Wsfs Financial Corporation · NASDAQ:WSFS
Wsfs Financial — Q3 2021 Earnings Presentation
43 slides from Wsfs Financial's earnings presentation, Oct 21, 2021
Slide 1: WSFS Financial Corporation 3Q 2021 Investor Update
WSFS Financial Corporation 3Q 2021 Investor Update October 2021 1
Slide 2: Forward Looking Statements & Non-GAAP
Forward Looking Statements & Non-GAAP 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 limita
Slide 3: Table of Contents
Table of Contents 3Q 2021 Highlights Page 4 Loan and Deposit Growth Page 5 Excess Liquidity Trends Page 6 Net Interest Margin Trends Page 7 Core Fee Revenue Trends Page 8 ACL Overview Page 9 2021 Core Outlook Page 10 WSFS Franchise and Markets Page 11 Lines of Business Page 19 Selected Financial and
Slide 4: 3Q 2021 Highlights
3Q 2021 Highlights 3Q 2021 3Q 2021 operating results reflect diversified fee revenue, $ in millions (expect per share Reported Core1 reduction in ACL reserves, and strong capital levels amounts) EPS $1.14 $1.19 3Q 2021 Highlights: ROA 1.43% 1.48% • Core ROA1 of 1.48%, compared to 2.59% in 2Q 2021 Ne
Slide 5: Loan and Deposit Growth
Loan and Deposit Growth Significant excess customer liquidity continues due to growth in Customer deposits; Elevated payoffs offsetting strong new loan originations Loans - 3Q 2021 vs 2Q 2021 and 3Q 2020 Deposits - 3Q 2021 vs 2Q 2021 and 3Q 2020 Sep Jun Sep 3Q21 Annualized YOY $ YOY % Sep Jun Sep 3Q
Slide 6: Excess Liquidity Impact and Management
Excess Liquidity Impact and Management Commercial Portfolio: Net New Loan Originations ($mm)1 $600 $429 $467 $434 $398 Excess liquidity impacted by loan growth and $372 $400 $256 $359 $338 investment expansion $200 $- Commercial Portfolio Highlights $(200) • New Commercial loan originations of ~$400
Slide 7: Net Interest Margin Trends
Net Interest Margin Trends NIM impacted by significant customer liquidity, lower PAA, PPP, balance sheet mix, and low funding costs 4.00% 3.93% Average Deposit Cost2 and Loan Yield3 4.6% 0.06% 0.8% 4.4% 3.66%1 Customer Deposit Cost (%) 3.75% 0.6% 4.39% 4.2% 4.33% 4.30% 3.59% 0 4.20% 0.51% 4.16% 4.0%
Slide 8: Core Fee Revenue Trends
Core Fee Revenue1 Trends Diversified business model drives Core Fee Revenue strength 28.8% 26.1% 29.4% 29.1% 29.3% Core Fee Revenue % (including PPP)2 $50 30.0% 27.9% 30.2% 30.0% 29.9% Core Fee Revenue % (excluding PPP)3 $45 • Well-diversified with over 20 discrete $9 $4 lines of business and produc
Slide 9: ACL Overview
ACL Overview Full-Year GDP forecast of 5.5% in 2021 and 4.4% in 20221 3Q 2021 ACL Commentary Full-Year Unemployment forecast of 5.4% in 2021 and 4.0% in 20221 • Coverage ratio of 1.30% excluding PPP loans and 1.58% including GDP Growth by Quarter Unemployment by Quarter 15% 7% estimated remaining cr
Slide 10: Full Year 2021 Core Outlook as of July 22, 2021
Full Year 2021 Core Outlook as of July 22, 2021 Full year core PPNR outlook range of 1.50% to 1.60%; Outlook assumes a gradual and uneven economic recovery; Excludes BMT merger impact, expected to be immaterial to full year 2021 core performance ratios Original Update Commentary Ongoing excess Custo
Slide 11: WSFS Franchise and Markets
WSFS Franchise and Markets 11
Slide 12: The WSFS Franchise – Strategic Opportunity
The WSFS Franchise – Strategic Opportunity At $15.4 billion in assets at 9/30/21, WSFS fills a long-standing service gap in our market between larger regional/national banks and smaller community banks MSA: Philadelphia-Camden-Wilmington 1 Regional Highlights2 2021 • 4th largest metro in the Northea
Slide 13: The WSFS Franchise
The WSFS Franchise 1 Founded in 1832, WSFS is one of the ten oldest banks in the U.S. Largest independent bank & trust company HQ in Delaware-Greater Philadelphia region • $15.4 billion in assets • $27.6 billion in combined AUA2 and AUM2, including $2.5 billion in AUM3 • 112 offices, including 89 br
Slide 14: The WSFS Franchise - Our Markets
