10-Q 1 d566104d10q.htm FORM 10-Q FORM 10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number 0-16668

 

 

WSFS FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   22-2866913

(State or other jurisdiction of

Incorporation or organization)

 

(I.R.S. Employer

Identification Number)

WSFS Bank Center, 500 Delaware Avenue, Wilmington, Delaware   19801
(Address of principal executive offices)   (Zip Code)

(302) 792-6000

Registrant’s telephone number, including area code:

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files),    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   ¨    Accelerated filer   x
Non-accelerated filer   ¨  (Do not check if smaller reporting company)    Smaller reporting company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of August 2, 2013:

 

Common Stock, par value $.01 per share

 

8,818,590

(Title of Class)   (Shares Outstanding)

 

 

 


Table of Contents

WSFS FINANCIAL CORPORATION

FORM 10-Q

INDEX

PART I. Financial Information

 

         Page  
Item 1.  

Financial Statements (Unaudited)

  
 

Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2013 and 2012

     3   
 

Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2013 and 2012

     4   
 

Consolidated Statements of Condition as of June 30, 2013 and December 31, 2012

     5   
 

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2013 and 2012

     6   
 

Notes to the Consolidated Financial Statements for the Three and Six Months Ended June 30, 2013 and 2012

     7   
Item 2.  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

     35   
Item 3.  

Quantitative and Qualitative Disclosures About Market Risk

     48   
Item 4.  

Controls and Procedures

     48   
PART II.
Other
Information
    
Item 1.  

Legal Proceedings

     48   
Item 1A.  

Risk Factors

     48   
Item 2.  

Unregistered Sales of Equity Securities and Use of Proceeds

     49   
Item 3.  

Defaults upon Senior Securities

     49   
Item 4.  

Mine Safety Disclosure

     49   
Item 5.  

Other Information

     49   
Item 6.  

Exhibits

     49   
Signatures        50   
Exhibit 31.1  

Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

  
Exhibit 31.2  

Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

  
Exhibit 32  

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

  
Exhibit 101.INS  

Instance Document

  
Exhibit 101.SCH  

Schema Document

  
Exhibit 101.CAL  

Calculation Linkbase Document

  
Exhibit 101.LAB  

Labels Linkbase Document

  
Exhibit 101.PRE  

Presentation Linkbase Document

  
Exhibit 101.DEF  

Definition Linkbase Document

  

 

2


Table of Contents

WSFS FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2013     2012     2013      2012  
     (Unaudited)  
     (In Thousands, Except Per Share Data)  

Interest income:

         

Interest and fees on loans

   $ 32,108     $ 32,787     $ 63,560      $ 66,182  

Interest on mortgage-backed securities

     3,470       4,891       7,199        10,609  

Interest on reverse mortgages

     (29     (47     214        (76

Interest and dividends on investment securities

     311       123       453        253  

Other interest income

     22       9       47        18  
  

 

 

   

 

 

   

 

 

    

 

 

 
     35,882       37,763       71,473        76,986  
  

 

 

   

 

 

   

 

 

    

 

 

 

Interest expense:

         

Interest on deposits

     1,821       3,400       3,840        7,415  

Interest on Federal Home Loan Bank advances

     451       1,645       894        3,582  

Interest on federal funds purchased and securities sold under agreements to repurchase

     245       264       494        511  

Interest on trust preferred borrowings

     337       370       666        745  

Interest on senior debt

     944       —         1,887        —    

Interest on other borrowings

     28       6       56        125  
  

 

 

   

 

 

   

 

 

    

 

 

 
     3,826       5,685       7,837        12,378  
  

 

 

   

 

 

   

 

 

    

 

 

 

Net interest income

     32,056       32,078       63,636        64,608  

Provision for loan losses

     1,680       16,383       3,911        24,628  
  

 

 

   

 

 

   

 

 

    

 

 

 

Net interest income after provision for loan losses

     30,376       15,695       59,725        39,980  
  

 

 

   

 

 

   

 

 

    

 

 

 

Noninterest income:

         

Credit/debit card and ATM income

     6,189       5,871       11,857        11,293  

Deposit service charges

     4,216       4,299       8,230        8,313  

Investment management and fiduciary revenue

     4,059       3,427       7,787        6,458  

Mortgage banking activities, net

     1,193       452       1,930        968  

Security gains, net

     906       13,310       2,550        15,346  

Loan fee income

     487       487       982        1,097  

Bank owned life insurance income

     48       136       88        321  

Other income

     2,441       1,010       4,189        1,954  
  

 

 

   

 

 

   

 

 

    

 

 

 
     19,539       28,992       37,613        45,750  
  

 

 

   

 

 

   

 

 

    

 

 

 

Noninterest expenses:

         

Salaries, benefits and other compensation

     17,455       16,663       35,438        32,898  

Occupancy expense

     3,401       3,414       6,784        6,462  

Equipment expense

     2,117       2,035       3,946        3,702  

Data processing and operations expenses

     1,394       1,466       2,743        2,788  

FDIC expenses

     942       1,441       2,108        2,878  

Professional fees

     899       1,082       1,846        2,246  

Loan workout and OREO expenses

     770       1,951       940        2,787  

Marketing expense

     608       818       1,125        1,597  

Other operating expense

     5,566       4,147       10,592        8,648  
  

 

 

   

 

 

   

 

 

    

 

 

 
     33,152       33,017       65,522        64,006  
  

 

 

   

 

 

   

 

 

    

 

 

 

Income before taxes

     16,763       11,670       31,816        21,724  

Income tax provision

     5,855       4,340       11,168        7,950  
  

 

 

   

 

 

   

 

 

    

 

 

 

Net income

     10,908       7,330       20,648        13,774  

Dividends on preferred stock and accretion of discount

     609       692       1,301        1,384  
  

 

 

   

 

 

   

 

 

    

 

 

 

Net income allocable to common stockholders

   $ 10,299     $ 6,638     $ 19,347      $ 12,390  
  

 

 

   

 

 

   

 

 

    

 

 

 

Earnings per share:

         

Basic

   $ 1.17     $ 0.76     $ 2.20      $ 1.42  

Diluted

   $ 1.16     $ 0.76     $ 2.18      $ 1.41  

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

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WSFS FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

     Three Months Ended     Six Months Ended  
     June 30,     June 30,  
     2013     2012     2013     2012  
     (Unaudited)     (Unaudited)  
     (In Thousands)     (In Thousands)  

Net Income

   $ 10,908     $ 7,330     $ 20,648     $ 13,774  

Other comprehensive (loss) income:

        

Unrealized (losses) gains on securities available for sale

     (31,156     11,724       (38,881     12,264  

Tax benefit (expense)

     11,840       (4,433     14,738       (4,656
  

 

 

   

 

 

   

 

 

   

 

 

 

Net of tax amount

     (19,316     7,291       (24,143     7,608  

Reclassification adjustment for gains included in net income

     (906     (13,310     (2,550     (15,346

Tax expense

     344       5,058       969       5,831  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net of tax amount

     (562     (8,252     (1,581     (9,515

Total other comprehensive loss

     (19,878     (961     (25,724     (1,907
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive (loss) income

   $ (8,970   $ 6,369     $ (5,076   $ 11,867  
  

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

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WSFS FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CONDITION

 

     June 30,     Dec 31,  
     2013     2012  
     (Unaudited)  
     (In Thousands, Except Per Share Data)  

Assets

    

Cash and due from banks

   $ 78,540     $ 93,629  

Cash in non-owned ATMs

     458,680       406,627  

Interest-bearing deposits in other banks

     302       631  
  

 

 

   

 

 

 

Total cash and cash equivalents

     537,522       500,887  

Investment securities, available-for-sale

     813,708       907,498  

Investment securities, trading

     12,590       12,590  

Loans held-for-sale

     14,698       12,758  

Loans, net of allowance for loan losses of $41,494 at June 30, 2013 and $43,922 at December 31, 2012

     2,794,066       2,723,916  

Bank-owned life insurance

     63,003       62,915  

Stock in Federal Home Loan Bank of Pittsburgh, at cost

     39,332       31,165  

Assets acquired through foreclosure

     7,109       4,622  

Accrued interest receivable

     10,307       9,652  

Premises and equipment

     36,978       38,257  

Goodwill

     28,146       28,146  

Intangible assets

     4,970       5,174  

Other assets

     46,294       37,568  
  

 

