Wsfs Financial Corporation · NASDAQ:WSFS
Wsfs Financial — Q3 2019 Earnings Presentation
36 slides from Wsfs Financial's earnings presentation, Nov 5, 2019
Slide 1: WSFS Financial Corporation Q3 2019 Investor Update
WSFS Financial Corporation Q3 2019 Investor Update November 5, 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 3Q 2019 Results Page 5 Net Interest Margin Page 8 Outlook Page 9 The WSFS Franchise Page 12 Selected Financial Information Page 17 Appendix 1 – Management Team Page 29 Appendix 2 – Non-GAAP Financial Information Page 31 Appendix 3 – Reconciliation of Conversion-related Reclassifica
Slide 5: 3Q 2019 Reported Financial Results
3Q 2019 Reported Financial Results 3Q 2019 Reported Results: • EPS $1.02 • NIM 4.38% • ROA 1.72 % • Fee Income / Total Revenue 34.0% • ROTCE (1) 17.51% • Efficiency Ratio 59.7% • Net revenue (which includes net interest income and noninterest income) was $183.2 million for 3Q 2019, an increase of $7
Slide 6: 3Q 2019 Highlights
3Q 2019 Highlights 3Q 2019 Core (1) Results: • EPS $0.98 • NIM 4.38% • ROA 1.66% • Fee Income / Total Revenue 25.3% • ROTCE 16.93% • Efficiency Ratio 55.9% Strong Operating Results: ($ in millions) 3Q19 3Q18 Change • Reflects strong organic and acquisition growth, including a Core(1) Net Revenue $57
Slide 7: 3Q 2019 Loan and Deposit Growth
3Q 2019 Loan and Deposit Growth 3Q 2019 vs 2Q 2019 % Sep June $ % Annlzd Loans ($ in millions) 2019 2019 (1) Growth Growth Growth C & I Loans $ 3,389 $ 3,421 (32) -1% -4% Commercial Mortgages 2,263 2,281 (18) -1% -3% • Loan growth impacted by Construction Loans 512 539 (27) -5% -20% anticipated decl
Slide 8: Net Interest Margin
Net Interest Margin • 4Q 2019 NIM Outlook lower than 5.00% 3Q 2019 due to anticipated 4.05 – 4.10 – 4.30 – additional 25bps fed funds rate 4.30% 4.68% 4.38% 4.75% 4.10% 4.20% 4.40% decrease in October, or 75bps in 0.00% total for 2019. Also, 4Q 2019 does 0.22% not assume incremental Beneficial 4.50%
Slide 9: Core Return on Average Assets - 2019-2021 Strategic Plan
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 Beneficial cl
Slide 10: Compelling Strategic Growth Opportunity
Compelling Strategic Growth Opportunity At $12.3 billion in assets at 9/30/19, WSFS 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 Total Deposits Ma
Slide 11: 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 – Minimum
Slide 12: The WSFS Franchise
The WSFS Franchise We Stand For Service
Slide 13: The WSFS Franchise
The WSFS Franchise • Largest independent bank and trust co. HQ in the Del. Valley (1) • $12.3 billion in assets • $20.2 billion in fiduciary assets, 25 miles including $2.6 billion in assets under management • 127 offices • Founded in 1832, WSFS is one of the ten oldest banks in the U.S. • Major bus
Slide 14: The WSFS Franchise – Diversified & Robust Fee Income
The WSFS Franchise – Diversified & Robust Fee Income Trust & Wealth 36% $140 Cash Connect 35% • Fee income is well diversified $120 Bank Segment $41 with over 20 discrete lines of business and products within our 34% $36 three segments Total Core Fee Income (1) $100 35% $27 • Strong historical growt
Slide 15: The WSFS Franchise – WSFS Wealth
The WSFS Franchise – WSFS Wealth A Full-Service Wealth Management Offering Net Revenue of $16.8 million in 3Q 2019 Pre-tax Income of $7.6 million $20.2 billion in fiduciary assets, including $2.6 billion in assets under management 15
Slide 16: The WSFS Franchise – Cash Connect
The WSFS Franchise – Cash Connect®(1) Leading National Provider of Cash Logistics ATM Vault Cash $11.6 million in net revenue (fee income less funding costs) and $1.8 million in pre-tax income in 3Q 2019 • 5 year CAGR(2) for net revenue is 13% Equipment Smart Safes Services Over $1.1 billion in vaul
Slide 17: Selected Financial Information
Selected Financial Information
Slide 18: WSFS Bank Asset Composition
The WSFS Franchise - WSFS Bank Asset Composition – September 30, 2019 Assets $12.3 Billion; Net Loans $8.5 Billion 40% Other Non- C&I Earning • Commercial loans Assets 10% comprise 75% of the BOLI loan portfolio <1% Other Construction 6% • C&I (including owner- occupied real estate), Net Loans Consu
Slide 19: WSFS Bank Funding Composition
The WSFS Franchise - WSFS Bank Funding Composition – September 30, 2019 Total Funding – $12.3 Billion; Customer Deposits – $9.3 Billion • Core deposits represent 86% of total customer deposits Time 14% Non- interest Equity 15% Customer DDA 25% • Non-interest and very Deposits 76% Money low interest
