WSFS Financial (WSFS) 25 Oct 242024 Q3 Earnings call transcript

Thank you for standing by, and welcome to the WSFS Financial Corporation Third Quarter Earnings Call. [Operator Instructions] I'd now like to turn the call over to Rodger Levenson, Chairman, President and Chief Executive Officer. Sir, you may begin.

Thank you, Ron, and thanks to everyone for joining us on the call today.

Before we get started, I wanted to officially introduce the newest member of our executive leadership team, Executive Vice President and CFO, David Burg.

know, at WSFS Citigroup. you a mid-August, of career XX-year many David in joined following As

growth value. We're During has the and our demonstrated short team. the deliver his tenure leadership skills with David? to him to have thrilled WSFS, he and on shareholder accelerate

XXXX Thank Rodger, quarter you, joining our everyone, you, call. for thank third and earnings

our earnings and earnings the refer call, today's on found release release in will Our can Relations Investor company of section to supplement, which website. be we

Levenson, Rodger by Operating Steve Officer; to In our President joined like I Clark, Consumer Chairman, Banking financial addition CEO, I'm Chief would statement. reviewing to our Art and Commercial Officer. Prior Kruzinski, Bacci, Officer; to read and results, harbor Banking our Chief Shari Chief safe

and loans remain and on call the annualized during core diversified. to $X.XX the deposits model return increased strength demonstrate of and Results and safe on today's information to, included well as our uncertainties, materially differ respectively, harbor including, most file these on core franchise share, indicated will well All tangible view as that XX-Q forward-looking management's our an to not comments Form of Exchange continued in X% Form WSFS prospects and diverse statements statement. I and recent today quarter. those future documents are equity ROA business in EPS and XX.XX%. Loans plans quarterly the historical our was X.XX% forward-looking during discussion risk we our Securities subject to statements. on results of constitute included due to Growth by report limited of common of with results deposits or made other results. will periodically Our now financial include Actual basis. expectations, broad-based, per from core may turn about XX-K, third X%, but Commission. annual and reports our a our the the factors risks

Our flexibility quarter of ratio XX% ample fund but third X% over was 'XX. balance sheet X% fee loan-to-deposit XX, of million fee Wealth year-over-year. revenue linked declined and September revenue $XX.X up to providing XX% capacity increased growth. Core and quarter, linked the was XX% management on future quarter

The and driven trust Trust Bryn life the EQ, in Services, Institutional marks an quarter. Core completion also from in Private primarily fees offset results increase XX% payment bank-owned and X% third and an share growth. Cash future third third seasonally quarter conversion units successful Mawr of by driven this Connect optimization 'XX, the strong the portal combined which as quarter of our was in quarter increased the for Delaware. Spring its our of we drove prior XX% in of quarter and increased past as as the by an to ROA accounting Bryn This, well Trust due bailment annual announced Banking mix, Company over system with Wealth Notably, us over the of sale X.XX% rollout account linked increased over well previously integration of of captured insurance Mawr client quarter, the continued revenues the the accordance by upgraded plan, revenue. with earn-out market in positions year. lower funding

X was to and have XQ quarter. with quarter, compensation-related company. Core we XXXX expect new points higher We're loan by expense franchise net expenses in workout basis income volumes unfunded linked release, X% commitment from XXXX and costs the currently X.XX%, with X% linked loan do the grew EQ, 'XX. growth. Net earnings margin future our was support Spring million interest reserves, fourth quarter, down driven interest not goal and in of noted noninterest $XXX.X As achieved originations our evaluating up origination the

XX took advantage quarter-over-quarter value opportunities by increases by primarily investment we basis impacted increased previously levels was net margin well to the interest of unrelated share primarily X% of quarter-over-quarter as in one loans, grow net year-to-date available-for-sale expectations. Total Our write-down of stockholders' growth and portfolio. Total to our mentioned X as market XX deposits investment market as in million by higher-priced our the credit the loans. Net impact driven and the nonperforming an earnings. unfunded costs. Nonperforming previously with identified credit market and for securities with value available-for-sale migration increased basis by of to assets points commitments are in and cost points, increased reserves to increase increases of linked and for charge-off loan XX of XX modestly offset prior the quarter, in basis compared $XX.X problem points losses, quarter, increased by the a provision charge-offs workout points, decrease driven basis driven quarterly line equity in

result, increased our X% our linked a book per share book and per quarter share XX% As linked to $XX.XX, value value increased tangible $XX.XX. to quarter

full our the On to cut occurred the of reflect September. supplement, last rate provided points basis year an in we page XX update that outlook to the

