WSFS Financial Corporation Reports Sale of Visa Class B Shares for $22 Million Gain

Strategic Insights -

WSFS Financial Corporation, a Delaware-based bank, has disclosed the sale of 360,000 Visa Class B shares through an equity forward-starting swap structured sale. The transaction, executed on June 16, 2020, will result in a net pre-tax gain of approximately $22 million, which will be reported in the company's second-quarter 2020 results. This sale represents a key strategic move for WSFS, enabling the company to monetize both the current book value and incremental gains to date.

Key Takeaways:

  • WSFS Financial Corporation sold 360,000 Visa Class B shares on June 16, 2020, through an equity forward-starting swap structured sale.
  • The transaction will generate a net pre-tax gain of approximately $22 million, which will be reported in the company's second-quarter 2020 results.
  • The sale will help WSFS monetize both the current book value and incremental gains to date on the Visa Class B shares.
  • WSFS acquired approximately 50,000 shares from the Visa IPO in March 2008 and 85,000 additional shares through separate transactions and the Beneficial Bank acquisition.
  • Total returns-to-date are approximately $78 million, derived from mark-to-market gains, sales, and dividends.
  • WSFS is updating its 2Q 2020 Outlook, with net interest margin expected to be near the high end of the range previously disclosed, and core pre-provision net revenue (PPNR) expected to exceed the 2Q 2020 Outlook due to the phased reopening of the economy.
  • The company's use of non-GAAP financial measures, such as core PPNR, is intended to provide a clearer understanding of ongoing operations and obscure trends in the company's underlying performance.

Statistics:

  • The sale of 360,000 Visa Class B shares resulted in a net pre-tax gain of approximately $22 million.
  • WSFS acquired a total of approximately 85,000 additional shares through separate transactions and the Beneficial Bank acquisition.
  • Total returns-to-date on the Visa Class B shares are approximately $78 million, derived from mark-to-market gains, sales, and dividends.
  • The company expects net interest margin to be near the high end of the range previously disclosed in its 2Q 2020 Outlook.
  • WSFS is updating its core PPNR expectations, which are expected to exceed the 2Q 2020 Outlook due to the phased reopening of the economy.

Sources:

  • FORM 8-K (Current Report) filed with Securities and Exchange Commission on June 18, 2020
  • FORM 8-K filed with Securities and Exchange Commission on April 27, 2020 (Exhibit 99.2)