WSFS - Earnings call transcript Q3 2019 | WSFS Financial Corporation

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the WSFS Financial Corp Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session [Operator Instructions].

I would now like to hand the conference over to your speaker for today, Dominic Canuso, Chief Financial Officer. Sir, you may begin.

Dominic Canuso

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

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

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

Rodger Levenson

second few by website. includes supplement timing our be an our tangible the Dominic posted you, of core quarters, quarter Thank the details thanks of everyone the to joining on and since equity X.XX% on we impacted return of year-over-year as on average release providing operating and the results WSFS on moments. have In comparisons the today. Beneficial of the quarter the core commentary last again to of will second a income us The earnings are per closing two These reported of additional assets Similar earnings acquisition, on acquisition. the supplement approximately call to with Beneficial for solid compared drove share common in and a Dominic, net full a our financial $XX core performance results on core increasing this million when of XX.XX%. additional $X.XX, XX% both results return year. provided

third integration successful completed of and the last the and milestone quarter, the very over systems the weekend conversion major Beneficial XXth. During brand the August we of XXth with

very office closing plan Combined of of complex including with XX the XXXX. This retail the locations. by we will project, was reduced original of five remaining May, location retail our to retail occur closures footprint the XX sale end of and five retail large branch of have a Princeton in the optimization locations. The now Bank our by offices

progress enthusiastic and We on to are Dominic and well Beneficial with team on opportunity to the Delaware will in results. entire to our turn I being regions. Greater it on Philadelphia the bank over and now largest is details our promise positioned WSFS the pleased deliver financial from provide locally-headquartered and the very

Dominic Canuso

Good Rodger. everyone. Thanks, afternoon,

GAAP to earnings We of the conversion. brand on basis, quarter are of core additional the quarter, focus mentioned in on successful pleased very with comment especially results the I both the on and the earlier. given first GAAP the intense so, financial Rodger reported a will core technology provide team the executing performance context then the and

and life-to-date the an development These costs offsetting ROA $XX.X GAAP and conversion. includes cost-to-date and associated our transaction quarter pre-tax of with $XX.X restructuring investments million X.XX% transaction share costs, $X.XX Beneficial pre-tax Our per in gain this million. More unrealized earnings are the share net is and Class of our unrealized results with corporate Visa realized and the $XX.X bringing than to gain of expectations. consistent original for our all million on B

Page after Also earnings growth and clarifying to our earnings X release X supplement portfolios. growth the our and on on supplemental is headline in outlined items slide. on detail These loan quarter, to rates of the run-off and included deposit for adjusting Page growth in the both for are reconciliation both in normalize core GAAP in our our included attrition

million quarter no million portfolios, the loans in recent of growth the from outlined quarter, million expected $XX quarter, with cost excluding declined second While the offset total This deposits in the Total than $XX annualized the million and for C&I. run-off trust $XXX attrition updated in $XX both in and in funding the related more consumer when attrition customer gross grew X% consistent cyclicality in public by which deposits. in low funding branch or our million customer million expectations and is loans included loans increased consolidations full-year call. with and $XX resulting $XX to loan growth

quarter margin short-term non-interest Net that quarter of $X strong due at X.XX% stability bank very products. in in bearing led relationship of and loan our XX% points the a no-and the C&I billion based by days. the lower X healthy almost the interest total basis held was deposits low-cost trust to was XX for for yields the was deposit customer NIM our

million income. expected a it declining decrease is rate XX While The prime basis points, consistent LIBOR and reduced in dilutive rate environment. net during environment, interest point to $X.X in with basis the in interest contributed XX which net by a interest margin performance NIM, quarter specifically

Credit historical at net is maintain on and Slide on in consistent low ratio. remain positive and supplement quarter trends second X. the metrics with strong end margin interest quality Additional the information of