As any our a previous XXXX. outlook did reminder, reflect cuts for not midyear rate

and outlook from previous margin, outlook loans, remains expect that our now and end the cuts. net revenue include prior unchanged year full for at did is our not the lower from of efficiency rate approximately Our the to which outlook. We any interest growth for fee outlook X.XX%, NIM deposits, ratio range be updated our

X.XX%. With our reduced sensitivity points consistent basis XX to approximately estimate corresponds X.XX% be X.XX%. the Fed that reduction lastly, each in ROA end to points, on basis updated we by for approximately previous range. And This XX X for is updated with of respect reduce funds of year previously, for we ROA rate outlook XQ the we would X.XX% to outlook basis basis. points to low the annualized NIM to which a charge-offs, provided to to our the that we an net the our addition, range change have In

the financial cuts rate future will pricing, be behavior cuts, path securities rates to by will note program uncertain, of results portfolio. our pace our hedge linear, While additional not the impact of that on future deposit of the and of and of the remains important impact it's be affected our the rate

full the results we our remain absorb the well and in we positioned the to to strategy for produce top-tier will face. Thank to performance for past, we quarter done unexpected year. our with and the important, WSFS have a will challenges in we January, in year release position economic grow XXXX despite execute now provides and on you, and deliver fourth summary, questions. line third Equally our capital cushion full the for that open provide might strong any uncertainty, a results. In As XXXX We continues of financial the outlook quarter. liquidity

comes the of Gunther from line Stephens. first from Your Instructions] Russell [Operator question

through I update and to what XXXX. we the the just understand margin hike be? on would well as appreciate stab per to as hedge But if impact a would program the expectation, XX expect NIM point off we'll take you at could basis thinking hold

to do And our Russell. quarter. doing that, Happy little I back Sure, and to the Sure. talk that. NIM before prior about just want a versus Russell, bit up

a you categories. One the we break think about reduction in X basis And write-up of different due a you As down it basis investment of had of to that points, points. portfolio. know, kind X our few can was when you

And nonaccruals, basis about math, The in is X which moderating. obviously, purely costs higher and X We is then tick-up was moderating. points, a that cost just that basis had rate little basis increase deposit was So higher deposit points. of points. X

about we program billion think quarter. you $X.X when had completed that So hedge the you last mentioned,

As the you this program -- program completed the billion. know, initially We for $X.X was quarter. was strategy whole the

start floor to those have and we in They And are they at billion but X.XX%. options, $X.X about at a and kick X starts basically strike now levels, around completed, in So different they at with -- different kick one basically first months forward XX-month term. the levels. they're

the we So to asset program hedge I the a way to think obviously it's that have. is that about the sensitivity think mitigant

additional will go through mitigate these as points that was effect basis you XX X provided. cycle, will And sensitivity the that previous the of points cuts, for our have rate of hedges so know, -- to about as basis we We and mitigate we cut, if of that provided somewhat. NIM some guidance, we continue

That's And switching helpful. the gears Okay. very side. fee then to

of debit, fee really that strong item. quarter out Another credit, revenue ATM

potential ahead trending maybe do broad linked a you fourth share gains stroke take item that the we market type of thinking as look Fed fee step then guys line in revenue additional occurred quarter? And unique cuts, to see to about lot the of how you What's 'XX, quarter and and share market item? 'XX. decent for rate As a that a growth for

Yes.

Cash to that respect year. that this item, significant now drive optimize that said, to were is that The there with focus particularly network some Connect, as of really network. business in market line and gains share So efficiency you

was quarter was decline related cash idle that nonearning. saw we of pretax the the cash, on this margin so that to Some

to need to we sure drive profitability make that that network so we And business. the really that optimize into

the interest the that of and rates based XXXX from that business of is impact on terms in remember, top in perspective, charge out a ATMs. line cash does that the In business,

revenue, more So in will see decline decline equal line in we decline top but we a will see or an expenses.

think we line business, the cycle expansion for coming interest on down though declines in So even our have that the when profitability, rates will top about you see down. should based just profitability higher

this EQ Got then quarter? for of would fee helpful. the be one right. the revenue And All me, guys, Spring Okay. just last it. income impact Super on

Yes.

