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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):October 20, 1998
WSFS FINANCIAL CORPORATION
- --------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 0-16668 22-2866913
- ---------------------------- ----------- ----------------
(State or other jurisdiction (Commission (I.R.S. employer
of incorporation) file number) identification no.)
838 MARKET STREET, WILMINGTON, DELAWARE 19899
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code:(302) 792-6000
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Not Applicable
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(Former name or former address, if changed since last report)
Exhibit Index on Page 2
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ITEM 5. OTHER EVENTS
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On October 20, 1998, the Registrant announced its earnings
for the quarter ended September 30, 1998. For additional
information, see the Registrant's earnings release which is
filed herewith as Exhibit 99.1
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
- --------------------------------------------------------------
(a) Financial Statements of Businesses Acquired. None
-------------------------------------------
(b) Pro Forma Financial Information. None
-------------------------------
(c) Exhibits. The following exhibits are filed as part
-------- of this report on Form 8-K:
EXHIBIT NO. DESCRIPTION
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99.1 Earnings Release, dated
October 20, 1998
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SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly author-
ized.
WSFS FINANCIAL CORPORATION
Date: November 5, 1998 BY: /s/ Marvin N. Schoenhals
-----------------------------
Marvin N. Schoenhals
Chairman, President
and Chief Executive Officer
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For Release:October 20, 1998 Contact: Mark A. Turner
(302) 571-7160
WSFS FINANCIAL CORPORATION ANNOUNCES
EARNINGS OF $.37 PER SHARE FOR THIRD QUARTER AND
STATUS OF SHARE REPURCHASE PROGRAM
WSFS Financial Corporation (NASDAQ/NMS: WSFS), the parent
company of Wilmington Savings Fund Society, FSB (WSFS) reported
net income of $4.6 million or $0.37 per share (diluted), for the
third quarter of 1998. These results represent an 8% increase
in net income and per share earnings over the $4.3 million and
$0.34 per share recorded in the third quarter of 1997. Net
income for the nine months ending September 30, 1998 was $13.5
million or $1.07 per share (diluted) compared to $12.5 million
or $0.98 per share for the same period in 1997. Net income
increased 8% and per share earnings increased 9% between
comparable nine month periods.
Total net revenue (net interest income plus other income)
for the quarter of $15.5 million grew $351,000, or 2.3%, between
comparable three month periods in 1998 and 1997. This increase
principally reflects volume growth in the operating lease
portfolio and automated teller machine (ATM) activity, offset in
part by a reduction in net interest income.
The $39.3 million growth in the average operating lease
portfolio balance between the third quarter of 1997 and 1998 has
increased other (non-interest) income but, as expected, has also
depressed net interest income, as the income from operating
leases is classified in noninterest income while the related
funding costs flow through interest expense. As a result of
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this required presentation, and also as a result of the mix of
earning assets favoring lower yielding securities; the current
interest rate environment (which reflects historically low
levels of interest rates and a relatively "flat" yield curve);
and the previously-reported attrition of large commercial loans
in the first six months of 1998, the net interest margin for the
three and nine months ended September 30, 1998 declined to 2.77%
and 2.93%, respectively, compared to 3.15% and 3.16% for the
same three and nine month periods in 1997. Primarily as a
result of the current interest rate environment's effect on
earning asset volumes, yields and the net interest spread, the
Company expects continuing pressure on net interest income
growth in coming quarters. Although the Company continues to
actively manage its exposure to changes in interest rates, the
Company does not consider it prudent at this point in the credit
cycle to compromise its underwriting standards or pricing
discipline in an effort to gather volumes sufficient to
completely mitigate the effect on the margin of this current
interest rate environment.
Net loans and operating leases were $924 million at
September 30, 1998, as compared to $933 million as of September
30, 1997. As previously reported, loan activity for the first
six months of 1998 included the prepayment of several large
commercial credits of the Bank, totaling $31 million. This
attrition was consistent with the Bank's underwriting and
pricing discipline and had the desired effects of reducing
commercial real estate loan concentrations and improving the
overall risk profile of the Company (more later). On an
annualized basis, net loans and leases grew 6% from June 30,
1998 to September 30, 1998.
Total nonperforming assets (NPAs) were $11.3 million at
September 30, 1998, an improvement of $1.4 million, or 12%, from
June 30, 1998 and $2.1 million, or 16%, from September 30, 1997.
Restructured loans also improved 900,000 to $3.8 million at
September 30, 1998. The
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ratio of NPAs to total assets improved to .71% at September 30,
1998 compared to .82% at June 30, 1998 and .90% at September 30,
1997. The allowance for loan, lease and ORE losses also
improved to 217% of total NPAs from 193% at June 30, 1998 and
183% at September 30, 1997. The allowance for nonaccruing loan
and lease losses improved to 297% of nonaccruing loans and
leases from 266% at June 30, 1998 and 243% at September 30,
1997. The allowance for loan/lease losses was 2.63% of total
loans and leases at September 30, 1998.
