WSFS - Earnings call transcript Q4 2024 | WSFS Financial Corporation

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Operator

Thank you for standing by. My name is Janine, and I will be your conference operator for today. At this time, I would like to welcome everyone to the WSFS Financial Corporation Fourth Quarter Earnings Call. [Operator Instructions]

I'd now like to turn the call over to David Burg, Chief Financial Officer. begin. may you Sir,

David Burg

Janine, our afternoon, call. fourth you, you and for joining quarter and Thank everyone, good thank Great. XXXX earnings

would earnings financial are can Bacci, Prior release to to earnings safe our and website. like Investor release Arthur we on of results, Chairman, Our refer this to harbor President me will CEO; call Relations supplement, section Officer. on Levenson, our found reviewing Chief be which call, I Operating With our in Rodger the read today's statement. and and

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

results. financial I turn to will now our

return equity on a Our core of of results common XX.XX%. of of with capped on businesses on quarter, share assets with a included perform return X.XX% return These equity per XXXX core into in on XXXX. results X.XX% $X.XX, providing well core assets tangible share full common of strong successful core $X.XX, XX.XX%. core and the tangible continued year earnings to very us XQ moving per return momentum core of and earnings

revenue and an overall and with impact million bearing $X.X Cash proactively This with does portfolio. to included This a million resulted insurance appropriate. will for client's to loss a million avenues a to event $X.X is business. Fee of client a a a a in termination noninterest the other the our pretax events interest, the protect as results termination the of adverse to broader result Core impact The we acted negative financials Our business core $X.X and long-standing in Connect quarter on Connect that expense. this incident recover have isolated working be through where Cash impact our to not team relationship

delivered the Cash X% double-digit growth Fee of in on Core Wealth WSFS powered fee million quarter the event, year-over-year by which delivered of Despite a Connect $XX XQ, & Trust revenue record growth. business,

interest relative achieved the For despite the Core the quarter, managed prior we the to XX% experienced company points in of basis an the XX% deposit year. We the rate interest of Fee up and Core of X.XX% end beta full XXXX, for repricing XXXX. with quarter year growth our that linked the XQ quarter, for net margin as X deposit of interest-bearing an cuts of beta exit December achieved actively was XX%.

in of Consumer basis, average loans On driven linked lines. Customer higher mid-single-digit driven by grew sales. Mortgage. X% a growth XQ. XX% with and X% quarter Noninterest-bearing declined payoffs C&I growth deposits the Trust, linked deposits Commercial deposits business and quarter, X% linked & Wealth business quarter year-over-year grew grew across comprised seasonal and and in Loans Commercial X% broad-based by

our while We business important Wealth relationships. strong to our sales pipeline originations continue client present have for expand to business a opportunities

XX% year and of with deposit a flexibility future fund the balance loyalty providing finished growth. ratio sheet to We capacity ample

well from by charge-offs. decreased problem costs $XX.X quarter. as and Our decrease asset improvements total million of net net million $X.X reflects This of prior as in early-stage the credit metrics lower delinquencies,

the Nonperforming runoff, are current based in migration assets and of for valuations. points charge-offs XX due relationship basis XX collateralized the quarter for Upstart Excluding recorded year. points two loans to on these loans, of which but believe net we is one portfolio the well our we increased with basis quarter-over-quarter

end the remains at year coverage ACL of at the Our X.XX%.

last basis point Overall, and approximately to of cut the expect June. we we with on On page growth assets core rate of XXX year which for full assumes the deliver another in outlook provided return year high supplement, our performance X.XX%. a of XXXX

We expect in flat our growth mid-single-digit Consumer in and loan Commercial portfolio. our growth portfolio

the will Upstart will our partnership be portfolio which runoff offset Consumer loan Our be by portfolios originated Spring impacted growth. EQ of and WSFS by

growth deposit on building broad-based recent continued XXXX, expect in our momentum. businesses across We our

Our low XQ. deposit outlook digits in very levels growth in the for is strong single from our

level for approximately the for X.XX% the net and in cut margin June. outlook this additional interest with year, XQ, rate consistent interest in Our is an incorporates

finish will repricing deposit to the deposit interest-bearing year approximately XX%. opportunities on beta We continue with an to of expect and focus

