WSFS Financial (WSFS) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the full year 2021, the company reported core earnings per share of $5.63 and a core return on assets (ROA) of 1.80% [7] - The full-year core pre-provision net revenue (PPNR) was$ 236 million, or 1.58% of average assets [8] - The company experienced a release of approximately $117 million in credit loss reserves from the COVID-related build in 2020 [8] - The anticipated full-year net interest margin (NIM) is expected to be in the range of 3.15% to 3.20% [21] - The efficiency ratio is projected to be in the low 60s, with expectations for the fourth quarter efficiency ratio to be in the high 50s [25][26] Business Line Data and Key Metrics Changes - Commercial loan fundings and pipeline continued to grow in Q4, exceeding pre-COVID levels [10] - Wealth Management and Cash Connect ended the year strong, contributing to the strength and diversity of fee-based businesses [12] - Fee revenue growth is expected in the mid-single digits, with double-digit growth anticipated in Cash Connect and mid-to-high single-digit growth in trust and wealth [22][23] Market Data and Key Metrics Changes - The company exited 2021 with strong momentum, driven by prior franchise investments [9] - 54% of customer deposits are from commercial, small business, and wealth segments, indicating a strong deposit base [11] - The commercial line of credit utilization increased from 33% to 35.8% in Q4, showing improved demand [94] Company Strategy and Development Direction - The company aims to capitalize on unique market presence and execute on revenue and cost synergies from the combination with Bryn Mawr Trust [15] - The strategic focus includes enhancing the wealth management segment, which is expected to become a larger part of the business, contributing nearly 50% of fee-based revenue [66] - The company plans to continue deploying excess liquidity into the investment portfolio to generate yield and earnings [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in loan growth despite the anticipated rising rate environment, expecting mid-to-high single-digit growth excluding residential mortgages [16][17] - The company anticipates a stable economic outlook, with provision costs expected to be between$ 15 million and $25 million [24] - Management noted that the macroeconomic environment remains unpredictable, particularly regarding excess liquidity [19] Other Important Information - The company is on track to meet or exceed the targeted annual cost savings identified with Bryn Mawr Trust, with full realization expected by early 2023 [26] - The tax rate is expected to remain around 24% for the year [27] Q&A Session Summary Question: Interest rate sensitivity and deposit beta assumptions - Management indicated that asset sensitivity has increased with the acquisition of Bryn Mawr Trust, with variable loans now at about 52% of total loans [33] Question: Expectations for loan growth and payoffs - Management expressed confidence that loan payoffs will decrease in 2022 due to a rising rate environment [35] Question: Wealth management growth amid market volatility - Management expects high-single-digit growth in core wealth business despite recent market volatility [44] Question: Securities purchases and growth expectations - The company anticipates a 5% growth in the securities book in 2022, driven by current excess liquidity deployment [42] Question: Employee and customer retention post-acquisition - Management reported no significant attrition among employees or customers following the acquisition of Bryn Mawr Trust [59] Question: Buyback plans and capital ratios - Management confirmed plans to resume share repurchases, targeting a minimum of 25% of annual core earnings [70]