Wsfs Financial Corporation · NASDAQ:WSFS
Wsfs Financial — Non-Deal Roadshow (September 2018)
68 slides from Wsfs Financial's roadshow presentation, Sep 19, 2018
Slide 1: Creating the Largest, Premier, Locally-Headquartered Community Bank for the Greater Delaware Valley
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 September 19, 2018
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: Additional Information & Participants in the solicitation
Additional Information & Participants in the solicitation Important Additional Information will be Filed with the SEC This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval with respect to the proposed ac
Slide 4: 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 5: 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 6: 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 Institution
Slide 7: 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 8: Transaction Summary
Transaction Summary Negotiated Deal Combines Two Strong Community Banks Per share: $19.61, Aggregate: $1.46 billion (a) $2.93 of cash and .3013 WSFS shares Transaction Value Approximately 85% WSFS Common Stock, 15% Cash & Consideration BNCL options will be cashed out P/TBV: 171.7%, P/2018E
Slide 9: Delivery Transformation
Delivery Transformation Disruptive Banking Landscape Technological advances and changing customer preferences are rapidly disrupting the traditional banking model as evidenced by the significant reduction of branch traffic and transaction volume, along with enhancements and customer adoption of di
Slide 10: Delivery Transformation
Delivery Transformation Opportunity for Delivery Transformation The combined platform creates an ideal opportunity to evaluate the expanded branch network and scale investment into complementary digital capabilities with the objective of developing a top‐tier, highly competitive omni‐channel deliv
Slide 11: 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 12: High Value / Low Risk Transaction
High Value / Low Risk Transaction Beneficial Pro Forma Delivery Combination Impact Transformation 2020 EPS Accretion 5.4% 4.2% (1.2%) 2021 EPS Accretion 8.7% 8.0% (0.7%) TBV Dilution (a) Financial Metrics (3.2%) (4.3%) (1.1%) TBV Earnback (Years)(a) 2.8 3.7 N/A IRR 19% $28.5 million of identified,
Slide 13: History of Delivering on Strategic Plan Targets
History of Delivering on Strategic Plan Targets Strategic merger rationale is in line with WSFS’ proven strategy of accelerating investment spending over the short‐term to deliver superior long‐term value creation 0 1.50% + 0 1.50% 0 0 1.19% 0 1.13% 1.15% 0 $13bn+ 0.95% 0 0.91% 0 $7.2bn $6.8bn $7.0b
Slide 14: Delivering Beyond Expectations, Including on M&A
Delivering Beyond Expectations, Including on M&A WSFS’ management team has a history of delivering superior shareholder value by performing beyond expectations WSFS 1 Christiana Bank & Trust Company CAGR: 24% Total Price Increase: 544% 2 Array Financial / Arrow Land Transfer* 3 First Wyoming Financi
Slide 15: 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 16: 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 17: Summary
Summary The WSFS combination with Beneficial and Delivery Transformation of the resulting $13 billion and growing franchise creates the only community bank in the demographically‐robust Delaware Valley with the scale and delivery capabilities to drive sustainable top‐quintile performance at or above
Slide 18: Appendix
Appendix WSFS::.. [| Beneficial bancorp, inc.
Slide 19: Thorough Due Diligence Process & Integration Plan
Thorough Due Diligence Process & Integration Plan Overview Integration Planning ‐ Current Comprehensive due diligence coordinated and led by key Establish core project team executives Complete detailed line of business reviews and planning Key focus areas: Credit Quality, Compliance, Risk,
Slide 20: High Quality Loan & Deposit Portfolio
High Quality Loan & Deposit Portfolio Based on Q2 2018 Balance Sheets Combined Total Loans: $4.92 bn Total Loans: $4.02 bn Total Loans: $8.94 bn Yield on Loans: 5.31% Yield on Loans: 4.50 % Yield on Loans: 4.99% Consumer Consumer 12% Consumer 12% C&I(a) 12% Residential 24% 5% Residential C&I(a) Cons
Slide 21: Capital Overview
Capital Overview Tier 1 Common Ratio Tier 1 Ratio Well Well 21.7% Capitalized 21.7% Capitalized 6.5% 8.0% 11.5% 10.8% 10.4% 10.2% WSFS BNCL Pro Forma WSFS BNCL Pro Forma 6/30/2018 6/30/2018 at Close 6/30/2018 6/30/2018 at Close Total Capital Ratio Leverage Ratio Well Well 22.8% Capitalized Capitaliz
Slide 22: Non-GAAP Financial Information
Non‐GAAP Financial Information Supports Core and Sustainable ROA Supports Core ROATCE figures on page 15 detail on page 13 Six months ended June 30, 2018 FY17 FY16 FY15 FY14 FY13 FY12 WSFS BNCL Reported (GAAP) ROA 0.87 1.06 1.05 1.17 1.07 0.73 Non‐recurring PCI accretion (0.02) Calculation of return
Slide 23: TBV Dilution Reconciliation
TBV Dilution Reconciliation Tangible Book Value Dilution Aggregate Per Share WSFS Projected TBV 12/31/18 $633,203 $19.97 Equity Consideration 1,253,085 Less Goodwill from Seller's One Time Costs 12,740 Less Total Additional Intangibles Created 764,360 Less Buyer's One Time Costs 78,921 Pro Forma TBV
Slide 24: Additional Information
Additional Information WSFS i353. IE) Beneficial bancorp, inc.
