false000082894400008289442024-07-252024-07-25
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
July 25, 2024
Date of Report
(Date of Earliest Event Reported)
WSFS Financial Corporation
(Exact Name of Registrant as Specified in its Charter)
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Delaware | | 001-35638 | | 22-2866913 |
(State or Other Jurisdiction of incorporation) | | (SEC Commission File Number) | | (IRS Employer Identification Number) |
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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:
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☐ | 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)) |
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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 July 25, 2024, WSFS Financial Corporation (the “Registrant”) issued a press release to report earnings for the quarter ended June 30, 2024. A copy of the press release is furnished with this Form 8-K as Exhibit 99.1.
This information (including Exhibit 99.1) is being furnished under Item 2.02 hereof and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 7.01 Regulation FD Disclosures
The attached presentation contains information that the members of the Registrant's management will use during visits with investors, analysts, and other interested parties to assist their understanding of the Registrant from time to time throughout the third quarter of 2024. Other presentations and related materials will be made available as they are presented during the year. A copy of the earnings release supplement is furnished with this Form 8-K as Exhibit 99.2.
This information (including Exhibit 99.2) is being furnished under Item 7.01 hereof and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference into any filing under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Other Exhibits
(d) Exhibits.
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.
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| | WSFS FINANCIAL CORPORATION |
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Date: | July 25, 2024 | By: | | /s/ Arthur J. Bacci |
| | | | Arthur J. Bacci Executive Vice President, Chief Wealth Officer and Interim Chief Financial Officer |
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| | WSFS Bank Center | WSFS Bank Place | 1 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
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| | EXHIBIT 99.1 |
FOR IMMEDIATE RELEASE | | Investor Relations Contact: Andrew Basile |
| | (302) 504-9857; abasile@wsfsbank.com |
July 25, 2024 | | Media Contact: Kyle Babcock |
| | (215) 864-1795; kbabcock@wsfsbank.com |
WSFS REPORTS 2Q 2024 ROA OF 1.34% AND EPS OF $1.16;
RESULTS REFLECT LOAN, DEPOSIT AND DIVERSIFIED FEE REVENUE GROWTH,
NET INTEREST MARGIN OF 3.85%
Wilmington, DE — WSFS Financial Corporation (Nasdaq: WSFS), the parent company of WSFS Bank, today announced its financial results for the second quarter of 2024.
Selected financial results and metrics are as follows:
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(Dollars in millions, except per share data) | | 2Q 2024 | | 1Q 2024 | | 2Q 2023 | | | | |
Net interest income | | $ | 174.4 | | | $ | 175.3 | | | $ | 181.8 | | | | | |
Fee revenue | | 91.6 | | | 75.9 | | | 66.9 | | | | | |
Total net revenue | | 266.0 | | | 251.1 | | | 248.7 | | | | | |
Provision for credit losses | | 19.8 | | | 15.1 | | | 15.8 | | | | | |
Noninterest expense | | 155.8 | | | 149.1 | | | 141.3 | | | | | |
Net income attributable to WSFS | | 69.3 | | | 65.8 | | | 68.7 | | | | | |
Pre-provision net revenue (PPNR)(1) | | 110.3 | | | 102.1 | | | 107.5 | | | | | |
Earnings per share (EPS) (diluted) | | 1.16 | | | 1.09 | | | 1.12 | | | | | |
Return on average assets (ROA) (a) | | 1.34 | % | | 1.28 | % | | 1.36 | % | | | | |
Return on average equity (ROE) (a) | | 11.4 | | | 10.7 | | | 11.8 | | | | | |
Fee revenue as % of total net revenue | | 34.4 | | | 30.2 | | | 26.8 | | | | | |
Efficiency ratio | | 58.5 | | | 59.3 | | | 56.7 | | | | | |
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.
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| | 2Q 2024 | | 1Q 2024 | | 2Q 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(2) | | $ | 5.6 | | | $ | 0.07 | | | $ | (0.6) | | | $ | (0.01) | | | $ | (0.6) | | | $ | (0.01) | |
Noninterest expense(3) | | (0.2) | | | — | | | 1.5 | | | 0.02 | | | 2.8 | | | 0.03 | |
Income tax impacts(4) | | 1.3 | | | 0.02 | | | (0.5) | | | (0.01) | | | (0.8) | | | (0.01) | |
(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) Includes a gain due to the reduction of our Visa B derivative liability established from our previous sale of 360,000 shares in 2Q 2020, a gain on the liquidation of a portion of our remaining Visa B equity investment, and post-close distributions from our investment in Spring EQ.
(3) Includes a reduction to expense for the final FDIC special assessment received during the quarter and corporate development and restructuring costs.
(4) Income tax impacts are presented on an after-tax basis.
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| | WSFS Bank Center | WSFS Bank Place | 2 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
CEO Commentary
Rodger Levenson, Chairman, CEO and President, said, "We are pleased to report second quarter earnings of a core ROA(5) of 1.25% and accompanying core EPS(5) of $1.08. Our results were highlighted by quarterly core fee revenue(5) growth of 13%, driven by strong performance in our Cash Connect®, Wealth and Trust, Capital Markets, and Mortgage businesses. Solid annualized loan growth of 6% was driven primarily by our commercial and consumer lending portfolios while deposits increased 3% annualized and the net interest margin of 3.85% also increased slightly from the prior quarter. Our strong performance provides momentum as we head into the second half of 2024.
"Overall asset quality metrics remained stable and reflected the uneven economy. While we experienced improvement in both non-performing loans and delinquency levels, problem loans saw a modest increase to 4.76% of total gross loans. Net charge-offs of 44 basis points remained consistent with recent history.
"During the quarter, Moody's Investor Services reaffirmed their ratings of WSFS Financial Corporation with an investment-grade issuer rating of Baa2 with a Stable Outlook. The ratings affirmation reflects the benefits of our diversified business model, our strong capital levels, earnings, liquidity, and asset quality.
"On June 12th, we held our second annual 'We Stand For Service Day', where nearly 1,500 of our Associates volunteered at more than 130 community organizations across the Greater Philadelphia, Southern New Jersey, and Delaware region. Additionally, we were honored to be named a 2024 honoree of The Civic 50 Greater Philadelphia by the Philadelphia Chamber of Commerce for the third year in a row. These community efforts are a testament of our over 2,200 Associates who live our mission of 'We Stand for Service' every day."
(5) 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.
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| | WSFS Bank Center | WSFS Bank Place | 3 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
Highlights for 2Q 2024:
•Core EPS was $1.08 compared to $1.11 for 1Q 2024.
•Core ROA was 1.25% compared to 1.31% for 1Q 2024.
•Core PPNR as a percent of average assets(6) of 2.02% was flat compared to 1Q 2024.
•Core fee revenue (noninterest income) of $86.0 million, an increase of $9.6 million, or 13% (not annualized), compared to 1Q 2024, driven by our Cash Connect®, Wealth and Trust, Capital Markets, and Mortgage businesses.
•Gross loan growth of 1% (6% annualized) from 1Q 2024 primarily driven by growth in the commercial & industrial (C&I) and consumer portfolios.
•Customer deposits increased by 1% (3% annualized) compared to 1Q 2024, driven by increases in noninterest demand deposits from short-term Trust deposits.
•Net interest margin of 3.85% compared to 3.84% for 1Q 2024, reflects increasing loan yields mostly offset by higher deposit pricing.
•Total net credit costs were $18.5 million, compared to $16.2 million for 1Q 2024 due to a higher provision on the commercial mortgage (CRE) portfolio.
•WSFS repurchased 897,461 shares of common stock at an average price of $44.20 per share, totaling an aggregate of $39.7 million. Tangible common book value (TBV) per share(6) increased by $0.68 to $25.20. The Board of Directors also approved a quarterly cash dividend of $0.15 per share.
(6) As used in this press release, core PPNR as a percentage of average assets and TBV per share 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.
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| | WSFS Bank Center | WSFS Bank Place | 4 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
Second Quarter 2024 Discussion of Financial Results
Balance Sheet
The following table summarizes loan and lease balances and composition at June 30, 2024 compared to March 31, 2024 and June 30, 2023:
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Loans and Leases | | | | | | | | | | | | |
(Dollars in millions) | | June 30, 2024 | | March 31, 2024 | | June 30, 2023 |
Commercial & industrial (C&I) | | $ | 4,599 | | | 35 | % | | $ | 4,489 | | | 35 | % | | $ | 4,533 | | | 37 | % |
Commercial mortgage | | 4,035 | | | 31 | | | 3,877 | | | 30 | | | 3,553 | | | 29 | |
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Construction | | 879 | | | 7 | | | 1,056 | | | 8 | | | 955 | | | 7 | |
Commercial small business leases | | 644 | | | 5 | | | 634 | | | 5 | | | 590 | | | 5 | |
Total commercial loans and leases | | 10,157 | | | 78 | | | 10,056 | | | 78 | | | 9,631 | | | 78 | |
Residential mortgage | | 936 | | | 7 | | | 888 | | | 7 | | | 847 | | | 7 | |
Consumer | | 2,106 | | | 17 | | | 2,066 | | | 17 | | | 1,905 | | | 16 | |
Gross loans and leases | | 13,199 | | | 102 | % | | 13,010 | | | 102 | % | | 12,383 | | | 101 | % |
ACL | | (198) | | | (2) | | | (193) | | | (2) | | | (172) | | | (1) | |
Net loans and leases | | $ | 13,001 | | | 100 | % | | $ | 12,817 | | | 100 | % | | $ | 12,211 | | | 100 | % |
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At June 30, 2024, WSFS’ gross loan and lease portfolio increased $189.2 million, or 1% (6% annualized), when compared with March 31, 2024 due to increases of $110.2 million in C&I, $47.9 million in residential mortgage due to the retention of certain loans based on favorable yields and relationship opportunities, and $40.6 million in consumer loans (primarily from Spring EQ home equity loans). The increase of $158.0 million in commercial mortgage and corresponding decrease of $177.1 million in construction loans was a result of a migration of construction loans to permanent commercial mortgages.
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 represents a majority of our lending portfolio at 78% of net loans and leases.
Gross loans and leases at June 30, 2024 increased $815.8 million, or 7%, when compared with June 30, 2023. The increase was driven by increases of $482.0 million in commercial mortgage, $201.2 million in consumer loans (primarily from Spring EQ), $89.2 million in residential mortgage, and $65.9 million in C&I.
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| | WSFS Bank Center | WSFS Bank Place | 5 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
The following table summarizes customer deposit balances and composition at June 30, 2024 compared to March 31, 2024 and June 30, 2023:
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Customer Deposits | | | | | | | | | | | | |
(Dollars in millions) | | June 30, 2024 | | March 31, 2024 | | June 30, 2023 |
Noninterest demand | | $ | 4,783 | | | 29 | % | | $ | 4,653 | | | 29 | % | | $ | 5,462 | | | 34 | % |
Interest-bearing demand | | 2,812 | | | 17 | | | 2,856 | | | 18 | | | 2,969 | | | 18 | |
Savings | | 1,537 | | | 9 | | | 1,577 | | | 10 | | | 1,815 | | | 11 | |
Money market | | 5,175 | | | 33 | | | 5,206 | | | 31 | | | 4,375 | | | 27 | |
Total core deposits | | 14,307 | | | 88 | | | 14,292 | | | 88 | | | 14,621 | | | 90 | |
Customer time deposits | | 1,984 | | | 12 | | | 1,895 | | | 12 | | | 1,640 | | | 10 | |
Total customer deposits | | $ | 16,291 | | | 100 | % | | $ | 16,187 | | | 100 | % | | $ | 16,261 | | | 100 | % |
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Total customer deposits increased by $103.9 million, or 1% (3% annualized), when compared with March 31, 2024, primarily due to increases in noninterest demand deposits from short-term Trust deposits and time deposits.
