Wsfs Financial Corporation · NASDAQ:WSFS
Wsfs Financial — Q2 2018 Earnings Presentation
42 slides from Wsfs Financial's earnings presentation, Aug 15, 2018
Slide 1: WSFS Financial Corporation 2Q 2018 Investor Update
WSFS Financial Corporation 2Q 2018 Investor Update August 15, 2018
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 C. Canuso Rodger Levenson
Slide 3: Table of Contents
Table of Contents Forward-Looking Statements / Non-GAAP Information / Reported Financial Results Page 4 2Q 2018 Highlights Page 7 2018 Outlook Page 10 The WSFS Franchise Page 13 Selected Financial Information Page 24 Appendix 1 – Management Team Page 35 Appendix 2 – Business Model Page 37 Appendix 3
Slide 4: 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 5: 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 6: 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 7: 2Q 2018 Highlights
2Q 2018 Highlights Financial Corporation
Slide 8: 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 9: 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 10: 2018 Outlook
2018 Outlook Financial Corporation
Slide 11: 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 12: Core & Sustainable ROA
2018 Outlook Core & Sustainable ROA(1) 1.50% Adjusted for 1.59% in new corporate 2Q 2018 1.40% tax rate 1.50% 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 13: The WSFS Franchise
The WSFS Franchise Financial Corporation
Slide 14: 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 15: Deposits of Traditional Banks in Delaware
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 16: 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 17: Deposits of Traditional Banks in Southeastern PA
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 18: 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 19: 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 20: 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% $27 Total Core (1) Fee income 5 Year CAGR 34% $80 35% $23 Trust & Wealth: 21% $ in Millions
Slide 21: 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 21
Slide 22: 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 23: Embracing Innovation as a Catalyst for Growth
Embracing Innovation as a Catalyst for Growth 23
Slide 24: Selected Financial Information
Selected Financial Information
Slide 25: WSFS Bank Asset Composition
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 26: WSFS Bank Funding Composition
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 27: 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 28: 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 29: 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 30: 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 31: 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 32: 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 33: 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 33
Slide 34: Appendices
Appendices Financial Corporation
Slide 35: 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 36: 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 37: Appendix 2 – Business Model
Appendix 2 – Business Model 37
Slide 38: 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 39: 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 40: 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 41: 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 42: For more information please contact:
For more information please contact: Investor Relations: Dominic C. Canuso (302) 571-6833 or dcanuso@wsfsbank.com www.wsfsbank.com Corporate Headquarters 500 Delaware Avenue Wilmington, DE 19801 42