WSFS Financial Corporation · NASDAQ:WSFS
WSFS Financial — Q3 2012 Earnings Presentation
32 slides from WSFS Financial's earnings presentation, Dec 7, 2012
Slide 1: WSFS Financial Corporation
WSFS Financial Corporation 1
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 [email protected] www.wsfsbank.com Mark Turner Stephen A. Fowle Rodger Levenson President & CEO
Slide 3: Forward-Looking Statements
Forward-Looking Statements This report contains estimates, predictions, opinions, projections and other statements that may be interpreted as “forward-looking statements” as that phrase is defined in the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, r
Slide 4: Quarter Highlights
Quarter Highlights Review of 3Q 2012 Results • Earnings reached highs last seen before the Great Recession – $1.06 per share; 51% increase over 3Q 2011 and strongest since 2Q 2008 – 0.95% ROA; strongest level since 4Q 2007 – Components – Helped by $2.6 million or $0.23 EPS, net, of notable items – M
Slide 5: Quarter Highlights
Quarter Highlights • Credit quality favorably impacted by 2Q “Asset Strategies” – statistics compare well to industry norms – Nonperforming assets improved for sixth consecutive quarter to 1.34% of assets – Classified assets declined to 43.4% tier 1 capital + ALLL – Delinquency stands at 1.27% of lo
Slide 6: The WSFS Franchise
The WSFS Franchise • Largest independent bank headquartered in Delaware – $4.3 billion in assets – $15.8 billion in fiduciary assets, includes $1.1 billion in assets under management – 51 offices • Founded in 1832, WSFS is one of the ten oldest banks in the U.S. • Major business lines – Retail – Com
Slide 7: The WSFS Franchise
The WSFS Franchise Market opportunities from significant disruption/distraction among major competitors Delaware Traditional Banks’ Deposits (June 30, 2012)* Rank Institution Branch Total Deposits in Total Market ’11-’12 Count Market Share Growth 1 M&T Bancorp (NY) 43 5,776,681 32.24% -11.92% 2 PNC
Slide 8: The WSFS Franchise
The WSFS Franchise Deposit Growth Comments 125 % 120 Customer Funding Growth 115 110 • Core deposits increased $233.7 million, or 12% 105 from 3Q 2011 • Customer funding increased $157.0 million or 6% from 100 3Q 2011 95 • Core deposits are $2.2 billion or 75% of customer funding • Higher cost CD’s
Slide 9: The WSFS Franchise
The WSFS Franchise Organizational Focus • Substantially improving credit quality • Focus on increasing operating earnings by harvesting investments made during prior several years • Managing capital prudently and thoughtfully • Goal – become solidly high performing (top quintile) - - Making su
Slide 10: Improving Credit Quality
Improving Credit Quality Improving Asset Quality Metrics Nonperforming Assets to Total Assets Comments 3Q 2012 compared to 2Q 2012: 2.31% of Assets 1.34% of Assets • NPA’s decreased 15% to 1.34% of assets 3.00% – And decreased .97% from 3Q 2011 OREO 2.50% • ALLL remains at a strong 1.69% of loans TD
Slide 11: Improving Credit Quality
Improving Credit Quality ALLL / Total Loan Delinquencies (includes nonperforming) ALLL / Total Classified Assets 140% 25% 128% 133% 22.6% 120% 23% 21.0% 100% 20% 17.6% 80% 18% 66% 60% 15% 03/12 06/12 09/12 03/12 06/12 09/12 ALLL / Total Criticized Assets ALLL / Total Nonperforming Loans 17% 140% 16.
Slide 12: Improving Credit Quality
Improving Credit Quality Peer Analysis NPA / Assets Nonaccrual Loans / Loans 3.00 3.50 3.00 2.50 2.50 2.00 2.00 1.50 1.50 1.00 1.00 2 ‐ 10 Peers WSFS Local Peers 2 ‐ 10 Peers WSFS Local Peers Texas Ratio (NPA + 90D / Tang Equity + LLR) 30.00 25.00 20.00 15.00 10.00 2 ‐ 10 Peers WSFS Local Peers 12
Slide 13: Increasing Earnings
Increasing Earnings ROA Progression Comments 1.00% During 3Q 2012 compared to 3Q 2011: 0.95% 0.90% 0.85% • Improved 30 basis points or 46% to 0.95% 0.80% • Excluding securities gains 0.75% improved 25 basis points or 53% to 0.70% 0.72% 0.65% • Highest return since 4Q 2007 0.60% 0.55% 0.50% 09/11 12/
Slide 14: Increasing Earnings
Increasing Earnings … reflect improved fee income1, Comments $20 Fee Income – 3Q 2012 compared to 3Q 2011 $19 $18 • Fee income increased $1.3 million from 3Q $17 2011 reflecting growth in all segments of $16 business • And due to improved income from mortgage $15 banking activities and loan fee inco
Slide 15: Increasing Earnings
Increasing Earnings and improved credit costs, Comments $12 Total Credit Costs – 3Q 2012 compared to 3Q $10 2011 $8 • Decreased significantly, reflecting improved $6 credit quality and the “Asset Strategies” $4 impact in 2Q 2012 $2 $0 09/11 12/11 03/12 06/12 09/12 Provision Other Credit Costs partia
Slide 16: Increasing Earnings
