- Earnings call transcript Q3 2022

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Operator

Good day and thank you for standing by. Welcome to the WSFS Financial Corporation Third 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] Please be advised that today's conference is being recorded. to conference like host to now Mr. today, would hand over the your I Financial Officer. Chief Canuso, Dominic Sir, begin. you may

Dominic Canuso

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

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

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

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

XXXX. restructuring and sale Class on remain $X.XX opportunities and EPS third valuation results our X.XX%, nonrecurring We competitive to corporate quarter X.XX%. a of XQ from between track XQ of the $X.X derivative, established balance the unique momentum X.XX% markets. demonstrated Visa and positioning, and the sheet diversity costs in in million deliver Our ROA and million $X.X with and and quarter third year in was of on structured X.XX% core strong ROA of development included the which our B franchise, position of Reported between full a ROA our adjustment X.XX%

results the growth $X.XX to included the Illustrated five, our both an acquired supplement, quarter, the at XQ. period-to-period; opportunities as trust. pipeline the trust points based context, mortgage some three levels. million ROTCE was million however, provide annualized that broader construction are $XXX from capital our market the the and the transactional broad to XQ, or vary with over the or and loans, in and nature Deposits XX.XX%. end These grew market or rebuild quarter in an As closings X% timing driven loan leases. services various these XX weighted to in on deposits pipeline XQ and was and basis growth deposits, trends. tied and XX% of customer from trust excluding to deposit in of ROA XX% of favorable transactional pipeline deposit by quarter long-term, over $XXX XX% annualized XX% when favorable of types ultimately, year-over-year, trust transactions decreased continue coming average agent XX% slide approximately will our paying expectation and annualized these X.XX% from XQ, the in grow To share ended market consumer with approximately can the we portfolio resi and slide or growth HFI almost $X.XX summarized see the excluding custodian of down due quarter, X% at core on items, was deposits of on with not $XXX of The in XX-day to to million which commercial commercial from annualized EPS

customer we and liquidity demonstrating large across small in account the macroeconomic as on X% resulting small annualized, attrition. accounts, runoff not customer Excluding business, impact deposits broader increased seeing retail liquidity, these or trust customers decreased balance X% from and are

the Additionally, accounts quarter, funded municipal and $XXX million. in increased public

Our Wealth low business from non-interest-bearing & commercial, and coming and accounts. small diversity strong from XX% XX% and Trust deposit with continues

of organic deposit detailed positioned X.XX% slide basis yields basis deposit to fixed Net ratio with continued well book our loan X%. sheet to mix Total basis interest of XQ, points cost up growth. increased continue XX and deposit points seven at balance now short interest the basis the environment Our the XX loan on XXX points stands XX% to steady interest-bearing hold position. asset-sensitive points higher to seven, the rate beta Loan XX% increased cycle-to-date as around the margin increased our basis since points fund variable driven XX/XX to XX by and reached end we tied curve. to as as almost be

capacity calls, expect on to potentially billion. available end, we the to not wholesale we betas and year by to we mentioned total funding XX% the XX% XX% deposit XX% $X wholesale funding by of reaching increase to with short-term prior of were As cycle. quarter end At utilizing end

positive million in the XQ, in Cash was demonstrated other XX.X% is non-interest $X.X increased other ratio with lower one-time environment, million. $X.X capital this our $X.X fee $X.X post-pandemic fully estimated point quarter while remaining million of in in continued in workout driven $X.X than charge-offs ACL and loan net costs. metrics Cash higher for leading million stable including Our markets, with personnel revenue, basis Current of basis almost the growth the or ratio the when average XX.X% million NII coverage of loans. million quarter-over-quarter. by core Connect, slide And particularly credit and The points acquired with $X.X primarily performance-based ACL decreased XX.X% XX% XQ, increases down of million, and X.XX% XX on quarter, fees. driven revenue the mortgage by million benefits fees, wealth, and or growth offset X.XX%. the and nine, provision Core $X.X portfolio, quarter-over-quarter the core by Detailed from offset marks and core in ratio on in of incentive, by down in the coverage the trends of and gross million in fees NII fees, primarily in Connect diversification loan $X.X increases from XQ. higher credit costs, higher quarter from stands by in $X.X stable XX.X% other expense funding costs one higher efficiency The of at driven credit to

