit costs were 1.79%, an increase of 17bps compared to 4Q 2023 and customer interest-bearing deposit costs were 2.55%, an increase of 20bps compared to 4Q 2023.
Net interest margin decreased 15bps from 4Q 2023 and decreased 41bps from 1Q 2023, primarily due to the reasons noted above.
Asset Quality
The following table summarizes asset quality metrics as of and for the period ended March 31, 2024 compared to December 31, 2023 and March 31, 2023.
(Dollars in millions)
March 31, 2024
December 31, 2023
March 31, 2023
Problem assets(6)
$
573.2
$
555.7
$
416.7
Nonperforming assets
67.2
75.8
33.1
Delinquencies
104.5
101.9
100.5
Net charge-offs
8.6
14.7
11.7
Total net credit costs (recoveries) (r)
16.2
25.4
29.0
Problem assets to total Tier 1 capital plus ACL
23.42
%
23.44
%
18.65
%
Classified assets to total Tier 1 capital plus ACL
17.56
17.29
15.38
Ratio of nonperforming assets to total assets
0.33
0.37
0.16
Delinquencies to gross loans (n)
0.81
0.80
0.83
Ratio of quarterly net charge-offs to average gross loans
0.27
0.46
0.40
Ratio of allowance for credit losses to total loans and leases (q)
1.48
1.46
1.39
Ratio of allowance for credit losses to nonaccruing loans
292
251
528
See “Notes”
Overall asset quality metrics remained stable and reflect continued credit normalization from prior favorable levels. Problem assets to total Tier 1 capital plus ACL ratio of 23.42% decreased 2bps from December 31, 2023. Delinquencies of $104.5 million or 81bps of gross loans increased $2.6 million, or 1bps compared to December 31, 2023.
Nonperforming assets decreased $8.6 million, or 4bps of total assets, compared to December 31, 2023 driven by the resolution of two nonperforming C&I loans. Net charge-offs decreased $6.0 million to $8.6 million, or 0.27% (annualized) of average gross loans during the quarter, due to lower charge-offs in our C&I and Construction portfolios. Excluding NewLane and Upstart, net charge-offs were a net recovery of $0.8 million.
Total net credit costs were $16.2 million in the quarter compared to $25.4 million in 4Q 2023, primarily due to lower provision on our NewLane and Upstart portfolios. The ACL was $192.6 million as of March 31, 2024, an increase of $6.5 million from December 31, 2023. The ACL coverage ratio was 1.48%, an increase of 2bps from December 31, 2023. The increase in ACL from the prior quarter was primarily due to specific reserves for two nonperforming C&I relationships.
(6) Problem assets includes all criticized, classified, and nonperforming loans as well as other real estate owned (OREO).
Core Fee Revenue
Fee business, including Wealth Management, Cash Connect®, capital markets and mortgage banking, continue to perform well, as expected, and reflect the investments we are making to diversify our fee businesses. Core fee revenue (noninterest income) decreased $1.5 million, or 2% (not annualized), compared to 4Q 2023 to $76.5 million, resulting from $3.5 million of lower income from our equity position in Spring EQ, which was sold in 4Q 2023. Excluding the impact from Spring EQ, fee revenue increased, mainly due to an additional $3.3 million in Cash Connect® driven by ATM vault cash units added during the fourth quarter of 2023.
Core fee revenue increased $12.8 million, or 20%, compared to 1Q 2023. The increase was primarily driven by $8.2 million from Cash Connect® due to the addition of ATM vault cash units during the fourth quarter of 2023 and the higher rate environment and $2.3 million from our Wealth and Trust business lines.
For 1Q 2024, our core fee revenue ratio(7) was 30.3% compared to 30.4% in 4Q 2023 and 25.8% in 1Q 2023. Fee revenue is a competitive differentiator providing a well-diversified source of revenue with further growth opportunities expected across all sources.
(7) As used in this press release, core fee revenue ratio 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 this and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.
