WSFS - Earnings call transcript Q4 2018 | WSFS Financial Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the WSFS Financial Corporation Fourth Quarter 2018 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 follow at that time. [Operator instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Mr. Officer. Financial Chief Canuso, Dominic Sir, you begin. may

Dominic Canuso

President Thank taking Wright, Retail the Amani, With Bacci, on Rodger Chief and Chairman; Steve Banking Turner, our Banking thanks for you me Officer; Levenson, are call Chief of Wealth all this CEO; time Art Chief today. Mark Executive to call you, and Clark, to Commercial Officer; on participate Rick and Officer.

Harbor remarks, I would to Statement. begins Rodger Safe with his Before read like our

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

Rodger Levenson

everyone Thank on Dominic for thank you, you the and to us joining call today.

to $X.XX of an operating with share net results of final pleased year $XXX.X strategic record recorded earnings of of ROA announce per ROTCE the are that in X.XX% XXXX income We we our XXXX XX.XX%. plan, to and million, and of

into term with strategic significant WSFS opportunity, combined XXXX we acquisition provides move plan. with XXXX to Our Beneficial and our of transformational our fundamental long Bank as momentum performance

it prepared an sections. recap and back I than a of happy are I three divided longer will update and and the hand then the targets. with will any to to answer questions. our of a on team Our our outlook three Beneficial including provide begin be ROA the into will comments now remarks, normal conclusion will year Dominic At be XXXX, XXXX today Dominic. bit primary will

Dominic Canuso

Good afternoon, everyone.

for with item. items, two our reported reduced will to practice noninterest as XXXX increased in core our shares, the for normal well year entirely full securities consistent along Highlights XX% which in I between legal net first, corporate and in increase compared full expense. were expectation. from XX% recoveries growth income. included were the matters, two XXXX to fee deal B our as these excluding Visa income of included related XX% net which which year expenses, Beneficial an core core positive class for non-core Our minimal our insurance investment legacy results and revenue noninterest In the be related the XXXX, gains, two performance discussing which for excluding year interest income growth Gains year, and development with balanced to of

of growth the loans were our loan This X% strong offset for which was was year. Second, by loans, flat the in consumer expectations, below for commercial growth as year.

competitive very maintained As and than fundings. structure to anticipated mentioned our quarters, a in which market, in pricing we previous led discipline lower

high addition, to and due level In experienced the non-bank market. we in of liquidity permanent payoffs

more growth. in our significantly loan margin expected up net net growth to than However, than lower our income interest this the contributed discipline and interest for and strong made

for XX our to to over of was demonstrate the continue deposit of the on XXXX. single XXXX, growth improvement basis which with Fourth, year year the digits. conjunction strength This deposit end expected when moderate our to deposit full customer franchise. X.XX%, core and margin a reported high net in compared betas interest represents deposits point with high range growth mid of strong Third, total X% growing

the low we into year, in expected net a Going year. interest for margin the the X.XXs

the wealth income loan by positioned of well and driven and core for was rates. balance XX%, XX.X% deposit fee low well for growth. of structure digit disciplined Fifth, mentioned consistent managed and variable core expenses the a were diversified a to efficiency well growth Connect ratio our rising with double Our pricing year with based inclusive Sixth, out be driven sheet Cash outlook businesses of performance previously compensation. and performance our of by higher

our revenue in growth points is of our percentage in discussed earnings positive of points, X noninterest XX% XX%. X for expense costs operating X%, year total credit As expectations net XXXX. of Seventh, in supported release, were XXXX full within Core growth for very this resulting line million under slightly the remain percentage core full of leverage at XX.XX%. with favorable $XX $XX.X as finally expectations performance, our XXXX million of year we And of a of the of our ROTCE year. credit Overall, stable and result levels. $XX range achieved core in metrics a ROA million our core X.XX% and to core quality

entirely a year growth organic and target full ROA. from significantly and plan came our exceeded As and strategic X.XX% of core financial a performance -- reminder, sustainable this

Rodger Levenson

Thanks, Dominic.

