WSFS Financial (WSFS) 27 Jan 232022 Q4 Earnings call transcript

Welcome to the WSFS Financial Corporation Fourth Quarter 2022 Earnings Call. [Operator Instructions].

I'd now like to turn the call over to your host for today, Mr. Dominic Canuso, Chief Financial Officer. Sir, you may begin.

thanks participate of on and the for Angela, to time our you, to you all taking Thank call today. this Bacci, Steve on and Chief Consumer Officer; me call Levenson, Kruzinski, Rodger With Officer. Chairman, and CEO; Shari Art Chief Chief Clark, Officer; Banking Wealth Commercial Banking are President

on with would quarter, like statement. to I begin the harbor Before read the remarks I our safe

risk results constitute future include differ Actual Our our the our to during due and about today's our including, the other historical Commission. to, will well from safe factors these Form made or as may on quarterly not Securities All our uncertainties, we but of information comments subject are XX-Q XX-K indicated harbor report expectations, discussion forward-looking prospects periodically filed results that as statement. today view management's plans risks and most documents by included Exchange with and reports the and limited statements. to statements materially in annual those call recent on forward-looking Forms

will over to call now pass Rodger. I the

practice the of quarter. Since January, our and closing Consistent results quarter, then X the Q&A provide our for team. Dominic. last with strong XXXX the momentum turn commentary the will After and over sections. recent up combination was Mawr with remarks, fourth divided year our improved prepared financial for on open will important for will fourth XXXX each our with call, built our WSFS. I it we fourth with culminating we an quarter performance Trust, into the on to our Bryn Dominic brief full remarks today year Thanks, quarter earnings be it and XXXX outlook.

XX% up the liquidity of exhibit to trend margin continued by the solid, than of our we results our into The build diversified decline higher and was during basis XXXX quarter's in the by was or of value increase. points evidenced XXXX were interest past This absorption economy quarter. third the of growth expanded which XX Loan X.XX%, net the core and highlighted excess fee deposits.

Excluding growth in continued linked costs Expenses lower normal credit and impact the capital X% well X% and economic loan institutional municipal all expenses remain seasonal deposits quarter annualized. approximately trust on deposits to activity metrics modestly funding deposits, markets our or favorable forecast rates revenue. Cash higher and total reflects fee and higher declined are at due Credit Connect runoff offset reduced the of that levels. managed were remain customer to of due

quarter significantly In our operating ROA with performance summary, increasing the from core and XX%, XX% XX%, and respectively. improved third PPNR core core EPS,

optimize growth near BMT economic the be past significant to over term, and Bank muted the enter positioned XXXX the completed very expect to we well integration investments we franchise with years. several in Dominic? successfully activity Although the

Thanks, Slide available will XXXX, which Relations presentation, release lay Investor out we expectations for Rodger. On X section walk is supplement which our now. in of website, of earnings outlook through I our company and the the

our growth growth, success continued Fed funds mid-single growth with be loan the mild of the and is with half high assumptions year. with GDP Our flat ending overall be is mix, along our in of our growth second loan in rates environment expected with relatively growth with driving single-digit both from portfolio. flat at a C&I based business to current year our commercial on the yield to to the portfolios. in to a meaningful the growth Consistent mid- NewLane Net leasing our are contributor total X.XX% all across recessionary digits lending lending expected

some liquidity anticipated continued market competitive our provide position Portfolio elevated excess payoffs. growth. result remaining and While could for in pipelines

consideration in to growth portfolio to XXXX economic outlook. the of We expect loan consumer the in overall moderate relative XXXX

Deposits remain flat by year-end. are expected to relatively

we have the We average including quarter demonstrated liquidity, loan-to-deposit While anticipate our XX%. lower-than-peer excess meaningfully our ratio, outsized throughout current XXXX. by customers' this from benefited to normalize