The increased fee income from ATMs reflects the growth in
the Bank's ATM activity. At September 30, 1998 the Bank owned
and operated 111 ATMs, compared to 65 at September 30, 1997. In
addition to the owned and operated ATMs, the Bank also provides
services to other ATM owners from which fees are earned.
Including these other ATMs, the Bank derived fee income from a
total of 373 ATMs at September 30, 1998, all of which are
surcharge-free to WSFS cardholders.
Total noninterest expenses increased $347,000, or 4%,
between the third quarter of 1998 and 1997. This increase in
expenses reflects the Company's continued commitment to invest
in its franchise growth, offset in part by lower stock
appreciation rights' expense. In addition to the previously
mentioned expansion of its ATM activity, in the quarter, WSFS
opened its third new branch this year. That branch is located
in the Trabant Center at the University of Delaware and is the
physical cornerstone in the Company's on-campus banking
partnership with the University. The Bank plans to open at
least six additional branches in Genuardi's supermarkets in
Pennsylvania and one in a Wal-Mart in Northern Delaware before
the end of 1999. Furthermore, the Company has completed
approximately one-half of its 24 month technology upgrade of the
Bank. The Company has already put in service a new wide area
computer network, voice communication system and business
on-line banking, and expects to deliver platform/customer call
center automation and offer internet banking by the first
quarter of 1999.
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As a result of these collective commitments to the long-term
growth of the franchise, core operating expenses are expected to
increase moderately in future periods.
"These are exciting times at WSFS, as we move forward with
new initiatives and partnerships with the goal of serving our
customers better and enhancing the Bank's long-term
performance," said Marvin N. Schoenhals, Chairman, President and
CEO of WSFS Financial Corporation.
On October 5, 1998, the U.S. Supreme Court denied an
appeal by a group of plaintiffs seeking a class action suit.
The plaintiffs alleged violations of the Federal Truth in
Lending Act, among other things, in connection with the sale of
reverse mortgages between 1988 and 1994 by Providential Home
Income Plan, Inc., a company purchased by WSFS in November 1994.
These plaintiffs may still make claims against the Company
individually, but only through separate cases in binding
arbitration and not as a single class-action case in federal
court.
Finally, since the end of the second quarter, the Company
has purchased 680,000, or 5.4% of its shares for treasury, under
its existing 10% share repurchase plan authorized by the Board
of Directors in April 1997. Under this plan, the Company still
has the authority to repurchase an additional 450,000 shares, or
approximately 4% of the current shares outstanding.
WSFS Financial Corporation is a $1.6 billion financial
services company. Its principal subsidiary, WSFS, operates 19
retail banking offices in Northern and Central Delaware as well
as Southeastern Pennsylvania. Other operating subsidiaries
include WSFS Credit Corporation; Community Credit Corporation;
and 838 Investment Group, Inc. For more information, please
visit out website at www.wsfsbank.com.
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This release contains forward-looking statements, within
the meaning of the Private Securities Litigation Reform Act,
that involve risk and uncertainty. It should be noted that a
variety of factors could cause actual results to differ
materially from the anticipated results or other expectations
expressed in the Company's forward-looking statements. The
risks and uncertainties include, but are not limited to, the
growth of the economy, interest rate movements, timely
development of technology enhancements for its products and
operating systems, the impact of competitive products, services
and pricing, customer-based requirements, Congressional
legislation, and similar matters. Readers of this release are
cautioned not to place undue reliance on forward-looking
statements which are subject to influence by the named risk
factors and unanticipated future events. Actual results,
accordingly, may differ materially from management expectations.
WSFS Financial Corporation does not undertake and specifically
disclaims any obligation, to publicly release the result of any
revisions that may be made to any forward-looking statements to
reflect the occurrence of anticipated or unanticipated events or
circumstances after the date of such statements.
