Wsfs Financial Corporation · NASDAQ:WSFS
Wsfs Financial — Q1 2019 Earnings Presentation
45 slides from Wsfs Financial's earnings presentation, May 6, 2019
Slide 1: WSFS Financial Corporation Q1 2019 Investor Update
WSFS Financial Corporation Q1 2019 Investor Update May 6, 2019
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. Such statements include, without limitation, references to the Company's predi
Slide 3: 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 4: Table of Contents
Table of Contents •1Q 2019 Reported Financial Results Page 5 •1Q 2019 Highlights / Beneficial Update Page 6 •2019 Outlook Page 9 •The WSFS Franchise Page 15 •Selected Financial Information Page 20 •Appendix 1 – Management Team Page 31 •Appendix 2 – Business Model Page 33 •Appendix 3 – Non-GAAP Finan
Slide 5: 1Q 2019 Reported Financial Results
1Q 2019 Reported Financial Results 1Q 2019 Reported Results: • EPS $0.33 • NIM 4.30% • ROA 0.58% • Fee Income / Total Revenue 33.0% • ROTCE (1) 6.77% • Efficiency Ratio 78.2% • Net revenue (which includes net interest income and noninterest income) was $124.4 million for 1Q 2019, an increase of $19.
Slide 6: 1Q 2019 Highlights
1Q 2019 Highlights 1Q 2019 Core (1) Results: • EPS $0.91 • NIM 4.30% • ROA 1.59% • Fee Income / Total Revenue 30.9% • ROTCE 17.68% • Efficiency Ratio 55.1% Strong Operating Results: ($ in millions) 1Q19 1Q18 Change • Excluding Beneficial, net loans increased 6% (annualized) Core(1) Net Revenue $120.
Slide 7: Beneficial Update
Beneficial Update • Legal Close: March 1, 2019 • Systems & Brand Conversion: Weekend of August 24, 2019 • Majority of branch consolidations will occur during that weekend • Divestitures: Sale of 5 New Jersey branches to The Bank of Princeton scheduled to close on May 17th • Approximately $190 millio
Slide 8: Beneficial Update
Beneficial Update • Balance Sheet Optimization & Repositioning • Leveraged BNCL Fed funds investments to pay off approximately $780 million in wholesale funding • Repositioned investment portfolio to align with WSFS duration risk and yield (2.2% 3.5%) • Target balance for MBS at 6/30/19 of approxi
Slide 9: 2019 Outlook
2019 Outlook (1) • Loan growth in the low single digits. Low-mid single digit organic growth is offset by day 1 accounting and normal merger attrition in the consumer, mortgage, and commercial real estate portfolios • Deposits to remain flat to slightly decreasing as low single digit organic growth
Slide 10: Outlook - Net Interest Margin
Outlook - Net Interest Margin 4.40 – 4.16% 4.30% 4.09% 4.45% 4.50% • Higher loan yields, lower deposit betas, and 0.16% favorable funding mix across both portfolios 4.25% 0.04% 0.18% • Balance sheet optimization resulted in greater de- 0.08% levering of the balance sheet and higher NIM 0.39% 0.10% 4
Slide 11: Outlook – 2019-2021 Strategic Plan: Core Return on Average Assets
Outlook – 2019-2021 Strategic Plan Core Return on Average Assets(1) 1.80% Core Return on Average Assets 1.70% 1.60% 1.50% 1.79% 1.73% 1.67% 1.40% 1.61% 1.51% 1.51% 1.30% 1.20% 2019 Outlook 2020 Outlook 2021 Outlook Core ROA With Revenue Synergies (1) Excludes one-time transaction costs; reflects Ben
Slide 12: Compelling Market Opportunity
Compelling Market Opportunity At $12.2 billion in assets at 3/31/19, the combined bank fills a long-standing service gap in the Delaware Valley market between larger regional / national banks and smaller community banks MSA: Philadelphia-Camden-Wilmington (PA/NJ/DE/MD) Market Position # Institution
Slide 13: 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 14: Delivery Transformation
Delivery Transformation • Focused on melding physical and digital delivery, consistent with our brand, by enabling our Associates with the latest technology and actionable data to better serve our Customers • ~50% of cost savings from branch consolidations to fund a Delivery Transformation - Increme
Slide 15: The WSFS Franchise
The WSFS Franchise WSFSiz2.. anda WSFS bank We Stand For Service!
