WSFS - Earnings call transcript Q1 2019 | WSFS Financial Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the WSFS Financial Corporation First Quarter 2019 Earnings Conference Call. At this time all participants are in listen-only mode. Later we will conduct a question-and-answer session instructions will follow at that time [Operator Instructions].

As a reminder, this conference call is being recorded. I'd now like to turn the conference over to your host, Mr. Officer. Financial Chief Canuso, Dominic Sir, you begin. may

Dominic Canuso

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

safe his Before would our I with read remarks, harbor Rodger begins to like statement.

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

Rodger Levenson

you thank Thanks, Dominic, on joining for call. us to and again everyone the

As due noise of to is Beneficial expected, numbers on there March Xst. a in the the the fair bit acquisition closing of

the the on transaction on accounting additional our impact after financial details one my information provide day supplement earnings Dominic release overview the in detailed posted are and Additional context and will included website. purchase adjustments comments. results on

a basis supported performance core increase to our of of XXXX. XX was well as good well. solid quarter. results nicely basis, were from very credit on on the and deposit XXXX related our of ROA lines the the elevated of points of Core $X.XX, income X.XX% relationships this XXXX. of grew quarter Fee which diversified. the to strength franchise. to was Core quarter net non-performing business share customer quarter our expanded growth loan. increase pleased our compared X.XX% first first were combined are report Each We one highlighting very quarter first earnings demonstrated deposit per a XX% in Loan representing primarily were existing in was Expenses costs value an reserves by managed, well margin, legacy interest and WSFS also linked the and for

outlined August. communicated material, in the compared accretive have As at value. Page and rate of Due metrics beneficial last to closing portfolio market, the is transaction when on of underlying the to interest at supplemental improved announcement the primarily estimates the tangible book environment, performance the forma pro X Beneficial overall change of transaction immediately to the

our earnings projections than to an higher We in also levels and potential modeling anticipated, starting aggressive have are application. our capital original of Since both levels. at will current stronger look be stock price buyer than and capital regulatory we

with of revenue small expectations our XXX it from has signs wealth opportunities. branches since early than evident combination less potential with synergy businesses, for the consistent business, significant of power close merger, the referrals two into the Although been months our the and and mortgage, are of the received Beneficial

joining four attracted eager quarters, and Jersey; new managers, Pennsylvania to two past new all over New Additionally, organization on two capitalize market our unique new our we've in us and in with to talent advisors one C&I three the position. relationship wealth

also Beneficial integration. with the on We are progress the pleased

conversion of in for preparation and collaboratively our XXth. for teams XXth systems the are working and of weekend scheduled the Our integration August

remaining of previously XXth. Jersey office Princeton to optimization August. XX Bank with step branches the first of will in with plan for office also looking conversion divestiture May announced consolidations of the scheduled are the in systems New We the five retail the forward occur in to The our majority

performance has quarter through sets I us of and been terms our will Dominic in walk up back expenses what nicely numbers. of ROA revenue to to turn Our seasonally in full it the weakest you our X.XX%. year typically goal strong to deliver

Dominic Canuso

afternoon, Thanks, everyone. Rodger. Good

premium Before first Relations Beneficial day the to posted and quarter value one would economics, value supplemental of comment core on estimated environment, and and like Also, life purchase portfolio the performance website. lower with yields, XXX.X% both the one summarized jumping at section tangible longer the consideration, price into is than which book our announcement. updates on notable financial were of loan regarding Beneficial interest performance a deposit results, considerably mark the X.X% information some to and and respectively. our to purchase the transaction marks estimated $XX the I Based in rate our day time on transaction transaction lower improved credit stable in Investor given inherently loans stronger million

offset will accounting net accretion, the and due higher to betas by this higher in purchase interest combined base lower of materially the While result margin this is yields portfolio. lower

our first onto Now quarter results.

