WSFS sees encouraging signs for economy while posting a $7.1 million 2nd quarter loss

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WSFS Financial Corporation posted a $7.1 million loss in the second quarter as its bank set more money aside for loan losses.
WSFS is based in Wilmington and operates in much of the Delaware Valley, thanks to the previous acquisition of Philadelphia-based Beneficial. WSFS processed $1 billion in Payroll Protection Program loan/grants during the quarter for commercial customers.
Results were affected by the deterioration in economic forecasts since March 31 and the continued and anticipated impacts of Covid-19 resulting in $94.8 million of provision for credit losses for the quarter.
WSFS did see a $22.1 million gain on the sale of Visa Class B shares. Below are the details:
(Dollars in millions, except per share data)
2Q 2020
1Q 2020
2Q 2019
Net interest income
$
113.8
$
116.2
$
123.2
Fee income
64.4
40.8
42.9
Total net revenue
178.1
157.0
166.1
Provision for credit losses
94.8
56.6
12.2
Noninterest expense
93.4
88.5
107.8
Net (loss) income attributable to WSFS
(7.1)
10.9
36.2
Pre-provision net revenue (PPNR)(1)
84.7
68.5
58.3
(Loss) earnings per share (diluted)
(0.14)
0.21
0.68
Return on average assets (ROA)
(0.22)
%
0.36
%
1.20
%
Return on average equity (ROE)
(1.6)
2.4
8.0
Efficiency ratio
52.4
56.3
64.8
Rodger Levenson, CEO, said, “Despite a challenging operating environment-related to COVID-19, our 2Q results reflected solid performance including core pre-provision net revenue of $63.5 million, or 1.96 percent of average assets.
During the quarter we provided nearly $1 billion in Paycheck Protection Program (PPP) loans for more than 5,400 new and existing WSFS Customers, supporting an estimated 100,000 jobs in our region. Additionally, we prudently increased credit reserves amidst the uncertain economic environment and recorded $94.8 million of provision for credit losses in the quarter. Even after the large reserve build, we continue to maintain significant excess capital levels with a Common Equity Tier 1 Ratio of 12.68 percent. at June 30th.
Levenson continued, “Overall, our strong balance sheet, capital, and diversified business model positions us well as the economy continues to gradually reopen.
“Our immediate focus remains on the health, wellbeing, and safety of our associates, customers, and our communities. We continue to serve Customers through drive-thru locations and have begun a carefully planned and phased approach to opening previously closed office and banking locations that aligns with Federal and State guidance and is informed by direction from the CDC, State Departments of Health and other governing bodies. We are encouraged by signs of improvement in our region’s economy during the early stages of a potentially prolonged and uneven recovery period.”
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