WSFS Financial Corp. (NASDAQ:WSFS) Q3 2020 Earnings Conference Call - Final Transcript

Oct 23, 2020 • 01:00 pm ET

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WSFS Financial Corp. (NASDAQ:WSFS) Q3 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] Our first question comes from Frank Schiraldi with Piper Sandler.

Analyst
Frank Schiraldi

Good afternoon.

Executive
Rodger Levenson

Hi, Frank.

Analyst
Frank Schiraldi

Hey. Roger, just wanted to follow up on your comments on the buyback. You certainly used the word aggressive. And if I look at your presentation, you guys talk about close to $500 million in excess capital that you either have on the books or you're going to generate over the next five quarters. And I guess, acquisition seem kind of unlikely. I would imagine net growth is difficult, just given the rundown in the Beneficial portfolio. So, is buybacks at this point the primary use of capital? And $500 million in excess capital, I guess, would be even greater than that 15% buyback that you have outstanding here?

Executive
Dominic C. Canuso

Yeah. So, Frank, maybe a little bit of high level context. I think, certainly right now, buybacks is one of the primary uses of capital. We feel, as we said in the second quarter, very well reserved for the economic environment and the potential losses that could occur with that. So we don't see that certainly based on everything that's going on now. But I do think there is continued uncertainty out there about the path of the recovery. And so, optionality on that front as well as optionality for opportunities is also part of the thought process on the capital deployment.

Clearly we just approved the 15%. But when we put the share repurchase suspension in place in the second quarter, that gives us a fair bit of headroom here over the next several quarters. But it will be a continual process of evaluating all those factors in terms of other opportunities that might present themselves.

Analyst
Frank Schiraldi

And then, just a follow-up, if I could, on the migration into problem assets in the quarter. I know, if you look at the presentation, certainly you breakout pieces like restaurant and retail and go back to last quarter, I guess, and pull out where the migration was this quarter, specifically in those categories. I think the hotel stuff has already been completed, if I recall, in 2Q. So just wondering if you could maybe talk about what were the greatest driver within those portfolios. And then maybe if there was a driver outside of those portfolios of the migration in the quarter.

Executive
Dominic C. Canuso

Sure. Thanks, Frank. Steve, do you want to talk about the process that we entailed in the third quarter and where that left the metrics?

Executive
Steve Clark

Sure, would be happy to. Hello, Frank. So, yeah, the third quarter was really a continuation of what we had started in the second quarter. And Frank, you're correct, we did complete our risk rating review of 100% of the hotel book in the second quarter. And we were about halfway through the risk rating review for the other high-risk kind of category. So we had completed about 50% of the review in CRE retail, almost 40% of the review on retail trade and about 50% of the restaurant. And again,