WSFS - Earnings call transcript Q2 2021 | WSFS Financial Corporation

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to WSFS Financial Corporation Second Quarter 2021 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] Please be advised that today’s conference is being recorded. [Operator Instructions] I’d now like to turn the call over to your host for today, Mr. Officer. Financial Chief Canuso, Dominic Sir, you begin. may

Dominic Canuso

Rick Thank Levenson, Chairman, Olivia. Officer; Clark, Officer; With Banking Bacci, me Rodger are Steve and Banking Commercial call this Chief Chief President Wealth Retail Officer. on Chief you, Wright, and Art CEO;

begin the quarter, with read like I on statements. harbor safe remarks I would to Before our

or Our our statements. and results plans, constitute risk periodically forward-looking indicated future All Actual annual to from the our will recent may those today’s prospects the on and reports information everyone, call materially but as today. XX-Q, in subject on not file our XX-K about forward-looking comments to include call you today Securities are limited statement. these Form expectations, on discussion harbor we management’s to and well of joining differ with Exchange and results made thank our report statements the view for by risks the indicated including, that factors Form during historical Commission. due most afternoon, Good quarterly as safe documents and other us uncertainties,

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

which margin and Net strong offset of persist small from expected includes excess $X.X negative materials. our trust quarter had income business points and XX% spending under positive consumer X Highlighted on detailed and the and X a Customer and strong environments. XX% various of originations trust X trends, $XXX accretion through and robust our which economies is quarter, XX to relationships across $XX.X diversity XX of Loans out our economic from NewLane loan continues gain strength of up $XXX portfolios. Versus cost business. is have primarily income, impact lending The and points, given and the commercial are We by X.XX% in the no deposits primarily of are deposits or and and quarter basis throughout particularly of deposit liquidity the first few in of signs with Slide leasing from utilization just an earnings commercial laid our total customer million and quarter balance another are and a core at seen XX%. stability expenses quarter, of non-core cost Growth on is weighted a a commercial, continue X.XX%, investor X liquidity and checking X% XX. in a sediments, reopening excess sheet versus grew at wealth. one-time Total franchise PPP customer the reported points and than costs XX line as our the broad-based have half average consumer, were growth, on significant more of accounting impact XXXX, million Pressure to points. is billion prior PPP large interest new deposit as quality second XXXX, points quarter year-over-year and region, and liquidity. rounding demonstrating X customers’ rate Reported loan demonstrated and net and from earnings only prior share see basis per to and presentation, customer loans. purchase into both annualized from or historic year, basis of XXXX customer across basis runoff in excluding in recovery offset Slide performance environment NewLane was annualized Loans lows of relationships accounts WSFS performance grew purposeful by of comparable metrics. in clients’ was million, low on as basis slides this savings ROA. local the customers. out as increased $X.XX higher in XX% credit our excess deposits a when represent

and core when volume market by including fee the increased interest supply core – impacts when and our to line revenue quarter XX.X% revenue environment. Durbin from Second our excluding fee accounting in especially revenue lower shortages. franchise resulting fee healthy When management services with excluding of with from Core demonstrated Amendment, again XX% all year-over-year a – and grew This growth. AUM, the XX% fees lower the fees reduced year-over-year by core was and housing ratio and banking wealth fee the mortgage PPP, recent efficiency this from XX% diversity of Connect. banking driven Cash from increase in refi strength year. of expectations billion value, increase in PPP a – X% for by and lower fees supported grew core in fee products record supported AUA along and slowdown $XX.X rate lower was by The the a accretion, mortgage purchase XX% offset with revenue

in to focused management with investments disciplined continued transformation. our in and delivery expense We franchise be growth

portfolios of the in and emerging stress. vulnerable most the XXXX our provision, lead COVID, second Regarding evaluating economic be we ACL quarter proactive at in were will onset the to of to the very

As reserves the ACL portfolios. of this losses of with anticipation built potential a these process, result in

of now than third $XXX.X remaining end PPP the meaningful an percentage X.XX% than and portfolios. was excluding X.XX when X.XX% modifications, the portfolios Shown the million The to our including Slide released at ACL problem PPP, this in and quarter of mark these factors government acquired the quarter loan these borrowers, reserve and impact better in due improving ACL much economic to on strength stands quarter. Fortunately, environment Combined the of peak coverage or with of on with performed points loans million stimulus, the X, expected. credit less the $XXX XXXX. additional a reduction ratio led ACL

lows be dependent improve loss upon pre-COVID across in toward to of releases portfolio. outlook low portfolio in content will metrics year in half and with performance by modest second loan trend and continued credit Potential improvement the the the the growth. offset the credit and economic continued reserve all As continue

We capital heading generate earnings capital significant strong into anticipated continue to position with the BMT. combination a have through and

TCE have repurchases share to in increased and cash approved As close $X.XX until transaction. a quarterly XXX of X XX no basis Directors points bank The the of in shares common the CET to ratio basis were Board of a paused as we the BMT stock X.XX% dividend per of the and quarter points purchased quarter improved XX.XX%.

gradual while full of remainder as to plan we liquidity be loan the strong growth in our which has XXXX for in assets recovery continues economic this results year Slide consistent the in the recovery, and out model to performance our delivered and first pleased expectation of the XXXX, discipline in through gradual expense for of we with excess anticipate impact of management, short-term, uneven PPNR anticipated of a and Our And uneven with X.X% a XX for environment. on range The the financial our business XXXX X.X%. continued operational to year. percentage outlook our the be may pace are played original half and and diversified original

in about businesses, upcoming BMT. our the along national strategic are and our with given strength markets, optimistic combination fee-based our excited future unique, with the prospects, We our of position competitive, and

on stockholders WSFS merger WSFS June a Mawr Regarding stockholders each the special approved and of BMT, both into of XXth, Bryn for at Bryn meeting Mawr company.

combination. for the this excited share week OCC We we that are approval received to also

integration consolidation branding teams planned engaged Bryn XXXX. including for the will The year, Thank highly conversion early is receipt and WSFS actively take at first And your anticipated and Our designing working bank be transaction branch are questions. happy Mawr of regulatory as the pending is and early required to quarter close plans together, the implementing remaining you. approvals. to we fourth our and conversion, bank of quarter

Operator

[Operator Instructions] question KBW. And line Michael coming our with from Perito of the first

Your line open. is

Michael Perito

taking good my Hey, for Thanks guys. questions afternoon

Rodger Levenson

Mike. evening, Good

Michael Perito

seems more I that, your future loan of some of of the was of financing like It update seeing just maybe I your on more could lane Philadelphia, if that And kind on a it. you’re and your because core strong I Metro part the do in really like having growth and today it view those areas the the outside diversification, other us guess better enhance little C&I you and growth. element curious of piece and of portfolio Wilmington you franchise of new of partnerships of equipment geographic seems growth markets, in how to try some yourself bit as like opportunities you consumer want area? but are exploring obviously see kind of

Dominic Canuso

commercial loans. to continues disciplined our here. into as demand markets terms, lot growth results off. excess a And in in We see seeing start mentioned, do particularly strength loan be the but Good in to Sure. I’ll loan in continue which pricing we you’re question. the and liquidity we’ve play the our in there, Obviously

and the mobile-based side, customers generating including secondary various for is On lending. products which partnerships we services EQ, consumer appropriate with and do the our avenues partnership have Spring market

quarter LendKey have is with a second We loan the in to add year. unsecured here, launching upstart, we the just lending half student generating, new the which the of which to lending product growth anticipate in and third we’re

Rodger Levenson

C&I obviously historical context regionally bank. we’re on just is I And driven some just Yes. this could add if that, commercial Mike, Rodger, – a focused obviously

us in I that those just go over based come the strategy I are think the value think those to borrowers. we’d growth premise full investments we’ve at C&I overtime a would where deposit some some relationships now, the consumer because a kind like relationships. for that I said, that franchise in of a around relationships. of, would time, in our little leading have little lot to And our locally, things But of of our of of our above, local the think, the that’s We’ve demonstrated of Obviously, that the will loans, of we’ve right Dominic of point we’ve diversity may which recovery upon category so as are a the with I growth important that again, think the bit And overall the from But I book. of challenged below out we’ve majority targeted, our depending area. XX% here of it’s made drivers at. being seen, and by have many conservatism to loan solidifies unevenness the or liked with expect lending always loans little a least commercial that

Michael Perito

Very it. Got helpful.

have I BMT Just deal pretty wealth forma revenues. two hit And you was important and management, the really pro and but quarters had of I the any fee you AUM you when more a know to quick. real franchise. you the have wealth obviously, two you that strong more, I yourselves if broader income the that outlook achieve just curious curious think if element the Both guys on that I I’m have comments any, think general platforms, growing was type wanted the once announced you just of could guide, combining about growth happens. and

Rodger Levenson

And very now, process little opportunity think through since our due again, from significant give a have our would the teams under Jen Rodger BMT together, there’s franchise. and thought coming is being significant just Art been wealth you confirmed. started into we specificity. integration that the this going more marketplace. Fox is you – diligence The has I’ll everything in received and come So We about integration with I well. really bit leadership and customers our put start plan. let that very discussions has The then a well the opportunity by just combined together Art it’s to tell the very

the throw to of over did combined think of recognizes more modeling, I the any Art see I’ll if original as me, And businesses. than value potential the – kind when for So, wealth much, specific color. everybody excuse we not combined we it

Art Bacci

points to the It’s Yes, each maybe getting that. at and yes, were laugh know Mike, each in thanks, to preparing Jen as through integration and looking we and One little add worked Rodger. other, we is that. as I’d this Art and independently. we I three were strategic plan, plans like shoulders a over we almost other’s each look is, other’s bit our

businesses they’re very this, out the the and finding realizing are and and coming we’re complimentary, seeing the but so teams very that potential, all of And excited. are

going that great So is combination. this to that us be to leads a believe

to our years of Steve the working between Rick, and holistic a have advisors. and really the of going Secondly, businesses wealth lot been interaction into on over our ends, I are market couple a retail, sure make more we’re good last commercial, seeing basis,

cases, some relationships in where referrals. the commercial we good so and we’re selling the business And have owners are getting

loan get So, while the growth. not may we

that. from due thing is then feed the people to We’re to business the retail securitization places trust certainly getting for with side very business. looking on activity And the invest the all our the excess on and partly all seeing just same other liquidity really mean, we’re market cylinders. high. the hitting is And corporate thirdly, I benefit

of Officer made relationships. our team has addition inroads new Secondly, with Business the into new Development a

we very really robust continues pipeline So helping be see that’s a front. and on that that to

Michael Perito

Helpful color. Thanks. else. me, from And just and it kick someone I’ll lastly then then to

you repurchase Rodger, as dividend your just mean, regards guys announcement, Bryn to to kind is to approach want and Just assume a closes capital I steady will that Trust did this it once of – share the to deployment I appetite for what the payout. to into confirm, probably answer, it that probably quick deal that that leading Mawr near fair us

Rodger Levenson

will to of There philosophy we’re in and change no Obviously, be the paused long-term capital at – the just our it’s where Yes. combination. strategy. because

Michael Perito

Appreciate it. Thank you, guys.

Dominic Canuso

Mike. you, Thank

Operator

Now, next with Zwick & line from question coming Scattergood. Boenning of Erik the

Your line is open.

Erik Zwick

everyone. afternoon, Are hear able me? Good to you

Dominic Canuso

Eric. Hey, Yep.

Erik Zwick

the with this if kind months you yield first ago, forward. three point? growth where thinking how could provide an to outlook pipeline relative maybe wanted to I on for start the loan Hey. of average update at today also and Curious stands the is trending about going just

Steve Clark

or it’s Steve it over has consistent pipeline Yes, the a past with The quarter Eric, what been fairly is Clark. so.

that commercial remained XX-day XXXX. fourth and as weighted million is $XXX of for pipeline our since as average the high strong around been it’s quarter So,

headwinds, the and businesses C&I CRE despite getting across we are opportunities feel about good our So, it. and

weighted quarter, new was X.XX%. both yield the second yields loans, Regarding $XXX,XXX greater the than for average

that So, fairly X.XX% quarter, that, target about first consistent. in mid-threes the we feel but that good compares the

Rodger Levenson

just could is Yes, that. I Rodger, if to this add

the just a in they’re commercial stay the second – candidly, talked about. reasons payoffs I we’ve challenge of front the in just under right fundings now, loan quarter, Our fundings our bit were up little think million. It’s $XXX all for to that

for the about we and the had So, than we churn a see that’s feel in really what outlook has the just reflected the good been anticipated, little second you of the year. greater momentum. It’s half

Erik Zwick

that risk second rating And due million indicated portfolio color. it of gears of loans a look excuse that good to to to by last quarter credit. the press that back to me, release $XXX – this Switching release had received, total quarter If That’s I appreciate I guys. press I declined year, portfolio. from the think a hotel assets downgrades. problem XQXX about $XXX mainly or hotel so million

some So, gives of those, you the curious of maybe are that were what seeing, yet kind hotel what to watching, or loans within concern those it today, are but what of type or kind you at look from you as have it percentage upgraded be today? that original you that, and any geography occupancy, still is commonalities or just and downgraded

Steve Clark

Yes, so, Steve, again.

our and book, over a $XXX of downgrade that criticize which was of year last book. little million. We yes, about did So XX% hotel

correct time. upgraded And So, we there that that and quarter. some the here was in that action read, we as exposure the we’ve you’ve seen thought second of at have improvement

So the to percent been in hotel criticized assets book reduced the XX%. of has down

four represents of paying paying million, all but contractual are only. The all, $XX original interest payments. borrowers or which remaining $XX So are million properties their those paying are five

trend Jersey a held is of with kind up a third those Shore time rebounded in so room at upward. you second year and were of to last this cannot of thought our So, locations. back Occupancies the beaches, book continue book quarter leisure, of the Delaware really get has or year. About we the where the from we kind of

and strong business have business but spoke So very, anecdotally Occupancies very specifics, all that properties, share borrower week hotel. increase. occupancies continued focused current XX leisure just can XX%. at very, this I to the we The approaching are is occupancy travel have to has I coming back. don’t one

example of across seeing entire positive So just one portfolio. of trend the we’re anecdotally kind that’s that

Erik Zwick

consumer what margin? and the out you might in be Thanks, How at comments, in jump to some from mentioned the you into on the expect figure commercial for and one prepared point pressure liquidity be guys and do and the look as the on in core and kind your some customers. at Steve. at excess door try the me, have all come that of of both the and processed of it margin and that Dominic And you stimulus what just off. drag deposits sticky your might the deposits ultimately long-term I’ll efforts then leaves relieve look last and flow you out then XXXX, across

Dominic Canuso

Sure. It’s a great question.

it focus in trust on and outsized relationship-based leads understanding wealth from I the first with to just demands. continue the to and partnering them, banking well, mid-XXs, ratio think fact and deposits grow the really speaking them stems it’s I add so list, your as really, our and loan-to-deposit their lower that to would we and to

the on combined next down sheet we liquidity optimize the we really runoff. doubled back the flex to liquidity billion over incrementally tolerance look over balance consistently $X.X BMT, the economy, year, I to with think impact anticipate on And trend GDP and it staying having and with will our and on could in even portfolio ability it’s if the prices off continued a that there’s the growth investment spending we’ll risk overall. with on the past growth We the once We probably our the quarter. And close our and excess of overall funding million in really We’ve then see of within that appropriately. way and quarter. more we’ve we’re paid senior that stimulus utilizing debt focused $XXX and off do last it of wholesale kind its paid expectations. be do

Erik Zwick

Thanks for taking my questions.

