WSFS - Earnings call transcript Q4 2017 | WSFS Financial Corporation

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Operator

Good day, ladies and gentlemen. And welcome to the WSFS Financial Corporation Fourth Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be -- will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. to conference like to now would turn over the Mr. I Chief Financial Canuso, Officer. Dominic begin. Sir, you may

Dominic Canuso

Thank Officer. thanks call Commercial Clark, Brian, Chairman, Officer; time Wright, on you, Paul and Rick call Banking President to taking you this Retail Wealth Levinson, Chief participate Officer; the and for Geraghty, CEO; and on Chief Mark Chief Chief our are today. Roger me to With Banking Turner, all Operating of Steve Officer;

would I like read Roger begins remarks, Before his Harbor Safe to statements. with our

included Our file of Report uncertainties, discussion well by indicated and XX-Q, Actual the Form historical XX-K and the but on including, reports recent constitute will Roger to management’s periodically today in as Exchange from most the With to, include information and read, those statements. Annual our prospects these not Levinson. we our Form limited with about forward-looking forward-looking quarterly documents results view our materially I’ll or plans our may statements differ future and due turn that discussion expectations, on results risks over Commission. Securities that as other factors to

Roger Levinson

us and to you Dominic, for our everyone Thanks, today. call joining thank on

that announce We are in very quarter the fourth strong fundamental pleased to and year WSFS. are performance for was solid the kept

presentation gains, of XXXX. our will primarily these as X, to excluding on excluding year-end, impact well practice on quarter. each development include As this Details securities as significant previously nominal which the disclosed, in signed focus our during expenses to non-recurring just corporate these were reported on our the performance provided both this items law quarter filed comments items, January were of X-K change four the on prior normal and XXth. our which results full year the both My of and December for items tax occurred related

section on these X% any growth net fourth net the for interest revenue this in income. year growth happy and fourth Q&A of during fee specific XX% call. full questions by in core quarter the items be compared the address to first, on driven growth and Highlights XXXX, XX%, will of We included, XXXX income of quarter to

Second, the by led digital a our as which C&I X% XX% our loan growth loans of portfolio lender. growth Spring quarter locally consumer of largest growth based partnership in annualized, in strategic equity EQ, a loans, annualized loan with and solid is our result home in

basis, and growth to reported growth sheet interest via of purchased Primary and accretion. quarter notes of the loan drivers core customer $XX senior partially very market and healthy balance environment, and grew of our mixed, deposits a deposit points the increase the represented total was deposits. levels with at very and organically deposits was quarter, million a rate was total remain lower fourth customer of X%, XX% for at Third, very and also X% short-term strong in annualized year of annualized. our to basis by plan Fourth, XX growth higher with healthy generated gain strong This of share deposits respectively. expectations XX% full customer the third were offset deposits. X%. the grew on the loan improvement this quarter our net Total This growing redemption demonstrate customer ability loans and X% compared our fund a to XXXX. continues consistent margin late total Fifth,

quarter grew to basis the XX% our success CashConnect and Sixth, businesses. driven X fourth margin and when in the points X.XX%, an core Our of at line year of across full fee Wealth by was full compared also in increase expectations. prior from with year XXXX, came continued which our income

to XX percentage expenses organic of were with the into fee core in expected. efficiency provision, real almost quarter. $X.X million a a year, points a REO year for drivers growth our was estate and reserves were at $X.X XX% acquisitions. the loan on cost primary provision X loan year percentage workout, typical and of other charge-off commercial were and million costs income our related million with the of points was business and For core Consistent The Eighth, ownership core ratio Bank. managed relationship, from of allocated Seventh, payments is familiar full technology from strong non-accrual efficiency quarter. the This well improved growth ratio divided consulting and recent to as that ratio the status exactly local the which seasonality full by total XX% is include our during very the supported current to the moved landed its to our credit C&I which continues throughout on the quarter. business, be XX% $X.X

quarter-to-quarter. we from uneven stated, As previously credit this have played can past total That be year. again costs out

full million, our on However, of range stable expectations very at of and all just remain $XX year. the assets which around our favorable midpoint points was total $XX the below for basis our and of million Overall, metrics costs XX to $XX.X quality average credit XXXX of level. year were million for right credit