 

   

 

 

 

Total assets

   $       4,408,723     $       4,375,148  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Liabilities:

    

Deposits:

    

Noninterest-bearing demand

   $ 657,616     $ 631,026  

Interest-bearing demand

     559,632       538,195  

Money market

     754,780       933,901  

Savings

     390,689       389,977  

Time

     276,731       316,986  

Jumbo certificates of deposit – customer

     242,266       294,237  
  

 

 

   

 

 

 

Total customer deposits

     2,881,714       3,104,322  

Brokered deposits

     172,758       170,641  
  

 

 

   

 

 

 

Total deposits

     3,054,472       3,274,963  

Federal funds purchased and securities sold under agreements to repurchase

     99,000       110,000  

Federal Home Loan Bank advances

     663,800       376,310  

Trust preferred borrowings

     67,011       67,011  

Senior debt

     55,000       55,000  

Other borrowed funds

     36,020       28,945  

Accrued interest payable

     2,672       1,099  

Other liabilities

     35,808       40,766  
  

 

 

   

 

 

 

Total liabilities

     4,013,783       3,954,094  
  

 

 

   

 

 

 

Stockholders’ Equity:

    

Serial preferred stock $0.01 par value, 7,500,000 shares authorized; issued 32,624 at June 30, 2013 and 52,625 issued at December 31, 2012

   $ 1     $ 1  

Common stock $0.01 par value, 20,000,000 shares authorized; issued 18,395,604 at June 30, 2013 and 18,354,055 at December 31, 2012

     184       184  

Capital in excess of par value

     205,435       222,978  

Accumulated other comprehensive (loss) / income

     (12,781     12,943  

Retained earnings

     450,381       433,228  

Treasury stock at cost, 9,580,569 shares at June 30, 2013 and December 31, 2012

     (248,280     (248,280
  

 

 

   

 

 

 

Total stockholders’ equity

     394,940       421,054  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 4,408,723     $ 4,375,148  
  

 

 

   

 

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

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Table of Contents

WSFS FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

     Six months ended  
     June 30,  
     2013     2012  
     (Unaudited)  
     (In Thousands)  

Operating activities:

    

Net Income

   $ 20,648     $ 13,774  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Provision for loan losses

     3,911       24,628  

Depreciation of premises and equipment

     2,754       2,543  

Amortization, net

     5,573       5,268  

(Increase) decrease in accrued interest receivable

     (655     1,645  

Decrease in other assets

     6,842       3,480  

Origination of loans held-for-sale

     (122,826     (69,557

Proceeds from sales of loans held-for-sale

     122,934       65,837  

Loss on sale of nonperforming loans

     —         14,176  

Gain on mortgage banking activities, net

     (1,930     (968

Security gains, net

     (2,550     (15,346

Stock-based compensation expense

     1,646       1,478  

Excess tax benefits from share-based payment arrangements

     (112     (10

Increase in accrued interest payable

     1,573       3,274  

Decrease in other liabilities

     (5,351     (3,861

(Gain) loss on sale of assets acquired through foreclosure and valuation adjustments, net

     (190     1,596  

Increase in value of bank-owned life insurance

     (88     (321

Decrease in capitalized interest, net

     (520     (295
  

 

 

   

 

 

 

Net cash provided by operating activities

   $ 31,659     $ 47,341  
  

 

 

   

 

 

 

Investing activities:

    

Maturities of investment securities

     310       4,524  

Sale of investment securities available for sale

     220,331       504,203  

Purchase of investment securities available-for-sale

     (213,302     (521,138

Repayments of investment securities available-for-sale

     44,422       73,353  

Disbursements for reverse mortgages

     (35     (14

Proceeds from loan disposition

     —         26,377  

Net increase in loans

     (82,146     (34,364

Net (increase) decrease in stock of Federal Home Loan Bank of Pittsburgh

     (8,167     2,392  

Sales of assets acquired through foreclosure, net

     4,178       10,134  

Investment in premises and equipment, net

     (1,505     (4,101
  

 

 

   

 

 

 

Net cash (used for) provided by investing activities

   $ (35,914   $ 61,366  
  

 

 

   

 

 

 

Financing activities:

    

Net (decrease) increase in demand and saving deposits

     (122,920     58,408  

Increase in time deposits

     (92,226     (36,889

Increase (decrease) in brokered deposits

     2,117       (1,709

Receipts from FHLB advances

     11,058,000       18,325,738  

Repayments of FHLB advances

     (11,069,000     (18,471,488

Receipts from federal funds purchased and securities sold under agreement to repurchase

     21,576,204       9,410,000  

Repayments of federal funds purchased and securities sold under agreement to repurchase

     (21,288,714     (9,360,000

Repayment of unsecured debt

     —         (30,000

Dividends paid

     (3,425     (3,407

Issuance of common stock and exercise of common stock options

     739       (136

Redemption of preferred stock

     (19,997     —    

Excess tax benefits from share-based payment arrangements

     112       10  
  

 

 

   

 

 

 

Net cash provided by (used for) financing activities

   $ 40,890     $ (109,473
  

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

     36,635       (766

Cash and cash equivalents at beginning of period

     500,887       468,017  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 537,522     $ 467,251  
  

 

 

   

 

 

 

Supplemental Disclosure of Cash Flow Information:

    

Cash paid for interest during the period

   $ 6,264     $ 9,104  

Cash paid for income taxes, net

     9,607       8,202  

Loans transferred to assets acquired through foreclosure

     6,475       8,605  

Net change in other comprehensive income

     (25,724     (1,907

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

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WSFS FINANCIAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2013

(UNAUDITED)

1. BASIS OF PRESENTATION

Our Consolidated Financial Statements include the accounts of WSFS Financial Corporation (“the Company”, “our Company”, “we”, “our” or “us”), Wilmington Savings Fund Society, FSB (“WSFS Bank” or the “Bank”) and Montchanin Capital Management, Inc. (“Montchanin”). We also have one unconsolidated affiliate, WSFS Capital Trust III (“the Trust”). WSFS Bank has two fully-owned subsidiaries, WSFS Investment Group, Inc. (“WIG”) and Monarch Entity Services LLC (“Monarch”) and Montchanin has one wholly owned subsidiary, Cypress Capital Management, LLC (“Cypress”).

Founded in 1832, the Bank is one of the ten oldest banks continuously operating under the same name in the United States. We provide residential and commercial real estate, commercial and consumer lending services, as well as retail deposit and cash management services. In addition, we offer a variety of wealth management and trust services to personal and corporate customers through our Wealth Management division. Lending activities are funded primarily with customer deposits and borrowings. The Federal Deposit Insurance Corporation (“FDIC”) insures our customers’ deposits to their legal maximums. We serve our customers primarily from our 51 offices located in Delaware (42), Pennsylvania (7), Virginia (1) and Nevada (1) and through our website at www.wsfsbank.com. Information on our website is not incorporated by reference into this quarterly report.

Amounts subject to significant estimates are items such as the allowance for loan losses and reserves for lending related commitments, goodwill, intangible assets, post-retirement benefit obligations, the fair value of financial instruments, investment in reverse mortgage, income taxes and other-than-temporary impairments (“OTTI”). Among other effects, changes to such estimates could result in future impairments of investment securities, goodwill and intangible assets and establishment of allowances for loan losses and lending related commitments as well as increased post-retirement benefits expense.

Our accounting and reporting policies conform with U.S. generally accepted accounting principles and prevailing practices within the banking industry for interim financial information and Rule 10-01 of the Securities and Exchange Commission (“SEC”) Regulation S-X. Rule 10-01 of Regulation S-X does not require us to include all information and notes for complete financial statements and prevailing practices within the banking industry. Operating results for the three and six month periods ended June 30, 2013 are not necessarily indicative of the results that may be expected for any future quarters or for the year ending December 31, 2013. For further information, refer to the consolidated financial statements and the accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2012 as filed with the SEC.

