WSFS - Earnings call transcript Q2 2020 | WSFS Financial Corporation

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the WSFS Financial Corporation Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] I would now like to turn the call over to your host for today, Mr. Dominic Canuso, Chief Financial Officer. Sir, you may begin.

Dominic Canuso

thanks participate of on and the for Jewell to time our you, to you all taking Thank call today. this Bacci, Steve on and Chief Retail Officer; me call Levenson, Wright, Rodger With Officer. Chairman, and CEO; Rick Art Chief Chief Clark, Officer; Banking Wealth Commercial Banking are President

I with read like our Safe Rodger begins would Before Harbor his remarks, to statement.

other results from prospects about our future Our our results of quarterly that are forward-looking indicated file discussion with documents, forward-looking risk in view annual constitute factors Commission. today recent on the by Securities materially including the our reports and Form included our comments call statements risks will management’s XX-Q XX-K not may today’s Harbor statements. or those due Actual Exchange made Form include during Safe statement. most as we limited to, historical and and plans on All and subject periodically report differ well but information these expectations, the uncertainties, to as to

I over call supplement. During release our turn release www.wsfsbank.com. both earnings will website Investor that referencing discussion Levenson. of be earnings at With read, we on the our are and Relations to available Both Rodger today, the will our

Rodger Levenson

joining thanks and to on Dominic Thanks, everyone us call. for the

materials, related uncertainty in official reopening modest Thankfully, followed in stay-at-home the the protocol in complete a had in the starting began improve, economy As second economic in mid-May, pandemic. to we first started anticipated COVID-XX the improvement early due to would the earnings see regional as to situation health outlined by June. of activity in remain our we throughout quarter our that region the economy to quarter the

continues phases is And uneven the expect through continues our economic term to economy impact The While to the the the forecasts established been governments, recovery local evolve. recovery. results reflected while of continue an second by we of and quarter. this open, process in has longer extended for move reopening to local and this state various

of a for the recorded second As quarter. per detailed release, credit loss in million, provision the attributable $X.XX to or million directly WSFS in the net results losses $X.X quarter. were These the $XX.X for earnings share

we As CECL, earnings the also have provide the supplement portfolio. Dominic, comments in moments. details on I by loan credit a provided in additional and on credit noted few will

of provision, Excluding our quarter operating of $X this was solid. quarter. the includes million approximately obviously was to revenue was highlight PPP income net focus the pre-tax X.XX% and of during organizational Core PPP. assets. performance impact $XX.X a million, the pre-provision This or related

We are and proud the to intentional customers for in have interest jobs. net loans, the The of When which an be went impact into reflecting the the flat rate, estimated business total the by of results. and at loan economy strong, the in for was and increase portfolios estimated non-relationship customer annualized run-off the in almost the low communities PPP timing basis dependent ongoing growing forgiveness Deposit magnitude upon the XX% will a X NIM points PPP PPP margin proceeds. with deposits when of impact on quarter. of activity. the very levels and the processing of losses, billion allowance support decline XXX,XXX directly assisted essentially excluding credit PPP, our were by continued $X local quarter, loans growth excluding reduced

commitment benefits of as included supplement. ratio our was in versus factors NIM last credit fee spot half rate second environment. in fee We second current of unfunded reflection driven the diversified the Core $X.X well the a also volumes non-provision having reserve the outlook The core continued the costs being of have XX.X% has revenue, as mortgage, bright to the increase impact by in included which expense. to of a quarter with lower efficiency estimated elevated economic million year see income related the direct clear

the cost have XX%. credit-related would this Excluding efficiency been ratio costs, around

gain In the to our million of as just addition was to our sale Class data are all investment almost X-K approximately initial returns PPP, the million. of shares Visa other XX. million the for B the $XX significant an related to-date Total detailed under highlight quarter in on June $XX $XX.X of

capital built as of uncertainty the credit, shape the maintaining factors, duration related to XXXX was throughout X.X% Turning to economic improving our including and year to assumes the positive several our recovery, full while forecast, and GDP, mid prudently quarter to XX% a conservatively the result single-digits reserves provision position. the strong negative XXXX. a of as during we of economic About which

the is assumes and travel until also X.X% safe in a year economic is improvement single-digits spending the forecast ongoing health of throughout impact of Underlying limited remains fourth magnitude significant this occur modest mid activity unemployment entertainment government also declining to not forecast this a will to stimulus XXXX. which and quarter The and and vaccine. remains in most the continued high in situation, Our additional there undetermined. and until likely

low, existing In for June of that most and short-term result we few seen May. overall modifications of the in deferrals, as quality, terms have the asset deferrals loan of executed new time, in expiring and requests Since delinquency primarily levels remained July. April a with