We continue of to in momentum strong Fee growth total X/X which and opportunities almost revenue. see businesses. our our contribute

& XXXX. business the technology talent Wealth to grow we made investments in Trust We as expect additions and capitalize double digits on

revenues revenue as expected to as Connect Fee the overall of reductions. grow are result rate mid-single digits interest will Cash Our a decline

resulting XXXX. funding this profit a revenue Cash in offset more than reminder, As margin the decline for higher costs a in is Connect's business in

of expected charge-offs XX of basis credit. to average are be XX points the year continues see the loans between to Net the industry as for to normalization

portfolio XXXX. may continues perform in losses remain uneven Commercial to Our but well,

leverage base. franchise to And continue continue expense we We the runs portfolio to our invest lastly, prudently to decline while off. charge-offs associated Upstart net managing in expect opportunities to will with as the

very delivering may quarter-to-quarter, in our is our committed the outlook of efficiency While We're ratio year ratio performance. an efficiency the for to and about high for fluctuations full excited XX%. we have future remain

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

Operator

Russell Our from question of Gunther is from Elliott the Instructions] line Stephens. first [Operator

Russell Elliott Gunther

year. above you're expense of I how for guide a line you the XX a margin efficiency us the run out we efficiency outlook. earlier quarter-on-quarter. AR appreciate the the rate, and the we of guide on shake lumpy provided XQ bps guide? around But I I wanted Could on as of year, some that of minus past hear assuming to plus bit to are a the thinking you type give embedded expenses, thought top or dollar range. start just the I about what's kind think -- how were for sort what as in of maybe your follow-up,

David Burg

Yes. Thanks, Russell.

a $X.X increases a talk Cash alluded at let And was So rate a the about which XQ a basis, bit. Cash as related interest to offset Connect me little you little XQ increases, you We we revenue. the of when to in had obviously quarter. Also, Connect had noisy in one-timer, look million year-over-year one-timer. bit are

flow line offset are expense revenue. that those purely that related are expenses variable through the So to in rates

things and about up for the year majority large expenses And are were X of in the that normalize a you X of out, salaries those if really benefits, there part our was and the XX%. drivers So our always one say, to for incentive I compensation we the true the that. performance the is had end at quarter, we main year year. in up of that would the fourth actual in that,

it. So part that making of was we're in And of that the in terms business the investment second headcount. the is part

And that on And as think that's look a Wealth the months areas: joined that the double-digit so you went added of to or a few choice I recently investments at manifestation side, many last in platform year, when the this year growth fact, expecting evidence people into we are that and About we position advisers continue to are you our of the in a side we're when people. and look fortunate continue the And be team. side our of just think Commercial next Commercial of making. we're year-over-year. growth, on invest -- competitors and see to of and interest, particularly from areas at we our us Fee the of X X/X in are Wealth the these both of this, I joining Technology. FTE about lot Wealth, in teams there heads, for that the And XX we're X those

that's of little color So on quarter. the a bit

In side. rate a it a terms bit efficiency the would moves quarter-over-quarter of guide, little bit obviously, also the because can and impact of on around little I around the revenue move ratio say,

parallel goal to continue the so flat, -- going model our philosophy. it on invest, right implies and growth continue kind long-term to And expense basically but revenue this year managing we but growth think you of expenses from can way. we're can that's that of is appropriately. a managing. be We're keeping the that's that say, that opportunistic, generally But decision, trade-off to deviate we're would I it's So focused and a on quarter-over-quarter, we'll goal the for I that's focused and that think you something efficiency we may with

Russell Elliott Gunther

of to improve agnostic you pull can then as you talk overall about in general what profitability it sort have Cash to rates any guys short Connect, could that yet do? relates of potential levers And

David Burg

absolutely. yes, Yes,

to interest important that see rates remember that's impact and Even rates line, And the business, have the than interest to said, to an it's we you as so going that, accretive and a one pricing. minimize focused of fee third one, going top as making on is in cash driving though should on an obviously, but growth, impact margins. sure our be that's the optimizing growth, cash. beyond profit the of line But profit it's margin to we the and of you're -- -- business are And declined, that more are expenses. on combination combination noninterest-earning logistics a And the up. it's that our important offset

