SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2019

16. SEGMENT INFORMATION

As defined in ASC 280, Segment Reporting (ASC 280), an operating segment is a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the enterprise’s chief operating decision makers to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. We evaluate performance based on pretax net income relative to resources used, and allocate resources based on these results. The accounting policies applicable to our segments are those that apply to our preparation of the accompanying unaudited Consolidated Financial Statements. Based on these criteria, we have identified three segments: WSFS Bank, Cash Connect^®, and Wealth Management.

The WSFS Bank segment provides financial products to commercial and retail customers. Retail and Commercial Banking, Commercial Real Estate Lending and other banking business units are operating departments of WSFS Bank. These departments share the same regulator, the same market, many of the same customers and provide similar products and services through the general infrastructure of the Bank. Accordingly, these departments are not considered discrete segments and are appropriately aggregated within the WSFS Bank segment in accordance with ASC 280.

Our Cash Connect^® segment provides ATM vault cash, smart safe and other cash logistics services through strategic partnerships with several of the largest networks, manufacturers and service providers in the ATM industry. Cash Connect^® services non-bank and WSFS-branded ATMs and retail safes nationwide. The balance sheet category “Cash in non-owned ATMs” includes cash from which fee income is earned through bailment arrangements with customers of Cash Connect^®.

The Wealth Management segment provides a broad array of planning and advisory services, investment management, trust services, and credit and deposit products to individual, corporate, and institutional clients through multiple integrated businesses. WSFS Wealth Investments provides financial advisory services along with insurance and brokerage products. Cypress, a registered investment adviser, is a fee-only wealth management firm managing a “balanced” investment style portfolio focused on preservation of capital and generating current income. West Capital, a registered investment adviser, is a fee-only wealth management firm operating under a multi-family office philosophy to provide customized solutions to institutions and high-net-worth individuals. The institutional trust division of WSFS (doing business as WSFS Institutional Services) provides trustee, agency, bankruptcy administration, custodial and commercial domicile services to institutional and corporate clients. The personal trust division of WSFS (doing business as Christiana Trust) provides personal trust and fiduciary services to families and individuals across the U.S. Powdermill is a multi-family office specializing in providing independent solutions to high-net-worth individuals, families and corporate executives through a coordinated, centralized approach. WSFS Wealth Client Management serves high-net-worth clients by delivering credit and deposit products and partnering with other Wealth Management units to provide comprehensive solutions to clients.

The following tables show segment results for the three and nine months ended September 30, 2019 and 2018:


	Three Months Ended September 30, 2019														Three Months Ended September 30, 2018
(Dollars in thousands)	WSFS Bank		Cash Connect^®		Wealth Management		Total		WSFS Bank		Cash Connect^®		Wealth Management		Total
Statements of Income
External customer revenues:
Interest income	$	138,585	$	—	$	2,677	$	141,262	$	72,836	$	—	$	2,579	$	75,415
Noninterest income	38,563		13,067		10,716		62,346		18,524		13,026		10,351		41,901
Total external customer revenues	177,148		13,067		13,393		203,608		91,360		13,026		12,930		117,316
Inter-segment revenues:
Interest income	2,855		—		5,592		8,447		4,002		—		3,020		7,022
Noninterest income	2,483		257		320		3,060		2,122		200		36		2,358
Total inter-segment revenues	5,338		257		5,912		11,507		6,124		200		3,056		9,380
Total revenue	182,486		13,324		19,305		215,115		97,484		13,226		15,986		126,696
External customer expenses:
Interest expense	19,056		—		1,373		20,429		11,461		—		857		12,318
Noninterest expenses	93,146		9,132		7,283		109,561		44,922		8,133		(601)		52,454
Provision for loan losses	3,954		—		167		4,121		3,776		—		(60)		3,716
Total external customer expenses	116,156		9,132		8,823		134,111		60,159		8,133		196		68,488
Inter-segment expenses:
Interest expense	5,592		1,730		1,125		8,447		3,020		2,885		1,117		7,022
Noninterest expenses	577		680		1,803		3,060		236		627		1,495		2,358
Total inter-segment expenses	6,169		2,410		2,928		11,507		3,256		3,512		2,612		9,380
Total expenses	122,325		11,542		11,751		145,618		63,415		11,645		2,808		77,868
Income before taxes	$	60,161	$	1,782	$	7,554	$	69,497	$	34,069	$	1,581	$	13,178	$	48,828
Income tax provision							15,902								9,893
Consolidated net income							53,595								38,935
Net loss attributable to noncontrolling interest							(287)								—
Net income attributable to WSFS							53,882								38,935


	Nine Months Ended September 30, 2019														Nine Months Ended September 30, 2018
(Dollars in thousands)	WSFS Bank		Cash Connect^®		Wealth Management		Total		WSFS Bank		Cash Connect^®		Wealth Management		Total
Statements of Income
External customer revenues:
Interest income	$	375,762	$	—	$	7,980	$	383,742	$	207,725	$	—	$	7,454	$	215,179
Noninterest income	74,697		38,824		32,818		146,339		57,175		36,707		30,473		124,355
Total external customer revenues	450,459		38,824		40,798		530,081		264,900		36,707		37,927		339,534
Inter-segment revenues:
Interest income	9,992		—		13,649		23,641		10,535		—		8,053		18,588
Noninterest income	6,522		626		717		7,865		6,449		581		107		7,137
Total inter-segment revenues	16,514		626		14,366		31,506		16,984		581		8,160		25,725
Total revenue	466,973		39,450		55,164		561,587		281,884		37,288		46,087		365,259
External customer expenses:
Interest expense	52,474		—		3,889		56,363		31,563		—		1,816		33,379
Noninterest expenses	267,138		26,055		21,808		315,001		126,862		23,357		13,478		163,697
Provision for loan losses	23,479		—		491		23,970		9,721		—		143		9,864
Total external customer expenses	343,091		26,055		26,188		395,334		168,146		23,357		15,437		206,940
Inter-segment expenses:
Interest expense	13,649		6,491		3,501		23,641		8,053		7,460		3,075		18,588
Noninterest expenses	1,343		1,923		4,599		7,865		688		1,936		4,513		7,137
Total inter-segment expenses	14,992		8,414		8,100		31,506		8,741		9,396		7,588		25,725
Total expenses	358,083		34,469		34,288		426,840		176,887		32,753		23,025		232,665
Income before taxes	$	108,890	$	4,981	$	20,876	$	134,747	$	104,997	$	4,535	$	23,062	$	132,594
Income tax provision							32,253								27,569
Consolidated net income							102,494								105,025
Net loss attributable to noncontrolling interest							(611)								—
Net income attributable to WSFS							103,105								105,025

The following table shows significant components of segment net assets as of September 30, 2019 and December 31, 2018:


	September 30, 2019														December 31, 2018
(Dollars in thousands)	WSFS Bank		Cash Connect^®		Wealth Management		Total		WSFS Bank		Cash Connect^®		Wealth Management		Total
Statements of Financial Condition
Cash and cash equivalents	$	255,440	$	313,964	$	10,895	$	580,299	$	115,147	$	491,863	$	13,747	$	620,757
Goodwill	452,759		—		20,199		472,958		145,808		—		20,199		166,007
Other segment assets	10,985,960		6,411		227,045		11,219,416		6,225,820		7,743		228,543		6,462,106
Total segment assets	$	11,694,159	$	320,375	$	258,139	$	12,272,673	$	6,486,775	$	499,606	$	262,489	$	7,248,870
Capital expenditures	$	9,160	$	1,411	$	130	$	10,701	$	4,779	$	375	$	344	$	5,498