the a million. The earn-out of And provisions announced So something origination volume that but earn-outs was we that under on this able of one for it previously certain is as number achieving the depend had potentially, that as this is originations Since now. the on year, basically for result, volume result in depending earn-outs, resulted sale, $X of discussion maybe where achieve we a were next is the in to that with Spring our -- that contract will we year. that year, -- about a still we future had EQ, -- volumes.

forward result we the fourth January the evaluating how we that of provide hope And is its we're new And the funding profile. a Spring As as we its a to look. mentioned, to result, is going don't originations. EQ discussing And sale, going as in update strategy an anticipate on quarter, XXXX them and with in outlook.

comes KBW. next from line from of ] Kate Your Ashley question the [

is Kelly. Kate on for This

lumpiness from guide, back previously So that I also are the the commercial mentioned but the so some appreciate what lower than charge-offs. was charge-offs expected, to going

NPA, related move with how that? about we potential be NCOs should So off to that thinking like

the our -- though for what's we Yes, a by up think think the Kate, to with these monitoring, impacts in problem they ones is I surprise towards of even to assets, been the path quarter that driven have a tick we're across relationships. working were on relationships in this way to not constructively and appreciate were have a really we And problem about few some sponsors think ones loans several that but been credit us, our I metrics, a resolution. had to important that

impacts uptick the full in the these the but think C&I loans feel And the hotel range, so surprises, year and the expected. to reducing low of coming, really those the the way credit not guide property X their side, And for are driven that's footprint. was why cycle. And C&I comfortable end suburban quarter working don't these these saw we and that's they basically, another present why of level. us. Philadelphia were this our credits of these of because surprises by We the a I our suburban charge-off so some through that And really -- kind again, necessarily one was charge-offs were on the to net on commercial in are

the So And in low. was seeing now release pretty be actually the commercial some in first were of had uneven, We net so quarter. the and going we you're coming half that terms through pipeline year, the know, as knew these that you charge-offs, of first of a to process.

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

you This is way way I on what And September for what XX% far expected the Sharanjit betas up. was deposit have in so done terms down, cuts? approximately on the rate And on Manuel. of since and are wondering were there

Yes.

been from We cut, of main our reduced then we've had pricing is tenor months -- first, the on we that. X in question in that about [ also even XX the second ] We a -- shortened rate And pretty your months. proactive our we brought an to product, ahead reduced XX-month CD little pricing, CD bit this. which on So and we've our we product.

those. that or taking million we've we would $XXX about CDs, of points, started all of have then number a have $X.X and that We reprice And actions on at indexed money that CDs the about billion are are market price higher automatically. high-yield

with working we're each moving so portfolio. that of those And clients, we're and

the the way And all in that interest-bearing the will clearly, this. be way lag in very as was be mid-XXs, on have, you On our our about costs there XX, proactive looking was down, to at the plan we you as said, a mentioned. beta deposit we down. But

I the near be somewhere how be for or will think rate cuts the But on XX will future, come. they if fourth high beta our highly and beta term other teens of on XX% future for come points in cuts dependent the quickly 'XX in these basis quarter. for those the the

opportunity So competitor that's market if wanted pick rate I allows clients. the And that's we to cuts out aggressive. But more the one succession, do have is rapid share up us see say a up number to we point other different pick and be very have from a thing our scenario, I pause, some other that to we If scenario. in we have of in disruption a and dynamics. that would

want our respect also that's do something so And that deposits. to we with to

So trying to strategic we're really we're trying about and not this. market for but we're manage behave strategize share how -- gains, one that's we'll manage and not for to quarter,

Okay. are right looking question, And pipelines your loan last now? for commercial my how then

past Yes. commercial quarters. Steve This pipeline with Clark. is The consistent is

to and would So in running small of SBA that's remains we million, terms pleased as our year. at XX-day what term we be consistent, and about weighted is addition that. commercial our near top that, unit, it businesses in expect closings. On have private in are pipeline, average decent which banking we our pretty we business throughout shown teams, news the of $XXX growth our have our the generally, unit mid-single-digit with good is But that in and