Wealth for was base and and three the $XX fees, million our declining basis earnings Connect. that on from consistency is our and from line the Cash Core worth and in credit or trend. across is income $X rate million to a and significantly of as Total points businesses improved with noting quarter our of products It income reporting our XX.X% result long-term XX various environment. revenue in diversified loans, XX stability segments; well fee in over diversified Banking, adds second a quarter cost fee ratio

the delivering cost synergies the cost which we relatively XX.X% in second XX% full-year continued management achieving was of cost get ratio on increases efficiency conversion to discipline from acquisition consistent by benefit results XXXX. savings increases in quarter core of XX% to integration from the the with XXXX saves and of XXXX, XXX% which Our and as cost

I Lastly, quarterly quarter, per we just buyers under it to leaves and be remaining will some shares million $X.X dividend at over of capital returned like in through million market in XXX,XXX pass to in $XX shareholders would repurchases. and $XX.X our to $X.XX final share we Rodger This to our share the our or authorization. above in continue current million over And even prices. current for active comments.

Rodger Levenson

XXXX. some our our industry, headed is interest recent relatively curve. wanted plan, the we into by I and environment of planning entire normal early the perspective stable significant Consistent part with share as with Q&A, to turn rates. we Before XXXX process in yield XXXX impacted XXXX to shift When modeled rate envisioned along one fed shape funds with initially and economy XXXX strategic a in a increase we each being

of two this the one we're As with next cuts rate along more interest week, our strong expected a year already facing net margin. cut fed headwind fairly result in a

synergies or tailwinds position in of to headwinds higher and from fortunate revenue to Beneficial. whole in be those are part the in offset a with we cost However,

our and provide XXXX We planning are regular upon the in dynamics of process the these update part the currently practice we'll assessing has of plan completion as January. been as

to your now take Thanks questions. be will happy we and

Operator

comes line Frank O'Neill. with Instructions] [Operator first of the Our Schiraldi question Sandler from

is line Your open.

Frank Schiraldi

Hey, guys.

Rodger Levenson

Hey, Frank.

Frank Schiraldi

give inclusive a you Just the start the margin, rate I If range I at is X.XX%. 'XX that the deck in include wonder a questions. on is of on decrease if X, couple that the could October? to Does had of XQ margin. -- I slide look Page X.XX%

Dominic Canuso

X.XX% not, an the supplement, October additional on right added and fed It clarifying that impact the X.XX%. to reduce year which full short-term bullet column the is Slide deposit rate far decrease of does X the just from why would we large the in in from

Rodger Levenson

for think quarter? was fourth asking specifically I Frank the

Dominic Canuso

Yes

Rodger Levenson

fourth cut. the include quarter So does the

Dominic Canuso

it Yes, does.

Rodger Levenson

Yes, thank you.

Frank Schiraldi

Okay.

So the X.XX% cut to no? include does X.XX% the or

Dominic Canuso

X.XX% fourth it, does, the purposes. quarter. the XXXX full starting dynamics does provided, maintained I X.XX% was just year outlook I But quarter the between understand for was the full range the with does. It for apologize second to and third at I year. that. to outlook include consistency

Frank Schiraldi

funds, thinking and beneficial is the of accretion then the large anything you compression, well the like know normalized basis points. -- -- to the how interest impact about then, if of I'm of me And year fair? your case, seems about thoughts the but it linked the know, you would rates, gave basis? point like excluding by this, given that's you impact is sort deposit of, there quarter, as of basis rate in guys reduction Okay. linked-quarter the impact sort quarter interest for wondering the X looks And the what margin give thinking on decrease fed kind let on just double-digits the a else seem full so, in baked XX margin And that I'm and can if would guys that into

Dominic Canuso

full the additional quarter impact Sure. for quarter cut, And the a averages a cut, obviously, I our of these the quarter cuts, rate not it's because answer. and say a is impact the rate full incorporates quarter the interest impact of fourth quarter of would product. of full alignment straightforward timing always What the are with conversion impact, rate an of most recent full

net be rate a So interest for interest otherwise to look which accentuates what more sensitive margin. sensitivity

Frank Schiraldi

Okay.

on a compression just case, cut normalized that in in So, NIM sort it -- all what XX basis, point to does basis of aside? terms else possible is a of

