WSFS - Earnings call transcript Q2 2024 | WSFS Financial Corporation

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Operator

Thank you for standing by. At this time, I would like to welcome everyone to today's Wilmington Savings Fund Society Financial Corporation Second Quarter Earnings Call. [Operator Instructions] I'd now like to turn the call over to your host for today, Mr. Art Bacci, Chief Wealth Officer and Interim Chief Financial Officer. Sir, you may begin.

Arthur Bacci

afternoon, earnings you call. good second joining or XXXX quarter morning and for thank our Good

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

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

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

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

turn Rodger. over call now to will I the

Rodger Levenson

on Thank the everyone joining else you, Art, for call and us today.

return equity tangible continued assets the Results on and core diverse share of strength included per return to business X.XX% XX.XX%. core common a quarter, During on second of WSFS $X.XX, of model. the and demonstrate our franchise of core earnings

XX% Mawr quarter fees driven grew results XX% for WSFS seasonal by higher revenue Management revenue businesses. across quarter institutional fee XX% and of Bryn strong quarter Trust and all Wealth at fee linked and XX% Core $XX Delaware growth by over year-over-year, of services. driven million activity tax of in up second Company was fee services, XXXX, the linked major

Connect's participant. This, has quarter. of third the from combined share of industry Connect the discussed a and its by ROA the Cash unit exit previously to service the non-bank since funding optimization quarter X.XX% of nearly ATMs gaining large added X,XXX in increased Cash XXXX market with mix second

markets Our respectively, and businesses quarter over activity. fee by XX% capital revenue due and to the XX%, mortgage increased prior increased

and increased respectively, loan loans an In addition, and annualized growth X.XX% which basis. saw on as release. high in and net environment from interest the of resulting rate securities was increase offset X%, the growth The our both interest the our from cash flows outlined portfolio retention deposits, from for income The in the and in quarter. of X% cost current continued our core portfolio CD we in margin redeployment maturing higher the funds

charge-offs of the were Asset Net excluding with declined Upstart to and assets, the line stable. loans. points basis downgrades basis over charge-off dropped NPAs loans levels of or Problem portfolios, basis the XX X quality leasing net to total C&I increased basis points primarily delinquencies XX XX year. to due in remained while quarter past XX points. for points,

$XX.X or During to the million buybacks. of incremental in stock from XX% form million earnings quarter, $XX.X and in mix shareholders returned and $X million dividends we the routine a of approximately of

We impact AOCI. of continue levels above to have the benchmarks, well-capitalized substantial including the regulatory capital full

We to our WSFS top grow remain deliver Despite first a quintile and and of half sustainable positioned continued financial uncertainty, produce strong the economic XXXX. strategy execute to well performance.

in a face cushion strength provides might positions absorb our liquidity earnings, unexpected going any us Just as changes and to importantly, capital we the forward.

outlook. turn you on will it our over midyear to I Art to update now

Arthur Bacci

Rodger. you, Thank

core ROTCE the of full communicated We in $X.XX tracking core half first January above or year EPS of outlook with ROA X.XX% XX.XX%. are of and

around positioned of with half of quintile X.XX%. strategy a full core remain financial we second to XXXX, our well year the performance top ROA to execute and look we As deliver

unchanged from relatively The several outlook underlying components outlook. our of I will items. highlight January remain mid-year our

continue assume XXXX. We no in interest cuts to rate

use no-cut a indications to has it found the best we made to as While rates, baseline scenario reduce for have a Fed our business.

analysis an ROA. have would basis impact shows basis full year X points annualized that to reduction point increase of a Our or a alternatively, XX

any rate year, our would not Assuming this performance. cuts it occur would year full later impact materially

and is be due projected deposits. volatility to growth primarily seasonality competitive flat pressures of well natural and as Deposit year-over-year, as to the commercial trust certain

to the our deposit deposit repricing shift in compared XX% communicated be beta in to We is to pricing. interest-bearing The competitive the previously CDs less mix, than of due expect the higher XX%. marketplace beta continued

at Our loan-to-deposit XX%. year ratio the end forecasted is to

a and excluding NewLane, this Upstart Net the in of charge-offs borrowers with working basis XX we problem continued are weakness economy. group softening actively potential reflect small of points, where loans in

line reiterate our long-term would in buyback with would buybacks. XX% to would be and the Finally, routine Any dividends the repurchases in our need our results framework. return economic historic of of environment, form approximately income stock net by be to our commitment and stock I financial determined incremental

will the now for we questions. and you, open Thank line

Operator

like [Operator the today Russell first Inc. line Gunther our Instructions] Looks of Stephens comes with question from

