WSFS FINANCIAL CORP - FORM 8-K - EX-99 - PRESS RELEASE - UPDATED EARNINGS

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8-K - FORM 8-K - WSFS FINANCIAL CORP	f8k_051012-0312.htm

FOR IMMEDIATE RELEASE	Investor Relations Contact: Stephen A. Fowle
May 10, 2012	(302) 571-6833 sfowle@wsfsbank.com
	Media Contact: Stephanie Heist
	(302) 571-5259 sheist@wsfsbank.com

WSFS Announces Selected Asset Strategies and Updated Earnings for 1Q 2012

WILMINGTON, Del., WSFS Financial Corporation (Nasdaq: WSFS), the parent company of WSFS Bank, announced today the implementation of selected asset strategies and an update to its reported earnings for the quarter ended March 31, 2012.

Selected Asset Strategies

The Company has been monitoring the market for distressed asset sales over the course of the economic recovery and from time to time has conducted small bulk sales of problem assets. The Board of Directors recently approved the marketing of approximately $52 million in unpaid principal balances of problem and nonperforming loans in bulk sale transactions. These loans were reclassified as loans held for sale in the second quarter of 2012 and will result in a charge to earnings in the second quarter. Upon receipt of acceptable bids, the Company anticipates that the closing of a sale will be on or around June 30, 2012. If successful, this transaction will improve certain asset quality statistics, including the nonperforming assets ratio.

Furthermore, in recent quarters, the Company has sold mortgage backed securities (MBS) as part of its portfolio management, and has recorded gains on sale of these securities. In the second quarter of 2012, the Company anticipates selling approximately $300 million in high quality MBS and reinvesting the proceeds in high quality securities but with a shorter duration, reducing the prepayment and interest-rate risk in the overall portfolio. Because the securities to be sold carry higher yields, the Company expects to record a gain which will be added to earnings and bank capital. This gain may offset all, or a large part, of the loss to be incurred in the bulk sale transaction, described above; however, there are no assurances that this will be the case.

While future earnings will be negatively impacted by the decreased securities portfolio yield, the Company expects that the impact on 2012 earnings will be offset by an improvement in total credit costs from the bulk sales.

Mark A. Turner, President and CEO commented, “Leveraging existing investments, increasing our bottom line, improving asset quality, and reducing the risk of rising rates on our securities portfolio are important outcomes for us this year. If the two asset sales are successful, the Company anticipates that the transactions combined will be relatively neutral to overall earnings and capital in 2012, will reduce prepayment and interest rate risk in our investment portfolio, and will reduce problem assets, freeing up management to focus on other productive activities.”

Updated Earnings for First Quarter of 2012

The Company also announced a decrease in net income of $726,000, or $0.08 per diluted common share for the first quarter of 2012. This revision is related to adoption of a new loan risk rating system and is the result of $1.6 million in additional provision for loan losses offset by a reduction in incentive accruals and net of taxes. As a result, updated net income for the first quarter of 2012 is $6.4 million, or $0.66 per diluted common share as compared to $7.2 million or $0.74 per diluted common share, indicated earlier. Updated summary financials are included in this release. The updated results were reported officially in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.

On March 1, 2012, the Company adopted a new loan risk-rating system for its commercial loans incorporating recommendations from industry experts. Following this implementation, the Company undertook an extensive internal review, validated by outside consultants, covering loans in its last pass grade and its problem loan grades. As a result of its review, the Company downgraded an incremental $62 million in loans, increasing the provision for loan losses as mentioned. Revised earnings of $0.66 per common share were stronger than earnings in the fourth quarter of 2011 of $0.63 per common share and earnings of $0.40 per common share for the first quarter of 2011.

About WSFS Financial Corporation

WSFS Financial Corporation is a multi-billion dollar financial services company. Its primary subsidiary, WSFS Bank, is the oldest, locally-managed bank and trust company headquartered in Delaware with $4.3 billion in assets on its balance sheet and $11.8 billion in fiduciary assets, including approximately $1.0 billion in assets under management. WSFS operates from 49 offices located in Delaware (39), Pennsylvania (8), Virginia (1) and Nevada (1) and provides comprehensive financial services including commercial banking, retail banking and trust and wealth management. Other subsidiaries or divisions include Christiana Trust, WSFS Investment Group, Inc., Cypress Capital Management, LLC and Cash Connect. Serving the Delaware Valley since 1832, WSFS is the seventh oldest bank in the United States continuously operating under the same name. For more information, please visit www.wsfsbank.com.