Dominic Canuso

a year would else cut All a you deposit historical a will, of Yeah. about $X impact equal, and point beta, million. if XX basis rate be full presuming

Frank Schiraldi

on ratio certainly the guys Thanks. that. is, And the ahead where schedule. are revenue into just plays then, picture of Obviously, you finally cost efficiency saves,

-- of of about and Dominic. and picture still the -- all? Are XX% deal? that you picture or for think you that kind you detail the as Has is it any on-trend kind on cost So And that tech-spend curious can just to could talked if of the kind saves? then you give alluded at was if the part of changed I XX%

Dominic Canuso

Sure.

say, XXXX, the some line saves, see rate to FTE of we Obviously count resulting and with facility I of a benefit the XXX%. first, post-conversion XX% saves cost So a growing would of sight sight branch in delivering the a reduced and cost continue also of yes, run of in XX% lot annualization the from clear annualization to count. we the of of XXXX line see of the that clear

Rodger Levenson

this Yeah. is And Frank, Rodger.

related announced year recall, integration saves when process. we spend? plan the between $X deal, and a we this have optimization XX% of the working that go project million tech said very would As we into the cost to been the So on $X branch alongside you'll roughly diligently or

plan, that just that one XXXX of our since the original plan will think months things likely we moving faster developed observation acceleration is the over I because the XX initially to that move are we of roadmap. we part that is faster, of along past plan as things an want update

of working we think have all first process, internal specificity more with I the our but need accelerate the just of with early our consultant that pull as year to plan. to in that we'll pieces continue indicates our together assessment that and own we other January

Operator

Thank you.

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

open. is line Your

Michael Perito

Rodger Hi, -- to afternoon. a good side. wanted good ask Dominic and cost the follow-up Rather. morning on I

at just I You release to million fairly according the XX still think core happen in late quarter, third least know we press that $XX look at new under of as conversion the in kind the August. --

elevated of of provide you likely under $XX fourth my where two won't for because million or kind just any shake mean in a $XX wasn't about that quarter. So the million the out range can in cost cost will number still the guess save near-term -- it's is I quarter that months some expense -- be incorporates the insight back

Dominic Canuso

That's right.

investment I FTE a quarter Well revenue that So branch reduce would discussed on normal give question. we've couple generating -- by quarter as expect and investing technology core business and a by full conversion, guidance a reduced can't dollars, from cost which offset consolidation, fourth What would an can count, million say the you in it's of the explicit between is, sales, the of fair I third cost. those quarter's benefit efforts. growth

Michael Perito

it. Got

some overall made the progress what about being been think Okay, as you, that from the it expectations guys of and to Beneficial, in the looking guys some side some have kind of release kind these side there and press obviously revenue that's should are there. the are kind analysis has we helpful. in are hires some you the -- Dominic. you an producing out from we then see Philadelphia of of of additions market? think comments these making of I how making initial for standpoint, hires on made, of Thank for your And successful about some the earnings on on the some be releases you you're revenue But

Rodger Levenson

Yeah.

So here, in I'll jump Michael.

support the pleased to integration, that investment made business as but of some we're those to that now was only we've very year. the that growth in part team major revenue the the was that the the conversion particularly hires, gotten progress not So from of Beneficial we the of from in next we've staff of with didn't areas in and alluding the and of product that. up to offer past lift we're some Dominic cases, milestone We're needed and particularly middle what overall last

a hiring certain road the reflected and all you when that's pieces do pulling down areas. was see to I referring the be Others, little the I all kind in will think we to, of, still XXXX the we're have those way plan of plan middle we're that and in together.