Russell Elliott Gunther

on guys sense first outlook they shook where for of specifically, us I bailment and this out give the for back half more the the we I year? and expect fees. a could, to if wanted should quarter ask, fee what Can you

Arthur Bacci

Sure, Russell.

up have. still the I it divisions -- into we I'll break income think that fee

see activity will good level the I continuing in Mawr quarter, down. But July. are to slow markets, seeing sometimes Delaware going us remains Company Company or which activity of pipeline September, institutional our seeing think really We've point, services Bryn caution into at Wealth, trust volumes levels help good July. the same the this the we're pretty mortgage well months Trust as I summer in nice elevated as the we're good to some potential really Trust in wins there. Delaware here got really activity tend in and at thing. our capital third would August,

Cash a there. somewhat growth of Connect, I would revenue in of the expect slowdown the

player. new the all other onboarded much that the from ATMs pretty came over have We

it. is the referred So pretty much X,XXX ATMs Rodger to

more the that rate So a to in I of returning half growth would second the of normal year. see

Russell Elliott Gunther

switching then maybe on gears to expenses. And a second

guys Could stroke maybe year? And the benefits the the similarly, you So in trend overall for half ratio back then just the quarter? efficiency through expectations salary broad just appreciate that the this line the of guide walk target. in and step-up

Arthur Bacci

Sure.

low line, On reversed that recall first but had so million in that the about target, were targeted -- than accrued $X.X paid salary incentives we we we out in because for XXXX, the less What quarter -- we you'll that look per gross at is reverse this it's reversal. artificially quarter GAAP quarter because those increase, when had ] of to an see coming first off you the [

quarter-over-quarter. is X% increase So the net more like

is Connect external funding we external we funding as Cash transitioned half that of funding those X,XXX that really internal that process. probably accounts, than the in Now used more

had in the was in merit and just the The other thing late first first quarter that is it increases. increases quarter, merit we we've processed

quarter got -- So increases. or a full a of those full year we've now

in incentive probably invest above that. we kind second people. a We've And have higher we'll for accruals half and little look accruing to will bit continued to so of business to to run on running for target, we start are the the because hiring and the rate of continue year

drivers. So those really kind are the of

this but medical elevated medical -- claims our highlight, medical did It's benefits, there's from a kind We get did drove also of think we that, some We expense continue. higher-than-average will claims. an just have it into associates. of call that the reason, bit portion claims, but population -- can't to We the we a higher a little small don't quarter. that had that

Russell Elliott Gunther

funding? Connect up Cash terms and the expense next appreciate to the just of should with How of that it. And perspective the versus use quarters? extrapolate the follow next of I internal Okay. from in -- then for ATMs, we the I couple external guess onboarding an of

Arthur Bacci

slightly. come I expense an perspective think you'll from see that down

to of and roughly with external that We have targeting XX% are done XX% internally. funding partners

higher coming that external of half from first of year. So the a much funding in level the

impact help to X.XX% should we've on ROA. a The will second quarter more our that drop Obviously, X.XX% cash that more ATMs. there. of X.XX%, to own also the in used as the like saw would we fund probably So our

Russell Elliott Gunther

year for just up curious to me that on drive bit. would then or that. Okay. That's are the be helpful. the what net last I'm unchanged the just expecting very expectations. charge-off as of would steps And seeing guys, you're Those half implies second a X

Rodger Levenson

comments, and there loans, Rodger. is closely. outlined a say this I'd problem increase monitoring some we're Art his saw little we situations bit in Russell, are our of in an

so And we out. the depending reflects potential losses feel outlook as work upon though those how

Operator

from And Manuel our Navas D.A. next line Davidson. question comes with the of

Manuel Navas

NIM exit XQ that shift do have the in range How September rate if cut? of a kind does we

Arthur Bacci

-- X.X% basis, were about probably as is on think later translate exit going is on be to the an rate year projected. impact NII. a of If rate. We the the NIM we've of year Manuel, that What in as lower would happening a bps late about the cut probably would in rates see kind full NIM quarter. in into cut I X

Manuel Navas

That's you in to past. the similar Okay. said what

the appreciate for is extra kind rate of So you you this longer? some that. on I XX% in thoughts at? projection? competition? increased can deposit that just Is it kind seeing arrived beta How Are of higher expectation sustaining Just give

Arthur Bacci

Shari consumer environment on side. competitive talk the the let about I'll

being CDs I price. And at as able coming mature of CD higher they our think rates. renewed book you reprice, just to the Shari, off to And been back mature are higher want of they're a is cover thing closely retain as lower they those but the do they really we've we've other a at competitive... on side. looked the some percentage and as

Shari Kruzinski

eased it's customer certainly still on say this protecting has we're is focused I that base. closely that landscape Manuel, would very bit, Shari. our something a very the Sure. it that competitive and monitoring

specials Art environment available as do again, CDs they're current rate said, taking that mature, advantage we see based the customers So of. have we as for on the some

those most is our of clients. so by driven really retaining And that success being

Arthur Bacci

environment. XX%, our And usually are that I'd to reaction exception priced, accounts also about add that's competitive money right? XX% in the market of

Manuel Navas

of return helpful. all long-term XX% That's really as income to net to I your commitment buybacks. that circle Can back

Can little strong bit talk of quarter. buybacks that? past You has higher. about this amount had you Pricing just a with thoughts really moved a

a enter for about And X-year then planning another ROE huge you're is up, keeping to buyback tool and process.

I on in maintaining on ROEs where think fits stand where thoughts out. of just high? buyback is kind ROE you And

Arthur Bacci

own dividends results, the in and be the on our where I importantly, philosophy framework we've our what Manuel, of seeing buybacks we're we XX% changed hasn't Yes, past. by stock as do that terms more and will buyback. target incremental had historic have to we routine generally to about Clearly, financial driven incremental the will in economy our anything XX% our IRR continue the mean,

And aggressive opportunities, so in buyback. nice saw really very clearly, disciplined got So we've the about we some the been that. we quarter, second in

appreciated here. The materially has stock

if longer assumptions still determine we So us we would in IRR changes and buybacks. think some look to the at there's term, to do underlying incremental going to have if really we're get XX% framework our a to a

Manuel Navas

Okay. I the commentary. appreciate

Operator

question next Bruyette, from Keefe, our Kelly Woods. Motta with the line of comes And &

Kelly Motta

I investor particularly on that, there. and points I asset hoping everything it's was circle came looks noticed to at the of reserves down. the was built now side. additional and strong to color quality. I basis driver get to mean comfort back really level hoping But the CRE I on XXX

Rodger Levenson

Kelly, it's this interest flow. And you'll maturing recall, environment, forward have in sensitizing rate $X.X all the for about over quarters, been Rodger. with cash we for that roll no their talking million. process And changes CRE current look loans a those we're at several XX-month we've

time impact And of so update potential our and that through we wherever model analysis ACL roll every we where into weakness. quarter, go see based that the we another upon forward we that

just forward modest continued seeing amount reserves you're the roll is that reflecting a of that what It's So they're project. increased of there. there

in also saw You of the continue to sector CRE. we increase office

that's really CRE what's build And in that overall. so the driving

Kelly Motta

could covered a Last me. the growth for joined year. I I bit with you But think with here flows together little guidance of was Is know the if are it. late. just Got this any kind with with margin loans? us the putting balance of in to cash into flat being puts Or as from or revised of takes the apologize sheet kind right deposit help question I already, redeployed that that way out guide? of terms steady the from

Arthur Bacci

of lot Art. end you see I elevated we part of Kelly, commercial flat absolutely balance would the that would steady. in in a sheet. XXXX the size change I tell the our is of coming deposits sheet material should pretty deposits, institutional business ended say that from trust this I don't the and level an the be with some really of of business. balance

on cash $XXX in down extra an put cash, We're million balance able lot a funds. on quarter-over-quarter that And deploy were our to sheet of average basis. that probably we Fed

change really NIM. ] But it overall impacts sheet [ the balance bottom impact doesn't II line, So but that much. won't really the

Operator

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

Frank Schiraldi

doing or that XX are of curious, bps synthetically is just see all acceptable that sheet-wise that that asset anything impact here lower? basis point Just here. you X sensitivity expect a an you move cuts, balance given the at in kind naturally Or rate business would from

