Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Wilmington Savings Fund Society Financial Corporation Second Quarter Earnings Call.

I'd now like to turn the call over to your host for today Mr. Dominic Canuso, Chief Financial Officer. Sir, you may begin.

Dominic Canuso

thanks participate of on and the for Mandeep, to time our you, to you all taking Thank call today.

this Bacci, Steve on and Chief Consumer Officer; me call Levenson, Kruzinski, Rodger With Officer. Chairman, and CEO; Shari Art Chief Chief Clark, Officer; Banking Wealth Commercial Banking are President

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

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

and thank you, second call. earnings afternoon, joining for XXXX quarter our again Good

release can earnings the fee across found earnings Our with pleased Relations will and revenue. which performance website. our the the all Investor demonstrated company's of We're be section our in in businesses deposits, today's loans, on solid release refer to quarter growth we in and call supplement, second by

to remain we I our to details NIM, update strong in some do will outlook well-positioned we with capital, current release. Combined quarter compete full-year earnings as an performance economic and and our provide levels, quarter, second After with credit the liquidity the on sharing typically environment. stable

over year-over-year. increase quarter to EPS which prior X.X%. per a core quarter share, and X.XX%, PPNR points assets, year-over-year up is as $X.XX declined percentage and a of over XX% core which Second ROA is basis of slightly which quarter and XX results included prior Core of

almost led annualized. converted followed volume million half loans construction growth, or grew mortgages. C&I the nearly by $XXX quarter, CRE commercial of In loans X.X% as the to

EQ growth from our competitive Spring grew partnership X%. consumer basis, continued annualized XX%. Residential mortgage leasing at an moderated and grew ARM NewLane products On XX%

grew primarily businesses. from capital annualized trust and markets Deposits or million our $XXX XX% wealth

in no cost deposits demonstrate overall are can deposit sometimes or diversity they nature, low of typically the deposits be While short-term franchise. and trust the

the bearing XX% Non-interest XX%. deposit quarter deposit held mix prior was flat to and from ratio loan at

margin through at deposit interest with Interest-bearing quarter X.XX% yields and deposit the betas was X.XX% total the Net XX% loan cost of ended cycle. of X.XX%.

up XX of While the quarter, percentage increasing first in in X beta pace percentage points slowed the points after quarter. the

up of X% was from of XX% X%. XQ even over Insurance as revenue and above Cash revenue fees. wealth fee quarter for up fee prior XXXX. Core the ratio NIM increased X% BMT the normalizing when our quarter sale at occurred the million that banking Connect, The or core in Advisors held core $X.X was end Growth year-over-year and to

discussed last some merit continued driven Cash offset were along were efficiency enhancements. core X% occurred which the NII ratio quarter, growth technology excluding than late cost, When increases costs and is quarter more first was first for one-timers primarily quarter normalizing Connect in that fee in by investment The funding the with revenue XX.X%. in that higher

points year. levels with flat lower historically held XX in and stable consistent quality the over basis levels assets average at to Asset XX and basis the Delinquencies remains relatively points. assets improved non-performing Problem increased last slightly remain quarter. of the at

levels portfolios attributable and profitability with charge-off stabilize provided net Upstart to these levels in been are expectations and Losses Net NewLane vintages. portfolio are charge-offs Recent $XX to increased at are million. leasing the for. of growth these and our the have to slightly consistent maturation expected underwriting from

portfolios, the X.XX% slightly marks and the other with consistent remaining the the ACL by ratio and flat million. on The $X.X As including such ACL loan leading estimated when coverage acquired at across increased the X.X% stable credit indicators remained credit portfolio.

capitalized. all capital reducing the AOCI, bank the by includes effective remain Access to which well levels and remained of levels liquidity significant full remained regulatory capitalized. impact the above HTM When capital well well portfolio, ratios

which We have for supplement. our key outlook full-year updated our Slide be our XX metrics, found on can of

July, of mild rate XXX Our outlook rates recession basis the and a the to reflects half the for flat begin point year, the in increase year. followed of remainder in by second

is around X.XX% near with PPNR core full-year expected X.XX%. a core full-year ROA Our

our strength businesses, the performance revenue deposit the the in our the benefits base, sheet. of of diversified and fee balance our the of Overall, quarter demonstrated potential resiliency and

bank We our Greater on are the serve the and locally plan markets well-positioned to and largest Philadelphia community trust headquartered region. in execute Delaware strategic and continue company our as to

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

Operator

The floor now your [Operator for is questions. Instructions]. open

of from Our Schiraldi line from Please first a question Frank comes go Sandler. ahead. Piper