As opportunity USB following we we going the deploy. leverage, we've an market client that acquisitions that's do we're we've for made, feel pricing have consolidated something share that and to

where this year. definitely drive from So is profit next our to is margin it year up goal the

Russell Elliott Gunther

Got it.

year there? end last overall by the of targeting XX% Helpful. in me, roughly you're should how the size average Okay. ultimately the if the assets and one still think guys, And of portfolio we of securities just maybe we of get might of then from when terms kind one about

David Burg

Yes.

it's of on portfolio, now. about securities So assets the right XX%

cash targeting a lower. mark, $X.X as about interest. about we're right, $XXX in as bit principal little It somewhere is well year The off of XX% portfolio billion. throws around maybe million security the per You're

growth we be business. is a the look will $XXX bit year. that to little may So about redeployed a million probably of portfolio. in we of But -- the going Most redeploy securities that to into into

even -- will we will portfolio be add do So of down it to the net-net, down. some But our to come bit. a little net-net, though expect securities we

Operator

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

Frank Schiraldi

there, term? Just point? Obviously, potential short additional just current more those buying have stock firepower color at you've -- the where got either as M&A -- medium level the I also but your interest thinking of back you've and could regulatory basis. look capital about this capital -- in we your and about in trend uses think a levels or been to wondering on term other on on Any you capital, at

David Burg

and terms XX% every I'll to of XX% in of talk capital it on capital, actually side, in the Maybe return dividends. the know, XX% buyback. you look net Yes. year, XX% When on and turn and that's was to we did dividend I'll But income which Frank, about as our off have start so that about about about M&A. the and terms at Rodger XX%, about of philosophy, in last we about a of in year, you that buyback we rest

look we business the we And take -- in stock, of trading back through equation constantly versus way deploy the at and that, deploy balance. the thinking cash hard buy we have look we always at kind that look balance so and we that we're to we're a that that and -- and the is to to opportunities where at ability and capital

looking macro we it's think And year. think I I just revisiting. we years, capital year, say an I over do equation expect volatility make in couple other rates. did would of we the next environment, And held So continuously interest again little -- last at that because bit in I is that year, credit, more of to that this a we're would next as point the will more

focused think that return on And buybacks, be definitely a manage it's continue and and it's sure more but at taking to to as hold can. again, But much continuing so we we carefully something to we prudent we that look make now. disciplined, we're hard still as we're little bit

Rodger Levenson

just to it's something Yes. next it position the this add, all plan. focus strategic I would 'XX, plan, is market our Rodger. that really Frank, we relates just across as our continuing M&A, And of 'XX, for optimize very have to strategic completed those as unique both franchise, we said, appetite 'XX optimize and the businesses and That we and to invest really our that businesses would continue the to to that being was activities. investment. accretive David be the to side look it Fee could we Banking invest in if outlined, in

is decision say those pretty high to we business. in kinds course any like the the to of deploy capital I that is decision it bar of because that investments will any deploy investment ordinary in make, a not

open to open we've we continue without outlined of that we're feel to and what having franchise. that So results but to looking achieve can do magnitude. we the confident opportunities in any strengthen to provided at the always we anything outlook of would the But very kind that that, significant have

Frank Schiraldi

else then this pretty all And sort on sizing Great. more see inflows have out it more large The Anything terms that inflows coming quarter, couple considered? -- in of customer or can a just modeling Okay. out is just quick temporary that ones in in nature. really you in I strong coming run you related. some good of terms are that -- growth rate of modeling back in XQ know deposit of sometimes the customer

Rodger Levenson

Yes, think I you're right. Frank,

will we I year-over-year, think that. that very growth a of When so at normalize even have in importantly, you quarter-over-quarter, you we seasonality. bit strong we when -- think like I -- have little but also for the look quarter said,

kind you high that if on in half and year when example, year, pattern we're But last importantly, single-digit the we in think at see expect first at X% deposits. And overall had we a on importantly, look up businesses, clients. you and growth year-over-year. fourth on look Fee would of strong built of say, look Core we noninterest-bearing things, average that. our Core I noninterest-bearing think out up I Fee you and still year-over-year, we across normalizes Consumer, relationships, you I that the more Wealth of so which also we're why reflects some and do even across this quarter would But had, out of quarter really these kind average all X% our the I then across & we would in about Trust. came XQ. For low a Commercial the maybe at the was really, deposits kind off that's similar for with probably that And growth -- of the year, across that And growth of business operating the balances last that's when the deposit say, point

you But it there's net-net, is strong at think think a quarter-over-quarter, solid I one. year-over-year, I the think story So deposit we very have I Yes, seasonality growth. there. way any look

Frank Schiraldi

one just talk No, that's Okay. I great. lastly, Cash And then the are business, impacts. terminated, about numbers quickly, think guys there's onetime when nature, in the I Is that giving onetime a from was anymore? Connect not trying it partnership customer think there meaningful the to you terms missing, you you're is in of can number lack am the -- it, impact there quarterly I provide, is just size partner a of just being this

Rodger Levenson

Connect impact this I pricing for client, the two are business. growth the Yes. about Cash the when there rate there think I and One few Yes. and that levers XXXX. three interest around pieces say, is would previously in discussed moving are Frank, you optimization a is

expect And down things, more of so when offset in all revenue those than to the top somewhat, but be you net that's expenses. line we

kind of And digits from profit single absence the so of we year. those increase still the of this to digits when to the you including a next margin net expect mid-single all client, high things

look at business, the the we're So business. that's really how we how that's and driving

Frank Schiraldi

Okay.

is terms one of not meaningful guys disclosing the or is of something it both? customer just specific aren't in from the Just absence just fee you or this

Rodger Levenson

too on But bottom specific the -- I little a this revenue. client margin I line, bit. quarter profit again, rating want Yes, run and to focus think really into I would the much I get don't can't

Operator

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

Kelly Motta

more on the one Connect quick just question Cash Maybe business.

risk or it beyond what sounds Just with the of what just business? somewhat from with just What mostly Is high potential this start level, idiosyncratic. rates? understand interest mismanagement are Maybe the kind in are it fraud that. a I'm moves trying I'll like risks risks to happened theft, this here or is

Rodger Levenson

Yes.

here, in profile situation, elevated relationship, stress of to that's More as of I business broadly, what is to we've track and place the risk enterprises proper business. back as controls we're amount you particular large making business the had the about related circle built years the managing we all that to is the been we obviously that materials, termination have and to sure our that manage system up or just have which led that, the and financial Kelly, of So felt systems and owner cash think risk keeping outlined the over that relationship. so the think the track of that lot been throughout the of in in XX a and

would all I particular working on but them controls ends in business. general are work risks are pursue of we the And to of outcome situation that to And those we avenue biggest risk those say, ultimate think this on this mitigate that in the those and our still and situation. loose demonstrated statement, There have would statement, way general as were I say, some charges, as that's in a satisfaction. that, the a well reflected we're very manage I some in that

Kelly Motta

made really kind and And the appreciate growth. revenue with That's commensurate of the I managing all color expenses you've how you're helpful. kind talent on and it. investments Got on brought you've of

the a recruiting that if challenged your you're in as in your plug here in areas for managing how are could which more be we wondering, efficiencies efforts? came when rooms additional would look greater you lighter still potentially ahead, toggle would the perhaps savings? and revenue be Just expenses, -- there much Or mostly get be

David Burg

combination. Kelly, it's a

time was typically again, company that example, numeric our this the for quarter performance. to our is incentive true-up the accrual, a the drove very really one fourth when of which is think, in expenses and relates things I

something So are where directly is. our that's and ROEs something that to where and related that is clearly is company performance variable the

that one thing. think I

same know, of talked doesn't the managers, expenses, until headcount, second The we is thing relationship of really the start in about investments as limitations, flowing advisers, materially start revenue day-X, particularly when may that made year. contractual the as you because course, we've but

optimistic double-digit bit a that's of when mismatch about of a -- there's the that between investments. little back continuing a revenue. and we that the timing so there's But little And on a mismatch feel bit of these expenses trajectory, is how

say, third is made technology had have from we would year I one we thing our our final including acquisitions. upgrading the this which accounting the And -- is integration major of pieces kind of investments some system, trust