Michael Perito

And levels mean paid made it. and you capital $XX saw just guys I build. the could I capital, $XX in million lastly out million quarter, Got on then still if

pressure -- bit of sense of I your it ratios? a it more multi-part the maybe dividend kind profitability capital here, is would point it guess help to capital it's need excess a off already question establish to policy I some one, makes to and of competitive ask and upward your guess a of guess where now take a I to but kind So likely levels at try succinctly. on

an would points view points, how more I of obviously content the or basis guess any near-term guys overall balance is But kind that that options to internally, And that? expect limited reason sheet to just of appreciation, your guys sheet within And risk your as to balance to XXX you is it focus two, capital. guys think given run lack limit kind fairly post of of at than Beneficial as carrying aggressive overall of level of you pre. I the growth? much lower XXX basis as Are area disposal of capital we try with you be capital with can you're possible further

Rodger Levenson

Mike. Clearly Thanks there, try a which of Sure. couple points I'll to discern.

our the consistent capital practice policy, returning dividend XX% level split would question we have be that long-standing a and First, annual -- on price buybacks. evaluated between a regarding dividend our and and your incremental minimum share the evenly of buybacks disciplined IRM of minimum model of based anything earnings through share that on low share incremental to determining

that capital for strategy position. the and balance the re-evaluate have our share our of lower, question the dividend because of structure, capital and we we overall base primarily investor of, second and capital believe that sheet to optimal strong evaluated the every the and We our of which your risk being balance blends the buyback is year

levels X% to in capital at we kind ratio, we've of look what X% between we of above look target would TCE it historically said and first business. when reinvest off, First of the our

very on our opportunities acquisition Second, income for in Beneficial, inorganic and and obviously look with brings, and focused opportunities align integration but that we would look put the much fee offering would and that for the that businesses appropriate opportunities today. other we're

in with Continuing position would the us, we in seen quarter to re-evaluate XXXX planning return have as repurchasing that what consistent share the we and continue we're of third remaining and authorization we with capital that strong lastly, process. to through the would shares, buybacks. then our available shareholders And capital part you've --

Michael Perito

Beneficial are or And any at -- I'll deal, the just around few then any a yet? know thoughts quite providing quite of helpful. jump I not prepared here, back, is guys or adoption that's just it, pieces moving the you there but point this lastly, especially Got process CECL in

Dominic Canuso

Yeah.

the over Xst, the an in in cut quarter clearly, toward area heading to as and CECL January it's end XXXX. So third focus of start on of we the year

governance have on been project a structure. technology, team data perspective, from active Our a has the and ensuring strong very clean CECL right we

modeling on on expectations around our our have adjustment qualitative and working been six by right months, side we the and have economic transparency factors. three last We the assumptions ensuring side methodology over to our

model and We to those. validate those continue

be third impacts, a we those prepared part annualize continually XXXX. the As not but will Xst, of quarter, on will we as disclosing fully be cutover the range we for January

Michael Perito

Thanks.

Sorry go ahead.

Rodger Levenson

I could just add. is add. just this Yeah Rodger and I'll Mike,

various loan that and make so we're and need and as this cross complexity to of prudent the of several when acquired is part differently that's that we assumptions the half on of parallel you part in our think process just incorporate CECL that handle under is we now almost all loan [indiscernible] that do over it's we As of have which iterations know, us the scenarios book good we sure do the is through. just book that modeling very a of and to we validation going for

Michael Perito

questions. you I appreciate taking guys Thank Helpful. my it. for

Rodger Levenson

Thanks Mike.

Operator

Instructions] from line Thank D.A. the you. [Operator question Our Russell with Gunther next Davidson. comes of

Your line open. is

Russell Gunther

guys. Hey, afternoon good

Rodger Levenson

Hi, Russell.

Russell Gunther

there from to are. we when sense net perspective trying gross what the on Perhaps to sense the circle C&I to first get I appreciate comment on conversation level the run-off return some and bit high to all growth? wanted the CRE. with loan there is for see opportunity growth a the I us of portfolios, a you your loan a of might and drivers kind thoughts give get back really a maybe but just of color pipelines a your, on could

Steve Clark

Steve is Hey, Russell. This Clark.

So pipeline. Pipeline relatively is regarding strong.

another, and C&I. quarters that average weighted in about say About is that $XXX of about sit. Pennsylvania million in is as is of we XX-day Our two-thirds three

will percent a continues of little as off. portfolio optimistic CRE the we'll trend that participation be that bit total to run a and increasing helped the by C&I of So we're continue that

all all, pretty prospects. So optimistic in I'm growth our about

Russell Gunther

then, any Okay, perhaps markets, you do so? lender got or it. within guys Philadelphia seeing commercial particular And any additional hires opportunities to are contemplating any

Steve Clark

Yes.