Based deterioration signs the increased percentage some a mid to of to problem did loan we of portfolio to the and loans credit decline commercial high payments their should XX% third during return of to loans. ongoing deferrals significant the upon of interest these a by levels as the expect modifications evidenced during the quarter. see single-digits these total loan We as In the with contractual of addition, early discussions majority about customers, paid quarter.

and risk with a performed focus additional foodservice hotel, by we modifications. loans likely updated loan most sectors. were in of The quarter, loan with impacted portfolios for retail be the those assessments highest on During rating the potential loans the evaluated on the majority pandemic, the to

problem criticised at drivers quarter hotel XX% result and portfolio As in this end. risk of migration, process, the XX.XX%. with in quarter. was at increase at strong stands levels, accounted one for loans previously increase coverage when the The hotels the Capital common and of the rating loans equity the of in X.XX% of primary total marks the a X of the problem with loans X.XX%, now acquired reserve including loans. XX% growth significant impact approximately ACL the build, on very including The PPP excluding at credit in remained reserve Tier experienced at

pandemic six in material regulatory hitting summary, for the the the before uneven over to In outlined as will focus run-rate reserved us get of fully of potential as additional as minimums PPNR capitalized. supplement, recovery. economy the long the CECL, the dividend market includes to approach estimated million allow quarters well primary the a the framework issues of within court took to a returns on our the possible much $XXX This gaining reserves credit existing of strong capacity the and As economic which we and an as pay and business ACL for absorb result as our to provides normal. running next assumption share of

lower environment material later year XXXX the and second we look expect occur changes to into reserve the XXXX. forward significantly builds forecasts, the assuming no and or loss of with to in we to economic would content half As

Durbin, to in impact million We $XX to third also begins of period. remarkable unprecedented which our of to our support customers you well in business quarter. the Thank the our as as this will turn million Q&A over facilitate with core PPNR team. includes the positions per conclusion, I and PPP which In combined WSFS dedication our of expect communities associates remain it range $XX now during to X,XXX strength with the uniquely quarter, model, of Dominic our to a over serve again.

Dominic Canuso

Rodger. you, Thank

answer be ourselves to line. a And in we also those open to you if any available after questions, like be questions as who detailed call questions are the will you I could the up will more pleased specific make asking asked. to reminder, extent would interested for today So the

Operator

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

now Your open. line is

Frank Schiraldi

Hey guys. Good afternoon.

Rodger Levenson

Frank. afternoon, Good

Frank Schiraldi

of me here quarter, the to basis wanted size, it cases so higher in maybe this in year. points, they some your banks delaying ratio. legging until with of to terms and downgrades Just banks later rating other like are risk certainly builds more with, reserve points then than provision into are Obviously, in are they seems that seems other kind certainly XXX start information the basis XXX large you have reserve-to-loan

you could what our you remain is Assuming the the guys – that you these these under where or that, that that here with are it have confident near-term move are – peak higher modeled assuming – now? are sort out are models reserves in where the of model these

Dominic Canuso

Frank. thanks, Yes,

and reserve the have portfolio and the took in But uncertainty recovery we the B would mentioned, how impacts will elongated in expected uniqueness of took approach assumptions of in of opportunity others fully CECL mentioned, both this downgrades based environment the environment. for I very to and kind say the the their economic of the continued in I to First, we as the have assumptions and environment the recovery, speak review our be the framework. approached rigorous given Rodger severity around Rodger at the and if as associated portfolio economic again, our framework this re-evaluate, Clearly, under we into reviews time. worsens, to point obviously and CECL but knowledge deep on the we can’t

Frank Schiraldi

I as get crystal these banks mean, – obviously, that is rates of on will think has we maybe on the you where based but also into delaying another today, year I based are nobody improve just one occupancy hotel of end, and And reopening. downgrades you are reasons stimulus. have a knowledge that many ball businesses risk-rating expectation So, is, they the said, the

am too run-rate there? I guys downgrades could good in be properties you just wondering occupancies off are what thoughts handled or assessment that. deferral So, you assuming in mean, looking to and I someone that are a a argued just at it’s on how October make now your sort of come and when early

