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WSFS Financial Corp
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Ladies and gentlemen, thank you for standing by and welcome to the WSFS Financial Corporation First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [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.
Thank you, Towanda and thanks to all of you for taking the time to participate on our call today. We hope you are all well and safe. With me on this call are Rodger Levenson, Chairman, President and CEO; Art Bacci, Chief Wealth Officer; Steve Clark, Chief Commercial Banking Officer; and Rick Wright, Chief Retail Banking Officer.
Before Rodger begins with his remarks, I would like to read our Safe Harbor statement. Our discussion today will include information about our management’s view of our future expectations, plans and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements due to risks and uncertainties, including, but not limited to, the risk factors included in our annual report on Form 10-K and our most recent quarterly reports on Form 10-Q. As well as other documents, we periodically file with the Securities and Exchange Commission. All comments made during today’s call are subject to the safe harbor statement.
With that read, I’ll turn the discussion over to Rodger Levenson.
Thanks, Dominic and thanks everyone for joining us on the call today. As we come together this afternoon, we are in the middle of the most significant health crisis in our nation’s history. Before I begin my comments, on behalf of our over 1,800 associates, I want to offer our thoughts and best wishes to our entire community and everyone who is listening today as we manage through this unprecedented period.
Although we could not have predicted the exact circumstances of the COVID-19 pandemic, WSFS was well prepared to operate effectively through this challenging situation. Recent technology investments, combined with our business continuity planning, have allowed us to serve our customers and communities while maintaining our top priority of the safety and well-being of our associates. Since March 16, we have had over 1,000 associates across the entire company working from home, supporting each other and serving our customers, including our national businesses of Institutional Trust, Cash Connect and NewLane Finance.
At the same time, we have been providing drive-through access and appointments with appropriate preventative protocol in our retail banking offices. We have also seen increased usage and adoption of our digital products, including our myWSFS mobile communication tool. While we are still very early into this environment, it is highly likely that we will continue to see an acceleration of the recent trends towards these channels. This is additional confirmation of the strategic rationale of our delivery transformation initiative, which commenced last year.
Turning to our first quarter results, our operating performance was solid. Obviously, the adoption of CECL and the impact of the current and forecasted economic environment led to elevated credit costs in the quarter. I will provide additional comments on credit and asset quality in a moment. Core pre-provision net revenue increased 7% on a linked-quarter basis and 32% versus the first quarter of 2019, reflecting the closing of Beneficial on March 1, 2019. This performance was driven by a 10% annualized loan growth in the quarter, excluding the impact of the allowance for credit losses and continued runoff from the non-relationship portfolios. Approximately 39% of this growth was a result of increased line of credit usage. Total core deposits also grew nicely during the quarter at a 9% annualized rate. Excluding several non-recurring items, core fee income decreased 3% on a linked-quarter basis, reflecting lower seasonal banking-related transaction volumes and lower bailment revenue in Cash Connect. The decline in bailment revenue was fully offset by reduced funding costs. Cash Connect continued its trend of improved performance, recording an accretive ROA of 1.84%. Expenses were well-managed and resulted in a core efficiency ratio of 54% as we continue to see the benefits from prior acquisitions and disciplined growth.
Turning to credit, we adopted CECL in the quarter consistent with our original plans. Asset quality improved modestly during the quarter, yet we purposely tried to get ahead of the oncoming deterioration in our CECL assumptions with a significant reserve build. The total reserves increased $92 million, reflecting both the day 1 increase and the quarterly provision. The corresponding ACL reserve to total loans ratio was 1.60% as compared to 0.56% at 12/31/19. Including the marks on the acquired loan book, our total coverage was 2.19% at 3/31/20. As outlined in the supplemental materials, our provision incorporated an economic outlook of a GDP decline of 15% and unemployment of 9% in the second quarter. Economic models for both the second quarter and the remainder of the year continue to fluctuate. Assuming deterioration from our assumptions from when we close the books, we would expect to continue to build reserves in the second quarter.