full reported restructuring post-acquisition to combined corporate all for Our charges the million only and of related included the transaction expectations. Beneficial $XX our quarter consistent of month results with one and performance original and development

gains B unrealized date. which life realized to shares In total recognized Visa million addition, gains and to B $X.X Class brings on of unrealized we on Class million shares, $XX.X Visa our

of and WSFS close and and growth Our and expectations our actual three and the by of view, the highlights lending. momentum December the ahead lending both designated was performance Beneficial led a the the core quarter XX, and positive for from X.X% net XXXX. growth When month total quarter for transaction the following. of compared performance excludes include in consumer segments, of WSFS of quarter our and strong the continuing auto strong growth. quarter growth successful for the annualized loans X% at growth which One, legacy This mortgage, the results was slightly demonstrated Beneficial Core along performance. XXXX run-up indicative loan residential Beneficial looking portfolios loans combined to was of student more loan business construction growth for the one included across months Beneficial with annualized,

pricing and continue structure expanding and metrics. to stable maintain yields leading We as evidenced credit loan in discipline our

the basis 'XX We annualized, healthy grew pipeline over that grew flat for quarter betas the to combined combined relationship-based deposits are pleased than anticipated XX% deposit the included more last our in the our Number as the higher across Beneficial respectively betas quarter both customer the of typically expanded result the and as the excludes public cycle XX% the NIM the performance for exit cost franchise commercial deposit at This strength one bank three WFST and in to the at year. and across combined of and of Three, months XX balance quarter to the a held improvement points continued of accounting portfolio, is month demonstrates Beneficial fourth planned the million. impact loan first low which XX, with marginal quarter-over-quarter with late no Beneficial municipal and across growth. relationship yields was zero both X.XX%, a deposit reductions quarter considered true quarter X% 'XX. positive XX-day weighted portfolios. two, annualized that deposit WSFS soft the average X% is during footprint. and was was This customer also the through approximately of and Beneficial impact NIM initial deposits just of month expanded portfolio, from seasonal expectations compared line and from somewhat the When December loan the total since betas, yields quarter The with large compression the looking sheet one $XXX accretion. portfolio funding. total view, lower including the a mentioned is strategy. from due flat growth of from by one includes growth and indicative offset legacy the positive repositioning purchase resulted in quarter previously This along optimization of

While to opportunity sheet closer resulting the be one XX% from products We smaller balance from to previous in our Beneficial, versus by second a legacy upcoming services. branch factors. X.XX% balance across of quarter grew was and offset higher million this core to quarter the XX% $XX.X first fee these the month well-diversified Four, compared and of we see income year fee optimization fees performance sheet excluding when NIM full would due When see WSFS' outlook, aforementioned income NIM and sale. XXXX.

ratio fee income XX% expected to XX.X% quarter our is range through the income XXXX Beneficial. due While of of from the ratio in lower for fee to historical XX% remainder to the the normalize

loan. total are million across and including banking, mortgage Rodger business, non-performing Leading our Number for note loans, steady primarily to synergy interest is a seeing private and wealth. reserve level. for reported were Charge-offs of and quarter, low low Beneficial were early strategies credit revenue at on implementing of remain previously classified we the commercial quarter. that costs increase driven approximately credit mentioned, with result indicators banking loans $XX positive small student due historically $X.X also to strong the five, credit million government important guaranteed risk by continue little in that It loss. accrue acquired of to U.S. is the As delinquencies the

would ratio full been When to aforementioned continue to continue revenue efficiency a below year as core at the one costs XX%. cost items, our ratio range a can of million in and and would efficiency year year to while And of to XXXX. have slightly significant the of both And uneven full the $XX few quarter-to-quarter, full costs for compared credit the XQ XX% ratio million favorable normalizing on pace the expect quarter. and deliver basis. from efficiency core to approximately expense XXXX for we a on NPL, the reserve incremental XQ demonstrated XX%, be low-end non-recurring core the been Excluding $XX credit credit our have improvement expectations six, range we

a business While remain the quarter, an are the to track ROA. on an of we core on X.XX% with pleased unexpectedly and trajectory noisy the results expectedly full while year deliver and -- both

this may We to any time. are at questions happy you answer have

Operator

Thank you Instructions]. [Operator

Frank question from Schiraldi comes Sandler first Our O'Neill. from

is Your line open. now

Frank Schiraldi

the more name to what in like trying say XQ? to NIM arms Just you the Dominic, going get look was my around here. did

Dominic Canuso

X.XX% .

