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WSFS Reports 4Q 2020 EPS of $1.20 and ROA of 1.73%; Results Driven By 3.93% NIM and Diversified Fee Income; Repurchased 6% of Shares in 4Q 2020; Strong ACL and Capital Levels

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WSFS Financial Corporation reported strong 4Q 2020 results, with net income reaching $59.8 million, up from $51.1 million in 3Q and $45.7 million in 4Q 2019. The company achieved an earnings per share (EPS) of $1.20, up from $1.01 in the previous quarter. The return on average assets (ROA) improved to 1.73%, and return on average equity (ROE) to 13.0%. Notably, WSFS repurchased 2.9 million shares, returning $122.4 million to shareholders while maintaining a robust bank common equity tier 1 ratio of 12.50%. These results underscore the company's resilience amidst a challenging economic environment.

Positive
  • Net income increased to $59.8 million from $51.1 million in 3Q 2020.
  • EPS rose to $1.20 compared to $1.01 in 3Q 2020.
  • ROA improved to 1.73%, while ROE reached 13.0%.
  • Repurchased 2.9 million shares, returning $122.4 million to shareholders.
  • Maintained bank common equity tier 1 ratio at 12.50%.
Negative
  • Net loans decreased by $261.3 million mainly due to $203 million decline in PPP loans.
  • Nonperforming assets increased to $60.5 million from $44.5 million in the previous quarter.

 FOR ADDITIONAL FINANCIAL INFORMATION AND OUTLOOK, PLEASE REFER TO THE 4Q 2020 EARNINGS RELEASE SUPPLEMENT AVAILABLE IN THE INVESTOR RELATIONS SECTION OF WSFS' WEBSITE (www.wsfsbank.com).

WILMINGTON, Del., Jan. 25, 2021 (GLOBE NEWSWIRE) -- WSFS Financial Corporation (Nasdaq: WSFS), the parent company of WSFS Bank, today announced its financial results for the fourth quarter of 2020.

Selected quarterly financial results and metrics are as follows:

                 
(Dollars in millions, except per share data) 4Q 2020
 3Q 2020 4Q 2019
Net interest income $123.0  $113.0  $117.6 
Fee income 46.6  49.2  41.8 
Total net revenue 169.6  162.2  159.3 
(Recovery of) provision for credit losses (0.9) 2.7  1.6 
Noninterest expense 93.4  93.5  98.1 
Net income attributable to WSFS 59.8  51.1  45.7 
Pre-provision net revenue (PPNR)(1) 76.3  68.7  61.2 
Earnings per share (diluted) 1.20  1.01  0.88 
Return on average assets (ROA) 1.73% 1.49% 1.48%
Return on average equity (ROE) 13.0  11.1  9.8 
Efficiency ratio 55.0  57.6  61.5 
          

GAAP results for the quarterly periods shown below included the following notable items that are excluded from our core results.

                          
  4Q 2020 3Q 2020 4Q 2019
(Dollars in millions, except per share data) Total
(pre-tax)		 Per share
(after-tax)		 Total
(pre-tax)		 Per share
(after-tax)		 Total
(pre-tax)		 Per share
(after-tax)
Securities gains $3.2  $0.05  $3.3  $0.05  $0.3  $— 
Unrealized gain on equity investments, net —  —  0.1  —  —  — 
Recovery of fraud loss —  —  —  —  0.5  — 
Corporate development and restructuring expense 0.3  0.01  0.4  0.01  6.1  0.09 
Realized loss on termination of FHLB advances —  —  2.3  0.03  —  — 

(1) As used in this press release, PPNR is a non-GAAP financial measure calculated as net revenue before provision for credit losses and net of noninterest expense. For a reconciliation of this and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.

CEO Commentary

Rodger Levenson, Chairman, President and CEO, said, “We are pleased to end 2020 with strong 4Q results including core ROA(2) of 1.67% and core pre-provision net revenue (PPNR)(2) of $73.4 million, or 2.12% of average assets. Our performance reflects the diversification of our franchise and positive momentum as we enter 2021. During the quarter, we resumed our share repurchase program and returned $122.4 million of capital to our shareholders through share repurchases and our cash dividend, while maintaining a strong Bank Common Equity Tier 1 Ratio of 12.50% at December 31st. The quarter also included continued reduction in short-term loan modifications and an ACL coverage ratio of 2.73% (excluding PPP loans) at December 31st. In addition, we completed the issuance of $150 million of Senior Notes in December 2020 at a very low initial fixed interest rate of 2.75% demonstrating the strength of our franchise, market position and strategic direction.

“During an ongoing difficult operating environment, we continue to make significant franchise, talent and technology investments to capture significant organic growth opportunities resulting from our market position as the largest locally headquartered community bank in the Greater Philadelphia and Delaware region.

“In the quarter, we were honored to be ranked the 4th Best Overall Bank in Bank Director’s 2021 RankingBanking study, while placing first in the Best Board and Best Technology Strategy categories. This recognition reflects our commitment to sustainable long-term high performance driven by our talented and engaged Associates.

“As we turn the page from 2020, I want to once again say thank you to our entire organization for their dedication and support of each other, our customers, and the community during a very challenging year.”