Turning to in approved report shareholders December. Beneficial, merger companies from overwhelmingly both to we are that the pleased

as In on for remain regulatory closing track and process addition, approval a the on March is expected moving along Xst. we

planning integration with integration closely for the Steering collaboratively integration plan. and which six are a working conversion As will conversion majority near from teams for Integration of forward Special with will on to scheduled consolidations look month and Committee, smooth the customers company management in very working time from branch systems pleased and both to-date with our key Committee progress with Executive This representatives our the in with and with monthly our period are XX closing Management Board. business is becoming occur. both provide very reviewed our brand and combined outlined ensure future. office diligently for updates Overall, of one also have companies both also when the weekly are ample previously, associates. to we organizations last the and is August, been training post weekend the Teams the

the In modeling high our XXXX. of combination. the for to worked baseline for a the when I many Beneficial outlook supporting teams Finally, companies development the both plan respects, financial provide establish from XXXX last summer began together will level

the months announcement, synergies combined the providing our assumptions corporate expenses plan. for revenue and been results, for the During development template original five affirmed XXXX our and cost have since operating

and As plan digit as brand the include is loan August. the plan close of a normal end a in results offset to growth mid attrition mortgage resulting of XX assumes single the at real estate digit, merger organic reminder, low first, portfolios. March single a consumer low in combined commercial the Xst and growth by in of the Highlights months of systems Beneficial and conversion

our to low attrition transformation. is and digit our to related as decreasing, flat as remain levels organic deposits slightly plan, to attrition Second, deposit growth are loan original part and of primarily single optimization Both modeling. consistent expected our offset delivery branch with by

XXXX. after the efficiency Fed could of high June, and when margin under This digit of betas no costs loan total model December. hike a includes futures, one core completed in in around market Fifth, with by in the the interest core as sheet recent corporate points. of expectation in couple in sale income merger-related points of for of $XX accretion balance expenses, basis Sixth, interest and just was incorporates plan Beneficial's or net rate XX of futures the for This range ratio also increasing excluding The the loans indicated be fund line to on growth increases, one-time NIM the deposit impact rate purchase a normalizing X.XX%. around our Third, in optimization. and the single credit Fourth, million $XX other year. XX%. (ph) basis insurance million average development fee late business of

a these to a full be rate stable economy. anticipation effective rate of year uneven due be can XX%. reported XX% note quarter-to-quarter tax As a and that core effective reminder, Seventh, closer tax XX% to treatment. to reflect will approximately transaction-related costs XX% to from our Please continued of tax

Finally, capital a note on management.

policy XX% -- bias shareholders Board income toward repurchases. new returning at of stated pricing in authorization our annual repurchase levels, a current a release, The repurchases. at combination dividends standing we we and approved continue December of intend As of the and least repurchases net share in long a through to have share to

amount when after the out a X.XX% closes. expect XXXX. in the merger Overall, to period ROA we come evaluate we blackout We achieve the of repurchases will of pace of full and year core

the half and year The slower typically results impacted of first transaction the anticipate of be ROA the seasonality would year. by will the by half the quarter, second We driven increasing during closing. first

a XX modeling, last which summary, a strategic ROA in successful of ROA X.XX% a beyond XXXX, first cost points rate of completion full us XXX% and including obviously with took our XXXX of a a year in fully planned synergies. XXXX of quarter environment. of Consistent and plans, and In a XXXX. ROA stable over XXXX realization assumes in economy of three our to core we in XX% Beneficial X.XX% to strategic basis from revenue integrated new This the XXXX. target plan reflects Looking and XXXX, core a saw year savings zero three ROTCE core X.XX% prior a in

to of Our would very to happy upcoming high come. many plan and we questions. quality us Beneficial the opportunity transformational continued At your new be to through deliver for levels this strategic gives with time, performance combination years our take

Operator

Perito question first Our Michael Instructions] [Operator you. Thank KBW. comes from with

open. now is line Your

Michael Perito

the all is commentary to me. I XXXX outlook transaction from Beneficial helpful. and know, -- on the really start questions Few the wanted you

remain, in of of of in cetera bit will You balance kind on you after And adjustments of total a can the talked little investment past size here just can deal borrowings et is will kind on assets how about sheet you the closes. more portfolio as trend will I we've post those the adjustments those closes know, curious all where and the deal area, shake deal the any guidance just, close. out -- the one think closure the kind was give and -- that the