# # #
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WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,
------------------------------- ------------------------------
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
(Unaudited)
INTEREST INCOME:
Interest and fees on loans $ 16,957 $ 18,061 $ 51,586 $ 53,951
Interest on mortgage-backed securities 7,496 6,357 19,671 20,050
Interest and dividends on investment
securities 655 710 2,385 1,963
Other interest income 2,206 2,813 7,675 6,678
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27,314 27,941 81,317 82,642
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INTEREST EXPENSE:
Interest on deposits 8,380 7,950 24,237 23,522
Interest on Federal Home Loan Bank
advances 6,175 5,962 17,675 16,667
Interest on federal funds purchased and
securities sold under agreements to
repurchase 2,730 3,002 8,413 9,153
Interest on senior notes 829 829 2,486 2,486
Interest on other borrowed funds 99 98 263 270
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18,213 17,841 53,074 52,098
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Net interest income 9,101 10,100 28,243 30,544
Provision for loan losses 189 400 938 1,073
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Net interest income after provision
for loan 8,912 9,700 27,305 29,471
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OTHER INCOME:
Loan and lease servicing fees 899 799 2,596 2,383
Rental income on operating leases, net 2,997 2,400 8,764 6,224
Deposit service charges 1,104 1,048 3,148 3,176
Credit/debit card and ATM income 809 416 2,034 992
Securities gains 4 94 280 98
Loss on sale of investment in real estate (218)
Other income 588 294 1,657 999
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6,401 5,051 18,261 13,872
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OTHER EXPENSES:
Salaries and other compensation 2,998 3,529 9,328 9,768
Employee benefits and other personnel
expense 857 832 2,821 2,574
Equipment expense 527 362 1,394 1,040
Data processing and operations expenses 1,297 1,237 3,861 3,280
Occupancy expense 779 688 2,226 2,055
Marketing expense 391 270 938 819
Professional fees 390 307 1,243 976
Net costs of assets acquired through
foreclosure 4 127 510 754
Other operating expense 1,842 1,386 5,008 4,365
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9,085 8,738 27,329 25,631
----------- ----------- ----------- -----------
Income before taxes 6,228 6,013 18,237 17,712
Income tax provision 1,619 1,733 4,741 5,195
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NET INCOME $ 4,609 $ 4,280 $ 13,496 $ 12,517
=========== =========== =========== ===========
EARNINGS PER SHARE:
Basic $ 0.37 $ 0.34 $ 1.08 $ 1.00
Diluted $ 0.37 $ 0.34 $ 1.07 $ 0.98
Weighted average shares outstanding for
dilu1uted EPS 12,560,785 12,630,525 12,634,799 12,717,686
________________________________________________________________________________________________________________
PERFORMANCE RATIOS:
Net interest margin (1)(2) 2.77% 3.15% 2.93% 3.16%
Return on average assets (1) 1.17 1.15 1.17 1.14
Return on average equity (1) 19.04 20.84 19.17 21.11
Efficiency ratio (3) 57.44 56.50 57.61 56.92
Overhead ratio (1)(4) 2.28 2.34 2.28 2.29
________________________________________________________________________________________________________________
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See "Notes"<PAGE>
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WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (CONTINUED)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
September 30, June 30, September 30,
1998 1998 1997
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(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
SUMMARY STATEMENT OF CONDITION:
ASSETS:
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Cash and due from banks $ 36,485 $ 34,667 $ 20,651
Investment securities (5) 41,254 41,676 44,074
Investment in reverse mortgages 30,793 31,923 32,891
Other investments 68,495 58,435 75,214
Mortgage-backed securities (5) 458,624 440,173 354,266
Net loans(6)(7)(8) 737,699 732,482 776,534
Vehicles under operating leases, net (8) 185,995 177,599 156,212
Other assets 36,347 34,676 35,767
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Total assets $1,595,692 $1,551,631 $1,495,609
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
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Noninterest-bearing deposits $ 87,992 $ 98,389 73,525
Interest-bearing deposits 737,149 687,822 664,267
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Total deposits 825,141 786,211 737,792
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FHLB advances 435,000 435,000 435,152
Other borrowings 214,388 212,060 211,671
Other liabilities 26,076 22,903 28,078
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Total liabilities 1,500,605 1,456,174 1,412,693
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Stockholders' equity 95,087 95,457 82,916
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Total liabilities and stockholders'
equity $1,595,692 $1,551,631 $1,495,609
========== ========== ==========
____________________________________________________________________________________
CAPITAL RATIOS:
Equity to asset ratio 5.96% 6.15% 5.54%
Core capital (9) (required: 4.00%) 7.26 7.37 6.76
Risk-based capital (9) (required: 8.00%) 12.19 12.28 10.73
____________________________________________________________________________________
ASSET QUALITY INDICATORS:
Nonperforming Assets:
Nonaccruing loans and nonperforming leases $ 8,101 $ 9,214 $ 10,113
Nonperforming investments in real estate 76 76 989
Assets acquired through foreclosure 3,128 3,417 2,302
