Wsfs Financial Corporation · NASDAQ:WSFS
Wsfs Financial — Q3 2020 Earnings Presentation
43 slides from Wsfs Financial's earnings presentation, Nov 4, 2020
Slide 1: WSFS Financial Corporation 3Q 2020 Investor Update
Exhibit 99.1 WSFS Financial Corporation 3Q 2020 Investor Update November 2020 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 3Q 2020 Financial Highlights Page 4 Loan & Deposit Growth Page 6 Core Fee Income Trends Page 7 Credit Risk Management CECL Page 8 Loan Modifications Page 9 Selected Portfolios Page 10 NIM Trends & 4Q Outlook Page 11 Core PPNR Trends & 4Q Outlook Page 12 Capital Position Page 13 WSF
Slide 4: 3Q 2020 Reported Financial Highlights
3Q 2020 Reported Financial Highlights 3Q 2020 $ in millions (expect per share amounts) GAAP WSFS 3Q 2020 GAAP included the following items that are excluded from Core results: EPS 1.01 • WSFS realized $3.3 million (pre-tax), or approximately $0.05 per share (after-tax), in net gains on Net Income $5
Slide 5: 3Q 2020 Core Financial Highlights
3Q 2020 Core Financial Highlights Solid operating performance with PPNR1 at 1.98% of average assets reflecting diversified business model Significant ACL reserve, strong capital levels, and the approved resumption of share repurchases in 4Q 2020 3Q 2020 • Core PPNR1 of $68.0 million increased $4.4 m
Slide 6: Loan and Deposit Growth
Loan and Deposit Growth Positive loan growth excluding purposeful run-off portfolios; Significant excess customer liquidity continues Loans - 3Q 2020 vs 2Q 2020 and 3Q 2019 Deposits - 3Q 2020 vs 2Q 2020 and 3Q 2019 Sep Jun Sep 3Q20 $ Annualized YOY $ YOY % Sep Jun Sep 3Q20 $ Annualized YOY $ YOY % (
Slide 7: Core Fee Income Trends
Core Fee Income1 Trends Diversified Business Model Drives Core Fee Income Growth Through 3Q 2020 $50 25.3%2 27.0%2 30.0%2 Core Fee Income % (excluding PPP) Millions $45 $3 $40 $8 • Core fee income is well diversified with over $5 $5 20 discrete lines of business and products $35 within our three cor
Slide 8: Credit Risk Management - CECL
Credit Risk Management - CECL 2 F/Y GDP forecast of (3.7%) in 2020 and 3.7% in 2021 Considerations & Components for 3Q 2020 ACL Y/E Unemployment forecast of 8.8% in 2020 and 6.6% in 20212 GDP Growth by Quarter Unemployment by Quarter • Coverage ratio of 2.74% excluding PPP loans and 3.22% including
Slide 9: Credit Risk Management – Loan Modifications
Credit Risk Management – Loan Modifications As of October 15, 2020, loan modifications declined to 3% of total loan portfolio Loan Modifications Commercial Loan Modifications by Sector As of October 15, 2020 As of October 15, 2020 1 1 ($ in millions) Loan Balances % of Portfolio ($ in millions) Loan
Slide 10: Credit Risk Management – Selected Portfolios
Credit Risk Management – Selected Portfolios Hotel Portfolio Retail CRE Portfolio $516.9 million; 6.1% of loan portfolio1 $734.3 million; 8.6% of loan portfolio1 • 48% of balances Criticized • 7% of balances Criticized • $5.8 million average loan balance size • $1.2 million average loan balance size
Slide 11: Net Interest Margin Trends and 4Q Outlook
Net Interest Margin Trends and 4Q Outlook NIM impacted by rate environment, PPP forgiveness timing, purchase accretion volatility and excess customer liquidity 4.75% • 2Q & 3Q 2020 included full quarter impact of the 150 bps Fed Fund rate decrease and negative 8 bps 4.50% from PPP loans 4.38% 0. • 3
Slide 12: Core PPNR Trends and 4Q 2020 Outlook
Core PPNR1 Trends and 4Q 2020 Outlook Solid Core PPNR Results Despite Challenging Rate Environment $140 2.50% 2.36% • 4Q 2020 Outlook assumes continued gradual Millions 2.36% $120 1.96% 1.98% reopening of the economy, and PPP net income 1.80% - 2.05% 2.00% growth from ~20% of PPP loans forgiven duri
Slide 13: Capital Position
