Slide 1: WSFS Financial Corporation 2Q 2016 Investor Update
WSFS Financial Corporation 2Q 2016 Investor Update August 2, 2016
Slide 2: 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 302-571-7264 stockholderrelations@wsfsbank.com www.wsfsbank.com Mark A. Turner Dominic Canuso Rodger Levenson Pr
Slide 3: 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. Such statements include, without limitation, references to the Company’s predi
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 uses these non-GAAP measures to measure the Company’s pe
Slide 5: 2Q 2016 Highlights & CEO Comments
2Q 2016 Highlights & CEO Comments Mark Turner, President & CEO
Slide 6: 2Q 2016 Highlights
2Q 2016 Highlights Strong Results Reported 2Q 2016 2Q 2015 % Change • EPS: $0.58 $0.43 +35% • ROA: 1.23% 0.98% +26% • ROTCE: 13.97% 11.09% +26% Strong Revenue Growth • Core net revenue increased $9.6 million, or 16% over 2Q 2015 • Core net interest income improved $7.3 million, or 19% over 2Q 2015;
Slide 7: 2Q 2016 Highlights
2Q 2016 Highlights Loan Growth Continues • Net loans increased $40.0 million from 1Q 2016. Growth was driven by a 13% (annualized) increase in C&I loans and a 17% (annualized) increase in Consumer loans, partially offset by a decline in Construction loans due to expected paydown/payoff activity in t
Slide 8: 2016-2018 Strategic Plan Goals
2016-2018 Strategic Plan Goals 8
Slide 9: 2016 Budgeted Outlook
2016 Budgeted Outlook(1) • High single digit organic loan growth and mid-to-high single digit deposit growth in 2016 • Net interest margin of mid-to-high 3.80%’s • Includes normal accretion from acquisitions and loan payoffs and normal reverse mortgage activity (but can be uneven) • Well-positioned
Slide 10: Core & Sustainable ROA Outlook
2016 Outlook(2) Core & Sustainable ROA(1) – Full Year Modeled Outlook 1.20% 1.10% Core & Sustainable ROA 1.00% 0.90% 1.20% 1.17% 1.13% 1.14% 0.80% 0.95% 0.91% 0.70% 0.77% 0.60% FY12 FY13 FY14 FY15 FY16 FY16 FY16 Core & Core & Core & Core & Modeled @ Modeled @ Modeled @ Sustainable Sustainable Sustai
Slide 11: Core & Sustainable ROA Trend Line
Core & Sustainable1 ROA Trend Line 1.30 4Q16 Plan 1.25 1.25% ROA 1.20 1.15 1.10 1.14% Core & Sustainable ROA 1.05 1.00 0.95 0.90 0.85 0.80 0.75 0.70 0.65 4Q tends to be the strongest on revenue and expenses; 1Q tends to be the weakest (1) Core and Sustainable ROA is a non-GAAP measure that divides (
Slide 12: 2016 – 2018 Strategic Plan Themes
2016 – 2018 Strategic Plan Themes • Strong organic growth driven by favorable market demographics and competitive disruption • Selected acquisitions with a focus on increasing fee-based revenue • Fee (non-interest) income to total revenue of 40% by 4Q 2018 • Positive operating leverage • Single digi
Slide 13: The WSFS Franchise
The WSFS Franchise Rodger Levenson, EVP & Chief Corporate Development Officer
Slide 14: The WSFS Franchise
The WSFS Franchise • Largest independent bank and trust co. HQ in the Del. Valley • $5.8 billion in assets • $13.4 billion in fiduciary assets, includes $1.2 billion in assets under management • 63 offices • Founded in 1832, WSFS is one of the ten oldest banks in the U.S. • Major business lines • Re
Slide 15: The WSFS Franchise - WSFS Bank
The WSFS Franchise - WSFS Bank (1) WSFS 2015 growth excluding the acquisition of The First National Bank of Wyoming was $119 million or 3.86% *Most recently available FDIC data (2) Excludes estimated out-of-market deposits of TD Bank 15 (3) Top 10 Delaware Banks house 96% of all traditional deposits
Slide 16: The WSFS Franchise – PA Expansion
The WSFS Franchise – PA Expansion Over the past 5 years, WSFS has successfully expanded its franchise into Pennsylvania through: • De novo branches; hiring local lenders • Acquisition of Alliance Bank • Recently announced Penn Liberty acquisition Strong position as one of the few remaining super-com
Slide 17: 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 $100 Trust & Wealth Management CAGR: 12% Cash Connect $90 Bank Segment 34.0% 34.5% $80 35.4% $23 $70 Total Core (1) Fee income 33.5% $18 $16 31.6% $60 $14 $ i
Slide 18: The WSFS Franchise – WSFS Wealth
The WSFS Franchise – WSFS Wealth Net Revenue of $9.5 million in 2Q 2016; Pre-tax profit of $3.4 million • Offers insurance and brokerage products • Registered investment advisor offering a • Focus on retail banking clients “balanced’ investment style focused on • $576,000 revenue in 2Q 2016 preserva
Slide 19: 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 • More than $700 million in vault cash • More than 18,000 non-bank ATMs nationwide • Adding ATM settlement services to existing managed ser
Slide 20: Selected Financial Information
Selected Financial Information Dominic Canuso, EVP & Chief Financial Officer
Slide 21: WSFS Bank Asset Composition – June 30, 2016
The WSFS Franchise - WSFS Bank Asset Composition – June 30, 2016 Assets $5.8 Billion; Net Loans $3.8 Billion Non- Earning Assets 6% 52% BOLI 2% C&I • Commercial loans comprise 83% of the Investments loan portfolio 17% • C&I (including owner- Net Loans Construction 65% occupied real estate), 5% CRE t
Slide 22: WSFS Bank Funding Composition
The WSFS Franchise - WSFS Bank Funding Composition – June 30, 2016 Total Funding – $5.8 Billion; Customer Funding - $3.8 Billion Equity 10% Sweeps 0.3% Time Non- • Core customer funding 14% interest comprises 85% of total DDA 25% Customer customer funding Funding Borrowings 66% Money • Non-interest
Slide 23: Well Positioned for Rising Rates
Well Positioned for Rising Rates NII NII BPS Change1 % Impact $ Impact +100 0.5% +$0.9mm +200 2.9% +$5.2mm +300 5.0% +$8.9mm +400 7.1% +$12.6mm Balance Sheet Drivers • +100 Model results primarily reflects impact of WSFS prime • High % of variable/adjustable rate total loan portfolio: 67% • High % c
Slide 24: Overall Credit Trends Remain Strong
Overall Credit Trends Remain Strong Delinquencies (1) / Gross Loans Criticized & Classified Loans / Tier-1 + ALLL 2.00% 50% Average 1.80% delinquency over 45% 1.60% the past 14 40% 1.40% quarters was 0.90% 35% 1.20% 30% 1.00% 24.22% 25% 0.80% 0.64% 18.56% 0.60% 20% 0.40% 15% 0.20% 10% 1Q13 2Q13 3Q13
Slide 25: 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 $650,000 $600,000 $550,000 $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 12/12 12/13 12/14 12/15 6/16 Total Risk-Based Capital Well Capitalized Requirement 12/12 12/13 12/14 12/15 6/16 TRBC 14.29% 14.3
Slide 26: 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 • Completed 5% stock repurchase
Slide 27: Business Model and Total Shareholder Returns
Business Model and Total Shareholder Returns • Consistently ranked in the top quartile of all businesses surveyed1 • Received the 2016 Gallup Great Focused Business Model Workplace Award • WSFS has been recognized by The • Voted “Top Bank” in Delaware Wilmington News Journal as a five years running
Slide 28: Appendices
Appendices Financial. Corporation
Slide 29: Appendix – Table of Contents
Appendix – Table of Contents Section Page # – Appendix 1 – Management Team 30-31 – Appendix 2 – Business Model 32 – Appendix 3 – Non-GAAP Financial Information 33-36 – Appendix 4 – Penn Liberty Investor Presentation 37-48 29
Slide 30: Appendix – Management Team
Appendix 1 – Management Team • Mark A. Turner, 52, has served as President and Chief Executive Officer since 2007. Mr. Turner was previously Chief Operating Officer and the Chief Financial Officer for WSFS. Prior to joining WSFS, his experience includes working at CoreStates Bank and Meridian Bancor
Slide 31: Appendix – Management Team
Appendix 1 – Management Team • Paul D. Geraghty, 62, Executive Vice President and Chief Wealth Officer since 2011. From 2007 to 2010, he was Chief Executive Officer at Harleysville National Corporation, Harleysville, PA. Mr. Geraghty received his Bachelor of Science in Accounting from Villanova Univ
Slide 32: Appendix – Business Model
Appendix 2 – Business Model 32
Slide 33: Appendix – 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, 2016 March 31, 2016 June 30, 2015 Total Assets $5,834,107 $5,686,154 $5,077,483 Less: Goodwill and other intangible assets ($94,
Slide 34: Appendix – Non-GAAP Financial Information
Appendix 3 – Non-GAAP Financial Information Core: GAAP Reconciliation 3 Months 3 Months Ended Ended June 30, 2016 June 30, 2015 Net Interest Income (GAAP) $46,414 $39,090 Core Net Interest Income $46,414 $39,090 Noninterest Inc (as reported) $24,849 $22,458 Less: Securities Gains ($545) ($477) Core
Slide 35: Non-GAAP Financial Information
Non-GAAP Financial Information Core: GAAP Reconciliation FY15 FY14 FY13 FY12 FY11 Pre-Tax FY15 Pre-Tax FY14 Pre-Tax FY13 Pre-Tax FY12 Pre-Tax FY11 Adjustments Adjustments Adjustments Adjustments Adjustments Reported (GAAP) Net Income $53,533 $53,757 $46,882 $31,311 $22,677 Adj: FHLB Dividend (808) (
Slide 36: Appendix – Non-GAAP Financial Information
Appendix 3 – Non-GAAP Financial Information Core & Sustainable: GAAP Reconciliation FY15 FY14 FY13 FY12 Reported (GAAP) ROA 1.05% 1.17% 1.07% 0.73% Non-recurring PCI accretion (0.02) - - - Long-term credit normalization - (0.09) (0.05) 0.33 Securities Gains (0.02) (0.01) (0.05) (0.33) SASCO write up
Slide 37: WSFS Financial Corporation to Combine with Penn Liberty Financial Corp.