Dominic Canuso

on as And Clark hotel, mentioned, the see line the I approach at-risk in pass the focus foodservices. to credit Sure. we of to the we in efforts portfolios take for to quarter discuss valuation what Steve and will But our as Rodger quarter. the over our approach retail did

Steve Clark

a is Dominic. and being question, of with as about June emphasize the Frank’s leisure. third book the in kind to our business hotel piece you, hotel really XX, answer of two-thirds thank sector Yes, Frank, to in of

operators mid have book the couple weekends XX% and pandemic approaching taking to future. and months a Rodger necessarily when decent that resume And Dominic the the and But beaches the XX% is XX% a segment, in do the has low started, to weekends. business we have maybe payments fact, was to payments, the on uncertain. and on clearly to shore the ratings do footprint. our operators weak owner risk last about hotel described our significant leisure are expect occupancy us are reporting benefit really weaknesses our the in reporting dictate and and other have contractual having as to there alone occupancy at risen in the and in as of our and progressed, potential Delaware don’t So, beaches But there up better And while as occupancy, portion single-digits. economy are the Jersey earlier expressed, the we step is of back view uncertainty shore

we approach through prudent a book. targeted think So, we that took and – very risk-rating

Frank Schiraldi

Okay.

you looks weakness you I am when think think closely amount I I compared community fact weaknesses you are books, in then to good the looking there I weaknesses, keep book say pretty elsewhere. your other know, if seen potential hotel greater And mean, bank’s asking businesses? and anything it versus as understand about lies with is about that you in – at bank, a average the not but what LTV are If that in dealing I the have the would not

as else greater to anything being to-date? your maybe others, a much you is lower much less – in some weakness there book So, have can versus had where banks rates point provisioning

Steve Clark

Yes.

Delaware travel Jersey, to of and and two-thirds uncertainty, the contributes restaurants our restaurants, the opening here And of sector to Pennsylvania, pointing states on is I out the in and to that business the restrictions. of So, frankly, between really and out that fact think around restrictions travel the Frank, kind in of uncertainty, assessment. states in mostly us the New closing that is revolving

Frank Schiraldi

Okay.

Dominic Canuso

return – the add out economic our to based to consistent, we comments CECL, to expect going builds, evaluate information there. the on to of provision And pre-COVID remains a would again, but forecast if forward lot around just kind close

Frank Schiraldi

will it. queue got back and Okay, a Thank you. else question. I Alright, let hop into someone ask

Operator

you. Thank

Perito with Michael comes from KBW. question next Our

Your line open. is now

Michael Perito

questions. the guys. for Hey, Thanks good afternoon, taking

Rodger Levenson

Michael. Hey,

Dominic Canuso

Michael. Hey,

Michael Perito

I specific mean on of am Couple how someone reserve being, some it better mostly I and supplement, – lack wanted so loop build for to book versus just credits missed questions, the specific of word, sorry if that was the in would a somewhere things the general first or of hit, to the hotel that allowance first close think to in a hotel I kind within reserve was build I the what follow-ups so I guess, quarter? much of but Frank’s book against the the

Dominic Canuso

Sure. see Yes, in and demonstrates we a supplement, look the first you reserve X, our you Thanks, provided Michael. the second in quarter if Slide growth at quarter fact, really from bridge to have that that. in

migration migration that impact economic impact the forecast from million and a assumption and from $XX hotels the $XX across portion some to million with is good then industry. is retail Now, to of foodservices specific and additional of portfolio specific it the

Michael Perito

migration there credits So, still within businesses? the specific the is we are certain yet for of incorporated against given specific outlook not or is it impact, the but or uncertainty guess kind properties reserves of I not just these that is and that

Dominic Canuso

versus kind the risk-rating are looking methodology those in expected and correlated No, specific pooled based on forecasts approach of CECL they loss reserves. at loan-by-loan the and for

Michael Perito

helpful, guess Okay, kind I said thought credit the But here, guys, as of you origination how build not on And you its business this thinking kind of you have are we the guys focus mean, trending forward cost so deferral talked I cost come and structure on part about orders the cost down. terms your behind from guys, on now the kind thing at thinking of think the a then home was business point and on I and of you you of outlook, lot of we Rodger, about PPNR your And, Thanks. interesting that in is of the was activities parts and I moving at this other do credit and look analysis one Dominic. the opportunities the doing the PPP learned of are rest that are obviously it, side. are that footprint? we considering as the starting and guy the forward? that And today, how guys consumer of of what you be we be far seen side, Maybe the that business kind guys and and should about so some reduction stay updated. your of you with move investments may given work