Slide 25: 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 26: Summary Modeling Assumptions & Key Dates
Summary Modeling Assumptions & Key Dates • Legal Close: 1Q 2019 ‐ subject to customary shareholder and regulatory approvals • Systems Conversion: August 2019 • Phasing of Cost Savings: $67.6mm cost savings phased at 50%, 90%, and 100% for 2019, 2020, and 2021 • Delivery Transformation: • Incremental
Slide 27: Summary Modeling Assumptions & Key Dates
Summary Modeling Assumptions & Key Dates Revenue Synergies (not modeled): $28.5 million of potential additional annual revenue. Starting 1Q 2020. Fee Income: ~$16.0mm of annual fee income through wealth management, mortgage, and traditional banking: • Wealth: WSFS has a full scale, full product Weal
Slide 28: Core Return on Average Assets
Outlook Modeled 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% 1.56% 1.50% 1.51% 1.51% 1.30% 1.20% 2018 Outlook / YTD Actual 2019 Pro Forma (2) 2020 Pro Forma (2) 2021 Pro Forma (2) Core ROA With Revenue Synergies YTD
Slide 29: Delivery Transformation
Delivery Transformation Incremental investment of $32 million over the next 5 years into digital delivery initiatives, representing ~3x WSFS’ non‐routine annual technology expenses WSFS has a long history of innovation highlighted by our Cash Connect business and our strong partnerships – SoFi,
Slide 30: WSFS Financial Corporation 2Q 2018
WSFS Financial Corporation 2Q 2018 Investor Update September 19, 2018
Slide 31: Table of Contents
Table of Contents Reported Financial Results Page 32 2Q 2018 Highlights Page 33 2018 Outlook Page 36 The WSFS Franchise Page 39 Selected Financial Information Page 50 Appendix 1 – Management Team Page 61 Appendix 2 – Business Model Page 63 Appendix 3 – Non‐GAAP Financial Information Page 64 31
Slide 32: Reported Financial Results
Reported Financial Results 2Q 2018 Reported Results: • EPS $0.89 • NIM 4.10% • ROA 1.65% • Fee Income / Total Revenue 36.3% • ROTCE 20.61% • Efficiency Ratio 60.0% • Reported net income of $28.7 million, or $0.89 per diluted common share for 2Q18 compared to net income of $20.6 million, or $0.64 per
Slide 33: 2Q 2018 Highlights
2Q 2018 Highlights Financial Corporation
Slide 34: 2Q 2018 Highlights
2Q 2018 Highlights 2Q 2018 Core (1) Results: • EPS $0.90 • NIM 4.10% • ROA 1.67% • Fee Income / Total Revenue 36.3% • ROTCE 20.9% • Efficiency Ratio 59.6% Strong Operating Results ($ in millions) 2Q 2018 2Q 2017 Change Core(1) Net Revenue $96.0 $85.3 +13% • Reflects strong organic growth Net Interes
Slide 35: 2Q 2018 Highlights
2Q 2018 Highlights Customer Funding Reflects Continued Core Deposit Strength • Total customer funding increased $85.3 million, or 7% (annualized), from 03/31/18, highlighted by a $62.3 million, or 18% (annualized), increase in noninterest bearing accounts • Core deposits were 86% of total customer d
Slide 36: 2018 Outlook
2018 Outlook Financial. Corporation
Slide 37: 2018 Outlook
2018 Outlook Mid‐Year Update to Full‐Year Outlook • Mid‐to high‐single‐digit loan and deposit growth Mid‐Year Update: ✓ • Net interest margin 3.90%s Mid‐Year Update: 4.00 – 4.10% • Assumes one rate increase in June 2018 • The impact of any additional rate increases and the magnitude and lag of risin
Slide 38: Core & Sustainable ROA
2018 Outlook Core & Sustainable ROA(1) 1.50% Adjusted for 1.59% in new corporate 2Q 2018 1.40% 1.50% tax rate Core & Sustainable(1) ROA 1.30% 1.20% 1.10% Began with Core and Sustainable ROA of 0.70% in 1.30% 1.00% 1Q13 1.19% 1.13% 1.15% 0.90% 0.95% 0.91% 0.80% FY13 FY14 FY15 FY16 FY17 FY18 Outlook C
Slide 39: The WSFS Franchise
The WSFS Franchise Financial Corporation
Slide 40: The WSFS Franchise