(2) As used in this press release, core ROA and core PPNR are non-GAAP financial measures. Core PPNR is calculated as core net revenue before provision for credit losses and net of core noninterest expense and certain pre-tax adjustments, and core ROA is calculated as GAAP ROA less certain pre-tax adjustments and the tax impact of such adjustments. For a reconciliation of these and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.

Highlights for 4Q 2020: 

  • Core ROA was 1.67% in 4Q 2020 compared to 1.63% for 4Q 2019.

  • Core EPS(3) was $1.16 in 4Q 2020 compared to $0.96 for 4Q 2019.

  • Core PPNR was $73.4 million, or 2.12% of average assets, an increase of $5.4 million, or 8%, from 3Q 2020 and an increase of $6.7 million, or 10%, from 4Q 2019. Excluding the impact of PPP, core PPNR was $63.8 million in 4Q 2020, or 1.97% of average assets, compared to $62.0 million, or 1.94%, in 3Q 2020 and $66.6 million, or 2.16% in 4Q 2019.

  • WSFS repurchased 2,946,507 shares, or 6% of our outstanding common stock, totaling $116.3 million in 4Q 2020, and the Board approved a quarterly cash dividend of $0.12 per share of common stock. WSFS maintained significant capital levels with a Bank Common Equity Tier 1 Ratio of 12.50%.

  • Total net credit (recoveries) costs were $(0.5) million and net charge-offs were $3.0 million, or 0.13% of average gross loans during the quarter, while credit quality remained relatively stable quarter-over-quarter. Short-term loan modifications declined to less than 2% of the total loan portfolio, excluding PPP loans, at December 31, 2020. Our ACL coverage ratio was 2.73%, excluding PPP loans, at December 31, 2020.

  • WSFS issued $150 million of Fixed-to-Floating Rate Senior Notes due 2030 with a fixed interest rate of 2.75% for the first five years, the lowest ever coupon obtained by a Kroll only rated senior debt issuance.

(3) As used in this press release, core EPS is a non-GAAP financial measure. This non-GAAP financial measure excludes certain pre-tax adjustments and the tax impact of such adjustments. For a reconciliation of these and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.

Fourth Quarter 2020 Discussion of Financial Results

Balance Sheet

The following tables summarize loan and customer funding balances and composition at December 31, 2020 compared to September 30, 2020 and December 31, 2019:

                   
Loans            
(Dollars in thousands) December 31, 2020 September 30, 2020 December 31, 2019
Commercial & industrial $3,299,118  37% $3,299,704  36% $3,341,136  39%
Commercial real estate (CRE) 2,086,062  23  2,167,508  23  2,212,026  26 
PPP 751,199  8  954,179  10  —  — 
Construction 716,275  8  666,317  7  578,713  7 
Commercial small business leases 248,885  3  227,539  3  190,592  2 
Total commercial loans 7,101,539  79  7,315,247  79  6,322,467  74 
Residential mortgage 954,824  11  1,003,373  11  1,099,744  13 
Consumer 1,165,917  13  1,168,891  13  1,133,701  14 
Allowance for credit losses (ACL) (228,804) (3) (232,726) (3) (47,576) (1)
Net loans $8,993,476  100% $9,254,785  100% $8,508,336  100%
                   


                         
Customer Funding            
(Dollars in thousands) December 31, 2020 September 30, 2020 December 31, 2019
Noninterest demand $3,415,021  29% $3,196,967  29% $2,189,573  23%
Interest-bearing demand 2,635,740  23  2,521,030  23  2,129,725  23 
Savings 1,774,332  15  1,717,952  15  1,563,000  17 
Money market 2,654,439  23  2,488,794  22  2,100,188  22 
Total core deposits 10,479,532  90  9,924,743  89  7,982,486  85 
Customer time deposits 1,158,845  10  1,223,843  11  1,356,610  15 
Total customer deposits $11,638,377  100% $11,148,586  100% $9,339,096  100%
                         

At December 31, 2020, WSFS’ net loan portfolio decreased $261.3 million when compared with September 30, 2020 primarily due to a $203.0 million decrease in PPP loans due to loan forgiveness during the quarter. Excluding PPP loans, run-off portfolios, and the allowance for credit losses, loans increased $74.1 million, or 1% (not annualized), during the quarter.

Net loans at December 31, 2020 increased $485.1 million when compared with December 31, 2019, primarily due to $751.2 million of PPP loans as of December 31, 2020. The year-over-year PPP loan increase was partially offset by a $423.5 million decline in non-relationship run-off portfolios and a $181.2 million increase in the allowance for credit losses year-over-year. Excluding PPP loans, run-off portfolios, and the allowance for credit losses, loans increased $338.7 million, or 5%, year-over-year, including growth across construction, commercial small business leases, and home equity installment loans originated through our partnership with Spring EQ.

Total customer funding was $11.6 billion at December 31, 2020, a $489.8 million increase from September 30, 2020 and a $2.3 billion increase from December 31, 2019, reflecting elevated deposits from customers who received PPP loans, government stimulus impact, and lower customer spending. Core deposits were $10.5 billion at December 31, 2020, an increase of $554.8 million over the prior quarter due primarily to $425.9 million of short-term customer deposits expected to exit during 1Q 2021 and elevated customer liquidity. Core deposits were a strong 90% of total customer deposits and no- and low-cost checking accounts represented a robust 52% of total customer deposits at December 31, 2020. These core deposits predominantly represent longer-term, less price-sensitive customer relationships. The ratio of loans to customer deposits was 77% at December 31, 2020 reflecting significant liquidity capacity.