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Total nonperforming assets $ 11,305 $ 12,707 $ 13,404
========== ========== ==========
Restructured loans $ 3,840 $ 4,740 $ 4,740
Past due loans (10) 3,458 2,749 916
Allowance for loan and lease losses 25,017 25,675 25,722
Ratio of nonperforming assets to total
assets 0.71% 0.82% 0.90%
Ratio of allowance for loan/lease losses
to total gross loans/leases 2.63 2.75 2.61
Ratio of allowance for loan/lease
losses to nonaccruing loans/leases (12) 297.11 266.05 242.87
Ratio of quarterly net charge-offs to
average gross loans/leases (1)(7) 0.52% 0.32% 0.27%
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</TABLE>
See "Notes"
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WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (CONTINUED)
(Dollars in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
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1998 1997
----------------------------- ----------------------------
AVERAGE YIELD/ AVERAGE YIELD/
AVERAGE BALANCE SHEET: BALANCE INTEREST RATE (2) BALANCE INTEREST RATE (2)
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(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-Earning Assets:
Loans: (6) (7)
Real estate loans............... $ 504,116 $11,200 8.89% $ 578,624 $12,773 8.83%
Commercial loans................ 88,789 1,695 8.85 64,638 1,368 10.18
Consumer Loans.................. 162,057 3,997 9.79 156,027 3,882 9.87
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Total loans.................. 754,962 16,892 9.12 799,289 18,023 9.18
Mortgage-backed securities(5)..... 465,335 7,496 6.44 372,684 6,357 6.82
Loans held for sale(7)............ 3,310 65 7.85 2,005 38 7.58
Investment securities(5).......... 41,293 655 6.34 44,066 710 6.44
Other interest-earning assets..... 95,603 2,206 9.03 103,876 2,813 10.60
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Total interest earning assets 1,360,503 27,314 8.12 1,321,920 27,941 8.55
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Allowance for loan losses......... (24,491) (23,769)
Cash and due from banks........... 28,047 17,036
Vehicles under operating lease,
net............................. 180,615 141,348
Other noninterest-earning assets.. 33,739 36,633
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Total assets................. $1,578,413 $1,493,168
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing liabilities:
Interest bearing deposits:
Money market and interest-
bearing demand.............. $ 60,921 $ 393 2.56 $ 57,814 $ 380 2.61
Savings........................ 197,746 1,631 3.27 163,799 1,196 2.90
Time........................... 452,869 6,356 5.57 446,692 6,374 5.66
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Total interest-bearing
deposits................... 711,536 8,380 4.67 668,305 7,950 4.72
FHLB advances..................... 435,000 6,175 5.63 406,812 5,962 5.81
Senior Notes...................... 29,100 829 11.39 29,100 829 11.39
Other borrowed funds.............. 198,104 2,829 5.71 211,486 3,100 5.86
---------- ------- ---------- -------
Total interest-bearing
liabilities................ 1,373,740 18,213 5.30 1,315,703 17,841 5.42
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Non-interest bearing demand
deposits........................ 86,118 72,726
Other noninterest-bearing
liabilities...................... 21,743 22,576
Stockholders' equity.............. 96,812 82,163
---------- ----------
Total liabilities and stockholders'
equity.......................... $1,578,413 $1,493,168
========== ==========
Excess (deficit) of interest-
earning assets over
interest-bearing liabilities... $ (13,237) $ 6,217
========== ==========
Net interest and dividend income. $ 9,101 $10,100
======= =======
Interest rate spread............. 2.82% 3.13%
==== ====
Interest rate margin............. 2.77% 3.15%
==== ====
Net interest and dividend income
to total average assets........ 2.39% 2.79%
==== ====
_________________________________________________________________________________________________________
</TABLE>
See "Notes"
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WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (CONTINUED)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
-------------------------- ----------------------------
September 30 September 30, September 30, September 30,
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
STOCK INFORMATION:
Market price of common stock:
High $21.88 $19.25 $24.13 $19.25
Low 15.38 13.50 15.38 10.13
Close 16.06 18.38 16.06 18.38
Book value per share 7.77 6.66
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OTHER FINANCIAL DATA:
One-year repricing gap to total assets (11) (3.88)% (1.13)%
Number of employees (FTEs) 331 300
Number of branch offices 19 16
________________________________________________________________________________________________________
</TABLE>
NOTES:
(1) Annualized.
(2) Computed on a fully tax-equivalent basis.
(3) Noninterest expense divided by (tax-equivalent) net
interest income and other income.
(4) Noninterest expense as a percentage of total assets.
(5) Includes securities available-for-sale.
(6) Includes loans held for sale.
(7) Net of unearned income.
(8) Net of allowance for loan/lease losses.
(9) Represents capital ratios of Wilmington Savings Fund
Society, FSB and subsidiaries.
(10) Accruing loans/leases which are contractually past due 90
days or more as to principal or interest.
(11) The difference between projected amounts of
interest-sensitive assets and interest-sensitive
liabilities repricing within one year divided by total
assets, based on a current interest rate scenario.
(12) Includes general reserves only.
