WSFS - Earnings call transcript Q1 2024 | WSFS Financial Corporation

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Operator

Thank you for standing by, and welcome to the WSFS Financial Corporation First Quarter Earnings Conference Call. [Operator Instructions]

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

Arthur Bacci

Rob. you, Thank thank earnings and joining first our Good you XXXX call. quarter afternoon, for

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

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

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

the Rodger. I call over will now turn to

Rodger Levenson

joining Thank strength the of WSFS for Art, start you, and call continuing everyone diverse to demonstrate our model. us today. to business the on else had and XXXX, a good franchise

return share assets core a XX.X% per included of core core results earnings equity quarter of tangible on first of return $X.XX, Our and a X.XX%. on common

position. and are benefits our investments company making our to continue Our reflect we the the results unique competitive market in of

deposits across annualized. was withdrawal. gross linked were of trust included up X% quarter consumer excluding customer a linked books. quarter expected growth commercial activity spread or mortgage, This X% after short-term Highlights commercial C&I end and deposit and for X% Quarter the quarter growth our loan

our across well in businesses and linked Commercial, increased average Trust quarter. X.X% accounts. diversified deposit Deposits with annualized balances XX% demand Consumer, Average deposits remain of Wealth noninterest-bearing

net X.XX% core interest-bearing margin was deposit the of XX%. for interest with quarter The beta

cost increase average The the meaningfully March. our of of early increase and rate in XX points during While basis declined in cost funds the mostly the in funds quarter. of quarter occurred increased

income linked Excluding of of million quarter. in the Spring increased equity quarter revenue our in X.X% $X.X from core position EQ fourth fee XXXX, the

As Spring we this XXXX, a from was will acquired effective therefore EQ longer recognize reminder, year-end and income no investment.

expenses of external Connect a XX.X% $X.X of these increase. nonrecurring this ratio fee quarter. the quarter. included funding the was linked Noninterest the Our increased first million for expenses X% fourth quarter adjustments. $X.X quarter, XXXX quarter year core of or for the in core costs items, in first stood Normalizing The ratio XX.X% with the representing both at revenue efficiency of number million Cash and

Cash ATMs to second Connect a exit opportunities added the for anticipate unit the during the quarter due large quarter. industry X,XXX service We non-bank discussed during additional participant. growth of previously

funding. quarter external in increased higher due to costs onboarding use the and were onetime Expenses of

loans, and loans of X.XX% delinquencies Problem stable. were remains XX at points basis respectively. quality Asset gross flat and

The of the XX upstart credits. a build we X.XX%, to C&I to leasing as Net due ACL nonperforming reserves continue charge-offs declined of resolution including was NPAs future X basis losses. XX points recovery, excluding assets, to to net coverage of total potential the basis points decreased gross for primarily and credit average portfolios. loans,

in we XXXX. remain quintile top financial summary, performance well deliver positioned In to

to well outlook the communicated are I you. Thank in We Art full facilitate Q&A. year January. will have tracking now

Operator

from the from of Gunther Stephens. Your line Instructions] [Operator comes first question Russell

Russell Elliott Gunther

space? coming where Connect, Cash from? the discussed, Who you and some How about touched should Rodger. is a competitor be? you this share market And But you the you around dynamics bit just opportunity just takes circle up I can the the of modeling expense? share for then we can what that mostly but left of to on the appreciate on think how gain related the us wanted guys a I and quantify kind market is, moment puts ago, share

Arthur Bacci

this is Russell, Art. Yes.

to aggregate, fourth year. was I to cash think the quarter somewhere we of QX. XX% more quarter a in I'd onboard. participant that that will year. We've process previously we've think communicated the of in and we And close U.S. quarter last the probably, last That's between first here units what few the purchases XX% XX,XXX exited Bancorp ] [ fourth of added in we've say, got the in

think up you cash in say, sat and had transition rather wound expenses some of as we just look using external make was carriers to I'd the where source go lower go source the of some at than there of the cash, confusion the profitability, optimize nonearning fact in that on would we carriers no get kind funding exclusively to the in was when that so we smoother of I additional where of on that quarter the well to our vaults, because and just some as transition the order first the -- the cash.