The WSFS Franchise • Largest independent bank and trust co. HQ in the Del. Valley • $7.1 billion in assets • $19.1 billion in fiduciary assets, including $2.3 billion in assets under management • 77 offices • Founded in 1832, WSFS is one of the ten oldest banks in the U.S. • Major business lines • R
Slide 41: The WSFS Franchise
The WSFS Franchise Deposits of Traditional Banks in the State of Delaware June 30, 2017* Total Total Rank Institution Branch Deposits in Market ‘16-’17 ‘16-’17 CAGR Count Market Share Growth Growth ‘08-’17 1 M&T Bank Corp (NY)1 39 6,063,740 29.28% 295,893 5.13% 3.08% 2 PNC Financial Service Group (P
Slide 42: The WSFS Franchise – PA Expansion
The WSFS Franchise – PA Expansion Strong position as one of the few remaining super‐community banks in the attractive and rapidly consolidating southeastern PA markets Over the past 5 years, WSFS has successfully expanded its franchise into Pennsylvania through: • De novo branches; hiring local lend
Slide 43: The WSFS Franchise – PA Expansion
The WSFS Franchise – PA Expansion Deposits of Traditional Banks in Chester, Delaware and Montgomery Counties in Pennsylvania June 30, 2017* Total Total Branch Deposits in Market ‘16-’17 ‘16-’17 CAGR Rank Institution Count Market Share Growth Growth ‘08-’17 1 Wells Fargo Bank 80 $10,975,086 19.29% $9
Slide 44: The WSFS Franchise - Attractive Markets
The WSFS Franchise ‐ Attractive Markets Population Number of Businesses 900,000 Delaware Southeastern PA Delaware Southeastern PA 90,000 800,000 80,000 700,000 70,000 600,000 60,000 500,000 50,000 400,000 40,000 300,000 30,000 200,000 20,000 100,000 10,000 ‐ ‐ Sussex Kent New Castle Delaware Chester
Slide 45: Regional Employment Composition
Regional Employment Composition Philadelphia‐Camden‐Wilmington MSA Diversity of industries drives stable & favorable employment in our markets Unemployment of 4.2%(1) Mining, logging, and Government construction 11% 4% Manufacturing 6% Other services 4% Trade, transportation, and Leisure and hospita
Slide 46: Diversified & Robust Fee Income
The WSFS Franchise – Diversified & Robust Fee Income WSFS Strategic Plan goal of fee (non‐interest) income to total revenue of 40% by 4Q 2018 Trust & Wealth 36% $120 Cash Connect Bank Segment 34% $36 $100 35% Total Core (1) Fee income $27 5 Year CAGR 34% $80 35% $23 Trust & Wealth: 21% $ in Millions
Slide 47: The WSFS Franchise – WSFS Wealth
The WSFS Franchise – WSFS Wealth A Full‐Service Wealth Management Offering Net Revenue of $14.3 million in 2Q 2018 Pre‐tax Profit of $5.1 million 47
Slide 48: 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 $944 million in vault cash managed • Approximately 26,000 non‐bank ATMs in all 50 States • Vault cash margin pressure offse
Slide 49: Embracing Innovation as a Catalyst for Growth
Embracing Innovation as a Catalyst for Growth 49
Slide 50: Selected Financial Information
Selected Financial Information
Slide 51: The WSFS Franchise - WSFS Bank
The WSFS Franchise ‐ WSFS Bank Asset Composition – June 30, 2018 Assets $7.1 Billion; Net Loans $4.9 Billion Non‐ Earning 53% Assets 6% C&I BOLI • Commercial loans <1% comprise 83% of the loan portfolio Net Loans Construction • C&I (including owner‐ Investments 17% 69% 6% occupied real estate), the
Slide 52: The WSFS Franchise - WSFS Bank
The WSFS Franchise ‐ WSFS Bank Funding Composition – June 30, 2018 Total Funding – $7.1 Billion; Customer Deposits – $5.0 Billion • Core deposits represent Time 86% of total customer Customer 14% Non‐ deposits and non‐interest Deposits interest Equity 11% 71% DDA 28% and very low interest Money DDA
Slide 53: The WSFS Franchise - 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 5,000,000 10% 6% 6,000,000 13% 4,000,000 27% 5% 5,000,000 23% 12% 3,000,000 4,000,000 14% 4% 10% 26% 9% 3,000,000 2,000,000 20% 24%
Slide 54: Well Positioned for Rising Rates
