Yahoo Finance WSFS Financial Corp (WSFS) Q1 2024 Earnings Call Transcript Highlights: Key Financial Metrics ...
Earnings Per Share (EPS): Core EPS of $1.11.
Return on Tangible Common Equity: 19.2%.
Return on Assets: 1.31%.
Gross Loan Growth: 2% linked quarter, 7% annualized.
Customer Deposits Growth: Up 3% linked quarter, excluding certain activities.
Average Deposit Balances: Increased by 4.9% annualized linked quarter.
Net Interest Margin: Core net interest margin at 3.84%.
Core Fee Revenue: Increased by 2.7% linked quarter, core fee revenue ratio at 30.3%.
Efficiency Ratio: Core efficiency ratio at 58.6%.
Non-Interest Expenses: Increased by $47.2 million or 5% linked quarter.
Asset Quality: Stable with nonperforming assets (NPAs) at 33 basis points of total assets.
Net Charge-Offs: Decreased to 27 basis points of average gross loans.
Allowance for Credit Losses (ACL): Excluding specific portfolios, ACL coverage at 1.48%.
Release Date: April 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you share where the market share for Cash Connect is mostly coming from and what the market share gain opportunity can be? A: Arthur Bacci, Executive Vice President, Chief Wealth Officer and Chief Financial Officer, explained that the market share is primarily coming from U.S. Bancorp, which exited in the fourth quarter of the previous year. WSFS added about 12,000 units between the first and fourth quarters of last year, capturing roughly 75% to 80% of the market share they anticipate onboarding. He also mentioned that the transition involved using external funding sources to ensure smooth operations, which temporarily affected profitability.
Q: With customer originations on pause with Upstart, what are the expectations for the portfolio, and what impact might this have on net charge-off guidance? A: Arthur Bacci noted that WSFS is well-reserved for potential losses in the Upstart portfolio. With no significant new originations, the provision under CECL will likely decline, but charge-offs are expected to remain level for a few more quarters as the portfolio size decreases. Rodger Levenson, CEO, added that the pause is due to the portfolio not meeting expected returns, particularly in cross-selling opportunities.
Q: Could you discuss your M&A appetite, particularly regarding the depository side? A: Rodger Levenson stated that WSFS is not focusing on traditional bank M&A for deposit acquisition due to their strong position for significant organic growth. However, they remain open to investing in business areas like wealth and commercial sectors where they see good return opportunities.
Q: Regarding wealth management, can you clarify the impact of the adjustment in deferred revenue on this quarter's earnings? A: Arthur Bacci clarified that a one-time item of approximately $1.3 million in overstated deferred revenue affected this quarter's earnings. This adjustment is not expected to recur, and the wealth management pipeline remains robust.
Q: What is the outlook for the net interest margin (NIM) given the current excess liquidity and interest rate environment? A: Arthur Bacci indicated that the NIM was primarily impacted by an increase in the cost of deposits and funding earlier in the quarter. He expects the NIM to plateau in the second quarter and then improve in the second half of the year as funds from maturing mortgage-backed securities are redeployed at higher yields.
Q: How much repricing opportunity do you see on fixed-rate loans in the near term that could influence loan yield? A: Arthur Bacci responded that there is no significant repricing opportunity in the fixed-rate commercial loan book, and yields should remain consistent unless there are changes in Federal rates due to the variable rate nature of a portion of the loan book.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