Increasing Earnings Normalized EPS Trend1 Comments $0.90 $0.80 • Positive normalized EPS and consistently increasing for eleven $0.70 consecutive quarters $0.60 $0.50 • Despite significant franchise investments $0.40 • Driven by strong revenue growth from: - Market share gains and growth in fee $0.3
Slide 17: Managing Capital: Bank-Level Capital Ratios
Managing Capital Bank-Level Capital Ratios (thousands) $500,000 $458,237 Total Risk-Based Capital $434,301 Well Capitalized Requirement $409,034 $400,000 $359,834 $304,679 $300,000 $200,000 $100,000 12/08 12/09 12/10 12/11 09/12 Total Risk-Based Capital 11.00% 12.24% 13.62% 13.43% 14.28% Tier 1 Capi
Slide 18: Managing Capital: Holding Company Capital
Managing Capital Holding Company Capital • Holding Company debt raise of $55.0 million during the quarter • Significant excess capital vs. – Regulatory well capitalized – Internal targets – Stress test minimum • $61.2 million in cash available at Holding Company • Our continuing strong intention is
Slide 19: Goals
Goals Solidly high performing by end of 2015: • ROA of 1.2% - 1.3% • Tangible common equity of 7.5% • Margin of 3.75% • Fee revenue – 40% of total revenue • Efficiency ratio – High 50’s 19
Slide 20: Alignment
Alignment • Near 15% insider ownership* • Executive management bonuses and equity awards based on bottom- line performance – ROA, ROE, EPS growth * As defined in our most recent proxy, plus WSFS 401(k) 20
Slide 21: Appendices
Financial Corporation
Slide 22: Appendix – Table of Contents
Appendix – Table of Contents Section Pg # • Appendix 1 – Management Team 23-24 • Appendix 2 – Business Model 25-26 • Appendix 3 – Balance Sheet – Assets, Funding, MBS 27-28 • Appendix 4 – Non-GAAP Financial Information 29-31 • Appendix 5 – Senior Note Offering 32 22
Slide 23: Appendix 1 – Management Team
Appendix 1 – Management Team • Mark A. Turner, 49, 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 24: Appendix 1 – Management Team
Appendix 1 – Management Team • Thomas W. Kearney, 64, Executive Vice President and Chief Risk Officer has been with WSFS since 1998. Mr. Kearney holds a Bachelor’s degree in Business Administration (Finance and Accounting) from Drexel University. He also holds the professional designations of Certif
Slide 25: Appendix 2 – Business Model
Appendix 2 – Business Model 25
Slide 26: Focused Business Model
Appendix 2 – Business Model Focused Business Model Delivering Creating Building Engaged Stellar Customer Associates Shareholder Service Advocates Value • Consistently ranked in the • Gallup survey shows • Customer advocacy survey • Builds sustainable real top quintile of all business WSFS best among
Slide 27: Appendix 3 – Balance Sheet: Asset Composition
Appendix 3 – Balance Sheet Asset Composition – September 30, 2012 Assets - $4.3 billion Net Loans - $2.7 billion Non-Earning Assets 4% BOLI 1% C&I 54% Net Loans Investments 64% Consumer 22% 10% Residential Mortgage 10% Cash CRE Connect 22% Other 9% 2% RCLD CCLD 1% 1% RCLD = Residential Construction
Slide 28: Appendix 3 – Balance Sheet: Funding Composition
Appendix 3 – Balance Sheet Funding Composition – September 30, 2012 Liabilities & Equity - $4.3 billion Customer Funding - $2.9 billion Total Equity Interest 10% DDA 14% Money Market & Customer Savings Funding 40% Borrowings 69% 14% Non-interest DDA 21% Time Sweeps 1% Wholesale 24% Deposits 6% Other
Slide 29: Appendix 4 – Non-GAAP Financial Information
Appendix 4 – Non-GAAP Financial Information Non-GAAP Reconciliation: Three months ended Sept 30, June 30, Sept 30, 2011 2012 2012 Interest Income (GAAP) $ 32,180 $ 32,078 $ 30,893 Noninterest Income (GAAP) 16,924 28,992 19,748 Less: Securities gains (1,935) (13,310) (2,451) Less: Unanticipated BOLI
Slide 30: Appendix 4 – Non-GAAP Financial Information
Appendix 4 – Non-GAAP Financial Information 3rd 4th 1st 2nd 3rd Quarter Quarter Quarter Quarter Quarter 2011 2011 2012 2012 2012 Noninterest Expense $32,400,000 $33,000,000 $31,000,000 $33,000,000 $32,000,000 Less: non-routine items Sale of federal government’s preferred shares (costs) (321,000) Reg
Slide 31: Appendix 4 – Non-GAAP Financial Information
Appendix 4 – Non-GAAP Financial Information Securities ATM Non-Routine (Gains) Loss BOLI Proforma EPS Losses (Recovery)* Income Bulk Sale EPS 1st Quarter 2010 ($0.03) $0.44 $0.41 2nd Quarter 2010 $0.36 ($0.02) $0.34 3rd Quarter 2010 $0.94 ($0.14) ($0.38) $0.42 4th Quarter 2010 $0.16 $0.07 $0.23 1st
Slide 32: Appendix 5 – Senior Note Offering
Appendix 5 – Senior Note Offering A Senior Note offering was priced on August 21, 2012 • Priced at $55.0 million • Rate of 6.25% • Term of 7 years due September 1, 2019 – Optional Redemption in 5 years on September 1, 2017 • Intended use of net proceeds: – General corporate purposes, including to su