Core Noninterest Expense(8)
Core noninterest expense of $147.6 million increased $7.8 million, or 6% (not annualized), compared to 4Q 2023. Core noninterest expenses included a one-time benefit of approximately $3.2 million in 1Q 2024, reflecting lower actual incentive payments made for 2023 and $3.9 million of net favorable one-time adjustments in 4Q 2023 related to certain employee benefit plan valuations that were partially offset by accelerated costs associated with the closure of a branch. Excluding these nonrecurring items, expenses increased $7.2 million over the prior quarter. The increase was mostly due to Cash Connect® external funding costs, which increased $5.2 million from $8.3 million to $13.5 million compared to 4Q 2023. The remainder of the increase in expenses for the quarter was primarily driven by higher 401(k) expense and payroll taxes associated with annual incentive payouts made during the first quarter.
Core noninterest expense increased $14.5 million, or 11%, compared to 1Q 2023. The increase was primarily due to $7.7 million from Cash Connect® external funding costs, $3.0 million in salaries and benefits, $1.1 million in loan workout and OREO expenses, and $1.1 million in uninsured losses.
Our core efficiency ratio(8) was 58.6% in 1Q 2024, compared to 54.5% in 4Q 2023 and 53.9% in 1Q 2023.
Income Taxes
We recorded a $21.2 million income tax provision in 1Q 2024, compared to $29.4 million in 4Q 2023 and $20.9 million in 1Q 2023.
The effective tax rate was 24.4% in 1Q 2024 compared to 31.6% in 4Q 2023 and 25.0% in 1Q 2023. The decrease in effective tax rate for 1Q 2024 compared to 4Q 2023 was primarily driven by the surrender of BOLI policies during the prior quarter.
(8) As used in this press release, core noninterest expense and core efficiency ratio are non-GAAP financial measures. These non-GAAP financial measures exclude 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.
Capital Management
Capital levels remain strong and are all substantially in excess of the “well-capitalized” regulatory benchmarks at March 31, 2024 with WSFS Bank’s Tier 1 leverage ratio of 11.14%, Common Equity Tier 1 capital ratio and Tier 1 capital ratio of 14.00%, and Total Risk-based capital ratio of 15.25%.
WSFS’ total stockholders’ equity decreased $4.2 million, or less than 1% (not annualized), during 1Q 2024. The decrease was primarily due to a decrease in accumulated other comprehensive income (AOCI) of $42.9 million driven by market-value decreases on investment securities and capital returns of $30.1 million to stockholders, comprising $21.0 million from share repurchases and $9.1 million from quarterly dividends and was partially offset by quarterly earnings of $65.8 million.
WSFS’ tangible common equity(9) increased $0.1 million, or less than 1% (not annualized), compared to December 31, 2023 primarily due to scheduled amortization of intangibles offset by the reasons described above. WSFS’ common equity to assets ratio was 12.02% and our tangible common equity to tangible assets ratio(9) was 7.52% at March 31, 2024, both essentially flat compared to the prior quarter.
At March 31, 2024, book value per share was $41.17, an increase of $0.24, or 1% (not annualized), from December 31, 2023, and tangible common book value per share(9) was $24.52, an increase of $0.19, or 1% (not annualized), from December 31, 2023.
During 1Q 2024, WSFS repurchased 492,368 shares of common stock for an aggregate of $21.0 million. As of March 31, 2024, WSFS has 4,849,225 shares, or approximately 8% of outstanding shares, remaining to repurchase under its current authorizations. For the year, total capital returned to stockholder through share repurchases and quarterly dividends was $30.1 million.
The Board of Directors approved a quarterly cash dividend of $0.15 per share of common stock. This dividend will be paid on May 24, 2024 to stockholders of record as of May 10, 2024.
(9) As used in this press release, tangible common equity, tangible common equity to tangible assets ratio 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.
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, credit and deposit products to individual, corporate, and institutional clients.