Rodger Levenson

a that we in process is served was for around market a prospects, us, was we their had we move interested mentioned, gone for Dominic how Yes, that that not we that, be give I lot by that generally the more but these let there focus grabs., thanks And which loan as question. that be of process. of through as to costs lot forgiveness other a have the of that PPP, there view the are up of the were will about as the to my is increase we for we modifications, in banks. and to result quarter, being there we remarks would half think PPP share going the I of are available through come and organizational an and once talking the you out some get second we between business that, and we assume I’ll year, for specifics say second past

and market our for for And relationship commercial think bodes so well that share potential we that, growth gains, managers.

credit so was, then but with that piece of grow and let the can address that get I there to will they the we out and hoping dealt identified, to, hoping to share, teams I cost most the what, is the are that’s side. behind business gain So, referring trying Dominic market

Dominic Canuso

back two businesses rate transformation charges stepping ratio and mortgage lower of PPP offices, to If leverage, the some investment acquisition, focused opening we would quarters and the forward. with opportunity in Sure. create in continue on and costs XXs, on as in operating included the our unfunded in in well, an going basis for last we to primarily onset the looking have specific reminder, create for expect to to the I not and Rodger. the And the shifts commitments, Thanks that the obviously, as are question retail positive forward, our particularly administrative speaking course, growth environment costs in relatively efficiency initiatives. excluding costs reoccur COVID in business particularly the over our of And annual maintaining our this for been environment interest but mentioned, generate of business, and opportunities your to Durbin our And rates. the technology our delivery are of costs, those in incremental any share at high business, consistent is where absolute would you have few regarding in cost Rodger some in communicated the see and preparing looking beneficial third the to driver we with last quarter the with investment as to synergies and we in trend clearly around our Michael, years to. cases a second levels. market those beginning growth specifically our continue quarter small costs, was and the

in initiative maybe amount make reinforced we level only of is customers both markets. them, investment in not other adopt maintain digital in our the usage to our that saw banking expectation but platforms and were obviously, WSFS for service delivery our addition, able to our we we those and our and known mobile are the who In and transformation quickly to significant as of significant hesitant of the results quality increases want COVID a adopted of

make term we that the about, things more we efficiently been talking how work the quarter continue now approach view. on can CECL , in investments those some build, to on regard on as say, locations. COVID focus expect being long longer as have we strategy. take the in reserve around second obviously, executing And we So various to the us to taught and to attention with take did to has we But able

working and looking the We leverage our we And are and efficiencies best that costs our while in over them some space home, footprint organization from as base. opportunities the maintained our footprint, learning’s a into will full etcetera. take commutes, in retail increase months months doing because and the last how to of across cost have last we experienced to assessment embedded office look cases, operating model create efficiencies of, have And what we lack look we on XXXX. few our the of few associates our over of for have to

Michael Perito

That it helpful, that incorporating outlook or guys PPNR through level taken Dominic. that bottom guys space I are point are was be of the don’t that any already? doing then to or analysis some is the additive would fair even analysis office at now there, if that of all you. you all really you in rather that say cost action outlook guess, fall that Thank to the efficiencies in And some line some they

Dominic Canuso

say now. right are Yes, rush we would any but its I into to additive, also looking I not decisions would say

work our health, decisions customers want overreact the the towards So, taking environment our priorities. any the top fulfillment to while again in and diligence and vaccine ensuring months our like we to in X put last prudent serve post-COVID of our world would would the by to forever, and do that near-term don’t best and steps associates due we well-being felt make a have

it’s views the result in our the second again year so in not PPNR And included would for XXXX. half of and in likely opportunity more

Michael Perito

to quite build will take it to even the big Got what I hop what mean, with I know to you on so it. on kind of that. losses quarter, uncertainty what to be thinking in to perspective start trying swing capital conservative, bit on share in hard sounds what about guys terms is and from credit And as do – then of are like. on capital, more looking back But like timing are you of is a clarity I won’t this justly ask just obviously, for and for, it mean, Rodger, reserve me repurchases I more maybe comment still a or the you capital to very deployment after excess. for than given I look strong complicated on this with kind could offensively, out. just it clarity a simple get the looking it’s of saddle or that?

Rodger Levenson

for simple and I as clarity us No, the and it’s as economy. for the for think credit industry the

though that, are we today, better capital to until to any it’s significant do think wait very I on have even a well-positioned actions. handle prudent we very,

Michael Perito

listen, Well, I guys thank Okay. questions. it and stay appreciate for you my taking well.

