WSFS Financial Corporation (NASDAQ:WSFS) 2024 Q1 Financial Results Call Record April 26, 2024
WSFS Financial Corporation wasn't among the 30 most popular stocks among hedge funds at the end of the third quarter (see the details).
operator: Thank you for your patience. Welcome to WSFS Financial Corporation's first quarter earnings conference call. All lines are set to mute to prevent ambient noise. There will be a question and answer session after the speakers' statements. [Operator Instructions] thank you. I would now like to turn the call over to today's host, Art Bach, Chief Wealth Officer and Interim Chief Financial Officer. Teacher, may I begin?
Art badge: Thank you, Rob. Hello. Thank you for participating in our 2024 first quarter financial results briefing. The Company's financial statements and financial statement supplements referenced during today's conference call are available on the Investor Relations section of the Company's website. Also participating in today's conference call is Roger Levenson, Chairman, President and Chief Executive Officer. Steve Clark, Chief Commercial Banking Officer; Shari Kruczynski Chief Consumer Banking Officer; Before I ask Mr. Roger to comment on this quarter, I would like you to read our safe harbor statement. Today's discussion includes information regarding management's beliefs about our future expectations, plans and prospects that constitute forward-looking statements.
Actual results may differ from historical results or forward-looking statements due to risks and uncertainties, including, but not limited to, the risk factors contained in our Annual Report on Form 10-K and our most recent Quarterly Report on Form 10. Results may differ materially from those shown in the description. -Q, and other documents we periodically file with the Securities and Exchange Commission. All comments made during today's conference call are subject to the safe harbor statement. I hand over the phone to Roger.
Roger Levenson: Thank you, Art, and everyone else for joining us on the call today. WSFS got off to a strong start to his 2024, continuing to demonstrate the strength of its franchise and diversified business model. Our first quarter results included core earnings per share of $1.11, core return on tangible common capital of 19.2% and core return on total assets of 1.31%. Our operating results continue to reflect the benefits of our investments and our unique competitive market position. Highlights of the quarter included gross loan growth of 2% quarterly or 7% annualized. This growth was spread across our commercial mortgage, consumer and C&I books. Quarter-end customer deposits increased 3% sequentially, after excluding expected trust activity and short-term commercial deposit withdrawals.
Average deposit balances increased at an annual rate of 4.9% in the consolidated quarter. Deposits continue to be well diversified across our commercial, consumer, property and trust businesses, with an average of 30% of deposits in interest-free demand accounts. Core net interest margin for the quarter was 3.84% and interest-bearing deposit beta was 47%. Our average cost of funds increased by 17 basis points during the quarter, but the increase occurred primarily at the beginning of the quarter and the rate of increase in cost of funds decreased significantly in March. Excluding $3.5 million in income from Spring EQ's equity position in the fourth quarter of 2023, core fee income increased 2.7% in the related quarter. Please note that Spring EQ was acquired by him at the end of 2023, so no income from this investment will be recognized.
The core fee income ratio for the first quarter was 30.3%. Core efficiency rate for the quarter was 58.6%. Non-interest expense for both the fourth quarter of 2023 and the first quarter of this year includes a number of non-recurring adjustments. Normalizing these items, expenses increased $7.2 million, or 5%, in the related quarter, with Cash Connect's external financing costs accounting for $5.2 million of the increase. Cash Connect added 4,336 non-bank ATMs to its service during the quarter due to the exit of the major industry participants mentioned above. We expect further opportunity for sales growth in the second quarter. Expenses increased in the quarter due to one-time onboarding costs and increased use of external funding. Asset quality is stable.
Problem loans and delinquencies remained flat at 4.41% and 81 basis points of total loans, respectively. NPAs declined to 33 basis points of total assets. This is primarily due to the resolution of two of his C&I debt defaults. Net charge-offs decreased to 27 basis points of average gross loans, including net recoveries excluding startups and lease portfolios. ACL coverage was 1.48% as we continued to build reserves for potential future credit losses. In summary, we are well positioned to achieve his first financial performance in the top five in 2024. The company is on track to meet his full-year guidance announced in January. thank you. We will now have an art facilitation Q&A.
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