WSFS - Earnings call 3 2023 | WSFS Financial Corporation

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

Operator

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the WSFS Financial Corporation Third Quarter 2023 Earnings Conference Call. [Operator Instructions] I'd now like to turn the conference over to your host for today, Mr. Art Bacci, Chief Wealth Officer, Interim Chief Financial Officer. begin. may you Sir,

Arthur Bacci

Good quarter thank XXXX Regina. joining again our third earnings afternoon, you, you and for Thank call.

in call Our supplement earnings me Commercial President be on today's Levenson, are company Clark, Chief and which release Relations found can Chairman, we will this Banking of release refer to website. With and our the Investor earnings CEO; Rodger Steve section call on Officer. and

to call the quarter, I Rodger our his remarks statement. over the like Before on I would for to read harbor safe turn

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

Rodger Levenson

to the Thank of continue represented X%, second X.XX% EPS performed demonstrate the else core Core the very of from you, Art, and business quarter for and X% WSFS model. we and strength quarter on call and ROA well third growth today. everyone joining us respectively. as in our $X.XX the of of diversity

revenue loans, classified losses these basis loans. Credit to Inclusive banking the office. including our XX in increased corresponding or Tier those was NPAs. deposit and credits few deposit total by growth the to net The banking, very interest-bearing X ratio attrition. Through and quarter see at and a purchase impact with NewLane slowing X XX.XX%. points the asset points interest metrics. as expected the short-term flat the C&I at basis ACL plus the pace modest the in July, favorably accretion reflecting were to each excluding basis of hike impacted this transaction-related points, betas business. in anticipated and Growth the of our fee in loans asset quarter, mortgages. runoff we of consumer loan in XX% major rates the linked to driven core markets variance status a our higher the corporate QX Connect, problem by X% under driven when growth $X of margin mortgage sectors, XX was capital than of to credit in increase commercial capital X% quality relatively betas uptick Consistent the business. The grew negative and including business performance core loan of solid normalization, at was NIM million businesses. Problem portfolio from did that Our Fed Cash all across high. delinquency Upstart came about challenges loan our second to commercial record and segments. Deposits very X% by in X lines, just maturity ended and to essentially compared short-term Most downgrades specific or trust unrelated deposits and has events moved X.XX%, were Total XX.XX% deposit Core was stood office fee to due less leasing reverse of quarterly cycle, downgrades, flat quarter moderate. Trust, portfolios. excluding in a to at operating reflected migration nonperforming continued economy due revenue and Wealth X remained

capitalized. achieve remain well regulatory outlook, now we Consistent on rate we to no QX results remains we capital the significant supplement, the incorporating our which assumes to sheet On XXXX Slide Q&A. growth in outlook outlook, provide to earnings historical we XXXX back QX modest PPNR you, including have and and the GDP balance our and on ROA to short-term an capacity it to additional and January. Thank liquidity with full provided midyear that of update percentages. Overall, strong, XX in facilitate earnings track a commentary will Our I exceed year ranges QX. QX announced levels and Art release practice, when hikes will NIM, late continue on turn

Arthur Bacci

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

Operator

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

Frank Schiraldi

ask mean, I I in about strong quite quarter. here. wanted to obviously the the loan growth

of You XXXX. sort think an -- But ratio, given about but for we're reiterated a environment. overall seeing your have guys your tougher maybe low we you also, loan-to-deposit credit as opportunity guide

loan a do versus risk we moderation this in opportunity how So think the you thoughts growth start your are here? forward you general? some going potential about What in here? to see Do think

Stephen Clark

Frank, speaking. this is Clark Steve

I in region macro is current So the we the look at environment, the opportunity current way the serve. think growth in about loan we really

very, So CRE, very on we continue selective. to be

and relatively companies and focused beach of issues at some their for the strong. our from the It's [ experiencing multifamily competitors have opportunity are incumbent real residential, of and is service That us markets. But the some being C&I. particularly pipeline banks. of the We shore distracted on ] is result

that So us. opportunity creates for

rate So to last calling commitments a but fundings in have we're prospecting from very a of selective higher environment. very coming CRE, and were extended environment do and were tailwind C&I active underwritten rate that year in sensitized in the very and

my of So that's kind perspective.