CETX adjusted Consistent the costs well-capitalized first of X these all were above capital flat remain XX.XX% Tier million returned half $XX million levels ratios Year-to-date, capital and XX.XX%. bank strong and shares and well shareholders, share at total other stock Excluding $X.X of income with shareholders. year, internal of returned dividend XXX% shares. outstanding items, the repurchases we in to quarter-over-quarter. common $XX.X of Capital have million X.X relatively to and in million with or capital of target X% risk-based and net of we the including or

XX, ended at X.XX%. TCE slide on depicted ratio As

to XX% full borrowing would have I ratio AOCI with TCE X.X%, mentioned a continue attributable TCE continue liquidity protecting was as mentioned. strong wholesale our the capital Over AOCI, available, the previously capacity earlier, to quarter-over-quarter sensitivity our the we Excluding be to of forward curve, as of to I monitor we shareholders, while return levels portfolio liquidity in decline as to investment the source.

to rate community region, diversity to also investment over years. our both In next totals current our bank summary, out performance the moved to with I competitive the $X.X investment geography page the MBS earnings in and investment point the best repost was as along our anticipated XX, of earnings We us are included interest quarter in wealth HTM and that along with continue the our correct. made our of opportunity that in securities from the be few and mix, volatility for there investments returns will the will HTM AFS securities. we and locally hedging evaluate resulting largest position growth past our corrected, balance years. and in release to in franchise unique a strategic This shortly. page between the consider the strategies of fees, incorrectly the in wanted our the demonstrated version release million All few from position our product loan is continued MBS the on on headquartered and portfolio error overall sheet as was

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

Operator

first question Frank Schiraldi Instructions] comes The from Piper [Operator with Sandler.

Your line is now open.

Frank Schiraldi

Hey guys.

guide that wondered to you talk adjustment updated Thanks. as the Just any could as there? expectation related? you color market expectation about Is -- the far just growth. more the if could fee provide income Or on

Dominic Canuso

growth we in market-driven. did update, This outlook fee lower that be the second note had our established than year in all is we quarter. would for Yes, the Frank. Sure,

volume markets in expect market and As capital impacting equity AUM. interest mortgage the a you swap rate higher environment would impacting volume,

Frank Schiraldi

in terms AUM just on And this the obviously, market-related. the Okay. of you noted quarter, subject then of contraction

outflows just impact there? the out if terms talk all curious you any market, pull can you inflows, of at in If business the from about

Art Bacci

was Hey due just market-driven. almost Frank, number really seasonality Most and with smaller small AUM but we tax I'd saw than client this decline We cash of the really Art. outflow the But really decline quarter significant prior was flow say, this the was, when is it from net to had for it market-driven. a much client had net flat, flow was cash payments. a quarter, a quarter the was in we

Frank Schiraldi

about on thresholds side? that talk know down your linked terms growth at just you the of on release, the to terms quarter. a size? all then just upstart you in in Could about equity then was break internal Thanks ceilings the -- consumer Art. And the in of home growth little you are -- and of contributing unsecured just on both remind what us business I relationship, And the or can that what talked growth, bit

Rick Wright

the Upstart others? take did did product. spring I'll We the Rick. the take about want the $XX to is We on on million million product. This Do you increase another growth. $XX

Dominic Canuso

Yes. Sure.

plus we So is of lending Upstart in limit ACL. have credit an cards, XX% primarily -- capital internal we're for book, that. of approaching unsecured And which

fourth relatively foreseeable for at future expect today., the this at it's point quarter in the consistent the with staying the upstart is you that So, levels what and would time, through portfolio

Frank Schiraldi

Great. if in sneak I then one. And one could last I appreciate it.

