Wsfs Financial ((WSFS)) has held its Q3 earnings call. Read on for the main highlights of the call.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
WSFS Financial Corporation’s recent earnings call revealed a generally positive sentiment, highlighting strong financial performance and significant year-over-year growth in key metrics. Despite facing challenges such as flat core fee revenue and loan portfolio issues, the company’s robust capital position and growth in the Wealth and Trust business were seen as positive indicators for future performance. However, potential margin pressures due to rate cuts were noted as a concern.
Strong Core EPS and Return Metrics
WSFS Financial reported a core EPS of $1.40, a core return on assets of 1.48%, and a core return on tangible common equity of 18.7%, all showing improvement from the second quarter. These metrics underscore the company’s strong financial footing and operational efficiency.
Year-Over-Year Growth
The company achieved a 21% increase in core net income, a 6% growth in core PPNR, and a 30% rise in core earnings per share year-over-year. This growth trajectory highlights WSFS’s ability to enhance profitability and shareholder value.
Tangible Book Value Increase
WSFS saw a 12% increase in tangible book value per share year-over-year, reflecting the company’s solid asset management and financial health.
Improved Asset Quality
Asset quality improved significantly, with total net credit costs decreasing by $5.9 million from the prior quarter and NPAs declining by over 30% to 35 basis points. This improvement indicates effective risk management strategies.
Capital Return and Strong Capital Position
The company returned $56.3 million of capital, including $46.8 million in buybacks, and maintained a CET1 capital ratio of 14.39%, exceeding their medium-term target. This strong capital position allows WSFS to continue investing in growth opportunities.
Growth in Wealth and Trust Business
The Wealth and Trust business grew by 13% year-over-year, with substantial growth in institutional services (30%) and Bryn Mawr Trust of Delaware (20%). This growth underscores the company’s successful expansion in these sectors.
Flat Core Fee Revenue
Core fee revenue remained flat quarter-over-quarter due to strategic exits in Wealth and Trust and the Spring EQ earn-out. This indicates a need for strategic adjustments to boost fee income.
Loan Portfolio Challenges
Loans decreased by 1% linked quarter due to the sale of the Upstart loan portfolio and runoff in the Spring EQ portfolio. This highlights challenges in maintaining loan growth amidst strategic portfolio adjustments.
Potential Margin Pressure
The net interest margin is sensitive to rate cuts, with an expected decrease of about 3 basis points per 25 basis point rate cut. This potential margin pressure could impact future profitability.
Forward-Looking Guidance
Looking ahead, WSFS Financial Corporation plans to continue an elevated level of buybacks and will provide a full year 2026 outlook in January. The company reported a core EPS of $1.40, a core return on assets of 1.48%, and a core return on tangible common equity of 18.7%, all improvements from the previous quarter. Despite some strategic exits, core fee revenue grew 5% quarter-over-quarter, and the commercial pipeline remains strong at approximately $300 million.
In summary, WSFS Financial Corporation’s earnings call reflected a positive sentiment with strong financial performance and growth in key areas. While challenges such as flat core fee revenue and potential margin pressures were noted, the company’s solid capital position and growth in the Wealth and Trust business provide a promising outlook for the future.