kind and with various usage ATMs. here at looking vaults purchases, the cash cash, As the we we'll involves optimize of to move of along which between distances these start

will back And between of sources. so funding into us funding down of a more normalized our and bring kind external that WSFS mix

Rodger Levenson

would that. I Russell, add just to Yes.

think business, historically, as the the profitability accretive be you the As to overall we've said time. of should bank over it about

levels return year. this course of we transition, this so should to we the move And feel like over through those of profitability as we

Russell Elliott Gunther

just if to there? talk time? with shift would upstart what, impact over if net switch originations WSFS bit a then customer could start portfolio Okay, your charge-off regard to guidance to decline. have you of That's out with that I the expect the just then Can about to And getting gears And you any, strategic us on on helpful. for a being pause very guys. bit, expectations

Arthur Bacci

think really meaningful provision the that well the And we're is under for losses portfolio. the that reserved this CECL will clearly, Art. originations think we will in methodology amounts, incur Russell, of the further without We any decline. we'll But another the charge-offs the see -- of as continues probably that shrink. we of we and with charge-offs couple declining on to a have portfolio level handle good quarters they do will

Rodger Levenson

originated didn't we it Yes. driven the plug for Russell, us could cross-sell a credit really see to was question, And that offering. with also a consumer opportunity first just product our experiment somewhat strategy it in gap two customers if -- digitally those. your as into partnership an reminder, to that dynamics. on part the was was of a the was strategy, One, by upstart

not the I And the to combination, us of size get would the seeing that that's performance, candidly, the to of the So the on returns getting it cross-sell for kinds we say, we did really we and to that expected. reason pause. saw that the give wanted -- credit

I the overall, will earnings. our still does of the we book, that just portfolio expect and clarify not size loan on channel that modest total our originations. the to available material And a have we customers impact with fairly but have obviously,

Russell Elliott Gunther

just side of any your activity profile the me, you guys level bit back. one potential partner? then Could switching overall And M&A talk Rodger. about for discussions depository step Great, then of just and or a I'll gears. and here an Okay. last appetite Again, on ideal

Rodger Levenson

us. has So that not for Russell, changed really,

time. after significant and growth talked we we're the with of about Bryn for we couple we've positioned the extended feel very Mawr As the investments for time made -- uniquely years, great over organic a last market franchises, beneficial in significant

not on really we're additional deposits. traditional so And would focusing that contemplating or bank M&A revolve around any

we say see and Commercial happening what business, both add to in would I continue are seeing to as well talent in the opportunities Cash the Connect. you and we though, Addition, the invest in as Wealth areas

the this So we for we'll in the returns business of bank consistent is sight. point, our M&A, in line see But business our continue not opportunity to at invest model. traditional with if

Operator

Your comes Frank from of line Sandler. next from Schiraldi question Piper the

Frank Schiraldi

terms adjustment around Just Wealth of commentary run of commentary And to wanted in the with driving part a and deferred curious through deferred the that that that run this a is rate? -- rate could with revenue? if here revenue come how decline. Or you out? the start think just better Does in with back talk quarter to around Management about

Arthur Bacci

some that we realized Yes. Russell, really onetime We moved $X.X a had I different item. about was a to billing so, overstated Art. accounts That this had of is doing in revenue. million And platform. deferred

of quarter's So the item. revenue, that this really onetime a was That's was million. impact $X.X the

the rush to and company trust get some usually There's In activity securitizations institutional in trust a Delaware that, of there's to year-end. done at both trust seasonality, addition business. and in just the

to compare that to it So definitely down when linked you be somewhat. going quarter, -- it's

ago business trust institutional our actually like compare you up to quarter, year were if year-over-year. a But

provided is of feel robust, pipeline in to comfortable the terms in the growth of still outlook the think So I fee continue we we and businesses. still very our

Frank Schiraldi

Okay.

a revenues to is this million come and $X.X hit that quarter out? back So will

Arthur Bacci

Yes, it we'll back revenue. earn it deferred was as

Frank Schiraldi

Right.