Selected quarterly performance results and metrics are as follows:
(Dollars in millions)
March 31, 2024
December 31, 2023
March 31, 2023
Net interest income
$
19.7
$
18.3
$
17.9
Provision for (recovery of) credit losses
0.3
(0.1
)
1.3
Fee revenue
33.5
36.0
30.9
Noninterest expense(10)
26.4
26.9
24.2
Pre-tax income
26.5
27.5
23.4
Performance Metrics
Trust fee revenue (Institutional Services and BMT of DE)
$
17.8
$
20.9
$
17.0
Private wealth management fee revenue
14.8
14.5
13.1
AUM/AUA(11) (12)
80,464
78,087
65,562
Wealth Management pre-tax income decreased $1.0 million, or 4% (not annualized) compared to 4Q 2023.
Fee revenue decreased $2.5 million from 4Q 2023, primarily due to an adjustment to deferred revenue in Institutional Services and seasonally lower activity at Bryn Mawr Trust of Delaware. Net interest income increased $1.3 million as average trust deposits were higher by $92.6 million compared to 4Q 2023. Total noninterest expense decreased $0.6 million compared to 4Q 2023 driven by lower technology-related expenses.
Wealth Management pre-tax income increased $3.1 million compared to 1Q 2023. Fee revenue increased $2.6 million, or 8%, compared to 1Q 2023 due to AUM growth in Private Wealth Management including the Rehoboth expansion and account growth in Institutional Services. Net interest income increased $1.7 million.
Net AUM of $8.9 billion at the end of 1Q 2024 increased $0.3 billion, or 4% (not annualized), compared to 4Q 2023, and increased $1.0 billion, or 12%, compared to 1Q 2023. AUM balances over the period benefited primarily from positive returns in broader equity markets.
(10) Includes intercompany allocation of expense.
(11) Represents Assets Under Management and Assets Under Administration.
(12) AUM/AUA as of December 31, 2023 reflects a correction to the computation of AUA that reduces the previously reported AUM/AUA balance by $6.3 billion to $78.1 billion.
Cash Connect®
Cash Connect® is a premier provider of ATM vault cash, smart safe and cash logistics services in the United States, servicing non-bank ATMs and smart safes nationwide and supporting ATMs for WSFS Bank Customers with one of the largest branded ATM networks in our region.
Selected quarterly financial results and metrics are as follows:
(Dollars in millions)
March 31, 2024
December 31, 2023
March 31, 2023
Net revenue(13)
$
24.1
$
19.0
$
15.5
Noninterest expense(14)
23.3
17.4
14.8
Pre-tax income
0.8
1.6
0.6
Performance Metrics
Cash managed
$
1,992
$
1,867
$
1,698
Number of serviced non-bank ATMs and smart safes
46,031
41,695
34,067
Number of WSFS owned and branded ATMs
583
590
691
ROA
0.83
%
1.17
%
0.45
%
Cash Connect® net revenue increased $5.1 million from 4Q 2023 driven by ATM vault cash units added during the quarter. Noninterest expense increased $6.0 million due to higher funding cost associated with the shift toward external funding and non-recurring onboarding costs for the additional units. As a result, pre-tax income decreased $0.8 million and ROA decreased 34bps to 0.83% compared to 4Q 2023.
Net revenue increased $8.6 million compared to 1Q 2023 due to the added units described above. Noninterest expense increased $8.5 million due to the reasons described above. Pre-tax income was essentially flat compared to 1Q 2023. ROA increased 38bps to 0.83% compared to 1Q 2023 due to a higher proportion of external funding.
During 1Q 2024, Cash Connect® added 4,336 serviced non-bank ATMs as a result of a large industry participant exiting their ATM cash vault business. Cash Connect® is targeting additional unit growth opportunities in 2024 as a result of the factor mentioned above.
(13) Includes intercompany allocation of income and net interest income.
(14) Includes intercompany allocation of expense.
First Quarter 2024 Earnings Release Conference Call
Management will conduct a conference call to review 1Q 2024 results at 1:00 p.m. Eastern Time (ET) on Friday, April 26, 2024. Interested parties may access the conference call live on our Investor Relations website (https://investors.wsfsbank.com). For those who cannot access the live conference call, a replay will be accessible shortly after the event concludes through our Investor Relations website.
