Wsfs Financial Corporation · NASDAQ:WSFS
Wsfs Financial — Q4 2020 Earnings Presentation
40 slides from Wsfs Financial's earnings presentation, Feb 2, 2021
Slide 1: WSFS Financial Corporation 4Q 2020 Investor Update
WSFS Financial Corporation 4Q 2020 Investor Update February 2021 1
Slide 2: Forward Looking Statements & Non-GAAP
Forward Looking Statements & Non-GAAP Forward Looking Statements: This presentation contains estimates, predictions, opinions, projections and other "forward-looking statements" as that phrase is defined in the Private Securities Litigation Reform Act of 1995. Such statements include, without limita
Slide 3: Table of Contents
Table of Contents Financial Highlights Page 4 2021 Core Outlook Page 5 Net Interest Margin Trends and 2021 Outlook Page 6 Loan & Deposit Growth Page 7 Credit Risk Management ACL Page 8 Selected Portfolios Page 9 WSFS Franchise and Markets Page 10 Delivery Transformation and Lines of Business Page 16
Slide 4: Financial Highlights
Financial Highlights 4Q 2020 FY 2020 4Q and Full-Year operating results reflect healthy NIM, $ in millions (expect per share amounts) Reported Core1 Reported Core1 diversified fee income, and strong ACL and Capital levels EPS $1.20 $1.16 $2.27 $1.91 4Q Highlights: ROA 1.73% 1.67% 0.87% 0.74% • Core
Slide 5: 2021 Core Outlook
2021 Core Outlook Outlook assumes a gradual and uneven economic recovery, franchise growth, and continued investments in our talent and technology 2021 Core Outlook Mid single digit growth excluding PPP and non-relationship run-off portfolios primarily driven by C&I, leasing and consumer; Loan Growt
Slide 6: Net Interest Margin Trends and 2021 Outlook
Net Interest Margin Trends and 2021 Outlook NIM impacted by purchase accretion variability, PPP forgiveness, customer liquidity, and strong deposit betas 4.50% • NIM excluding purchase accretion and PPP is 4.38% stabilized with slight increase from 4Q 2020 levels 0.22% assumed in full-year 2021 Outl
Slide 7: Loan and Deposit Growth
Loan and Deposit Growth Positive loan growth excluding purposeful run-off portfolios and PPP; Significant excess customer liquidity continues Loans - 4Q 2020 vs 3Q 2020 and 4Q 2019 Deposits - 4Q 2020 vs 3Q 2020 and 4Q 2019 Dec Sep Dec 4Q20 $ Annualized YOY $ YOY % Dec Sep Dec 4Q20 $ Annualized YOY $
Slide 8: Credit Risk Management - ACL
Credit Risk Management - ACL Full-Year GDP forecast of (3.4%) in 2020 and 4.3% in 20211 4Q 2020 ACL Commentary Year-End Unemployment forecast of 8.1% in 2020 and 6.3% in 20211 GDP Growth by Quarter Unemployment by Quarter • Coverage ratio of 2.73% excluding PPP loans and 3.13% including estimated re
Slide 9: Credit Risk Management – Select Portfolios
Credit Risk Management – Select Portfolios • $524.6 million or 6.2% of loan portfolio1 Hotel • 49% Criticized; ~85% of loans include recourse; 100% secured by real estate Loan Modifications1 Portfolio • 65% business and 35% leisure % of $ ($ in millions) Portfolio • $667.6 million or 7.9% of loan po
Slide 10: WSFS Franchise and Markets
WSFS Franchise and Markets 10
Slide 11: The WSFS Franchise
The WSFS Franchise 1 Founded in 1832, WSFS is one of the ten oldest banks in the U.S. Largest independent bank & trust company HQ in Delaware-Greater Philadelphia region • $14.3 billion in assets • $24.2 billion in combined AUA2 and AUM2, including $2.8 billion in AUM • 112 offices, including 89 bra
Slide 12: The WSFS Franchise - Our Markets
The WSFS Franchise - Our Markets Philadelphia-Camden-Wilmington MSA Regional Employment Composition1 Regional Statistics3 Diversity of industries drives stable and favorable employment and economic growth in our markets 6.1M 2.3M 38.9 7.1% Unemployment2 Population Households Median Age Financial Act
Slide 13: The WSFS Franchise – Strategic Opportunity
The WSFS Franchise – Strategic Opportunity At $14.3 billion in assets at 12/31/2020, WSFS fills a long-standing service gap in our market between larger regional/national banks and smaller community banks MSA: Philadelphia-Camden- Regional Highlights2 1 Wilmington • 4th largest metro in the Northeas