Okay. then just little Obviously, you the track on of on have you the kind give from little you or the detail more out wonder year, could guidance NIM. -- And mentioned beginning of there. a if more are color a and you there guys

forward kind with the outlook part, there opportunity. like was lower. if in just kind of from quarter wondering drive in how NIM And know some And that I fits don't that in excess XQ? liquidity moving maybe look arbitrage in color help NIM Just an that's NIM and of your

Arthur Bacci

the an funds really and only in March, I'd cost bps. the just most NIM first deposits increase up went some increased basis Frank, you give points. cost X just XX was say thing impacted that It to -- of color, of was really in funding. And

opening mentioned the the We as of it the that in was a plateauing in of see and second of So kind lag quarter. deposits. NIM was of repricing increase because most Rodger comments, our still in his quarter, early in

a ironically The actually degree, investment portfolio the on down because have factor, AOCI, other declined, yield as the the some to securities the the -- higher contributing goes balance. you was mark little

that point basis So on roughly was securities. mortgage-backed decline the another X

even the put that yield pickup Fed the we loans and so funds, will there. the kind because back up year, the a that securities of quarter point in the XXX redeploying mortgage-backed paydown we'll -- into half to the answer second namely that accrete of NIM point the of if second in see portfolio flow cash is believe or we and continue in be basis to starts it very the into confidently But short lower

Frank Schiraldi

basis down I think Okay. said costs sorry, you to just Art, I'm -- X And deposit were clarify, said March? down points in you

Arthur Bacci

only The increased in relative costs deposit X to March February. points basis

was of So funds first that basis point [ increase half. XX for said, were the quarter for XX mostly, the like ] in I cost

Operator

Feddie Your next Janney. from question comes from the Strickland line of

Feddie Strickland

needle the much ask opportunity move how stays do in the do on yield term see yield? just the where loans at you to Or rate loan think of could portion of wanted point, the that kind fixed it given Just repricing portfolio? you is on this near floating potentially

Stephen Clark

fixed Really, commercial significant here. opportunity Clark rate repricing there's Steve Feddie, in no loan our book.

yield our throughout think the be increases year, variable loan rates rate I book. Fed the will the rest consistent of fairly unless given

be range yield X%, equal, being things forward. low all should So going still in X% that

Feddie Strickland

it. and was wanted what then that surprised in talk That's this assets. next liquidity helpful. level at of the through you back quarter know I And just growth? you -- extra of to about some terms Can asset we switch see little bit I growth drove Got quarter having to a might of and asset talked what earning there. of

Arthur Bacci

Yes, Feddie, this is Art.

Refinance down advantage of there funding. look bank-term at of there in was $XXX and lower you the liquidity securities. $XXX of we that take earning prior we really, quarter, when rate probably about above borrow took some quarter, growth, and did the actually about we face excess or value million had, the $XXX asset can and we the because that's the first at fact think of million the million I

Going forward, generally probably to that's say this flat still quarter. I'd

cash coming receipts payments usually cash in some the quarter. in elevate the out tax more of little think will tax tax and going keep payments out the significant the the for I quarter, -- we'll of elevated bit and more a see the second or flows some because

Feddie Strickland

first in last by just you're back we the what that. I from Is came then versus just points XX going one what below effectively quarter guidance the variance this NewLane versus much well the consumer over basis question, charge-offs. guidance the between saw potentially And the to guidance? we driven the Upstart? and should what know year, we expecting we pretty is future to what delta in see that time Is in quarters helpful. XX That's to book or and expect and

Rodger Levenson

Yes.

I'll here. in Feddie, just jump So,

think start both as just quickly. plateaued we the with drift mentioned, down a NewLane especially see for it So little a Upstart level of and to we we'll as trades the having bit, here Art little more for Upstart, and probably charge-offs bit portfolio

will we're be still historically for the low how Obviously, portfolio really a think book -- the we're I credit net recovery delta performed. commercial the us quarter. But little with the pleased be on to coming and charge-offs levels, lumpy. off tends of in bit this what C&I

see and as that what that upon of the or So assume all X that to spike And credits depending of kind we the a or year. that some we continue range in will we remainder you those the rate us the to averaging it's so charge-off outlook. during seen historical can have got size X occur of of that provided X of credits. And

Operator

from Manuel of the comes line Davidson. question next Navas D.A. from Your

Manuel Navas

year terms staying growth. from are at all the of loan rates? impacted pipelines? to -- And demand start Any issue -- Any with rates great in is are they A with how high?