So say interest. we have I would yes, certainly continuing

Over our new added one Relationship team. the Beneficial experienced team Pennsylvania-based RM to we've manager the we to year, Managers added one legacy three then and last very and portfolio

and continue add opportunities we opportunities. Philadelphia, in with are should talent. presence in now active And we to our We to entertain those to have conversations think continue

Russell Gunther

that you. ring you comfortable up it. And Thank is start or outpace there got to and in the organic number picture of which to point from low-single-digit kind think Okay, able big portfolios a put are even be fence to run-off a to perspective, be guys able then, a about a forward? -- going you'll

Dominic Canuso

So, Russell. that, I'll jump in on

slide, That's think as we've That's the all way down portfolio. you -- that relationships. really two can amount our worked leverage the that significant to I loan we see from think of through C&I.

you think on trajectory I see, coming can books, terms And particularly an and the as loans. auto, of a material consumer see I'd mortgage is the the you student as standpoint end in to say resi well.

and exit factor didn't to moderating on refinances. normal we bit and And of I thought. originally some that what that is run interest The the those fit of are combination pace to cycle accelerated portfolios some decisions of CRE year the most that which versus our more this a slowing, is a environment, dependent the we rate part rate rate think I participations. a interest attrition see the economy clearly kind would call But one little of upon what

we of our would rates you plan, this versus our see moderating, enjoyed growth and in we've I to in historically certainly the that returning will that terms say, peers. So XXXX then us and see

Russell Gunther

Got it.

that's disclosure, and you Well loud on both on briefly just credit where anything -- And look, your switching on for I comments guys thank outlook, kind quality stroke pace concern, Okay, about your that. any but class asset -- clear cost. the within normalizing waiting footprints would broad we of or just a CECL of quicker gears, see a you credit hear to thoughts

general your appreciate Just thoughts.

Steve Clark

again. Clark, Steve Russell, Yeah,

very So stable. credit are no, currently underlying trends

to and mentioned, costs we of the end credit we are. low historical of here we're where of feel back comfortable in today, the kind Dominic range sitting with As terms

Russell Gunther

taking all thanks Very for good. right, questions. my All

Rodger Levenson

Russell. Thanks,

Operator

Thank you.

Gladue comes Alden with Our next of from question Securities. the Joe line

line open. Your is

Joe Gladue

Hi, good afternoon.

Rodger Levenson

Hey, Joe

Joe Gladue

just question. one Yeah. had I

at second you guess portfolio, to points driving -- Just the looking decline? over third from real -- a if looks on rapid yields, the what were estate little that down give could XXX quarter loan just wondering basis just was color particularly like us I quarter. And commercial on yields

Rodger Levenson

Thanks, Joe. Sure.

schedule to quarter in of second earnings the in the all the you're the quarter, mostly the that's yield portfolio is quarter accounting accretion. third release, the third If in the down includes sorry second where mostly to quarter it from accounting our purchase the in the and driven quarter. I'm More the and primarily on came loan shift is of accretion step in to the referring CRE categories accretion significant was significant There purchase from a CRE was C&I. volatility -- third that

within kind step release So offsetting you'll material. earnings the see up in the of an yield C&I

Joe Gladue

I Okay. you. thought it. Thank that might part of it. was That be

Rodger Levenson

Thank you, Joe.

Operator

will to turn the I call now you. over remarks. Rodger for Thank Levenson closing

Rodger Levenson

today. have address have joining Dominic a And Thank for and may as thanks, participating we the us. back of call go again, in And in good and look December. are forward Thanks us you to questions Please everybody happy to any November day. the many hesitate don't when seeing on we interim. always, the other you. again road I contact on and you for to

Operator

concludes Thank you this gentlemen, and disconnect. now for conference. you participating, Ladies may today's

WSFS Financial (WSFS) 22 Oct 192019 Q3 Earnings call transcript