Net Interest Income

             
 Three Months Ending
(Dollars in thousands) December 31,
2020		 September 30,
2020		 December 31,
2019
Net interest income before purchase accretion and PPP $97,741  $95,618  $103,696 
Purchase accounting accretion 14,754  11,057  13,873 
Net interest income before PPP 112,495  106,675  117,569 
PPP 10,506  6,373  — 
Net interest income $123,001  $113,048  $117,569 
       
Net interest margin before purchase accretion and PPP 3.36% 3.35% 3.84%
Purchase accounting accretion 0.51  0.39  0.51 
Net interest margin before PPP 3.87  3.74  4.35 
PPP (excluding income and interest-earning assets) 0.06  (0.08) — 
Net interest margin 3.93% 3.66% 4.35%
          

Net interest income increased $5.4 million, or 5%, compared to 4Q 2019, primarily due to $10.5 million of PPP income in 4Q 2020 including $8.4 million of fee accretion, partially offset by a $6.0 million reduction due to the lower rate environment. Net interest margin decreased 42 bps from 4Q 2019 due to a 31 bps net decline from the lower rate environment and balance sheet mix and 17 bps from the significant short-term liquidity increase in customer deposits, partially offset by a 6 bps increase from PPP.

Net interest income increased $10.0 million, or 9% (not annualized), from 3Q 2020 primarily due to a $4.1 million increase in PPP income, a $3.7 million increase in purchase accounting accretion and $2.1 million primarily from lower funding costs due to deposit repricing. Net interest margin increased 27 bps including 14 bps from PPP, 12 bps from higher purchase accounting accretion, and 7 bps from lower funding costs partially offset by asset mix change resulting from the significant short-term liquidity increase in customer deposits.

Credit Quality

Credit quality at December 31, 2020 remained stable with total problem assets of $766.0 million flat when compared to $769.7 million as of September 30, 2020. Total problem assets includes all criticized, classified, and nonperforming loans as well as other real estate owned (OREO).

Delinquencies increased to $78.9 million at December 31, 2020, or 0.88% of gross loans, and nonperforming assets increased to $60.5 million as of December 31, 2020 primarily due to one $15 million multi-family commercial relationship. Customer loans receiving short-term loan modifications as of December 31, 2020 decreased to $114.8 million, or less than 2% of the loan portfolio excluding PPP. Net charge-offs for 4Q 2020 were a low $3.0 million, or 0.13% (annualized), of average gross loans.

Total net credit (recoveries) costs were $(0.5) million in the quarter compared to $4.1 million in 3Q 2020 and the ACL decreased slightly to $228.8 million as economic forecasts were largely consistent with the prior quarter with modest decreases in the ACL due primarily to normal portfolio run-off.

The following table summarizes credit quality metrics as of and for the period ended December 31, 2020 compared to September 30, 2020 and December 31, 2019.

           
(Dollars in millions)December 31,
2020		 September 30,
2020		 December 31,
2019
Problem assets$766.0  $769.7  $238.6 
Nonperforming assets60.5  44.5  39.8 
Delinquencies78.9  76.8  61.1 
Net charge-offs3.0  2.2  1.7 
Total net credit (recoveries) costs (r)(0.5) 4.1  2.7 
Problem assets to total Tier 1 capital plus ACL50.67% 48.78% 16.89%
Classified assets to total Tier 1 capital plus ACL35.02  32.34  13.15 
Ratio of nonperforming assets to total assets0.42  0.32  0.32 
Ratio of nonperforming assets (excluding accruing TDRs) to total assets0.31  0.21  0.21 
Delinquencies to gross loans0.88  0.82  0.72 
Ratio of quarterly net charge-offs to average gross loans0.13  0.09  0.08 
Ratio of allowance for credit losses to total loans and leases (q)2.51  2.47  0.56 
Ratio of allowance for credit losses to nonaccruing loans546  901  208 

See “Notes”

Core Fee Income(4)

Core fee income (noninterest income) was $43.5 million, an increase of $2.0 million, or 5%, compared to 4Q 2019, despite a $3.3 million decrease in interchange fees resulting from the Durbin Amendment effective at the beginning of 3Q 2020. The year-over-year increase was primarily due to a $3.8 million increase from our mortgage banking business driven by increased volume resulting from the lower interest rate environment and improved secondary market conditions. Additionally, trust services revenue increased $2.6 million, or 36%, year-over-year. Partially offsetting these increases was a $2.3 million decrease in Cash Connect® primarily driven by the significant decline in interest rates compared to last year and fully offset by lower funding costs.

Core fee income decreased $2.3 million, or 5%, compared to 3Q 2020, primarily due to a $4.8 million decrease from our mortgage banking business, resulting from an expected seasonal decline in volume and less favorable secondary market conditions. Partially offsetting the decrease in mortgage fees was a $1.1 million increase in core banking fees, $0.9 million of higher gains on sale of SBA loans, and a $0.6 million increase in our trust and wealth businesses.

(4) As used in this press release, core fee income is a non-GAAP financial measures. This non-GAAP financial measures excludes securities gains unrealized/realized gains on equity investments, net. For a reconciliation of these and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.

