WSFS: 3Q19 Results Beat Estimates but Lowering EPS Estimates on Declining Interest Rate Environment; Maintaining Target Price; Downgrading to Neutral Rating.
WSFS reported 3Q19 net income of $53.9 million, up $17.7 million or 48.8% compared to the $36.2 million posted in 2Q19. This translates to EPS $1.02 compared to the $0.68 recorded in the preceding quarter. Included in 3Q19 results are $18.9 million of corporate development and restructuring charges related to the Beneficial acquisition, and a $21.3 million unrealized gain on the valuation of the company’s remaining Visa, Inc. Class B stock. Included in 2Q19 results are $15.8 million of corporate development and restructuring charges related to the Beneficial acquisition, $0.6 million in unrealized gains related to the company’s investment in digital home equity lender Spring EQ, and a $0.4 million unrealized gain on the valuation of the company’s remaining Visa, Inc. Class B stock. These items amounted to an increase of roughly $0.04 per share in 3Q19 and a reduction of $(0.20) per share in 2Q19. Excluding these items “core” EPS was $0.98 in 3Q19 compared to $0.88 in 2Q19. The core results for 3Q19 exceeded our $0.95 “core” estimate and the $0.86 median Street estimate. The main drivers of the positive variance versus our estimate were higher-than-expected net interest income and a lower-than-projected loan loss provision. Highlights from the quarter include: