WSFS - Earnings call 1 2022 | WSFS Financial Corporation

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Operator

Thank you for standing by, and welcome to the WSFS Financial Corporation First Quarter 2022 Earnings Conference Call. [Operator Instructions] Please be advised that today's call is being recorded. [Operator Instructions] I would now like to hand the call over to your host for today, Dominic Canuso, Chief Financial Officer. Please go ahead.

Dominic Canuso

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

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

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

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

cost Bryn bank, achieved households, Trust we conversions exciting XX milestones in with year. After from customer consolidated of converted January the transaction. synergies on We recognizing over technology, the the branches March the branding close weekend significant and successfully XX,XXX our the combination quarter completed of X, of and We over first and the Mawr branch began XX.

annual We cost XXXX. or the savings slightly exceed XX% of are of transaction-related the identified schedule ahead achieve to in

The the early Wealth XXXX as Mawr to and brand. into new technology Management occur also branding expected announced We've Bryn Wealth throughout Trust supporting integration XXXX. is prominent

positioned and continued the diversified for plan our business with successfully out Mawr we model. see addition, with initiative, Bryn transformation combination across opportunities of both Beneficial delivery our closed In which we and our that our the us strategic included X-year combination

I out will plan, our few next speak to X-year now a which moments. strategic in are rolling We

This from results income of of underlying charges significant restructuring Bryn Bryn the provision initial points transaction, reported basis or EPS. resulting or Mawr was the associated closing development of quarter included $X.XX the the ACL net $X.XX And our pretax X.XX%. including onetime items results. corporate ROA $XX.X and strong million $XX.X million ROA $X.X our included and when basis of ROA the X Reported had was XX While of in with and core million, financial of EPS. points also Mawr impacts transaction from we

noisy Mawr, are the this the demonstrates due quarter with momentum strength year. metrics performance deliver the combination the our returns Bryn and the to improved While of to throughout our franchise performance

cost loan-to-deposit well all balance funding the rate ratio us of basis environment. an X rising Our position customer of and sheet XX%, asset-sensitive yields stable points, low for

We XX year. increase anticipate total a points of the the expansion X point throughout NIM of by assuming basis Fed of funds basis in XXXX, fourth XX quarter

X XX throughout the additional As and the our phasing this to illustrated of the on NIM basis the original outlook is points to rate supplement, of X Slide earnings of XQ year. increases anticipation due favorable increases earlier

points X.XX%. expands, ROA range NIM core XX to our improve achieve we we year, the cost XX anticipate to X.XX% to As synergies of throughout continued the and basis approximately XQ to by in

estimated initial of includes BMT million ratio provision prior provision in in there ACL continued due X.XX% non-PCD $XXX.X remaining Bryn quarter. of loan in of coverage portfolios. is million million Mawr, ACL credit when portfolio. of including for XX on total approximately consistent have ACL $X.X our for would The of credit with and ACL initial release $XX.X a the PCD from marks initial excluding the $XX loans improvement $XX.X of million trends million Slide On including to ACL the supplement, ratio coverage The loans. provision, When quarter BMT the acquired ACL been is the X.XX%

of We dividends stock that $XX.X repurchases returned quarter, approximately repurchases, and included paused and in million were incremental the $XX million share share which of anticipation million including shareholders routine in capital common combination of from to the XXXX in repurchases. $X.X

total ratios XX.XX%. in and of capital capital regulatory the close Our with CETX combination and XX.XX% excess are anticipated of the Tier to capitalized capital well of favorable time BMT post position announcement, our capital substantially and of significantly X at

environment The AFS AOCI plus equity total rate basis lower Bryn the common X.X%. at our impact transaction. quarter, negative the current onetime quarter associated the Mawr on the a the than on ended points TCE is from in of costs This the XXX AOCI anticipated portion basis XXX Tangible is from changes portfolios impact rising prior resulting points. with investment

of illustrated transaction as tangible the in dilution with supplement, same The the time X/X the AOCI $X.XX transaction from decreased announcement. share expectations of resulting X to the the onetime from Similarly, value per on BMT at of X/X X events, the Slide favorable reduction model our impacts. total BMT transaction estimated book deal and is from approximately quarter, the

redeploy was organic the flows the provide and in was impact investment is strategy risk important the low to with deploy growth consistent or into earnings, into back to minimize along loan-to-deposit our to to position, ran duration we in cash AOCI, deposits and growth from decision to optionality it flows The the This note deposit liquidity flows strategic event our customer of capital that the or cash purposeful deployment, few over securities. reinvest the portfolio. strong last customer into provide diversified the loan XXs, maximize excess ratio made flexibility years given Regarding our strong optionality. net of and in to maintain to our cash off

the amortize of this best the of assets position back Regardless to over do the we and expect We is continue off these for duration option believe intend loss investment maturity hold tangible the to us. and to equity. into AOCI categorization, to

the fee headquartered above-market X focuses Wealth investments super including particular, continued be growth our our that by financial supplement, banks sharing plan in market community the or our market transformation made will as other the through Bryn delivery Lastly, our share strategic over are combinations for largest our national businesses, all we the Slide supported growth bank optimizing from franchises locally nationals positioned as of and Connect. our in in supplemented differentiated on and diversified strongly Beneficial revenue strength Cash large are in the regionals. few Loan are with our We initiative. on years, last by targets and XXXX, believe and Mawr X-year for we XXXX illustrated which

the When external and ROA volatility low-cost that during period. with sheet improve our factors. balance we likely deposits, asset-sensitive strategic planning, plan combined will there our be recognize have to to in considered diversified is our these our variability due and macroeconomic In performance expected

anticipated delivers. our quintile We by believe in to defined between to we planning our our of of range financial primary importantly deliver and have which peer ROA is end volatility the sustainable, the hold that the of captured ROA we the plan X.XX% group, top by in high-performing our as continue objective as X.XX% period. Most results

you may now the open any have. answer up will to We questions line

Operator

Schiraldi Instructions] of Sandler. [Operator from of question Our line Frank first Piper comes the

Frank Schiraldi

loan not And have that your in provide guys' have you're But you can time. side guess terms pipeline? things? additional color of on Paydowns I remained this at on of on there have now just moved that color updating guide strong But wondered, you rates commercial slow higher? I elevated. growth any is that seen any

Stephen Clark

Steve here. Clark Frank,

$XXX were million flat, $XXX balances funding loan quarter-over-quarter yes, prior strong, but commercial in top So on so of loan commercial was of very quarter million over the activity quarter. last

headwinds historical rising activity CRE. the remain interest of and activity rates do should believe liquidity, excess We in some forward. certainly through has So refinance going space the been in C&I lessen refinance there

weighted On nonrevolving The over top little is small pipeline, unfunded $XX have of is lastly, million. commitments million. our $XXX strong. pipeline top our million. that, of On XX-day that mentioned, you And is average $XXX very a business we of as of commercial

expect but and that to we would the periods. to start So these year are yet fund, loans past funding not future closed have over in those started

strong So we very about we pipeline, activity, prospects really good are, very significant and favorable. feel remain where

that level. digit forecasting are single mid- bank of high to the kind at We

activity well. very includes business, our the and of strategic Finance on NewLane doing the we been out leasing partnerships business, that very, have have the coming consumer So side, which

Frank Schiraldi

you And the right. then on side, consumer following I for All guess Is quarter? there. Upstart on detail pace that give you're up relationship? Okay. growth But in the of can on the sure things. split side much double-digit that just the how mostly growth I'm not certainly that is

side if change of given that's that still of sort to a thinking Just on your that you're macro wondering if maybe with any driving factors, growth level, things? just comfortable

Rick Wright

month. We're Yes. in million the to of do continuing $XX-plus neighborhood somewhere a

because delinquencies planning closely us. are footprint. is We are portfolio obviously loans in generally range. The it our are new this to still our monitoring within The

are on dime or with prime geography, control average to to of and either We underwriting, XXX. ability those able and pricing in super move are XX% the an loans prime of a FICO

are are. moment, the So proceeding comfortable at we as we

Frank Schiraldi

NIM I on -- points. guide And Great. one of to excess from sneak guide. basis if Okay. last assumed can initial in the From liquidity quarter -- drag just a XX a quick more on XX one

in you that guess, any at the updated for in to of -- the you that provided quarter. the there the slide high deck? Is I guide You're end the that first adjustment made

Dominic Canuso

we drag the the that. to Frank, year. original excess have is updated last guide shrink we for the outlook quarter And as to continue anticipated at communicated a not we throughout liquidity

Operator

Michael from comes question next of Our KBW. Perito

Michael Perito

made, missed the forward? the just continue or out to the guess you there as forward, I the that continued excess position. grow held I think grows be where any But a comments in the to deposit I here? that, outpaces I on that from just follow. equivalents? levels? securities look will we guys like, has do that in trying that was situation -- more you book wanted and Dominic, be like it's potentially say, portfolio. does projections spend liquidity going capped that I if likely you cash, apologize to could let's shorter-term Or further is But minute kind question bond you around And the a your book more cash do Or think guess anything flexible of the -- this, purchased I QX

Dominic Canuso

question. Yes. Good

for. to target achieved we've we're the part, most looking balance the sheet For

However, there in years. the few levels amount some grown meaningful MBS the the is to first additional in portfolio, expansion but the relative not we've likely quarter last from

Michael Perito

the And again, kind blended what's and don't the after investment said of this, just sorry, I quarter. the the purchases in -- duration you if portfolio updated once first but the of know

Dominic Canuso

to still look duration to X within Yes, we manage the it's around is portfolio. years, the which

Michael Perito

And it. Got then kind here. quick a X-part of secondly, just question

rate as run Or that that chance likely to the do can that if you think it. new the could Fed exit come Just inflation, QX scenario that stubborn offsetting in the partly Obviously, kind rates it's back to that, year of to has with guide. for that a it raise -- to the safe well? drift some would updated is kind in dramatically ratio that one, well, guided lower of just of efficiency you you in guys there's the that response expenses are ROA the as NIM say -- into But benefit?