Stephen Clark

Steve commercial bank remain in Manuel, fairly Pipeline group again. and Clark small the the strong. business

is So over our $XXX weighted just XX-day little million. a average

So activity present to and continue opportunities themselves.

of that of talent Rodger at portion from both customer disruption occurring and market, that players some in significant is generating and our acquisition the bigger is as for the a think opportunity, I earlier, acquisition. said that's

customer continue supporting side acquisition environment very our not on of has the customer interest existing base. C&I in our focus the certainly, we sponsor So CRE remain pipeline. new on terms side, And rate new on selective very, and acquisition, to impacted

Manuel Navas

great. That's

other shifting to of over for? movements bit, deposits that deposits a looking take out any and on in early trust flows terms you're In

Arthur Bacci

Art. is this Manuel,

think steady. I things are right now pretty

of that's the assets go for I mentioned acquire deposits, and the continue very trust. some We mortgages pipeline to those to strong trust a going securitization prefunding Remember, have in as are really in past, deals. for out cash

teams markets easily. they've really second to the opportunities nice certainly -- very the But as active And bring a got of there up that, forecast we not actively different year. if they can't could us. That's some quarter, the type half the here, deals second really clients securitization and in of and in pipeline got be

Manuel Navas

In to you've your even budget talked to defend progressed? about that assumptions if bit in your deposit having has a of more. ability little what deposits past, updated are that And deposits necessary? more, a your on defend the How beta thoughts

Arthur Bacci

still Shari, I'll Yes. And but I'll turn it over to we're tell you, tracking.

we having We to to was said price. But deposit XX%, defend you about terms have of declined to think -- our really be if beta interest We XX%. bearing have we'll on kind of use excess that. close to budget, seems the pressure will, in

can seeing Shari about more talk the she's in And what market.

Shari Kruzinski

of customers comfortable. successful it's mentioned, products. money exists, say certificates pleased pressure, those I to competitive are Art the very would in and interested subsided that, it And somewhat. But new feeling Sure. as customers still still seeing although been We've really deposit, we market. the attracting

expected, a lot actually rates are In the on well. higher fact, really front running exception than management pricing CD as retention proactive our we had

Manuel Navas

I my to buyback last shift -- the Can return. just capital and helpful. really question, That's

XX% You've kind of threshold. above gone the

Just any that? updated on comments

Arthur Bacci

No.

to to the some to We continue QX to for We to little made for XX%. we going from year. it the the term. we're stick under But had in generally, do were QX. XX% long no, XX% stick a We where bit makeup up

quarters, between be but some no So timing differences there change. may real

Rodger Levenson

it an is Art an it ongoing ongoing event. obviously well. Manuel. It's articulated But evaluation,

evaluate near-term we not capital we routine go that. our go opportunities buybacks, testing, It's our we we as above just so to in thing. that call what And current stress see and through the will

Operator

Kelly the KBW. question Motta line from next from Your of comes

Kelly Motta

says the XX, million maturing all Slide mine have been maybe $X.X you've But loans months. Most plus answered. XX it and asked in reviewing next continually been looking of at

conversations focus investor with borrowers the repricing given coming those? or and managing your findings due any Just with are have could on you are up borrowing what provide how and CRE Office, whose you -- if loans been, for

Stephen Clark

again. Clark Steve Kelly,

scheduled mature now, project time all dates. we've well noted, maturity be protocol customers and X to quarters to look we've just as front forward in and quarters the this yes, for proactive our that get as in during of at an roll any year are And want out we So advance to period. several loans years had, progresses or of ongoing

far, working the we've that during and so challenges. matured have really successful our with first customers with quite been last of And loans in year this of end minor for quarter the year minor,

it continue So our each their to of all that work maturities. customers be quarter, to will and as we'll ongoing relates with

as certain it be could likely concern. a forward. loan really certain broad episodic move versus There But as basis in with and we some with view a loan really be will by discussions borrowers we loans

Operator

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

Arthur Bacci

you the Thank for joining today. call

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

Operator

concludes conference your This Thank call. today's you participation. for

now disconnect. may You

WSFS Financial (WSFS) 26 Apr 242024 Q1 Earnings call transcript