Slide 20: Commercial Loan Portfolio Composition
Commercial Loan Portfolio Composition Outstanding Balances as 9/30/19 No industry or CRE concentrations in the loan portfolio C&I & Owner Occupied CRE CRE Investor & Construction Flex, Warehouse, Self- Accommodation and Special Use & Other Mixed Use Storage, General Food Services 7% 1% Industrial Ot
Slide 21: Interest Rate Risk
Interest Rate Risk As of 9/30/19 (WSJ Prime @ 5.00%) 12 month NII NII BPS Change(1) % Impact $ Impact -100 (2.0%) -8.9mm -50 (0.9%) -3.8mm -25 (0.5%) -2.0mm +25 0.5% +2.1mm +50 1.0% +4.3mm +100 2.0% +8.6mm Balance Sheet Drivers • High % of variable/adjustable rate to total loan portfolio: 50% – Appr
Slide 22: Overall Credit Trends Remain Stable
Overall Credit Trends Remain Stable Criticized & Classified Loans / Tier-1 + ALLL Delinquencies (1) / Gross Loans 50% 2.00% High point during the cycle 1.80% High point during 45% 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 23: 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 24: 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) $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 12/14 12/15 12/16 12/17 12/18 9/19 Total Risk-Based Capital Well Capitalized Requirement 12/14 12/15 12/16 12/17 12/18 9/19
Slide 25: 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 is over 2.5% • Board of Directors and Executive Management ownership guidelines in place and followed • In 3Q 201
Slide 26: Business Model and Total Shareholder Returns
Business Model and Total Shareholder returns Total Shareholder Returns2 NASDAQ WSFS Bank Index 1 year -5.44% -8.00% 3 year 23.99% 28.81% 5 year 92.41% 62.48% 10 year 446.60% 165.67% (1) (2) Completed by the Gallup Organization, as of December 31, 2018. Per Bloomberg; closing price as of September 30
Slide 27: Business Model
Business Model WSFS&.. MISSION We Stand For Service® VISION We envision a day when everyone says “| can’t imagine a world without WSFS.” STRATEGY Engaged Associates, living our culture, making a better life for all we serve. VALUES At WSFS we: Do the right thing + Serve others Are welcoming, open an
Slide 28: Appendices
Appendices WSFS Financial WSFS bank We Stand For Service
Slide 29: 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 Executive Vice President (EVP) and Chief Operating Officer from July 2017 to December 2018, WSFS’
Slide 30: Appendix 1 – Management Team
Appendix 1 – Management Team Steve Clark, 62, 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 31: Appendix 2 – Non-GAAP Financial Information
Appendix 2 – Non-GAAP Financial Information Tangible common book value per share and Tangible common equity to tangible assets End of Period September 30, December 31, December 31, December 31, December 31, December 31, (dollars in thousands, except per share data) 2019 2018 2017 2016 2015 2014 Tota
Slide 32: Appendix 2 – Non-GAAP Financial Information
Appendix 2 – Non-GAAP Financial Information Core ROA and Core EPS Three months ended (dollars in thousands, except per share data) September 30, 2019 June 30, 2019 September 30, 2018 GAAP net income attributable to WSFS $ 53,882 $ 36,200 $ 38,935 Plus (less): Pre-tax adjustments (1) (2,467) 14,731 (
Slide 33: Appendix 2 – Non-GAAP Financial Information
Appendix 2 – Non-GAAP Financial Information Return on average tangible common equity and Core return on average tangible common equity End of period (dollars in thousands) September 30, 2019 June 30, 2019 September 30, 2018 GAAP net income attributable to WSFS $ 53,882 $ 36,200 $ 38,935 Plus: Tax-ef
Slide 34: Appendix 2 – Non-GAAP Financial Information
Appendix 2 – Non-GAAP Financial Information Reconciliation of Core Efficiency Ratio Three months ended (dollars in thousands) September 30, 2019 June 30, 2019 September 30, 2018 Net interest income (GAAP) $ 120,833 $ 123,232 $ 63,097 Core net interest income (non-GAAP) $ 120,833 $ 123,232 $ 63,097 N
Slide 35: Appendix 3 - Reconciliation of conversion-related reclassifications
Appendix 3 - Reconciliation of conversion-related reclassifications Loans • June 30, 2019 reported As reported Conversion Adjusted (Dollars in millions) June 30, 2019 reclassifications June 30, 2019 balances for certain loan and Commercial & Industrial $ 3,465 $ (44) $ 3,421 deposit categories have
Slide 36: 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 President and