About WSFS Financial Corporation
WSFS Financial Corporation is a multibillion-dollar financial services company. Its primary subsidiary, WSFS Bank, is the oldest and largest locally headquartered bank and trust company in the Greater Philadelphia and Delaware region. As of March 31, 2024, WSFS Financial Corporation had $20.6 billion in assets on its balance sheet and $80.5 billion in assets under management and administration. WSFS operates from 114 offices, 88 of which are banking offices, located in Pennsylvania (57), Delaware (40), New Jersey (14), Florida (1), Nevada (1) and Virginia (1) and provides comprehensive financial services including commercial banking, consumer banking, treasury management and trust and wealth management. Other subsidiaries or divisions include Arrow Land Transfer, Bryn Mawr Capital Management, LLC, Bryn Mawr Trust®, The Bryn Mawr Trust Company of Delaware, Cash Connect®, NewLane Finance®, Powdermill® Financial Solutions, 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.
Forward-Looking Statements
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 in financial markets, particularly in the markets in which the Company operates and in which its loans are concentrated, including difficult and unfavorable conditions and trends related to housing markets, costs of living, unemployment levels, interest rates, supply chain issues, inflation, and economic growth; the impacts related to or resulting from bank failures and other economic and industry volatility, including potential increased regulatory requirements and costs and potential impacts to macroeconomic conditions; 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, which could impact market confidence in the Company’s operations; possible additional loan losses and impairment of the collectability of loans; 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; , the credit risk associated with the substantial amount of commercial real estate, commercial and industrial, and construction and land development 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 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; the success of the Company's growth plans; failure of the financial and/or operational controls of the Company's Cash Connect® and/or Wealth Management segments; the Company's ability to successfully integrate and 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; 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 remote working arrangements; the Company's ability to recruit and retain key Associates; the effects of weather, including climate change, and natural disasters such as floods, droughts, wind, tornadoes and hurricanes as well as effects from geopolitical instability, armed conflicts, 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 market valuations and/or the speed of prepayments of mortgage-backed securities (MBS) due to changes in the interest rate environment, and the related acceleration of premium amortization on prepayments in the event that prepayments accelerate; regulatory limits on the Company's ability to receive dividends from its subsidiaries and pay dividends to its stockholders; 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; any compounding effects or unexpected interactions of the risks discussed above; and other risks and uncertainties, including those discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, and other documents filed by the Company with the Securities and Exchange Commission from time to time.
The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. 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 FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
SUMMARY STATEMENTS OF INCOME (Unaudited)
Three months ended