Finally, of X.XX% we core full core X.XX%. a and ROA significantly, ROA a a of for result and our the of performance, achieved as year quarter

ROA strategic and of now turn quarter schedule. XXXX, of plan. pleased sustainable our to financial fourth goal are of like that by year we of report the our to achieved full plan XXXX our X.XX% I a to ahead would core We

to plan finalized law. in passage mid-December of prior tax Our new the was the

lift other Tax Reform. include, first, not rate, Although, to updated economy we corporate to reflect reflect made a plan and we from the the mid-to-high growth loan digits. our have in Highlights of business deposit rate have our tax potential the effective assumptions the tax underlying single continuing in any changes to new the

and rising to will get additional basis determine the magnitude for interest Second, in increase betas of in hikes the the our XX of net lag the funds June. additional upper ability rate full range assumes conservatively of to this in end one impact a likely this rate margin the The fed year. and X.XX%, point any deposit

rate as finally, quarter-to-quarter full This that And be quarter-to-quarter. of years activity. driven double approximately continued credit year. $XX the just growth CashConnect tax assets of on year growth a digits for million can points Third, average to our we’ve we the efficiency seen under rate the would were well costs total effective past these may organic two Fifth, ratio XX%. equity due diversified basis and costs in by fee Fourth, uneven million $XX approximately XX%. from Wealth to exercise businesses. Again, XX tax income low good in fluctuate caution in of full year

potential core sustainable reminder, be the weakest, ROA revenues to and build a tends throughout summary, to acquisitions In XXXX our WSFS. produce would first three-year for around year with the continue expect because a plan. and full both and negatively our our recent year a X.XX%. quarter core impacts strategic As therefore very We We of on our seasonality our the solid to to year sustainable that expenses. ROA was and of optimize execute

for we with metrics earlier achieved plans, also result, are delivered and the annual than for happy recent laws objective time and the both increased in take economy full be strategic the our ROA turn core facilitate communities better At the your our enter planned. and changes year we in growth WSFS. and additional a As tax be XXXX will our We customers, key and which will questions. in a sustainable in this that momentum operating better we on to hopeful will

Operator

Sir, from question Stephens. Thank the line your of line Austin first you. [Operator Nicholas from open. comes Instructions] is now Our

Austin Nicholas

Hey, guys. Good morning.

Mark Turner

Austin. Hi,

Austin Nicholas

like, looks low business, think by Was Maybe side on kind -- about am ‘XX, business, still do maybe how driven was how the a but net that just then, was quarter-over-quarter, right. it that touching and down of of gross CashConnect it business revenue bit we the revenue if I going the double-digit net little that revenue up, side we is out funding growth? the that of into should reading

Dominic Canuso

to as fee transition XXXX. investment digits business rates that low-double is the that growth of in seen smart rate in This reduce net to we safe and has has in mid-single the environment our with have we and reduced grow topline business Austin. Sure, would I growth continue through rising the Dominic. and bottomline that the say the growth digits our growth in the

We continue revenue or that to fee bottomline expect mid-single do in growth we see and digit business digits. topline prospects growth the to low-double to in be be the

Austin Nicholas

quarterly next should basis to at year loan of Understood. on the quarter be Thanks. a call up growth, Thanks, out a of, to Dominic. And pick then then few maybe single-digit kind on looking we loan quarters, should the it get on full weak maybe that be basis? seasonally and and in first to expect we terms growth mid-to-high over what looking

Steve Clark

Clark. Steve is this Austin, Yeah.

little are while full XX-day past a of the the success It mid-to-high the we growth weighted and for represents or So kind year commercial million bit lower we single-digit ending It’s the quarters. forecasting pipeline average. than loan year. had around $XXX it’s

of So mid-to-high year. we will as the said we’re that for pipeline in C&I come represents XX% we and confident pretty opportunities think we full that single-digit