-- look you that the full so at you that drove year, a look year, lever. as a was more when but quarter, of also And when that full at third really the

do at. levers, we So we that manage think take and it's look a very I have again something hard -- we

Rodger Levenson

Yes, Rodger. it's Kelly,

historical Just to little a give context. bit of

I of be think a of if period our peers. efficiency than time, bit over ratio you our some a has followed us to little tended higher

dipped of bit the carry more around businesses hovered in XXs and them. were to little and long-term a kind are XX% fee We we that load as businesses mid-XXs periodically. -- service-driven is and of expense the into because XX We've think a higher the part a which big high have businesses, sustainable level of that

So our long-term efficiency being around that's we talk XX%. is why that about goal. That ratio the

become at opportunities more efficient. to Obviously, look we always

taking moved hopefully, quarter, advantage, some some held real the expense we marketplace sale. for savings of estate owned opportunities some to You saw address in We're potential this there. and

that efficiency model level to I So But kind be our of ratio. there looking of and way. a bit dictates shouldn't historical mix that going drop our little higher at below it an somewhere that businesses service-based because think expectation we're we're

Kelly Motta

second where last of Understood. me. uptick the last you year? this of helpful larger provide question calls out your quarter migrations out that you That's land believe from context. these us back This super had Construction. of an some work on the this I and presentation quarter Multifamily in of the over Can half migration occurred the in NPAs process some color Maybe is quarter.

Rodger Levenson

Yes.

of any was and NPA, relationship. it So size I that was there to say that would moved one really, only credit that

in course we're way. Central and that more we're right flow, global well has $XX X we in another the construction into would as into year situations that. run area we So land very as each a and loan that around loans To loan, the working then had, I we loan his in cash I industrial million very NPA, those outlined continue say, in a a Similarly, North materials, David Jersey some in last large we've on feel, work of that to Jersey. land said, sponsor multifamily the through think secured, other constructive migrated over challenges

hope the As of near incorporated about future. that borrowers, our the on with in was obviously, we've some we've we talked going -- to ACL all resolution into where forward. see And the landed where

David Burg

would I our that just Kelly, of are with recourse loans a add majority vast as well.

we actively So we manage -- have that.

have We tools. different

don't have so the that's turn you that NPAs into And necessarily why losses.

Operator

Davidson. [Operator Our from Manuel comes DA Instructions] Navas line from the question of last

Manuel Navas

into go they're outlook and make up discuss on that. little start you for kind Let's what consumer growth detail Could mix it, pipelines Upstart with of the the flat, for runoff? parts keeps what loan and to the going bit more a

David Burg

Sure, Sure. sure.

So Yes.

of businesses. Consumer, running million of you the -- is you have that be to, we you runs One Consumer really portfolios look between you X the is have look Commercial you the off right growth end down about a outlook, when off. as $XXX will partnership the $XX and It loan the to about UpStart, alluded think million now year. which quarter. the as at I at So it When break

year. this be negligible So really, the end portfolio year, the of by of end the this by will kind of

and portfolio. prepayments. interest it is the portfolio off Spring is the runs with portfolio off In other but to million bit $XX subject rates, about generally, EQ runoff month. portfolio, But that The little per runs to million $X that runoff billion, a $XX

that portfolio. we think $XX was the had I quarter, runoff this in about So million

that, decliners. success mortgage originated So had as nice well focused residential WSFS a and quarter. those combination that in have portfolios portfolios that, we're of those growing we nice kind as The loans, primarily offsetting and had that have definitely this and this the are consumer of growth growth had kind HELOC which we loans are again, quarter are of other

we think we as as this more combination the So real think, smaller -- some offset do of our I of can the well our feel which is on I doing side, to some mortgage going keep growth largely portfolios, flat. consumer of estate other to

the that's So of Consumer story. kind

of we -- -- this On if particularly we business at about which had generally, which about look had happens the good the we But Commercial payoffs the story, -- had payoffs. But we for accounted origination you always still we side solid, I still equation about look when good at and the of you feel it's it. and larger to the the We quarter, pipeline, feel XX% our our quarter. in momentum. the due in seasonality, fourth some think sales, -- quarter this

think I continue going to mid-single-digit Commercial so And deliver growth. is to

it that put you together, X.X%, how to all a maybe out. and you So get growth between when X, that's of X% kind shakes the of

