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WSFS Reports 4th Quarter And Full Year 2012 Net Income; Full Year EPS Increased 43% Above 2011 Levels; ROA Improved 30% Over 2011

Stocks in this article: WSFS

The net interest income increase in the fourth quarter relative to the third quarter reflects lending growth and was achieved despite slight net interest margin compression. The two basis point net interest margin decline in the fourth quarter was the net result of approximately a six basis point decrease from the full quarter impact of the issuance of $55 million of 6.25% Senior Notes (the "Senior Notes") during the third quarter of 2012, offset by other improvements. 

The decrease in net interest income and margin over the same period of 2011 was largely due to the impact of the Senior Notes as well as significantly reduced rates on the mortgage-backed securities ("MBS") portfolio, resulting from substantial sales and paydowns with subsequent reinvestment at much lower market rates.

Customer funding growth reflects continued success of business lines

Customer funding increased to $3.1 billion at December 31, 2012, an increase of $204.1 million, or 7%, and included core deposit growth of $295.2 million, or 13%, over levels reported at September 30, 2012. The growth included $141.2 million in short-term, temporary trust-related money market deposits at year-end. Excluding these deposits, customer funding increased $62.9 million, or 2% (9% annualized), and core deposits increased a strong $154.0 million, or 7% (28% annualized). These increases reflected continued growth in market share during the quarter and more than offset the purposeful decrease of $88.4 million in high-cost, customer time deposits. 

Excluding temporary trust deposits (including $55.0 million at December 31, 2011), core deposits also grew a significant $318.0 million, or 15%, and customer funding increased $159.9 million, or 6%, over December 31, 2011 balances despite a $147.4 million intentional run-off in high-cost customer time deposits.

The following table summarizes current customer funding balances and composition compared to prior periods.

  At At At
(Dollars in thousands) December 31, 2012 September 30, 2012 December 31, 2011
Noninterest demand  $631,026   20%   $596,235   21%   $525,444   18% 
Interest-bearing demand  538,195   17   413,042   14   389,495   14 
Savings  389,977   12   388,878   13   368,390   13 
Money market  933,901   30   799,786   27   805,570   28 
Total core deposits  2,493,099   79   2,197,941   75   2,088,899   73 
Customer time  611,223   20   699,604   24   758,595   26 
Total customer deposits  3,104,322   99   2,897,545   99   2,847,494   99 
Customer sweep accounts  27,218   1   29,942   1   37,927   1 
Total customer funding  $3,131,540    100%   $2,927,487    100%   $2,885,421    100% 

Loan portfolio growth reflects market share gains

Total net loans were $2.7 billion at December 31, 2012, an increase of $59.6 million, or 2% (9% annualized), compared to the prior quarter-end. This was due to a $65.4 million, or 3% (12% annualized), increase in total commercial loans and $6.3 million, or 2% (9% annualized) growth in consumer loans. These increases were partially offset by the intentional decrease of $13.7 million in residential mortgage loans as the Company continued its strategy of selling newly-originated mortgages into the secondary market. 

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