WSFS Financial Corporation to Combine with Penn Liberty Financial Corp. As Published on November 23, 2015 37
Slide 38: Additional Information
Additional Information IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT In connection with the proposed merger, WSFS will file with the SEC a Registration Statement on Form S-4 that will include a proxy statement of Penn Liberty and a prospectus of WSFS, as well as other relevant documents conc
Slide 39: Transaction Rationale
Transaction Rationale • Significantly strengthens WSFS’ position in our southeastern Pennsylvania market Already the largest super-community bank headquartered in the Delaware Valley (Philadelphia-Camden-Wilmington MSA)(1) Creates 3rd largest super-community bank franchise in three key southeast
Slide 40: Transaction Rationale
Transaction Rationale • Penn Liberty offices are within a well-defined southeastern PA geography, where WSFS already has a presence; creates market density in attractive markets • Strong C&I lending base and low cost core deposit base with nearly 45% no-and-low interest bearing demand deposits Str
Slide 41: Attractive Combined Franchise
Attractive Combined Franchise Expands WSFS’ position as the largest, most diversified, super-community bank headquartered in the Delaware Valley (Philadelphia-Camden-Wilmington MSA) ($mm) WSFS Penn Liberty Pro Forma Balance Sheet 9/30/15(1) Assets: $5,476 $651 $6,127 Gross Loans HFI: 3,698 510 4,208
Slide 42: Enhanced Market Demographics
Enhanced Market Demographics Penn Liberty operates in demographically attractive southeastern PA markets which are contiguous and very similar to WSFS’ home markets, where we have had success for 183 years Penn Liberty Counties Northern WSFS Counties Montgomery Chester New Castle Delaware County, PA
Slide 43: Pro Forma Market Share
Pro Forma Market Share Chester, Montgomery and Delaware PA Counties Number Market • Creates the 3rd largest super- Rank Institution (ST) of Branches Deposits in Market ($mm) Share (%) community bank franchise in 1 Wells Fargo & Co. (CA) 82 9,280 18.1 three key southeastern PA 2 Toronto-Dominion Bank
Slide 44: Transaction Details & Assumptions
Transaction Details & Assumptions • $101 million in the aggregate (including the value of Penn Liberty’s options)(1) • 0.6601 shares of WSFS common stock, or $21.75 in cash • 60% WSFS common stock / 40% cash consideration mix Transaction • Pat Ward, 32 year local PA banker and founder and Chairman o
Slide 45: Overview of Penn Liberty
Overview of Penn Liberty • Founded in 2004 by former Executives of Gross Loans & Leases: $510mm southeastern PA’s Commonwealth Bank Consumer & Construction • Well regarded, high-quality community bank Other 3.7% • Approximately $650 million in total assets 11.9% Residential • Commercial-oriented loa
Slide 46: Fee Income Opportunities
Fee Income Opportunities • Penn Liberty operates in the large, growing and demographically attractive counties of Montgomery and Chester, PA • Existing wealth management platform can be significantly enhanced with WSFS’ more extensive product offerings Christiana Trust and Cypress Capital Manageme
Slide 47: Summary
Summary A WSFS combination with Penn Liberty represents a strategically compelling, low risk franchise expansion that meets or exceeds WSFS’ financial return hurdles while providing significant upside opportunities for both revenue enhancements and capturing significant market share that is “in-play
Slide 48: For more information please contact
For more information please contact: Investor Relations: Dominic Canuso (302) 571-6833 or dcanuso@wsfsbank.com www.wsfsbank.com Corporate Headquarters 500 Delaware Avenue Wilmington, DE 19801 48