Kelly Mota

Kelly Mota from KBW asked about WSFS Financial Corporation's talent acquisition strategy, specifically if there are other areas beyond the Philly Market President where the company seeks to bolster talent (e.g., product lines, wealth, core bank, or attractive geographies) and opportunities in referral pipelines. She also inquired about margin management, asset sensitivity, deposit base flexibility to absorb rate cuts, and the amounts of floating rate loans and indexed deposits.

Answer

David Burg, CFO, confirmed that WSFS Financial Corporation is actively adding talent in commercial relationship management and the wealth business, citing successful team liftouts and evaluating RIA acquisitions. He emphasized significant untapped potential in referral pipelines across wealth, commercial, small business, and home lending. Regarding the margin, David Burg stated a near-term sensitivity of about 3 basis points per 25 basis point rate cut, but noted that long-term actions (deposit repricing with a low 40s beta, hedging program with $850 million in-the-money floor options, reinvestment of new low-cost deposits, and securities portfolio rollover yielding 4-5 basis points annually) mitigate this to 1-2 basis points. He specified floating rate loans are slightly over 50% (loan beta ~50%, dropping to ~40% with hedges) and indexed deposits are $700-$800 million.

Kelly Mota asked about other areas where WSFS Financial Corporation is looking to add talent beyond the Philadelphia Market President, such as specific product lines, wealth management, the core bank, or attractive growth geographies. She also inquired about the company's ability to manage its net interest margin, specifically the deposit base's flexibility to absorb further rate cuts and potential near-term margin pressure.

Answer

CFO David Burg confirmed ongoing focus on increasing commercial relationship managers and wealth business talent, including successful liftouts and evaluating RIA acquisitions. He also highlighted significant untapped potential in referral pipelines across all business segments. Regarding the net interest margin, Mr. Burg outlined a near-term sensitivity of about 3 basis points per 25 basis point rate cut, but detailed several tools to mitigate this impact over the longer term, including deposit repricing (targeting a low 40s beta), a hedging program with floor options (currently $850 million in the money), reinvesting new low-cost deposits at higher yields, and a securities portfolio rollover providing 4-5 basis points of annual yield pickup. He also stated floating rate loans are a little over 50%, with a loan beta of about 50% (over 40% with hedges), and approximately $700-800 million in index deposits.