Slide 16: The WSFS Franchise
The WSFS Franchise • Largest independent bank and trust co. HQ in the Del. Valley (1) • $12.2 billion in assets • $19.0 billion in fiduciary assets, 25 miles including $2.2 billion in assets under management • 152 offices • Founded in 1832, WSFS is one of the ten oldest banks in the U.S. • Major bus
Slide 17: The WSFS Franchise – Diversified & Robust Fee Income
The WSFS Franchise – Diversified & Robust Fee Income Trust & Wealth • Fee income is well diversified $140 36% with over 20 discrete lines of Cash Connect 35% business and products within $120 our three major segments Bank Segment $41 34% $36 • Strong historical growth in each Total Core (1) Fee inco
Slide 18: The WSFS Franchise – WSFS Wealth
The WSFS Franchise – WSFS Wealth A Full-Service Wealth Management Offering Net Revenue of $15.9 million in 1Q 2019 Pre-tax Income of $7.2 million $19.0 billion in fiduciary assets, including $2.2 billion in assets under management 18
Slide 19: The WSFS Franchise – Cash Connect
The WSFS Franchise – Cash Connect®(1) Leading National Provider of Cash Logistics ATM Vault Cash $10.0 million in net revenue (fee income less funding costs) and $1.4 million in pre-tax income in 1Q 2019 • 5 year CAGR for net revenue is 11.9% Equipment Smart Safes Services Over $1 billion in vault c
Slide 20: Selected Financial Information
Selected Financial Information
Slide 21: The WSFS Franchise - WSFS Bank: Asset Composition
The WSFS Franchise - WSFS Bank Asset Composition – March 31, 2019 Assets $12.2 Billion; Net Loans $8.7 Billion 38% C&I • Commercial loans Non-Earning Assets 10% comprise 75% of the loan portfolio Other Construction 7% BOLI • C&I (including owner- 1% occupied real estate), Net Loans 71% Consumer the
Slide 22: The WSFS Franchise - WSFS Bank: Funding Composition
The WSFS Franchise - WSFS Bank Funding Composition – March 31, 2019 Total Funding – $12.2 Billion; Customer Deposits – $9.4 Billion • Core deposits represent 84% of total customer Time 16% deposits Non- interest Customer Deposits DDA 24% • Non-interest and very Equity 15% 77% low interest DDA (WAC M
Slide 23: Loan and Funding Composition
The WSFS Franchise Loan Composition Funding Composition 10,000,000 14,000,000 9,000,000 2% 12,000,000 7% 12% 8,000,000 13% 7,000,000 10,000,000 13% 30% 6,000,000 8,000,000 5,000,000 6% 9% 27% 14% 6,000,000 17% 4,000,000 29% 5% 3,000,000 23% 4,000,000 15% 18% 2,000,000 22% 38% 8% 2,000,000 52% 1,000,
Slide 24: Overall Credit Trends Remain Stable
Overall Credit Trends Remain Stable Criticized & Classified Loans / Tier-1 + ALLL Delinquencies (2) / Gross Loans 50% 2.00% 45% High point during the cycle 1.80% High point during of: 1.60% the cycle of 3.03% 40% Criticized: 105.6% in 1Q10 in 1Q12 1.40% 35% Classified: 70.5% in 3Q09 1.20% 30% 1.00%
Slide 25: Loan Portfolio Composition
Loan Portfolio Composition Outstanding Balances as of 3/31/2019 No industry or CRE concentrations in the loan portfolio C&I & Owner Occupied CRE CRE Investor & Construction Flex, Warehouse, Special Use & Other Mixed Use Self-Storage, 8% Accommodation 1% General Industrial and Food Services 9% Other
Slide 26: Regional Employment Composition
Regional Employment Composition Philadelphia-Camden-Wilmington MSA Diversity of industries drives stable & favorable employment in our markets Unemployment of 4.0%(1) Mining, logging, and construction Government 4% Manufacturing 11% 6% Other services 4% Trade, transportation, and utilities Leisure a
Slide 27: 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) $1,300,000 $1,200,000 $1,100,000 $1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 12/14 12/15 12/16 12/17 12/18 3/19 Total Risk-Based Capital Well Capitalized Requirement 12/14 12/1
Slide 28: 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 ownership is over 2.5% • Board of Directors and Executive Management ownership guidelines in place and followed • In 1Q 2019, WSFS repurchased
Slide 29: Business Model and Total Shareholder Returns
Business Model and Total Shareholder returns Total Shareholder Returns2 NASDAQ WSFS Bank Index 1 year (18.7%) (11.0%) 3 year 21.5% 40.7% 5 year 68.4% 46.6% 10 year 471.8% 189.5% (1) Completed by the Gallup Organization, as of December 31, 2018. (2) Per Bloomberg; closing price as of March 29,2019. 2
Slide 30: Appendices
Appendices WSFS:.. WSEFS bank We Stand For Service
Slide 31: Appendix 1 – Management Team