Rodger Levenson

you. Thank

Operator

Now coming next Instructions] line of from [Operator Preston Brody Stephens. our the question with

open. Your line is

Brody Preston

Hey, good afternoon, everyone.

Rodger Levenson

Brody. Hi,

Brody Preston

runoff a have I you portfolio. the regarding question for Hey, just

and a that side. model on a little challenging it’s to for So say quarter-to-quarter the I’ll speak runoff residential portfolio myself basis, particularly the to

reset, Mawr fourth a given runoff cleaning here, so that faster guess and quarter kind up plug a the could letting the you’ve any the strategy some that shares just than but earnings off know residential just maybe back on loan and the the maybe to maybe the run buy capital Bryn in like potentially way to that. puts of of got and bigger up with point portfolio I sluggish about so you at the there think side that coming bit deal use And to you I’m can beginning of hole? pursuing the selling to closing, a just little I things of has been it thought to takes trying

Rodger Levenson

Yes. specifically. address I and resi the that, mortgage appreciate I’ll

the the as initially primarily beneficial of know, we think, at all mortgage commercial of three residential about see year. very exception environment. I portfolios portfolio by addition And Brody, a any of years would by at around And small the left, to the with look it runoff these years for loan really four runoff a student we portfolios when you from rate the will transaction. this And end because year, you the have the originate trade-off. and right BMT. commercial that there’s the don’t take sooner from happened portfolios stuff that It’s runoff really time of end thought it to

us beneficial. within our where our be mortgage we because lots most officers portion loan obviously predated through the these or relationships originated of book. of or will things, strategy network mortgages potential This are who – And but either today residential what region. evaluate significant different left operate retail this So for relationships of for is are mortgage

activity where gone those BMT to over tradeoff. And wouldn’t rates to that expect this since opportunity refi really the be can we dropped what expect see we’ve going it will want enhance we although significantly, just if “runoff amortization is so use from kind letting time. some. the a the the really And come as forward”, including period of we will it And would through to much there relationships we see over of normal

can that will we duration, think want if rate. those and seeing be of relationships. grow a normal more out mortgage I flatten when of portfolio we So And again, attrition to sort focus

expect as mortgage So a in to wholesale, wouldn’t I resi a portfolio. it relates a our transaction near-term

Brody Preston

you. Got mortgages you that, follow-up to, to just of are you’ve it. kind the their I’m they’ve just single guess, Thank pegged residential a assuming maybe relationship, just as with that. And I for that that got maybe runoff as mortgage

So of maybe you’ve I successful have sell loan trying you I relationship? in to so into? more most full them customers converted to guess that runoff products designated with And might far what as you been guess, and are have them a terms been cross what originally, a

Rodger Levenson

Yes.

So where that the would mortgages I that the sort service relationships. of large percentage beneficial, call over mortgage, single of resi came from

but also capture located they’re our operate, These located sell here. know, because And an originated actively of primarily here broker have opportunity, of we and have are in who those had footprint. a been make were arrangements, to they refinance customers geographic with. were then team is, only in and you builder to they model. and engaged and So never effort it remainder the undertaken people as a not We’ve contact through traditional with We’ve originate banking all hopefully relationships. these fuller products

these off the many that in cases, of are private already of relationships, So including out significant our referrals group, that part broader are commercial come our retail bank, here trading well network. loans are that as sitting as

Brody Preston

Rodger. significant guess there’s it. appreciate have. when another color, significant liquidity I gears, that Dominic, the for you growth despite build Thank it. I’m maybe you Got of just switching securities I quarter

you opportunities are be buybacks near-term of around being hang you about? with for from so coming any we of suspension just in just here deployment a guidance growth for loan kind that should little are or quarter down liquidity, And thinking expecting there that and another the bit, the sort