For 4Q 2020, core fee income was 26.1% of core net revenue, or flat compared to 4Q 2019, and was diversified among various sources, including traditional banking, mortgage banking, trust and wealth management and cash logistics services (Cash Connect®). The year-over-year percentage comparison includes the impact of lower net interest income due to the lower rate environment offset by the adverse impacts of the Durbin Amendment.

Core Noninterest Expense(5)

Core noninterest expense of $93.1 million for 4Q 2020 increased slightly compared to $92.5 million in 4Q 2019. The year-over-year change includes higher compensation costs from overall franchise growth and talent investments, continued investment in delivery transformation across multiple projects, and PPP loan processing costs. These year-over-year increases were partially offset by continued integration cost synergies from our combination with Beneficial in 2019.

When compared to 3Q 2020, core noninterest expense increased $2.3 million primarily due to higher incentive compensation costs related to our strong operating performance, continued delivery transformation investment, and PPP processing costs. These increases were partially offset by lower unfunded commitment reserve expense, which is recorded under loan workout and other credit costs, and lower other operating expenses.

Our core efficiency ratio(5) was 55.8% in 4Q 2020, compared to 57.1% in 3Q 2020 and 58.0% in 4Q 2019.

Income Taxes

We recorded a $17.5 million income tax provision in 4Q 2020, compared to $15.1 million in 3Q 2020 and $14.2 million in 4Q 2019.

The effective tax rate was 22.6% in 4Q 2020, 23.0% in 3Q 2020, and 23.8% in 4Q 2019. The year-over-year decline primarily reflects higher nondeductible expenses in 4Q 2019.

(5) As used in this press release, core noninterest expense and core efficiency ratio are non-GAAP financial measures. These non-GAAP financial measures exclude corporate development and restructuring expense and the contribution to the WSFS Community Fund. For a reconciliation of these and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release

Capital Management

During 4Q 2020, WSFS resumed share repurchases and repurchased 2,946,507 shares, or 6% of our outstanding common stock, at an average price of $39.45, totaling $116.3 million. WSFS has 4,648,470 shares, or approximately 10% of outstanding shares, remaining to repurchase under our current authorization. We continue to execute the Board-approved share repurchase plan, including opportunistically repurchasing shares, based on current valuation levels, above our stated practice of returning a minimum of 25% of annual net income to stockholders through dividends and share repurchases.

WSFS’ total stockholders’ equity decreased $71.8 million, or 4% (not annualized), during 4Q 2020, primarily due to $116.3 million of share repurchases, market-value changes on available-for-sale securities and the dividend on common stock paid during the quarter, partially offset by quarterly earnings.

WSFS’ tangible common equity(6) decreased $69.4 million, or 5% (not annualized) compared to September 30, 2020 for the reasons described above. WSFS’ common equity to assets ratio was 12.50% at December 31, 2020, and our tangible common equity to tangible assets ratio(5) decreased by 86 bps during the quarter to 8.96%.

At December 31, 2020, book value per share was $37.52, an increase of $0.75, or 2%, from September 30, 2020, and tangible common book value per share(5) was $25.85, an increase of $0.12 from September 30, 2020.

At December 31, 2020, WSFS Bank’s Tier 1 leverage ratio of 9.74%, Common Equity Tier 1 capital ratio and Tier 1 capital ratio of 12.50%, and Total Capital ratio of 13.76% were all substantially in excess of the “well-capitalized” regulatory benchmarks.

The Board of Directors approved a quarterly cash dividend of $0.12 per share of common stock. This dividend will be paid on February 25, 2021 to stockholders of record as of February 11, 2021.

(6) As used in this release, tangible common equity, tangible common equity to tangible assets and tangible common book value per share are non-GAAP financial measures. These non-GAAP financial measures exclude goodwill and intangible assets and the related tax-effected amortization. For a reconciliation of these and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.

Selected Business Segments (included in previous results):

Wealth Management

The Wealth Management segment provides a broad array of planning and advisory services, investment management, trust services, and credit and deposit products to individual, corporate, and institutional clients through multiple integrated businesses. Combined, these businesses had $24.2 billion in assets under management (AUM) and assets under administration (AUA) as of December 31, 2020. 

Wealth Management reported pre-tax income of $9.2 million in 4Q 2020 compared to $5.2 million in 4Q 2019, and $6.0 million in 3Q 2020.

For 4Q 2020, total revenue (net interest income and fee income) was $19.0 million, an increase of $3.7 million, or 24%, compared to 4Q 2019 and an increase of $1.5 million, or 9% (non-annualized) compared to 3Q 2020. The increase was due to strong results across all Wealth Management lines of business.

Institutional trust total revenue of $7.5 million in 4Q 2020 was up 35% from 4Q 2019 and down 1% from 3Q 2020. WSFS Institutional Services® ended 2020 as the securitization industry's sixth most active trustee for U.S. ABS and MBS according to Asset-Backed Alert’s ABS Database. New personal trust account activity was robust with total personal trust accounts on December 31, 2020 increasing 13% from year-end 2019.