(Dollars in thousands, except per share data)
March 31, 2024
December 31, 2023
March 31, 2023
Interest income:
Interest and fees on loans
$
224,703
$
224,760
$
193,724
Interest on mortgage-backed securities
25,897
26,245
27,526
Interest and dividends on investment securities
2,184
2,184
2,237
Other interest income
8,838
4,042
2,896
261,622
257,231
226,383
Interest expense:
Interest on deposits
72,795
67,319
35,192
Interest on Federal Home Loan Bank advances
308
213
3,371
Interest on senior and subordinated debt
2,449
2,455
2,573
Interest on trust preferred borrowings
1,756
1,782
1,555
Interest on other borrowings
9,036
7,335
1,160
86,344
79,104
43,851
Net interest income
175,278
178,127
182,532
Provision for credit losses
15,138
24,816
29,011
Net interest income after provision for credit losses
160,140
153,311
153,521
Noninterest income:
Credit/debit card and ATM income
19,669
17,058
13,361
Investment management and fiduciary revenue
32,928
35,475
30,476
Deposit service charges
6,487
6,543
6,039
Mortgage banking activities, net
1,647
1,119
1,122
Loan and lease fee income
1,523
1,535
1,372
Unrealized gain (loss) on equity investment, net
—
338
(4
)
Realized gain on sale of equity investment, net
—
9,493
—
Bank-owned life insurance income
1,200
675
1,510
Other income
12,403
14,969
9,251
75,857
87,205
63,127
Noninterest expense:
Salaries, benefits and other compensation
75,806
69,524
72,849
Occupancy expense
9,479
12,115
10,408
Equipment expense
10,692
11,077
9,792
Data processing and operations expense
3,660
4,692
4,724
Professional fees
4,481
6,031
4,439
Marketing expense
1,782
1,984
1,716
FDIC expenses
3,982
7,908
2,582
Loan workout and other credit costs
1,071
560
(55
)
Corporate development expense
208
282
740
Restructuring expense
—
557
(761
)
Other operating expenses
37,911
32,916
26,611
149,072
147,646
133,045
Income before taxes
86,925
92,870
83,603
Income tax provision
21,202
29,365
20,941
Net income
65,723
63,505
62,662
Less: Net (loss) income attributable to noncontrolling interest
(38
)
(403
)
258
Net income attributable to WSFS
$
65,761
$
63,908
$
62,404
Diluted earnings per share of common stock:
$
1.09
$
1.05
$
1.01
Weighted average shares of common stock outstanding for fully diluted EPS
60,521,951
60,772,603
61,678,871
See “Notes”
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
SUMMARY STATEMENTS OF INCOME (Unaudited) - continued
Three months ended
March 31, 2024
December 31, 2023
March 31, 2023
Performance Ratios:
Return on average assets (a)
1.28
%
1.25
%
1.27
%
Return on average equity (a)
10.68
11.12
11.20
Return on average tangible common equity (a)(o)
18.76
20.83
21.19
Net interest margin (a)(b)
3.84
3.99
4.25
Efficiency ratio (c)
59.28
55.56
54.02
Noninterest income as a percentage of total net revenue (b)
30.16
32.81
25.63
See “Notes”
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
SUMMARY STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(Dollars in thousands)
March 31, 2024
December 31, 2023
March 31, 2023
Assets:
Cash and due from banks
$
787,729
$
629,310
$
686,788
Cash in non-owned ATMs
186,522
458,889
409,265
Investment securities, available-for-sale
3,734,229
3,846,537
4,086,459
Investment securities, held-to-maturity
1,049,807
1,058,557
1,094,799
Other investments
35,397
37,533
73,906
Net loans and leases (e)(f)(l)
12,816,986
12,612,470
12,016,579
Bank owned life insurance
42,708
42,762
100,907
Goodwill and intangibles
1,000,344
1,004,560
1,008,250
Other assets
925,526
904,054
842,337
Total assets
$
20,579,248
$
20,594,672
$
20,319,290
Liabilities and Stockholders’ Equity:
Noninterest-bearing deposits
$
4,652,875
$
4,917,297
$
5,299,094
Interest-bearing deposits
11,534,329
11,505,113
10,581,285
Total customer deposits
16,187,204
16,422,410
15,880,379