Frank Schiraldi

All think coverage on reserve flat was I the And ratio Okay. credit, just linked -- it. ratio quarter. then I coverage right. appreciate

on of particularly you the migration, reserve this thoughts on this of the just on the just baked problem side, into credit maybe a to was bit? kind problem some Or could downgrades the speak that the and migration sort given asset your Just -- already? was side? asset of reserving And credit general

Arthur Bacci

a The because was of that loan is of at ACL portion growth. good this just Art. Frank, was Remember, X.XX%. flat

So quarter and at the is. as to that with by pretty we mean the impacted feel economic comfortable look But trends it the issues. outlook is was I will something at seeing. we're evaluate where ratio that coverage we any we throughout migration less this point, this continue the

Stephen Clark

would qualitative is baked only that this is current Steve. migration Frank, ACL are quantitative And credit the the I into a perspective. assumptions add you from referenced both those and

Frank Schiraldi

in last And if I on the just could deposits. Okay. sneak one then one

down deposits out that guys You a quarter. And guess the stuff. of being trust that driver back the transactional balances I flowed the linked noninterest-bearing was mentioned

of this kind of more Do noninterest-bearing for in in a thoughts what any there? longer generally balances believe you're Just seeing continued environment? higher expect rate you kind

Arthur Bacci

We're Frank, about this look is XX% our noninterest-bearing pre take to now. I'll Art. is that. deposits XX%, you XX%. total around When at COVID,

time, bottom there that payments above in components kind of I the a cash were we're component $XXX to the COVID. that It's with there's for coming of be on call cash, just it towards There of prefunded are recurring flow element think may to now trust a million it. I there's types it. still where it -- So there, $XXX the that's pre component One but million more of our trust we on deposits. trust investors. Then may we're a deposits, I'd hold that there's pass lumpy little and really we where loan bit X go of a lead to of from period base. certain is of an of we be right kind

driven that market. And so activity at pipeline potentially the the and by has the the securitization We noninterest-bearing QX. do that really we're and securitization more a done of deals looking that's that have being a in deposits really type function how of going. markets market are the it's capital is in But some

Rodger Levenson

the only relationships being just is deposits the focus with building The And add Steve's Rodger. thing this broadly With on relationships. about it, largest business. would our come the with those on overall Frank, C&I commercial I and more Yes. comments loan to segment,

in should of offset, liquidity ability the consumer commercial space, some In addition on us the we excess said, of relationships have the in focus give a to the Wealth, which absorption some lingering full Art as to book. strong

Operator

next question line from will Gunther of come with Stephens. Your the Russell

Russell Elliott Gunther

comments the for question given environment remain Appreciate competitors, share the positioning. the continue an a for in still any taking take opportunity? to is loan And Does quick from good your your a Obviously, How to follow-up on guys environment Just growth that commercial wins talent? there. you earlier. lending quarter?

Stephen Clark

Russell, So Clark. Steve

an calls from WSFS No, So we we're there team. yes, managers opportunity. quarter, were in are it market in have the inbound interested the receiving remains who outreach, the wins active but joining relationship in and no

in coming have the some So our dialogue, we quarter. be will we third to but way believe there nothing and report talent in future periods, active

Rodger Levenson

under positioning, Board is of manager competitive Obviously, has Russell, say, and us talented seen same we us banks. also leadership. ] particularly to join consistent want philosophy at years this relationship and And natural relationship around to to have we can Steve's spot them point. a larger very joining The business people a add high group are over our [ for move landing with several who managers, as that would have though banking. with the culturally last relationship kind the from that you've expanded I

bring lot get is of for over. of people inbound terms bar higher the calls, a the quality So of would we we definitely in but us that

Stephen Clark

confused. need to Clark correct And Russell, Steve coders myself. -- I Steve this my I have is again.