Frank Schiraldi

And the purchase accretion benefit from accounting would much is how PAA? break you from out how of that --

Dominic Canuso

basis purchase -- would purchase accretion. approximately Beneficial-specific that loan of accounting XX points accounting include So

Frank Schiraldi

was accelerated wondering only amortization Now, contribution so also the was one that accounting the an in there the you interest, closed and month, that purchase to method, speak just is that, given Beneficial first could change if seem anything effective method? maybe from outsized quarter in the

Rodger Levenson

Sure.

your And from from necessarily First, mark, outsized there I accounting a quarter of the the mark for in points benefit accretion incremental was the question? loan more CD not purchase for some coming benefit but in Beneficial remainder would expect due of what shift second year. to than only the would say, basis few the we

Frank Schiraldi

-- Was effective on marks? the method the the for amortization

Rodger Levenson

is a the method in So of have life conservatively with method and portfolio we have would we're used the consistent what straight simplified analyzing time using the and announcement expect. the was loans at what fully you done line previous to to anticipate method the prior anticipate and of loans. The deals

Frank Schiraldi

like the near-term. seems similar been It very seems have like going certainly this it accretion the we're purchase the see but significantly, in reduced -- accounting to marks still here

front now, purchase not accretion, case? it is that accounting the So, loaded or the is

Rodger Levenson

Yes, margin thing lower lower, anticipated. we net clarify are have the interest would the than but because impact the sheet, on higher is we balance the that marks first I is a

portfolio. basis the deposit But of front-end the lower specifically offset relatively So, marks time CD to to the last basis the and yields the if -- Beneficial, some the closer will from the expectation announcement year, sheet. lower lower purchased the cost the point the over mentioned There had on accounting environment. quarters, accretion that from you some higher lower the the be we're marks due marks XX the balance loading of few for by long-term total rate from betas higher due impact. But is in and the interest points at XX to we for from in flat of recall, are portfolio,

Frank Schiraldi

deterioration? classifieds criticizing sounds to like up And bouncing even but then already, a you're it around you that's seeing any a spoke just ticked of excluding not there Beneficial, you like they just then, here look and signs credit saw bit

Rodger Levenson

is That correct.

Frank Schiraldi

what the customers lower just ATMs, don't Okay. I the is that -- guys anticipate could number growing if And release. a just bailment on just that rapidly. Connect little you pretty may WSFS business, you're and I about of your on servicing And -- that given it that's what just the a no contract here in also saw and margins? wandered just should no like Thanks. business talk question have I if Cash finally, seems the disclosure given using bit I the then know, then, you in for XX-K something are of longer the the longer one on we just use mean, you

Dominic Canuso

Sure. questions. those Thanks for

of clarify safe the on amount. that we want see ATMs, ATM you'll both the First, in communicate release the number I smart to the and

So from you in lot ATM XX,XXX-plus those business but appropriately see ATMs opportunities opportunities to grow those the still growth combine we'll a ROA and look grow them the continue release see to metric. to to we as the now well both coming of of numbers grow, continue business. safe smart when for for them of and We price the strongly, is and

our to year in the attrition quarter, looking Specifically had do one quarter. we anticipated was that this customer we that and expectations were to this in full that

quarter-over-quarter that of be for closer basis as beyond flat, point over of repositioned XXX we as the bank coming the part with growth. portfolio continue higher exercise take the to be back grander we'll net see, fact, about returns in accretive so balance the sheet is to and business XXX of advantage basis And to XX business we basis points while you'll In fact a generate growth XX% as returns that improve the from range that's reduced and story our points the to able to income overall.

Rodger Levenson

I Rodger. some add would is just This color.

think about that which said, the period this we've large is time, obviously trade-off. we proper Dominic we very of made this and strong As some for a knew relationship

relationship, there trend. anything While preserving indicate don't some parts value see the added magnitude the services, is of that fee that still in the of of we that income else any would near-term

Operator

next from comes Austin and Stephens. you Thank Nicolas from question

Your line is now open.