Customer deposits increased by $30.6 million from June 30, 2023, primarily due to transactional accounts, which drive notable inflows and outflows of deposits in our Wealth and Trust and Commercial businesses.
Our deposit base remains highly diverse, with more than half of our customer deposits, or 51%, coming from our Commercial, Small Business, and Wealth and Trust business lines. The loan-to-deposit ratio(7) was 80% at June 30, 2024, reflecting continued capacity to fund future loan growth.
Core deposits were a strong 88% of total customer deposits. No- and low-cost checking accounts represented 46% of total customer deposits with a weighted average cost of 43bps for the quarter. While customer deposits continue to shift into Certificates of Deposits (CDs), these accounts represent only 12% of total customer deposits as of June 30, 2024.
(7) Ratio of net loans and leases to total customer deposits.
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| | WSFS Bank Center | WSFS Bank Place | 6 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
Net Interest Income | | | | | | | | | | | | | | | | | | | | |
| Three Months Ending |
(Dollars in millions) | | June 30, 2024 | | March 31, 2024 | | June 30, 2023 |
Net interest income before purchase accretion | | $ | 172.7 | | | $ | 173.1 | | | $ | 178.5 | |
Purchase accounting accretion | | 1.7 | | | 2.2 | | | 3.3 | |
Net interest income | | $ | 174.4 | | | $ | 175.3 | | | $ | 181.8 | |
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Net interest margin before purchase accretion | | 3.81 | % | | 3.79 | % | | 4.03 | % |
Purchase accounting accretion | | 0.04 | | | 0.05 | | | 0.08 | |
Net interest margin | | 3.85 | % | | 3.84 | % | | 4.11 | % |
Net interest income decreased $0.8 million, or less than 1% (not annualized), compared to 1Q 2024 primarily due to higher deposit pricing resulting from growth in high yield money markets and repricing of maturing CDs. Net interest income decreased $7.4 million, or 4%, compared to 2Q 2023, primarily driven by lagging increases in deposit pricing following rate hikes in 2023 and increased deposit costs due to the reasons noted above.
Total loan yields were 7.09%, an increase of 7bps when compared to 1Q 2024. Total customer deposit costs were 1.89%, an increase of 10bps, while customer interest-bearing deposit costs were 2.69%, an increase of 14bps compared to the prior quarter.
Net interest margin increased 1bp from 1Q 2024, due to increasing loan yields mostly offset by higher deposit pricing which resulted from growth in high yield money markets and repricing of maturing CDs. Net interest margin decreased 26bps from 2Q 2023, primarily due to lagging increases in deposit pricing following rate hikes in 2023 and a continued shift to higher yielding deposit products.
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| | WSFS Bank Center | WSFS Bank Place | 7 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
Asset Quality
The following table summarizes asset quality metrics as of and for the period ended June 30, 2024 compared to March 31, 2024 and June 30, 2023.
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(Dollars in millions) | June 30, 2024 | | March 31, 2024 | | June 30, 2023 |
Problem assets(8) | $ | 628.5 | | | $ | 573.2 | | | $ | 465.3 | |
Nonperforming assets | 65.4 | | | 67.2 | | | 33.5 | |
Delinquencies | 89.0 | | | 104.5 | | | 72.8 | |
Net charge-offs | 14.2 | | | 8.6 | | | 13.1 | |
Total net credit costs (recoveries) (r) | 18.5 | | | 16.2 | | | 16.4 | |
Problem assets to total Tier 1 capital plus ACL | 27.00 | % | | 23.42 | % | | 20.14 | % |
Classified assets to total Tier 1 capital plus ACL | 19.93 | | | 17.56 | | | 15.37 | |
Ratio of nonperforming assets to total assets | 0.32 | | | 0.33 | | | 0.16 | |
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Delinquencies to gross loans (n) | 0.68 | | | 0.81 | | | 0.59 | |
Ratio of quarterly net charge-offs to average gross loans | 0.44 | | | 0.27 | | | 0.43 | |
Ratio of allowance for credit losses to total loans and leases (q) | 1.51 | | | 1.48 | | | 1.39 | |
Ratio of allowance for credit losses to nonaccruing loans | 310 | | | 292 | | | 521 | |
See “Notes”
Overall asset quality remained stable compared to the previous quarter. Problem assets to total Tier 1 capital plus ACL ratio was 27.00%, an increase of 358bps compared to March 31, 2024, primarily driven by the downgrades of three C&I loans totaling $56.6 million during the quarter.
Delinquencies of $89.0 million, or 68bps of gross loans, decreased $15.5 million, or 13bps, compared to March 31, 2024, due to the payoff of a $15.3 million CRE-multifamily relationship.
Nonperforming assets decreased $1.8 million, or 1bp of total assets, compared to March 31, 2024, primarily driven by favorable resolutions and paydowns of multiple loans, partially offset by the addition of a $17.3 million C&I relationship and a $4.3 million CRE-office relationship in the suburban Philadelphia market. Net charge-offs increased $5.6 million to $14.2 million, or 0.44% (annualized) of average gross loans during the quarter, primarily due to a charge-off on the CRE-office relationship mentioned above. Excluding Upstart and NewLane, net charge-offs were 17bps of average gross loans.
Total net credit costs were $18.5 million in the quarter compared to $16.2 million in 1Q 2024. The ACL was $198.3 million as of June 30, 2024, an increase of $5.6 million from March 31, 2024. The ACL coverage ratio was 1.51%, an increase of 3bps from March 31, 2024. The increases in net credit costs and ACL from the prior quarter were primarily due to higher provision on the CRE portfolio.
(8) Problem assets includes all criticized, classified, and nonperforming loans as well as other real estate owned (OREO).
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| | WSFS Bank Center | WSFS Bank Place | 8 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
Core Fee Revenue
Fee businesses, including Wealth and Trust, Cash Connect®, Capital Markets and Mortgage banking, continue to perform well and reflect the investments we have made to diversify our revenue. Core fee revenue (noninterest income) increased $9.6 million, or 13% (not annualized), compared to $86.0 million from 1Q 2024, primarily driven by increases of $4.7 million from Cash Connect® and $4.7 million from Wealth and Trust. The increase from Cash Connect® was due to growth from ATM customers added during 1Q and 2Q and one Customer moving to higher margin services during the quarter. The increase from Wealth and Trust was due to growth in Trust Services and seasonally-driven tax revenue in Private Wealth Management.
Core fee revenue increased $18.6 million, or 28%, compared to 2Q 2023. The increase was primarily due to the reasons noted above.
For 2Q 2024, our core fee revenue ratio(9) was 33.0% compared to 30.3% in 1Q 2024 and 27.0% in 2Q 2023. Fee revenue is a competitive differentiator providing a well-diversified source of revenue with further growth opportunities expected across all sources.
(9) 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.
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| | WSFS Bank Center | WSFS Bank Place | 9 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
Core Noninterest Expense(10)
Core noninterest expense of $156.0 million increased $8.4 million, or 6% (not annualized), compared to 1Q 2024. Excluding the one-time benefits of approximately $3.2 million to reflect lower incentive payments during 1Q 2024 and a $2.1 million increase in Cash Connect® external funding costs, core noninterest expense increased by $3.1 million, or 2% (not annualized). The increase was primarily due to an increase of $1.9 million in Associate medical benefits as well as impacts from annual merit increases and other investments in our Associates.
Core noninterest expense increased $17.5 million, or 13%, compared to 2Q 2023. The increase was primarily due to $10.9 million in higher salaries and benefits from annual salary increases and talent additions and $8.9 million from Cash Connect® external funding costs, partially offset by a decrease in professional fees.
Our core efficiency ratio(10) was 59.8% in 2Q 2024, compared to 58.6% in 1Q 2024 and 55.5% in 2Q 2023.
Income Taxes
We recorded a $21.3 million income tax provision in 2Q 2024, compared to $21.2 million in 1Q 2024 and $23.0 million in 2Q 2023.
The effective tax rate was 23.5% in 2Q 2024 compared to 24.4% in 1Q 2024 and 25.1% in 2Q 2023. The decrease in effective tax rate for 2Q 2024 compared to 1Q 2024 was primarily driven by solar tax credit investments entered into during the quarter. The decrease in effective tax rate when compared to 2Q 2023 is due to the benefit from the solar and other tax credit investments and lower state income taxes.
(10) 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.
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| | WSFS Bank Center | WSFS Bank Place | 10 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
Capital Management
Capital levels remain strong and are all substantially in excess of the “well-capitalized” regulatory benchmarks at June 30, 2024, with WSFS Bank’s Tier 1 leverage ratio of 10.44%, Common Equity Tier 1 capital ratio and Tier 1 capital ratio of 13.07%, and Total Risk-based capital ratio of 14.32%.
WSFS’ total stockholders’ equity increased $16.1 million, or less than 1% (not annualized), during 2Q 2024. The increase was primarily due to quarterly earnings of $69.3 million and was partially offset by capital returns of $48.7 million to stockholders, comprising $39.7 million from share repurchases and $9.0 million from quarterly dividends, as well as a decrease in accumulated other comprehensive income (AOCI) of $6.0 million driven by market-value decreases on investment securities.
WSFS’ tangible common equity(11) increased $20.3 million, or less than 1% (not annualized), compared to March 31, 2024, primarily due to the reasons described above and scheduled amortization of intangibles. WSFS’ common equity to assets ratio was 12.00% and our tangible common equity to tangible assets ratio(11) was 7.56% at June 30, 2024, both essentially flat compared to the prior quarter.
At June 30, 2024, book value per share was $42.01, an increase of $0.84, or 2% (not annualized), from March 31, 2024, and TBV per share was $25.20, an increase of $0.68, or 3% (not annualized), from March 31, 2024.
During 2Q 2024, WSFS repurchased 897,461 shares of common stock for an aggregate of $39.7 million. As of June 30, 2024, WSFS has 3,951,764 shares, or approximately 7% of outstanding shares, remaining to repurchase under its current authorization. For the year, total capital returned to stockholders through share repurchases and quarterly dividends was $78.7 million.
The Board of Directors approved a quarterly cash dividend of $0.15 per share of common stock. This dividend will be paid on August 23, 2024 to stockholders of record as of August 9, 2024.
(11) As used in this press release, tangible common equity and tangible common equity to tangible assets ratio 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.