Rodger Levenson

Thanks Mike.

Dominic Canuso

Thank you, Mike.

We soon. you will talk to

Operator

Thank you.

question Davidson. Gunther next with from Our D.A. comes Russell

is line now open. Your

Russell Gunther

Hey, afternoon guys. good

Rodger Levenson

Russell. Hey,

Dominic Canuso

Russell. afternoon, Good

Russell Gunther

Maybe first? would of just tied the characterize maybe forecast a something kind two want a the those qualitative how migration, pieces So, back or characterize factor to that and question help some start, you step reserve million of factor specific by impact $XX $XX build? million portfolios those economic a understand of you me moving is to step ticky-tacky just quantitative understand the but as to

Rodger Levenson

Russell. Sure. Thanks,

quantitative. the look they interest rate we model CECL everyone and like, the They are slide, dependent I the unemployment on is on and forecast the price while the spreads inclusive GDP have of estate indices. BBB primarily XX-year and Now, communicated then remind what also model and are real curve, that

build reserves. specific influence the in special or the do as reserve while statistically with driven. these qualitative so And same have migration, speaking, again, And some these adjustment are factors model, the model what’s we And driving that incorporated that’s those aren’t here. steps

Russell Gunther

some said are And those deterioration share could observable on think appreciate following of approach. credit whether or that. price kind metrics just in it’s the terms pooled that kind then to of it’s up clarity you I on just credits? a inputs there you decline caused of But I the you of downgrade that migration identified the Okay, understanding impact,

Rodger Levenson

if Steve, speak Sure, those? you to would to like

Steve Clark

Yes.

that could question, Russell? you repeat So,

Russell Gunther

Steve. I assumptions Hey, your would of of provide kind just within restaurants, those thoughts hotels, Yes. you them portfolios, specifics terms decision any problem sense within price trying in declines into be get retail of that to to around a your drove the sort loan bucket? was can of what the move asset

Steve Clark

Yes.

So thank you. Yes.

So the cover it’s is for really debt ability the metric and us, primary coverage, flow service. to cash

in hotel value So, very book weighted average is at the for to instance, the while operating, the operating at fact origination and strong, the loan hardly are low really that XX%, hotels all. the a is capacity

you decision. otherwise, for to that. flow and to much to really all its cash risk And flow or the drove in applies about look restaurants, risk same cover us generate our entity, rating. is ability the that one assessment businesses, the if so of ability other to and that that particular number metric that borrowing is It debt, cash So, metric, and service at

Dominic Canuso

just to likely a help rustle it’s to maybe process. little and bit kind of Yes, the add you, of understand color,

what get the round did the the in be to not stages to modifications of total us legs in where of that like. And them, As the business going with a the businesses, people this they we was we was. could, on was that we did start of to a then appropriate path thought working and adjust give when those chance forward was really their deferral, underneath XX were know the a said, sea people the forecast of duration process, shutdown what if what look early future therefore, impact first to their kind on it day give

risk of the them risk multiple type, Steve amount those Steve RevPAR, the factors then versus that which flow and rating including driver with for a you rating, down cash think the number I so then customers, sitting dependent stats the hotels of is, ADR, flag properties leisure out of all is in debt updated other the primary plays into coverage. in all forecasting and and scenarios, service team And making business that under, as those and, the what migration fair etcetera see assessment occupancy, said, a getting upon

very have those. it’s as said, informed, have actually as as did we So I process eye evaluate But I conservative think adjust have more those for a at, and of evaluation, understanding are we that and a point, at a and sensitivities we time sponsors think take that we this develop of had informed the we sort plans react of a kind those future. to now their things where

Russell Gunther

I your Thank three of that. appreciate all you guys. thoughts on

of bit please. Another help,

third you have In terms quarter? $X.X risk and quarter, on of that that the clarifying this the were in commercial is of plan what in X, one, that $X.X reviewed loans out relation review billion am that Slide at of one the, is so does the to of loans the modified I tie been to billion and to remainder that balance

