Wsfs Financial Corporation · NASDAQ:WSFS
Wsfs Financial — Q1 2020 Earnings Presentation
49 slides from Wsfs Financial's earnings presentation, May 4, 2020
Slide 1: WSFS Financial Corporation 1Q 2020 Investor Update
WSFS Financial Corporation 1Q 2020 Investor Update May 4, 2020
Slide 2: Forward Looking Statements and Non-GAAP Financial Measures
Forward Looking Statements and Non-GAAP Financial Measures 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 inc
Slide 3: Table of Contents
Table of Contents 1Q 2020 Earnings Supplement Page 4 WSFS Franchise and Markets Page 23 Lines of Business and Technology Page 29 Selected Financial Information Page 36 Appendix: Non-GAAP Financial Information Page 46 3
Slide 4: 1Q 2020 Earnings Release Supplement
1Q 2020 Earnings Release Supplement Filed as Exhibit 99.2 to WSFS’ April 27, 2020 8-K filing.
Slide 5: 1Q 2020 Earnings Supplement - Table of Contents
1Q 2020 Earnings Supplement -Table of Contents COVID-19 Preparedness and Response Page 6 Customer Support and Relief Programs Page 7 Channel Strategy and Digital Adoption Page 8 1Q 2020 Financial Highlights Page 9 1Q 2020 CECL Overview Page 10 Capital Position and Stress Scenarios Page 11 Financial
Slide 6: COVID-19 Preparedness and Response
COVID-19 Preparedness and Response Management Response Associate and Community Initiatives Business and Consumer Support Implemented our well-tested • Retail office Associate schedules • Drive-thru service only at retail offices Business Continuity Plan, including: adjusted to balance work and famil
Slide 7: Customer Support and Relief Programs
Customer Support and Relief Programs • $1.6 billion of Customer loans receiving deferred payments (over 99% 90 days or Payment Deferral Loan Modifications as of April 17th less) resulting in ~$11 million of monthly cashflow support to our Customers as of # of % of ($ in '000's) Loans $ Portfolio Apr
Slide 8: Channel Strategy and Digital Adoption
Channel Strategy and Digital Adoption Channel Volumes 1 • Since COVID-19 pandemic, WSFS supported consistent volumes of total 150% 140% 141% deposit transactions with a significant shift from physical to mobile 127% 130% 121% 120% 114% 110% 100% 99% 102% 104% 96% 105% • Increased digital and remote
Slide 9: 1Q 2020 Financial Highlights
1Q 2020 Financial Highlights Strong fundamental operating performance as pre-provision net revenue (PPNR)1 continues strong trend since the Beneficial combination. Significant excess capital levels and liquidity capacity. 1Q 2020 • Core results include adoption of CECL; COVID-19 impact on macroecono
Slide 10: 1Q 2020 CECL Overview
1Q 2020 CECL Overview Consensus Economic Outlook expects 2Q’20 1Q’20 ACL Drivers (in millions) GDP Growth of -15% and Unemployment of ~9% ACL by Segment January 1, 2020 March 31, 2020 ($ thousands) CECL Adoption CECL • Day 1 CECL adoption was approximately $36 million, driven by: % of % of o Estimat
Slide 11: Capital Position and Stress Scenarios
Capital Position and Stress Scenarios Well Positioned in Current Environment and Compared to beginning of Great Recession1 Common Equity Tier-1 Capital 2-Year Stress Scenario • WSFS Bank’s Common Equity Tier-1 Capital Ratio was a strong 13.52% at 14.00% end of 2019 compared to 10.97% at the beginnin
Slide 12: Financial Strength and Performance
Financial Strength and Performance Significantly Stronger Financial Performance Compared to Beginning of Great Recession1 Core ROA2 Core PPNR2 1.60% $300,000 2.50% 1.61% 2.31% 1.20% 264,789 $200,000 2.00% 0.80% 0.85% $100,000 1.50% 0.40% 1.53% 48,780 0.00% $0 1.00% TTM 3Q'08 TTM 4Q'19 3Q 2008 TTM 4Q
Slide 13: NIM and Pre-Provision Net Revenue (PPNR) Trends
NIM and Pre-Provision Net Revenue (PPNR) Trends Net Interest Margin (NIM)1 CORE PPNR1,2 4.75% 4.37% 4.38% 3.85%–3.95%1 $140,000 3.00% 4.50% 2.36% 0.13% $120,000 2.41% 2.27% 2.16% 2.50% 4.25% 0.23% 0 1.65-1.70%1 0.35% 0-0.10%% $100,000 4.00% 0.31% 2.00% $80,000 $72,986 $71,151 $71,481 $66,632 3.75% 0
Slide 14: Appendix 1: Loan Portfolio
| Appendix 1: Loan Portfolio WSFS bank WSFS 2:2... We Stand For Service®
Slide 15: Balance Sheet Composition at March 31, 2020
Balance Sheet Composition at March 31, 2020 Loan to Deposit Ratio - 90% Asset Composition Funding Composition Assets: $12.3 Billion; Net Loans: $8.5 Billion Total Funding: $12.3 Billion; Customer Deposits: $9.4 Billion Time CRE, 26% 13% Non-interest Net Loans 69% Consumer, DDA 25% Customer Deposits
Slide 16: Commercial Loan Portfolio at March 31, 2020
