WSFS - Earnings call transcript Q2 2022 | WSFS Financial Corporation

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the WSFS Financial Corporation Second Quarter 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’d now like to turn the call over to your host for today, Mr. Dominic Canuso, Chief Financial Officer. begin. may you Sir,

Dominic Canuso

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

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

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

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

the business lie a of conversion services. Reported are potential nationwide to strategic to continued late The strength The non-reoccurring based in $XX relationship given items illustrated at in and C&I management along million branch BMT approximately our March. the wealth related called $X.XX results that CRE and the small with announce locally of branding in as include for estate businesses. the strong bank our demonstrated business We and of KCMI. of of lending quarter growth of real and pleased the our region, our position diversity unit our the first quarter. legacy par opportunities quarter the model largest sold couple after quarter products BMT of EPS bank and We and also X.XX% ahead a franchise our ROA loans headquartered both

going In Advisors on After Growth strategic it our X. Insurance completing on in product BMT quarter focus costs forward. not Patriot share. per the development plan combination, were sold $X.XX These corporate to or will restructuring a ongoing addition, were business noted with lines material have not as areas release financial the July and Insurance results. $XX.X these pre-tax our considered sales press BMT our we impact two the two businesses the One-time aligning to of and million

net was million in included EPS synergy an and fee this the CRED.ai on million of X results and of offsetting diversified $X.XX per these of with share. our by items, gain of from on combination. cost with excluding or and loans our investment run the unrealized equity core achieving results including Somewhat across XX%. nearly our company, These driven an ROA Summarized positive in pretax rate ROTCE our along Slide BMT areas of strong when both anticipated $X.XX or the $X base, of supplement, $XX.X X.XX% a growth performance full income all were consistent an

the our year our consistently are We executing with for plan. expectations and strategic for

by driven with years. supported weighted continues total annualized, decreased XX% and were loan new over commercial XX.X%, a robust a loans. are Net annualized, the XX gross grew XX% commercial EQ of have annualized This to has acquired The X% pipeline loans highest lending growth average X.X million Customer continued was over loans the approximately day both excluding trust half Consumer now including our fundings Spring nearly residential of by leasing. on annualized $XXX new deposit products. record X% quarter, XX%. grow in $XXX Upstart in success the to line two utilization Consumer or deposits transaction over partnership which million. by supported growth $XXX when and from mortgage driven deposits noted deposits. billion short-term decline annualized our X% related by portfolios. in X% lane trust the grown increasing past or in of sale loan of commercial [XX%] now X, these [ph] We base, just excluding KCMI transaction the when year now KCMI which growth million was As Slide and

ratio continued The we loan addition, at accounts. In capacity approximately the to growth. XX% fund deposits deposit stands sweep into net to loan strong $XX moved demonstrating customer million of future

the reducing the billion in HTM, increase. curve investment middle TCE AFS on we to speak $X.X of XX% reclassified or potential to our the portfolio rate more higher quarter, During a impact I'll from capital moment. negative of

increased NIM the the Slide basis as As and yields XX, a second quarter point environment XX in rate rising from points churn seen basis XQ on the loan was increase over in portfolio. X.XX%, XX

customer relatively X costs only flat, While increasing point. deposit were basis

points In X liquidity excess to addition, basis negative impact bps. the XX decreased from

ratio X mortgage revenue increase as million resi million as sheet ACL with from X.XX% refi each, the was million. which an increase and charge-offs in Net the on or from as XX. market have grew remain Cash for the illustrated credit portfolio annualized estimated metrics and quarter portfolios. not credit when and was is ratio million banking the core $X.X loan or of reclassification, fees flat fee X% on investment lower weaker included in remaining $X.X stable by marks billion $X.X capital driven in volume. balance fees Both ACL $X.X of acquired leading by now and Connect $X.X normalizing banking, relatively million Our XQ growth well XX.X% current fees of When would offset net growth ACL in been at X.XX% mix The approximately resulted coverage positive Slide stock million of the Board approximately XX% shares a authorized repurchases per and same dividend on full shares. points Approximately of dividend the with $XX.X million impact basis. quarter-end. distributed or or to XX.X%. we've share early. shareholders, The approved run the capital of as ratio million improved improved quarter repurchase including common synergies for million comparable while $XX.X XX% and well a authorization. than first Non-interest earnings returned X.X to time expense in prior at achieving $X.X be X.XX to rate quarterly the the XX% BMT bps higher Consistent cost of share, XX% Also, repurchase of outstanding an million are was share over percentage quarter, core to X.XX% or efficiency $X.XX X continues X in in the quarter. additional the core the increase managed,

capital capital of rate in based of XX.XX%. are regulatory ratios continued AOCI. and bank TCE on XX.X% to X.XX% decreased excess CETX and interest impact capital capitalized with driven risk the total Our of Tier substantially by X well

our volatility evaluate portfolio anticipated We few both AFS HTM consider the in best years. along hedging continue us and sheet for mix interest and with the balance to to next rate investment position strategies