Appendix 1 – Management Team Rodger Levenson, 58, has served as President and Chief Executive Officer, since January 2019. Mr. Levenson previously served in various executive leadership roles, including the Chief Commercial Banking Officer from 2006 to 2015 and interim Chief Financial Officer from M
Slide 32: Appendix 1 – Management Team
Appendix 1 – Management Team Peggy H. Eddens, 63, Executive Vice President, Chief Associate and Customer Experience Officer, joined WSFS Bank in 2007. From 2003 to 2007 she was Senior Vice President for Human Resources and Development for NexTier Bank, Butler PA. Ms. Eddens received a Master of Scie
Slide 33: Appendix 2 – Business Model
Appendix 2 – Business Model 33
Slide 34: Tangible common equity to assets and tangible book value per share
Appendix 3 – Non-GAAP Financial Information Tangible common equity to assets and Tangible common book value per share March 31, 2019 December 31, 2018 December 31, 2017 December 31, 2016 December 31, 2015 December 31, 2014 Total assets $ 12,184,417 $ 7,248,870 $ 6,999,540 $ 6,765,270 $ 5,584,719 $ 4
Slide 35: Appendix 3 – Non-GAAP Financial Information
Appendix 3 – Non-GAAP Financial Information Core: GAAP Reconciliation Three months ended March 31, 2019 December 31, 2018 March 31, 2018 GAAP net income attributable to WSFS $ 13,023 $ 29,718 $ 37,350 Plus (less): Pre-tax adjustments: Securities gains, unrealized gains on equity investment, recovery
Slide 36: Appendix 3 – Non-GAAP Financial Information
Appendix 3 – Non-GAAP Financial Information Core: GAAP Reconciliation Three months ended March 31, 2019 December 31, 2018 March 31, 2018 Calculation of return on average tangible common equity: GAAP net income attributable to WSFS $ 13,023 $ 29,718 $ 37,350 Plus: Tax effected amortization of intangi
Slide 37: Appendix 3 – Non-GAAP Financial Information
Appendix 3 – Non-GAAP Financial Information Core: GAAP Reconciliation Three months ended March 31, 2019 December 31, 2018 March 31, 2018 Net interest income (GAAP) $ 83,314 $ 64,674 $ 57,714 Core net interest income (non-GAAP) $ 83,314 $ 64,674 $ 57,714 Noninterest income (GAAP) $ 41,122 $ 38,186 $
Slide 38: Appendix 3 – Non-GAAP Financial Information
Appendix 3 – Non-GAAP Financial Information Core: GAAP Reconciliation WSFS Bank & Beneficial Bank Reconciliation of GAAP Fee Income to Non-GAAP Core Fee Income 12/31/2018 December 31, 2018 WSFS BNCL Net interest income (GAAP) $ 246,474 $ 180,364 Core net interest income (non-GAAP) $ 246,474 $ 180,36
Slide 39: Q1 2019 Earnings Release Supplement – Beneficial Combination
WSFS Financial Corporation Q1 2019 Earnings Release Supplement Beneficial Combination April 25, 2019
Slide 40: Day 1 Transaction Impact
Day 1 Transaction Impact • Legal Close: March 1, 2019 • Transaction Value & Consideration: $15.97 per share plus cash out of options; Aggregate of $1.2 billion ($1.5 billion at announcement) • $2.93 in cash and 0.3013 WSFS shares of WSFS common stock • Price / Tangible Book Value: 130.6% (171.7% est
Slide 41: Transaction Metrics
Transaction Metrics Original Model ($000’s except per share figures) Updated Estimate Aggregate Per Share Per Share • Pro forma TBV per share is 10% WSFS Standalone TBV (2/28/19)(1) $653,777 20.84 $19.97 higher than originally modeled Plus: Equity Consideration 949,968 Less: Total Intangibles Create
Slide 42: Purchase Accounting Fair Value Adjustments
Purchase Accounting Fair Value Adjustments Day 1 Fair Value Adjustments (3/1/2019) ($000’s) Recorded Mark Estimated Balance Sheet Amortization Mark Category % $ Life (Years) Size Method HTM Investments Fair Value $32,370 (4.61%) ($1,491) N/A N/A Core Deposit Intangible 3,027,066 2.81% 85,053 10.00 S
Slide 43: Key Drivers of Goodwill
Key Drivers of Goodwill ($ in millions) Actual to Date Original Model Variance Higher (Lower) Stock Consideration $950 $1,248 ($298) Cash Consideration 228 236 (8) Total Consideration Paid $1,179 $1,485 ($306) • Total consideration reduced due to WSFS common stock price Net Assets Acquired $951 $896
Slide 44: Non-GAAP Reconciliation
Non-GAAP Reconciliation Calculation of WSFS tangible book value: (Dollars in thousands) February 28, 2019 Shareholders' equity $ 837,984 Less: Goodwill and intangible assets 184,207 Tangible book value $ 653,777 The Company uses non-GAAP (Generally Accepted Accounting Principles) financial informati
Slide 45: Investor Relations Contact
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 302-792-6009 stockholderrelations@wsfsbank.com www.wsfsbank.com Rodger Levenson Dominic C. Canuso President and