Capital Position Strong Capital Levels and PPNR1 Run-Rate Result in Significant Capital Return Opportunity1 Bank Common Equity Tier-1 (CET1) Capital Ratio Scenario2 Five Quarters Ending 4Q 2021 16% • PPNR (after-tax) run-rate2 provides approximately 42 bps of CET1 per quarter. After estimated routin
Slide 14: WSFS Franchise & Markets
WSFS Franchise & Markets Financial Corporation
Slide 15: The WSFS Franchise
The WSFS Franchise 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 region1 • $13.8 billion in assets • $22.5 billion in fiduciary assets, including $2.7 billion in assets under management • 115 offices • On
Slide 16: 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 Employment – Industry Breakdown 6.1M 2.3M 38.9 Population Households Median Age
Slide 17: The WSFS Franchise – Strategic Opportunity
The WSFS Franchise – Strategic Opportunity At $13.8 billion in assets at 09/30/2020, WSFS fills a long-standing service gap in our market between larger regional/national banks and smaller community banks MSA: Philadelphia-Camden- Regional Highlights2 Wilmington1 • 4th largest metro in the Northeast
Slide 18: The WSFS Franchise – Growth & Performance
The WSFS Franchise – Growth & Performance Millions 18 1 This is a non-GAAP financial measures 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 18
Slide 19: Business Model and Total Shareholder Returns
Business Model and Total Shareholder Returns Engaged Associates, living our culture, making a better life for all we serve “Top Workplace” fifteen #1 “Top Bank” in Delaware nine years in “Soaring 76’s Fastest Growing years in a row and #1 in a row; The News Journal Companies”; Philadelphia Business
Slide 20: Delivery Transformation and Lines of Business
Delivery Transformation and Lines of Business 20
Slide 21: Delivery Transformation
Delivery Transformation Optimizing physical footprint through consolidation of 25% (30) of retail offices; investing savings into our digital capabilities, consistent with our brand, to provide best-in-industry solutions and better serve our Customers • Improved Branch NPS scores and expanding NPS s
Slide 22: Channel Strategy & Digital Adoption
Channel Strategy & Digital Adoption Channel Volumes1 200% 186% 172% • Branch Net Promoter Score (NPS) improved in Q3 and 175% 166% 162% 159% remains strong at 72.9. Contact Center Net Promotor 150% 141% 128% Score (NPS) was introduced for the first time in Q3 and 123% 115% 125% 111% was 58.1. Survey
Slide 23: 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 24: Retail Banking
Retail Banking Relationship-focused community banking model with 90 banking offices & 635 ATMs Branch & ATM COVID-19 Online & Mobile Banking Lending Mortgage Network Response Offering a full range of Our Associates, Locations across Over 130K active online Providing Customers with Meeting Customers’
Slide 25: Cash Connect
Cash Connect® Leading National Provider of Cash Logistics • Oldest and second largest vault cash provider in the ATM industry - over $1.3 billion in vault cash supplied or supported at 9/30/2020 ATM Vault Cash • Approximately 32,000 non-bank ATMs & retail safes in all 50 states1 “Bailment” 1 WSFS •
Slide 26: 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 27: WSFS Wealth
WSFS Wealth Full-Service, Relationship-based Wealth Management Financial Highlights 3Q 2020 Net Revenue: $16.1 million 3Q 2020 Pre-tax Income: $8.6 million $22.5 billion in fiduciary assets, including $2.7 billion in assets under management at 9/30/2020 Private Banking Services for Commercial Custom
Slide 28: Selected Financial Information
Selected Financial Information 28
Slide 29: Diversified & Robust Fee Income
Diversified & Robust Fee Income $180 27% 2 $160 Trust & Wealth 2 Cash Connect 36% • Core Fee income is well diversified with $140 $44 over 20 discrete products and services Bank Segment 2 36% within our lines of business $120 $41 2 35% $36 $100 2 • Strong historical growth in each segment; 34% Fee i