did X talent RM national the One from Philadelphia tenured to large the a actually add in us relationship in we market, came manager So quarter, long bank.

the in care So market, in health experienced Philadelphia. RM a then he's vertical. health RM, And joined our housed care long

occur did quarter. RMs in the third X those So

Russell Elliott Gunther

remind maybe Can I perspective, of this to then gears came relative guys. quickly a Great, stand appreciate that. just just maybe color base relative quarter. on total a you quite assets? today margin they balances kind to bit down you a switching like remain from but at, Okay. all to where the cash us And

Rodger Levenson

it Connect, with -- sheet, business of of within this I are goals on upon balances within off-balance Remember, liquidity liquidity what's and sheet right fluctuates on-balance And little long-term with and a what goals. our the Yes. now, the we're Russell, our say, going planning. are. the depending Cash range overall kind bit then would

this So in and around it range. should stay

Russell Elliott Gunther

ultimately just helpful. get think you about months. your year timing talking margin we where for quarter, the a picture, in quarter about just few guys in But that fourth XQ, the We've about how then And XQ, from how can generally thinking about we'll are That's guys Okay. as perspective? this I a trough trough timing a seen there? you outlook competitors thinking even know range bigger updated full are

Arthur Bacci

left budget kind see with opportunity some see bottoming -- at. to our beta to NIM. We're but certainly have quarter next betas, protect do relationships. And deposit Russell, and rates of assuming relationships. in increase start our second we're as our we business with I us start see of Steve There's quarter, want we of in to of year, lately, increasing where bottoming lot where our we still somewhere margin. we rates, some some thinking Yes. stay to think they're But the we'd the the comes second new a competitors to a to said,

Russell Elliott Gunther

Great. me. And one last for

outlook, the bigger picture. charge-off On net again,

You Upstart. mentioned core of points NewLane kind ex and basis XX

in Just trends near charge-off a for sense have general term? your for consumer expectation the

Arthur Bacci

charge-off The they've within been expectations. quarters, The much trends last consumer consistent. been have our X pretty

of seem think portfolio that's level. those -- NewLane and being even more rate the but to portfolios, out leasing kind pretty have the though a of we're So of at Upstart mostly a for I business, kind at normalizing the this steady small but leveled and those

Operator

Strickland Scott. Your Janney from next come Feddie line with will of the question Montgomery

Feddie Strickland

update allow earning off. run total portfolio and you the investment asset you as expectations to for us Can on growth

XX% total even in from near same along those today. it the term? balance trying see go? assets think get could to XX% relatively for we sense shrink And slides, the here lines, you're or from maybe sheet where says a I targeting Just flat should then

Arthur Bacci

we think much remain would total I pretty see assets flat.

going had down allowing to I think take run to around last we're because traditional a been and excess that so, few securities years, the had XX% years. more portfolio or our liquidity elevated few and mortgage-backed that's levels, to the we over

in billion about runoff mix on shift. of billion a that portfolio we're of loan into in we But and next pickup runoff the portfolio the that redeployed years to seeing, kind $X nice our supplement and over be look X of $X as that transition can at as said yields in that

Feddie Strickland

come in That business down more from line by could see digits the one fourth the I if guidance year, income overall that mean, me. makes for of particular? just in sense. mid-single the just any given so, fee And we is some and driven quarter,

Arthur Bacci

a BOLI has did core quarter core so bit the Cash Connect derivative to I have quarter's why income to costs. X%. fee the Wealth, up some components banking gone I wouldn't projected. We of at just markets we expect drive and X%. the because of little tell and up you noise that helped income capital strong continue continue would a the which it, have The generate that's range in times fee area, of we you this our at fees from revenue, it at grow to see the

expectations I back think be of more our to digit normal mid-single appropriate. would

Operator

next will with the come Your Navas from question Davidson. of Manuel line D.A.

