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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…

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