Slide Lastly, we our at updated as on do typically mid-year, X. have outlook we assumptions

the I second we loan our are rate consistent be year mid-to-high with in of single-digits. at the half executing As the growth we the anticipate plan, to while mentioned beginning,

growth in a annual the of full-year now growth performance mid-single-digits financial XQ we the the date, revenue single Slide the and with original our is for higher the the X combined is to anticipated in NIM, X.XX%, AUM Insurance digits. look Given sale strategic position or the on demonstrates our rate full-year range. markets our ahead. CECL of ROA in the opportunities PPNR substantial markets around near These quarter our the BMC, BMT ROA both Updated forward XQ, fee X.XX%. initial organic growth and the XQ. anticipated business interest in and summary, excluding ROA growth positive expectations impact percent, and illustrated In performance low combined expectation and continue markets, low-end and our to refi given for growth in is lower Also, for full-year with the volume residential with overall are now provision the on environment

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

Operator

[Operator first from Schiraldi line Thank Sandler. Frank question the Instructions] And with Piper you. our comes of

Frank Schiraldi

afternoon Good guys.

additional NIM is if other additional by have wondered there anything other NIM might any the obviously the betas, in whether guide I but guide, the just if hikes, on previous than can [XX] on, versus how color and changed cash they any it’s First better additional hikes inputs give loan or change or that [ph]? rate betas rate baked the deposit you in guide now are driven

Dominic Canuso

in second increase but rate be We environment. Sure, expect in in higher those but the as XXXX, is betas coming up full the the variable somewhat pick is interest cycle primarily the would churn The from betas as half interest loans, the less to rate well. Dominic. in to Frank. by than continue of the portfolio, rate portfolio would driven investment into increase is This do churn year, and benefit really higher betas a the NIM

Frank Schiraldi

Okay.

you the do those can when your In that? of cycle around? you terms deposit sort of time through betas will just to to be remind similar basically ramping that expectation us betas, the And is last up have

Dominic Canuso

Sure.

Our long-term to XX%. was closer historical data

last a which be to performance rising over near half. rate the expect next the year would – it peaked XX%, around and environment, expect we However, the would in term be

beta with continued seven the second of would year, increases, some with the given For the increases particularly deposit XXXX. around end timing we of XX% to to into ramp XX% up by year, this expect the the rate remaining half in year

Frank Schiraldi

on And of give color growth Thanks could quarter, the unsecured for you that's Okay, great. color at within the have in more within terms detail, the in and in – the the if point? just any consumer Difficulty] I just more XX% you wondered consumer any then there. consumer [Technical maybe book, equity loan the versus if growth this the that in home

Dominic Canuso

Sure. data couple I'll a provide of points.

XX% XX%, we loan consumer the quarter, than comes we portfolios when overall more was the line basis. from from growing will remainder base. partnership comfortable said growth is which the business – evaluate evaluate total we The have our the or Obviously, strategically, our And environment regarding traditional a about unsecured. lending. total mix, quarter-to-quarter consumer of about and our are our product the loans was In banking as mortgage Upstart, products. with half equity to half are First, on investment home the XX% less credit of we

Frank Schiraldi

been where detail portion there has XX% comfort any at comfort on that your there? unsecured the level within is And

Dominic Canuso

internal on have limit. the limits We unsecured

of upstart as we continuing launched in are of to evaluate particularly the product quarter We it the performance, the third last year. just

vintage stay years So, within business coming through our still and early quarter the meaningfully perspective. capacity credit to in we're our a We well. They to have limit. getting are performing performance grow concentration from that

Rodger Levenson

just Rodger. to would add Yes, is I that. Frank, this

said, we're in X unsecured below this capital Tier XX% ACL our we're, that the Dominic at of well is So limit concentration as plus and point. policy

So, days we still some a relatively more to portfolio, headroom modest grow. [indiscernible]. It’s have credit early in

dictates. So, monitor adjust we'll it to continue as and originations situation our

Frank Schiraldi

Right.

a of, I'm portion of did Okay. bit, sorry of that unsecured – But could, little I a total you say that said portion guys you just if obviously XX% Dominic, the is missed if in about then those is about XX%, did terms partnership numbers and whether half portfolio give is detail? the that. consumer, that, I you summarizing of that

Dominic Canuso

than it's Yes, XXX It's million. less around half.

Frank Schiraldi

Okay, could just more updated in great. And one fee if I then on sneak outlook. the

us of if just we've might volatility the touched to that XQ in, already date of say in much is but you management priced billing you the the to around terms rate? Thanks. would wealth I wondered run business how think seen you the have in remind it, terms market could on Just of,

Art Bacci

we AUM built pretty were Frank, a our the this third we is AUM in I of quarter see see the would business. quarter. to say Art diversified is some in that have still quarter XX% second third Bacci. based A balances, arrears, I'd quarter-over-quarter. would remind you so good business off also wealth would about portion down you be But which declines have

So, AUM of while our business the is fees. XX% around XX%,

account is and based of to transaction based We business fees fees. the have much pretty tied rest –

So some that that offset of kind of helps to, decline.