Rodger Levenson

want about a little bit status? do talk to Steve, you

Steve Clark

that yellow, by the be Steve, red I or impacted portfolio, portfolio borrowers that red, look at pandemic of When so payment is were overall a green, is requested going the we Yes, we this kind clearly – kind took so triaged relief. of correct. to and the really COVID were our

portfolios of retail first XX portfolio. XXX% XX% the portfolio, over $Xmillion of of CRE penetration, million that of relationships, portfolio almost and we reviewed we C&I a larger top the restaurant so nearly book, were exposure the hotel XX% we portion service, with every significant they deep into that reviewed, So $X half retail food that of well, CRE very of of a got book the significant every retail that

relationship our to So, books. very, tie X.X significant of will reviews of our kind end yes, will we into into but those the continue quarterly, with all very, of August, normal evaluate focused process does the and continue and believe we we have quarterly all through July X.X. we And that penetration portfolio managers,

Russell Gunther

really guys, the in Final know, portfolio much Great a piece $X.X been runoff ring from Steve. you much of of reviewed the is reflects beneficial kind of of how acquisition? you, that color. clarification, point question, the Thank How of the have that’s that of what you quarter? -fence much how kind of another billion reviewed,

Rodger Levenson

very runoff is I book. little ongoing of this in Most is would actually the in portfolio. estimate

Russell Gunther

Okay. taking Thanks, Rodger. Thank my you, guys for questions.

Dominic Canuso

Russell. you, Thank

Operator

Thank you.

comes Stephens Inc. Brody question next Our Preston from with

now line is Your open.

Brody Preston

I well. hope you afternoon, everyone. Good are

Dominic Canuso

Brody. Okay,

Brody Preston

guess just expense all Dominic, I PPP on any is draw expense, wanted the like of interest PPP clarify facility the a the housecleaning non-interest reconciliation that to I that and question expense? and The lending all to guys a on did at start, income just is or non-GAAP, you couple.

Dominic Canuso

Slide income quarter The net kind expense. loans on interest way the on non-interest accretion, internal our of included all is spread on with the we X in cost. have X% the the with minus the the along million funding articulated That fee is $X.X

Brody Preston

then the loss, And up insurance items? a wanted PPP expense, to had recovery, and great. PPP guess plan Okay, some just across better showed expense, sense you get items, those the where for line pension the I COVID, the one-time consolidated

Dominic Canuso

of with would to earnings to kind at P&L if Sure. like you items that. various to release, meeting Happy the the work in you we kind reported of do the you the through have walk within as

Brody Preston

great. that be Yes, will

and substandard? how $XXX So, into of into mention that went circle just that went into moved back to much much to hotel, million the the the special criticize how

Dominic Canuso

mention little special into and a over So, under XX% little about it’s went it’s substandard. XX% into – a went

Brody Preston

for thank you that. Okay,

XX% in-depth a future substandard, impact would migration fair? that these if XX% I that that as to I Is were just see reviews, do guess continue guess reflect I remaining you quarter guess migrate in that you into So, I that suppose. if to quarterly

Dominic Canuso

are continued wasn’t downward things and would any remains things some get if but you some dynamic there everything these that don’t. some If be know changes, migration reflected, as other Yes. static better, there portfolios and were

about an would hard statement it over that absolute to would time. how be make happen it So,

Brody Preston

guess, as opposed how pooled to being I migration the that? impact about Okay. maybe you do guess, then any pooled approach CECL the on And the Dominic, a mentioned retail it by, reserve under should credits. I hotel the I asset CRE is or think and specific a to pool CRE when approach, like type of But pooled you pool

Dominic Canuso

assets the those in loans, loan of the as have laid then look Yes. them those portfolio rating. for by we by segment we The problem total underwriting segments the in risk at primarily level at out do look we part, slide, the the most and but some on categories

Brody Preston

good $X.X loan for the revert you I XQ, modifications the thinking mods, thinking last that be is how to we guess I billion of expect original That’s color. saw that okay. original about math? that that Okay, The quarter, in the about XX% base all should just

Dominic Canuso

entire we I first round, portfolio X, total kind and it’s billion modifications off just at what billion illustrated those and have basis of will, as a it’s XX-day Yes. with of across say, the commercial if and that of. we first on would we full you over are $X.X being the $X includes Slide see speaking that

Brody Preston

Okay, okay.

peak levels? I so guess were guess I And what – modification were what

Rodger Levenson

Yes.

billion a down it total think little I was $X.X higher just amount dollar probably that, the little was and just it’s bit bit. come than a

Brody Preston

Okay.

start to of be to good a like deferral? So contractual my think I will kind that I revert guess of might as the not about about place another XXX terms XX% payment, for that full thinking XX-day in