Dominic Canuso

Sure, This Dominic. Mike. is

of of day and for before one of They are funding go portfolio higher That points term to to to -- one from at increase see billion yield then investment the $X.X and overnight term on threes. day which transaction, $X.X just restructuring cash consolidated billion optimize reduction short investments, pay loan growth to cost, We'll -- the then down discussed percentage transaction, significant they is half So we've investment the about first as be mid close an Beneficial. and see along $X.X of combined portfolio result transaction short year. cash, cash restructure do two the sheet the and restructuring balance that of balance opportunity balance with will the sheet sitting sheet cash a million will the today compensation at after $XXX will of balance pro from we'll in and about leveraging X%. we forma of after liquidity the sheet are on We the of low shortly million pay throughout in the we the net the the throughout our grow basis is to remainder year. that the it increase to

Michael Perito

And obviously now non-bank the number, it's Thanks. on competition not challenging then including a mean some much seems where it side. X% on from there's right does a does you dollar that seem basis number are obviously larger Dominic. of dynamics increased making market on a basis, and guys percentage Helpful, things really so to like some relative growth but low lender. a a I were huge that bit

X% and how -- where I production coming discussed that to that light it expect the just in you'll new XXXX? those and of brought on you've see is do on and that rebound the curious all you these the -- from or of from, guess, you and I'm in you team do expectation that's mentioned bring things over the guys just view growth baked it the course -- current in course I over So there lenders is the number the year. really is of more Or from where you

Rodger Levenson

then Steve can some commentary. Rodger. and -- this start So color is add I'll

some include referenced think would normal attrition to of obviously, portfolios the is like is I at and -- reiterate growth, Beneficial. consumer and the includes in X% that of my also this which So that net that expected just for comments, transitions one-off to legacy I so

of we forward us those we the considering growth not is only digits So we're single hiring in feel includes to low that appropriate mid momentum marketplace, of amount going organic for in which our lenders, from the feel a the new other larger because to balance lot and our talking we're getting in we're as we customers of to existing new new positive the things of positive very lenders, hearing go market, sheet. customers, feedback and talk out the

feel for good growth So opportunity XXXX. in very we about the organic

Michael Perito

Okay.

we mentioned -- the hear authorization Rodger, size didn't was Board I that But specifically. approved? repurchase what you didn't the if I the number Lastly, do

Rodger Levenson

purposely dividend price of the referenced after long So so And to annual go deal come approval our as out low of on amounts repurchases said in said levels. to will that's the share increasing blackout where XX% look levels these have will of our capital of we in combination we we as -- we we at our and -- share release, call we and the I in back grows earning the a closes, to repurchases, then do earnings certainly look and trajectory and build, the returning in do -- start. especially to policy standing of resume and

shareholders. to continue program of to we authorization authorization return -- the So ample XX% ample have we have

Michael Perito

Okay.

So to the XX% or… amount is target is authorization that's specific just complete no been disclosed, there payout generally it

Rodger Levenson

say I'd accurate. Yeah. that's

earnings, you we're It's current a at I our in again, this the authorization expect the application bit to revisit middle But that levels conjunction in an capital out come that have. If XXX,XXX we said. blackout, when -- little would of it's look of things And and other as is under our and shares. we process. remember with we

Operator

you. Thank

comes question with Austin from next Our Stephens. Nicholas

is now open. line Your

Austin Nicholas

on slightly what back guidance? X.XX% us NIM within Maybe Could the just is for you accretion NIM the guidance. remind expectation under the

Dominic Canuso

CDs purchase and Included Sure, basis then XX loan Austin. which full year Dominic. the on marks points is is the a around accretion, on that This a borrowings basis. and accretion, in includes net

Austin Nicholas

And resulted and the on maybe was the the -- fee business. outlook kind revenue in then the Understood. know just of side That strong part net I business, the of funding helpful. growth income it the course Cash maybe in being kind the you over of bit maybe quarter, but fee of have gears that's a us -- like little switching to income revenue outlook the of Connect looked net year. Could this changes some profitability give flat

any So any 'XX thoughts helpful? -- would on business that in be

Dominic Canuso

and and loan a your given that just to we question, purchase on to to that And and for we Sure. loan about the follow-up this of talked note about we've it's longer I important assets the when accretion, think previous accretion expect years. continue quickly the reiterated from purchase Beneficial duration pricing, before lower four half