The WSFS Franchise - Our Markets Philadelphia-Camden-Wilmington MSA Regional Employment Composition1 Regional Statistics3 Diversity of industries drives stable and favorable employment and economic growth in our markets 6.1M 2.3M 38.9 6.7% Unemployment2 Population Households Median Age Financial Act
Slide 15: The WSFS Franchise – Growth & Performance
The WSFS Franchise – Growth & Performance Millions 1 This is a non-GAAP financial measure and should be considered along with results prepared in accordance with GAAP, and not as a substitute for GAAP results. See Appendix for reconciliation to GAAP financial information Note: GAAP ROA is the follow
Slide 16: The WSFS Franchise – Strategic Partnerships
The WSFS Franchise – Strategic Partnerships Partnering with industry leaders for product diversification, knowledge, and technology best-practices Timeline 2013 – Current 2015 – 2017 2016 – Current 2017 – 2021 2020 – Current 2021 - Current Digital mortgage Digital lending Mobile multi- solution spec
Slide 17: Delivery Transformation
Delivery Transformation Optimization of our physical footprint driving accelerating investments into our digital capabilities, consistent with our brand, to provide best-in-industry solutions and better serve Customers • Maximizing data-driven analytics to deliver personalized campaigns leading to c
Slide 18: Recognitions and Total Shareholder Returns
Recognitions and Total Shareholder Returns Engaged Associates, living our culture, making a better life Total Shareholder Returns1 for all we serve “Top Workplace” fifteen #1 “Top Bank” in Delaware nine years 450% years in a row and #2 in in a row; The News Journal 400% 2021; The News Journal 350% “
Slide 19: Lines of Business
Lines of Business Financial Corporation
Slide 20: 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 21: Retail Banking
Retail Banking Relationship-focused community banking model with 89 banking offices & 610 ATMs1 Branch & ATM Network Digitally Active Banking Lending Mortgage Offering a full range of Over 131K digitally active Providing Customers with a Meeting Customers’ Locations across Delaware, mortgage product
Slide 22: WSFS Wealth
WSFS Wealth Financial Highlights 3Q 2021 total revenue of $20.2 million 3Q 2021 pre-tax income of $10.1 million $27.6 billion in combined Assets Under Management and Administration, including $2.5 billion in AUM1 at 9/30/2021 Total AUM and AUA2 $30 Billions $25 $20 $15 $27.6 $23.1 $10 $20.2 $5 $- 3Q
Slide 23: Cash Connect®
Cash Connect® Leading National Provider of Cash Logistics and Services • Oldest and second largest vault cash provider in the ATM industry - approximately $1.7 billion in vault cash supplied or supported at 9/30/2021 ATM Vault Cash • Approximately 34,000 non-bank ATMs & retail safes in all 50 states
Slide 24: NewLane Finance
NewLane Finance Micro & Small Ticket Commercial Equipment Financing Background: • Co-founded in 2017 by industry veterans, each with over 20 years of experience1 Market Size: Attractive Risk Adjusted Margins • Micro & Small Ticket Equipment Leasing is a $100 billion segment with over 100 thousand eq
Slide 25: Selected Financial and Performance Metrics
Selected Financial and Performance Metrics 25
Slide 26: Balance Sheet Composition at September 30, 2021
Balance Sheet Composition at September 30, 2021 Asset Composition (ex PPP)1 Funding Composition $15.3B $7.9B 19% $12.7B 63% 14% Assets Net Loans YOY Asset Growth Deposits2 Loan-to-Deposit YOY Deposit Growth Construction Money Market 10% & Savings CRE Commerical 25% Leasing 37% 3% Residential Custome
Slide 27: Customer Deposit Costs
Customer Deposit Costs 14.0 0.9% Billions 0.82% 0.8% 12.0 Interest-bearing 1 Noninterest-bearing 0.65% • Disciplined funding cost- 0.7% Interest-bearing cost 1 management through 10.0 interest rate cycles while Total deposit cost 0.6% supporting Customer and 0.62% 0.47% 8.0 deposit retention 0.5% 0.
