WSFS Reports 2Q 2021 EPS of $2.01 and ROA of 2.60%; Results

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WILMINGTON, Del., July 22, 2021 (GLOBE NEWSWIRE) — WSFS Financial Corporation (Nasdaq: WSFS), the parent company of WSFS Bank, today announced its financial results for the second quarter of 2021.

Selected quarterly financial results and metrics are as follows:


(Dollars in millions, except per share data)	2Q 2021			1Q 2021			2Q 2020
Net interest income	$	106.7		$	114.2		$	113.8
Fee income	49.0			47.8			64.4
Total net revenue	155.8			162.0			178.1
(Recovery of) provision for credit losses	(67.6		)	(20.2		)	94.8
Noninterest expense	96.0			95.6			93.4
Net income attributable to WSFS	95.7			65.1			(7.1		)
Pre-provision net revenue (PPNR)⁽¹⁾	59.7			66.4			84.7
Earnings per share (diluted)	2.01			1.36			(0.14
Return on average assets (ROA) (a)	2.60		%	1.85		%	(0.22		)%
Return on average equity (ROE) (a)	21.3			14.9			(1.6		)
Efficiency ratio	61.6			58.9			52.4

GAAP results for the quarterly periods shown below included the following items that are excluded from core results. During the quarter, WSFS recorded a $5.1 million unrealized gain on our investment in Social Finance, Inc. (SoFi), which we liquidated at a net realized gain of $4.4 million in July 2021. For 2Q 2021, the $2.4 million of corporate development and restructuring expense primarily relates to our pending combination with Bryn Mawr Bank Corporation (“Bryn Mawr”) anticipated to close in early 4Q 2021.


	2Q 2021				1Q 2021				2Q 2020
(Dollars in millions, except per share data)	Total (pre-tax)		Per share (after-tax)		Total (pre-tax)		Per share (after-tax)		Total (pre-tax)		Per share (after-tax)
Securities gains	$	—	$	—	$	0.3	$	0.01	$	1.9	$	0.03
Unrealized gain on equity investments, net	5.3		0.08		—		—		—		—
Realized gain on sale of equity investment, net	—		—		—		—		22.1		0.35
Corporate development and restructuring expense	2.4		0.04		1.8		0.04		2.8		0.04
Loss on debt extinguishment	1.1		0.02		—		—		—		—
Contribution to WSFS CARES Foundation	1.0		0.02		—		—		—		—

⁽¹⁾ As used in this press release, PPNR is a non-GAAP financial measure calculated as net revenue before (recovery of) provision for credit losses and net of noninterest expense. For a reconciliation of this and other non-GAAP financial measures to their comparable GAAP measures, see “Non-GAAP Reconciliation” at the end of the press release.

CEO Commentary

Rodger Levenson, Chairman, President and CEO, said, “Our 2Q operating results included continued improvement across key credit metrics, solid growth in our fee businesses, and a strong capital and balance sheet position. We are well positioned for the post-COVID economic recovery, including our significant organic growth opportunity as the largest locally owned bank and wealth management franchise in the Greater Philadelphia and Delaware region.

“During the quarter we were also pleased to receive stockholder approval on our upcoming combination with Bryn Mawr. In addition, we recently received a key regulatory approval from the Office of the Comptroller of the Currency. Pending the remaining required regulatory approval, we remain on track for an early fourth quarter close.

“Additionally, we recognized a gain on our shares of SoFi which went public during the quarter. This investment began in 2015 from our relationship with Zenbanx and is consistent with our history of partnerships with entrepreneurial companies to enhance our knowledge base of innovative products and services. We were pleased to take a portion of these proceeds to make a $1.0 million contribution to the WSFS CARES Foundation. We continue to invest in the success of our local communities, which is critical to our strategy of “Engaged Associates, living our culture, making a better life for all we serve.”