Dominic Canuso

Sure.

the the have do doubling towards and last last that, $XXX debt, liquidity we just year, up mentioned, to eye with to amount payoff the an We million of and I the and the sheet investment post year. we’re excess it including June look doing As transaction a over senior optimized the optimization. significant balance the the would combination continue over BMT portfolio of

So the we opportunity framework the within the that yield low-risk, cashflow our liquidity from works continue portfolio. increase see portfolio moderate size expect we do acceptable of and investment the to the the to of that investments, providing

likely would continue you see So of that second in increase to half year. the the

Brody Preston

it. you’ve one view do customer or last that slides to given on on additional deck how the wanted sort may over have of branch this digital in acquisition slide. point? all And shift the as was your just an seen physical more in the think Got of the then been stood have update sustained the me out And the or at the the locations an for get interaction, digital to you an shaped year of becoming customer so Do channel it’s alternative network. you digital tool, to see channels

Rodger Levenson

Rick?

Rick Wright

Rick. is This

digital products I But that We have. never company. going transformation of market going to over rapid in the think and of relationships hit what touch. important hope services we be digital the think next are that to year. And a we’re seeing more to everything that’s humanize digital doing and is we’re to see there’s we’re more the And try our we the effort. do adoption a we’re obviously first to what the delivery

Brody Preston

floors us rate? any the All or if are me. then right, loan what percent great. of deck, there it portfolio I for floor you one I’m then remind in And missed place, portfolio is Dominic, sorry floating could below levels? if the at is loan in And what of percent last but the

Dominic Canuso

Sure.

what to that resi the as of we variable between And portion XX-XX grow to portfolio mortgage runoff would increase fixed. relationship-based to and the the of about – running would lending. We’re portfolio continue that about variable talked continue look C&I we and the

Steve Clark

when year the of floors it. this past of a variable have Brody, X% X% our get originations book floor third all is in can About and a floors new or either note. have over floors of And rate LIBOR half a that we Steve. the

Brody Preston

And it. of floor do what the percent to is at to you Got happen below – that do you that Steve, what levels? or know third, know of currently happen

Steve Clark

to have guess we of most. at get answer. a you back exact is to think couple an I My So $XXX with million

Brody Preston

right. very I All taking everyone. appreciate questions. you Okay. Thank you my much,

Steve Clark

you. Thank

Operator

line Now from of Gunther our next coming the D.A. question Russell with Davidson.

is Your open. line

Manuel Navas

Hey, Manuel for on Navas is this Russell.

Rodger Levenson

Hello.

Manuel Navas

wanted this. just Hey, in on to check

do what expense the achieve kind ratio With target of that? of to should run expect we help efficiency low-XXs, rate have you

Dominic Canuso

Sure. Yes.

do I’ve franchise mentioned, continue But discipline we monitor rate So in in as particularly, continue environment to Connect. portfolio. invest our we materials in anticipate, transformation our we’ve of wealth the Cash as our the efforts, this and expense to out laid and delivery growth in will growth, in and

positive And are continue faster and the quarter up than step growth see cost second in dollar ensure expense some maintain growing of that second rate to so rate. revenues we absolute leverage would the half into to year, operating the run from the of the but look would

Manuel Navas

you of you. you rest Thank all Thank my got the much. questions. – I’m very

Dominic Canuso

very you much. Thank Okay.

Operator

to the to you. Mr. see would I turn And questions I no queue. conference like over Thank in further Canuso. back

Dominic Canuso

events Thank look the Rodger summer. the and with we throughout call and forward many then. today. quarter, of will investor you attending the conferences I you. and meeting be you for third Thank Enjoy to participating on

Rodger Levenson

Thanks, everybody.

Operator

Ladies our and gentlemen, conference conclude for that today. does your for you Thank participation.

now may disconnect. You

WSFS Financial (WSFS) 23 Jul 212021 Q2 Earnings call transcript