Manuel Navas

I the any on color like part would that kind And helpful. EQ of resi color. if and finding households? that with with some already could that? process of Wealth that Just new the I'm Is wondering you're thought add just households. was to origination, ways Spring Upstart that be deeper do relationships Management That origination you folks side? the have of Does appreciate or on the it HELOC add mortgage you does

David Burg

Yes.

combination. think mortgage, I the a residential it's

think that we perspective. business it's capability and lend there's we from a We originate that I relationship that ourselves. have obviously -- a think we try and to

expand clients But input an then our into Wealth of from be So we that cross-sell source also is that influx important accounts. of can both try ways. new well, deposit as to an business

well So is channels area point come in that I Wealth. where an can expand through other relationships clients an that as new like entry we clients for as also for think

Arthur Bacci

this Manuel, Art. I'd also remind you, is

as market and the the to have to a and clients well we prospects relationships have into mortgage We loans non-clients, the for loans for book or sell both flexibility as those be gain. originated secondary non-client able

of on where So there, than a to client the it books those combination a are it's relationships competitor. rather rather and then keep sales expose we'd that

Manuel Navas

I to build. a kind lot leave you overall appreciate could loan of of flows capital lot covered that blended rate that. X%, securities cash with a of growth with With that more X.X% that's potentially

about having to similar a it year. of last increase? Could talked meaningfully level activity buyback You

Rodger Levenson

Yes.

I think, return touched this some we excess, growth securities, of ongoing can be that we're the on fair be generating before. Manuel, of capital we will analysis included there talked may a kind and with all fund bit. the Yes, certainly our in loan that the capital, and philosophy we've about

David Burg

beginning I generation cash, we driven in off I had BTFB business. paid that would add particular by the it this that quarter, the of -- one the liquidity in the Emmanuel, Yes. the things in in paid that quarter, of mean, basically we off our facility. We

our been interest net So accretive also that's margin. to

of deploy continue we Rodger So to look of evaluate said, kind at and sure. think opportunities levers we'll liquidity. And to all as for I those buybacks

Manuel Navas

it other for strategic comes else of can strategic new outlook any across you near-term discuss you this focus there of the plan, -- obviously, further kind the that just plan? plan, there -- X-year can But Is is X-year is on on on with kind anything year. what takeaways the the

Rodger Levenson

through across I gone plan I of It's us tell process the franchise business the those very talk made in investments that you've our is to lines. X about. optimize into to lean of continue all before. combination management that would a been consistent it's we've the It's hearing the and we've that with And prior what It's Board. with you think, with working to first every consistent all, areas then continue the of years.

to much really large just is. we and long-term through heard unique us with the about, favorable some where where markets more there's consistent piece that as of this the last several of all that's for is over of the with of have we've franchise, is continue of of years. share market in And our players their goal delivering opportunities really investments take get you've to larger a you've talk focus us seen most franchise institutions to customers much, a market our market our position the the wallet for to it's grow where in demonstrated made. our -- or the and performance think small high As plan, country one growth this long-term the we And very sustainable one of share

as with of invest We I you similar to what's to want be because optimizing of and different. open very 'XX what those well. be of all organization could to unique us a have think That investments on in focused as we in little what's really adding size for front that. I in will bit larger the said, will bar saw right talent, the be and we would high But and

Operator

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

David Burg

Okay. you, for call. Thank everyone, today's joining

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

Operator

today. This concludes call for conference our

disconnect. now may You

WSFS Financial (WSFS) 28 Jan 252024 Q4 Earnings call transcript