Arthur Bacci

basis it would pretty I in consumer whether rates of we you Frank, our EQ points, impact and right loans, book of highlight up same our you go the directions. our that feel portfolio just at both the XX% rate. And portfolio, look loan or XX about is that has regardless look when loan at now fixed some Spring balanced down of

have We do million. $X.X another -- did we on are hedges, billion authorized on Yes. to $XXX of about we put put and

And so NIM lower. that just downside cycles these and to of of whether higher -- and regardless are produce remind on kind rate been rates to we've protect the through also top we quintile or I'd continue everyone

have sure over go potential the want that we've still because projections we're at last few years, And against tended wrong. there's we make to the down so over-insuring rates And up point. all be could rates seen to some not as rate

very on that both where feel comfortable we So we're having sides. protected balance

Frank Schiraldi

you. Cash on Art, Got -- you Okay. the mentioned then on Connect. And

that run large at terms increasing piece this You've business you rate of of the point. built kind in in in shares added that of

talked about onesie, from high chunky maybe you to here? normal And see just So further single here? do sort share or significant up opportunity rate. growth that it Is digits more twosie of more pick market is

Arthur Bacci

Yes.

the it's be don't think I digits. high latter, single I Frank. know, And it would

X ATMs back about we did of Xx are a were client nice half they quarter have pure the gave than doing of got number services, and that just a this full profitable but with we that reconciliation think work, services and fair more us just back it more was I where ATMs, win number we bailment bailment reconciliation. for

better do really could things, it day services we do and types of kind those of at profit but the things deeper certainly we if long. number, increase So all those margins, wouldn't would

Frank Schiraldi

just then And in could I Great. if sneak a one. quick

that in in terms missed the Any of C&I led increase common to assets. I if the but X there? downgrades Sorry it, problem thread

Stephen Clark

customers City, no through Steve. Center a is were thread. X fulfillment this City Philly X really Frank, up quarter this common last in softness repositioning X to some logistics then and has area geographies in that hotel first in going is C&I There industries: different of is and The of its in different been one, built business; a the a in quarter Lehigh newly Valley, in had of cultural that trucking institution the property company That year fourth Ocean Maryland. Allenham-Betlaham stabilize. year; slow

geographically so industry-wide. no and customers, loans, causes, all real distinct totally good all related So performing

Operator

line our the Montgomery Janney Scott. Jake with Civiello And next from question of comes

Jacob Civiello

there me. your that in portfolio additional AFS a get all recognizing to any assets question securities to XX% to securities at to the Just of change loss from appetite ratio XX% consider target. on more to Is X quickly

Arthur Bacci

portfolio. to off We're that have it we'll at And really handle continue kind us to we but look deploy yield. sense. that in coming able we for cash continue that Jake, out new consistent transactions, flow that very mid-X of see not see originations to anything pencils a makes

the just point, maybe get at If portfolio. look to no no, cash go plans And continue that. take there's flow we'd But we at let redeployed naturally. and think approach real restructure this rates best that's the drop, to to that another

Operator

comes D.A. today Navas question of with final Davidson. the our from line Manuel And

Manuel Navas

the hop I or more going seeing if just forecasts wanted anything you see to excited. on and based any there's changes loan on in commercial borrowers rate or less excited Are pipeline. getting on

of context thoughts kind Just loan your mid-single-digit in rate. there growth of

Stephen Clark

Manuel, Steve again.

a of little half several of first the been is pipeline low in reflection is down actually in had we is closings $XXX XX-day the that which weighted strong really quarters. it's And year. million, the as average our to So as over a

Having said full remain that, mid-single-digit about we for optimistic growth that year. very still the

significant opportunities our the at stage pull have our of they'll early normal process through in pull-through rate. We believe and

So still the half full second the sitting here with of year year, looking our today, at comfortable forecast.

Manuel Navas

that those yield kind yields? the in And origination of of loan range? pricing X.X% are that Is kind right new

Stephen Clark

Yes.

So looking June loans at funded our for activity through $XXX,XXX. all over commercial

the of was out month for June, in and yield X.X%, for January population of X.X%. June came that Our we

redeployed range. So -- Art mid- X% down that we to we're being as in securities amortizing yield that mentioned, portfolio and high definitely,

Operator

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

Arthur Bacci

Thank you call the today. for joining

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

Operator

that gentlemen, and now call. concludes and for joining, all disconnect. Thank ladies may And you you today's

WSFS Financial (WSFS) 26 Jul 242024 Q2 Earnings call transcript