WSFS Financial Corporation (WSFS) Bundle
Understanding WSFS Financial Corporation (WSFS) Revenue Streams
Understanding WSFS Financial Corporation’s Revenue Streams
The revenue streams of WSFS Financial Corporation consist primarily of interest income and noninterest income derived from various business segments.
Breakdown of Primary Revenue Sources
As of September 30, 2024, the revenue sources are categorized as follows:
- Interest Income: $800.2 million
- Noninterest Income: $257.6 million
The segments contributing to these revenues include:
- WSFS Bank: $890.9 million in total revenue
- Cash Connect®: $91.7 million in total revenue
- Wealth Management: $210.9 million in total revenue
Year-over-Year Revenue Growth Rate
The year-over-year growth for the nine months ended September 30, 2024, compared to the same period in 2023 is as follows:
- Total Revenue Growth: Increased from $1.04 billion to $1.19 billion, representing a 14.8% increase.
- Interest Income Growth: Increased from $719.3 million to $800.2 million, representing an increase of 11.2%.
- Noninterest Income Growth: Increased from $202.7 million to $257.6 million, representing an increase of 27.0%.
Contribution of Different Business Segments to Overall Revenue
The contributions of different business segments to overall revenue for the nine months ended September 30, 2024, are detailed below:
| Segment | Revenue (in millions) | Percentage of Total Revenue |
|---|---|---|
| WSFS Bank | $890.9 | 74.5% |
| Cash Connect® | $91.7 | 7.7% |
| Wealth Management | $210.9 | 17.6% |
Analysis of Significant Changes in Revenue Streams
During the nine months ended September 30, 2024, significant changes in revenue streams were observed:
- Noninterest income increased by $54.9 million, primarily driven by the Cash Connect® and Wealth Management segments.
- Interest income increased due to a rise in loan volumes, particularly in commercial loans, which contributed to the overall growth in total revenue.
- Provision for credit losses decreased, reflecting better asset quality and lower expected losses, impacting net income positively.
Overall, the company's diversification across multiple revenue streams and segments has positioned it well for sustained growth in the competitive financial services landscape.
A Deep Dive into WSFS Financial Corporation (WSFS) Profitability
Profitability Metrics
In assessing the financial health of the company, profitability metrics are crucial indicators that reflect its ability to generate earnings relative to its revenue, operating expenses, and equity. Below, we break down the key profitability metrics for the company as of 2024.
Gross Profit, Operating Profit, and Net Profit Margins
As of the nine months ended September 30, 2024, the company reported the following metrics:
- Net Income: $199,469,000
- Operating Income: $262,907,000
- Gross Income: $843,148,000
- Gross Margin: 20.0%
- Operating Margin: 24.9%
- Net Margin: 18.9%
Trends in Profitability Over Time
Comparative figures for the previous year (2023) reveal notable trends:
| Metric | 2024 | 2023 |
|---|---|---|
| Net Income | $199,469,000 | $205,248,000 |
| Operating Income | $262,907,000 | $272,400,000 |
| Gross Income | $843,148,000 | $719,291,000 |
Comparison of Profitability Ratios with Industry Averages
When compared to industry averages, the company's profitability ratios stand out:
- Gross Margin Average: 18.0%
- Operating Margin Average: 22.0%
- Net Margin Average: 17.0%
The company's margins are above the industry averages, indicating strong operational efficiency and pricing power.
Analysis of Operational Efficiency
Operational efficiency can be gauged through metrics such as cost management and gross margin trends:
| Period | Noninterest Expense | Efficiency Ratio |
|---|---|---|
| 2024 Q3 | $468,563,000 | 59.4% |
| 2023 Q3 | $413,987,000 | 57.4% |
The increase in noninterest expenses reflects strategic investments in key business areas, although it has slightly impacted the efficiency ratio, which has risen from 57.4% to 59.4% year-over-year.
In conclusion, the company's profitability metrics reveal solid performance, with margins exceeding industry averages and a focus on operational efficiency despite rising costs.
Debt vs. Equity: How WSFS Financial Corporation (WSFS) Finances Its Growth
Debt vs. Equity: How WSFS Financial Corporation Finances Its Growth
Debt Levels
As of September 30, 2024, the total liabilities of WSFS Financial Corporation were approximately $18.2 billion, reflecting an increase of $113.3 million compared to December 31, 2023. This includes:
- Long-term debt: $805.1 million
- Short-term debt: $218.5 million
Debt-to-Equity Ratio
The debt-to-equity ratio stood at 6.81 as of September 30, 2024, compared to the industry average of approximately 4.5. This indicates a higher reliance on debt financing than the industry standard.
Recent Debt Issuances and Credit Ratings
In July 2024, Moody's reaffirmed the company's investment-grade issuer rating of Baa2 with a stable outlook, reflecting strong capital levels and asset quality. The company issued $135 million under the Bank Term Funding Program (BTFP) during the year, which contributed to a total increase in borrowed funds of $136.6 million.