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| | WSFS Bank Center | WSFS Bank Place | 11 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
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) | | June 30, 2024 | | March 31, 2024 | | June 30, 2023 | | | | |
Net interest income | | $ | 18.4 | | | $ | 19.7 | | | $ | 21.5 | | | | | |
Provision for (recovery of) credit losses | | — | | | 0.3 | | | (0.5) | | | | | |
Fee revenue | | 38.2 | | | 33.5 | | | 32.9 | | | | | |
Noninterest expense(12) | | 28.0 | | | 26.4 | | | 24.3 | | | | | |
Pre-tax income | | 28.6 | | | 26.5 | | | 30.5 | | | | | |
Performance Metrics | | | | | | | | | | |
Trust fee revenue (Institutional Services and BMT of DE) | | $ | 21.8 | | | $ | 17.8 | | | $ | 17.5 | | | | | |
Private Wealth Management fee revenue | | 15.5 | | | 14.8 | | | 14.4 | | | | | |
AUM/AUA(13) | | 84,938 | | | 80,464 | | | 67,877 | | | | | |
Wealth Management pre-tax income increased $2.1 million, or 8% (not annualized), compared to 1Q 2024. Fee revenue increased $4.7 million from 1Q 2024, primarily due to account-based fees from new business and increases in assignment and bankruptcy fees in Institutional Services, increased activity in the Bryn Mawr Trust Company of Delaware and seasonal recognition of tax revenue in Private Wealth Management. Net interest income decreased $1.3 million, as average trust deposits were lower by $162.5 million compared to 1Q 2024. Total noninterest expense increased $1.7 million, compared to 1Q 2024 mostly due to our trust system conversion and certain volume-based charges.
Wealth Management pre-tax income decreased $1.9 million compared to 2Q 2023 due to higher expenses and lower net interest income. Fee revenue increased $5.3 million, or 16%, compared to 2Q 2023 due to account growth in Private Wealth Management, which includes market-based appreciation and expansion into the Rehoboth, DE market. Net interest income decreased $3.1 million due to higher funding costs. Total noninterest expense increased $3.7 million driven by salary expense, reflecting the growth in the business including the addition of the Rehoboth office.
Net AUM of $9.0 billion at the end of 2Q 2024 was essentially flat compared to 1Q 2024, and increased $0.9 billion, or 11%, compared to 2Q 2023. AUM balances over the period benefited primarily from positive returns in broader equity markets.
(12) Includes intercompany allocation of expense.
(13) Represents Assets Under Management and Assets Under Administration.
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| | WSFS Bank Center | WSFS Bank Place | 12 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
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) | | June 30, 2024 | | March 31, 2024 | | June 30, 2023 | | | | |
Net revenue(14) | | $ | 27.6 | | | $ | 24.1 | | | $ | 17.0 | | | | | |
Noninterest expense(15) | | 25.6 | | | 23.3 | | | 16.0 | | | | | |
Pre-tax income | | 2.0 | | | 0.8 | | | 0.9 | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Performance Metrics | | | | | | | | | | |
Cash managed | | $ | 1,730 | | | $ | 1,992 | | | $ | 1,632 | | | | | |
Number of serviced non-bank ATMs and smart safes | | 42,524 | | | 46,031 | | | 34,325 | | | | | |
Number of WSFS owned and branded ATMs | | 579 | | | 583 | | | 679 | | | | | |
ROA | | 1.72 | % | | 0.83 | % | | 0.72 | % | | | | |
Cash Connect® pre-tax income increased $1.2 million to $2.0 million and ROA increased 89bps to 1.72%, compared to 0.83% in 1Q 2024, driven by growth from ATM customers added in 1Q and 2Q 2024 and one Customer moving to higher margin services during the quarter. Net revenue increased $3.5 million from 1Q 2024 driven by the same. Noninterest expense increased $2.2 million due to higher external funding costs associated with the increase in vault bailment units.
Net revenue increased $10.6 million and noninterest expense increased $9.6 million compared to 2Q 2023, primarily driven by an 84% increase in bailment units year over year. This also drove a pre-tax income increase of $1.0 million compared to 2Q 2023. ROA increased 100bps compared to 2Q 2023 due to higher net income and a higher proportion of external funding mix.
During 2Q 2024, Cash Connect® saw improved financial metrics, a net decrease in overall units, and cash managed as a result of the Customer shift mentioned above.
(14) Includes intercompany allocation of income and net interest income.
(15) Includes intercompany allocation of expense.
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| | WSFS Bank Center | WSFS Bank Place | 13 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
Second Quarter 2024 Earnings Release Conference Call
Management will conduct a conference call to review 2Q 2024 results at 1:00 p.m. Eastern Time (ET) on Friday, July 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 June 30, 2024, WSFS Financial Corporation had $20.7 billion in assets on its balance sheet and $84.9 billion in assets under management and administration. WSFS operates from 114 offices, 88 of which are banking offices, located in Pennsylvania (57), Delaware (39), New Jersey (14), Florida (2), 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.
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| | WSFS Bank Center | WSFS Bank Place | 14 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
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, Form 10-Q for the quarter ended March 31, 2024, 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.
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| | WSFS Bank Center | WSFS Bank Place | 15 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
SUMMARY STATEMENTS OF INCOME (Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended | | Six months ended |
(Dollars in thousands, except per share data) | | June 30, 2024 | | March 31, 2024 | | June 30, 2023 | | June 30, 2024 | | June 30, 2023 |
Interest income: |
Interest and fees on loans | | $ | 230,815 | | | $ | 224,703 | | | $ | 207,884 | | | $ | 455,518 | | | $ | 401,608 | |
Interest on mortgage-backed securities | | 25,784 | | | 25,897 | | | 27,130 | | | 51,681 | | | 54,656 | |
Interest and dividends on investment securities | | 2,183 | | | 2,184 | | | 2,182 | | | 4,367 | | | 4,419 | |
Other interest income | | 6,455 | | | 8,838 | | | 4,573 | | | 15,293 | | | 7,469 | |
| | 265,237 | | | 261,622 | | | 241,769 | | | 526,859 | | | 468,152 | |
Interest expense: | | | | | | | | | | |
Interest on deposits | | 76,693 | | | 72,795 | | | 50,054 | | | 149,488 | | | 85,246 | |
Interest on Federal Home Loan Bank advances | | 359 | | | 308 | | | 1,597 | | | 667 | | | 4,968 | |
Interest on senior and subordinated debt | | 2,441 | | | 2,449 | | | 2,334 | | | 4,890 | | | 4,907 | |
Interest on trust preferred borrowings | | 1,750 | | | 1,756 | | | 1,635 | | | 3,506 | | | 3,190 | |
Interest on other borrowings | | 9,545 | | | 9,036 | | | 4,307 | | | 18,581 | | | 5,467 | |
| | 90,788 | | | 86,344 | | | 59,927 | | | 177,132 | | | 103,778 | |
Net interest income | | 174,449 | | | 175,278 | | | 181,842 | | | 349,727 | | | 364,374 | |
Provision for credit losses | | 19,814 | | | 15,138 | | | 15,830 | | | 34,952 | | | 44,841 | |
Net interest income after provision for credit losses | | 154,635 | | | 160,140 | | | 166,012 | | | 314,775 | | | 319,533 | |
Noninterest income: | | | | | | | | | | |
Credit/debit card and ATM income | | 23,875 | | | 19,669 | | | 14,430 | | | 43,544 | | | 27,791 | |
Investment management and fiduciary revenue | | 37,606 | | | 32,928 | | | 32,379 | | | 70,534 | | | 62,855 | |
Deposit service charges | | 6,496 | | | 6,487 | | | 6,277 | | | 12,983 | | | 12,316 | |
Mortgage banking activities, net | | 2,217 | | | 1,647 | | | 1,304 | | | 3,864 | | | 2,426 | |
Loan and lease fee income | | 1,706 | | | 1,523 | | | 1,190 | | | 3,229 | | | 2,562 | |
| | | | | | | | | | |
Unrealized loss on equity investment, net | | — | | | — | | | — | | | — | | | (4) | |
Realized gain on sale of equity investment, net | | 2,130 | | | — | | | — | | | 2,130 | | | — | |
Bank-owned life insurance income | | 793 | | | 1,200 | | | 760 | | | 1,993 | | | 2,270 | |
Other income | | 16,775 | | | 12,403 | | | 10,531 | | | 29,178 | | | 19,782 | |
| | 91,598 | | | 75,857 | | | 66,871 | | | 167,455 | | | 129,998 | |
Noninterest expense: | | | | | | | | | | |
Salaries, benefits and other compensation | | 83,249 | | | 75,806 | | | 72,367 | | | 159,055 | | | 145,216 | |
Occupancy expense | | 9,387 | | | 9,479 | | | 10,132 | | | 18,866 | | | 20,540 | |
Equipment expense | | 12,054 | | | 10,692 | | | 10,810 | | | 22,746 | | | 20,602 | |
Data processing and operations expense | | 4,807 | | | 3,660 | | | 4,771 | | | 8,467 | | | 9,495 | |
Professional fees | | 4,781 | | | 4,481 | | | 6,118 | | | 9,262 | | | 10,557 | |
Marketing expense | | 2,020 | | | 1,782 | | | 2,165 | | | 3,802 | | | 3,881 | |
FDIC expenses | | 2,390 | | | 3,982 | | | 2,863 | | | 6,372 | | | 5,445 | |
| | | | | | | | | | |
Loan workout and other credit costs | | (1,278) | | | 1,071 | | | 536 | | | (207) | | | 481 | |
Corporate development expense | | 158 | | | 208 | | | 2,796 | | | 366 | | | 3,536 | |
Restructuring expense | | — | | | — | | | (26) | | | — | | | (787) | |
| | | | | | | | | | |
| | | | | | | | | | |
Other operating expenses | | 38,200 | | | 37,911 | | | 28,721 | | | 76,111 | | | 55,332 | |
| | 155,768 | | | 149,072 | | | 141,253 | | | 304,840 | | | 274,298 | |
Income before taxes | | 90,465 | | | 86,925 | | | 91,630 | | | 177,390 | | | 175,233 | |
Income tax provision | | 21,257 | | | 21,202 | | | 23,035 | | | 42,459 | | | 43,976 | |
Net income | | 69,208 | | | 65,723 | | | 68,595 | | | 134,931 | | | 131,257 | |
Less: Net (loss) income attributable to noncontrolling interest | | (65) | | | (38) | | | (83) | | | (103) | | | 175 | |
Net income attributable to WSFS | | $ | 69,273 | | | $ | 65,761 | | | $ | 68,678 | | | $ | 135,034 | | | $ | 131,082 | |
Diluted earnings per share of common stock: | | $ | 1.16 | | | $ | 1.09 | | | $ | 1.12 | | | $ | 2.24 | | | $ | 2.13 | |
Weighted average shares of common stock outstanding for fully diluted EPS | | 59,958,628 | | | 60,521,951 | | | 61,414,273 | | | 60,237,232 | | | 61,526,331 | |
See “Notes”
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| | WSFS Bank Center | WSFS Bank Place | 16 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
SUMMARY STATEMENTS OF INCOME (Unaudited) - continued | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended | | Six months ended |
| | June 30, 2024 | | March 31, 2024 | | June 30, 2023 | | June 30, 2024 | | June 30, 2023 |
Performance Ratios: | | | | | | | | | | |
Return on average assets (a) | | 1.34 | % | | 1.28 | % | | 1.36 | % | | 1.31 | % | | 1.31 | % |
Return on average equity (a) | | 11.39 | | | 10.68 | | | 11.81 | | | 11.03 | | | 11.51 | |
Return on average tangible common equity (a)(o) | | 20.08 | | | 18.76 | | | 21.66 | | | 19.42 | | | 21.43 | |