Our loan portfolio continues to be very well diversified and granular. It reflects our long-held philosophy of concentration management. As we learned during the Great Recession, even with high-quality underwriting, concentrations represent the highest potential risk to any loan portfolio. Since that time, our concentration risk management has been governed by 20 Board-approved concentration limits each of which remain in compliance. In addition, over the past year, we continued to execute our strategy of repositioning the loan portfolio post Beneficial while continuing to improve asset quality. This included $343 million of intentional payoffs of non-relationship loans as well as an 11% reduction in problem assets and a 23% reduction in NPAs. We have provided information on the overall loan portfolio along with additional details on our retail, hotel and food service portfolios in the supplement.
In addition to the strategic benefits of the beneficial combination, it also significantly improved our capital levels. Including the impact of CECL, our common equity Tier 1 capital stood at 13.41% at the end of the quarter. This provides us with significant capacity to absorb future potential credit losses. In our most recently completed stress testing, we utilized the Federal Reserve assumptions for a severely adverse scenario, which are generally consistent with the current environment. Under this scenario, WSFS can absorb almost $600 million of losses over 2 years while maintaining a Tier 1 common equity capital ratio of 11.20% at the end of that period. This capital cushion provides us with additional flexibility as we move through this environment.
During the quarter, we completed our previous share buyback authorization, repurchasing just over 1 million shares. Although our Board has approved a new buyback authorization of 15% of outstanding shares, we have decided to take a pause until at least the end of the second quarter for both routine and incremental share buybacks. We also maintained our cash dividend at $0.12 per share. A resumption of buybacks and potential future increases in the dividend will be evaluated based upon our updated economic outlook and corresponding modeling.
In addition to focusing on adjusting our business to adapt to the current situation, we continue to serve our customers and communities. In terms of customers, through April 17, we have provided over $770 million in PPP loans throughout our footprint to help sustain businesses and we are in the process of another – we are in the process of filing another 1,500 applications in the second phase of funding that commenced yesterday.
We have also provided cash relief via $1.6 billion of loan modifications in both our commercial and consumer portfolios through April 17. Almost 60% of these modifications came from our C&I businesses, which include owner-occupied real estate and NewLane, and reflect the full or partial closure of these customers in late March and early April. We know many of these customers well and remain in contact with them so that we can collectively assess the best path forward at the end of the 90-day or in some cases less deferral period. We also recognize the significant need to support in our communities, particularly the not-for-profit organizations who serve those most in need. To enhance our impact, we made a $3 million grant to the WSFS Community Foundation.
As we look ahead to our future performance, we will benefit from the significant investments we have made over the past decade. In addition to becoming the largest locally headquartered bank in the demographically rich Philadelphia and Delaware region, we added significant capacity to our mortgage and Wealth Management businesses, established our national leasing company and, most importantly, have very strong talent throughout our organization. These and other investments have provided a much greater, healthier and diverse pre-provision net revenue stream.
Our core pre-provision net revenue of $71.5 million for the quarter included $3.6 million in accelerated loan accretion as a result of a restructuring of the largest loan acquired from Beneficial. We expect that our second quarter core pre-provision net revenue will be in the range of $50 million to $55 million, primarily as a result of the 150 basis point decline in the fed funds rate during the first quarter. Our core pre-provision net revenue estimate also assumes that our region would remain in the current stay-at-home protocol through the end of the quarter and does not include the impact of PPP loans.
Finally, some additional context, WSFS has served this community for 188 years. We are a very resilient company. And when faced with periods of adversity, we stay true to our values and manage the company for the long term. We are prepared and ready to do so once again. Thank you and please stay safe. I will now turn it over to Dominic to facilitate Q&A with our team.
Thank you, Roger. I will be facilitating the Q&A session. So if you could Towanda, please let the question in queue.
Thank you. [Operator Instructions] Our first question comes from a line of Frank Schiraldi with Piper Sandler. Your line is open.
Hey, good afternoon guys. Hope you are well.
Thanks, Frank. You too.
I wanted to ask about the deferral or forbearance levels or modifications whatever we are going to call them in terms of percentage of some of the sensitive loan concentration. So you guys break out of your – plenty of which I think you do every quarter, plenty of loan concentrations in the CRE and C&I books. And just wondering obviously, I would assume hotel and restaurants, there is a heavy level of deferrals, but where else are you seeing those deferral requests come from and have requests overall begun to moderate here?