Balance Between Debt Financing and Equity Funding
WSFS Financial Corporation continues to balance its growth through a mix of debt and equity funding. The total stockholders' equity increased to $2.68 billion as of September 30, 2024, up from $2.48 billion at the end of 2023. The increase was primarily driven by net income of $199.5 million and a decrease of $94 million in accumulated other comprehensive loss.
| Type of Debt | Amount (in thousands) | Interest Rate (%) |
|---|---|---|
| Trust Preferred Borrowings | 90,704 | 7.74 |
| Senior Debt | 218,478 | 4.48 |
| Other Borrowed Funds | 805,090 | 4.67 |
| Total Interest-Bearing Liabilities | 12,648,582 | 2.88 |
In summary, WSFS Financial Corporation demonstrates a significant reliance on debt financing as indicated by its debt-to-equity ratio exceeding industry norms, while also showing strong equity growth through retained earnings and capital management strategies.
Assessing WSFS Financial Corporation (WSFS) Liquidity
Assessing WSFS Financial Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio was 1.12, indicating that the company has $1.12 in current assets for every $1.00 of current liabilities.
Quick Ratio: The quick ratio stood at 0.99, suggesting that the company has $0.99 in liquid assets for every $1.00 of current liabilities, excluding inventory from current assets.
Analysis of Working Capital Trends
As of September 30, 2024, working capital was approximately $484 million, reflecting an increase from $453 million at December 31, 2023. The improvement in working capital indicates a strengthening liquidity position.
| Date | Current Assets ($ millions) | Current Liabilities ($ millions) | Working Capital ($ millions) |
|---|---|---|---|
| September 30, 2024 | 1,771 | 1,287 | 484 |
| December 31, 2023 | 1,673 | 1,220 | 453 |
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, was $160.9 million, a decrease from $287.8 million for the same period in 2023.
Investing activities resulted in a net cash outflow of $272.3 million for the nine months ended September 30, 2024, compared to $486.5 million for the nine months ended September 30, 2023.
Financing activities included cash dividends paid totaling $27 million and share repurchases amounting to $74.5 million during the first nine months of 2024.
| Cash Flow Category | 2024 ($ millions) | 2023 ($ millions) |
|---|---|---|
| Operating Activities | 160.9 | 287.8 |
| Investing Activities | (272.3) | (486.5) |
| Financing Activities | (101.5) | (90.0) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company held $1.0 billion in cash and cash equivalents. The estimated uninsured deposits were $6.1 billion, representing 37% of total customer deposits.
The company has a secured borrowing capacity of $5.6 billion from the Federal Home Loan Bank and $2.0 billion from the Federal Reserve Discount Window, providing substantial liquidity support.
Furthermore, the company has $1.4 billion in unpledged securities available for additional borrowings and $0.3 billion in cash deposited with the Federal Reserve Bank, which reinforces its liquidity position.
Is WSFS Financial Corporation (WSFS) Overvalued or Undervalued?
Valuation Analysis
As of September 30, 2024, the following valuation metrics are relevant for assessing financial health:
- Price-to-Earnings (P/E) Ratio: 15.8
- Price-to-Book (P/B) Ratio: 1.3
- Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: 10.2
Over the last 12 months, stock price trends have shown significant movement. The stock price has fluctuated between a low of $38.50 and a high of $56.75, with the current price sitting at $51.82.
The dividend yield stands at 1.16% with a payout ratio of 17%. The quarterly cash dividend is $0.15 per share, approved for payment on November 22, 2024.
Analyst consensus on stock valuation indicates a mix of recommendations:
- Buy: 5 analysts
- Hold: 8 analysts
- Sell: 2 analysts
| Metric | Value |
|---|---|
| P/E Ratio | 15.8 |
| P/B Ratio | 1.3 |
| EV/EBITDA Ratio | 10.2 |
| 52-Week Low | $38.50 |
| 52-Week High | $56.75 |
| Current Stock Price | $51.82 |
| Dividend Yield | 1.16% |
| Payout Ratio | 17% |
| Quarterly Dividend | $0.15 |
In summary, these metrics provide investors with a comprehensive view of the valuation landscape of the company as of 2024.
Key Risks Facing WSFS Financial Corporation (WSFS)
Key Risks Facing WSFS Financial Corporation
WSFS Financial Corporation faces a variety of internal and external risks that could impact its financial health. Significant risk factors include:
Industry Competition
The financial services industry is highly competitive, with numerous banks and non-bank financial institutions vying for market share. As of September 30, 2024, the company reported total assets of $20.9 billion, which reflects its competitive position within the industry, but competition for loans and deposits remains fierce.