Of the macro well that all expect have base With diversified environment. are we businesses, of our unpredictable loyal and prudent be across and competitive current our to will our we said, nature somewhat liquidity expectations course, customer in a subject primary and is of our our deposit with of demonstrated the through-the-cycle of and to year. by new where which our to as the pricing appropriate retain grow to XX% customers approximately by to XX%, consistent date existing to performance customers. we beta end increase This

be has to the X our our XX% our into past range total investment liquidity excess target to historically provided in As environment XXXX. high years, portfolio, optionality of which generating and in unpredictable the nature of given served has been to income us this we over million the the in deploy well, assets $XX grown has has and XX%. of discussed XX% over strategy have of pretax was

our let to down level fund the cash growth. portfolio will we liquidity, flow excess of loan normalization investment the target to With back

The net is range. Full run X.XX% margin portfolio per to expected approximately at $XXX year interest $XXX year. to be rate to cash currently million X.XX% of flows a the million in

the XXX by in are year. year, assuming point the basis short-term increases rates followed XXX basis We decrease late point in early in

deposit borrowings. be continue asset loan previously investment offset wholesale to from shift will the variable of the and portfolio modest return to our and loans. portfolio These mix will benefit to level betas a mentioned by a We from predominantly our

in and revenue to expected high Connect's in mortgage supported single and the Core growth pricing Cash mid- markets. rate fee driven digits banking modest also capital variable is by and franchise fee growth by growth

an driven supported coverage through core basis are Our to with economic a mid- XX%. of and forecasted of high resiliency ratio is the ACL metrics leading average loans revenue economic to of fee This the and generating portfolio credit by fee X.XX%. loan strong beginning environments, and the primarily expected growth continue Provision year rate environment. in for by its ratio the and income year current between be costs the points interest XX expected these to is to XX

and core franchise, and year of lending ROA base. overall to technology assets across Our continue particularly XXXX growth invest mid-XXs around with internal as X.X%, into as and outlook enable expected talent our fee be our our is the to prudently to in and model, enhance which of to business channels. and a products ratio around core highly of full percentage strength of X.XX%, stack delivery experiences efficiencies our customer we scale revenue in efficiency robust including reflects PPNR the is the the a and the to continue diversified resilient broad benefits our

potential excited position market strong regional XXXX unique growth franchises. and both strategic about the from are our XXXX continues the from momentum in our national we and

to will We the may open line now any have. questions you answer

[Operator Instructions].

the Frank Schiraldi line Sandler. from first Your question with of Piper comes

It Just from the or digit book. -- the the securities they're in cash I on to growth the offsetting. pretty general guide then utilizing Dominic, mid-single-digit perfectly don't much, flow on me mid-single the and seems loan know,

mentioned, also borrowings. think, you level modest I of some So

to So just it for kind sure modeling. I wanted in I'm of terms a of make just click. thinking about

The think the they you the come together. phasing question year. summarized be Yes, will the of throughout calculus how I

$XX the on we the are wholesale cash million that. is with might of in growth flowing that different of liquidity to depending we portfolio a result borrowings. do while the anticipated fund the phasing expect So And between excess the a to loan month, pace runoff -- $XX million investment of

Okay. have know excluded And loan past, resi complete about sort then talked growth, runoff. when don't the that's maybe in now. you just guys I you've almost if of

thinking the doesn't or just move there? the it needle what's So

Yes.

since recall, may beneficial residential portfolio. you As BMT, including and portfolios, had we've some runoff the acquired through

have they some to the of working remaining ARM to plus some their that retaining our part, most run portfolio is story, select places in supplement and the nominal customers, impact we with acquired portfolio. will mortgages residential the For that attrition course, relative and rate are entire

total a out. So be where we're at to now growth here loan we'll on point from speaking

Okay. you just higher talked investment mentioned further about me, efficiencies lastly, but the into on in the revenue you a surprising the mid-XXs the Great. was then to franchise. little guide And

to is something merger? in that if wondering further that's I in also, in that XXXX expect saves first, the cost is Just business a any then assume term? the operate Management -- to longer WSFS does out? reasonable the guess, that And of Or place sort following that's Wealth