Whenever necessary, reclassifications have been made to prior period Consolidated Financial Statements to conform to the current period’s presentation. All significant intercompany transactions were eliminated in consolidation.

Accounting for Stock-Based Compensation

Stock-based compensation is accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 718, Stock Compensation. After stockholder approval in 2005, the 1997 Stock Option Plan (“1997 Plan”) was replaced by the by the 2005 Incentive Plan (“2005 Plan”). Upon stockholder approval in 2013, the 2005 Incentive Plan was amended and replaced by the 2013 Incentive Plan (“2013 Plan”). No future awards may be granted under the 2005 Plan, however, we still have options outstanding under the 1997 Plan and 2005 Plan for our officers, directors and employees of us and our subsidiaries (“Associates”). The 2013 Plan will terminate on the tenth anniversary of its effective date, after which no awards may be granted. We have stock options outstanding under the 1997 Plan, 2005 Plan and 2013 Plan (collectively, “Stock Incentive Plans”). The number of shares reserved for issuance under the 2013 Plan is 698,845. At June 30, 2013, there were 548,845 shares available for future grants under the 2013 Plan.

With the exception of certain Performance Stock Awards, the Stock Incentive Plans provide for the granting of incentive stock options as defined in Section 422 of the Internal Revenue Code as well as non-incentive stock options (collectively, “Stock Options”). Additionally, the 2013 Plan provides for the granting of stock appreciation rights, performance awards, restricted stock and restricted stock unit awards, deferred stock units, dividend equivalents, other stock-based awards and cash awards. All Stock Options are to be granted at not less than the market price of our Corporation’s common stock on the date of the grant. All Stock Options granted during 2013 and 2012 vest in 25% per annum increments, start to become exercisable one year from the grant date and expire five years from the grant date. Generally, all awards become immediately exercisable in the event of a change in control, as defined within the Stock Incentive Plans. In addition, the Black-Scholes option-pricing model is used to determine the grant date fair value of stock options.

 

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Table of Contents

Stock Options

The following table provides information about our stock options outstanding for the three months ended June 30, 2013 and 2012:

 

     June 30, 2013      June 30, 2012  
           Weighted-            Weighted-  
           Average            Average  
     Shares     Exercise
Price
     Shares     Exercise
Price
 

Stock Options:

         

Outstanding at beginning of period

     435,804     $ 44.19        447,901     $ 43.41  

Granted (1)

     400,000       49.52        55,477       38.93  

Exercised

     (13,647     37.79        (2,059     27.49  

Forfeited

     (13,081     47.50        (2,075     69.00  
  

 

 

      

 

 

   

Outstanding at end of period

     809,076       46.88        499,244       42.87  

Exercisable at end of period

     198,647     $ 44.57        334,430     $ 44.93  

Weighted-average fair value of awards granted

   $ 14.93        $ 12.57    

 

(1) Options granted in the second quarter of 2013 are more than were granted in the second quarter of 2012 due to additional one-time awards being granted under the 2013 Plan and the WSFS Financial Corporation Non-Plan Stock Option agreement. Both plans were approved by shareholders at the 2013 Annual Meeting of Stockholders on April 25, 2013.

The following table provides vesting information about our stock options outstanding for the three months ended June 30, 2013, and 2012:

 

     June 30, 2013      June 30, 2012  
           Weighted-            Weighted-  
           Average            Average  
     Shares     Exercise
Price
     Shares     Exercise
Price
 

Stock Options:

         

Unvested at beginning of period

     237,861     $ 43.92        110,137     $ 38.53  

Granted

     400,000       49.52        55,477       38.93  

Vested

     (14,351     38.72        (800     35.12  

Forfeited

     (13,081     47.50        —         —    
  

 

 

      

 

 

   

Unvested at end of period

     610,429     $ 47.63        164,814     $ 38.68  

Stock Options

The following table provides information about our stock options outstanding for the six months ended June 30, 2013, and 2012:

 

     June 30, 2013      June 30, 2012  
           Weighted-            Weighted-  
           Average            Average  
     Shares     Exercise
Price
     Shares     Exercise
Price
 

Stock Options:

         

Outstanding at beginning of period

     335,730     $ 42.14        416,886     $ 43.52  

Granted

     522,357       49.09        88,307       39.66  

Exercised

     (35,930     33.80        (3,874     26.29  

Forfeited

     (13,081     47.50        (2,075     69.00  
  

 

 

      

 

 

   

Outstanding at end of period

     809,076       46.88        499,244       42.87  

Exercisable at end of period

     198,647     $ 44.57        334,430     $ 44.93  

Weighted-average fair value of awards granted

   $ 13.94        $ 12.50    

 

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The following table provides vesting information about our stock options outstanding for the six months ended June 30, 2013, and 2012:

 

     June 30, 2013      June 30, 2012  
           Weighted-            Weighted-  
           Average            Average  
     Shares     Exercise
Price
     Shares     Exercise
Price
 

Stock Options:

         

Unvested at beginning of period

     157,298     $ 38.57        112,258     $ 36.08  

Granted

     522,357       49.09        88,307       39.66  

Vested

     (56,145     35.43        (35,751     32.94  

Forfeited

     (13,081     47.50        —         —    
  

 

 

      

 

 

   

Unvested at end of period

     610,429     $ 47.63        164,814     $ 38.68  

The total amount of compensation cost to be recognized related to non-vested stock options as of June 30, 2013 was $6.9 million. The weighted-average period over which it is expected to be recognized is 4.1 years. We issue new shares upon the exercise of options.

On April 25, 2013 stockholders’ approved a change in future compensation for Mark A. Turner, President and CEO. As result, Mr. Turner was granted 250,000 non-statutory stock options with a longer and slower vesting schedule than our standard options, 40% vesting after the second year and 20% vesting in each of the following three years. Additionally, these options were awarded at an exercise price of 20% over the December 2012 market value (date in which framework of the plan was decided on). Upon the grant, Mr. Turner will no longer be eligible to receive any grants under any of our other stock based award programs for a period of five years.

Additionally, as a result of stockholder approval, 150,000 incentive stock options were issued to certain executive officers of the Company under the 2013 Plan. These options have the same vesting schedule and exercise price as the Non-Plan Stock Options granted to Mr. Turner.

Restricted Stock

We did not issue any restricted stock units or awards during the second quarter of 2013. We issued 11,357 restricted stock units and awards during the first six months of 2013 compared to 24,442 during the first six months of 2012. These awards vest over a four year period. These stock awards were made to certain executive officers. The total amount of compensation cost to be recognized relating to non-vested restricted stock as of June 30, 2013, was $2.1 million. The weighted-average period over which it is expected to be recognized is 2.0 years.

Performance Stock Awards

The Board approved a plan in which Marvin N. Schoenhals, Chairman of the Board, was granted 22,250 shares of restricted stock effective January 3, 2011, with a five-year performance vesting schedule starting at the end of the second year. These awards are based on acquiring new business relationships in which Mr. Schoenhals has played a meaningful role in helping us establish. These shares are subject to vesting in whole or in part based on the role Mr. Schoenhals plays in establishing new business relationships that, over a two year period of time achieve at least a 50% return on the investment of restricted stock cost. We recognized compensation expense of $69,000 related to this award during the second quarter of 2013 compared to $86,000 during the second quarter of 2012.

For the three months ended June 30, 2013, the effect of stock-based compensation, including stock options, restricted stock, stock awards, and performance stock, on salaries, benefits and other compensation was $837,000 pre-tax ($613,000 after tax) or $0.07 per share. This compares to $767,000 pre-tax ($537,000 after tax) or $0.06 per share during the three months ended June 30, 2012.

For the six months ended June 30, 2013, the effect of stock-based compensation, including stock options, restricted stock, stock awards, and performance stock, on salaries, benefits and other compensation was $1.8 million pre-tax ($1.4 million after tax) or $0.16 per share. This compares to $1.5 million pre-tax ($1.1 million after tax) or $0.12 per share during the six months ended June 30, 2012.