Austin Nicolas

on you Dominic, as and Appreciate from then, that but can expectations excluding maybe updating commentary was X.X% sense in full the of maybe come give just to us a previous top-line year the accretion And purchase XXXX, margin margin second think reported it call for number? about you'd really the the the the for under from the expect you quarter, accounting I a the guess us guidance. where just

Dominic Canuso

of have month reported this clearly point time, in under we At one performance our belt.

balance I that we feel for quarter, sharing like this for likely would at But I the while of impact, to the continue size at we with the remainder our X.X% of the X.XX% second so, for And year. comfortable that sheet, point said, look continue hold expectations still a given in the of in time, we to ROA the full full basis. year range year but

Rodger Levenson

add in is I There's forward we current no in at deposit view Obviously This data rate our the to Rodger. yield. are interest able pricing economic levels. the hold or change would assuming color or loan that. that's environment to significant

Frank Schiraldi

the on purchase And accounting there some accretion? then of I assets, guess core given in are with dynamics the out XXXX average looking and to maybe guess XXXX return and just to I that goals XXXX, changes XXXX any the

Rodger Levenson

the great consistent the we in us announcement, that XXXX a our for accretion original you'll XXXX material on to And our with consistent. transaction we've our and XXXX, communicated are see result posted website, that's expectations from are previously ROA that continuing question. the EPS hold that So, of that trajectory supplemental and

credit performance underlying wholesale accretion on is As that lower our along lower I and interest purchase demonstrated metrics funding. our deposit accounting yields environment to due is is loan the mentioned the of there while much earlier, both business stronger betas in rate and of lower that lower with the and

in for total the are remain out expectations they balanced. So believe the we same. our And years

Frank Schiraldi

one capital. last just maybe one then, on And

guess, on that stock above XX% here? is. it's with total dividend I come the mentioned more thoughts on the targets the how as buyback You early. we combine you're Company And the see capital buyback. from payout minimum given the where aggressive could I the about thinking being you just the any know

Rodger Levenson

full and with of share continue deliver capital and a as increase we application, throughout incremental minimum capital the would look our our the the a the to very it's and do that vet year. early, Yes, but and path expectations, more pleased and levels year post close, pro and through we're earnings original ratio buyback, regulatory on dividend our to clearly to XX% clearly our we'll we forma original plan, to look

Operator

you. Thank

from comes question Perito next from Michael KBW. Our

is line open. now Your

Michael Perito

I assume was about have I that accretion. of which first a quarter. for points X.XX% the I few correct range it want maybe first mentioned full X the of to to in things, the that you the point a in quarter. And quarter's on just of just margin couple basis guys follow-ups. is X, to out accounting start XX the And from it another then Beneficial, drag was think there's still a basis come impact that purchase

Dominic Canuso

correct. You are

Michael Perito

and how give the relates credit early us but change a to how relates could it And the I anyway. know, then, probably maybe little with that know as as related maybe But to, just maybe I to I here, time other you I'm reserve XXXX? the don't play Beneficial any and specific just had in to things, your the mark the it it it the in still know process probably of about -- deal obviously you thoughts not CECL high absolute as know, can occupying dynamic guys and level are number I I already, reserve both some CECL, relates margin could answer and level if and but just as have trying out

Rodger Levenson

for the early have CECL. It Beneficial, and little focused for a implementing new full been are is on our XXXX. of midst year the doing of testing been results disclosures we end it focused we While also for indication, some we And be quarter to and in we quarter then. have but speak solution include of our parallel to at that the to will our suited of would expect an material and second us second better to the on provide

Michael Perito

fair focused not to on moving pieces in though -- that anticipate anything there's that that say going obviously I way, that you really stay materially the ROA it any Is we that guess I easiest mean, just seems correct? today, -- that elsewhere, altering see it's because as meaningful to target, be thing really it you change what to if doesn't

Dominic Canuso

both include combination accounting CECL billion let in point of $XX So, lease hold we targets been The see anything me and of at And the discussing our crossing impact those from items from an the the announcement did time, impacting expectations for all that and from outyear since clarify. ROA XXXX we've Durbin. August to particular ROA last this at this the assumptions in don't continued time. from the

Michael Perito

Just to bit. want help little a Can us a maybe you things I of couple quickly. hit

a Some sense first you remarks little in quarter rate commentary of expense expense can looked a was But helpful the expense? the you give of us the quarter. just XXXX, solid of pretty the balance of first obviously the run in the timing perspective, trend from and bit WSFS given how you've over operating first legacy a expenses the and seen expect of month to maybe core