Well Positioned for Rising Rates As of 6/30/18 (WSJ Prime @ 5.00%) 12 month NII NII BPS Change(1) % Impact $ Impact +25 0.5% +1.2mm +50 1.0% +2.4mm +100 2.0% +4.7mm +200 3.7% +8.8mm Balance Sheet Drivers • High % of variable/adjustable rate total loan portfolio: 64% • High % core deposits: 86%; high
Slide 55: 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 High point during the cycle 45% 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 4.95 30% 5.00 4
Slide 56: Loan Portfolio Composition
Loan Portfolio Composition Outstanding Balances as of 6/30/2018 No industry or CRE concentrations in the loan portfolio C&I & Owner Occupied CRE CRE Investor & Construction Other Services Special Use & Other Flex, Warehouse, Self‐ (except Public Mixed Use Storage, General 11% Administration) 2% Indu
Slide 57: 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 $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 6/18 Total Risk‐Based Capital Well Capitalized Requirement 12/12 12/13 12/14 12/15
Slide 58: 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 ownership1 is over 5% • Board of Directors and Executive Management ownership guidelines in place and followed • In 2Q 2018, WSFS repurchased
Slide 59: Business Model and Total Shareholder Returns
Business Model and Total Shareholder Returns (1) Completed by the Gallup Organization, as of December 31, 2017 (2) Per Bloomberg; closing price as of June 29, 2018 59
Slide 60: Appendices
Appendices Financial. Corporation
Slide 61: Appendix 1 – Management Team
Appendix 1 – Management Team Mark A. Turner, 55, has served as President and Chief Executive Officer since 2007. He was elected Chairman of the Board of Directors in July 2017. Mr. Turner was previously Chief Operating Officer and the Chief Financial Officer for WSFS. Prior to joining WSFS, his expe
Slide 62: Appendix 1 – Management Team
Appendix 1 – Management Team Steve Clark, 60, joined WSFS Bank in 2002 and has served as Executive Vice President and Chief Commercial Banking Officer since May 2016. From 2002 thru 2006, Mr. Clark led and managed the establishment of the Middle Market lending unit, and in 2007 became Division Manag
Slide 63: Appendix 2 – Business Model
Appendix 2 – Business Model 63
Slide 64: 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 June, 30, 2018 March 31, 2018 June 30, 2017 Total Assets $7,112,547 $6,987,931 $6,822,427 Less: Goodwill and other intangible assets $187
Slide 65: Appendix 3 – Non-GAAP Financial Information
Appendix 3 – Non‐GAAP Financial Information Core: GAAP Reconciliation Three months ended June 30, 2018 March 31, 2018 June 30, 2017 GAAP net (loss) income $28,740 $37,350 $20,570 Plus (less): Pre‐tax adjustments: Securities gains, unrealized gains, recovery of/provision for fraud loss and corporate
Slide 66: Appendix 3 – Non-GAAP Financial Information
Appendix 3 – Non‐GAAP Financial Information Core: GAAP Reconciliation 3 Months Ended 3 Months Ended 3 Months Ended June, 30, 2018 March 31, 2018 June 30, 2017 Net Interest Income (GAAP) $60,989 $57,714 $54,314 Core Net Interest Income (non‐GAAP) $60,989 $57,714 $54,314 Noninterest Income (GAAP) $34,
Slide 67: Appendix 3 – Non-GAAP Financial Information
Appendix 3 – Non‐GAAP Financial Information Core & Sustainable ROA: GAAP Reconciliation FY17 FY16 FY15 FY14 FY13 FY12 Reported (GAAP) ROA 0.87 1.06 1.05 1.17 1.07 0.73 Non‐recurring PCI accretion (0.02) Long‐term credit normalization (0.00) 0.04 (0.00) (0.09) (0.05) 0.33 Securities Gains (0.02) (0.0
Slide 68: Stockholders or others seeking information may call or write: WSFS Financial
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 302‐571‐7264 stockholderrelations@wsfsbank.com www.wsfsbank.com Mark A. Turner Dominic C. Canuso Rodger Levenson