Slide 14: The WSFS Franchise – Growth & Performance
The WSFS Franchise – Growth & Performance Millions 1 This is a non-GAAP financial measure and should be considered along with results prepared in accordance with GAAP, and not as a substitute for GAAP results. See Appendix for reconciliation to GAAP financial information 14 Note: GAAP ROA is the fol
Slide 15: Business Model and Total Shareholder Returns
Business Model and Total Shareholder Returns Engaged Associates, living our culture, making a better life Total Shareholder Returns2 for all we serve 275% “Top Workplace” fifteen #1 “Top Bank” in Delaware nine years years in a row and #1 in in a row; The News Journal 225% 2020; The News Journal 2020
Slide 16: Delivery Transformation and Lines of Business
Delivery Transformation and Lines of Business 16
Slide 17: Delivery Transformation
Delivery Transformation Optimization of our physical footprint driving accelerating investments into our digital capabilities, consistent with our brand, to provide best-in-industry solutions and better serve Customers • Maximizing data-driven analytics to deliver personalized campaigns leading to c
Slide 18: Channel Strategy and Digital Adoption
Channel Strategy and Digital Adoption Channel Volumes1 200% 186% 187% • Branch Net Promoter Score (NPS) improved in 4Q to 175% 162% 172% 166% 159% 162% 160% 77.5, the highest quarter performance since program 150% 141% inception. Contact Center Net Promotor Score (NPS) 128% 123% improved in 4Q to 59
Slide 19: Commercial Banking
Commercial Banking Local, relationship-focused lending including cash management, wealth management, and private banking services Business Banking Middle Market Comm. Real Estate Small Business SBA Lending Revenues: Revenues: Revenues: Revenues: Profit: $3 million - $20 million+ $20 million-$150 mil
Slide 20: Retail Banking
Retail Banking Relationship-focused community banking model with 89 banking offices & 626 ATMs Branch & ATM Network Online & Mobile Banking Lending Mortgage Offering a full range of Providing Customers with a Meeting Customers’ Locations across Delaware, Over 125K active online mortgage products wit
Slide 21: Cash Connect®
Cash Connect® Leading National Provider of Cash Logistics • Oldest and second largest vault cash provider in the ATM industry - over $1.5 billion in vault cash supplied or supported at 12/31/2020 ATM Vault Cash • Approximately 32,000 non-bank ATMs & retail safes in all 50 states1 “Bailment” WSFS • ~
Slide 22: NewLane Finance
NewLane Finance Micro & Small Ticket Commercial Equipment Financing Background: • Co-founded in 2017 by industry veterans who built Marlin Business Services from a start-up to a publicly-traded company (Nasdaq: MRLN) • WSFS owns ~83% of the Company Attractive Risk Adjusted Margins Market Size: • Mic
Slide 23: WSFS Wealth
WSFS Wealth Financial Highlights 4Q 2020 Net Revenue: $19.0 million 4Q 2020 Pre-tax Income: $9.2 million $24.2 billion in combined assets under management and administration, including $2.8 billion AUM at 12/31/2020 23
Slide 24: Selected Financial Information
Selected Financial Information 24
Slide 25: Balance Sheet Composition at December 31, 2020
Balance Sheet Composition at December 31, 2020 Asset Composition (ex PPP)1 Funding Composition $13.6B $8.2B 11% $11.6B 77% 25% Assets Net Loans YOY Asset Growth Deposits Loan-to-Deposit YOY Deposit Growth Construction 8% Commerical Money Market CRE Leasing & Savings 25% 3% 38% Residential Net Loans
Slide 26: Customer Deposit Costs
Customer Deposit Costs Disciplined funding cost management, including deposit beta of approximately 28% for the down rate cycle Average Customer Deposit Costs Per Year Average Customer Deposit Costs Per Quarter $12 0.9% $12 0.86% 0.9% 0.83% Billions 0.82% Billions 0.8% 0.76% 0.8% $10 $10 0.65% 0.7%
Slide 27: Diversified & Robust Core Fee Income
