Wsfs Financial Corporation · NASDAQ:WSFS
Wsfs Financial — Q4 2018 Earnings Presentation
47 slides from Wsfs Financial's earnings presentation, Feb 12, 2019
Slide 1: WSFS Financial Corporation Investor Update
WSFS Financial Corporation Investor Update February 12, 2019
Slide 2: Forward Looking Statements
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. Forward-looking statements include, without limitation, statements relating to
Slide 3: Non-GAAP Information
Non-GAAP Information This presentation contains financial information and performance measures determined by methods other than in accordance with accounting principles generally accepted in the United States (“GAAP”). The Company’s management believes that these non-GAAP measures provide a greater
Slide 4: Table of Contents
Table of Contents 2018 Reported Financial Results Page 5 2018 Highlights Page 6 2019 Outlook Page 8 Selected Pages from Beneficial Announcement Presentation Page 13 The WSFS Franchise Page 22 Selected Financial Information Page 29 Appendix 1 – Management Team Page 40 Appendix 2 – Business Model Page
Slide 5: 2018 Reported Financial Results
2018 Reported Financial Results 2018 Reported Results: • EPS $4.19 • NIM 4.09% • ROA 1.92% • Fee Income / Total Revenue 39.61% • ROTCE 23.72%(1) • Efficiency Ratio 54.8% • Net revenue was $409.0 million, an increase of $63.1 million, or 18%, in comparison with full- year 2017 • Net interest income w
Slide 6: 2018 Highlights
2018 Highlights Financial Corporation
Slide 7: 2018 Highlights
2018 Highlights 2018 Core (1) Results: • EPS $3.55 • NIM 4.09% • ROA 1.63% • Fee Income / Total Revenue 35.8% • ROTCE 20.18% • Efficiency Ratio 59.1% Strong Operating Results: ($ in millions) 2018 2017 Change • Driven entirely by strong and balanced organic Core(1) Net Revenue $384.5 $343.9 +12% gro
Slide 8: 2019 Outlook
2019 Outlook Financial Corporation
Slide 9: Beneficial Update
Beneficial Update • Legal Close: March 1, 2019 • Systems Conversion: Weekend of August 24, 2019 • Integration Planning Structure: • Integration Committee of Board of Directors - Meets monthly • Executive Management Steering Committee / Integration Management Office • 35 key business teams with repre
Slide 10: 2019 Outlook
2019 Outlook (1) • Loan growth in the low single digits. Low-mid single digit organic growth is offset by day-1 accounting and normal merger attrition in the consumer, mortgage, and commercial real estate portfolios • Deposits to remain flat to slightly decreasing as low single digit organic growth
Slide 11: Outlook: Core Return on Average Assets
Outlook 2019-2021 Strategic Plan Core Return on Average Assets(1) 2.00% 1.90% Core Return on Average Assets 1.80% 1.70% 1.60% 1.50% 1.79% 1.73% 1.67% 1.40% 1.61% 1.51% 1.51% 1.30% 1.20% 2019 Outlook 2020 Outlook 2021 Outlook Core ROA With Revenue Synergies (1) Excludes one-time transaction costs; re
Slide 12: Delivery Transformation
Delivery Transformation Focused on melding physical and digital delivery, consistent with our brand, by enabling our Associates with the latest technology and actionable data to better serve our Customers ~50% of cost saves from branch consolidations to fund a Delivery Transformation - Increment
Slide 13: Creating the Largest, Premier, Locally-Headquartered Community Bank
Creating the Largest, Premier, Locally-Headquartered Community Bank for the Greater Delaware Valley Concurrently executing a technology transformation to secure a competitive advantage and meet fast-changing Customer needs Selected Pages from Beneficial Announcement Presentation as presented on Augu
Slide 14: Delaware Valley's Premier Community Bank
Delaware Valley’s Premier Community Bank $7.1bn in assets The only community $5.8bn in assets Wilmington, DE bank with scale (#6 Philadelphia, PA Founded 1832 market share) and a Founded 1853 Oldest and largest independent community bank full service product Oldest and largest inde
Slide 15: Compelling Market Opportunity
Compelling Market Opportunity At $13 billion in assets, the combined bank fills a long-standing service gap in the Delaware Valley market between larger regional / national banks and smaller community banks Philadelphia-Camden-Wilmington Deposit Market Share Total Market Market Position Deposits Sha
Slide 16: Leading Market Position in Demographically-Robust Region
Leading Market Position in Demographically-Robust Region 3rd largest metro in the Northeast – $432 billion regional economy 5th largest depository MSA in the U.S. 8th largest MSA population in the U.S. 25 Miles Median household income of $71k versus national median of $61k New Jersey 200,0