Frank Schiraldi

or that XX% the noted that than expecting talk shift the on a trust you a or bearing trust you a trust deposits of bearing there And deposits total deposits offset sometimes Do general trends maybe business? I little non-interest non-interest Just see still a the potentially curious I at non-interest think side. can bearing -- and in about mix and bit business, you seeing can be you're non-interest is bearing quarter little if short-term on in bit mentioned longer-term a you Dominic, by related the wonder, nature. the just

Dominic Canuso

can first opportunities short-term in that raise continue Sure. in Thanks, short-term speak and business that is nature. I'll to be they to no to interest as they but rates, at trust low mentioned, see deposits Frank. Overall, we

and fluctuate may accounts. they or DDA quarter-to-quarter bearing bearing interest would the non-interest low the in show up So

to consumed deposit portfolio, to move even the we're a continue if our or decline to those AUM excess a a but is we looking maybe to bearing optimize through for account expect liquidity they're by or money products. to as and well-positioned continue CD would products as believe customers we customers non-interest Overall and deposits, market retain potentially short-term their Fed

Frank Schiraldi

Okay.

in shrink margin some to that expect incoming by that do quarters? you So XX%

Dominic Canuso

is correct. That

Frank Schiraldi

the that just you if credit had then mentioned the talked in And C&I side the about, events you you release could quarter. credits two about during on charge-off talk

Just you color there of was that in wondered component could any if the picture? and charge-off overall terms provide what

Steve Clark

Frank, is Steve Hey Clark speaking. Yes. this

the been that a a that sale Regarding charge-off. proceeds classified for classified commercial asset in a bankruptcy through charge-offs, had less A over expected HVAC than two went one contractor year. hence the was the space generated

automation a a for which The fulfillment with resulted difficulties. had distributions. other That customer in over a client providing change was equipment cash largest dispute their customer flow severe company warehouse order,

I unique really as really two unrelated circumstances. and occurrences would view So

Frank Schiraldi

to size net and is terms -- the and the coming more the Okay. of Is credits it that get in that Is more that quarter? more Upstart of and portfolio the to trying in level? the are maturing the driver or charge-off C&I the that losses of driver these through driving those just leasing two just

Steve Clark

both. It's

to of net expect and we as our NewLane were -- that referred have unique levels. we the and of mentioned, Upstart there XX% you -- these charge-offs stabilize over noted charge-offs as but one-off to As levels these to driven the -- of We in one materials but maturation and charge-offs, within Upstart vintaging, we are been maturation we the performing growing four of last coming that, around and because and net forward. from these going them the quarters and the expectations the they've range are NewLane

Frank Schiraldi

customer I you net market-driven if leaving one about AUM business? the increase you then, market one Okay. aside, I flows believe last just like in wealth just this on the could, And talked the what in putting what quarter. the talk market, about Great. AUM that any Can side, being the look

Art Bacci

really three consumer at inflows Hey attributed record Frank, this in WSFS. seen wealth businesses increased straight actually going is commercial quarters the We've referrals between think and to on and I Art AUM, Bacci. the of that's

deaths seen from have imagine can where inflation, There's rates some you idiosyncratic asking distributions. see spend events continue to We distributions people made are because for just trust. with as higher outflows, like

a say the pipeline core and the looking pretty over three but just slight been at positively really future it's to growing forward. flows going in steadily positive continue see last flow, the the more we in So have coming because quarters, I'm

Frank Schiraldi

Okay. way XQ, look it see through just markets of flow in else XQ --? up more all then in to And revenues and at equal, the that if the you that that,

Art Bacci

increasingly drive the little our is billing bit QX but with a Bryn more QX, Mawr acquisition complex. Yes. will

that monthly, quarter third some the some quarterly look for expect to because should we have advance, but We bill in generally us. we positive bill

Operator

comes the go Our next Please from question from line Michael KBW. of Perito ahead.

Michael Perito

you charge-offs came just I you rate to that portfolios of like and in forward? on or kind Upstart. have of the stabilize from wanted question moving to net actual XX% the expect NewLane that that of Do quickly. Frank's so you charge-off those follow-up Dominic, both mentioned

Dominic Canuso

X%. around an be in to Yes. basis We to would around expect and annualized NewLane be on X% Upstart

Michael Perito

elevated slide Okay. really read not in -- going back you it guidance Does how the And in that, a half that would because material to direction when that what the you year. enough a say I is see it in environment would you guys mean, guess much? into is in expect non-recessionary forward, you a -- to perspective assume be charge-off stabilize I or the either to of mentioned, from that does mild recession those

Dominic Canuso

our performing underwritten. the range updating to what impacting economic we've when relatively ACL model. all the the as first it's But in Well, in the spoke they're we in No. forecast ACL of quarter

at in So time. not most this based of the based, ACL increases forecast performance point