Brokered deposits
—
51,676
309,309
Total deposits
16,187,204
16,474,086
16,189,688
Federal Home Loan Bank advances
—
—
800,000
Other borrowings
1,124,958
895,076
338,206
Other liabilities
801,464
755,695
688,052
Total liabilities
18,113,626
18,124,857
18,015,946
Stockholders’ equity of WSFS
2,473,481
2,477,636
2,306,362
Noncontrolling interest
(7,859
)
(7,821
)
(3,018
)
Total stockholders' equity
2,465,622
2,469,815
2,303,344
Total liabilities and stockholders' equity
$
20,579,248
$
20,594,672
$
20,319,290
Capital Ratios:
Equity to asset ratio
12.02
%
12.03
%
11.35
%
Tangible common equity to tangible asset ratio (o)
7.52
7.52
6.72
Common equity Tier 1 capital (required: 4.5%; well capitalized: 6.5%) (g)
14.00
13.72
13.39
Tier 1 leverage (required: 4.00%; well-capitalized: 5.00%) (g)
11.14
10.92
10.57
Tier 1 risk-based capital (required: 6.00%; well-capitalized: 8.00%) (g)
14.00
13.72
13.39
Total risk-based capital (required: 8.00%; well-capitalized: 10.00%) (g)
15.25
14.96
14.56
Asset Quality Indicators:
Nonperforming assets:
Nonaccruing loans (t)
$
65,948
$
74,185
$
32,017
Assets acquired through foreclosure
1,210
1,569
1,131
Total nonperforming assets
$
67,158
$
75,754
$
33,148
Past due loans (h)
$
11,362
$
11,584
$
13,565
Troubled loans
119,243
95,268
18,061
Allowance for credit losses
192,637
186,134
169,171
Ratio of nonperforming assets to total assets
0.33
%
0.37
%
0.16
%
Ratio of allowance for credit losses to total loans and leases (q)
1.48
1.46
1.39
Ratio of allowance for credit losses to nonaccruing loans
292
251
528
Ratio of quarterly net charge-offs to average gross loans (a)(e)(i)(n)
0.27
0.46
0.40
Ratio of year-to-date net charge-offs to average gross loans (a)(e)(i)(n)
0.27
0.44
0.40
See “Notes”
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
AVERAGE BALANCE SHEET (Unaudited)
(Dollars in thousands)
Three months ended
March 31, 2024
December 31, 2023
March 31, 2023
Average
Balance
Interest &
Dividends
Yield/
Rate
(a)(b)
Average
Balance
Interest &
Dividends
Yield/
Rate
(a)(b)
Average
Balance
Interest &
Dividends
Yield/
Rate
(a)(b)
Assets:
Interest-earning assets:
Loans: (e) (j)
Commercial loans and leases (p)
$
5,047,482
$
88,530
7.06
%
$
5,049,932
$
89,474
7.04
%
$
4,954,622
$
80,744
6.63
%
Commercial real estate loans (s)
4,887,483
86,724
7.14
4,757,766
85,717
7.15
4,425,354
71,828
6.58
Residential mortgage
874,703
10,579
4.84
865,631
10,176
4.70
769,581
8,628
4.48
Consumer loans
2,041,390
38,228
7.53
1,992,434
38,495
7.67
1,849,398
31,535
6.92
Loans held for sale
34,907
642
7.40
46,227
898
7.71
43,527
989
9.21
Total loans and leases
12,885,965
224,703
7.02
12,711,990
224,760
7.02
12,042,482
193,724
6.53
Mortgage-backed securities (d)
4,476,032
25,897
2.31
4,376,102
26,245
2.40
4,823,507
27,526
2.28
Investment securities (d)
365,375
2,184
2.65
356,495
2,184
2.72
376,760
2,237
2.86
Other interest-earning assets
643,749
8,838
5.52
291,626
4,042
5.50
240,943
2,896
4.87
Total interest-earning assets
$
18,371,121
$
261,622
5.74
%
$
17,736,213
$
257,231
5.76
%
$
17,483,692
$
226,383
5.27
%
Allowance for credit losses
(188,762
)
(179,030
)
(153,181
)
Cash and due from banks
273,286
263,724
230,193
Cash in non-owned ATMs
243,941
396,589
421,057
Bank owned life insurance
42,791
91,769
101,612
Other noninterest-earning assets
1,953,037
2,009,939
1,919,065
Total assets
$
20,695,414
$
20,319,204
$
20,002,438
Liabilities and stockholders’ equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Interest-bearing demand
$
2,834,273
$
7,366
1.05
%
$
2,941,311
$
7,966
1.07
%
$
3,142,930
$
5,024
0.65
%
Savings
1,588,224
1,580
0.40
1,646,314
1,614
0.39
2,065,212
1,256
0.25
Money market
5,186,402
45,433
3.52
4,760,003
40,373
3.37
3,861,590
19,258
2.02
Customer time deposits
1,835,424
