WSFS Financial (US:WSFS)2025-04-25 18:02Financial Data and Key Metrics Changes - The company reported core earnings per share of $1.13, core return on assets (ROA) of 1.29%, core pre-provision net revenue (PPNR) of $104.6 million, and core return on tangible common equity of 16.97%, all showing improvements from the prior quarter [5][10] - Net interest margin expanded by eight basis points to 3.88%, reflecting a reduction in total funding cost by 15 basis points to 1.77% [5][6] - Total net credit costs increased to $17.6 million, up $8.9 million from the previous quarter, with net charge-offs at $24.6 million [9] Business Line Data and Key Metrics Changes - Core fee revenue grew by 6% year over year, driven by a 19% increase in wealth and trust services [6] - Institutional Services showed strong year-over-year growth, contributing to higher deal flow [6] - Cash Connect fees declined quarter over quarter due to seasonally lower volumes, but profit margins improved through expense and pricing offsets [7] Market Data and Key Metrics Changes - Client deposits declined by 1% linked quarter but increased by 4% year over year, with non-interest bearing deposits up by 6% year over year [8] - The loan to deposit ratio remained stable at 77%, providing flexibility for future growth [8] Company Strategy and Development Direction - The company plans to target a CET1 ratio of 12% in the medium term, with a gradual glide path over two to three years [11][56] - The company is committed to returning capital to shareholders, having returned $62.6 million in capital during the first quarter, including $53.8 million in buybacks and a 13% increase in the quarterly dividend [10][11] Management's Comments on Operating Environment and Future Outlook - Management noted that clients are cautious about expansion due to macroeconomic uncertainty, leading to postponed investments [32][33] - The company remains engaged with clients and is monitoring the overall environment closely, indicating a stable outlook despite current challenges [9][20] Other Important Information - The company has a strong capital position with a CET1 ratio of 14.1% and TCE of 8.63%, significantly above regulatory targets [10] - The company is actively managing its net interest margin through various tools, including deposit beta management and optimization of wholesale funding [45][46] Q&A Session Summary Question: Why was there no updated guidance in the presentation? - Management stated that it is typical to update guidance after the second quarter due to the volatility of the environment, and there is nothing to read into the absence of guidance this quarter [16][17] Question: What is the outlook for net charge-offs? - Management indicated that the increase in charge-offs was primarily due to a one-off item and that the rest of the portfolio is performing as expected [19][20] Question: How should expenses be viewed going forward? - Management provided insights on seasonal impacts and one-time items affecting expenses, suggesting a run rate between the first and fourth quarters [21][24] Question: What is the outlook for commercial growth? - Management noted that clients are cautious about expansion due to market volatility, but the pipeline remains consistent [32][33] Question: How are deposit beta expectations evolving? - Management exceeded their initial goal for deposit beta, reaching 38% this quarter, and plans to continue pushing higher [44][45] Question: What is the medium-term target for CET1? - Management indicated a two to three-year glide path to a 12% CET1 target, with discretion to adjust based on macroeconomic conditions [56][57] Question: How does the macro environment impact buyback decisions? - Management expressed confidence in their capital position but acknowledged the need to monitor the macro environment for any changes [59][60]