Net interest margin (a)(b) | | 3.85 | | | 3.84 | | | 4.11 | | | 3.85 | | | 4.18 | |
Efficiency ratio (c) | | 58.46 | | | 59.28 | | | 56.71 | | | 58.86 | | | 55.37 | |
Noninterest income as a percentage of total net revenue (b) | | 34.38 | | | 30.16 | | | 26.85 | | | 32.33 | | | 26.24 | |
See “Notes”
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| | WSFS Bank Center | WSFS Bank Place | 17 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
SUMMARY STATEMENTS OF FINANCIAL CONDITION (Unaudited) | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | June 30, 2024 | | March 31, 2024 | | June 30, 2023 |
Assets: | | | | | | |
Cash and due from banks | | $ | 618,446 | | | $ | 787,729 | | | $ | 723,034 | |
Cash in non-owned ATMs | | 400,482 | | | 186,522 | | | 386,176 | |
Investment securities, available-for-sale | | 3,651,913 | | | 3,734,229 | | | 3,954,918 | |
Investment securities, held-to-maturity | | 1,038,854 | | | 1,049,807 | | | 1,079,768 | |
Other investments | | 36,204 | | | 35,397 | | | 40,309 | |
Net loans and leases (e)(f)(l) | | 13,000,556 | | | 12,816,986 | | | 12,211,112 | |
Bank owned life insurance | | 36,090 | | | 42,708 | | | 101,108 | |
Goodwill and intangibles | | 996,181 | | | 1,000,344 | | | 1,004,278 | |
Other assets | | 965,804 | | | 925,526 | | | 884,988 | |
Total assets | | $ | 20,744,530 | | | $ | 20,579,248 | | | $ | 20,385,691 | |
Liabilities and Stockholders’ Equity: | | | | | | |
Noninterest-bearing deposits | | $ | 4,782,920 | | | $ | 4,652,875 | | | $ | 5,462,461 | |
Interest-bearing deposits | | 11,508,161 | | | 11,534,329 | | | 10,798,060 | |
Total customer deposits | | 16,291,081 | | | 16,187,204 | | | 16,260,521 | |
Brokered deposits | | — | | | — | | | 167,435 | |
Total deposits | | 16,291,081 | | | 16,187,204 | | | 16,427,956 | |
Federal Home Loan Bank advances | | 22,306 | | | — | | | — | |
Other borrowings | | 1,119,949 | | | 1,124,958 | | | 899,493 | |
Other liabilities | | 832,837 | | | 801,464 | | | 750,858 | |
Total liabilities | | 18,266,173 | | | 18,113,626 | | | 18,078,307 | |
Stockholders’ equity of WSFS | | 2,489,580 | | | 2,473,481 | | | 2,314,659 | |
Noncontrolling interest | | (11,223) | | | (7,859) | | | (7,275) | |
Total stockholders' equity | | 2,478,357 | | | 2,465,622 | | | 2,307,384 | |
Total liabilities and stockholders' equity | | $ | 20,744,530 | | | $ | 20,579,248 | | | $ | 20,385,691 | |
Capital Ratios: | | | | | | |
Equity to asset ratio | | 12.00 | % | | 12.02 | % | | 11.35 | % |
Tangible common equity to tangible asset ratio (o) | | 7.56 | | | 7.52 | | | 6.76 | |
Common equity Tier 1 capital (required: 4.5%; well capitalized: 6.5%) (g) | | 13.07 | | | 14.00 | | | 13.68 | |
Tier 1 leverage (required: 4.00%; well-capitalized: 5.00%) (g) | | 10.44 | | | 11.14 | | | 10.83 | |
Tier 1 risk-based capital (required: 6.00%; well-capitalized: 8.00%) (g) | | 13.07 | | | 14.00 | | | 13.68 | |
Total risk-based capital (required: 8.00%; well-capitalized: 10.00%) (g) | | 14.32 | | | 15.25 | | | 14.85 | |
Asset Quality Indicators: | | | | | | |
Nonperforming assets: | | | | | | |
Nonaccruing loans (t) | | $ | 64,034 | | | $ | 65,948 | | | $ | 33,003 | |
| | | | | | |
Assets acquired through foreclosure | | 1,342 | | | 1,210 | | | 527 | |
Total nonperforming assets | | $ | 65,376 | | | $ | 67,158 | | | $ | 33,530 | |
Past due loans (h) | | $ | 9,798 | | | $ | 11,362 | | | $ | 13,571 | |
Troubled loans (u) | | 133,080 | | | 119,243 | | | 51,129 | |
Allowance for credit losses | | 198,260 | | | 192,637 | | | 171,877 | |
Ratio of nonperforming assets to total assets | | 0.32 | % | | 0.33 | % | | 0.16 | % |
| | | | | | |
Ratio of allowance for credit losses to total loans and leases (q) | | 1.51 | | | 1.48 | | | 1.39 | |
| | | | | | |
Ratio of allowance for credit losses to nonaccruing loans | | 310 | | | 292 | | | 521 | |
Ratio of quarterly net charge-offs to average gross loans (a)(e)(i)(n) | | 0.44 | | | 0.27 | | | 0.43 | |
Ratio of year-to-date net charge-offs to average gross loans (a)(e)(i)(n) | | 0.35 | | | 0.27 | | | 0.41 | |
See “Notes”
| | | | | | | | | | | | | | |
| | WSFS Bank Center | WSFS Bank Place | 18 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
AVERAGE BALANCE SHEET (Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Three months ended |
| | June 30, 2024 | | March 31, 2024 | | June 30, 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) | | $ | 5,115,017 | | | $ | 91,001 | | | 7.17 | % | | $ | 5,047,482 | | | $ | 88,530 | | | 7.06 | % | | $ | 5,051,292 | | | $ | 86,073 | | | 6.85 | % |
Commercial real estate loans (s) | | 4,968,847 | | | 88,852 | | | 7.19 | | | 4,887,483 | | | 86,724 | | | 7.14 | | | 4,484,162 | | | 78,018 | | | 6.98 | |
Residential mortgage | | 892,139 | | | 10,995 | | | 4.93 | | | 874,703 | | | 10,579 | | | 4.84 | | | 804,390 | | | 9,384 | | | 4.67 | |
Consumer loans | | 2,088,180 | | | 39,019 | | | 7.52 | | | 2,041,390 | | | 38,228 | | | 7.53 | | | 1,907,294 | | | 33,508 | | | 7.05 | |
Loans held for sale | | 42,010 | | | 948 | | | 9.08 | | | 34,907 | | | 642 | | | 7.40 | | | 45,766 | | | 901 | | | 7.90 | |
Total loans and leases | | 13,106,193 | | | 230,815 | | | 7.09 | | | 12,885,965 | | | 224,703 | | | 7.02 | | | 12,292,904 | | | 207,884 | | | 6.79 | |
Mortgage-backed securities (d) | | 4,335,831 | | | 25,784 | | | 2.38 | | | 4,476,032 | | | 25,897 | | | 2.31 | | | 4,766,207 | | | 27,130 | | | 2.28 | |
Investment securities (d) | | 361,093 | | | 2,183 | | | 2.70 | | | 365,375 | | | 2,184 | | | 2.65 | | | 370,530 | | | 2,182 | | | 2.62 | |
Other interest-earning assets | | 469,120 | | | 6,455 | | | 5.53 | | | 643,749 | | | 8,838 | | | 5.52 | | | 345,791 | | | 4,573 | | | 5.30 | |
Total interest-earning assets | | $ | 18,272,237 | | | $ | 265,237 | | | 5.85 | % | | $ | 18,371,121 | | | $ | 261,622 | | | 5.74 | % | | $ | 17,775,432 | | | $ | 241,769 | | | 5.46 | % |
Allowance for credit losses | | (195,557) | | | | | | | (188,762) | | | | | | | (170,968) | | | | | |
Cash and due from banks | | 308,226 | | | | | | | 273,286 | | | | | | | 255,590 | | | | | |
Cash in non-owned ATMs | | 339,430 | | | | | | | 243,941 | | | | | | | 387,889 | | | | | |
Bank owned life insurance | | 41,067 | | | | | | | 42,791 | | | | | | | 101,031 | | | | | |
Other noninterest-earning assets | | 2,020,925 | | | | | | | 1,953,037 | | | | | | | 1,872,610 | | | | | |
Total assets | | $ | 20,786,328 | | | | | | | $ | 20,695,414 | | | | | | | $ | 20,221,584 | | | | | |
Liabilities and stockholders’ equity: | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | |
Interest-bearing deposits: | | | | | | | | | | | | | | | | | | |
Interest-bearing demand | | $ | 2,807,761 | | | $ | 8,107 | | | 1.16 | % | | $ | 2,834,273 | | | $ | 7,366 | | | 1.05 | % | | $ | 3,039,257 | | | $ | 6,525 | | | 0.86 | % |
Savings | | 1,553,044 | | | 1,774 | | | 0.46 | | | 1,588,224 | | | 1,580 | | | 0.40 | | | 1,873,572 | | | 1,342 | | | 0.29 | |
Money market | | 5,172,682 | | | 46,390 | | | 3.61 | | | 5,186,402 | | | 45,433 | | | 3.52 | | | 4,137,867 | | | 27,898 | | | 2.70 | |
Customer time deposits | | 1,937,265 | | | 20,422 | | | 4.24 | | | 1,835,424 | | | 18,238 | | | 4.00 | | | 1,578,615 | | | 10,597 | | | 2.69 | |
Total interest-bearing customer deposits | | 11,470,752 | | | 76,693 | | | 2.69 | | | 11,444,323 | | | 72,617 | | | 2.55 | | | 10,629,311 | | | 46,362 | | | 1.75 | |
Brokered deposits | | — | | | — | | | — | | | 18,410 | | | 178 | | | 3.89 | | | 307,515 | | | 3,692 | | | 4.82 | |
Total interest-bearing deposits | | 11,470,752 | | | 76,693 | | | 2.69 | | | 11,462,733 | | | 72,795 | | | 2.55 | | | 10,936,826 | | | 50,054 | | | 1.84 | |
Federal Home Loan Bank advances | | 25,742 | | | 359 | | | 5.61 | | | 21,429 | | | 308 | | | 5.78 | | | 123,297 | | | 1,597 | | | 5.20 | |
Trust preferred borrowings | | 90,704 | | | 1,750 | | | 7.76 | | | 90,655 | | | 1,756 | | | 7.79 | | | 90,511 | | | 1,635 | | | 7.25 | |
Senior and subordinated debt | | 218,478 | | | 2,441 | | | 4.47 | | | 218,420 | | | 2,449 | | | 4.48 | | | 218,247 | | | 2,334 | | | 4.28 | |
Other borrowed funds | | 816,919 | | | 9,545 | | | 4.70 | | | 781,854 | | | 9,036 | | | 4.65 | | | 390,576 | | | 4,307 | | | 4.42 | |
Total interest-bearing liabilities | | $ | 12,622,595 | | | $ | 90,788 | | | 2.89 | % | | $ | 12,575,091 | | | $ | 86,344 | | | 2.76 | % | | $ | 11,759,457 | | | $ | 59,927 | | | 2.04 | % |
Noninterest-bearing demand deposits | | 4,835,912 | | | | | | | 4,828,865 | | | | | | | 5,458,676 | | | | | |
Other noninterest-bearing liabilities | | 891,273 | | | | | | | 822,834 | | | | | | | 674,300 | | | | | |
Stockholders’ equity of WSFS | | 2,446,371 | | | | | | | 2,476,453 | | | | | | | 2,332,147 | | | | | |
Noncontrolling interest | | (9,823) | | | | | | | (7,829) | | | | | | | (2,996) | | | | | |
Total liabilities and equity | | $ | 20,786,328 | | | | | | | $ | 20,695,414 | | | | | | | $ | 20,221,584 | | | | | |
Excess of interest-earning assets over interest-bearing liabilities | | $ | 5,649,642 | | | | | | | $ | 5,796,030 | | | | | | | $ | 6,015,975 | | | | | |
Net interest and dividend income | | | | $ | 174,449 | | | | | | | $ | 175,278 | | | | | | | $ | 181,842 | | | |
Interest rate spread | | | | | | 2.96 | % | | | | | | 2.98 | % | | | | | | 3.42 | % |
Net interest margin | | | | | | 3.85 | % | | | | | | 3.84 | % | | | | | | 4.11 | % |
See “Notes”
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| | WSFS Bank Center | WSFS Bank Place | 19 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Unaudited)
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(Dollars in thousands, except per share data) | | Three months ended | | Six months ended |
Stock Information: | | June 30, 2024 | | March 31, 2024 | | June 30, 2023 | | June 30, 2024 | | June 30, 2023 |
Market price of common stock: | | | | | | | | | | |
High | | $47.55 | | $47.71 | | $40.54 | | $47.71 | | $51.77 |
Low | | 41.33 | | 40.20 | | 29.59 | | 40.20 | | 29.59 |
Close | | 47.00 | | 45.14 | | 37.72 | | 47.00 | | 37.72 |
Book value per share of common stock | | 42.01 | | 41.17 | | 37.89 | | | | |
Tangible common book value (TBV) per share of common stock (o) | | 25.20 | | 24.52 | | 21.45 | | | | |
Number of shares of common stock outstanding (000s) | | 59,261 | | 60,084 | | 61,093 | | | | |
Other Financial Data: | | | | | | | | | | |
One-year repricing gap to total assets (k) | | (0.30)% | | 0.19% | | 2.50% | | | | |
Weighted average duration of the MBS portfolio | | 5.7 years | | 5.8 years | | 5.8 years | | | | |
Unrealized losses on securities available for sale, net of taxes | | $(549,039) | | $(539,939) | | $(550,890) | | | | |
Number of Associates (FTEs) (m) | | 2,279 | | 2,241 | | 2,219 | | | | |
Number of offices (branches, LPO’s, operations centers, etc.) | | 114 | | 114 | | 114 | | | | |
Number of WSFS owned and branded ATMs | | 579 | | 583 | | 679 | | | | |
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.
