Core EPS: $1.08 per share.
Core ROA: 1.22%.
Core return on tangible common stock: 16.96%.
Loan growth: 5% annual increase.
Deposit growth: 3% annual increase.
Loan-to-deposit ratio: 80% as of September 30th.
Core fee income: $90.1 million, up 5% in the related quarter and 23% year over year.
Wealth management fee income: decreased 3% in the linked quarter but increased 12% year over year.
Cash Connect Revenues: Up 3% in the consolidated quarter and 50% year-over-year.
Core non-interest expense: $163.7 million, up 5% in the linked quarter.
Net interest income growth: 2% in the linked quarter.
Net interest margin: 3.78%, down 7 basis points from 2Q24.
Total net credit costs: $20.1 million, up slightly compared to the prior quarter.
Non-Performing Assets: Increased 12 basis points sequentially to 44 basis points.
Net charge-offs: 58 basis points, an increase of 14 basis points sequentially.
Total shareholders’ equity: up 8% in the consolidated quarter.
Book value per share: increased 8% to $45.37 in the consolidated quarter.
Specific book value per share: increased 13% to $28.56 in the consolidated quarter.
Release date: October 25, 2024
For a complete record of financial statements, see Complete Record of Financial Statements.
WSFS Financial Corp (NASDAQ:WSFS) reported strong financial performance, reporting core EPS of $1.08 per share.
Loans and deposits increased by 5% and 3% respectively on an annualized basis, indicating healthy growth.
Core fee income increased 5% sequentially and 23% year over year, demonstrating strong revenue generation.
The successful completion of the trust accounting system conversion and upgraded client account portal positions WSFS for future growth.
Total shareholders’ equity increased 8% in the trailing quarter, reflecting strong market value growth and profits.
Net interest margin decreased 7 basis points from the prior quarter due to higher deposit prices.
Non-performing loans increased 12 basis points sequentially due to two problem loans.
Net charge-offs increased 14 basis points sequentially, primarily due to bad debt write-downs.
Core non-interest expenses increased 5% in the trailing quarter due to higher unfunded loan commitment reserves and loan workout costs.
Wealth management fee income fell 3% in the trailing quarter, despite increasing 12% year-on-year.
Q: Can you explain the impact of the hedging program on net interest margin (NIM) and how much is expected for each 25 basis point rate hike? A: CFO David Berg explained that the 7 basis point reduction in NIM was due to investment portfolio valuations, higher receivables and higher deposit costs. This hedging program has now been completed for $1.5 billion and reduces asset sensitivity. The hedge will reduce the impact of rate cuts on NIM, which was previously estimated at 5 basis points for every 25 basis points cut.
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Q: What do you think will be the trend in fee income, particularly credit, debit, and ATM fees, from Q4 through 2025? A: David Burg noted that Cash Connect has significantly increased market share. The focus now is on optimizing the network for efficiency. Sales may decline due to lower interest rates, but expenses may also decrease, leading to improved profitability.
Q: What impact did Spring EQ revenue have on fee income this quarter? A: The Spring EQ sale generated approximately $2 million in profit as we met our opening volume goals. Future revenues are dependent on 2025 volumes and are currently under discussion. No new business starts are expected in the fourth quarter.
Q: How should we think about potential net charge-offs (NCOs) given the lumpiness from commercial charge-offs? A: David Berg said the rise in credit metrics was due to some expected and monitored said that the problem was brought about by financing. Net charge-offs were primarily due to two commercial and industrial loans. The full-year outlook was lowered to the lower end of the range, as expected.
Q: What are your expectations for future deposit beta, and what actions have you taken since the rate cut? A: David Berg mentioned aggressive measures like lowering CD prices and shortening tenors. Interest-bearing beta was 51% midway through, and we expect fourth-quarter beta to be in the high teens or 20%. Future beta will depend on the pace of rate cuts and market conditions.
For a complete record of financial statements, see Complete Record of Financial Statements.
This article first appeared on GuruFocus.