Austin Nicholas

then What what and market are fee M&A in beyond income in on where one I you on And I the what just what -- looking, maybe side outlook And are your with guess, Thanks. in Okay. one business? this -- of be are you be? now for Management last the might are Liberty may opportunities guess that there, integrated. the the opportunities Wealth Penn the M&A, then, seeing is terms

Roger Levinson

It’s Austin. Hey, Roger.

recent took we accomplishment. think to we accomplished the and behind XXXX are the recall, acquisitions year significantly is optimize that we we you As that

on So really forward continue to our plan. now our goal strategic going is

or existing on some our of the we our call the business again so I fee-based to Wealth offering and would integratable our like easily acquisition. offering will with what of with small deepening product product or if could, And side, pattern, we expansions continuing supplement

million So consideration acquisitions had similar the those million think several ago. to years two deal total we of $XX $X about size to in

the side about. they like much continue do come Bank to we we opportunity M&A traditional built had very the from we Pennsylvania, opportunities we standpoint, that Southeastern that augment franchise the those evaluate a and would in to to On if as

Austin Nicholas

Understood. Thanks, Roger.

I questions I so all the off. have will hop think I that’s

Operator

Our line Mealor KBW. of from question next from comes Catherine the

line is Your now open.

Catherine Mealor

Thanks. Good afternoon.

Dominic Canuso

Hi, Catherine.

Mark Turner

afternoon. Good

Catherine Mealor

with what’s little thinking question mostly us bit, as of is for base, lot. just that I coming just just thought your I margin in if to guidance yield, it going like bit your of in you guidance the to which up margin giving environment it are quarter we outlook are what compression, high the it we a two higher guess, it see How is should feels it offset quick fourth or side. then like a might should betas, higher betas Thank these dynamics? deposit is higher what’s to But this -- the are compression the what like offset really enough we be but rising we like kind so be and loan feels betas here, are deposit increase from two driving think off on a question also your should the of not of we for little asset -- that One in on deposit pick a rate see my margin, about year a improvement really, is from you. parts, feels really your enough looks loan yields,

Dominic Canuso

Dominic. is This Catherine. Sure,

So will little a bit. walk I through that

-- fourth of some with we call fees payoff So through experience quarter. margin back the elevated in one-time were we slightly the that in the benefits quarter was

we we take increase XX% one beta continue the have experienced we sensitive, do see we So we so XX% back low-double rising we Roger that in a and in would well-positioned rate the would but stepping to year experienced the and yield in expect the of midst rates to the our and be rate long-term to do XX%, fourth call we that as off through expect rising the on over next of to some are that of to XX% plan we’ve that cycle increase anticipate digits, Historically, benefits June. but asset of we mentioned, towards into side. in advantage continue assumptions quarter be

PCI runoff end high increases, but rate X.XX% the see We not achieve number the rising next of the depending could beta that that reduced range of we points continued the of of through forward. performance reverse that the covering the only mid of strong basis are mortgage along for and continued provides balance environment X runoff the and do though, going of mentioned with Roger that As about year some sheet. on rate of with we portfolio headwinds

pass to the year-over-year and yields. I there’s to it due X other points So over of the talk about bond impact reduced are municipal yields lastly basis items to tax that about tax legislation. on will tax and advantage Steve

Steve Clark

Yeah.

if than was fourth average interesting, for commercial back X.XX%. $XXX,XXX, about greater yield So, our Catherine, yield a it’s kind look XXXX was X.XX% of quarter our year and loans average ago quarter of fourth XXXX, the you

in So trend obviously over would year to benefiting from short-term and the continue. the increases we expect past rates that

Mark Turner

from This Yeah. Mark, to add just global a is Catherine. more that perspective. I will

planning As items our in the last we’ve them, I at look the or annual line and up over several come consistently hitting very years, the think successful for net margin on percentage. on and we major very, goals been annual back our plans I interest one have short is plan that setting

the the my too and we and are if this all much may know because team if too cost cost revenues be allows in So the conservative, the year in that revenue come guidance to let’s project we not. was business we -- much

our very up next comment. things in we only conservative in about think rate we plan in is So One showing your June. anticipated the increase year two I in estimation were one is that

that point economists that would to generating As sensitive help and like that -- in -- we deposit know a the good this are how course, if secondly, pass then, that comes will a we at our fed thing. you could be given are betas, that or have tremendous and of franchise asset three, history. us, And forecasting two more