(u)Represents loans modified in the form of principal forgiveness, interest rate reduction, an other-than-insignificant payment delay, or a term extension to borrowers experiencing financial difficulty.
| | | | | | | | | | | | | | |
| | WSFS Bank Center | WSFS Bank Place | 20 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Dollars in thousands, except per share data)
(Unaudited)
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Non-GAAP Reconciliation (o): | | Three months ended | | Six months ended |
| | June 30, 2024 | | March 31, 2024 | | June 30, 2023 | | June 30, 2024 | | June 30, 2023 |
Net interest income (GAAP) | | $ | 174,449 | | | $ | 175,278 | | | $ | 181,842 | | | $ | 349,727 | | | $ | 364,374 | |
Core net interest income (non-GAAP) | | 174,449 | | | 175,278 | | | 181,842 | | | 349,727 | | | 364,374 | |
Noninterest income (GAAP) | | 91,598 | | | 75,857 | | | 66,871 | | | 167,455 | | | 129,998 | |
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Plus: Unrealized loss on equity investments, net | | — | | | — | | | — | | | — | | | (4) | |
Less: Realized gain on sale of equity investment, net | | 2,130 | | | — | | | — | | | 2,130 | | | — | |
Less/(plus): Visa derivative valuation adjustment | | 3,434 | | | (605) | | | (552) | | | 2,829 | | | (1,105) | |
Core fee revenue (non-GAAP) | | $ | 86,034 | | | $ | 76,462 | | | $ | 67,423 | | | $ | 162,496 | | | $ | 131,107 | |
Core net revenue (non-GAAP) | | $ | 260,483 | | | $ | 251,740 | | | $ | 249,265 | | | $ | 512,223 | | | $ | 495,481 | |
Core net revenue (non-GAAP)(tax-equivalent) | | $ | 260,900 | | | $ | 252,084 | | | $ | 249,633 | | | $ | 512,984 | | | $ | 496,492 | |
Noninterest expense (GAAP) | | $ | 155,768 | | | $ | 149,072 | | | $ | 141,253 | | | $ | 304,840 | | | $ | 274,298 | |
(Plus)/less: FDIC special assessment | | (383) | | | 1,263 | | | — | | | 880 | | | — | |
| | | | | | | | | | |
Less: Corporate development expense | | 158 | | | 208 | | | 2,796 | | | 366 | | | 3,536 | |
Plus: Restructuring expense | | — | | | — | | | (26) | | | — | | | (787) | |
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Core noninterest expense (non-GAAP) | | $ | 155,993 | | | $ | 147,601 | | | $ | 138,483 | | | $ | 303,594 | | | $ | 271,549 | |
Core efficiency ratio (non-GAAP) | | 59.8 | % | | 58.6 | % | | 55.5 | % | | 59.2 | % | | 54.7 | % |
Core fee revenue ratio (non-GAAP) (b) | | 33.0 | % | | 30.3 | % | | 27.0 | % | | 31.7 | % | | 26.4 | % |
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| | End of period | | | | |
| | June 30, 2024 | | March 31, 2024 | | June 30, 2023 | | | | |
Total assets (GAAP) | | $ | 20,744,530 | | | $ | 20,579,248 | | | $ | 20,385,691 | | | | | |
Less: Goodwill and other intangible assets | | 996,181 | | | 1,000,344 | | | 1,004,278 | | | | | |
Total tangible assets (non-GAAP) | | $ | 19,748,349 | | | $ | 19,578,904 | | | $ | 19,381,413 | | | | | |
Total stockholders’ equity of WSFS (GAAP) | | $ | 2,489,580 | | | $ | 2,473,481 | | | $ | 2,314,659 | | | | | |
Less: Goodwill and other intangible assets | | 996,181 | | | 1,000,344 | | | 1,004,278 | | | | | |
Total tangible common equity (non-GAAP) | | $ | 1,493,399 | | | $ | 1,473,137 | | | $ | 1,310,381 | | | | | |
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Tangible common book value (TBV) per share: | | | | | | | | |
Book value per share (GAAP) | | $ | 42.01 | | | $ | 41.17 | | | $ | 37.89 | | | | | |
Tangible common book value per share (non-GAAP) | | 25.20 | | | 24.52 | | | 21.45 | | | | | |
Tangible common equity to tangible assets: | | | | | | | | |
Equity to asset ratio (GAAP) | | 12.00 | % | | 12.02 | % | | 11.35 | % | | | | |
Tangible common equity to tangible assets ratio (non-GAAP) | | 7.56 | | | 7.52 | | | 6.76 | | | | | |
| | | | | | | | | | | | | | |
| | WSFS Bank Center | WSFS Bank Place | 21 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-GAAP Reconciliation - continued (o): | | Three months ended | | Six months ended |
| | June 30, 2024 | | March 31, 2024 | | June 30, 2023 | | June 30, 2024 | | June 30, 2023 |
GAAP net income attributable to WSFS | | $ | 69,273 | | | $ | 65,761 | | | $ | 68,678 | | | $ | 135,034 | | | $ | 131,082 | |
Plus/(less): Pre-tax adjustments: Realized/unrealized gain (loss) on equity investments, net, Visa derivative valuation adjustment, FDIC special assessment, and corporate development and restructuring expense | | (5,789) | | | 2,076 | | | 3,322 | | | (3,713) | | | 3,858 | |
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(Plus)/less: Tax impact of pre-tax adjustments | | 1,273 | | | (507) | | | (798) | | | 776 | | | (976) | |
Adjusted net income (non-GAAP) attributable to WSFS | | $ | 64,757 | | | $ | 67,330 | | | $ | 71,202 | | | $ | 132,097 | | | $ | 133,964 | |
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GAAP return on average assets (ROA) | | 1.34 | % | | 1.28 | % | | 1.36 | % | | 1.31 | % | | 1.31 | % |
Plus/(less): Pre-tax adjustments: Realized/unrealized gain (loss) on equity investments, net, Visa derivative valuation adjustment, FDIC special assessment, and corporate development and restructuring expense | | (0.11) | | | 0.04 | | | 0.07 | | | (0.04) | | | 0.04 | |
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(Plus)/less: Tax impact of pre-tax adjustments | | 0.02 | | | (0.01) | | | (0.02) | | | 0.01 | | | (0.01) | |
Core ROA (non-GAAP) | | 1.25 | % | | 1.31 | % | | 1.41 | % | | 1.28 | % | | 1.34 | % |
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Earnings per share (diluted) (GAAP) | | $ | 1.16 | | | $ | 1.09 | | | $ | 1.12 | | | $ | 2.24 | | | $ | 2.13 | |
Plus/(less): Pre-tax adjustments: Realized/unrealized gain (loss) on equity investments, net, Visa derivative valuation adjustment, FDIC special assessment, and corporate development and restructuring expense | | (0.10) | | | 0.03 | | | 0.05 | | | (0.06) | | | 0.06 | |
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(Plus)/less: Tax impact of pre-tax adjustments | | 0.02 | | | (0.01) | | | (0.01) | | | 0.01 | | | (0.01) | |
Core earnings per share (non-GAAP) | | $ | 1.08 | | | $ | 1.11 | | | $ | 1.16 | | | $ | 2.19 | | | $ | 2.18 | |
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Calculation of return on average tangible common equity: | | | | | | | | |
GAAP net income attributable to WSFS | | $ | 69,273 | | | $ | 65,761 | | | $ | 68,678 | | | $ | 135,034 | | | $ | 131,082 | |
Plus: Tax effected amortization of intangible assets | | 3,007 | | | 2,973 | | | 2,884 | | | 5,980 | | | 5,764 | |
Net tangible income (non-GAAP) | | $ | 72,280 | | | $ | 68,734 | | | $ | 71,562 | | | $ | 141,014 | | | $ | 136,846 | |
Average stockholders’ equity of WSFS | | $ | 2,446,371 | | | $ | 2,476,453 | | | $ | 2,332,147 | | | $ | 2,461,412 | | | $ | 2,296,403 | |
Less: Average goodwill and intangible assets | | 998,939 | | | 1,003,167 | | | 1,006,972 | | | 1,001,053 | | | 1,008,798 | |
Net average tangible common equity | | $ | 1,447,432 | | | $ | 1,473,286 | | | $ | 1,325,175 | | | $ | 1,460,359 | | | $ | 1,287,605 | |
Return on average tangible common equity (non-GAAP) | | 20.08 | % | | 18.76 | % | | 21.66 | % | | 19.42 | % | | 21.43 | % |
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| | WSFS Bank Center | WSFS Bank Place | 22 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-GAAP Reconciliation - continued (o): | | Three months ended | | Six months ended |
| | June 30, 2024 | | March 31, 2024 | | June 30, 2023 | | June 30, 2024 | | June 30, 2023 |
Calculation of PPNR: |
Net income (GAAP) | | $ | 69,208 | | | $ | 65,723 | | | $ | 68,595 | | | $ | 134,931 | | | $ | 131,257 | |
Plus: Income tax provision | | 21,257 | | | 21,202 | | | 23,035 | | | 42,459 | | | 43,976 | |
Plus: Provision for credit losses | | 19,814 | | | 15,138 | | | 15,830 | | | 34,952 | | | 44,841 | |
PPNR (non-GAAP) | | $ | 110,279 | | | $ | 102,063 | | | $ | 107,460 | | | $ | 212,342 | | | $ | 220,074 | |
Plus/(less): Pre-tax adjustments: Realized/unrealized gain (loss) on equity investments, net, Visa derivative valuation adjustment, FDIC special assessment, and corporate development and restructuring expense | | (5,789) | | | 2,076 | | | 3,322 | | | (3,713) | | | 3,858 | |
Core PPNR (non-GAAP) | | $ | 104,490 | | | $ | 104,139 | | | $ | 110,782 | | | $ | 208,629 | | | $ | 223,932 | |
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Calculation of core PPNR to average assets: |
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Core PPNR (non-GAAP) | | $ | 104,490 | | | $ | 104,139 | | | $ | 110,782 | | | $ | 208,629 | | | $ | 223,932 | |
Total average assets | | 20,786,328 | | | 20,695,414 | | | 20,221,584 | | | 20,740,871 | | | 20,112,616 | |
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Core PPNR to average assets | | 2.02 | % | | 2.02 | % | | 2.20 | % | | 2.02 | % | | 2.25 | % |
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1 WSFS Financial Corporation 2Q 2024 Earnings Release Supplement July 2024 Exhibit 99.2
2 Forward Looking Statements & Non-GAAP 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 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, the uncertain effects of geopolitical instability, armed conflicts, public health crises, inflation, interest rates 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, 2023, and Form 10-Q for the quarter ended March 31, 2024, 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 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 income, Core Net Interest Margin (“NIM”), Tangible Common Equity (“TCE”), tangible assets, Return on Tangible Common Equity (“ROTCE”), Core ROTCE, Core Fee Revenue, Core Fee Revenue ratio, net tangible income, tangible common book value (“TBV”), TBV excluding AOCI, coverage ratio including the remaining credit marks, and Effective AOCI. 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. Trade names, trademarks and service marks of other companies appearing in this presentation are the property of their respective holders.