Sure.

those across Cash our average levels mid-XXs efficiency to of expect particularly we level in a customer fee would a ratio efficiency our Wealth than franchise high-touch both and bank We ratio higher parse sustainable and service be our banking those outsized know, out. for Connect, there's And So in X businesses. as ratio. reasons: income

achieved There cost the all were And opportunities. on in of So of invest was the synergies business no to rate. the to them XXXX anticipated, from wealth look that our does -- the the we across markets. benefits. I included but low higher The labor factor vacancy do were our we and lastly, side. all been have restructuring because from some point we opportunities, the all continue synergies then from but continue step-off side, from BMT particularly those run of operational almost for think they've all bank

line Strickland question next Your Janney of comes from Feddie the with Scott. Montgomery

loan year assuming curious fairly year? to weighted loan it of consistent? do be just should earlier the with Or the we heavily later will expect more an you slowdown was towards guidance, growth respect think the I to part in economic be

Steve is this Feddie, Clark speaking.

of the XX-day under weighted has for I million. just past been think quarters $XXX pipeline consistent, average our several pretty the

that's through generate front year. So to loan our robust going a No pipeline real continue have fairly loading. We're the whole and we'll that forward. expectation hoping growth

deposit it. then Got And to costs. switch

Can business a the little how lot a your that? costs. about and of like play guys Wealth lines strategy You this had talk deposit quarter down different bit you into year holding deposit more success for your

full loan-to-deposit for way consistent first, all banks loyal board, the their we larger from base, have by to the higher provide variable Philadelphia say, would smaller rushing deposits from some banks to ratios. CDs. we is across setting I competition driven have higher-priced and a and rates. that Yes. the aren't the products the rate We very suite predominantly of services do and customer a But landscape see change market Sure. who Greater

the competitive customers to throughout And able customers and so with our market customers and the rate to year. to existing new expected work our for be be our right this needs. leverage -- the retain to we grow for interest to we in to And product expect their continue

benefit do run. to continue from coming and in well-diversified long from with term, there's do And share the than we see the we of deposits, those billion particularly Management. this be branch our our able of all XX% opportunity some coming more deposits quarter-to-quarter side our grow outlook over grow on Wealth. Trust with base continue being those from the over trust and both outside a while deposits, and the take where deposit to $X year. deposit in environment expect there consumer network We for may long heightened to a But focus market Wealth the And to are in included variation Wealth

Got that's And Dominic, follow-up. X it. helpful. just more

Just runoff, that a it portfolio liquidity following discussed in cash fair assessment? an amount the . next flow on limited sounds see like earning continue earlier question, the given we've couple to and asset of a of already the might of excess decline Is investment the up we quarters.

be really year. will assets we throughout interest liquidity trend the of but be It our of function total relatively expect assets to would a the and environment, the earning stable

comes question with KBW. Michael of Your line next Perito from the

Just couple. a

the of does aware growth. of points be mean, guide, But First, just in loan on in basis the imagine. XX recession favorable? terms just I'd clarification, of assumption mild Steve efficiency if NIM more Dominic, a show. does I the it provisioning obviously, XX the kind to XXXX we of kind shifts that like the where else else point impact or anything macro should But of addressed

Yes.

wealth up Wealth income, our of I particularly Trust the AUM on & think the banking side and side. business will some our that in show mortgage of fee

rosy. have becomes So the they upside relative forecast our could economic outlook if to more

uncertain, this had. no That sense. over years, think handful we've economic And There's the Okay. of the back question. if the of runoff. then, yield at least makes -- in There's feels smaller. I last guides cleaner margin environment like I accretable picture the one or think I while mean much Rodger, big no is a

differently? at guys be the to for right looking point? metrics, of of grow kind and us frame ROA, XXX net for XXX you you Is the the being I'm of so PPNR of And Or while try you is ROA, focus basis, this of? guys these to you to these targeted the would return the are think on are kind right a for metrics? for the thinking metrics kind the guys that about at franchise way these strategically it maintaining time at, And kind where