Slide 17: Key Model Details
Key Model Details Traditional $45.6 million annual from non-branch operations and personnel 39%(a) Synergies $10.3 million annual expenses related to BNCL’s 2015 public offering(b) $11.7 million of additional annual cost savings from branch consolidations 8%(a) Delivery 36% from proximity, 6
Slide 18: High Value / Low Risk Transaction
High Value / Low Risk Transaction Beneficial Pro Forma Delivery Combination Impact Transformation 2020 EPS Accretion (b) 5.4% 4.2% (1.2%) 2021 EPS Accretion (b) 8.7% 8.0% (0.7%) Financial Metrics TBV Dilution (a) (3.2%) (4.3%) (1.1%) TBV Earnback (Years)(a) 2.8 3.7 N/A IRR 19% $28.5 million of ide
Slide 19: Strategic Upside
Strategic Upside Significant strategic upside with the potential to drive $28.5 million of additional annual revenue (not modeled) with further upside from disciplined capital management Significant opportunity to increase Beneficial’s fee income By improving by making available WSFS’ full suite of
Slide 20: Rationale for Combination & Delivery Transformation
Rationale for Combination & Delivery Transformation Premier Locally Headquartered Large Scale Delivery Transformation Community Bank for the Delaware Valley 5th largest depository MSA Consolidating ~25% of combined branch 6th largest bank in MSA by deposit market share infrastructure Consist
Slide 21: Overview of Mark to Market Adjustments
Overview of Mark to Market Adjustments Projected Estimated Mark Estimated Balance Sheet Mark Category % $ Life (Years) Method Size HTM Investments Fair Value Estimate $924,669 (1.19%) ($10,998) 3.10 Straight Line Impact of Core Deposit Intangible 3,513,231 1.75% 61,482 10.00 Straight Line Impact of
Slide 22: The WSFS Franchise
The WSFS Franchise Financial Corporation
Slide 23: The WSFS Franchise
The WSFS Franchise • Largest independent bank and trust co. HQ in the Del. Valley • $7.2 billion in assets • $19.0 billion in fiduciary assets, including $2.1 billion in assets under management • 76 offices • Founded in 1832, WSFS is one of the ten oldest banks in the U.S. • Major business lines • R
Slide 24: The WSFS Franchise: Delaware Deposit Market Share
The WSFS Franchise Deposits of Traditional Banks in the State of Delaware June 30, 2018(1) Total Branch Total Deposits Market ‘17-’18 ‘17-’18 CAGR Rank Institution Count in Market Share Growth Growth ‘08-’18 1 M&T Bank Corp (NY)2 39 $6,265,332 29.46% 201,592 3.32% 2.79% 2 PNC Financial Service Group
Slide 25: Regional Employment Composition
Regional Employment Composition Philadelphia-Camden-Wilmington MSA Diversity of industries drives stable & favorable employment in our markets Unemployment of 3.9%(1) Mining, logging, and Government construction 11% 4% Manufacturing 6% Other services 4% Trade, transportation, and Leisure and hospita
Slide 26: Diversified & Robust Fee Income
The WSFS Franchise – Diversified & Robust Fee Income Trust & Wealth $140 36% Cash Connect 35% Bank Segment $120 $41 34% $36 $100 Total Core (1) Fee income 35% 5 Year CAGR $27 34% Trust & Wealth: 21% $ in Millions $80 35% $23 33% $51 Cash Connect: 16% $18 $16 $43 $60 Bank: 7% $14 $36 $30 $24 $26 $40
Slide 27: The WSFS Franchise – WSFS Wealth
The WSFS Franchise – WSFS Wealth A Full-Service Wealth Management Offering Net Revenue of $14.8 million in 4Q 2018 Pre-tax Income of $6.1 million 27
Slide 28: The WSFS Franchise – Cash Connect
The WSFS Franchise – Cash Connect® • Leading provider of ATM vault cash, armored carrier management, cash forecasting services, insurance and equipment services • Approximately $1 billion in vault cash managed • Approximately 26,600 non-bank ATMs in all 50 States • Vault cash margin pressure offset
Slide 29: Selected Financial Information
Selected Financial Information
Slide 30: WSFS Bank Asset Composition
The WSFS Franchise - WSFS Bank Asset Composition – December 31, 2018 Assets $7.2 Billion; Net Loans $4.9 Billion Non- Earning Assets 6% 52% C&I BOLI <1% • Commercial loans comprise 82% of the loan portfolio Net Loans Construction • C&I (including owner- 6% Investments 20% 67% occupied real estate),
Slide 31: WSFS Bank Funding Composition
The WSFS Franchise - WSFS Bank Funding Composition – December 31, 2018 Total Funding – $7.2 Billion; Customer Deposits – $5.4 Billion • Core deposits represent 88% of total customer Time deposits 12% Non- interest • Non-interest and very Equity 11% Customer DDA 30% low interest DDA (WAC Money Deposi
Slide 32: Balanced Growth
The WSFS Franchise - Balanced Growth Balance sheet composition has remained steady as WSFS has grown Loan Composition Funding Composition 6,000,000 8,000,000 7,000,000 9% 5,000,000 6% 6,000,000 14% 29% 4,000,000 5% 5,000,000 10% 3,000,000 23% 4,000,000 4% 15% 10% 28% 9% 3,000,000 2,000,000 24% 22% 1