3 Financial Highlights 2Q 2024 Highlights: • Core Fee Revenue1 of $86mm; grew 13% quarter-over-quarter • Cash Connect®, Wealth and Trust, Capital Markets, and Mortgage all with double-digit linked quarter increases • Gross Loans increased $189mm or 6% (annualized) • Driven by growth in C&I and Consumer with migration of Construction to CRE • Customer Deposits increased $104mm or 3% (annualized) • Noninterest deposits increased $130mm driven by short-term Trust deposits • NIM of 3.85%; reflects increasing loan yields mostly offset by higher deposit costs • Asset quality metrics remain stable 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 Excludes net income that is attributable to noncontrolling interest Reported Core1 $ in millions (except per share amounts) 2Q24 1Q24 2Q24 1Q24 EPS $1.16 $1.09 $1.08 $1.11 ROA 1.34% 1.28% 1.25% 1.31% Net Income2 $69.3 $65.8 $64.8 $67.3 PPNR %1 2.13% 1.98% 2.02% 2.02% ROTCE1 20.08% 18.76% 18.83% 19.19% NIM 3.85% 3.84% 3.85% 3.84% Fee Revenue %3 34.4% 30.2% 33.0% 30.3% Efficiency Ratio 58.5% 59.3% 59.8% 58.6% ACL Ratio4 1.51% 1.48% 1.51% 1.48% Bank CET1 13.07% 14.00% 13.07% 14.00% 3 Tax-equivalent 4 ACL Ratio excludes HTM securities
4 $15 $19 $19 $17 $17 $20 $21 $23 $26 $31 $32 $33 $36 $33 $38 $67 $73 $78 $76 $86 $- $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 2Q 2023 3Q 2023 4Q 2023 1Q 2024 2Q 2024 Co re F ee R ev en ue ( $m m )2 Banking Cash Connect Wealth Management3 Core Fee Revenue1 33% Core Fee Revenue ratio with continued substantial growth opportunities 1 This is a non-GAAP financial measure 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 Tax-equivalent basis 3 Banking includes deposit service charges, SBA loan sales, loan and lease fees, credit and debit revenue, capital markets, mortgage, and other banking related fees Wealth Management: • Private Wealth Management benefited from seasonal recognition of tax service fees • Institutional Services increased due to account-based fees from new business and increases in assignment and bankruptcy fees • Bryn Mawr Trust Company of Delaware grew from increased activity and account growth Cash Connect®: • Captured market share from a major competitor exiting the space and a Customer’s shift to higher margin services Banking: • Capital Markets and Mortgage with double- digit growth in fees quarter-over-quarter ®
5 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 2Q 2023 3Q 2023 4Q 2023 1Q 2024 2Q 2024 1.16% 1.38% 1.62% 1.79% 1.89% 1.40% 1.59% 1.83% 1.99% 2.09% 6.69% 6.81% 6.92% 6.95% 7.03% 2.0% 4.0% 6.0% 8.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 2Q 2023 3Q 2023 4Q 2023 1Q 2024 2Q 2024 Lo an Y ie ld (% ) Cu st om er D ep os it Co st (% ) Total Deposit Cost Total Funding Cost Total Loans Ex PAA Yield Deposit Betas3 Net Interest Margin Trends Favorable funding cost and competitive beta while generating profitable loan relationships Average Deposit Cost and Loan Yield 1 Includes non-interest and interest-bearing; interest-bearing deposits include demand, money market, savings, and customer time deposits 2 Average total loans yield excludes PAA 3 Deposit betas are cumulative customer deposits for the current cycle 21 4.11% 4.08% 3.99% 3.84% 35% 39% 44% 47% 50% 23% 27% 31% 34% 35% 0% 15% 30% 45% 60% 75% 2Q 2023 3Q 2023 4Q 2023 1Q 2024 2Q 2024 De po sit B et a Interest-bearing Dep Beta Total Dep Beta 3.85%
6 Deposit Highlights • $104mm (3% annualized) increase in ending Customer Deposits • Driven by $130mm in noninterest deposits (primarily from short-term Trust) and $89mm in time deposits • 1.89% total average Customer Deposit cost; 35% total deposit beta • 30% average noninterest deposits • 51% of Customer Deposits are from non-Consumer business lines Resilient deposit base with competitive pricing and diversified funding mix Average Total Customer Deposit Mix 10% 10% 11% 11% 12% 37% 39% 40% 42% 41% 19% 18% 18% 17% 17% 34% 33% 31% 30% 30% 0% 20% 40% 60% 80% 100% 2Q23 3Q23 4Q23 1Q24 2Q24 Noninterest Interest-bearing Savings/MM Time ($ in millions) Jun 2024 Mar 2024 Jun 2023 QoQ $ Growth Annualized % Growth Noninterest Demand $4,783 $4,653 $5,462 $130 11% Interest-bearing Demand 2,812 2,856 2,969 (44) (6%) Savings 1,537 1,577 1,815 (40) (10%) Money Market 5,175 5,206 4,375 (31) (2%) Total Core Deposits $14,307 $14,292 $14,621 $15 0% Customer Time Deposits 1,984 1,895 1,640 89 19% Total Customer Deposits $16,291 $16,187 $16,261 $104 3% EOP Deposits by Product - 2Q24 vs 1Q24 Consumer 49% Commercial 24% Small Business 13% Trust 6% Wealth 7% Other 1% Average Customer Deposits By Business Line
7 Loan Portfolio Highlights • Commercial: Growth driven by C&I originations; migration of Construction to CRE • Line utilization to 39.3%, up from 38.3% last quarter • Consumer: Driven by $48mm increase in Spring EQ loans, partially offset by $28mm decline in Upstart loans • Residential mortgage retained certain loans based on favorable yields and relationship opportunities • Upstart portfolio stands at $190mm and is expected to continue to decline going forward 6% annualized gross loan growth across Commercial and Consumer portfolios 1 Includes new loans, existing new funding, paydowns, payoffs, and prior Commercial runoff portfolios. Excludes reclasses, HFS, purchase accounting mark/unearned changes, and Commercial leases 2 C&I loans includes Owner-Occupied Real Estate $376 $442 $400 $326 $364 ($491) ($289) ($379) ($241) ($285) $(600) $(400) $(200) - $200 $400 $600 2Q23 3Q23 4Q23 1Q24 2Q24 New Loans Fundings Paydown/Payoffs Commercial Portfolio: New Net Loan Fundings ($mm)1 ($ in millions) Jun 2024 Mar 2024 Jun 2023 QoQ $ Growth Annualized % Growth C & I Loans2 $4,599 $4,489 $4,533 $110 10% Commercial Mortgages (CRE) 4,035 3,877 3,553 158 16% Construction Loans 879 1,056 955 (177) (67%) Commercial Leases 644 634 590 10 6% Total Commercial Loans $10,157 $10,056 $9,631 $101 4% Residential Mortgage (HFS/HFI) 936 888 847 48 22% Consumer Loans 2,106 2,066 1,905 40 8% Total Gross Loans $13,199 $13,010 $12,383 $189 6% EOP Loans - 2Q24 vs 1Q24
8 3 Commercial Loan Composition1 1 As defined by the North American Industry Classification System (NAICS) 2 Based on the underlying real estate collateral 3 Concentration limits are based on relationship exposure, and Tier-1 + ACL; as of June 30, 2024 2 Highly diversified C&I, Owner-Occupied, CRE, and Construction Portfolios C&I and Owner-Occupied1 $4.6 billion CRE and Construction2 $4.9 billion Hotels, 12% Other Services (except Public Admin), 11% Healthcare & Social Assistance, 9% Construction, 9% Manufacturing, 7% Real Estate Rental and Leasing, 6% Retail Trade, 7% Finance & Insurance, 8% Professional, Science & Tech., 5% Food Services, 5% Wholesale Trade, 4% Other, 17% Retail, 26% Residential Multifamily, 29% Office5, 14% Flex, Warehouse, Self-Storage, General Industrial, 10% Residential 1-4, 11% Special Use & Other, 8% Medical Office, 2% • 22 distinct concentration limits3 • All in compliance • House limit of $100mm • No relationships > limit • 15 relationships over $50mm4; • <8% gross loans • CRE & Const./Tier 1 Capital + ACL: 211% • CRE & Const.: 37.2% of gross loans • Office5: 5.1% of gross loans • Multifamily: 11.0% of gross loans • Construction: 6.7% of gross loans Concentration Statistics 4 Based on relationship’s outstanding balances 5 Office portfolio excludes Medical Office CRE/Construction
9 Stable Asset Quality Metrics Problem Assets Nonperforming Assets Delinquencies Net Charge-offs $465 $543 $556 $573 $629 3.76% 4.27% 4.34% 4.41% 4.76% 0.0% 1.2% 2.4% 3.6% 4.8% 6.0% $300 $400 $500 $600 $700 $800 2Q23 3Q23 4Q23 1Q24 2Q24 M ill io ns Problem Assets % of Gross Loans $73 $111 $102 $105 $89 0.59% 0.87% 0.80% 0.81% 0.68% 0.0% 0.3% 0.6% 0.9% 1.2% 1.5% $0 $25 $50 $75 $100 $125 $150 $175 $200 2Q23 3Q23 4Q23 1Q24 2Q24 M ill io ns Delinquencies % of Gross Loans $8 $8 $10 $10 $9 $5 $6 $5 -$1 $5 0.43% 0.45% 0.46% 0.27% 0.44% 0.0% 0.1% 0.2% 0.3% 0.4% 0.5% $0 $4 $8 $12 $16 $20 2Q23 3Q23 4Q23 1Q24 2Q24 M ill io ns Upstart/NewLane Other % of Avg. Gross Loans $34 $58 $76 $67 $65 0.16% 0.29% 0.37% 0.33% 0.32% 0.0% 0.1% 0.2% 0.3% 0.4% 0.5% $0 $20 $40 $60 $80 $100 2Q23 3Q23 4Q23 1Q24 2Q24 M ill io ns Nonperforming Assets % of Total Assets
10 $0.0 $0.1 $0.2 $0.3 $0.4 $0.5 2H24 2025 2026 2027 2028 Bi lli on s Volume of Maturing CRE Loans by Industry Office Multi-Family Industrial/Flex Retail Single Family Other CRE and Select Portfolios 1 Inclusive of Construction 2 Office CRE portfolio excludes $98.0mm ($102.2mm exposure) of Medical Office CRE/Construction 3 Central Business District CRE Portfolio: • Granular with an average loan of $1.2mm; 11 relationships over $50mm • ~80% of the portfolio effectively has a fixed rate (40% of the portfolio fixed with ~67% of variable rates swapped) • ~9% of the portfolio is maturing in 2024; 50% of loans mature post-2028 • Continually reviewing all $2.5mm+ loans maturing in the next 24 months • Less than $50mm of loans in 2024 and $80mm in 2025 have a DSCR below 1.05x in a 7.50% rate scenario; proactively addressing all maturing loans • $670mm with $701mm exposure2; 5.1% of gross loans • $1.8mm average loan size • 77% Suburban and 23% Urban; 8% of Office is in CBD3 • 14 loans over $10mm; 3 loans >$20mm (largest ~$27mm) • Average LTV of ~60% at origination • 0% DLQ; <1% NCO; <1% NPA; 12% problem loans • 82% with recourse Office Portfolio1 • $1.4b with $1.8b exposure; 11.0% of gross loans • $3.1mm average loan size • 51% Suburban and 49% Urban; 6% of CRE Multi-Family is in CBD3 • 20 loans over $20mm; largest loan ~$35mm • Average LTV of ~56% at origination • <1% DLQ; 0% NCO; <1% NPA; 4% problem loans • 86% with recourse Multifamily Portfolio1 8.8% 11.5% 8.1% 10.4% 11.3% Portfolio Maturity %