Just marks value in in at currently? the Can talk buybacks And the a how is AOCI plays stock you it if the book about for thinking? on that further tangible buyback where with the significant quarter. activity contraction and into all, bit your appetite little

Dominic Canuso

question Good Frank. Sure.

then Our overall changed has view the capital first, to philosophy, balance capital our in always over deploy by few last capital regulatory our we and particularly years then evaluate as excess ratios, sheet, which liquidity, articulated the and and the return over capital protecting our shareholders, And quarters and not capital, we've opportunities COVID looking seen paused as where the amounts Beneficial of out growth again paused coming meaningfully we then we the you've our years on during opportunities at returned with reengaged and then significant the organic to significant transaction sitting inorganic. over BMT. were environment,

occur and waterfall demonstrates to we With that last I eye loan we evaluating we regard in we're quarter each a wholesale kind few is have and over our will significant risk quarterly think liquidity, of on opportunity. what view And ensure the continue leading do portfolio as a I liquidity through for fourth as AOCI, to quarters, our mentioned that that of in other take the strong. -- were the we and economic current cash the we to deposit our it, which do certainty Obviously, environment, that than in we flows. ratio up as lack ratios that capacity to with investment my capital the close or leverage funding, of and consideration in to the felt not into forecast, it the will runoff we keep natural were either foresee the take script, environment need that our quarter.

the into so about therefore, at meaningful, think AOCI levels. both ratios the and that impact availability total we regulatory funding capital is focus the the and on bank our consideration company while when And capital, take we

Frank Schiraldi

Thank great. you color. for Okay, all the

Operator

Please next standby our question. for

with comes next from Our Navas question Davidson. D.A. Manuel

Your line is now open.

Our next Manuel-- question from comes

Manuel Navas

good afternoon. Hey,

with add about color describing -- the the what portfolio? for any more on Sorry about prepared you're Could that. remarks securities in options you

Dominic Canuso

Sure.

between categorization to the for I maturity? and think held you're to sale available speaking

Manuel Navas

Yes.

Dominic Canuso

That correct?

Manuel Navas

Yes.

Dominic Canuso

Yes.

over we've investment our increased interest deploy So, the last as over therefore, lower liquidity, two to a significant we've amount years years, excess environment. in having invested significantly two rate the discussed the portfolio last

of $X.X of continue that we was the portfolio We year, to evaluate to as quarter it in rate categorization. sensitive future to most second the the allocated And million HTM impacts. right this

and portfolio, nothing look forward. to monitor throughout continue in to was We at the moved going tranches the quarter. we'll third continue But

Manuel Navas

That's like helpful. what's Remind -- current runoff portfolios? that me from the from the

Dominic Canuso

flowing determined part liquidity was either or to deployment cash fund about higher a of liquidity month, because why which Yes. investment the The growth the optionality opportunity any $XX we portfolio rate of the for is million at cash reinvest the best option of portfolio a the and runoff loan the flowing excess it of was excess environment.

Manuel Navas

helpful. Okay, that's

had just low. kind performance pretty trajectory you Are think any really I You've deposit quarter, competition deposit of cost color still I far. pick seeing the that there? your so the is mean since up kind of strong of beta close any

Rick Wright

is this Yes, Rick again.

We're think seeing not that seems money. point. lower competition to that that a is between even Internet what this of banks got and seeing pretty balance And I some deposits trend where is the offering. out some going much banks customer through the and the be for going customer from are it to they industry the on see we're but relief. COVID treasuries, higher that alternatives, and not the seeing finding bank what are balance And across delta there's instance, board, money an money significant is pretty big we at trend during we

Dominic Canuso

through funds lower backdrop something lending, well-diversified to this then or of it's add just we Manuel, that. is form, maintain the treasuries redeployment deposits like or And relationship all assets, a our deposit with of Where that of wealth And in banking appropriate different working if to AUM wealth for are across is that. our working Dominic, private with when customers, looking and in the and their base our just this a are tends a color they to we're result into beta those group in cycles. to whether

as and lower deposit we see position maintain I strong We in expect increase, in we're manage funding through levels. beta script, mentioned to and the my but a to both costs that

Manuel Navas

thank into Appreciate comments. you. you. Hey step I'll the back the queue. Thank

Dominic Canuso

you. Thank

Operator

would Canuso. And with Mr. back like questions turn queue, no the further the I Instructions] over conference [Operator to in to

Dominic Canuso

and and then. Have for the will be good we throughout Officer, look today. joining quarter meeting and call attending many with investor Bacci, Art you the Thank with you along conferences Rodger Wealth Chief of I, our to forward a meetings day.

Operator

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

may now You disconnect.

WSFS Financial (WSFS) 25 Oct 222022 Q3 Earnings call transcript