XX% ratio. a have We loan-to-deposit

$XXX investment BOLI that to can we generating also we We have in portfolio growth fund are in cash turning that high a our loan million quality in way. announced really we and policy liquid use

overly expect given don’t rates. and mentioned our with will I to the I deposit be just that positioning brand aggressive we respect So

be that betas and hoping the lag of would X.XX%. end am that year I would on X.XX%s, year’s and the to we rate increases So last over we we continue do can increase get deposit I which we if get higher hope can an full towards

Catherine Mealor

change generate Management, capital all now color. thoughts faster lower strategy your everyday. to years? couple very to and maybe a with over tax of on helpful you, to Capital are the any one rate other any Those Thank And follow-up on ability your to next corporate pace

Dominic Canuso

Yeah.

per and this Dominic. XXXX and tax capital will -- the we of the of our and is be through buyback that expected would continue return through profits share annually our share our more will again policies to evaluate returned share performance. is We in back that expect would our or evaluate higher the and program. But -- capital business So, rate capital. either lower that dividend XXXX monitor generation with capital the we consistent regular now $X.XX evaluate of as We rate we

Catherine Mealor

you so Thank much. Great.

Operator

comes line D.A. of Gunther Russell Davidson. from next the Our question from

Your open. line now is

Russell Gunther

Good afternoon, guys.

Mark Turner

Hi, Russell.

Russell Gunther

of couple please. questions a Just clarifying

throughout sustain result if quarter the build you understood guys X.XX% I ROA, then and is so that something the On fourth believe can correctly, the you year.

to ability that that Tax the as X.X% exit correct? With hit is Reform, an the incorporates the

Roger Levinson

Yeah.

goals the a that metrics that the be of the year if we were outlined we achieve if me happen, all X.XX%, that in those to the let outlined full the So does incorporate but change of I ROA to law, things tax all we we I that’s that, have opportunity, correct. clear, achieve said think and

Russell Gunther

Okay.

Mark Turner

It pointed of start the build in the does, year. Roger out, because as first during seasonality the quarter lower and

you and we with put rate am increasing as translate to year, a sustainable, exited this X.XX% things, is full the are momentum to in core the year would the year I change. performance, we year to X.XX% year, Last we result is just Mark, next So achieved saw, of coupled sorry. last it which in that perspective tax two X.XX% so expecting

Russell Gunther

growth just thoughts that. follow-up to perhaps, in perspective? terms me your of expect outlook. another you product then, would appreciate loan, where in around of I a some terms could your guidance us both growth just and ask But magnitude. appreciate give the you even from come let I And thoughts that -- geographic

Steve Clark

Yes.

this So again. is Steve

see they we can Liberty disruption as Pennsylvania. we’ve CRE We it see I at C&I Southeastern Pennsylvania. coming in it and in prior production and the past We the hopefully the achieve. mentioned, see think I years integration commercial looking portfolio, Bank teams continued Alliance look over we our the management the successful we from both several at at into from look coming hired team, opportunities, relationship and certainly Southeastern of that and Bank

with opportunity those opportunity nice a So up Pennsylvania. we in locations see Southeastern just our think all things an meaningful us and presence for local and in there XX executive we with leadership now market, very decision-making, the

Mark Turner

Yeah.

So I add opportunities Pennsylvania. that that, of at represent about XX% in would mentioned had before of just commercial Steve Russell, pipeline, that overall if to our pipeline, look Southeastern you

Steve Clark

Correct.