Total revenue from our advisory businesses totaled $3.5 million in 4Q 2020 compared to $3.3 million in 4Q 2019, and $3.3 million in 3Q 2020 as AUM at the end of 4Q 2020 grew 7% (non-annualized) from 3Q 2020 and 6% from 4Q 2019. AUM growth resulted primarily from equity market performance and also included positive net client cash inflows.

Total noninterest expense (including intercompany allocations and excluding provision for credit losses) was $10.0 million in 4Q 2020, flat when compared to 4Q 2019 and 3Q 2020. Wealth Management efficiency ratio was 47% in 4Q 2020, compared to 52% in 3Q 2020 and 57% in 4Q 2019.

For the full-year 2020, pre-tax income was $22.8 million compared to $26.1 million in 2019. Results in 2020 were impacted by the CECL implementation in 1Q 2020 and lower interest rate environment throughout 2020. Wealth Management's 2019 results also included $1.7 million of net interest income from a large short-term noninterest bearing trust deposit.

Cash Connect®

Cash Connect® is a premier provider of ATM vault cash, smart safe and cash logistics services in the United States. Cash Connect® services over 32,000 non-bank ATMs and retail deposit safes nationwide supplying or servicing approximately $1.6 billion in cash at December 31, 2020. Cash Connect® also supports over 600 ATMs for WSFS Bank Customers, which is one of the largest branded ATM networks in our market.

Cash Connect® reported pre-tax income of $2.2 million for 4Q 2020, which was an increase of $1.1 million, or 95%, compared to 4Q 2019 primarily due to higher cash volumes, a low interest rate environment, and continued growth of higher margin products and services. Net income in 4Q 2020 was $0.9 million lower than 3Q 2020, as activity and margins pulled back from a summer surge. ROA of 1.74% in 4Q 2020 increased 68 bps from 4Q 2019 and decreased 72 bps from 3Q 2020.

Net revenue of $10.3 million in 4Q 2020 was down $0.9 million from 4Q 2019, driven by the lower interest rate environment, fully offset by lower cost of funds (including lower third party funding fees in noninterest expense) and higher cash volume. Compared to 3Q 2020, net revenue decreased $0.1 million.

Noninterest expense (including intercompany allocations of expense) was $8.2 million in 4Q 2020, a decrease of $2.0 million compared to 4Q 2019 driven by lower funding fees as noted above, and $0.8 million higher compared to 3Q 2020, driven by incentive expense, courier costs partially offset in courier revenue, and allocated overhead.

During 2020, Cash Connect® focused on expanding smart safe and ATM managed services to increase fee incomes and margins, resulting in a full-year 2020 ROA of 1.97%, an increase of 68 bps in comparison with full-year 2019. The division also saw a 35% increase in retail deposit safe units over the period and 14% increase in total cash supported to an all-time high of $1.6 billion at year-end 2020.

Fourth Quarter 2020 Earnings Release Conference Call and Supplemental Materials

Management will conduct a conference call to review 4Q 2020 results at 1:00 p.m. Eastern Time (ET) on Tuesday, January 26, 2021. Interested parties may listen to this call by dialing 1-877-312-5857 and using Conference ID #7570483. A rebroadcast of the conference call will be available beginning at 4:00 p.m. ET on January 26, 2021 until February 6, 2021 by dialing 1-855-859-2056 and using Conference ID #7570483.

We have provided additional information in the 4Q 2020 Earnings Release Supplement, which is available in the Investor Relations section of WSFS' website (www.wsfsbank.com).

About WSFS Financial Corporation

WSFS Financial Corporation is a multi-billion dollar financial services company. Its primary subsidiary, WSFS Bank, is the oldest and largest locally-managed bank and trust company headquartered in Delaware and the Greater Philadelphia region. As of December 31, 2020, WSFS Financial Corporation had $14.3 billion in assets on its balance sheet and $24.2 billion in assets under management and administration. WSFS operates from 112 offices, 89 of which are banking offices, located in Pennsylvania (52), Delaware (42), New Jersey (16), Virginia (1) and Nevada (1) and provides comprehensive financial services including commercial banking, retail banking, cash management and trust and wealth management. Other subsidiaries or divisions include Arrow Land Transfer, Cash Connect®, Cypress Capital Management, LLC, Christiana Trust Company of Delaware®, NewLane Finance®, Powdermill® Financial Solutions, West Capital Management®, WSFS Institutional Services®, WSFS Mortgage®, and WSFS Wealth® Investments. Serving the Greater Delaware Valley since 1832, WSFS Bank is one of the ten oldest banks in the United States continuously operating under the same name. For more information, please visit www.wsfsbank.com.