Slide 30: Interest Rate Risk at September 30, 2020
Interest Rate Risk1 at September 30, 2020 WSJ Prime @ 3.25% 12-Month including PPP 12-Month excluding PPP BPs change NII Impact (%) NII Impact ($) NII Impact (%) NII Impact ($) -100 (1.3%) ($5.5 million) (1.2%) ($4.9 million) -50 (1.1%) ($4.8 million) (1.0%) ($4.2 million) -25 (0.7%) ($2.8 million)
Slide 31: Credit Metrics
Credit (exCredit Metrics PPP) 3 2 1 Ratio of quarterly net charge One large $15.4 million, highly non- Includes 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 10% 20% 30% 40% 50% accruing loans accruing 1Q15 1Q15 2Q15 2Q15 Criticized& Classified Loans 3Q15 3Q15 4Q15 4Q15 - offs to average gross loans - seasonal rela
Slide 32: Capital Management - Bank
Capital Management - Bank Disciplined capital management providing flexibility to grow & return profits to shareholders Tier 1 Capital Common Equity Tier 1 Capital 13.52% 1,550 13.52% 1,550 13.16% 13.41% 13.24% 13.16% 13.41% 13.24% 13.5% 12.68% 13.5% 12.68% 12.15% 1,350 12.15% 12.35% 1,350 12.35% 12
Slide 33: Share Buyback & Dividends – Recent History
Share Buyback & Dividends – Recent History $120,000 $0.50 $0.47 $0.45 $0.42 $100,000 ) $0.40 $0.36 000s $0.35 $80,000 $0.30 $0.30 $0.25 $60,000 $0.25 $0.21 $0.20 $40,000 $0.15 Capital Returned ($ in ($ Returned Capital $0.10 $20,000 Annual Dividends Paid per Share $0.05 $- $- 1 2015 2016 2017 2018 2
Slide 34: Strong Alignment / Capital Management
Strong Alignment / Capital Management • Executive management bonuses and equity awards based on bottom-line performance ROA, ROTCE and EPS growth – equally weighted • Insider ownership1 is approximately 2% Board of Directors and Executive Management ownership guidelines in place and followed • The B
Slide 35: WSFS Mission, Vision, Strategy, & Values
WSFS Mission, Vision, Strategy, & Values 35
Slide 36: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information 36
Slide 37: 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). The following are the non-GAAP measures used in this presentation: • Adjusted net income (non-GAAP) is a non-GA
Slide 38: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information Three Months Ended September 30, September 30, (dollars in thousands, except per share data) 2020 June 30, 2020 March 31, 2020 2019 Net interest income (GAAP) $ 113,048 $ 113,756 $ 116,150 $ 120,833 Core net interest income (non-GAAP) $ 113,048 $ 113,756 $ 11
Slide 39: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information Three Months Ended (dollars in thousands, except per share data) September 30, 2020 June 30, 2020 March 31, 2020 September 30, 2019 GAAP net income (loss) attributable to WSFS $ 51,145 $ (7,111) $ 10,927 $ 53,882 Plus/(less): Pre-tax adjustments1 (718) (21,14
Slide 40: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information Three Months Ended (dollars in thousands, except per share data) September 30, 2020 June 30, 2020 March 31, 2020 September 30, 2019 Calculation of return on average tangible common equity: GAAP net income (loss) attributable to WSFS $ 51,145 $ (7,111) $ 10,92
Slide 41: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information $ in 000's 3Q'20 2Q'20 1Q'20 4Q'19 3Q'19 2Q'19 1Q'19 TTM 4Q'19 Calculation of core PPNR: Net income (loss) (GAAP) $ 50,823 $ (7,811) $ 10,567 $ 45,424 $ 53,595 $ 35,969 $ 12,930 $ 147,918 Plus/(less): Income tax provision (benefit) 15,140 (2,247) 1,288 14,199
Slide 42: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information For the year ended December 31, 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Net Income (GAAP) $ 14,117 $ 22,677 $ 31,311 $ 46,882 $ 53,757 $ 53,533 $ 64,080 $ 50,244 $ 134,743 $ 148,809 Plus/less core adjustments (after-tax) 420 (2,664) (11,546) (4,290)
Slide 43: Stockholder and Investor Relations Contact Information
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