Sure. Thanks, Frank. Steve, would you like to address that question?
Sure, Dominic. So, I would say the other two segments that we received deferral request is retail CRE and then a little bit in the healthcare social assistance segments. There are the other two besides the two obvious hotel and food service. And I would also say, Frank, the requests really have kind of leveled off or and are kind of trickling in at this point, we have received and we believe the majority, the vast bulk of deferral request at this point.
Okay. And are you providing or able to provide specific levels within some of these concentrations in terms of this percentage of hotel loans are in deferral?
Yes. I think in the sub-segment on Page 5, you can see percentages for each portfolio. So, hotel was clearly the biggest, 65% of that portfolio. We have approved a 90-day deferral, a couple 120-day deferrals and the next biggest segment is really the restaurant food service, which is 48% of that portfolio, we have approved referrals for.
Okay, thanks. And then just as a follow up, wondered if you could talk about the NIM guide for next quarter, since the PPA and our guide doesn’t include a PPP, I am assuming the NIM guide doesn’t either. But maybe if you could just talk a little bit about the contraction quarter-over-quarter and what some of the assumptions are in that contraction in terms of deposit betas and so forth?
Sure, Frank. Thanks. First, I would point out as Roger mentioned, the first core elevated purchase loan accretion was primarily from one large customer that paid off and refinanced within WSFS. Excluding that, the PL, I would have been in the range that we had guided at the beginning of the year and consistent with, as we’ve laid out on Slide 11 of the supplement, what we expect in the second quarter of about 30 basis points of modeled accretion and then up to 10 basis points of additional, depending on payoffs. And again, obviously, all of that is a function of the pay down rate and which this environment could affect. Secondarily, the decrease from the first quarter NIM of $384 million, excluding PLA to the second quarter of $355 million is all interest rate-driven, and very consistent with not only our IRR assumptions, but what we expected this year, given the original plan of 2020, assuming one rate cut, but obviously, we’ve received 150 basis point reduction at the end of March. This assumes, in the second quarter, a 25% beta for our deposits as we are able to, given our significantly high loan-to-deposit ratio, affect our funding costs through lower CD rates as we have already put in place post the fed rate actions, managing our exception pricing and to continue to drive the appropriate mix within our portfolio.
Okay, I appreciate it. Thank you.
Thank you, Frank.
Thank you. Our next question comes from the line of Michael Perito with KBW. Your line is open.
Hey, good afternoon guys. I am glad to hear everyone is doing well. Thank you for taking my questions this afternoon.
Thanks for joining, Mike.
I wanted to double down on the credit conversation a little bit. I think the one book I’m struggling with a little bit is the hotel book, not just for you guys, just more broadly, because it seems to be an area where even if there is some type of recovery as we move into the summer, that it might take a bit longer to kind of return to something close to full revenue or occupancy, however you want to measure it. And I’m just curious, have you guys think about that dynamic as we move forward here? I mean, obviously, initially, there was probably just trying to get the CECL and the COVID qualitative reserves up given the uncertainty. But as we kind of drill down specifically on that portfolio, how are you guys kind of thinking about those trends? And what do you think you’re looking to see that could drive either additional reserves or, hopefully, kind of a return to normal operation as this plays out?
Sure. Thanks for the question, Mike. And for reference, we do have some additional detail on the hotel segment of our portfolio on Slide 16 within the supplement. Steve, if you would like to address that question?
Yes. So I guess the first, as we mentioned, that is definitely the biggest percentage of portfolio that’s in deferral. So about 65%, as I had said with the exception of a couple, customers, these are all 90-day deferrals. So the plan really is, it really gives us an opportunity over the next 30 to 60 days to sit down with each of these customers, and really work with them to develop a plan for the second half of the year. We’re very confident in the sponsorship, and very confident in the original underwriting of these credits. So, you know, it’s unclear whether this will be a B or U or a longer recovery in this space. But the fact that we kept the furloughs to 90-days gives us the chance to really work with all of our customers for a longer term plan.