Michael Perito

you questioning of as updated back portfolio mentioned or you lot us to remember you get after to to guys to next rates still the going were next an Okay. that years your your think how you've try guys that about are forward? guys now environment rates Obviously loan targets? And just -- loan portfolios, Can how ideally a give -- you you of lot's that six that Can the transitioning target consumer's assuming you of line that since a handful another of of the quarters think you mix the the then. think of grown C&I had loss distance you between look I deal, kind ago of XX%. up mix should were changed. if give thoughts is, loss about been targeting those should us the those in hitting kind Mawr There's portfolio update beneficial, some maybe maybe your mix Bryn over maybe the from kind months normalized acquisition. on put are about we over

Rodger Levenson

portfolio, within it's bit were talked the would clearly Mike, Hey XX% little consumer. but mix pleased And with but years were different say we it'll XX% driver, of we that longer-term, a in from where more we saw forward CRE definitely it's C&I C&I would be about heavier than a come acquisitions commercial, Rodger. quarter bucket, growth ago and little what to the Yes. because expect the past, what on we've in as the you the to several is commercial would CRE, we were in expect we book. growth going being that like be should the this I

Michael Perito

kind put run sense, on Rodger. rates it structurally about back, those that cite or Got would as to of fair to mean your a would run as time of of exit just it. but targets particularly a and you Thanks. your to it And horse, around fair rates as the of some Is it environment, the That just was ahead, it's of and the think run that be normalized timing I want in lastly then to kind step profitability something something but to, just think longer-term. more that way the parameters realize ROA I about makes kind update exit the I and in exit guidance and guys, I'll kind deposit is don't cart rates think for think NIM differently? you the PPNR just put over upside would front challenging of ROA, helpful, then of there we that now, me hope those you

Dominic Canuso

No.

is first expansion, and expansion way assumption. year, some think NIM you've that it portfolio there rate then into say, dependent would from be fair to would and early lag deposit ROA quarter. improve I likely would expect interest there. But next beta margins I we from described environment the a into continued both clearly the it's

but of year. indicator out So think a decent lot that half in depending play the range a second on I XQ exit probably this is economically the obviously

Rodger Levenson

next that add just Yes. we've will couple forward, can be I would the and out going as credit with years. play that said lumpy always economic over the uncertainty of to

of at And so the being be going credit economy things we're where path all a bit wild card depending forward. how terms of of in described equal, may the little Dominic a that's upon it,

Operator

line the Feddie from Strickland Please of question next ahead. Scott. from go Our comes Janney Montgomery

Feddie Strickland

afternoon, Thanks. Good everybody.

and to point be September that if the have do hike were Just another margin Is maybe wanted basis another the to course that the XXXX to follow-up in potentially being like flat. this come expect year sounds and stop. potentially one of week Fed assume It the we XX over if right? in are It on question. would then last we reasonable to still Fed up funds

Rodger Levenson

Yes.

depended margin liquidate into timing I portfolio there. settle into in tailwinds one of we've the loans. with once though -- the assumed shift have XXXX, and into down that Like specifics So some those increase to it want And would do betas. add expand one get trends as Again, investment our we we -- deposit And in tomorrow on all don't come should we to rate mix really migrates I said, it it economy. the will -- rate to liquidity from the forecast. but portfolio tailwinds

Feddie Strickland

Understood. That $X next of XX that sense. putting Slide Appreciate in just along over securities deck. that billion flow the wanted touch And questioning, months. cash makes line about on the talk you same We the XX. in to

quarter yield both trying go flow to more of as think we going a particularly a coming end that's couple Just should back. to through. mean trying AOCI or backend get Just to in about roughly or $XXX where that relates off I about loaded? next can run how that as front is the to sense quarters and increased it that think million

Dominic Canuso

if environment. XX-month flow would portfolio, on which depending the mix driven interest to cetera. investment et But from prepaid rate I some cash sevens, in fair it's the over a the relatively straight shift think to That the speeds, the a sixes, it's from period into loan assume yields rate represents extent Sure. to on upper and X.X% assumption lined not yield

Feddie Strickland

Got it.

size for share Can capital is you'll authorization? where pause one Should you for think continue and we of me. last one in now? future see the Just given just repurchases quarters that on the

Dominic Canuso

Yes.

by today we and we As quarter And in a stress, evaluate the quarter take credit discuss outlook we first a see third repurchases second would with can likely levels quarter, position, the based and the we in view on capital the and provide call. view we stress share capital in quarter-to-quarter environment return we total regularly, next in believe the commensurate quarter anticipated had portfolio. but the where we we are take that economic growth where our we and on another

Feddie Strickland

on. Hold step queue. back Dominic. Thanks, good. I'll Sounds in the

Dominic Canuso

Thanks, Fed.