18,238
4.00
1,763,678
15,766
3.55
1,276,204
5,993
1.90
Total interest-bearing customer deposits
11,444,323
72,617
2.55
11,111,306
65,719
2.35
10,345,936
31,531
1.24
Brokered deposits
18,410
178
3.89
119,843
1,600
5.30
346,355
3,661
4.29
Total interest-bearing deposits
11,462,733
72,795
2.55
11,231,149
67,319
2.38
10,692,291
35,192
1.33
Federal Home Loan Bank advances
21,429
308
5.78
14,620
213
5.78
267,367
3,371
5.11
Trust preferred borrowings
90,655
1,756
7.79
90,606
1,782
7.80
90,459
1,555
6.97
Senior and subordinated debt
218,420
2,449
4.48
218,362
2,455
4.50
233,189
2,573
4.41
Other borrowed funds
781,854
9,036
4.65
635,512
7,335
4.58
131,221
1,160
3.59
Total interest-bearing liabilities
$
12,575,091
$
86,344
2.76
%
$
12,190,249
$
79,104
2.57
%
$
11,414,527
$
43,851
1.56
%
Noninterest-bearing demand deposits
4,828,865
4,965,356
5,560,252
Other noninterest-bearing liabilities
822,834
889,962
770,565
Stockholders’ equity of WSFS
2,476,453
2,281,076
2,260,262
Noncontrolling interest
(7,829
)
(7,439
)
(3,168
)
Total liabilities and equity
$
20,695,414
$
20,319,204
$
20,002,438
Excess of interest-earning assets over interest-bearing liabilities
$
5,796,030
$
5,545,964
$
6,069,165
Net interest and dividend income
$
175,278
$
178,127
$
182,532
Interest rate spread
2.98
%
3.19
%
3.71
%
Net interest margin
3.84
%
3.99
%
4.25
%
See “Notes”
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Unaudited)
(Dollars in thousands, except per share data)
Three months ended
Stock Information:
March 31, 2024
December 31, 2023
March 31, 2023
Market price of common stock:
High
$47.71
$47.97
$51.77
Low
40.20
33.12
34.83
Close
45.14
45.93
37.61
Book value per share of common stock
41.17
40.93
37.57
Tangible common book value (TBV) per share of common stock (o)
24.52
24.33
21.15
Number of shares of common stock outstanding (000s)
60,084
60,538
61,387
Other Financial Data:
One-year repricing gap to total assets (k)
0.19%
(0.14)%
3.34%
Weighted average duration of the MBS portfolio
5.8 years
5.8 years
6.0 years
Unrealized losses on securities available for sale, net of taxes
$(539,939)
$(499,932)
$(510,522)
Number of Associates (FTEs) (m)
2,241
2,229
2,177
Number of offices (branches, LPO’s, operations centers, etc.)
114
114
119
Number of WSFS owned and branded ATMs
583
590
691
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. Capital Ratios for the current quarter are to be considered preliminary until the Call Reports are filed.
(h)
Accruing loans which are contractually past due 90 days or more as to principal or interest. Balance includes student loans, 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 and commercial small business leases.
(q)
Represents amortized cost basis for loans and leases.
(r)
Includes provision for credit losses, loan workout expenses, OREO expenses and other credit costs.
(s)
Includes commercial mortgage and commercial construction loans.
(t)
Includes nonaccruing troubled loans.
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Dollars in thousands, except per share data)
(Unaudited)
Non-GAAP Reconciliation (o):
Three months ended
March 31, 2024
December 31, 2023
March 31, 2023
Net interest income (GAAP)
$
175,278
$
178,127
$
182,532
Core net interest income (non-GAAP)
175,278
178,127
182,532
Noninterest income (GAAP)
75,857
87,205
63,127
Less/(plus): Unrealized gain (loss) on equity investments, net
—
338
(4
)
Less: Realized gain on sale of equity investment, net
—
9,493
—
Plus: Visa derivative valuation adjustment
(605
)
(605
)
(553
)
Core fee revenue (non-GAAP)
$
76,462
$
77,979
$
63,684
Core net revenue (non-GAAP)
$
251,740
$
256,106
$
246,216
Core net revenue (non-GAAP)(tax-equivalent)
$
252,084
$
256,523
$
246,859
Noninterest expense (GAAP)
$
149,072
$
147,646
$