Diversified & Robust Core Fee Income $180 • Core Fee income is well diversified 27%2 with over 20 discrete products and Bank Segment 27%2 services within our lines of business $160 Mortgage 2020 Notables: $140 Cash Connect 36%2 $50 $44 Trust & Wealth • Cash Connect fees impacted by the 36%2 lower in
Slide 28: Interest Rate Risk at December 31, 2020
Interest Rate Risk1 at December 31, 2020 WSJ Prime @ 3.25% Balance Sheet Drivers 12-Month IRR2 BPs change NII Impact (%) NII Impact ($) • High % of variable/adjustable rate to total loan portfolio: 50% excluding PPP -100 (2.8%) ($11.5 million) • Approximately half of variable rate loans tied to 30-
Slide 29: Credit Metrics (ex PPP)
Credit Metrics (ex PPP) Criticized & Classified Loans / Tier-1 + ACL Delinquencies1 / Gross Loans 60% 1.2% 51.3% 0.93% 1.0% 50% 0.8% 40% 35.5% 0.6% 30% 0.4% 20% 0.2% 10% 0.0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q15
Slide 30: Capital Management - Bank
Capital Management - Bank Disciplined capital management providing flexibility to grow & return profits to shareholders Tier 1 Leverage Ratio Common Equity Tier 1 Capital 14,000 1,550 13.52% 13.16% 13.24% Millions Millions 13.41% 13.5% 14.5% 12.68% 1,350 12.15% 12.35% 12.50% 12,000 12.5% 11.72% 12.5
Slide 31: Capital Management / Ownership Alignment
Capital Management / Ownership Alignment $200,000 $0.60 $180,000 • Executive management bonuses and equity $0.48 $0.50 awards based on bottom-line performance $0.47 ROA, ROTCE and EPS growth – equally Annual Dividends Paid per Share $160,000 Capital Returned ($ in 000s) $0.42 weighted $140,000 $0.40
Slide 32: WSFS Mission, Vision, Strategy, and Values
WSFS Mission, Vision, Strategy, and Values 32
Slide 33: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information 33
Slide 34: Non-GAAP Information
Non-GAAP Information This presentation contains financial measures determined by methods other than in accordance with accounting principles generally accepted in the United States (GAAP). This presentation may include the following non-GAAP measures: • Adjusted net income (non-GAAP) is a non-GAAP m
Slide 35: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information Three Months Ended Twelve Months Ended (dollars in thousands, except per share data) December 31, 2020 September 30, 2020 December 31, 2019 December 31, 2020 Net interest income (GAAP) $ 123,001 $ 113,048 $ 117,569 $ 465,955 Core net interest income (non-GAAP
Slide 36: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information Three Months Ended Twelve Months Ended (dollars in thousands, except per share data) December 31, 2020 September 30, 2020 December 31, 2019 December 31, 2020 GAAP net income attributable to WSFS $ 59,813 $ 51,145 $ 45,704 $ 114,774 Plus/(less): Pre-tax adjust
Slide 37: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information Three Months Ended Twelve Months Ended (dollars in thousands, except per share data) December 31, 2020 September 30, 2020 December 31, 2019 December 31, 2020 Calculation of return on average tangible common equity: GAAP net income attributable to WSFS $ 59,
Slide 38: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information For the year ended December 31, (dollars in thousands, except per share data) 2010 2011 2012 Net Income (GAAP) $ 14,117 $ 22,677 $ 31,311 1 Adj: Plus/less core (after-tax) 420 (2,664) (11,546) Adjusted net income (non-GAAP) $ 14,537 $ 20,013 $ 19,765 Average
Slide 39: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information For the year ended December 31, (dollars in thousands, except per share data) 2015 2016 2017 2018 2019 2020 Net Interest Income (as reported) $ 166,800 $ 193,745 $ 221,271 $ 246,474 $ 444,948 $ 465,955 Adj: FHLB Special Dividend (808) - - - - - Adj: Tax-equiv
Slide 40: Stockholders or others seeking information may call or write
Stockholders or others seeking information regarding the Company may call or write: WSFS Financial Corporation Investor Relations WSFS Bank Center 500 Delaware Avenue Wilmington, DE 19801 302-504-9857 stockholderrelations@wsfsbank.com www.wsfsbank.com Rodger Levenson Dominic C. Canuso Chairman, Pres