Dominic Canuso

Yes.

inflation, environment obviously, I higher inflation environment, think in is But the ratio. would rate you the NII out. a playing stem macroeconomics equal, higher interest efficiency else impacts All point, still to the leading are to this higher summarized impacts your of NIM to reduce and the accurately.

expect efficiency year. the throughout that improved we we ratio, from the cost the expect to takeout BMT to and continue synergies we continue So --

Michael Perito

Great.

in. I'm And to so last actually, one sneak going one

strategic between $XX with and obviously, years. around just large the changed X-year of thoughts billion X curious, space strategically lot the Bryn M&A or Mawr your at of a belt fairly the and if Just now deals altered in under plan, few all have kind last and you

of wondering any if there's are refreshing point. kind Just this or thoughts that indication different at around M&A

Rodger Levenson

Levenson. Rodger it's Mike,

organic on X-year strategic is plan focus, integrate. the it the And and theme really, very our much of optimize growth. -- focused is So

into on plan relates without the the said, in side. bank that the nothing built That is going investment But always achievable is significant as significant franchise. invest any So into particularly the we're model. to to being M&A, built plan it

Operator

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

Russell Gunther

deposit give might on you update expectations and how assumptions the us us backdrop the of rate the in about that Appreciate X that sense update terms thinking hikes Could a progress? margin in there. against and 'XX, you're betas how of

Dominic Canuso

start in rate about recent cycle range. closer mid-XXs. Typically, Sure. more that would cycle more the with the when X to from though, historical 'XX the out to months X I'll in day, be year. betas to XXXX betas betas to in deposit interest likely inflationary of low most rate rise. been environment. in rising mean and would have recent start lagged the this begin the at in play the think, But deposit was deposit 'XX I expect likely rates very different. That We next had the XX% is The and would environment would in end

environment. in may that So important rates, deposit believe help no stabilize rate deposit Trust of we interest [ that our to beta out and play in base at the will and is although XX% ] differently betas, deposit note it's rising in Wealth in the that

Russell Gunther

some then total metrics range there going. the lower? fee I is any discussions the had know Very XX% outlook particularly Got NII And forma outlook franchise, side? color the any helpful. slide, could Wealth We've previously? is revenue the guess for refreshed share and it. terms there been on in expectations where profitability the of pro terms Or you left take again, Does contribution, in your outlook that had I of plan longer-term are around XXXX Okay. unchanged. in

Dominic Canuso

start mid-single-digit with communicated fees. In growth. we absolute this in expected I'll year we our outlook, Sure. that growth

or loss included and We expect to Durbin better. that as from the high is fee look obviously, fees the loans. continue the think and interest digits But ratio impacted directly XX expect to strategic we range, of to would grow by through some plan income that in around BMT We single continue. rate environment. the a horizon, and that for double-digit that, PPP But we impact would

digits the be to next but So low depending XXs the on for few single growing importantly, that I it we could in that high digits, double to XXs, the number low of the in see rate increases, continue years. high to hope, most

Russell Gunther

the very things That's I forward Wealth? should capital. to heard then And How of on we build. helpful, me expectations about on last about continue to commentary you your going relative that and just think Dominic. one for buybacks for side XQ M&A to

Dominic Canuso

Yes.

of capital continue. this tangible proven importantly, the historical we core anything will between we returns. I about continue ensuring we maximizer capital of to regulatory capital of will our positions, price, opportunity incremental Clearly, to we right and return that greater those think In continue IRR first function philosophy equity. and deliver will at of And has loan will return a than routine repurchases our practice position. of would we'll good environment And then most evaluate that XX% hold our a and shareholder this have incremental in repurchases and least XX%. environment, share amount that share dividend that our equally then an it total evaluate And that and, regardless net growth any ultimately, income to share that price. be split ensure

Operator

like I'd over Mr. to turn Canuso. Sir? in further the questions no queue, with to back And call

Dominic Canuso

be a I conferences throughout many Rodger and meeting meetings for look you the and with day. today. joining to attending we great and will the call investor quarter, you. of forward Have Thank

Operator

call. conference Thank today's concludes you participating. for This

You may now disconnect.

WSFS Financial (WSFS) 22 Apr 222022 Q1 Earnings call transcript