11 ACL Ratio $165 $175 $185 $195 $205 $215 3/31/2024 Economic Impact Net Loan Growth Migration / Other 6/30/2024 2Q 2024 ACL ($mm) $9 ($10) $198 $6 1 This is a 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 Source: Oxford Economics as of June 2024 ACL Overview ACL and Coverage Ratio by Segment 2Q 2024 ACL Commentary 1.51% • ACL coverage ratio of 1.51%; 1.67% including estimated remaining credit mark on acquired loan portfolios1 • Increase driven by higher ACL provision related to CRE • CRE Office portfolio ACL of 3.22% • FY GDP forecast of 2.4% in 2024 and 1.8% in 20252 • FY Unemployment forecast of 3.9% in 2024 and 4.1% in 20252 1.48% 1.29% 2.08% 1.51% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 2Q20 2Q21 2Q22 2Q23 2Q24 ACL % By Portfolio and Total3 Commercial Consumer and Leasing Total ACL%5 3 Percentages are over amortized cost of loans and leases (excluding HTM securities) 4 Hotel loan balances are included in the C&I and Construction segments 5 Commercial excludes Leasing $193 ($ millions) $ % $ % $ % C&I4 $52.4 2.00% $55.9 2.17% $56.5 2.14% Owner Occupied R/E $6.3 0.34% $10.6 0.56% $9.7 0.50% CRE Investor $31.9 0.90% $36.8 0.95% $46.8 1.16% Construction4 $9.2 0.97% $11.0 1.04% $9.2 1.05% Resi Mortgage $5.0 0.61% $5.4 0.62% $5.1 0.56% Leases $10.4 1.76% $15.5 2.44% $16.2 2.51% HELOC & HEIL $8.4 1.31% $8.6 1.25% $9.2 1.29% Consumer Partnerships $45.5 4.19% $46.0 3.77% $42.8 3.44% Other $2.8 1.74% $2.8 1.86% $2.8 1.88% TOTAL $171.9 1.39% $192.6 1.48% $198.3 1.51% June 30, 2023 March 31, 2024 June 30, 2024
12 Investment Portfolio High-quality investment portfolio providing consistent cash flows and borrowing capacity 1 Investment portfolio value includes market value AFS and book value of HTM 2 Weighted average duration and yield of the MBS portfolio 3 This is a non-GAAP financial measure 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 4 Effective AOCI ($742.3mm) includes AFS, HTM, and HTM unrecognized MTM • Targeting 18% - 20% of total assets over time • Forecast cash flows of $1b+ over the next 24 months • Cash flows redeployed in higher yielding loans • Anticipated cash flows could fund ~3.5% annualized loan growth • AOCI grew $6mm or 0.9% quarter-over-quarter Investments Investment Portfolio1 $4.69b % of Total Assets 23% Portfolio Duration2 5.7yrs Portfolio Yield2 2.38% Agency MBS/Notes % >95% AOCI ($642.9mm) Effective AOCI3,4 ($742.3mm) AFS Agency MBS Agency CMOs GNMA MBS/CMOs Agency Debent. HTM Agency MBS Munis $3.65b $1.04b $656 $781 $594 $637 $643 $0 $200 $400 $600 $800 $1,000 2Q23 3Q23 4Q23 1Q24 2Q24 M ill io ns AOCI Trend
13 $25.20 $36.05 $15 $20 $25 $30 $35 $40 2Q19 4Q19 2Q20 4Q20 2Q21 4Q21 2Q22 4Q22 2Q23 4Q23 2Q24 Corp. TBV and AOCI’s Impact per Share TBV/share TBV/share ex-AOCI Capital All capital ratios remain above “well-capitalized” while deploying our disciplined buyback framework 9.12% 8.84% 10.46% 7.56% 3.95% 1.60% 3.86% 1.63% 13.07% 10.44% 14.32% 9.19% 0% 4% 8% 12% 16% Bank CET1 Bank Leverage Bank TRBC Corp. TCE Effective AOCI Well-capitalized Reported 2Q24 Capital Ratios with Effective AOCI1 Impact 1 Effective AOCI ($742.3mm) includes AFS, HTM, and HTM unrecognized MTM; reported AOCI of ($642.9mm) 2 This is a non-GAAP financial measure 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
14 Original FY Outlook1 Mid-single digit Low-single digit Range of 3.80% - 3.90% Double-digit 0.50% - 0.60% +/- 60% +/- 1.20% Updated FY Outlook1 Mid-single digit Flat Range of 3.80% - 3.90% Double-digit 0.50% - 0.60% +/- 60% +/- 1.25% 2024 Core Outlook - Update Loan Growth Deposit Growth Net Interest Margin Fee Revenue Growth Net Charge-offs Efficiency Ratio ROA2 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 2 25% effective tax rate assumed; unchanged from original outlook Commentary Increased market share Driven by broad-based growth partially offset by Trust deposits; 4Q exit deposit beta of <55% 4Q exit range of 3.85% - 3.90% Driven by Cash Connect® and Wealth & Trust ~30 bps when excluding Upstart and NewLane Continued franchise investment Reflects strong 1H results and 2H expectations Assumes continued flat interest rate environment and FY GDP of ~1% in 2024; +/- 25bps would have a +/- 3bps annualized ROA impact Focused on delivering sustainable top-quintile financial results and franchise growth
15 Non-GAAP Financial Information Appendix:
16 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). This presentation may include the following non-GAAP measures: • Adjusted Net Income (non-GAAP) attributable to WSFS is a non-GAAP measure that adjusts net income determined in accordance with GAAP to exclude the realized gain on equity investments, net, Visa derivative valuation adjustment, FDIC special assessment, and corporate development and restructuring expense; • Core fee revenue, also called core noninterest income, is a non-GAAP measure that adjusts noninterest income as determined in accordance with GAAP to exclude the impact of realized gain on equity investments, net, and Visa derivative valuation adjustment; • Core fee revenue ratio (%) is a non-GAAP measure that divides (i) Core Fee Revenue by (ii) Core Net Revenue (tax-equivalent); • Core net interest income is a non-GAAP measure that adjusts net interest income to exclude the impact of certain dividends; • Core Earnings Per Share (EPS) is a non-GAAP measure that divides (i) Adjusted Net Income (non-GAAP) attributable to WSFS by (ii) weighted average shares of common stock outstanding for the applicable period; • Core Net Revenue is a non-GAAP measure that adds (i) core net interest income and (ii) Core Fee Revenue; • Core noninterest expense is a non-GAAP measure that adjusts noninterest expense as determined in accordance with GAAP to exclude FDIC special assessment, and corporate development and restructuring expenses; • Core Efficiency Ratio is a non-GAAP measure that divides (i) core noninterest expense by (ii) the sum of core interest income and Core Fee Revenue; • Core Return on Average Assets (ROA) is a non-GAAP measure that divides (i) Adjusted Net Income (non-GAAP) attributable to WSFS by (ii) average assets for the applicable period; • Tangible Common Equity (TCE) is a non-GAAP measure and is defined as total stockholders’ equity of WSFS less goodwill and other intangible assets; • TCE Ratio is a non-GAAP measure that divides (i) TCE by (ii) tangible assets; • Tangible assets is a non-GAAP measure and is defined as total assets less goodwill and 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; • Core ROTCE is a non-GAAP measure that is defined as adjusted net income (non-GAAP) attributable to WSFS divided by tangible common equity; • Net tangible income is a non-GAAP measure that adjusts net income determined in accordance with GAAP to exclude the impact of the amortization of intangible assets; • Core net tangible income is a non-GAAP measure that adjusts adjusted net income (non-GAAP) attributable to WSFS to exclude the impact of the amortization of intangible assets; • Tangible common book value per share (TBV) is a non-GAAP financial measure that divides (i) TCE by (ii) shares outstanding; • TBV excluding AOCI is a non-GAAP financial measure that adjusts TBV to exclude AOCI; • Pre-provision Net Revenue (PPNR) is a non-GAAP 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; • Core PPNR is a non-GAAP measure that adjusts PPNR to exclude the impact of realized gain on equity investments, net, Visa derivative valuation adjustment, FDIC special assessment, and corporate development and restructuring expenses; • PPNR % is a non-GAAP measure that divides (i) PPNR (annualized) by (ii) average assets for the applicable period; • Core PPNR % is a non-GAAP measure that divides (i) core PPNR (annualized) by (ii) average assets for the applicable period; and • Core Return on Average Equity (ROE) is a non-GAAP measure that divides (i) Adjusted Net Income (non-GAAP) attributable to WSFS by (ii) average stockholders’ equity for the applicable period. • Effective AOCI is a non-GAAP measure that adds (i) unrealized losses on AFS securities, (ii) unrealized holding losses on securities transferred from AFS to HTM, and (iii) unrecognized fair value losses on HTM securities; • Adjusted risk weighted assets is a non-GAAP measure that adjusts the Bank’s risk weighted assets determined in accordance with GAAP to exclude our AFS and HTM securities; • Adjusted average assets is a non-GAAP measure that adjusts the Bank’s average assets determined in accordance with GAAP to exclude our AFS and HTM securities; • Adjusted tangible assets is a non-GAAP measure that adjusts risk weighted assets determined in accordance with GAAP to exclude our AFS and HTM securities ; • Adjusted TCE is a non-GAAP measure that adjusts TCE to exclude unrecognized fair value losses on HTM securities; • Adjusted TCE ratio is a non-GAAP measure (i) adjusted TCE by (ii) adjusted tangible assets; • Adjusted total risk-based capital is a non-GAAP measure that adjusts total risk-based capital determined in accordance with GAAP to exclude effective AOCI; • Adjusted total risk-based capital ratio is a non-GAAP measure that divides (i) adjusted total risk-based capital by (ii) adjusted risk weighted assets; • Adjusted common equity Tier 1 capital is a non-GAAP measure that adjusts common equity Tier 1 capital determined in accordance with GAAP to exclude effective AOCI; • Adjusted common equity Tier 1 capital ratio is a non-GAAP measure that divides (i) adjusted common equity Tier 1 capital by (ii) adjusted risk weighted assets; • Adjusted Tier 1 capital is a non-GAAP measure that adjusts Tier 1 capital determined in accordance with GAAP to exclude effective AOCI; • Adjusted Tier 1 leverage ratio is a non-GAAP measure that divides (i) adjusted Tier 1 capital by (ii) adjusted average assets; • Coverage ratio including the remaining credit marks is a non-GAAP measure that adjusts the coverage ratio to include the impact of the remaining credit marks on the acquired loan portfolios.