 

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2. EARNINGS PER SHARE

The following table shows the computation of basic and diluted earnings per share:

 

     For the three months ended      For the six months ended  
     June 30,      June 30,  
     2013      2012      2013      2012  
     (In Thousands, Except Per Share Data)  

Numerator:

           

Net income allocable to common stockholders

   $   10,299      $     6,638      $   19,347      $   12,390  
  

 

 

    

 

 

    

 

 

    

 

 

 

Denominator:

           

Denominator for basic earnings per share – weighted average shares

     8,802        8,706        8,792        8,696  

Effect of dilutive employee stock options and warrants

     95        72        89        75  
  

 

 

    

 

 

    

 

 

    

 

 

 

Denominator for diluted earnings per share – adjusted weighted average shares and assumed exercise

     8,897        8,778        8,881        8,771  
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings per share:

           

Basic:

           

Net income allocable to common stockholders

   $ 1.17      $ 0.76      $ 2.20      $ 1.42  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted:

           

Net income allocable to common stockholders

   $ 1.16      $ 0.76      $ 2.18      $ 1.41  
  

 

 

    

 

 

    

 

 

    

 

 

 

Outstanding common stock equivalents having no dilutive effect

     548        536        637        536  

3. INVESTMENT SECURITIES

The following tables detail the amortized cost and the estimated fair value of the Company’s investment securities available-for-sale (which include reverse mortgages) and trading securities:

 

           Gross      Gross        
     Amortized     Unrealized      Unrealized     Fair  
     Cost     Gains      Losses     Value  
     (In Thousands)  

Available-for-sale securities:

         

June 30, 2013:

         

Reverse mortgages

   $ (422   $         $        $ (422

State and political subdivisions

     60,058       153        (4,368     55,843  

U.S. Government and government sponsored enterprises (“GSE”)

     43,688       148        (3     43,833  

Federal National Mortgage Association (“FNMA”) Mortgage-Backed Securities (“MBS”)

     380,368       475        (10,187     370,656  

Collateralized Mortgage Obligation (“CMO”) (1)

     127,408       2,418        (4,200     125,626  

Federal Home Loan Mortgage Corporation (“FHLMC”) MBS

     112,964       47        (3,251     109,760  

Government National Mortgage Association (“GNMA”) MBS

     109,608       1,531        (2,727     108,412  
  

 

 

   

 

 

    

 

 

   

 

 

 
   $ 833,672     $ 4,772      $ (24,736   $ 813,708  
  

 

 

   

 

 

    

 

 

   

 

 

 

December 31, 2012:

         

Reverse mortgages

   $ (457   $ —        $ —       $ (457

State and political subdivisions

     3,120       89        —         3,209  

GSE

     46,726       266        (2     46,990  

FNMA

     396,910       9,588        (243     406,255  

CMO (1)

     251,848       7,849        (301     259,396  

FHLMC

     58,596       1,171        (117     59,650  

GNMA

     129,288       3,221        (54     132,455  
  

 

 

   

 

 

    

 

 

   

 

 

 
   $ 886,031     $ 22,184      $ (717   $ 907,498  
  

 

 

   

 

 

    

 

 

   

 

 

 

Trading securities

         

June 30, 2013:

         

CMO

   $ 12,590     $ —        $ —       $ 12,590  
  

 

 

   

 

 

    

 

 

   

 

 

 

December 31, 2012:

         

CMO

   $ 12,590     $ —        $ —       $ 12,590  
  

 

 

   

 

 

    

 

 

   

 

 

 

 

(1) Includes agency CMO and SASCO 2002 RM-1 Class O securities classified as available-for-sale

 

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The scheduled maturities of investment securities available-for-sale at June 30, 2013 and December 31, 2012 were as follows:

 

     Available-for-Sale  
     Amortized
Cost
     Fair Value  
     (In Thousands)  

June 30, 2013

     

Within one year (1)

   $ 15,567      $ 15,611  

After one year but within five years

     32,424        32,504  

After five years but within ten years

     296,558        285,108  

After ten years

     489,123        480,485  
  

 

 

    

 

 

 
   $ 833,672      $ 813,708  
  

 

 

    

 

 

 

December 31, 2012

     

Within one year (1)

   $ 18,544      $ 18,658  

After one year but within five years

     28,855        29,034  

After five years but within ten years

     321,103        329,580  

After ten years

     517,529        530,226  
  

 

 

    

 

 

 
   $ 886,031      $ 907,498  
  

 

 

    

 

 

 

 

(1) Reverse mortgages do not have contractual maturities. We have included reverse mortgages in maturities within one year.

The portfolio of available-for-sale MBS includes 142 securities with an amortized cost of $730.3 million comprised of all GSE securities. All securities were AAA-rated at the time of purchase. All securities were re-evaluated for OTTI at June 30, 2013. The result of this evaluation showed no OTTI for the second quarter of 2013. The weighted average duration of MBS was 5.4 years at June 30, 2013.

MBS have expected maturities that differ from their contractual maturities. These differences arise because borrowers may have the right to call or prepay obligations with or without a prepayment penalty.

At June 30, 2013, investment securities with market values aggregating $436.5 million were pledged as collateral for retail customer repurchase agreements, municipal deposits, and other obligations. From time to time, investment securities are also pledged as collateral for FHLB borrowings. There were no FHLB pledged investment securities at June 30, 2013.

During the first six months of 2013, we sold $220.3 million of investment securities categorized as available-for-sale for net gains of $2.5 million. In the second quarter of 2012, proceeds from the sale of investment securities available-for-sale were $504.2 million and resulted in net gains of $15.4 million. The cost basis of all investment securities sales is based on the specific identification method.

As of June 30, 2013, our investment securities portfolio had remaining unamortized premiums of $25.0 million and $115,000 of unaccreted discounts.

 

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At June 30, 2013, we owned investment securities totaling $690.2 million in which the amortized cost basis exceeded fair value. Total unrealized losses on those securities were $24.7 million at June 30, 2013. The temporary impairment is the result of changes in market interest rates subsequent to the purchase of the securities. Our investment portfolio is reviewed each quarter for indications of impairment. This review includes analyzing the length of time and the extent to which the fair value has been lower than the cost, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and our intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in the market. We evaluate our intent and ability to hold securities based upon our investment strategy for the particular type of security and our cash flow needs, liquidity position, capital adequacy and interest rate risk position. In addition, we do not have the intent to sell, nor is it more likely-than-not we will be required to sell these securities before we are able to recover the amortized cost basis.

During the first six months of 2013, we purchased $51.1 million of municipal bonds. The purpose was to improve return and reduce our effective tax rate.

For these investment securities with unrealized losses, the table below shows our gross unrealized losses and fair value by investment category and length of time that individual securities were in a continuous unrealized loss position at June 30, 2013.

 

     Less than 12 months      12 months or longer      Total  
     Fair      Unrealized      Fair      Unrealized      Fair      Unrealized  
     Value      Loss      Value      Loss      Value      Loss  
     (In Thousands)  

Available-for-sale

                 

State and political subdivisions

   $ 47,284      $ 4,368      $ —        $ —        $ 47,284      $ 4,368  

U.S Government and agencies

     —          —          2,004        3        2,004        3  

FNMA

     350,249        10,187        —          —          350,249        10,187  

CMO

     100,807        4,172        2,704        28        103,511        4,200  

FHLMC

     108,868        3,251        —          —          108,868        3,251  

GNMA

     78,322        2,727        —          —          78,322        2,727  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total temporarily impaired investments

   $ 685,530      $ 24,705      $ 4,708      $ 31      $ 690,238      $ 24,736  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The table below shows our investment securities’ gross unrealized losses and fair value by investment category and length of time that individual securities were in a continuous unrealized loss position at December 31, 2012.