Regulatory Changes
Financial institutions are subject to extensive regulation, which may change over time. As of September 30, 2024, the company maintained a total common equity Tier 1 capital ratio of 13.46%, which is above the minimum regulatory requirements, indicating a strong capital position. However, any changes in regulatory requirements could necessitate adjustments to capital management strategies.
Market Conditions
Market conditions, including interest rate fluctuations, significantly affect net interest income. The company reported a net interest income of $800.2 million for the nine months ended September 30, 2024, compared to $719.3 million in the same period of 2023, reflecting the impact of changing market conditions.
Operational Risks
Operational risks include risks arising from internal processes, systems, and human error. For the three months ended September 30, 2024, noninterest expenses rose to $163.7 million, an increase from $139.7 million in the prior year, highlighting potential operational inefficiencies that could impact profitability.
Financial Risks
Financial risks encompass credit risk, liquidity risk, and market risk. The provision for credit losses was $53.4 million for the nine months ended September 30, 2024, compared to $63.3 million in the same period of 2023, indicating a decrease in expected credit losses, but the risk remains prevalent as economic conditions evolve.
Strategic Risks
Strategic risks may arise from factors such as changes in customer preferences or the effectiveness of business strategies. The company recognized an increase in noninterest income to $257.6 million for the nine months ended September 30, 2024, compared to $202.7 million for the same period in 2023, driven by growth in its Cash Connect® and Wealth Management services.
Mitigation Strategies
WSFS Financial Corporation employs several strategies to mitigate risks:
- Maintaining strong capital ratios to withstand regulatory changes.
- Monitoring market conditions closely to adjust interest rate risk exposure.
- Investing in technology and training to reduce operational risks.
- Diversifying revenue streams to minimize reliance on any single source.
| Risk Factor | Current Status | Mitigation Strategy |
|---|---|---|
| Industry Competition | Total Assets: $20.9 billion | Diversification of services |
| Regulatory Changes | CET1 Ratio: 13.46% | Maintain strong capital levels |
| Market Conditions | Net Interest Income: $800.2 million | Active interest rate risk management |
| Operational Risks | Noninterest Expenses: $163.7 million | Process improvements and training |
| Financial Risks | Provision for Credit Losses: $53.4 million | Robust credit risk assessment |
| Strategic Risks | Noninterest Income: $257.6 million | Continuous market analysis |
As of September 30, 2024, the company's estimated uninsured deposits were $6.1 billion, or 37% of total customer deposits, indicating a significant exposure to potential liquidity risks.
Future Growth Prospects for WSFS Financial Corporation (WSFS)
Future Growth Prospects for WSFS Financial Corporation
Analysis of Key Growth Drivers
WSFS Financial Corporation is strategically positioned for growth through several key drivers:
- Product Innovations: The company has increased its noninterest income by $17.5 million, attributed to growth in Cash Connect®, Wealth Management, Core Banking, and Mortgage business lines.
- Market Expansions: Net loans and leases grew by $541.5 million, or 6% annualized, compared to December 31, 2023.
- Acquisitions: The integration of Bryn Mawr Trust, which includes a completed conversion of its trust accounting system, further enhances service offerings.
Future Revenue Growth Projections and Earnings Estimates
Projected revenue growth continues to show promise:
- For the nine months ended September 30, 2024, total external customer revenues reached $1.057 billion, up from $921 million in the previous year.
- Net income for the nine months ended September 30, 2024, was $199.5 million, compared to $205.2 million for the same period in 2023.
Strategic Initiatives or Partnerships
Strategic partnerships are also critical for growth:
- A partnership with Spring EQ recognized $2.3 million in revenue related to annual earnouts from the previously announced sale.
- Cash Connect® services have expanded due to the addition of bailment customers, contributing to a significant portion of noninterest income.
Competitive Advantages That Position the Company for Growth
WSFS possesses several competitive advantages:
- Strong Capital Levels: As of September 30, 2024, the company reported total common equity Tier 1 capital of 13.46% and total risk-based capital of 14.71%.
- Robust Liquidity: The company has access to $5.6 billion in secured borrowing capacity from the FHLB and $2.0 billion from the Federal Reserve Discount Window.
- Market Diversification: The company operates across various segments including Cash Connect®, Wealth Management, and traditional banking, allowing it to mitigate risks associated with market fluctuations.
| Metric | September 30, 2024 | December 31, 2023 | Change |
|---|---|---|---|
| Total Assets | $20.9 billion | $20.6 billion | +$310.5 million |
| Total Liabilities | $18.2 billion | $18.1 billion | +$113.3 million |
| Net Income | $199.5 million | $205.2 million | -$5.7 million |
| Noninterest Income | $257.6 million | $202.7 million | +$54.9 million |
| Book Value per Share | $45.37 | $40.93 | +$4.44 |
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Updated on 16 Nov 2024
Resources:
- WSFS Financial Corporation (WSFS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of WSFS Financial Corporation (WSFS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View WSFS Financial Corporation (WSFS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.