Slide 28: Diversified and Robust Core Fee Revenue
Diversified and Robust Core Fee Revenue $180 • Core Fee revenue is well diversified Bank Segment 27%2 with over 20 discrete products and 27%2 services within our lines of business $160 Cash Connect $11 $30 Wealth & Trust 2020 Notables: 36%2 $140 Mortgage $6 • Cash Connect fees impacted by the 36%2 $
Slide 29: Credit Metrics (ex PPP)
Credit Metrics (ex PPP) Criticized & Classified Loans / Tier-1 + ACL Delinquencies1 / Gross Loans 60% 1.2% 50% 1.0% 0.8% 40% 33.18% 0.57% 0.6% 30% 0.4% 20.58% 20% 0.2% 10% 0.0% 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 3Q16 4Q16 1Q17 2Q1
Slide 30: Credit Risk Management – Select Portfolios
Credit Risk Management – Select Portfolios • $525.6 million or 6.6% of loan portfolio1 Hotel • 33% Criticized; ~82% of loans include recourse; 100% secured by real estate Loan Modifications1 Portfolio • 65% business and 35% leisure % of $ ($ in thousands) Portfolio • $706.7 million or 8.8% of loan p
Slide 31: Channel Strategy and Digital Adoption
Channel Strategy and Digital Adoption Channel Volumes1 • Branch Net Promoter Score (NPS) held flat at 79.6 200% 163% 166% 170% 164% 172% 170% in 3Q 2021, which ties the highest quarter 175% performance since program inception. Contact 150% Center Net Promotor Score (NPS) improved in 3Q 116% 125% 100
Slide 32: Capital Management - Bank
Capital Management - Bank Disciplined capital management providing flexibility to grow & return profits to shareholders Tier 1 Leverage Ratio Common Equity Tier 1 Capital 16,000 12.5% 1,750 16% Millions Millions 14.59% Millions 10.52% 10.82% 1,550 13.24% 13.20% 14,000 10.31% 10.27% 13.04% 12.69% 14%
Slide 33: Capital Management / Ownership Alignment
Capital Management / Ownership Alignment $200,000 $0.60 $180,000 $0.48 • Executive management incentive compensation $0.47 $0.50 and equity awards aligned with shareholder Annual Dividends Paid per Share $160,000 performance Capital Returned ($ in 000s) $0.42 $140,000 $0.40 ROA, ROTCE and EPS growth
Slide 34: Interest Rate Risk at September 30, 2021
Interest Rate Risk1 at September 30, 2021 WSJ Prime @ 3.25% Balance Sheet Drivers 12-Month IRR2 BPs change NII Impact (%) NII Impact ($) • High % of variable/adjustable rate to total loan portfolio: 51% excluding PPP -100 (3.9%) ($16.3 million) • Approximately half of variable rate loans tied to 30-
Slide 35: WSFS Mission, Vision, Strategy, and Values
WSFS Mission, Vision, Strategy, and Values 35
Slide 36: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information 36
Slide 37: Non-GAAP Information
Non-GAAP Information This presentation contains financial measures determined by methods other than in accordance with accounting principles generally accepted in the United States (GAAP). This presentation may include the following non-GAAP measures: • Adjusted net income (non-GAAP) attributable to
Slide 38: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information Three Months Ended (dollars in thousands, except per share data) September 30, 2021 June 30, 2021 September 30, 2020 Net interest income (GAAP) $ 104,491 $ 106,749 $ 113,048 Core net interest income (non-GAAP) $ 104,491 $ 106,749 $ 113,048 Noninterest income
Slide 39: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information Three Months Ended (dollars in thousands, except per share data) September 30, 2021 June 30, 2021 September 30, 2020 GAAP net income attributable to WSFS $ 54,406 $ 95,667 $ 51,145 Plus/(less): Pre-tax adjustments1 2,873 (775) (718) (Plus)/less: Tax impact of
Slide 40: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information Three Months Ended (dollars in thousands, except per share data) September 30, 2021 June 30, 2021 September 30, 2020 Calculation of return on average tangible common equity: GAAP net income attributable to WSFS $ 54,406 $ 95,667 $ 51,145 Plus: Tax effected
Slide 41: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information For the year ended December 31, (dollars in thousands, except per share data) 2010 2011 2012 2013 Net Income (GAAP) $ 14,117 $ 22,677 $ 31,311 $ 46,882 Adj: Plus/less core (after-tax) 1 420 (2,664) (11,546) (4,290) Adjusted net income (non-GAAP) $ 14,537 $ 20
Slide 42: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information For the year ended December 31, (dollars in thousands, except per share data) 2015 2016 2017 2018 2019 2020 Net interest income (as reported) $ 166,800 $ 193,745 $ 221,271 $ 246,474 $ 444,948 $ 465,955 Adj: FHLB special dividend (808) - - - - - Adj: Tax-equiv
Slide 43: Stockholders or others seeking information may call or write
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