that's think a of at. where we're No, good characterization I

that of environment. representative of rate that's there by the manage would to we're we we're it's fact noise behind now, been and of a And Obviously, the and ROA, Mike, the grow of as think lot measured you think in company years to the more be way couple in there the top our deal, know, I quintile because us beneficial now. be has to from bring grow the last benefits a seeing all numbers of the group our we goal peer performer and -- the here. is

how recession capital you like high back some mild back, the authorization the probably but just and you've I'll not are guys Perfect. is throughout guess you you as the question do saw the build I being. year, is, last here, for it for in the me, active. is It step balance? backs, then And case should sounds been on of buy base used to as year, half still your the

So do buybacks for the the that the you how balance course over ongoing appetite of year? with

Michael. is This Sure, Dominic.

share X% have period during up participants do authorization. repurchases that were heavy the first the X XXXX, waiting in particularly we quarters as pended in we We throughout share caught share acquisition. for repurchases mentioned, you we As some BMT the to very

then to our to waterfall protect with look and we we approach, X would then extent our relative is we have to needed the and the that growth first not said, tiers, historical environment we've As organic balance at those capital economic overall capital sheet redeploy practice with evaluate capital, where the is additional then regard we it.

anticipate -- on by waterfall year. on capital need that basis would and that as cycle to the share we and repurchase quarter-by-quarter a our the do that And return Incremental we demand throughout XX% about that of upon core would we'll IRR the between through share and be expect overall plan, our of dividend, we income routine looking net would our Now dependent model followed repurchases regardless our at evaluate of average we price. take would economy.

question the Manuel Davidson. Your with comes of D.A. Navas next from line

some the out, have deposit you deposit future beta that there Or deposit cost started have have be projected anticipate The already costs? you to just you increases? that of out increase kind to to --

the accelerated in quarters our pricing, materials, continued few in supplement deposit our they deposit the a betas In chart see Sure. you'll and have and on rates. up. NIM to slide demonstrates that last And tick fact, at

XX% have deposit seen of we year-end. So through cycle betas the by

interest the to moving we So given shifting been and pricing environment. deposit attract year. this expect deposits of retain on particularly and the some anticipated the potential have our of through rise end we product rate by CDs and the rack beta exception to judiciously the rate movements, deliver And stabilization that in CDs pricing, shorter-term mid-XXs

Do you spot year? of end for a the have the rate

where to the beta think do we not are relative have but think, for provide that deposit detail would that, you. we We disclosed I today,

offers out kind rate -- there? nice what putting of are success already you pretty you have seen type of some attracting for And What deposits?

Yes.

products of is higher that one leading -- to customers to And competitive. shifting That's extent some while evaluate looking term. XX expectations the market then for very that. more customers think will are to we at now And looking XX- variable time then the assess they short than I trends. XX-month us products and that kind for CD been other X% are something broader have to from give rate of we our that to. rate, And retain right

teams treasuries but bring consumer to in term, value at look near We are the other working Wealth the commercial including with are working customer. the products, to the retain and and

helpful. reserve in had X.X%, What product just That's back thing the question that loan does one the require? strong. reserve on but small One -- the of loss was the whole kind consumer consumer EQ itself. Spring out know you of in the partnership I that product That loan really laid growth of specifically. type was

been Yes, quickly, low. it's flows losses pretty kind relatively have and -- of secure the and that's a product cash

the and loan in mid-single-digit provide in to line reserve loss slide. the we it's low the on item that consumer range So captured

queue, to with Mr. like And further no would Canuso. back the turn Instructions]. I over the [Operator to questions conference in

all for you call the joining Thank today.

out free of questions any have meeting you me forward good Have I conferences a you many reach directly. and and this we specific then. and If following meeting, to look to quarter investor throughout to Also, day. feel meetings Rodger be attending will the with

This concludes today's conference.

You may now disconnect.