Forward-Looking Statement Disclaimer
This press release contains estimates, predictions, opinions, projections and other "forward-looking statements" as that phrase is defined in the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, references to the Company's predictions or expectations of future business or financial performance as well as its goals and objectives for future operations, financial and business trends, business prospects, and management's outlook or expectations for earnings, revenues, expenses, capital levels, liquidity levels, asset quality or other future financial or business performance, strategies or expectations. The words “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “project” and similar expressions, among others, generally identify forward-looking statements. Such forward-looking statements are based on various assumptions (some of which may be beyond the Company's control) and are subject to risks and uncertainties (which change over time) and other factors which could cause actual results to differ materially from those currently anticipated. Such risks and uncertainties include, but are not limited to, difficult market conditions and unfavorable economic trends in the United States generally, and particularly in the markets in which the Company operates and in which its loans are concentrated, including possible declines in housing markets, an increase in unemployment levels and slowdowns in economic growth, including as a result of the COVID-19 pandemic; possible additional loan losses and impairment of the collectability of loans, particularly as a result of the COVID-19 pandemic and the policies and programs implemented by the Coronavirus Aid, Relief, and Economic Security Act, including its automatic loan forbearance provisions and our PPP lending activities; additional credit, fraud and litigation risks associated with our PPP lending activities; economic and financial impact of federal, state and local emergency orders and other actions taken in response to the COVID-19 pandemic; the Company's level of nonperforming assets and the costs associated with resolving problem loans including litigation and other costs and complying with government-imposed foreclosure moratoriums; changes in market interest rates which may increase funding costs and reduce earning asset yields and thus reduce margin; the impact of changes in interest rates and the credit quality and strength of underlying collateral and the effect of such changes on the market value of the Company's investment securities portfolio; the credit risk associated with the substantial amount of commercial real estate, construction and land development, and commercial and industrial loans in the Company's loan portfolio; the extensive federal and state regulation, supervision and examination governing almost every aspect of the Company's operations and potential expenses associated with complying with such regulations; the Company's ability to comply with applicable capital and liquidity requirements (including the effect of the transition to the Current Expected Credit Losses (CECL) methodology for allowances and related adjustments), including its ability to generate liquidity internally or raise capital on favorable terms; possible changes in trade, monetary and fiscal policies and stimulus programs, laws and regulations and other activities of governments, agencies, and similar organizations, and the uncertainty of the short- and long-term impacts of such changes; any impairments of the Company's goodwill or other intangible assets; conditions in the financial markets, including the destabilized economic environment caused by the COVID-19 pandemic, that may limit the Company's access to additional funding to meet its liquidity needs; the intention of the United Kingdom's Financial Conduct Authority (FCA) to cease support of London Inter-Bank Offered Rate (LIBOR) and the transition to an alternative reference interest rate, such as the Secured Overnight Funding Rate (SOFR), including methodologies for calculating the rate that are different from the LIBOR methodology and changed language for existing and new floating or adjustable rate contracts; the success of the Company's growth plans, including its plans to grow the commercial small business leasing portfolio and residential mortgage small business and SBA portfolios; the successful integration of acquisitions; the Company's ability to fully realize the cost savings and other benefits of its acquisitions, manage risks related to business disruption following those acquisitions, and post-acquisition Customer acceptance of the Company's products and services and related Customer disintermediation; negative perceptions or publicity with respect to the Company generally and, in particular, the Company's trust and wealth management business; failure of the financial and operational controls of the Company's Cash Connect® division; adverse judgments or other resolution of pending and future legal proceedings, and cost incurred in defending such proceedings; the Company's reliance on third parties for certain important functions, including the operation of its core systems, and any failures by such third parties; system failures or cybersecurity incidents or other breaches of the Company's network security, particularly given widespread remote working arrangements; the Company's ability to recruit and retain key employees; the effects of problems encountered by other financial institutions that adversely affect the Company or the banking industry generally; the effects of weather and natural disasters such as floods, droughts, wind, tornadoes and hurricanes as well as effects from geopolitical instability, public health crises and man-made disasters including terrorist attacks; the effects of regional or national civil unrest (including any resulting branch or ATM closures or damage); possible changes in the speed of loan prepayments by the Company's Customers and loan origination or sales volumes; possible changes in the speed of prepayments of mortgage-backed securities due to changes in the interest rate environment, particularly as a result of the COVID-19 pandemic, and the related acceleration of premium amortization on prepayments in the event that prepayments accelerate; regulatory limits on the Company's ability to receive dividends from its subsidiaries and pay dividends to its stockholders; any reputation, credit, interest rate, market, operational, litigation, legal, liquidity, regulatory and compliance risk resulting from developments related to any of the risks discussed above; and other risks and uncertainties, including those discussed in the Company's Form 10-K for the year ended December 31, 2019, Form 10-Q for the quarter ended March 31, 2020, Form 10-Q for the quarter ended June 30, 2020, Form 10-Q for the quarter ended September 30, 2020 and other documents filed by the Company with the Securities and Exchange Commission from time to time.

We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date on which they are made, and the Company disclaims any duty to revise or update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company for any reason, except as specifically required by law. As used in this press release, the terms "WSFS," "the Company," "registrant," "we," "us," and "our" mean WSFS Financial Corporation and its subsidiaries, on a consolidated basis, unless the context indicates otherwise.


WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
SUMMARY STATEMENTS OF INCOME (Unaudited)

                       
  Three months ended Twelve months ended
(Dollars in thousands, except per share data) December 31, 2020 September 30, 2020 December 31, 2019 December 31, 2020 December 31, 2019
Interest income:
Interest and fees on loans $118,737   $110,195   $122,302   $460,394   $463,220  
Interest on mortgage-backed securities 10,923   11,686   13,270   48,377   48,954  
Interest and dividends on investment securities 1,419   1,265   973   4,619   4,015  
Other interest income 218   224   805   1,015   4,903  
  131,297   123,370   137,350   514,405   521,092  
Interest expense:          
Interest on deposits 6,447   8,346   16,159   39,262   60,075  
Interest on Federal Home Loan Bank advances 50   445   1,025   1,950   5,520  
Interest on senior debt 1,460   1,179   1,179   4,998   4,717  
Interest on trust preferred borrowings 334   347   636   1,751   2,772  
Interest on other borrowings 5   5   782   489   3,060  
  8,296   10,322   19,781   48,450   76,144  
Net interest income 123,001   113,048   117,569   465,955   444,948  
(Recovery of) provision for credit losses (936)  2,716   1,590   153,180   25,560  
Net interest income after provision for credit losses 123,937   110,332   115,979   312,775   419,388  
Noninterest income:          
Credit/debit card and ATM income 7,098   7,251   12,076   35,014   50,383  
Investment management and fiduciary revenue 13,822   13,266   11,462   48,979   42,450  
Deposit service charges 5,405   4,772   5,984   19,999   22,972  
Mortgage banking activities, net 6,729   11,507   2,963   30,201   11,053  
Loan and lease fee income 1,137   1,165   1,219   4,518   3,577  
Securities gains, net 3,153   3,322   255   9,076   333  
Unrealized gain on equity investment, net —   104   —   761   26,175  
Realized gain on sale of equity investment, net —   —   —   22,052   —  
Bank-owned life insurance income 269   591   370   1,280   1,247  
Other income 9,019   7,193   7,441   29,145   29,919  
  46,632   49,171   41,770   201,025   188,109  
Noninterest expense:          
Salaries, benefits and other compensation 51,442   48,772   48,895   194,317   182,564  
Occupancy expense 7,991   8,152   8,806   32,105   33,068  
Equipment expense 7,392   5,678   5,882   23,793   20,879  
Data processing and operations expense 3,263   3,198   3,193   12,600   13,373  
Professional fees 5,123   4,611   3,200   18,757   11,167  
Marketing expense 2,060   1,451   1,804   5,677   6,714  
FDIC expenses 1,068   829   48   2,148   1,483  
Loss on early extinguishment of debt —   2,280   —   2,280   —  
Loan workout and other credit costs 437   1,422   1,079   6,899   3,616  
Corporate development expense (242)  428   4,607   4,328   55,697  
Restructuring expense 510   —   1,530   510   16,133  
Recovery of fraud loss —   —   (463)  —   (463) 
Other operating expenses 14,329   16,719   19,545   65,430   68,896  
  93,373   93,540   98,126   368,844   413,127  
Income before taxes 77,196   65,963   59,623   144,956   194,370  
Income tax provision 17,455   15,140   14,199   31,636   46,452  
Net income $59,741   $50,823   $45,424   $113,320   $147,918  
Less: Net loss attributable to noncontrolling interest (72)  (322)  (280)  (1,454)  (891) 
Net income attributable to WSFS $59,813   $51,145   $45,704   $114,774   $148,809  
Diluted earnings per share of common stock: $1.20   $1.01   $0.88   $2.27   $3.00  
Weighted average shares of common stock outstanding for fully diluted EPS 49,707,973   50,684,493   52,164,692   50,546,497   49,554,058  

See “Notes”


WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
SUMMARY STATEMENTS OF INCOME (Unaudited) - continued

                       
  Three months ended Twelve months ended
  December 31,
2020		 September 30,
2020		 December 31,
2019		 December 31,
2020		 December 31,
2019
Performance Ratios:          
Return on average assets (a) 1.73% 1.49% 1.48% 0.87% 1.30%
Return on average equity (a) 13.00  11.08  9.77  6.25  8.91 
Return on average tangible common equity (a)(o) 19.37  16.61  14.76  9.68  13.48 
Net interest margin (a)(b) 3.93  3.66  4.35  3.96  4.44 
Efficiency ratio (c) 54.95  57.57  61.47  55.21  65.13 
Noninterest income as a percentage of total net revenue (b) 27.45  30.26  26.17  30.09  29.66 

See “Notes”


WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
SUMMARY STATEMENTS OF FINANCIAL CONDITION (Unaudited)