Rodger Levenson

Yes, the I obviously think that’s – math. that’s

think make deferrals, modifications. is a on the as important think I I this or second comment it

that’s making that we that where approach situations into will least driving modification process is could as customers at there to expect be are what we the second be So an we with are We is coming there round but and of really this these we a some the some were expectation of getting are second actual making profile we that’s once left the really to and the approach deferment modifications. little the have where loan calling again the interest potentially get primary what’s be through of working shorter that enhancements that the of part borrower a we longer, short-term that structure, would if to interest going term payments. although payments maybe length the the taking do bit

Brody Preston

guess if maybe reserve thoughts? forward releases assuming the X.XX optimistic that terms all-in. your levels I feel you the are on this you, you guess are you with That’s front guess, where additional you and and you mean, forward Okay, future just and I have detail. reserve like I book at and think earnings and step loan your look of do I marks, share at at opportunity does high it in in like do you look I as you Rodger guess you look future of optimistic alright. somewhat got and okay on about about reserve broadly, change, ratio color the I perspective the is reserve near everything pace macro any a like you of just great X% I capital I the level doesn’t guess or from you back, at any have more C&I feel there look market the as I so a of guess

Rodger Levenson

Yes.

about So in and very the of us. the we optimistic front are path opportunity

guys, against we how think of mentioned, large the times, that up the of combination difficult I the near-term going being terms As confirmed even has environment, that situations because PPP in and from as and cases have magnitude have the beneficial bank that many I see handle has as will this the of been into as the contrast they benefits thought credit couple compete local big unfolds. everything through that will how said, of some opportunity going to increased. in this a of most we in the we come the likely And we

but very, we opportunity not also the said magnitude, way. we’re the and deal this great optionality only of opportunity about to very position to coming it’s the can capital So opportunity market not this and envision Obviously, being strength a with but deal that optimistic the of beneficial have it’s the did we we with and we that base had, with customer like things model clearly strength was that business take the still the demonstrated the that growing as had on combination be the And of can of business the and focus this base. we we we anything would business. to into our part this grow

for for feel I the future, health out with the very know optimistic the we the things team, myself play near term with speaking obviously, and in the So caveat how situation. depending upon

Brody Preston

slightly one And of behind from this safe forward is is Okay, Connect, one cuts us, net non-bailment on for million last in a biased sources? smart reported great. Cash that interest me upward good quarter, sort go guess that and the that, I you $X.X growth revenue revenue Dominic, with rate then maybe

Dominic Canuso

but would a and was driven as strong rate the correct, say orders fees, that’s fully interest rate funding our Yes, a by primarily for lower but national run lower country. a expenses drive in included at a almost of you about are half the environment kind of volume, It our of both I to rate, quarter interest third lower the were net especially are because those operating home offset in fees XX% those stay and business it’s neutral. costs, margin

And would economy the continue continued than new baseline so bring it’s a legacy good say, like recovery returns some to I business, products. and the then the lines higher growth product in that line including in the

Brody Preston

for Alright, great. Thank all it. you questions. very I taking much my appreciate

Dominic Canuso

Brody. Thanks,

Operator

Thank you.

next from with Boenning Zwick comes question Erik Our & Scattergood.

line now Your open. is

Erik Zwick

afternoon. Good

Dominic Canuso

Hi, Erik.

Rodger Levenson

Erik. Hey,

Erik Zwick

million the is the on looking at about follow-ups Slide XX, $XX of of hotel or portfolio is portfolio, construction couple a so. Just XX% that

is $XX to properties million new if or existing is this of and some the or there? many secondly, how all that or construction expansions but curious is all still then any $XX average I properties? point guess First construction properties it suggests bigger And there ongoing entails, one, at million, in that improvements maybe potentially

Steve Clark

Steve. is this Yes,

to hotel ongoing loans have the due So, all And of future right. to of back math and you specifics, really project of on is interest are open size, our financing. in midst yes, construction. resides the pass these average lowest about all book properties page to are for XX, as On this period in built – is they with in the the most Slide see category you have some reserve these circle not the in of construction because the but part on I the will

between under projects construction. to You know, XX somewhere seven in plate

Dominic Canuso

commitments I are larger to so Steve would about. point slide is that Erik, and support add just Yes, the clarification. size of was This the talking a balances that that those would just on

Erik Zwick

the you then, that of both I on point – them the And the Since bit think Got portfolio for a these kind for made – mentioned, guess, quite that point clarification Steve thanks that said to since Well, existing and properties percentage criticized nature. interest there. it. not you there of you of lower properties open to compared of although the at reserves taking of to and you scheduled this are is I those things point.

process? this the potentially risk So at in there point is not much as

Steve Clark

are Yes, at under time. none that’s that hotels in criticize segment construction in the that or point correct. believe the of construction this I

Erik Zwick

Great. for That’s my all taking questions. I had. Thanks

Dominic Canuso

Thanks, Erik.