133,045
Less: FDIC special assessment
1,263
5,052
—
Less: Corporate development expense
208
282
740
Less/(plus): Restructuring expense
—
557
(761
)
Less: Contribution to WSFS CARES Foundation
—
2,000
—
Core noninterest expense (non-GAAP)
$
147,601
$
139,755
$
133,066
Core efficiency ratio (non-GAAP)
58.6
%
54.5
%
53.9
%
Core fee revenue ratio (non-GAAP) (b)
30.3
%
30.4
%
25.8
%
End of period
March 31, 2024
December 31, 2023
March 31, 2023
Total assets (GAAP)
$
20,579,248
$
20,594,672
$
20,319,290
Less: Goodwill and other intangible assets
1,000,344
1,004,560
1,008,250
Total tangible assets (non-GAAP)
$
19,578,904
$
19,590,112
$
19,311,040
Total stockholders’ equity of WSFS (GAAP)
$
2,473,481
$
2,477,636
$
2,306,362
Less: Goodwill and other intangible assets
1,000,344
1,004,560
1,008,250
Total tangible common equity (non-GAAP)
$
1,473,137
$
1,473,076
$
1,298,112
Tangible common book value (TBV) per share:
Book value per share (GAAP)
$
41.17
$
40.93
$
37.57
Tangible common book value per share (non-GAAP)
24.52
24.33
21.15
Tangible common equity to tangible assets:
Equity to asset ratio (GAAP)
12.02
%
12.03
%
11.35
%
Tangible common equity to tangible assets ratio (non-GAAP)
7.52
7.52
6.72
Non-GAAP Reconciliation - continued (o):
Three months ended
March 31, 2024
December 31, 2023
March 31, 2023
GAAP net income attributable to WSFS
$
65,761
$
63,908
$
62,404
Plus/(less): Pre-tax adjustments: Realized/unrealized gain (loss) on equity investments, net, Visa derivative valuation adjustment, FDIC special assessment, corporate development and restructuring expense, and contribution to WSFS CARES Foundation
2,076
(1,335
)
536
Plus: Tax adjustments: BOLI surrender
—
7,056
—
(Plus)/less: Tax impact of pre-tax adjustments
(507
)
65
(134
)
Adjusted net income (non-GAAP) attributable to WSFS
$
67,330
$
69,694
$
62,806
GAAP return on average assets (ROA)
1.28
%
1.25
%
1.27
%
Plus/(less): Pre-tax adjustments: Realized/unrealized gain (loss) on equity investments, net, Visa derivative valuation adjustment, FDIC special assessment, corporate development and restructuring expense, and contribution to WSFS CARES Foundation
0.04
(0.03
)
0.01
Plus: Tax adjustments: BOLI surrender
—
0.14
—
(Plus)/less: Tax impact of pre-tax adjustments
(0.01
)
—
(0.01
)
Core ROA (non-GAAP)
1.31
%
1.36
%
1.27
%
Earnings per share (diluted) (GAAP)
$
1.09
$
1.05
$
1.01
Plus/(less): Pre-tax adjustments: Realized/unrealized gain (loss) on equity investments, net, Visa derivative valuation adjustment, FDIC special assessment, corporate development and restructuring expense, and contribution to WSFS CARES Foundation
0.03
(0.02
)
0.01
Plus: Tax adjustments: BOLI surrender
—
0.12
—
(Plus)/less: Tax impact of pre-tax adjustments
(0.01
)
—
—
Core earnings per share (non-GAAP)
$
1.11
$
1.15
$
1.02
Calculation of return on average tangible common equity:
GAAP net income attributable to WSFS
$
65,761
$
63,908
$
62,404
Plus: Tax effected amortization of intangible assets
2,973
2,976
2,880
Net tangible income (non-GAAP)
$
68,734
$
66,884
$
65,284
Average stockholders’ equity of WSFS
$
2,476,453
$
2,281,076
$
2,260,262
Less: Average goodwill and intangible assets
1,003,167
1,007,136
1,010,645
Net average tangible common equity
$
1,473,286
$
1,273,940
$
1,249,617
Return on average tangible common equity (non-GAAP)
18.76
%
20.83
%
21.19
%
Non-GAAP Reconciliation - continued (o):
Three months ended
March 31, 2024
December 31, 2023
March 31, 2023
Calculation of PPNR:
Net income (GAAP)
$
65,723
$
63,505
$
62,662
Plus: Income tax provision
21,202
29,365
20,941
Plus: Provision for credit losses
15,138
24,816
29,011
PPNR (non-GAAP)
$
102,063
$
117,686
$
112,614
View source version on businesswire.com: https://www.businesswire.com/news/home/20240425294075/en/