Manuel Navas

up back going loan Just to growth expectations. the

a selectivity end some and expectations the you include the book in in the the recession in the the of of others. of growth at understand How portions I So for year opportunity projections? do your bit that

Rodger Levenson

is from mentioned, most say, market as generally taking of growth coming our just I So we would share. Manuel,

a contraction share we term, growth. Longer We to on where expanding the relationships. path our would taking run is would we're there loan And it so is seeing the that most market GDP even a from obviously from don't what expect. and, growth impact have would the degree, But depend lesser rate near an if which the immediate on was in term, of believe economy. existing on of growth, the

Manuel Navas

you And of quarter. in Can gains what a bit, seeing and of there you're there? construction were pipeline kind trends some about just the talk you a construction that about just nice talked

Stephen Clark

Clark. So Steve Manuel,

subdivision, into loan the the from multifamily we XX% construction looking XX% past residential borrower So first. for early or over of when again, to back in cost. year, goes range for underwriting equity the financing And in XXXX, so we're approve to

we on last in our on, equity that And is settled that So significant, first. goes those now year this closed year. commitments funding unfunded

So multifamily the to at interest rate were completion a of that And our environment higher loan make on reserve an is coverage underwritten in sure even loans rate again, residential project. or a and growth. those the would sensitized to a tailwind higher subdivision appropriate there environment lot be in project

Manuel Navas

Is quantify tailwind that from the guidance. sure the -- that? I'm can is of some XXXX in captured benefit to you

Stephen Clark

quantify at Yes. point. I this it can't

Manuel Navas

the the I shift Or environment? assuming Fed in next rise? And that that start NIM more we'll Thinking this bottom understand get second update about stability kind of to is the of there NIM? could quarter. I'll you'll is hikes no questions. expectation quarter funds even in an flat see 'XX, it and a

Arthur Bacci

changes and Manuel, loan, XXX I the shift. points see that we'd of to stabilize the Yes. it again, a MBS as leveling picking think period some mix on we'd But for would to up time. from the portfolio be XXX over mix basis

it's say, some would up time. we'd that bring equal, immediate, to NIM. not of be but start the going yes, of some half yields all would in assuming I over the So the Obviously, second period see to else to start year, lift

Manuel Navas

-- Or X.XX%, the building of yields of peak Kind are that rates right. if same, that, yields? bit at flat the loan All what we from mix here? loan a looking little of the alone higher? getting just we kind that on at could progression, around are And close of stay are thoughts to stay still

Arthur Bacci

assuming some point, no of the we're we're bringing that think think really look which on on in the loan Xs, this pricing Steve, we X.XX in. change -- At is. the is much are into comfortable where probably depends the over we're rates, mix but our I have originations But side I in coming pricing loans at low pretty it

Stephen Clark

Yes.

interest yield unless significant a not would Fed expect raises rates. increase the I So in

variable. Our books XX%

yields predict absent yields that. -- increase. So we I going higher significantly Fed But would would benefit higher forward from not a

Manuel Navas

the going time? loan to of from to benefit securities over XX yields yields going X Okay. But you're still

Arthur Bacci

Correct.

Stephen Clark

Correct.

Manuel Navas

the about Like of some that You your maybe the made room higher versus seems strategically, I'll it that about are you're in kind beta recent of a of talk comment protect on some quarters. about and thinking flows? like to kind -- you target target. It using leftover leave How deposit deposit kind of beta just there. your outperforming

Arthur Bacci

every talk where that to ALCO exception higher about a relationships, when some to protect We competitive No. we have again, determine We what competitors that to is do pricing. rates. exception pricing left up really it's and necessary, it the -- committee we of do And pricing month. that's our line some business at looks will see leaders

the just want we strong very So we ability of have rates But to protect. certainly, acquired in go We're we've increase not do believe some we some to doing relationship. the board to the deposits. manage where relationships additional to get and the necessary not those to across needing it position We're raise liquidity.

Operator

to no over Bacci. with to like further questions back And Mr. I'd conference the in queue, turn

Arthur Bacci

Thank call you today. for again joining the

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

Operator

will That meeting. for you all We today's conclude thank joining.

now disconnect. may You

WSFS Financial (WSFS) 24 Oct 232023 Q3 Earnings call transcript