 

     Less than 12 months      12 months or longer      Total  
     Fair      Unrealized      Fair      Unrealized      Fair      Unrealized  
     Value      Loss      Value      Loss      Value      Loss  
     (In Thousands)  

Available-for-sale

                 

State and political subdivisions

   $ —         $ —         $ —         $ —         $ —         $ —     

U.S Government and agencies

     2,008        2        —           —           2,008        2  

FNMA

     43,696        243        —           —           43,696        243  

CMO

     40,358        268        1,364        33        41,722        301  

FHLMC

     13,884        117        —           —           13,884        117  

GNMA

     10,029        54        —           —           10,029        54  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total temporarily impaired investments

   $ 109,975      $ 684      $ 1,364      $ 33      $ 111,339      $ 717  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

We own $12.6 million par value of SASCO RM-1 2002 class B securities which are classified as trading. We expect to recover all principal and interest due to seasoning of the underlying collateral and the amount of excess collateral. Based on FASB ASC 320, Investments – Debt and Equity Securities (“ASC 320”), when these securities were acquired they were classified as trading because it was our intent to sell them in the near term. We use the guidance under ASC 320 to provide a reasonable estimate of fair value. We estimated the value of these securities based on the pricing of BBB+ securities that have an active market through a technique which estimates the fair value of this asset using the income approach as of June 30, 2013.

We purchased 100% of SASCO 2002-RM1 Class O certificates for $2.5 million. As of June 30, 2013, the market value of these securities was determined to be $6.4 million in accordance with FASB ASC 820-10, Fair Value Measurement (“ASC 820”). These securities have been included in our available-for-sale CMO portfolio since their purchase.

 

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4. ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY INFORMATION

Allowance for Loan Losses

We maintain an allowance for loan losses and charge losses to this allowance when such losses are realized. We established our loan loss allowance in accordance with guidance provided in the SEC’s Staff Accounting Bulletin 102 (“SAB 102”). The determination of the allowance for loan losses requires significant judgment reflecting our best estimate of impairment related to specifically identified impaired loans as well as probable loan losses in the remaining loan portfolio. Our evaluation is based upon a continuing review of these portfolios. The following are included in Allowance for Loan Losses:

 

   

Specific reserves for impaired loans

 

   

Allowances for pools of homogenous loans based on historical loss experience

 

   

Adjustments for qualitative and environmental factors

 

   

Allowance for model estimation and complexity risk

Specific reserves are established for impaired loans where we have identified significant conditions or circumstances related to specific credits that indicate losses are probable. Unless loans are well-secured and collection is imminent, all loans that are 90 days past due are deemed impaired. Reserves for impaired loans are generally charged-off within 90 days of impairment recognition. Estimated losses are based on collateral values, estimates of future cash flows, or market valuations.

Allowances for pooled homogeneous loans, that are not deemed impaired, are based on historical loss experience. Estimated losses for pooled portfolios are determined differently for commercial loan pools and consumer loan pools. Commercial loans are pooled into the following segments: Business Loans (Commercial and Industrial Loans), Commercial Real Estate – Owner-Occupied, Commercial Real Estate – Investor, and Construction Loans. Each pool is further segmented by internally assessed risk ratings. Loan losses for commercial loans are estimated by determining the probability of default and expected loss severity upon default. Probability of default is calculated based on the historical rate of migration to impaired status during the last thirteen quarters. This was an increase of one quarter over the previous period’s analysis. This adjustment provides a more representative period and accurate estimation of the allowance at the current point in this credit cycle. Loss severity is calculated as the actual loan losses (net of recoveries) on impaired loans in the respective pool during the same time frame. Retail loans are pooled into the following segments: residential mortgage loans, home equity secured loans, and all other consumer loans. Pooled reserves for retail loans are calculated based solely on the previous thirteen quarter average net loss rate.

Qualitative and environmental adjustment factors are taken into consideration when determining the above reserve estimates or core reserves. These adjustment factors are based upon our evaluation of various current internal and external conditions including:

 

   

Assessment of current underwriting policies, staff, and portfolio mix

 

   

Internal trends of delinquency, nonaccrual and criticized loans by segment

 

   

Assessment of risk rating accuracy, control and regulatory assessments/environment

 

   

General economic conditions – locally and nationally

 

   

Market trends impacting collateral values

 

   

Competitive environment as it could impact loan underwriting and loan portfolio mix

The above factors are based on their relative standing compared to the period which historic losses are used in core reserve estimates and current directional trends. Each individual qualitative and environmental factor in our model can add or subtract to core reserves.

The final component of the allowance is a reserve for model estimation and complexity risk. The calculation of reserves is generally quantitative; however, qualitative estimates of valuations and risk assessment are necessary. We currently increase our calculated reserves by 2% to account for model estimation and complexity risk.

Our loan officers and risk managers meet at least quarterly to discuss and review the conditions and risks associated with individual problem loans. In addition, various regulatory agencies and loan review consultants periodically review our loan ratings and allowance for loan losses.

 

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The following tables provide the activity of the allowance for loan losses and loan balances for the three and six months ended June 30, 2013 and 2012:

 

    Commercial     Owner-
Occupied
Commercial
    Commercial
Mortgages
    Construction     Residential     Consumer     Complexity
Risk (1)
    Total  
    (in thousands)  

Three Months Ended June 30, 2013

               

Allowance for loan losses

               

Beginning balance

  $ 12,768      $ 6,338      $ 7,193      $ 6,785      $ 3,281      $ 5,741      $ 842      $ 42,948   

Charge-offs

    (883     (36     (24     (1,321     (255     (1,516     —         (4,035

Recoveries

    401       33       106       70       23       268       —         901  

Provision (credit)

    681       1,714       (930     (1,582     181       1,644       (28     1,680  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

  $ 12,967      $ 8,049      $ 6,345      $ 3,952      $ 3,230      $ 6,137      $ 814      $ 41,494   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Six Months Ended June 30, 2013

               

Allowance for loan losses

               

Beginning balance

  $ 13,663      $ 6,108      $ 8,079      $ 6,456      $ 3,124      $ 5,631      $ 861      $ 43,922   

Charge-offs

    (1,139     (37     (1,721     (1,340     (695     (2,810     —         (7,742

Recoveries

    627       45       109       85       41       496       —         1,403  

Provision (credit)

    (184     1,933       (122     (1,249     760       2,820       (47     3,911  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

  $ 12,967      $ 8,049      $ 6,345      $ 3,952      $ 3,230      $ 6,137      $ 814      $ 41,494   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Period-end allowance allocated to:

               

Loans individually evaluated for impairment

  $ 2,171      $ 977      $ 1,995      $ —        $ 1,006      $ 12      $ —        $ 6,161   

Loans collectively evaluated for impairment

    10,796       7,072       4,350       3,952       2,224       6,125       814       35,333  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

  $ 12,967      $ 8,049      $ 6,345      $ 3,952      $ 3,230      $ 6,137      $ 814      $ 41,494   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Period-end loan balances evaluated for:

               

Loans individually evaluated for impairment

  $ 6,048      $ 12,681      $ 10,791      $ 646      $ 16,961      $ 4,925      $ —        $ 52,052  (2) 

Loans collectively evaluated for impairment

    733,581       755,261       677,442       124,892       216,755       280,314       —       $ 2,788,245   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

  $ 739,629      $ 767,942      $ 688,233      $ 125,538      $ 233,716      $ 285,239      $ —        $ 2,840,297   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Represents the portion of the allowance for loan losses established to account for the inherent complexity and uncertainty of estimates.
(2) The difference between this amount and nonaccruing loans at June 30, 2013, represents accruing troubled debt restructured loans.