Frank Schiraldi

the color all Difficulty] guys. Thanks, Art [Technical

Dominic Canuso

Thank you.

Operator

our Perito question the with KBW. next you. Instructions] [Operator comes Thank Mike line of And from

Mike Perito

afternoon my taking guys. good Hey, Thanks questions. for

Dominic Canuso

Thanks Mike.

Mike Perito

the don't little uncertainty just like assuming guys the kind I guide there's in quarter in Are given apologies stays of you around that with of the but that that? of it's that has what's consumer of the missed dealing questions we're and loan of the a mentioned some been consumer now? maybe drop if two, production been growth or the last Are guys some it answering the fairly of the which think the of I fees, you macro where this. off kind year lending robust? year, this for you assuming a bit right half explicitly all I sounds pickup back when mix Frank's

Dominic Canuso

growth rates particularly than the still partnership the driven we consumer in half be less book, but include continued the year The the Sure. loan anticipate growth the second those robust. in of do to but quarter, growth second by products,

Mike Perito

it. at process changed are equation you has kind not that rates with believe are and some this point, if the guys around book Got fairly I or but fairly you thought of guys guys specific unsecured it's all personal lending all taking particularly that And credit you and unsecured relevant of types Understanding have business. at that in standards inflation all I changing at recall, you on, and of geographical credits lending yet? moving guys your for higher the

Dominic Canuso

strong evaluate So, to still we expectations. to and very continue favorable is which performance, the

discussed, ACL small monitor X%. the that forecast, portion As economic the total setting coverage a product that to than we And still yield basis. quarter-to-quarter the is but continue a we we looking overall just on very seeing on product less and given for are we aside the are the comfortable continue the of with product, – portfolio at we this in this given will unsecured are

Mike Perito

buybacks as over lower XX outstanding so, integration for a Bryn how transaction? of NIM will months You last Great. the back know be with of you well, start is in going the which kind here, NIM do of as how Thanks, Mawr particularly it do kind that you AOCI should to step and here good the balance are moving like a [ph] some Mawr one-time degradation presumably secondly me, the quarters, quite guys [excess the balance it of see then to of Obviously build of or kind obviously capital] book year, moderate half value Dominic. few And the value book between high you continued, the has over but next building, seems the taken is? guys guys higher. with buyback your charges the the Bryn bit for capital versus, with moving and going but

Dominic Canuso

A expect it's last return. our couple Yes, we capital and question a capital good significant as in to to the one. few points, an quarters from seen key generate to returns important and that continue expect we've

well are I capitalized. Our mentioned regulatory capital ratios as significantly ahead of

So we have regulatory from significant capital, a capacity.

impacting TCE our something for the and ratio is the is we that While AOCI that consider decisioning in capital.

as capital the last notable in with We may of equally low in migrating continue split to dividend the items look the the share by reevaluated and philosophy. price. we for have over we practice share, and our opportunities to speak capital And per we $X.XX quarter to us portfolio dividend return the along deployment. of regardless standing share purposely of XX% two a that have long the evaluating if addition our our Historically, strategies. you authorization, capital other of minimum return we repurchases always, utilize said, of XX% With investment few heard have hedge hedging would increasing first years, as to between

our to low and expectations, share up repurchases we so of that annually, increased purposely Given returned to of one-third XX%, of it's returns regardless earnings or capital dividend, but have returned price. growth now annually XX% two-thirds – it's

contributor our a a view, routine ultimately on those would within practice share that ensuring decision we then buy need repurchases. that's capacity strong more then in to share our incremental shares IRR major capital purchases. economic And to bit little a to the get price us prospects, dependent gives and it and So, to as growth back do be

Mike Perito

one. me. helpful. just that Appreciate And for then really last Great. Thanks. That was

here, portfolio, mortgage the kind impact is growth move be the of that's the point, things, forward would at about this loan few else else? but should running concluded On left runoff loans, most or might size thing anything other believe I is there residential that am really significant is here? your I a correct only we as everything of small that that net forgetting there's down

Dominic Canuso

have that Beneficial only this held for that historically is we're portfolio may then portfolios correct. called book portfolio course, from continuing resident not to residential consumer and have either runoff run KCMI is with we the their portfolio. the investment that transaction, All particularly No, other sale,

Mike Perito

plus Okay, which is just the [ph]? million] [XXX

Dominic Canuso

Correct.

Mike Perito

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

Dominic Canuso

Thanks, Mike.

Operator

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

Dominic Canuso

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

Operator

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

WSFS Financial (WSFS) 26 Jul 222022 Q2 Earnings call transcript