WSFS Financial Corporation

Thank you for standing by at this time. I would like to welcome everyone to today's Wilmington Savings Fund Society Financial Corporation second quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star one on your telephone keypad. Once again, star one. I'd now like to turn the call over to your host for today, Mr. Art Bacci. Chief Wealth Officer and Interim Chief Financial Officer. Sir, you may begin.

Good morning or good afternoon, and thank you for joining our second quarter 2024 earnings call. Our earnings release and earnings release supplement, which we will refer to on today's call, can be found in the investor relations section of our company website. With me on this call are Roger Levinson, Chairman, President and CEO, Steve Clark, Chief Commercial Banking Officer, and Sherry Krasinski, Chief Consumer Banking Officer. Before I turn the call over to Roger for his remarks on the quarter, I would like to read our safe harbor statement. Our discussion today will include information about our management's view of the future expectations, plans, and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by those forward-looking statements due to risk and uncertainties including, but not limited to, the risk factors included in our annual report on Form 10-K and our most recent quarterly reports on Form 10-Q, as well as other documents we periodically file with the Securities and Exchange Commission. All comments made during today's call are subject to this Safe Harbor Statement. I will now turn the call over to Roger.

Thank you, Art, and everyone else for joining us on the call today. During the second quarter, WSFIS continued to demonstrate the strength of our franchise and diverse business model. Results included a core earnings per share of $1.08, core return on assets of 1.25%, and core return on tangible common equity of 18.83%. Core fee revenue of $86 million was up 13% link quarter and 28% year-over-year, driven by growth across all major fee businesses. Wealth management fee revenue grew 14% link quarter and 16% over the second quarter of 2023, driven by strong results in WSFIS institutional services, higher activity at Bryn Mawr Trust Company of Delaware, and seasonal fees for tax services. Cash Connect has added nearly 8,000 service non-bank ATMs since the third quarter of 2023 by gaining market share from the previously discussed exit of a large industry participant. This, combined with the optimization of its unit and funding mix, increased Cash Connect's ROA to 1.72% in the second quarter. Our capital markets and mortgage businesses increased fee revenue by 13% and 35% respectively over the prior quarter due to increased activity. In addition, we saw growth in both loans and deposits, which increased 6% and 3% respectively on an annualized basis. The core net interest margin was 3.85% for the quarter. The higher income from our continued loan growth and redeployment of cash flows from the securities portfolio offset the increase in our cost of funds resulting from the current interest rate environment and high retention in our maturing CD portfolio as outlined in the release. Asset quality remained stable. NPAs declined to 32 basis points of total assets, while delinquencies dropped to 13 basis points. Problem loans increased primarily due to the downgrades of three C&I loans. Net charge-offs for the quarter were 44 basis points or 17 basis points excluding upstart and leasing portfolios in line with net charge-off levels over the past year. During the quarter, we returned $48.7 million or approximately 70% of earnings to shareholders in the form of $9 million in dividends, and $39.7 million from a mix of routine and incremental stock buybacks. We continue to have substantial capital levels above the well-capitalized regulatory benchmarks, including the full impact of AOCI. Despite the economic uncertainty, WSFIS continued to grow and deliver a strong first half of 2024. we remain well positioned to execute our strategy and produce sustainable top quintile financial performance. Just as importantly, the strength in our earnings, liquidity, and capital positions provides us a cushion to absorb any unexpected changes we might face going forward. I will now turn it over to Art to update you on our mid-year outlook.