Slide 33: Well Positioned for Rising Rates
Well Positioned for Rising Rates As of 12/31/18 (WSJ Prime @ 5.50%) 12 month NII NII BPS Change(1) % Impact $ Impact -25 (0.7)% -1.7mm +25 0.7% +1.7mm +50 1.3% +3.5mm +100 2.7% +7.0mm Balance Sheet Drivers • High % of variable/adjustable rate total loan portfolio: 64% • High % core deposits: 88%; hi
Slide 34: Overall Credit Trends Remain Strong
Overall Credit Trends Remain Strong Weighted Average Risk Rating (1) Criticized & Classified Loans / Tier-1 + ALLL 6.00 50% 5.80 High point during 45% High point during the cycle 5.60 the cycle of 5.53 in of: 40% Criticized: 105.6% in 1Q10 5.40 1Q12 35% Classified: 70.5% in 3Q09 5.20 4.99 30% 5.00 4
Slide 35: Loan Portfolio Composition
Loan Portfolio Composition Outstanding Balances as of 12/31/2018 No industry or CRE concentrations in the loan portfolio C&I & Owner Occupied CRE CRE Investor & Construction Other Services Special Use & Other Flex, Warehouse, (except Public Mixed Use Self-Storage, 9% Administration) 2% General Indus
Slide 36: Robust Capital to Grow and to Return to Shareholders
Robust Capital to Grow and to Return to Shareholders Total Risk Based Capital (TRBC) 000’s $800,000 $750,000 $700,000 $650,000 $600,000 $550,000 $500,000 $450,000 $400,000 $350,000 $300,000 12/12 12/13 12/14 12/15 12/16 12/17 12/18 Total Risk-Based Capital Well Capitalized Requirement 12/12 12/13 12
Slide 37: Strong Alignment / Capital Management
Strong Alignment / Capital Management • Executive management bonuses and equity awards based on bottom-line performance • ROA, ROTCE and EPS growth • Insider ownership(1) is over 5% • Board of Directors and Executive Management ownership guidelines in place and followed • In 4Q 2018, WSFS repurchase
Slide 38: Business Model and Total Shareholder Returns
Business Model and Total Shareholder Returns Financial Corporation FOCUSED BUSINESS MODEL-VIRTUOUS CYCLE DELIVERING GROWING AENEID LESS STELLAR EXPERIENCES CUSTOMER ADVOCATES Regularly ranked in the top Voted #1 “Top Bank” Customer advocacy quartile of all businesses in Delaware seven years survey p
Slide 39: Appendices
Appendices Financial Corporation
Slide 40: Appendix 1 – Management Team
Appendix 1 – Management Team Rodger Levenson, 57, has served as President and Chief Executive Officer, since January 2019. Mr. Levenson previously served in various executive leadership roles, including the Chief Commercial Banking Officer from 2006 to 2015 and interim Chief Financial Officer from M
Slide 41: Appendix 1 – Management Team
Appendix 1 – Management Team Peggy H. Eddens, 63, Executive Vice President, Chief Associate and Customer Experience Officer, joined WSFS Bank in 2007. From 2003 to 2007 she was Senior Vice President for Human Resources and Development for NexTier Bank, Butler PA. Ms. Eddens received a Master of Scie
Slide 42: Appendix 2 – Business Model
Appendix 2 – Business Model 42
Slide 43: Appendix 3 – Non-GAAP Financial Information
Appendix 3 – Non-GAAP Financial Information Tangible common equity to assets and Tangible common book value per share 3 Months Ended 3 Months Ended 3 Months Ended December, 31, 2018 September, 30, 2018 December 31, 2017 Total Assets $7,248,870 $7,159,842 $6,999,540 Less: Goodwill and other intangibl
Slide 44: Appendix 3 – Non-GAAP Financial Information
Appendix 3 – Non-GAAP Financial Information Core: GAAP Reconciliation Three months ended Three months ended Three months ended 12 Months Ended 12 Months Ended December 31, 2018 September 30, 2018 December 31, 2017 December 31, 2018 December 31, 2017 GAAP net (loss) income $29,718 $38,935 ($9,832) $1
Slide 45: Appendix 3 – Non-GAAP Financial Information
Appendix 3 – Non-GAAP Financial Information Core: GAAP Reconciliation 3 Months Ended 3 Months Ended 3 Months Ended 12 Months Ended 12 Months Ended December, 31, 2018 September, 30, 2018 December 31, 2017 December, 31, 2018 December 31, 2017 Net Interest Income (GAAP) $64,674 $63,097 $57,725 $246,474
Slide 46: Appendix 3 – Non-GAAP Financial Information
Appendix 3 – Non-GAAP Financial Information Core: GAAP Reconciliation on Select Beneficial Pages Six months ended June 30, 2018 WSFS BNCL Calculation of return on average tangible common equity: GAAP net (loss) income $66,090 $21,729 Plus: Tax effected amortization of intangible assets 1,084 291 Net
Slide 47: Investor Relations Contact
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 302-792-6009 stockholderrelations@wsfsbank.com www.wsfsbank.com Rodger Levenson Dominic C. Canuso President and