Highlights for 2Q 2021:

Core ROA⁽²⁾ was 2.59% in 2Q 2021 compared to (0.73)% for 2Q 2020.
Core EPS⁽²⁾ was $2.00 in 2Q 2021 compared to $(0.46) for 2Q 2020.
Total net credit (recoveries) costs were $(68.1) million during the quarter. Second quarter results reflected a $72.4 million decrease in the allowance for credit losses (“ACL”) as credit quality improved quarter-over-quarter, including declines in problem assets, nonperforming assets, and delinquencies, and economic forecasts continued to improve. The ACL coverage ratio was 1.63%, excluding Paycheck Protection Program (“PPP”) loans, at June 30, 2021.
Core fee revenue (noninterest income) was $43.8 million, an increase of $3.3 million, or 8%, compared to 2Q 2020. Excluding the impact of the Durbin Amendment effective at the beginning of 3Q 2020 and PPP loans, core fee revenue increased $6.3 million, or 16%.
On June 15, 2021, WSFS completed the redemption of $100.0 million in aggregate principal amount of our 4.50% fixed-to-floating rate senior notes due 2026 and recorded a $1.1 million loss on debt extinguishment to recognize the remaining unamortized debt issue costs.
WSFS made a $1.0 million (pre-tax) contribution, or $0.02 per share (after-tax), to the WSFS CARES Foundation to further fund support to our expanded communities.
On June 10, 2021, WSFS and Bryn Mawr stockholders approved the previously announced merger of Bryn Mawr into WSFS at their respective special meetings of stockholders.
The Board of Directors approved a quarterly cash dividend of $0.13 per share of common stock.

⁽²⁾ As used in this press release, core ROA, core EPS and core fee revenue (noninterest income) are a non-GAAP financial measure. This non-GAAP financial measure excludes certain pre-tax adjustments and the tax impact of such adjustments. For a reconciliation of this and other non-GAAP financial measures to their comparable GAAP measures, see “Non-GAAP Reconciliation” at the end of the press release.

Second Quarter 2021 Discussion of Financial Results

Balance Sheet

The following tables summarize loan and lease and customer deposit balances and composition at June 30, 2021 compared to March 31, 2021 and June 30, 2020:


Loans and Leases
(Dollars in thousands)	June 30, 2021					March 31, 2021					June 30, 2020
Commercial & industrial (C&I)	$	3,233,412		39	%	$	3,212,970		38	%	$	3,354,007		36	%
Commercial real estate (CRE)	2,024,684			25		1,975,966			23		2,165,547			24
PPP	222,869			3		526,789			6		945,136			10
Construction	779,601			9		784,101			9		638,504			7
Commercial small business leases	291,657			4		264,937			3		213,133			2
Total commercial loans	6,552,223			80		6,764,763			79		7,316,327			79
Residential mortgage	720,045			9		829,234			10		1,012,235			11
Consumer	1,105,169			13		1,140,034			13		1,133,371			13
ACL	(132,418		)	(2	)	(204,818		)	(2	)	(232,192		)	(3	)
Net loans and leases	$	8,245,019		100	%	$	8,529,213		100	%	$	9,229,741		100	%

Customer Deposits
(Dollars in thousands)	June 30, 2021				March 31, 2021				June 30, 2020
Noninterest demand	$	4,328,060	34	%	$	3,857,610	31	%	$	3,188,046	30	%
Interest-bearing demand	2,633,423		21		2,659,336		22		2,302,484		21
Savings	1,927,627		15		1,886,222		16		1,731,875		16
Money market	2,722,868		22		2,721,647		22		2,333,326		22
Total core deposits	11,611,978		92		11,124,815		91		9,555,731		89
Customer time deposits	1,052,042		8		1,093,984		9		1,228,440		11
Total customer deposits	$	12,664,020	100	%	$	12,218,799	100	%	$	10,784,171	100	%

At June 30, 2021, WSFS’ net loan and lease portfolio decreased $284.2 million when compared with March 31, 2021, including a $303.9 million decrease in PPP loans primarily due to forgiveness. Excluding PPP loans, purposeful run-off portfolios, and the ACL, loans increased $34.2 million, or 2% (annualized), due to growth in C&I, CRE, and commercial small business leases.

Net loans and leases at June 30, 2021 decreased $984.7 million when compared with June 30, 2020, including a $722.3 million decrease in PPP loans primarily due to forgiveness. Excluding PPP loans, purposeful run-off portfolios, and the ACL, loans increased $93.3 million, or 1%, year-over-year, with growth across CRE, construction, and commercial small business leases.

Total customer deposits were $12.7 billion at…