X.XX%, its back continue we north of the been wanted income with to I funding last over we that customer point do -- and X.XX% business and to where that their safe XXXX few quarters, fee follow-up in the smart beyond. toward which been the in for Within it So across also of of on historical average the of business, to point. the other repositioning their ROA just has continue it leveraging the transition of invest base. we from opportunity this Cash digit bailment see year Connect, to do XX of double to basis expand fee north full their -- discussing ROA along growth, as And toward have expect they services and range to

the costs that fourth that fact, from one-time we adjustment income. in quarter In a one reduced that line cash of on funding basis -- items a true-up to our included their accrual under legacy basis shifted

in year-over-year growth by about had an So quarter income in X.XXs. ROA net would they the have and in the fact -- X%

smaller will fee we bailment trajectory a from and but services, that So to their balance are maintain shift larger improve we business that customers XXXX, anticipate their also that they are has from We balance do bailment reduce ROA. and seeing into -- XXXX. sheet positive other in repositioning -- expect continue sheet, a their as their significant will customer volume, that of one slightly

-- So be considerably thereon. X.XXs flat year-over-year, bottom growth the income consider and into relatively net-net, the we then but will net expect improve ROA will line from

Austin Nicholas

questions two only Got Thanks. it. helpful. were Thanks, had. very -- the Those That Dominic. was the I

Operator

Our Instructions] next with Gunther Davidson. [Operator from comes you. Russell Thank question

is now line open. Your

Russell Gunther

quantify get from business will the company a at a that guys revenue one Just that or being, the things just with Could quick risk started so selling. that's is you business, please? to insurance Beneficial me be on that

Dominic Canuso

it -- have I'm I'm Yeah here. -- I Yeah. second. a Hold on

Rodger Levenson

Sure. that run not had insurance $X number little -- going forward. million annual in be Their their agency rate of under revenue a there the will

Russell Gunther

Okay. guys, talked about. Got as nice Spring it. bit well a Thank touch -- that you. of for the on little growth consumer, And to with growth switching outlook get have the as you'd forward you to consumer able the just then be Maybe the gears on and the -- partnerships side, within growth yield, just of terms the there upon the and have EQ a of loan more source color, in guys you to could type to going expect you you portfolio? as continue LendKey, been

Rick Wright

Rick. is This

of volumes terms in changes. a million I the would me grown the paper. then exactly EQ both for on of that's the in a of in LendKey, student of metrics is have In Springy average with I we with loans I consolidation on a we've side, those, yields XXXX. the the Spring in the rate And -- The FICO they've of as those, the the about we nothing are deterioration $XXX there. have on loans credit which have don't of -- XXX. expect X% front got ours. would EQ, bit between LendKey XXX excess where about credit you solid on portfolio way same and and tell the We're The something of my underwriting -- seeing the that little -- but probably

delinquency volume, bit putting growth low lot we're out of next of of We traditional very -- -- up equity push. business, lot it that the on a much have a having year. were and We're over they We The a as been home we're the traditional of had in run-off having not sort lines the but might extended past. on got of little utilization. we've again, well. the we're a as So as XX%

Now, we're closer the XXs. lower to

Russell Gunther

us you plan. integration, Thank there ROA. that with but that's guys you strategic three color the initiatives on to -- are I accomplish -- lot within And appreciate of to drive share to your sharing from there. the could your other had with bigger a thoughts you. do of going one year you I that would ROA the picture there the you me. last would appreciate help hope Beneficial kind would in integration beyond Obviously

Rodger Levenson

No. Yeah.

that I think at then you components our strategic done harvest that all that; term full with obviously year Beneficial we plan opportunities of and the and being starting two that -- look long combination. yeah Russell, the conjunction really that if major delivery with are of kind the -- successful integration see three with the growth in to is and of transformation

And really numbers so that year items are strategic plan. that's a the -- two the driving combination in three the thing of those the the -- in

Russell Gunther

Makes sense.

much. so it Thanks guys. me. Okay, That's from

Operator

And Capital Merion question with Group. Gladue Thank comes you. from Joe next our

line open. Your now is

Joe Gladue

questions My been have sorry. answered. I'm Yeah. Thanks.

Operator

Thank remarks. like you. to over And in with for turn conference Mr. closing now no Levenson further back I would the Rodger queue, questions to

Rodger Levenson

on Dominic you. very joining the and for months, couple in to have Thank many next Conference your few the forward be weeks, look again day. will a Thank then. and -- Thanks We'll we'll the and next much, road. in on attention. over Investor you next and Mark of seeing and be you good the time the then road we over be I of

Operator

conference. This participating and Ladies in does today's you thank for program. the conclude gentlemen,

a disconnect. all great have day. Everyone may You

WSFS Financial (WSFS) 23 Jan 192018 Q4 Earnings call transcript