* * *

This press release contains estimates, predictions, opinions, projections and other statements that may be interpreted as “forward-looking statements” as that phrase is defined in the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, references to our financial goals, management’s plans and objectives for future operations, financial and business trends, business prospects, and management’s outlook or expectations for earnings, revenues, expenses, capital levels, liquidity levels, asset quality or other future financial or business performance, strategies or expectations. Such forward-looking statements are based on various assumptions (some of which may be beyond the Company’s control) and are subject to risks and uncertainties (which change over time) and other factors which could cause actual results to differ materially from those currently anticipated. Such risks and uncertainties include, but are not limited to, the results of the Company’s proposed bulk sale and investment securities transactions, those related to the economic environment, particularly in the market areas in which the Company operates; the volatility of the financial and securities markets, including changes with respect to the market value of financial assets; changes in market interest rates, changes in government regulation affecting financial institutions, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules being issued in accordance with this statute and potential expenses associated therewith; and the costs associated with resolving any problem loans and other risks and uncertainties, discussed in documents filed by WSFS Financial Corporation with the Securities and Exchange Commission from time to time. Forward looking statements are as of the date they are made, and the Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.

# # #

WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
STATEMENT OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)	Three months ended
	Mar 31,			Dec 31,			Mar 31,
	2012			2011			2011
Interest income:
Interest and fees on loans	$	33,395		$	33,223		$	31,956
Interest on mortgage-backed securities		5,718			6,196			7,026
Interest and dividends on investment securities		101			150			170
Other interest income		9			16			-
		39,223			39,585			39,152
Interest expense:
Interest on deposits		4,015			4,255			5,223
Interest on Federal Home Loan Bank advances		1,937			2,106			2,727
Interest on trust preferred borrowings		375			360			336
Interest on other borrowings		366			448			612
		6,693			7,169			8,898

Net interest income		32,530			32,416			30,254
Provision for loan losses		8,245			6,948			5,908

Net interest income after provision for loan losses		24,285			25,468			24,346

Noninterest income:
Credit/debit card and ATM income		5,422			5,477			4,740
Deposit service charges		4,014			4,396			3,564
Fiduciary & investment management income		3,031			3,004			2,827
Securities gains, net		2,036			1,925			415
Loan fee income		610			589			685
Mortgage banking activities, net		516			489			547
Bank-owned life insurance income		185			240			179
Other income		944			876			682
		16,758			16,996			13,639
Noninterest expenses:
Salaries, benefits and other compensation		16,235			15,257			14,816
Occupancy expense		3,048			3,110			2,838
Loan workout and OREO expense		836			2,907			2,483
Equipment expense		1,667			1,720			1,614
Marketing expense		779			856			951
FDIC expenses		1,437			1,471			1,764
Data processing and operations expense		1,322			1,314			1,417
Professional fees		1,164			1,855			1,123
Acquisition integration costs		-			-			334
Other operating expenses		4,501			4,536			4,047
		30,989			33,026			31,387

Income before taxes		10,054			9,438			6,598
Income tax provision		3,610			3,276			2,392
Net income		6,444			6,162			4,206
Dividends on preferred stock and accretion of discount		692			693			692
Net income allocable to common stockholders	$	5,752		$	5,469		$	3,514

Diluted earnings per common share:
Net income allocable to common stockholders	$	0.66		$	0.63		$	0.40

Weighted average common shares outstanding for diluted EPS		8,760,397			8,714,731			8,730,043

Performance Ratios:
Return on average assets (a)		0.61	%		0.59	%		0.43	%
Return on average equity (a)		6.47			6.30			4.54
Return on tangible common equity (a)		8.26			7.41			5.18
Net interest margin (a)(b)		3.57			3.61			3.56
Efficiency ratio (c)		62.43			66.47			71.07
Noninterest income as a percentage of total net revenue (b)		33.76			34.21			30.88
See "Notes"

WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
SUMMARY STATEMENT OF CONDITION
(Dollars in thousands)
(Unaudited)	Mar 31,			Dec 31,			Mar 31,
	2012			2011			2011
Assets:
Cash and due from banks	$	67,517		$	70,889		$	65,215
Cash in non-owned ATMs		391,939			397,119			328,837
Investment securities (d)(e)		48,054			42,569			38,594
Other investments		34,207			35,765			35,880
Mortgage-backed securities (d)		855,276			829,225			696,051
Net loans (f)(g)(m)		2,732,036			2,712,774			2,592,127
Bank owned life insurance		63,577			63,392			64,422
Other assets		134,548			137,275			130,425
Total assets	$	4,327,154		$	4,289,008		$	3,951,551
Liabilities and Stockholders' Equity:
Noninterest-bearing deposits	$	542,176		$	525,444		$	505,154
Interest-bearing deposits		2,350,228			2,322,050			2,150,945
Total customer deposits		2,892,404			2,847,494			2,656,099
Brokered deposits		297,104			287,810			164,267
Total deposits		3,189,508			3,135,304			2,820,366

Federal Home Loan Bank advances		527,973			538,682			498,165
Other borrowings		175,124			184,938			235,438
Other liabilities		38,011			37,951			26,665

Total liabilities		3,930,616			3,896,875			3,580,634

Stockholders' equity		396,538			392,133			370,917

Total liabilities and stockholders' equity	$	4,327,154		$	4,289,008		$	3,951,551


Capital Ratios:
Equity to asset ratio		9.16	%		9.14	%		9.39	%
Tangible equity to asset ratio		8.44			8.41			8.61
Tangible common equity to asset ratio		7.22			7.18			7.27
Tier 1 leverage (h) (required: 4.00%; well-capitalized: 5.00%)		9.34			9.29			9.61
Tier 1 risk-based capital (h) (required: 4.00%; well-capitalized: 6.00%)		12.31			12.18			12.44
Total risk-based capital (h) (required: 8.00%; well-capitalized: 10.00%)		13.57			13.43			13.69


Asset Quality Indicators:

Nonperforming Assets:
Nonaccruing loans	$	74,065		$	71,093		$	85,874
Troubled debt restructuring (accruing)		8,837			8,887			7,646
Assets acquired through foreclosure		6,708			11,695			8,311
Total nonperforming assets	$	89,610		$	91,675		$	101,831

Past due loans (i)	$	965		$	965		$	1,000

Allowance for loan losses	$	55,798		$	53,080		$	56,000

Ratio of nonperforming assets to total assets		2.07	%		2.14	%		2.58	%
Ratio of allowance for loan losses to total gross loans (j)		2.01			1.92			2.11
Ratio of allowance for loan losses to nonaccruing loans		75			75			65
Ratio of quarterly net charge-offs to average gross loans (a)(f)		0.80			1.04			1.56

See "Notes"

WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
AVERAGE BALANCE SHEET
(Dollars in thousands)
(Unaudited)		Three months ended
			Mar 31, 2012							Dec 31, 2011						Mar 31, 2011
		Average			Interest &	Yield/			Average		Interest &	Yield/			Average		Interest &	Yield/
		Balance			Dividends	Rate (a)(b)			Balance		Dividends	Rate (a)(b)			Balance		Dividends	Rate (a)(b)
Assets:
Interest-earning assets:
Loans: (f) (k)
Commercial real estate loans	$	739,158		$	8,931	4.83	%	$	723,029	$	8,741	4.84	%	$	755,256	$	8,860	4.69	%
Residential real estate loans (m)		279,480			3,199	4.58			290,316		3,326	4.58			314,677		3,862	4.91
Commercial loans		1,468,048			17,775	4.88			1,416,787		17,465	4.90			1,253,433		15,381	4.99
Consumer loans		289,230			3,490	4.85			294,679		3,691	4.97			307,873		3,853	5.08
Total loans (m)		2,775,916			33,395	4.86			2,724,811		33,223	4.92			2,631,239		31,956	4.90
Mortgage-backed securities (d)		826,088			5,718	2.77			809,732		6,196	3.06			711,852		7,026	3.95
Investment securities (d)(e)		47,276			101	0.96			48,175		150	1.25			47,806		170	1.42
Other interest-earning assets (n)		35,290			9	0.10			35,866		16	0.18			37,596		-	-
Total interest-earning assets		3,684,570			39,223	4.30			3,618,584		39,585	4.41			3,428,493		39,152	4.60