Rodger Levenson

Sure.

we say efficiency I'll of the reiterate ratio. expectations our do First, XX%

of due It non-recurring strong The our to was very particularly because favorable is within to of first a one-time the the legal expectations and own ensuring focus quarter day just one combination. organization, also items. the favorable some

transaction. increase the see in with quarter the the consolidate August, through a with of technologies the count, third begin the when we saves. integration costs full cost late the And rebrand those expect rate quarter and to quarter our we that Beneficial rationalize will significant conversion then, to and branch second We run

more quarter quarter of really that run the some with and future have a combination. rate of Beneficial in third we'll the indicative fourth impact quarter the being post full So the

Michael Perito

guys run that willing early a at point? still provide number end where rate point this you it to QX range at could or Are about is this you think up too

Dominic Canuso

by if of XX% you increasing X.XX% still and XX% saves, is to full-year dependent in efficiency due play which that then to and the the pro and we those and the we But ROA, early. ratio expect those well. the believe we And year-after-year on XXXX, efficiency in expected forma, had hitting cost will annualization saves. achieve our XXXX little XXXX a It's recall on ratio to cost improvement us as as XXX% improvement of a the cost saves of ratio the XX% in out in mentioned,

Rodger Levenson

Obviously the you especially parallel to so, Roger. imagine I us literally is way think a how And as there this CECL, best or give models indication beneficial can just things quarter loan book. is, Mike, to the for dozens is said, with you assumptions. landed Dominic our of considering on an if run for

next much so, educated And quarter. estimate this it more time be will a

Michael Perito

I you the And in you right then for full to quarter, did the that the one, quick repositioning average sheet the expectations just the share make sure second want balance earning to initial the quarter's as asset on we impact with can last Dominic, just full your on earning assets one just move -- what and so average all about paying are Beneficial, base I'm XQ? with

Dominic Canuso

quarter spot in purchases What because our our make sheet would optimization billion of see the the at some of we re-lever interest assets in more second investment to say for portfolio $XX.X end it quarter is earning in do second the and indicative MBS the some I look repositioning, is would so range. quarter the we and balance the of balance

Operator

Thank you. from And Russell Gunther Davidson. from comes next our D.A. question

is now line Your open.

Russell Gunther

of earning it, that is and but is repositioning, forthcoming in that the Just $XX.X you've anything following think else optimization complete that's sheet in to billion number, up on asset got there meat the balance question, considered range? and Mike's I is this

Dominic Canuso

So, we're at point. to most for XX% the part, XX% complete this about

the repurchasing and our majority the than was hundred the weeks of few up repositioning first to couple prior a But investment the of other back just in the portfolio to to levering of the purchases. average dollar-cost complete continue We within just combination. pace million,

Russell Gunther

growth portfolios, net of remind a basis the loan quarterly just in where pace the for us of perhaps you'd of forward, then, remainder year? to the could And run-off you -- on going expect consideration

Dominic Canuso

to as expectations month only the loan in combination, these we hold run before are would growth digits and that full again still purchase and year accounting and the we reminding and portfolios. some and the include that So, off we've low-single one for of mentioned the had loan organic growth

Operator

queue, you would the to Thank any back the no Levenson like And in now Instructions]. turn call Mr. further I [Operator with to further questions Rodger for remarks.

Rodger Levenson

seeing Thank you. again, thanks again everybody with to call further Dominique you on as for many on time forward And free feel today. and will investor us look of contact the the various investor today. please road joining and good conference have always, appreciate other with questions. and meetings And your be you during for along our to any a at I directly We day. coming weeks. Thank

Operator

Ladies thank today's participation you for and This program. conference. today's gentlemen, concludes your in

disconnect. great a You may all have Everyone day.

Dominic Canuso	Chief Financial Officer
Rodger Levenson	President and CEO
Art Bacci	Chief Wealth Officer
Steve Clark	Chief Commercial Banking Officer
Rick Wright	Chief Retail Banking Officer
Frank Schiraldi	Sandler O'Neill
Austin Nicolas	Stephens
Michael Perito	KBW
Russell Gunther	D.A. Davidson

WSFS Financial (WSFS) 26 Apr 192019 Q1 Earnings call transcript