Operator

Thank Frank Sandler. you. with from comes [Operator Piper Instructions] Our next Schiraldi question

Your line is now open.

Frank Schiraldi

you. Hi, guys. Thank

could. couple follow-ups a Just if of I

own Just mostly XX sense guys wanted – deferral to at off can I their has volition just interest, end or on the of your straightforward? you know they or have there stay been come least willing cover on conversations pretty here of for get how another gone a to it the it not and the to days. if have Is tougher been get conversations there

Steve Clark

returning ready to to say saying have been customer that part I contractual very modifications they Those good. of conversations the are very, us the are Frank. XX% would Steve, is loan for the original is most to this the it So, for payments. return. And

of there the For for to so only, the interest that to is some bridge there there to piece pay a them been is good. conversations segment a going XX% have interest a another the asking then And ready they’re round deferral. aren’t this, where conversations tougher contractual that are clearly some or those full of when piece return for of are customer is payments

looking looking enhancement but future levels guarantees after are some next we round or also of for mentioned, credit additional for Rodger support the to our reserve account of whether payments As that’s customer, we’re deferments.

those conversations So a tougher. are little

Frank Schiraldi

from And to clarification, you. get Steve just Okay.

XX if on of some rates that mentioned since improved have earlier pretty dire the you they occupancy June places, think and I look back in you these then. at were

based weighting In then on what risk that able you terms where your pull or to these effectively is have apply that you, XX forward done you’ve where of guys loans? you learned think since and to the June more

Steve Clark

Yes.

based out of beginning hearing end March, very, things from of we really have that scenarios, the the we’ve further owner service occupancies that using that of kind back that its goes as the what different So our where point at operators, I very risk a to property and can April are assessment haven’t were we And is said, forecasting rating. are improved the but been they to terms really in on where comfortably improved direness low. I when think debt very –

make we’re but a still will Some is weakness rating or of payments, risk that such there criticized. clear these properties there weakness even as the potential appropriately

Frank Schiraldi

it, Got okay.

seems the been guess of So that off going – and deferral math I is there that piece seem number classified is doing some coming to to that there downgraded contractual that but payment, back be makes sense a a to is because still into criticized.

Steve Clark

does that necessarily payment drive rating. Yes, a risk mean not alone I is contractual correct.

So making yes, or that are to we payment that book make assets payment. have in plan criticized

Frank Schiraldi

buying XX% so on, I more piece and any just get been flexibility go again, And dividends you Rodger to that I like mentioned know sort share Okay. behind buybacks, finally, to payout back then beyond – if getting a to grabs timing low buybacks and up on share it’s are assume because you get after more talked that you for pieces some stock, for you potential can the ask capital flexibility would market and helps it offer of market credit asked two price. broken and you the you and then is you up into the beyond about get already to you’ve I your supplementary then on to there and you guess

sets to So how on and for just timing you may any sense be back buybacks there? earlier any this up help getting for

Rodger Levenson

get to think closer in Frank. point us this I time, part So that does of

prudent buybacks overall before prudent there. we the it’s it’s all for more to know, suspended visibility us think wait a believe on go little credit we we environment I mentioned you as and temporarily there’s until – As I bit

evaluate in and this environment at And turn, until you positive little So feel that has certainty, But it’s it’s turns of much we the prudent number clear, more more is are and quarter. that’s evaluate will continue and time. that something hope wait we is to next a continue a had we unexpected to evaluate bit a wait. know bit there this to little but till it’s every a just going turn to point point until we

Frank Schiraldi

you. enough. fair Thank Okay,

Operator

to questions further like Thank queue, no the over you. conference I Rodger would Mr. back Levenson. in with to turn And

Rodger Levenson

some do Thanks is for some everybody if be today. the so. have wants to further Dominic we said, available, there happy the he, follow be to are Joel. and anybody call team would out going reach Thanks, joining and whole Appreciate follow-up up as questions. to Sure, I conversations and the please

So thanks good rest you. Thank joining day. your again of for and today wish everybody a

Operator

today’s conference concludes this gentlemen, and call. Thank participating. Ladies for you

You disconnect. may now

WSFS Financial (WSFS) 24 Jul 202020 Q2 Earnings call transcript