Commercial Loan Portfolio at March 31, 2020 C&I and Owner Occupied - $3.4 billion CRE Investor and Construction - $2.8 billion Real Estate Rental Special Use & Mixed Use, Flex, Warehouse, Well Diversified and Granular and Leasing, 10% Other, 4% 1% Self-Storage, Other, 20% General Industrial, • No si
Slide 17: Retail and Food Service Portfolios at March 31, 2020
Retail and Food Service Portfolios at March 31, 2020 Retail Food Service1 Loan Type # of Outstanding Average Loan Type # of Outstanding Average ($ in millions) Loans Balances Outstanding ($ in millions) Loans Balances Outstanding CRE/Construction 605 $744.2 $1.2 C&I 364 $108.9 $0.3 C&I 583 $127.1 $0
Slide 18: Hotel Portfolio at March 31, 2020
Hotel Portfolio at March 31, 2020 • Conservative credit underwriting with maximum loan-to-value of Hotels1 75% and debt service coverage ratio of 1.30 times at original loan Loan Type # of Outstanding Average underwriting ($ in millions) Loans Balances Outstanding CRE 72 $386.0 $5.4 • 4 loans over $
Slide 19: 1Q 2020 Loan and Deposit Growth
1Q 2020 Loan and Deposit Growth Loans - 1Q'20 vs 4Q'19 and 1Q'19 Mar Dec Mar 1Q'20 $ Annualized YOY $ YOY % • We are ahead of schedule after the first year of ($ in millions) C & I Loans 2020 2019 2019 $3,412 $ 3,341 $ 3,389 $ Growth % Growth 71 8% Growth Growth 24 1% executing our strategy to optim
Slide 20: Appendix 2: 1Q 2020 Reported Results and Non-GAAP Reconciliation
Appendix 2: 1Q 2020 Reported Financial Results and Reconciliation of Non-GAAP Financial Information
Slide 21: 1Q 2020 Reported Financial Results
1Q 2020 Reported Financial Results 1Q 2020 • GAAP results for 1Q 2020 were significantly impacted by the $ in millions (expect per share amounts) economic effects of the COVID-19 pandemic and our adoption of the Current Expected Credit Loss method of accounting (CECL), Net Revenue $157.0 primarily r
Slide 22: Reconciliation of Non-GAAP Financial Information
Reconciliation of Non-GAAP Financial Information Reconcilation of Non-GAAP Financial Information: PPNR and Core PPNR $ in 000's 4Q'07 1Q'08 2Q'08 3Q'08 TTM 3Q'08 Net Income $ 7,496 $ 7,246 $ 6,700 $ 5,510 $ 26,952 Plus: Income Tax Provision 1,533 2,902 3,735 2,957 11,127 Plus: Provision for Credit L
Slide 23: WSFS Franchise and Markets
| WSFS Franchise and Markets WSFS bank WSFS 2:2... We Stand For Service®
Slide 24: The WSFS Franchise - Overview
The WSFS Franchise - Overview • Largest independent bank and trust co. HQ in Delaware and greater Philadelphia region(1) • $12.3 billion in assets • $20.5 billion in fiduciary assets, including $2.4 billion in assets under management • 116 offices • Founded in 1832, WSFS is one of the ten oldest ban
Slide 25: The WSFS Franchise - Strategic Growth Opportunity
The WSFS Franchise - Strategic Growth Opportunity At $12.3 billion in assets at 03/31/2020, WSFS fills a long-standing service gap in our market between larger regional/national banks and smaller community banks MSA: Philadelphia-Camden-Wilmington (PA/NJ/DE/MD) Total Deposits • 3rd largest metro in
Slide 26: The WSFS Franchise - Our Markets
The WSFS Franchise - Our Markets Philadelphia-Camden-Wilmington MSA Regional Employment Composition(1) Regional Statistics Diversity of industries drives stable and favorable employment and economic growth in our markets • Population: ~6.1 million • Number of Households: ~2.3 million • Unemployment
Slide 27: The WSFS Franchise - Delivering Growth and High Performance
The WSFS Franchise - Delivering Growth and High Performance 27
Slide 28: Business Model and Total Shareholder Returns
Business Model and Total Shareholder Returns Total Shareholder Returns2 NASDAQ KBW SNL US Bank Bank Banks > S&P 500 WSFS Index Index $10B Index 1 year (35%) (29%) (28%) (26%) (7%) 3 year (44%) (30%) (23%) (22%) 16% 5 year 3% 2% 2% 3% 38% 10 year 110% 63% 56% 54% 172% (1) Completed by the Gallup Orga
Slide 29: Lines of Business and Technology
Lines of Business and Technology
Slide 30: 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 31: Retail Banking
Retail Banking Relationship-focused community banking model with 93 banking offices & nearly 500 ATMS(1) Recently optimized retail footprint through reduction of branch locations Branch & ATM Network Online & Mobile Banking Borrowing Mortgage Offering a full range of Providing Customers with a Meeti
Slide 32: 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 Market Size: • Micro & Small Ticket Equipment Leasi
Slide 33: WSFS Wealth