17 Appendix: Non-GAAP Financial Information Three Months Ended (dollars in thousands) June 30, 2024 March 31, 2024 June 30, 2023 Net interest income (GAAP) $ 174,449 $ 175,278 $ 181,842 Core net interest income (non-GAAP) $ 174,449 $ 175,278 $ 181,842 Noninterest income (GAAP) $ 91,598 $ 75,857 $ 66,871 Less: Realized gain on sale of equity investment, net 2,130 — — Less/(plus): Visa derivative valuation adjustment 3,434 (605) (552) Core fee revenue (non-GAAP) $ 86,034 $ 76,462 $ 67,423 Core net revenue (non-GAAP) $ 260,483 $ 251,740 $ 249,265 Core net revenue (non-GAAP) (tax- equivalent) $ 260,900 $ 252,084 $ 249,633 Noninterest expense (GAAP) $ 155,768 $ 149,072 $ 141,253 (Plus)/less: FDIC special assessment (383) 1,263 — Less: Corporate development expense 158 208 2,796 Plus: Restructuring expense — — (26) Core noninterest expense (non-GAAP) $ 155,993 $ 147,601 $ 138,483 Core efficiency ratio (non-GAAP) 59.8 % 58.6 % 55.5 % Core fee revenue ratio (non-GAAP)(tax- equivalent) 33.0 % 30.3 % 27.0 % Three Months Ended (dollars in thousands, except per share data) June 30, 2024 March 31, 2024 June 30, 2023 Calculation of tangible common equity ratio: Total Assets (GAAP) $ 20,744,530 $ 20,579,248 $ 20,385,691 Less: Goodwill and other intangible assets 996,181 1,000,344 1,004,278 Total tangible assets (non-GAAP) $ 19,748,349 $ 19,578,904 $ 19,381,413 Total stockholders’ equity of WSFS (GAAP) $ 2,489,580 $ 2,473,481 $ 2,314,659 Less: Goodwill and other intangible assets 996,181 1,000,344 1,004,278 Total tangible common equity (non-GAAP) $ 1,493,399 $ 1,473,137 $ 1,310,381 Equity to asset ratio (GAAP) 12.00 % 12.02 % 11.35 % Tangible common equity to tangible assets ratio (non-GAAP) 7.56 % 7.52 % 6.76 % Three Months Ended (dollars in thousands) June 30, 2024 Calculation of effective AOCI: Unrealized losses on AFS securities $ 549,039 Unrealized losses on securities transferred from AFS to HTM 84,046 Unrecognized fair value on HTM securities 109,186 Effective AOCI (non-GAAP) $ 742,271 Calculation of coverage ratio including the estimated remaining credit marks: Coverage ratio 1.51 % Plus: Estimated remaining credit marks on the acquired loan portfolios 0.16 Coverage ratio including the estimated remaining credit marks (non-GAAP) 1.67 %
18 Appendix: Non-GAAP Financial Information Three Months Ended (dollars in thousands, except per share data) June 30, 2024 March 31, 2024 June 30, 2023 GAAP net income attributable to WSFS $ 69,273 $ 65,761 $ 68,678 Plus/(less): Pre-tax adjustments1 (5,789) 2,076 3,322 (Plus)/less: Tax impact of pre-tax adjustments 1,273 (507) (798) Adjusted net income (non-GAAP) attributable to WSFS $ 64,757 $ 67,330 $ 71,202 Net income (GAAP) $ 69,208 $ 65,723 $ 68,595 Plus: Income tax provision 21,257 21,202 23,035 Plus: Provision for credit losses 19,814 15,138 15,830 PPNR (Non-GAAP) 110,279 102,063 107,460 Plus/(less): Pre-tax adjustments1 (5,789) 2,076 3,322 Core PPNR (Non-GAAP) $ 104,490 $ 104,139 $ 110,782 Average Assets $ 20,786,328 $ 20,695,414 $ 20,221,584 PPNR % (Non-GAAP) 2.13 % 1.98 % 2.13 % Core PPNR % (Non-GAAP) 2.02 % 2.02 % 2.20 % GAAP return on average assets (ROA) 1.34 % 1.28 % 1.36 % Plus/(less): Pre-tax adjustments1 (0.11) 0.04 0.07 (Plus)/less: Tax impact of pre-tax adjustments 0.02 (0.01) (0.02) Core ROA (non-GAAP) 1.25 % 1.31 % 1.41 % Earnings per share (diluted)(GAAP) $ 1.16 $ 1.09 $ 1.12 Plus/(less): Pre-tax adjustments1 (0.10) 0.03 0.05 (Plus)/less: Tax impact of pre-tax adjustments 0.02 (0.01) (0.01) Core earnings per share (non-GAAP) $ 1.08 $ 1.11 $ 1.16 1 Pre-tax adjustments include realized gain on equity investments, net, Visa derivative valuation adjustment, FDIC special assessment, and corporate development and restructuring expense
19 Appendix: Non-GAAP Financial Information Three Months Ended (dollars in thousands) June 30, 2024 March 31, 2024 June 30, 2023 Calculation of return on average tangible common equity: GAAP net income attributable to WSFS $ 69,273 $ 65,761 $ 68,678 Plus: Tax effected amortization of intangible assets 3,007 2,973 2,884 Net tangible income (non-GAAP) $ 72,280 $ 68,734 $ 71,562 Average stockholders' equity of WSFS $ 2,446,371 $ 2,476,453 $ 2,332,147 Less: Average goodwill and intangible assets 998,939 1,003,167 1,006,972 Net average tangible common equity $ 1,447,432 $ 1,473,286 $ 1,325,175 Return on average equity (GAAP) 11.39 % 10.68 % 11.81 % Return on average tangible common equity (non-GAAP) 20.08 % 18.76 % 21.66 % Three Months Ended June 30, 2024 March 31, 2024 June 30, 2023 Calculation of core return on average tangible common equity: Adjusted net income (non-GAAP) attributable to WSFS $ 64,757 $ 67,330 $ 71,202 Plus: Tax effected amortization of intangible assets 3,007 2,973 2,884 Core net tangible income (non-GAAP) $ 67,764 $ 70,303 $ 74,086 Net average tangible common equity $ 1,447,432 $ 1,473,286 $ 1,325,175 Core return on average equity (non-GAAP) 10.65 % 10.93 % 12.25 % Core return on average tangible common equity (non-GAAP) 18.83 % 19.19 % 22.42 % Three Months Ended (dollars in thousands) June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 Calculation of core fee revenue: Noninterest income (GAAP) $ 91,598 $ 75,857 $ 87,205 $ 72,668 $ 66,871 Less/(plus): Unrealized gains on equity investment — — 338 (5) — Less: Realized gain on sale of equity investment 2,130 — 9,493 — — Less/(plus): Visa B Valuation Adjustment 3,434 (605) (605) (750) (552) Core fee revenue (non-GAAP) $ 86,034 $ 76,462 $ 77,979 $ 73,423 $ 67,423
20 Appendix: Non-GAAP Financial Information (dollars in thousands, except per share data) June 30, 2024 December 31, 2023 June 30, 2023 December 31, 2022 June 30, 2022 December 31, 2021 Calculation of tangible common book value per share and tangible common book value per share ex-AOCI: Total stockholders’ equity of WSFS (GAAP) $ 2,489,580 $ 2,477,636 $ 2,314,659 $ 2,205,113 $ 2,315,360 $ 1,939,099 Less: Goodwill and other intangible assets 996,181 1,004,560 1,004,278 1,012,232 1,019,857 547,231 Total tangible common equity (non-GAAP) 1,493,399 1,473,076 1,310,381 1,192,881 1,295,503 1,391,868 Less: AOCI (642,878) (593,991) (656,059) (675,844) (518,878) (37,768) Tangible common equity ex-AOCI (non-GAAP) $ 2,136,277 $ 2,067,067 $ 1,966,440 $ 1,868,725 $ 1,814,381 $ 1,429,636 Shares outstanding (000s) 59,261 60,538 61,093 61,612 63,587 47,609 Tangible common book value per share (non-GAAP) $ 25.20 $ 24.33 $ 21.45 $ 19.36 $ 20.37 $ 29.24 Tangible common book value per share ex-AOCI (non-GAAP) $ 36.05 $ 34.14 $ 32.19 $ 30.33 $ 28.53 $ 30.03 (dollars in thousands, except per share data) June 30, 2021 December 31, 2020 June 30, 2020 December 31, 2019 June 30, 2019 Calculation of tangible common book value per share and tangible common book value per share ex-AOCI: Total stockholders’ equity of WSFS (GAAP) $ 1,884,054 $ 1,791,726 $ 1,823,669 $ 1,850,306 $ 1,836,611 Less: Goodwill and other intangible assets 551,951 557,386 562,515 568,745 575,696 Total tangible common equity (non-GAAP) 1,332,103 1,234,340 1,261,154 1,281,561 1,260,915 Less: AOCI 10,238 56,007 72,780 23,501 22,688 Tangible common equity ex-AOCI (non-GAAP) $ 1,321,865 $ 1,178,333 $ 1,188,374 $ 1,258,060 $ 1,238,227 Shares outstanding (000s) 47,535 47,756 50,660 51,567 53,232 Tangible common book value per share (non-GAAP) $ 28.02 $ 25.85 $ 24.89 $ 24.85 $ 23.69 Tangible common book value per share ex-AOCI (non-GAAP) $ 27.81 $ 24.67 $ 23.46 $ 24.40 $ 23.26
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WSFS Financial (NASDAQ:WSFS)
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