 

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Table of Contents

The following table provides the activity of the allowance for loan losses and loan balances for the three and six months ended June 30, 2012:

 

    Commercial     Owner-
Occupied
Commercial
    Commercial
Mortgages
    Construction     Residential     Consumer     Complexity
Risk (1)
    Total  
    (in thousands)  

Three months ended June 30, 2012

               

Allowance for loan losses

               

Beginning balance

  $ 11,625      $ 7,005      $ 10,530      $ 8,917      $ 6,400      $ 10,253      $ 1,068      $ 55,798   

Charge-offs

    (7,704     (2,186     (4,701     (8,498     (2,315     (1,692     —         (27,096

Recoveries

    797       —         51       300       33       163       —         1,344  

Provision (credit)

    5,173       (728     3,738       4,588       2,147       1,617       (152     16,383  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

  $ 9,891      $ 4,091      $ 9,618      $ 5,307      $ 6,265      $ 10,341      $ 916      $ 46,429   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Six months ended June 30, 2012

               

Allowance for loan losses

               

Beginning balance

  $ 15,067      $ 9,235      $ 7,556      $ 4,074      $ 6,544      $ 10,604      $ —        $ 53,080   

Charge-offs

    (10,035     (2,688     (4,891     (10,004     (2,639     (2,921     —         (33,178

Recoveries

    850       6       364       328       58       293       —         1,899  

Provision (credit)

    4,009       (2,462     6,589       10,909       2,302       2,365       916       24,628  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

  $ 9,891      $ 4,091      $ 9,618      $ 5,307      $ 6,265      $ 10,341      $ 916      $ 46,429   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Period-end allowance allocated to:

               

Loans individually evaluated for impairment

  $ 629      $ 10      $ 309      $ 139      $ 882      $ 45      $ —        $ 2,014   

Loans collectively evaluated for impairment

    9,262       4,081       9,309       5,168       5,383       10,296       916       44,415  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

  $ 9,891      $ 4,091      $ 9,618      $ 5,307      $ 6,265      $ 10,341      $ 916      $ 46,429   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Period-end loan balances evaluated for:

               

Loans individually evaluated for impairment

  $ 4,020      $ 17,980      $ 5,219      $ 5,656      $ 16,083      $ 4,014      $ —        $ 52,972  (2) 

Loans collectively evaluated for impairment

    807,981       619,004       613,648       90,520       239,515       280,302       —         2,650,970  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

  $ 812,001      $ 636,984      $ 618,867      $ 96,176      $ 255,598      $ 284,316      $ —        $ 2,703,942   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Represents the portion of the allowance for loan losses established to account for the inherent complexity and uncertainty of estimates.
(2) The difference between this amount and nonaccruing loans at June 30, 2012, represents accruing troubled debt restructured loans.

 

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Nonaccrual and Past Due Loans

The following tables show our nonaccrual and past due loans at the dates indicated:

 

June 30, 2013

(In Thousands)

  30 – 59 Days
Past Due and
Still Accruing
    60 – 89 Days
Past Due and
Still Accruing
    Greater Than
90 Days
Past Due and
Still Accruing
    Total Past
Due
And  Still
Accruing
    Accruing
Current
Balances
    Nonaccrual
Loans
    Total Loans  

Commercial

  $ 257      $ —        $ —        $ 257      $ 733,348      $ 6,024      $ 739,629   

Owner-Occupied commercial

    —         —         —         —         755,261       12,681       767,942  

Commercial mortgages

    102       —         —         102       677,340       10,791       688,233  

Construction

    —         —         —         —         124,892       646       125,538  

Residential

    4,012       937       129       5,078       220,661       7,977       233,716  

Consumer

    671       29       —         700       281,625       2,914       285,239  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 5,042      $ 966      $ 129      $ 6,137      $ 2,793,127      $ 41,033      $ 2,840,297   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

% of Total Loans

    0.18     0.03     —       0.21     98.34     1.45     100
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

December 31, 2012

(In Thousands)

  30 – 59 Days
Past Due and
Still Accruing
    60 – 89 Days
Past Due and
Still Accruing
    Greater Than
90 Days
Past Due and
Still Accruing
    Total Past
Due

And Still
Accruing
    Accruing
Current
Balances
    Nonaccrual
Loans
    Total Loans  

Commercial

  $ 1,214      $ —        $ —        $ 1,214      $ 698,416      $ 4,861      $ 704,491   

Owner-Occupied commercial

    1,264       —         —         1,264       755,316       14,001       770,581  

Commercial mortgages

    —         —         —         —         618,731       12,634       631,365  

Construction

    269       70       —         339       131,489       1,547       133,375  

Residential

    5,383       606       786       6,775       226,863       9,989       243,627  

Consumer

    971       526       —         1,497       282,776       4,728       289,001  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $            9,101      $   1,202      $               786      $   11,089      $    2,713,591      $     47,760      $    2,772,440   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

% of Total Loans

    0.33 %       0.04 %       0.03 %       0.40 %       97.88 %       1.72 %       100 %  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Table of Contents

Impaired Loans

The following tables provide an analysis of our impaired loans at June 30, 2013 and December 31, 2012:

 

                                                                                                                                               
     Ending      Loans with      Loans with      Related      Contractual      Average  
June 30, 2013    Loan      No Specific      Specific      Specific      Principal      Loan  

(In Thousands)

   Balances      Reserve (1)      Reserve      Reserve      Balances      Balances  

Commercial

   $ 6,048       $ 2,008       $ 4,040       $ 2,171       $ 7,332       $ 4,700   

Owner-Occupied commercial

     12,681        5,390        7,291        977        14,828        14,250  

Commercial mortgages

     10,791        4,740        6,051        1,995        19,401        9,152  

Construction

     646        646        —           —           16,416        2,337  

Residential

     16,961        9,231        7,730        1,006        19,357        17,835  

Consumer

     4,925        4,794        131        12        5,941        5,634  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 52,052       $ 26,809       $ 25,243       $ 6,161       $ 83,275       $ 53,908   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

                                                                                                                                               
     Ending      Loans with      Loans with      Related      Contractual      Average  
December 31, 2012    Loan      No Specific      Specific      Specific      Principal      Loan  

(In Thousands)

   Balances      Reserve (1)      Reserve      Reserve      Balances      Balances  

Commercial

   $ 4,861       $ 1,598       $ 3,263       $ 2,100       $ 12,060       $ 4,993   

Owner-occupied commercial

     14,001        13,827        174        1        18,658        16,856  

Commercial mortgages

     12,634        5,422        7,212        1,887        22,192        10,233  

Construction

     1,547        1,172        375        28        17,711        11,239  

Residential

     18,483        11,053        7,430        919        20,771        16,917  

Consumer

     6,329        5,635        694        16        7,265        4,514  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $  57,855       $  38,707       $  19,148       $  4,951       $    98,657       $   64,752   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Reflects loan balances at their remaining book balance.

Interest income of $235,000 and $473,000 was recognized on impaired loans during the three and six months ended June 30, 2013, respectively.

Credit Quality Indicators

Below is a description of each of our risk ratings for all commercial loans:

Pass. These borrowers presently show no current or potential problems and their loans are considered fully collectible.

Special Mention. Borrowers have potential weaknesses that deserve management’s close attention. Borrowers in this category may be experiencing adverse operating trends, for example, declining revenues or margins, high leverage, tight liquidity, or increasing inventory without increasing sales. These adverse trends can have a potential negative effect on the borrower’s repayment capacity. These assets are not adversely classified and do not expose the Bank to significant risk that would warrant a more severe rating. Borrowers in this category may also be experiencing significant management problems, pending litigation, or other structural credit weaknesses.

Substandard. Borrowers have well-defined weaknesses that require extensive oversight by management. Borrowers in this category may exhibit one or more of the following: inadequate debt service coverage, unprofitable operations, insufficient liquidity, high leverage, and weak or inadequate capitalization. Relationships in this category are not adequately protected by the sound financial worth and paying capacity of the obligor or the collateral pledged on the loan, if any. The distinct possibility exists that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful. Borrowers have well-defined weaknesses inherent in the Substandard category with the added characteristic that the possibility of loss is extremely high. Current circumstances in the credit relationship make collection or liquidation in full highly questionable. A doubtful asset has some pending event that may strengthen the asset that defers the loss classification. Such impending events include: perfecting liens on additional collateral, obtaining collateral valuations, an acquisition or liquidation preceding, proposed merger, or refinancing plan.

 

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Table of Contents

Loss. Borrowers are uncollectible or of such negligible value that continuance as a bankable asset is not supportable. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical to defer writing off this asset even though partial recovery may be recognized sometime in the future.

Residential and Consumer Loans

The residential and consumer loan portfolios are monitored on an ongoing basis using delinquency information and loan type as credit quality indicators. These credit quality indicators are assessed in the aggregate in these relatively homogeneous portfolios. Loans that are greater than 90 days past due are generally considered nonperforming and placed in nonaccrual status.

 

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Table of Contents

The following tables provide an analysis of problem loans as of June 30, 2013 and December 31, 2012:

Commercial credit exposure credit risk profile by internally assigned risk rating (dollars in thousands):

 

     Commercial      Owner-Occupied
Commercial
     Commercial Mortgages      Construction      Total Commercial  
     Jun 30,
2013
     Dec. 31,
2012
     Jun 30,
2013
     Dec. 31,
2012
     Jun 30,
2013
     Dec. 31,
2012
     Jun 30,
2013
     Dec. 31,
2012
     June 30, 2013     December 31, 2012  
                             Amount      Percent     Amount      Percent  

Risk Rating:

                                  

Special mention

   $ 19,413       $ 14,611       $ 15,134       $ 27,398       $ 304       $ 29,267       $ —         $ 2,453       $ 34,851         $ 73,729      

Substandard:

                                  

Accrual

     63,699        63,074        43,465        44,899        5,111        6,222        3,012        5,755        115,287          119,950     

Nonaccrual

     1,984        1,598        5,390        13,827        4,740        5,422        646        1,172        12,760          22,019     

Doubtful/Nonaccrual

     4,040        3,263        7,291        174        6,051        7,212        —          375        17,382          11,024     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

    

Total Special Mention, Substandard and Doubtful

     89,136         82,546        71,280        86,298        16,206        48,123        3,658        9,755        180,280         8     226,722        10

Pass

     650,493        621,945        696,662        684,283        672,027        583,242        121,880        123,620        2,141,062        92       2,013,090        90  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total Commercial Loans

   $ 739,629       $ 704,491       $ 767,942       $ 770,581       $ 688,233       $ 631,365       $ 125,538       $ 133,375       $ 2,321,342         100   $ 2,239,812         100
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

    

Consumer credit exposure credit risk profile based on payment activity (dollars in thousands):

 

     Residential      Consumer      Total Residential and Consumer  
     Jun 30,
2013
     Dec.31,
2012
     Jun 30,
2013
     Dec. 31,
2012
     June 30, 2013     December 31, 2012  
                 Amount      Percent     Amount      Percent  

Nonperforming (1)

   $ 16,961       $ 18,483       $ 4,925       $ 6,329       $ 21,886         4   $ 24,812         5

Performing

     216,755        225,144        280,314        282,672        497,069        96       507,816        95  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 233,716       $ 243,627       $ 285,239       $ 289,001       $ 518,955         100   $ 532,628         100
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

    

 

(1) Includes $11.0 million as of June 30, 2013 and $10.1 million as of December 31, 2012 of troubled debt restructured mortgages and home equity installment loans that are performing in accordance with modified terms and are accruing interest.

 

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Table of Contents

Troubled Debt Restructurings (TDR)

The balance of TDRs at June 30, 2013 and December 31, 2012 was $22.2 million and $22.0 million, respectively. The balance at June 30, 2013 included approximately $11.2 million in nonaccrual status and $11.0 million in accrual status compared to $11.9 million in nonaccrual status and $10.1 million in accrual status at December 31, 2012. Approximately $1.0 million and $936,000 in related reserves have been established for these loans at June 30, 2013 and December 31, 2012, respectively.

During the six months ended June 30, 2013, the terms of sixteen loans were modified in TDRs, four of which were commercial loans that had already been placed on nonaccrual. The remaining loans represented residential and consumer loans. Our concessions on restructured loans consisted mainly of forbearance agreements, reduction in interest rates or extensions of maturities. Principal balances are generally not forgiven by us when a loan is modified as a TDR. Nonaccruing restructured loans remain in nonaccrual status until there has been a period of sustained repayment performance, typically six months.

The following table presents loans identified as TDRs during the three and six months ended June 30, 2013 and 2012:

 

     Three Months Ended      Three Months Ended      Six Months Ended      Six Months Ended  

(In Thousands)

   June 30, 2013      June 30, 2012      June 30, 2013      June 30, 2012  

Commercial

   $ 24       $ —         $ 24       $ 9,276   

Commercial mortgages

     826        —          1,061        —    

Construction

     —          —          —          378  

Residential

     173        827        599        1,278  

Consumer

     44        —          717        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 1,067       $ 827       $ 2,401       $ 10,932   
  

 

 

    

 

 

    

 

 

    

 

 

 

The TDRs described in the table increased the allowance for loan losses by $28,000 through allocation of a related reserve, and resulted in charge-offs of $363,000 during the six months ended June 30, 2013, compared to increased reserves of $130,000 and charge-offs of $5.3 million for the same period of 2012.

There was one residential TDR in the amount of $130,000, which defaulted (defined as past due 90 days) during the three and six months ended June 30, 2013, that was restructured within the last twelve months prior to June 30, 2013.

5. TAXES ON INCOME

We account for income taxes in accordance with FASB ASC 740, Income Taxes (“ASC 740”) (Formerly SFAS No. 109, Accounting for Income Taxes and FASB Interpretation No. 48, Accounting for Uncertainty In Income Taxes, an Interpretation of FASB Statement 109). ASC 740 requires the recording of deferred income taxes that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. We exercise significant judgment in the evaluation of the amount and timing of the recognition of the resulting tax assets and liabilities. The judgments and estimates required for the evaluation are updated based upon changes in business factors and the tax laws. If actual results differ from the assumptions and other considerations used in estimating the amount and timing of tax recognized, there can be no assurance that additional expenses will not be required in future periods. No valuation allowance has been recorded on our deferred tax assets due to our history of prior earnings along with our expectations of future income. ASC 740 prescribes a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. We recognize, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the financial statements. Assessment of uncertain tax positions under ASC 740 requires careful consideration of the technical merits of a position based on our analysis of tax regulations and interpretations.

There were no unrecognized tax benefits as of June 30, 2013 and December 31, 2012. We record interest and penalties on potential income tax deficiencies as income tax expense. Our federal and state tax returns for the 2009 through 2012 tax years are subject to examination as of June 30, 2013. Our 2010 federal tax return is currently being audited by the Internal Revenue Service. No state income tax return examinations are currently in process.

 

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Table of Contents

6. SEGMENT INFORMATION

In accordance with FASB ASC 280, Segment Reporting (“ASC 280”) (Formerly SFAS No. 131, Disclosures About Segments of an Enterprise and Related Information) we discuss our business in three segments. There is one segment for each of WSFS Bank, Cash Connect (the ATM division of WSFS Bank), and Trust and Wealth Management.

The WSFS Bank segment provides financial products to commercial and retail customers through its 51 offices located in Delaware (42), Pennsylvania (7) and Virginia (1) and Nevada (1). Retail and Commercial Banking, Commercial Real Estate Lending and other banking business units are operating departments of WSFS. These departments share the same regulator, the same market, many of the same customers and provide similar products and services through the general infrastructure of the Bank. Because of these and other reasons, these departments are not considered discrete segments and are appropriately aggregated within the WSFS Bank segment in accordance with ASC 280.

Cash Connect provides turnkey ATM services through strategic partnerships with several of the largest networks, manufacturers and service providers in the ATM industry. The balance sheet category “Cash in non-owned ATMs” includes cash from which fee income is earned through bailment arrangements with customers of Cash Connect.

The Wealth Management division provides a broad array of fiduciary, investment management, credit and deposit products to clients through four businesses. WSFS Investment Group, Inc. provides insurance and brokerage products primarily to our retail banking clients. Cypress Capital Management, LLC is a registered investment advisor with over $604 million in assets under management. Cypress’ primary market segment is high net worth individuals, offering a ‘balanced’ investment style focused on preservation of capital and current income. Christiana Trust, with $16.5 billion in assets under administration, provides fiduciary and investment services to personal trust clients, and trustee, agency, custodial and commercial domicile services to corporate and institutional clients. WSFS Private Banking serves high net worth clients by delivering credit and deposit products and partnering with Cypress, Christiana and WSFS Investment Group to deliver investment management and fiduciary products and services.