WSFS Wealth Full-Service, Relationship-based Wealth Management Financial Highlights 1Q 2020 Net Revenue: $14.7 million 1Q 2020 Pre-tax Income: $3.8 million $20.5 billion in fiduciary assets, including $2.4 billion in assets under management at 3/31/2020 Private Banking Services for Commercial Custom
Slide 34: Cash Connect
Cash Connect® Leading National Provider of Cash Logistics $11.0 million in net revenue (fee income less funding ATM Vault Cash costs) and $2.0 million in pre-tax income in 1Q 2020 “Bailment” • 5 year CAGR(2) for net revenue is 12% WSFS Smart Manages 470(1) branded ATMs for WSFS Bank; one of Branded
Slide 35: Delivery Transformation
Delivery Transformation 2020 Program Focus and Outlook Full-Year Gross Investment of $15.2mm; $9.7mm Net Expense; $8.2mm Net of Revenue Lift Customer Acquisition Expected Benefits from 2020 Initiatives • Expand nCino capabilities • Initiate implementation of enterprise-wide CRM, piloting Wealth and
Slide 36: Selected Financial Information
Selected Financial Information
Slide 37: Diversified & Robust Fee Income
Diversified & Robust Fee Income $180 Trust & Wealth 27% (2) Cash Connect $160 • Fee income is well diversified with over Bank Segment 35% (2) 20 discrete lines of business and $140 $44 products within our three segments (2) 35% Total Core (1) Fee income $120 (2) $41 • Strong historical growth in eac
Slide 38: Balance Sheet Composition
Balance Sheet Composition at March 31, 2020 Asset Composition Funding Composition Assets: $12.3 Billion; Total Funding: $12.3 Billion; Net Loans: $8.4 Billion Customer Deposits: $9.4 Billion Other Non- • Commercial loans comprise • Core deposits Other Other earning Assets, Liabilities, Cash 73% of t
Slide 39: Commercial Loan Portfolio Composition
Commercial Loan Portfolio Composition Outstanding Balances as 03/31/2019 No industry or CRE concentrations in the loan portfolio C&I and Owner Occupied - $3.4 billion CRE Investor and Construction - $2.8 billion Real Estate Rental Special Use & Mixed Use, 1% Flex, Warehouse, and Leasing, 10% Other,
Slide 40: Interest Rate Risk
Interest Rate Risk As of 3/31/2020 (WSJ Prime @ 3.25%) 12 month Gradual(1) Instantaneous(2) BPs Change NII Impact - % NII Impact - $ NII Impact - % NII Impact - $ -100 (0.9%) ($3.7 million) (4.1%) ($17.5 million) -50 (0.3%) ($1.3 million) (2.1%) ($8.9 million) -25 (0.1%) ($0.6 million) (0.7%) ($3.2
Slide 41: Credit Metrics
Credit Metrics Overall Credit Trends Remain Stable and Strong Criticized & Classified Loans / Tier-1 + ALLL Delinquencies (1) / Gross Loans 30% 2.00% 28% 1.80% 26% 1.60% 24% 1.40% 22% 1.20% 20% 14.68% 1.00% 18% 0.69% 0.80% 16% 0.60% 14% 12% 0.40% 10% 12.64% 0.20% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4
Slide 42: Capital Management
Capital Management Disciplined capital management providing flexibility to grow & return profits to shareholders Tier 1 Capital ($000s) (1) Common Equity Tier 1 Capital ($000s) (1) Tier 1 Leverage Ratio ($000s) (1) Total Risk Based Capital ($ 000s) – WSFS Bank (1) Holding Company ratio. 42
Slide 43: Share Buybacks and Dividends – Recent History
Share Buybacks and Dividends – Recent History $120,000 $0.50 $0.47 $0.45 $0.42 $100,000 $0.40 Annual Dividends Paid per Share $0.35 Capital Returned ($ in 000s) $80,000 $0.30 $0.30 $0.25 $60,000 $0.25 $0.21 $0.20 $40,000 $0.15 $0.10 $20,000 $0.05 $- $- 2015 2016 2017 2018 2019 Dividends Routine buyb
Slide 44: 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 ownership(1) is approximately 2% Board of Directors and Executive Management ownership guidelines in place and followed • WSF
Slide 45: WSFS Mission, Vision, Strategy and Values
WSFS Mission, Vision, Strategy and Values 45
Slide 46: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information
Slide 47: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information Three Months Ended Three Months Ended March 31, December 31, March 31, March 31, December 31, March 31, (dollars in thousands, except per share data) 2020 2019 2019 (dollars in thousands, except per share data) 2020 2019 2019 Net interest income (GAAP) $ 116,
Slide 48: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information March 31, December 31, March 31, (dollars in thousands) 2020 2019 2019 GAAP net income attributable to WSFS $ 10,927 $ 45,704 $ 13,023 Plus: Tax-effected amortization of intangible assets 2,103 2,121 1,034 Net tangible income (non-GAAP) $ 13,030 $ 47,825 $ 14
Slide 49: 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