Russell Gunther

it. Got

Very Okay. topline going your expectation if drive, what’s give just double-digit you, you business? me said, think, guys. could you CashConnect one for low me, some please, the helpful. color within Last Thank I about around to

Dominic Canuso

-- and is Sure. again. Dominic see see I We can we continue to apologies, this

continue the bailment We as the industries see market to in client that consolidation such we in serve and share business. and the grow within

the of see services, strong as market throughout of of ourselves a repackage given our positioned a In and the that is inception in to opportunity other see expect product count be car to optimization double Since about to country cash services, we expected XXXX. business, services, safes. reconciliation we armored that that sell logistic advantage across program insurance, good to smart smart XXXX And next addition, of to presence growth XX% cash we of market. fee about with grow safe established services. is opportunity full take we and This year the a proliferation lastly, including have as the which logistic our

we low-to-mid the that digits. to expansion revenue and grow, of in of in the bailment So the double through our safe services the business continue Steve, business traditional opportunities logistic see additional smart

Russell Gunther

That’s you, helpful. have. I Dominic. Thanks, guys. all Thank it. Very Got

Dominic Canuso

you. Thank

Operator

line Our Merion Joe question comes from next Capital from Group. the Gladue of

Your line open. now is

Joe Gladue

Hi. Good afternoon.

Dominic Canuso

Hi, Joe.

Mark Turner

Hi, Joe.

Joe Gladue

or last guess, business, fees the other wondering benefits follow-up to the the with question will the in I Wealth on the, on under your on guess, on question there the Asset any that growth I incorporate for and And in do tax from just Management thoughts estimates businesses that I of Management. assets not, guess, individuals management -- small what I increased can business? reduced your are rates if terms what and

Roger Levinson

any Roger. is of not the any as metrics, this include the outline revenue did assumptions legislation Joe, that So, in we our from impact change talk I on about. The tax

it’s of out, our will determined there. I still that in and in -- all way businesses be put the play in of we think achieving any how to isn’t double-digit provided not driven course But that by tax law. the change I outlook would Wealth low the was

Joe Gladue

All right.

my asked. questions other think I Thanks. have been

Operator

Our from Frank Instructions] from [Operator of Schiraldi line the next comes question Sandler O’Neill.

is now open. line Your

Frank Schiraldi

Good afternoon.

of up some a On, loss. does this wondering just credit in think, for where you cycle of costs expectations million left the couple point Roger, $XX for is Just slightly year questions reflect me. translate and million that this modest or $XX at were year build last you reserve the I which from does to normalized mentioned, of into

how guys are wondering, about I you thinking Just guess, point? at a credit this

Roger Levinson

Frank. Yeah. Thanks the for question

costs million average on assets assets. XX million for that basis XX we $XX around costs $XX So under year range were basis year, in average points points on if for total you credit look coming to credit past at anticipates next this also total just and

coming or fundamental number is opposed in view just business growth the So changing in underlying credit. the really in to any the growth from the as

So is it there. we nothing really see that

cover consistent think going provisioning is will it’s even this generally charge-offs that and past growth what forward cycle now and extended though I saw very approximately view with that’s been year. an loan we our our

Frank Schiraldi

I NIM you guys you just am the of And I sure terms recall your we But XX on this about equal? not year. another boost basis don’t this Okay. that hike, point past. one you have, the if talked in if in -- estimate NIM, a this as then, it just if finds the else think would it all -- into the market How rate about in much way quarter

Dominic Canuso

point basis $X.X we again million full a historically XX% NII, basis would Sure. the year see that’s increase If a XX% XXX beta, Dominic. is with This with about lift rate that’s beta. but -- our a on full on modeled year to basis

the be beta unfavorable and timing that favorable obviously, that on, could size to we depending metric. So or

Frank Schiraldi

have. Okay. Got All right. I you. all Thanks. That’s

Dominic Canuso

thanks. Frank,

Mark Turner

Thank you.

Operator

And further showing Levinson, to now Roger the I for Chief would to am any back Operating I further questions. like no Officer remarks. turn call

Roger Levinson

conferences again of and thank to Mark, over everybody and I couple time next Have forward many day. will we months seeing look attention. and you road a Thanks good the you Dominic your on Investor then. for be for and of the at

Operator

gentlemen, This have and Everyone conference. thank in you a for disconnect. day. concludes today’s may Ladies and you this participating program great all

WSFS Financial (WSFS) 23 Jan 182017 Q4 Earnings call transcript