[Operator question comes Piper next Instructions] Frank line Sandler. the from Your from of Schiraldi

quarter, for delinquencies, when I is driven go NPAs, really totally net that look wanted couple at to credit linked get back a Just to credits. by second. a just of I charge-offs

main credits in that the just were I'm growth I -- linked the think in problem the a base. trying for is the quarter? driver problem mentioned those sense you And of However, asset to assets get already what in terms

think have the mentioned Yes. what look we terms our at at portfolio. all have is approach entire we our really rigorous flows take that I problem looking -- Frank, maturities, would -- in cash assets robust of we a look we where cash environment, the think we we to forward of in think a I try and flows, before, I years, process say pretty as look at valuations. at very we we underlying evaluate the And I looking updating continuously X

to quarter value. challenges. at it's was XX% the we driven short-term think -- we're this give based of relationship to more XX% the an where rather of on process by one indication think, increases collateral, rigor are bad you in the updated some would I omen say look at is, a I there -- a than think specific a I that mean, even I But this we an And valuations, So portfolio. when the example, of

think that's there. of indication that's But an think I again, an of just our more something So I process. example

just more maybe Frank, numbers around a put it. just little I'll

are construction the we're pop that a And really the problem another project. you see you at customer, there's a very driver larger David If of in the almost some flow -- slowness credits cash It where the of the in leasing of in collaboratively. that there's loan sponsor's up referred some that really solid, was growth our that criticized projects in it. there's category, that problem there's one made where loans. some the That's global look have, to, up working but loans, relationship long-time stress XX% we X project through completed

in terms with And Okay. you of could your don't some for know something fine NIM talked point do? number know that's put this there's or you on that -- the it. the just to Obviously, know forward then if points going a past, X to like the program. a XX basis I cut. potentially about for given a XXXX don't look too basis compression here hedges, you around adjusted in to want if of I wanted rate a point put mitigation I if hedging what

think start we'll thing the is our [ the important But X.XX ] I nonlinearity And I do in Frank, think we of at of it. Yes, that's that that XXXX. lower the more again, hedges the and one. an impact go, number is,

obviously, on our how play a three cuts is the two, I to higher. think $XXX sensitivity downside more bit I securities little want depending because come. And to we aggressive about million mitigant kicks that X.X% important asset we see at point mentioned out. Number number off also that's the portfolio respect redeploy year as to many our about the portfolio, to with of a pricing cash So on ability cuts and be you that an how know, the about

And go, portfolio. accelerated so how on because MBS the you rates pay mostly depending that's downs may far have

you may a there. So large paydowns, and rates have accelerated as pickup come have we down also

think So how on out. that to us and things I see I about next there really a and more makes takes a little year trajectory play dependent few of there bit outlook rates, as puts for and we the that's give think are sense it why

something points the think more whole that first few rather can was the I X that extrapolate basis to than So for you cuts, cycle.

about I lastly, just wanted capital. to then And ask just Okay.

growth, In in not profitability done still mirror. the growth larger-sized far of too you've and deals, your understanding and trajectory, is organic terms priority X rearview the

you thoughts any bank around environment of potential, what guys today, the are M&A? you as wondering the look at -- Just there's if further updated

Frank, it's Rodger.

on the the great all X of big points. on the hit progress We're I optimization think important really investments. you seeing

growing pretty and quarters last through you a deposits, fee first the income X know, market share. But we taking and from If low of this year consistently were starting you as loans, very bottom. look year,

there -- broadly. we the terms think more a in in So is our market position of

there's of the larger a David said, runway particularly players on that in lot when see you of to in are going So think still market. the there distractions of we some And as go. some our

In in we're of the lines business. at if organizations. we've that's X/X about to Again, in to other had And addition opportunities about you talent -- that adds across staff look talked that [ continue to talent, NIE year-over-year somewhat from invest ]. business-generating up we in pick from that, organization, are to seeing the the those heavily of reflected we've

So very, our we for high for investing things be continue an heavily light keep could ability those We'll that help activities. would impact execute very to business. are that in how support organic opportunistic eye the very the to opportunity. bar the it out be always would that would But reiterate have that I us would on considered would because in for be of to that

it. We'll on at So primarily see we're what a our along, organic growth, comes focus running hard continues be from to standpoint. but bank

no with Mr. to the further turn over back questions queue, to And Burg. conference I like in would

you for today. Thank you joining thank very much, call the and all

of free specific Have and feel have conferences reach investor questions, Rodger, out any will look meeting you follow-up great many quarter, to and If Art or and the please be throughout to quarter. to forward the attending day. during Andrew we a with meetings you me. I

This participation. today's conference call. for Thank concludes you your

now may disconnect. You