            
(Dollars in thousands) December 31, 2020 September 30, 2020 December 31, 2019
Assets:      
Cash and due from banks $1,244,705  $714,062  $164,021 
Cash in non-owned ATMs 402,339  347,462  407,524 
Investment securities, available-for-sale (d) 2,529,057  2,334,922  1,944,914 
Investment securities, held-to-maturity 111,741  113,609  133,601 
Other investments 23,003  28,329  91,350 
Net loans (e)(f)(l) 8,993,476  9,254,785  8,508,336 
Bank owned life insurance 32,051  31,717  30,294 
Goodwill and intangibles 557,386  559,806  568,745 
Other assets 440,156  445,416  407,517 
Total assets $14,333,914  $13,830,108  $12,256,302 
Liabilities and Stockholders’ Equity:      
Noninterest-bearing deposits $3,415,021  $3,196,967  $2,189,573 
Interest-bearing deposits 8,223,356  7,951,619  7,149,523 
Total customer deposits 11,638,377  11,148,586  9,339,096 
Brokered deposits 218,287  242,759  247,761 
Total deposits 11,856,664  11,391,345  9,586,857 
Federal Home Loan Bank advances 6,623  16,751  112,675 
Other borrowings 334,018  187,543  376,613 
Other liabilities 347,129  373,167  330,666 
Total liabilities 12,544,434  11,968,806  10,406,811 
Stockholders’ equity of WSFS 1,791,726  1,863,499  1,850,306 
Noncontrolling interest (2,246) (2,197) (815)
Total stockholders' equity 1,789,480  1,861,302  1,849,491 
Total liabilities and stockholders' equity $14,333,914  $13,830,108  $12,256,302 
Capital Ratios:      
Equity to asset ratio 12.50% 13.47% 15.10%
Tangible common equity to tangible asset ratio (o) 8.96  9.82  10.97 
Common equity Tier 1 capital (required: 4.5%; well capitalized: 6.5%) (g) 12.50  13.24  13.52 
Tier 1 leverage (required: 4.00%; well-capitalized: 5.00%) (g) 9.74  10.31  11.72 
Tier 1 risk-based capital (required: 6.00%; well-capitalized: 8.00%) (g) 12.50  13.24  13.52 
Total Risk-based capital (required: 8.00%; well-capitalized: 10.00%) (g) 13.76  14.50  14.01 
Asset Quality Indicators:      
Nonperforming assets:      
Nonaccruing loans $41,908  $25,835  $22,922 
Troubled debt restructuring (accruing) 15,539  15,670  14,281 
Assets acquired through foreclosure 3,061  3,000  2,605 
Total nonperforming assets $60,508  $44,505  $39,808 
Past due loans (h) $16,694  $11,886  $16,150 
Allowance for credit losses 228,810  232,733  47,576 
Ratio of nonperforming assets to total assets 0.42% 0.32% 0.32%
Ratio of nonperforming assets (excluding accruing TDRs) to total assets 0.31  0.21  0.21 
Ratio of allowance for credit losses to total loans and leases (q) 2.51  2.47  0.56 
Ratio of allowance for credit losses to nonaccruing loans 546  901  208 
Ratio of quarterly net charge-offs to average gross loans (a)(e)(i)(n) 0.13  0.09  0.08 
Ratio of year-to-date net charge-offs to average gross loans (a)(e)(i)(n) 0.09  0.07  0.22 

See “Notes”


WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued) 
AVERAGE BALANCE SHEET (Unaudited)

                                    
(Dollars in thousands) Three months ended
  December 31, 2020 September 30, 2020 December 31, 2019
  Average
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) $4,394,992  $59,758  5.42% $4,472,190  $52,753  4.70% $3,549,692  $55,725  6.24%
Commercial real estate loans (s) 2,812,685  30,071  4.25  2,848,655  30,218  4.22  2,768,893  36,016  5.16 
Residential mortgage 823,305  14,049  6.83  892,634  12,512  5.61  1,029,469  14,344  5.57 
Consumer 1,169,238  13,578  4.62  1,153,168  13,726  4.74  1,141,969  15,532  5.40 
Loans held for sale 152,138  1,281  3.35  110,768  986  3.54  69,204  685  3.93 
Total loans and leases 9,352,358  118,737  5.05  9,477,415  110,195  4.63  8,559,227  122,302  5.67 
Mortgage-backed securities (d) 2,167,521  10,923  2.02
  2,062,459  11,686
  2.27
  1,934,750  13,270
  2.74
 
Investment securities (d) 324,679  1,419  1.98  261,670
  1,265
  2.22
  134,494  973
  3.41
 
Other interest-earning assets 644,785  218  0.13  530,178  224  0.17  111,276  805  2.87 
Total interest-earning assets 12,489,343  $131,297  4.19% 12,331,722  $123,370  3.99% 10,739,747  $137,350  5.08%
Allowance for credit losses (232,053)     (233,301)     (47,136)    
Cash and due from banks 93,968      135,198      110,997     
Cash in non-owned ATMs 365,738      370,912      357,869     
Bank owned life insurance 31,829      30,956      30,838     
Other noninterest-earning assets 1,004,075      1,012,506      1,033,847     
Total assets $13,752,900      $13,647,993      $12,226,162     
Liabilities and stockholders’ equity:                  
Interest-bearing liabilities:                  
Interest-bearing deposits:                  
Interest-bearing demand $2,543,711  $660  0.10% $2,372,547  $790  0.13% $2,134,950  $2,405  0.45%
Savings 1,750,313  275  0.06  1,753,489  621  0.14  1,556,488  2,104  0.54 
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FAQ

What were WSFS's earnings per share for 4Q 2020?

WSFS reported earnings per share (EPS) of $1.20 for the fourth quarter of 2020.

How much capital did WSFS return to shareholders in 4Q 2020?

WSFS returned $122.4 million to shareholders through share repurchases and dividends in the fourth quarter of 2020.

What was the net income of WSFS for 4Q 2020?

The net income for WSFS in the fourth quarter of 2020 was $59.8 million.

What was the common equity tier 1 ratio for WSFS as of December 31, 2020?

WSFS maintained a common equity tier 1 ratio of 12.50% as of December 31, 2020.

Did WSFS experience any changes in nonperforming assets during 4Q 2020?

Yes, WSFS's nonperforming assets increased to $60.5 million at the end of the fourth quarter of 2020.

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WSFS Financial Corp

NASDAQ:WSFS

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3.16B
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91.47%
1.86%
Banks - Regional
National Commercial Banks
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United States of America
WILMINGTON