Stockholders' Equity and Regulatory Capital

12 Months Ended

Dec. 31, 2019

STOCKHOLDERS’ EQUITY AND REGULATORY CAPITAL

14. STOCKHOLDERS' EQUITY AND REGULATORY CAPITAL

Savings associations such as the Bank are subject to regulatory capital requirements administered by various banking regulators. Failure to meet minimum capital requirements could result in certain actions by regulators that could have a material effect on the Company’s Consolidated Financial Statements. In July 2013, the Federal Reserve Board approved final rules (the “U.S. Basel III Capital Rules”) establishing a new comprehensive capital framework for U.S. banking organizations. The U.S. Basel III Capital Rules substantially revised the risk-based capital requirements applicable to bank holding companies and depository institutions, and included a minimum common equity Tier 1 capital ratio of 4.50% of risk-weighted assets, a minimum Tier 1 capital ratio of 6.00% of risk-weighted assets, and a current minimum total capital ratio of 8.00% of risk-weighted assets and a minimum Tier 1 leverage capital ratio of 4.00% of average assets.

As of December 31, 2019 and 2018, the Bank was in compliance with regulatory capital requirements and exceeded the amounts required to be considered “well capitalized” as defined in the regulations.

The following table presents the capital position of the Bank and the Company as of December 31, 2019 and 2018:


	Consolidated Bank Capital						For Capital Adequacy Purposes						To Be Well-Capitalized Under Prompt Corrective Action Provisions
(Dollars in thousands)	Amount		Percent		Amount		Percent		Amount		Percent
December 31, 2019
Total Capital (to risk-weighted assets)
Wilmington Savings Fund Society, FSB	$	1,414,791	14.01	%	$	807,877	8.00	%	$	1,009,846	10.00	%
WSFS Financial Corporation	1,394,666		13.78		809,730		8.00		1,012,162		10.00
Tier 1 Capital (to risk-weighted assets)
Wilmington Savings Fund Society, FSB	1,365,186		13.52		605,908		6.00		807,877		8.00
WSFS Financial Corporation	1,345,061		13.29		607,297		6.00		809,730		8.00
Common Equity Tier 1 Capital (to risk-weighted assets)
Wilmington Savings Fund Society, FSB	1,365,186		13.52		454,431		4.50		656,400		6.50
WSFS Financial Corporation	1,280,061		12.65		455,473		4.50		657,906		6.50
Tier 1 Leverage Capital
Wilmington Savings Fund Society, FSB	1,365,186		11.72		466,003		4.00		582,504		5.00
WSFS Financial Corporation	1,345,061		11.54		466,088		4.00		582,610		5.00

December 31, 2018
Total Capital (to risk-weighted assets)
Wilmington Savings Fund Society, FSB	$	788,512	13.37	%	$	471,659	8.00	%	$	589,574	10.00	%
WSFS Financial Corporation	761,027		12.71		478,980		8.00		598,724		10.00
Tier 1 Capital (to risk-weighted assets)
Wilmington Savings Fund Society, FSB	748,219		12.69		353,744		6.00		471,659		8.00
WSFS Financial Corporation	720,734		12.04		359,235		6.00		478,980		8.00
Common Equity Tier 1 Capital (to risk-weighted assets)
Wilmington Savings Fund Society, FSB	748,219		12.69		265,308		4.50		383,223		6.50
WSFS Financial Corporation	655,734		10.95		269,426		4.50		389,171		6.50
Tier 1 Leverage Capital
Wilmington Savings Fund Society, FSB	748,219		10.82		276,665		4.00		345,831		5.00
WSFS Financial Corporation	720,734		10.37		278,111		4.00		347,636		5.00

The December 31, 2019 and 2018 capital ratios presented above were determined in accordance with the Basel III Capital Rules.

The Holding Company

As of December 31, 2019, our capital structure includes one class of stock, $0.01 par common stock outstanding with each share having equal voting rights.

In 2005, WSFS Capital Trust III, our unconsolidated subsidiary, issued Pooled Floating Rate Securities at a variable interest rate of 177 basis points over the three-month LIBOR rate with a scheduled maturity of June 1, 2035. The par value of these securities is $2.0 million and the aggregate principal is $67.0 million. The proceeds from the issue were invested in Junior Subordinated Debentures issued by the Company. These securities are treated as borrowings with interest included in interest expense on the Consolidated Statements of Income. At December 31, 2019, the coupon rate of the WSFS Capital Trust III securities was 3.68%. The effective rate will vary due to fluctuations in interest rates.

When infused into the Bank, the Trust Preferred Securities issued in 2005 qualify as Tier 1 capital. The Bank is prohibited from paying any dividend or making any other capital distribution if, after making the distribution, the Bank would be undercapitalized within the meaning of the Prompt Corrective Action regulations.

At December 31, 2019, $71.4 million in cash remains at the holding company to support the parent company’s needs.

Pursuant to federal laws and regulations, our ability to engage in transactions with affiliated corporations, including the loan of funds to, or guarantee of the indebtedness of, an affiliate, is limited.

During the year ended December 31, 2019, the Company repurchased 2,132,390 common shares at an average price of $42.83 per share as part of our share buy-back program approved by the Board of Directors. The program is consistent with our intent to return a minimum of 25% of annual net income to stockholders through dividends and share repurchases while maintaining capital ratios in excess of “well-capitalized” regulatory benchmarks.