 

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Table of Contents

An operating segment is a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the enterprise’s chief operating decision makers to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. We evaluate performance based on pretax ordinary income relative to resources used, and allocate resources based on these results. The accounting policies applicable to our segments are those that apply to our preparation of the accompanying Consolidated Financial Statements. Segment information for the three and six months ended June 30, 2013 and 2012 follows:

For the three months ended June 30, 2013

 

Statement of Operations    WSFS Bank      Cash Connect      Trust &  Wealth
Management
     Total  
     (In Thousands)  

External customer revenues:

           

Interest income

   $ 33,961      $ —        $ 1,921      $ 35,882  

Noninterest income

     9,333        6,025        4,181        19,539  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total external customer revenues

     43,294        6,025        6,102        55,421  
  

 

 

    

 

 

    

 

 

    

 

 

 

Inter-segment revenues:

           

Interest income

     914        —          1,368        2,282  

Noninterest income

     1,701        223        28        1,952  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total inter-segment revenues

     2,615        223        1,396        4,234  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

     45,909        6,248        7,498        59,655  
  

 

 

    

 

 

    

 

 

    

 

 

 

External customer expenses:

           

Interest expense

     3,693        —          133        3,826  

Noninterest expenses

     26,731        3,167        3,254        33,152  

Provision for loan loss

     1,535        —          145        1,680  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total external customer expenses

     31,959        3,167        3,532        38,658  
  

 

 

    

 

 

    

 

 

    

 

 

 

Inter-segment expenses

           

Interest expense

     1,368        405        509        2,282  

Noninterest expenses

     251        538        1,163        1,952  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total inter-segment expenses

     1,619        943        1,672        4,234  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses

     33,578        4,110        5,204        42,892  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before taxes

   $ 12,331      $ 2,138      $ 2,294      $ 16,763  

Provision for income taxes

              5,855  
           

 

 

 

Consolidated net income

            $ 10,908  
           

 

 

 

Capital expenditures

   $ 272      $ 277      $ —        $ 549  
  

 

 

    

 

 

    

 

 

    

 

 

 

As of June 30, 2013

           

Statement of Condition

           

Cash and cash equivalents

   $ 59,041      $ 475,745      $ 2,736      $ 537,522  

Other segment assets

     3,682,809        2,003        186,389        3,871,201  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total segment assets

   $ 3,741,850      $ 477,748      $ 189,125      $ 4,408,723  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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For the three months ended June 30, 2012

 

Statement of Operations    WSFS Bank      Cash Connect      Trust &  Wealth
Management
     Total  
     (In Thousands)  

External customer revenues:

           

Interest income

   $ 35,688      $ —         $ 2,075      $ 37,763  

Noninterest income

     20,969        4,473        3,550        28,992  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total external customer revenues

     56,657        4,473        5,625        66,755  
  

 

 

    

 

 

    

 

 

    

 

 

 

Inter-segment revenues:

           

Interest income

     1,048        —           1,479        2,527  

Noninterest income

     2,178        248        —           2,426  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total inter-segment revenues

     3,226        248        1,479        4,953  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

     59,883        4,721        7,104        71,708  
  

 

 

    

 

 

    

 

 

    

 

 

 

External customer expenses:

           

Interest expense

     5,478        —           207        5,685  

Noninterest expenses

     27,583        2,543        2,891        33,017  

Provision for loan loss

     15,494        —           889        16,383  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total external customer expenses

     48,555        2,543        3,987        55,085  
  

 

 

    

 

 

    

 

 

    

 

 

 

Inter-segment expenses

           

Interest expense

     1,479        336        712        2,527  

Noninterest expenses

     248        601        1,577        2,426  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total inter-segment expenses

     1,727        937        2,289        4,953  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses

     50,282        3,480        6,276        60,038  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income (loss) before taxes

   $ 9,601      $ 1,241      $ 828      $ 11,670  

Provision for income taxes

              4,340  
           

 

 

 

Consolidated net income

            $ 7,330  
           

 

 

 

Capital expenditures

   $ 2,208      $ —        $ 3      $ 2,211  
  

 

 

    

 

 

    

 

 

    

 

 

 

As of December 31, 2012

           

Statement of Condition

           

Cash and cash equivalents

   $ 68,419      $ 430,382      $ 2,086      $ 500,887  

Other segment assets

     3,683,073        1,605        189,583        3,874,261  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total segment assets

   $ 3,751,492      $ 431,987      $ 191,669      $ 4,375,148  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents

For the six months ended June 30, 2013

 

Statement of Operations    WSFS Bank      Cash Connect      Trust &  Wealth
Management
     Total  
     (In Thousands)  

External customer revenues:

           

Interest income

   $ 67,561      $ —        $ 3,912      $ 71,473  

Noninterest income

     18,560        11,052        8,001        37,613  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total external customer revenues

     86,121        11,052        11,913        109,086  
  

 

 

    

 

 

    

 

 

    

 

 

 

Inter-segment revenues:

           

Interest income

     1,817        —          2,799        4,616  

Noninterest income

     3,351        423        54        3,828  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total inter-segment revenues

     5,168        423        2,853        8,444  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

     91,289        11,475        14,766        117,530  
  

 

 

    

 

 

    

 

 

    

 

 

 

External customer expenses:

           

Interest expense

     7,533        —          304        7,837  

Noninterest expenses

     53,161        6,159        6,202        65,522  

Provision for loan loss

     3,781        —          130        3,911  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total external customer expenses

     64,475        6,159        6,636        77,270  
  

 

 

    

 

 

    

 

 

    

 

 

 

Inter-segment expenses

           

Interest expense

     2,799        776        1,041        4,616  

Noninterest expenses

     477        1,088        2,263        3,828  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total inter-segment expenses

     3,276        1,864        3,304        8,444  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses

     67,751        8,023        9,940        85,714  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income (loss) before taxes

   $ 23,538      $ 3,452      $ 4,826      $ 31,816  

Provision for income taxes

              11,168  
           

 

 

 

Consolidated net income

            $ 20,648  
           

 

 

 

Capital expenditures

   $ 1,045      $ 460      $ —        $ 1,505  
  

 

 

    

 

 

    

 

 

    

 

 

 

As of June 30, 2013

           

Statement of Condition

           

Cash and cash equivalents

   $ 59,041      $ 475,745      $ 2,736      $ 537,522  

Other segment assets

     3,682,809        2,003        186,389        3,871,201  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total segment assets

   $ 3,741,850      $ 477,748      $ 189,125      $ 4,408,723  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

24


Table of Contents

For the six months ended June 30, 2012

 

Statement of Operations    WSFS Bank      Cash Connect      Trust &  Wealth
Management
     Total  
     (In Thousands)  

External customer revenues:

           

Interest income

   $ 72,724      $ —        $ 4,262      $ 76,986  

Noninterest income

     30,498        8,546        6,706        45,750  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total external customer revenues

     103,222        8,546        10,968        122,736  
  

 

 

    

 

 

    

 

 

    

 

 

 

Inter-segment revenues:

           

Interest income

     2,156        —           2,986        5,142  

Noninterest income

     4,247        421        —          4,668  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total inter-segment revenues

     6,403        421        2,986        9,810  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

     109,625        8,967        13,954        132,546  
  

 

 

    

 

 

    

 

 

    

 

 

 

External customer expenses:

           

Interest expense

     11,953        —           425        12,378  

Noninterest expenses

     53,967        4,515        5,524        64,006  

Provision for loan loss

     23,790        —           838        24,628  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total external customer expenses

     89,710        4,515        6,787        101,012  
  

 

 

    

 

 

    

 

 

    

 

 

 

Inter-segment expenses

           

Interest expense

     2,986        670        1,486        5,142  

Noninterest expenses

     421        1,126        3,121        4,668  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total inter-segment expenses

     3,407        1,796        4,607        9,810  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses

     93,117        6,311        11,394        110,822  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income (loss) before taxes

   $ 16,508      $ 2,656      $ 2,560      $ 21,724  

Provision for income taxes

              7,950  
           

 

 

 

Consolidated net income

            $ 13,774  
           

 

 

 

Capital expenditures

   $ 4,114      $ 10      $ 20      $ 4,144  
  

 

 

    

 

 

    

 

 

    

 

 

 

As of December 31 ,2012

           

Statement of Condition

           

Cash and cash equivalents

   $ 68,419      $ 430,382      $ 2,086      $ 500,887  

Other segment assets

     3,683,073        1,605        189,583        3,874,261  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total segment assets

   $ 3,751,492      $ 431,987      $ 191,669      $ 4,375,148