WSFS Financial Corporation (WSFS) Q1 2012 Earnings Call April 27, 2012, 1:00 p.m. ET Executives Stephen A. Fowle – EVP and CFO Mark A. Turner – President and CEO Rodger Levenson – EVP and Director of Commercial Banking Analysts David Peppard – Janney Capital Markets Michael Sarcone – Sandler O'Neill Presentation Operator I will now turn the call over to your host, Mr. Steve Fowle, Chief Financial Officer. You may begin. Steve Fowle
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Mark TurnerThanks, Steve, and thanks again everyone for your time and attention. We were pleased to report earnings of $.74 per share in the quarter. Adjusting for items like securities gains and small non-routine costs, our more normalized or core earnings were $.61 per share. Calculating quarter earnings similarly in prior periods, this was a 53% improvement over the same quarter last year, and a 69% improvement annualized over the link quarter. Generally speaking, the bottom line improvement has been driven by both growth in revenues and/or flat to decreased non-provision expenses, both expected outcomes of the shift in our strategic phase. From the significant investment of the last few years during a period of heavy local market disruption, to the current strategic phase of optimizing our investments, we are growing at above peer rates, and that growth is coming from maturing recent franchise investments, with fewer new investments coming online to impact expenses. As a result, operating leverage and efficiency are kicking in, leading to a nice improvement in bottom line results. In addition, statistical and anecdotal data indicates the local economy is in slow recovery, and we are seeing a similar trend line in the decline in total credit costs, which is also helping performance. However, we are still vigilant. The economy and credit quality are still not where they should be, so we expect a bumpy road and can still see occasional surprises. With that big picture background, let me summarize some of the quarter’s highlights and add some color on the business and the future, as best as we can tell at this time. Revenues were up 12% from this time last year, driven by both increased net income on volume and growth in fee income, which represents about one-third of total revenues. Even excluding securities gains in each period, revenues were up over 8%, reflecting fundamental growth in all of our businesses, including traditional banking, wealth management and Cash Connect’s ATM services. Revenues were relatively flat over the link quarter, reflecting some margin percentage pressure, as the net interest margin was down four basis points and some expected first quarter seasonality in our fee-based businesses, especially Cash Connect and trust services. We expect very modest margin pressure to continue, and some of it we are doing to ourselves.
While over the last year, the loan-to-deposit spread has been stable to improving, to manage risk we have been selling higher-yielding securities and therefore quicker pre-paying securities, before they pay off at par. Hence, the outside securities gains we have taken over the past several quarters, which were not core earnings per se, are still cash earnings and capital in the bank.Deposits were up 6%, annualized over the fourth quarter, and up 13% when factoring out a temporary trust deposit we had over year-end. Moreover, core deposits grew 9% link quarter, and grew 20% when factoring out the same temporary account. Our goals for the year are still mid- to high single digit deposit growth, since we believe as the economy improves some money will move out of savings to spending and risk assets. Read the rest of this transcript for free on seekingalpha.com