WSFS Financial (US:WSFS)2024-07-26 19:00Financial Data and Key Metrics Changes - Core earnings per share for the quarter was $1.08, with a core return on assets of 1.25% and a core return on tangible common equity of 18.83% [15][7] - Net charge-offs were reported at 30 basis points, excluding Upstart and NewLane, reflecting potential weakness in a small group of problem loans [16] - The company returned approximately 70% of earnings to shareholders, totaling $48.7 million, which included $9 million in dividends and $39.7 million in stock buybacks [4] Business Line Data and Key Metrics Changes - Core fee revenue reached $86 million, up 13% linked quarter and 28% year-over-year, driven by growth across all major fee businesses [21] - Wealth Management fee revenue grew 14% linked quarter and 16% year-over-year, attributed to strong results in institutional services and seasonal fees for tax services [21] - Cash Connect added nearly 8,000 service non-bank ATMs since Q3 2023, increasing its return on assets to 1.72% in Q2 [22] Market Data and Key Metrics Changes - Loans and deposits increased by 6% and 3% respectively on an annualized basis [2] - Deposit growth is projected to be flat year-over-year due to competitive pressures and the natural volatility of certain deposits [23] - The interest-bearing deposit beta is expected to be less than 55%, reflecting a shift in deposit mix and repricing of CDs [23] Company Strategy and Development Direction - The company remains well-positioned to execute its strategy and deliver sustainable top quintile financial performance [5] - The management assumes no interest rate cuts in 2024, using a no-cut scenario as a baseline for business planning [8] - The company continues to target a long-term commitment to return approximately 35% of net income through dividends and stock buybacks [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to absorb unexpected changes due to strong earnings, liquidity, and capital positions [5] - The outlook for the second half of 2024 remains optimistic, with expectations for core ROA around 1.25% [7] - The company is monitoring potential losses from problem loans closely, indicating a cautious approach to the current economic environment [36] Other Important Information - Asset quality remained stable, with non-performing assets declining to 32 basis points of total assets and delinquencies dropping to 13 basis points [3] - The company has substantial capital levels above regulatory benchmarks, including the full impact of accumulated other comprehensive income (AOCI) [4] Q&A Session Summary Question: What is the outlook for fee revenue, particularly bailment fees? - Fee revenue was strong this quarter, with expectations for continued growth in the back half of the year [43] Question: Can you provide insights on the increase in problem loans? - The increase in problem loans was due to downgrades in three C&I loans, which are being closely monitored [92] Question: What are the expectations for net charge-offs in the second half of the year? - Net charge-off expectations remain unchanged, with potential increases depending on the performance of monitored loans [47] Question: How is the competitive landscape affecting deposit growth? - The competitive landscape has eased slightly, but the company remains focused on retaining its customer base [49] Question: What is the company's strategy regarding stock buybacks? - The company maintains its philosophy of returning 35% of net income through dividends and stock buybacks, with any incremental buybacks dependent on financial results and economic conditions [51]