Allowance for loan losses		(53,776)							(54,028)						(61,883)
Cash and due from banks		68,354							71,936						59,527
Cash in non-owned ATMs		361,508							364,297						312,580
Bank owned life insurance		63,458							63,229						64,303
Other noninterest-earning assets		127,835							132,658						124,166
Total assets	$	4,251,949						$	4,196,676					$	3,927,186

Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Interest-bearing demand	$	379,315		$	60	0.06	%	$	366,364	$	105	0.11	%	$	301,563	$	120	0.16	%
Money market		768,666			519	0.27			759,454		604	0.32			729,072		842	0.47
Savings		383,294			173	0.18			375,848		250	0.26			298,442		306	0.42
Customer time deposits		763,802			2,984	1.57			754,023		3,056	1.61			781,955		3,729	1.93
Total interest-bearing customer deposits		2,295,077			3,736	0.65			2,255,689		4,015	0.71			2,111,032		4,997	0.96
Brokered deposits		270,814			279	0.41			234,922		240	0.41			198,233		226	0.46
Total interest-bearing deposits		2,565,891			4,015	0.63			2,490,611		4,255	0.68			2,309,265		5,223	0.92

FHLB of Pittsburgh advances		530,518			1,937	1.44			567,969		2,106	1.45			515,600		2,727	2.12
Trust preferred borrowings		67,011			375	2.21			67,011		359	2.10			67,011		336	2.01
Other borrowed funds		136,480			366	1.07			124,282		449	1.45			175,726		612	1.39
Total interest-bearing liabilities		3,299,900			6,693	0.81			3,249,873		7,169	0.88			3,067,602		8,898	1.16

Noninterest-bearing demand deposits		520,044							515,428						468,022
Other noninterest-bearing liabilities		33,571							40,229						20,911
Stockholders' equity		398,434							391,146						370,651
Total liabilities and stockholders' equity	$	4,251,949						$	4,196,676					$	3,927,186

Excess of interest-earning assets
over interest-bearing liabilities	$	384,670						$	368,711					$	360,891

Net interest and dividend income				$	32,530					$	32,416					$	30,254

Interest rate spread						3.49	%					3.53	%					3.44	%

Net interest margin						3.57	%					3.61	%					3.56	%

See "Notes"

WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Dollars in thousands, except per share data)
(Unaudited)	Three months ended
	Mar 31,				Dec 31,				Mar 31,
Stock Information:	2012				2011				2011

Market price of common stock:
High		$	43.74			$	40.92			$	49.57
Low			36.02				30.22				40.01
Close			41.00				35.96				47.10
Book value per common share			45.55				45.19				43.16
Tangible book value per common share			41.64				41.24				39.22
Tangible common book value per common share			35.62				35.20				33.15
Number of common shares outstanding (000s)			8,705				8,678				8,595
Other Financial Data:
One-year repricing gap to total assets (l)			(0.04	) %			1.54	%			5.90	%
Weighted average duration of the MBS portfolio		3.3 years				3.6 years				2.5 years
Unrealized gains (losses) on securities available-for-sale, net of taxes		$	10,728			$	11,673			$	6,826
Number of Associates (FTEs) (o)			758				767				707
Number of offices (branches, LPO's and operations centers)			49				49				42
Number of WSFS owned ATMs			410				415				380



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 available-for-sale at fair value.
(e) Includes reverse mortgages.
(f) Net of unearned income.
(g) Net of allowance for loan losses.
(h) Represents capital ratios of Wilmington Savings Fund Society, FSB and subsidiaries.
(i) Accruing loans which are contractually past due 90 days or more as to principal or interest.
(j) Excludes loans held-for-sale.
(k) Nonperforming loans are included in average balance computations.
(l) 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.
(m) Includes loans held-for-sale.
(n) The FHLB of Pittsburgh has suspended dividend payments from December 31, 2008 until February 22, 2012.
(o) Includes summer Associates, when applicable.

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