Operator

from Davidson. the Our of Manuel comes from ahead. next Navas question go line Please D.A.

Manuel Navas

Hey, good afternoon.

the Just following-up Would include recession. the would you ranges or further, ranges, the a recession those end on return mild those back exit those was at above even they high exit returns, pushed of range? if be

Dominic Canuso

Yes. fair question. It's a

ACL. than suggests recession impact the already limited mild there's outlook what our the think incorporated into I that very other to we've

a but up determined. upon recession recession maybe would it's it which to yet the And think mild the I end that So the captured of doesn't the dependent have, is be high course, given. of extent at is the to is type we're ranges recession then we within be show

Manuel Navas

-- an do update on in betas for NIM? to of have deposit assumption and Shifting kind what's the the you

Dominic Canuso

Sure. Yes.

end So just the today call that to expected deposit the talked in we be around our about first year clarify, to XX% June, deposit we through betas. a had this XX%. quarter We in cycle betas

this outlook. I think that in holds

betas seen year Fed our the them second have the NIM to out. play half have for do but we of given some We the bit capacity But within forecast. slow that have increase the we'll to increases, a down deposit

Manuel Navas

to June a for costs deposit jumping modeling? or of that with kind quarter a third of help NIM off like have you kind point Do

Dominic Canuso

Yes. Sure.

second So was material. customer at for quarter the customer average, a the X.XX% of cost was and June That funding our total a interest in funding X.XX%. that's

Our beta. the bearing XX% that June for of for represents step total interest X.XX% deposit in off then was and month and the and a funding, customer X.XX%

Manuel Navas

Okay.

step Okay. I back appreciate you. the that. Thank I'll into queue.

Dominic Canuso

Manuel. Thanks,

Rodger Levenson

Thank you.

Operator

from from question Gunther comes Stephens. go next Russell Please Our ahead.

Russell Gunther

on afternoon, I just guys. a good Hey, the had follow-up --

Dominic Canuso

Hi.

Russell Gunther

Hey Dominic.

back year, of guide. mid kind you or more first frame the growth upper, in upper characterize that would loan single-digit you results can the the so you strength and the half updated the to On of how reflective see the and Is at just How discussion of do range continue of that? half think this clip? that kind in you you moderating, the

Steve Clark

I'mSteve Clark. Russell, Hey

and yes, down end and So yes, up rebounded half the to XX-day at to which average we It the kind production that's really things. in our of really has end the quarter reflects, reflects pipeline. million, reduced low the some updated million the our high, weighted the a first first to significant guidance mid of from our year, couple back I quarter. pipeline quarter where a the of think first performance had It's the of second $XXX $XXX pipeline,

think our So really getting position outlook across in on competitors independent the and focused market focus locally the is Philadelphia the I our of country. significant reflects largest Dominic activity. bank managed And our market this mentioned, And as larger bank. Greater are our kind

we're care in advantage presented customers macro and us taking are we're the to opportunities of So taking that current environment. of

Russell Gunther

in? those as given talent appreciate recruit seeing are of from in the your driver set Or commercial some of you opportunity how growth would a opportunities, characterize the lending forward? And ability I Is terms that. to going of that the guys follow-up position you a you're competitors there?

Steve Clark

attracting so additions baked upside. of from production from talent outlook, an the into some we Those them competitors. yes, that's aren't are local So our

who we're and we to the high to and adds banking continue team the team. So the in new several to in to a add commercial WSFS. the to at pretty quarter, team. we frankly third bar It's join very announce discussions onboard we here expect selective entertain And

Russell Gunther

Understood.

the And appreciate is just a on and other where look the XQ on could then buyback look. that. follow-up the return discussion. capital comments I appreciate Okay. I quarter-by-quarter the

total that there want beyond more of targeted XX% think about. you to bogies about right though, before payout? that think you guys of -- You're payout Dominic around that normal your see kind would Are forward would going that kind increasing we tend to should materialize

Dominic Canuso

Sure.

the to well I capital capitalized. we're the severity be is followed bogey. compete credit of the and on well -- think quarterly performance. as our would That We're there, impact to a return there the biggest I And recession level to From In mentioned. be a it by first extent we would basis. meantime, we'll on always be to as targeted of I do. we positioned are able reassess the positioned

Operator

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

Dominic Canuso

for call you Thank joining today. the

of have questions, investor conferences Also, reach throughout I attending you to look and the will you then. meetings If be and to out to Have with forward free feel many any day. good Rodger follow-up meeting and specific a me directly. quarter we

Operator

Thank today's you. this you conclude call. and for does gentlemen, Ladies Thank your participation.

disconnect. now may You

WSFS Financial (WSFS) 25 Jul 232023 Q2 Earnings call transcript