And, Mike, this is Dominic just to add on. Obviously, we’ve been in constant dialogue with all of our customers, particularly in this area, and we’ll continue to work with them to develop the go forward plan over the next 30 to 60 days and for the remainder of the year.
Okay, helpful additional color. Thanks. And switching over the conversation to capital, obviously, it’s a pretty large it’s kind of unique, all the timing the way this came together, I guess, but you know, fairly large new authorization, although it’s kind of temporarily pause. But I guess, you know, as we think about your appetite, I know you said you’re on pause until at least the end of the quarter, but I guess, less respective of the timeframe, more respective of what do you guys kind of looking for that would bring you back to market? Is it just clarity on the recovery or is it other economic factors or how should we be thinking about that dynamic as we move forward?
Sure. Thanks Mike. I would say our approach continues to be the same as we have laid out and consistent with how we have communicated our capital management. First and foremost, we look at our capital as protection and for reserves in cases like this. And when we feel comfortable with that environment, then we look to invest that capital into the organic growth of the business for inorganic growth. As we’ve done so in recent history, and then beyond those two uses, we would return that capital were appropriate to our stakeholders through our routine share buybacks and then incrementally based on the share price at the time relative to an IRR model demonstrating positive accretion. What I would say is that is no different than how we’re approaching it today. Clearly, that first tranche of recognizing we want to evaluate ensure that the bank continues to have the capital needed so that we can focus on our customers, as that subsides or we get more certainty around that. And that will likely take two to three quarters. We will continue to evaluate and quarter by quarter, as we observe the performance of our PPNR. And the macroeconomic factors affecting our provision through CECL, we will make a determination.
Sounds good. So I mean, I don’t know, if you’re willing to comment this far, but it sounds like it’s fair to think that, you know, over the next two quarters, there’s probably not much as you guys kind of sort out, minimally what’s going on on the credit side and making sure that the bank is as strong as it can be positioned from a capital perspective?
Yes, I don’t think we can say for certain, but obviously, in this environment, there’s a lot of volatility in the macroeconomic environment, and therefore its impact on our customers and potentially our credit position. And so we will continue to monitor and do what’s right for the long-term health of the bank and our shareholders.
Okay. And then just one more than I’ll hop back, but on loan growth, any updated thoughts about how the current environment could impact maybe any of the plan runoff you had or just pipelines in general, is there any kind of updated you know, maybe second quarter view you can give us on how you think kind of net growth could trend just given, there are already quite a few moving pieces kind of before the macro uncertainty?
Sure, thanks. I will first speak to the runoff portfolio and that detail is in the supplemental material on Slide 17. When we purchased beneficial a year ago now, about 19% of the total loan portfolio was considered in this runoff non-relationship-based portfolio that is down to 1.3 billion or 15%. And we do expect that to continue. The largest portion of that work book is residential mortgage of just under $1 billion. And obviously, that is clearly affected by the interest rate environment and we had seen significant run down in that portfolio, along with some refinancing and participation and leveraged loans throughout the year. It will obviously be interest rate dependent, we would expect it to continue, but the rate of pace will be a function of particularly the refinancing in the residential mortgage market. And Steve, if you would like to talk about the pipeline?
Yes. So, as Roger indicated in his opening comments, we were really pleased with the first quarter kind of 10% annualized growth, excluding the allowance and the runoff portfolios. Presently, as we ended March, our pipeline was fairly strong – we had a 90-day weighted average of just over $200 million of new opportunities what we expect to fund as a weighted average probability over the next 90-days. But clearly all the focus right now is on the PPP activity and on the loan deferral activity and while our pipeline is good, we really would anticipate a lot of this opportunity moving to the latter half of the year. In the near term, it’s really hard to forecast any type of loan growth with any type of accuracy. But assuming some recovery to latter part of the year and the third quarter, early fourth quarter, we should see some activity pick up.
Okay, really helpful. Thank you, guys. Stay well and appreciate you take my question.
Thank you, Mike.
Thank you. Our next question comes from the line of Russell Gunther with D.A. Davidson. Your line is open.
Hey, good afternoon, guys.
Hey, Russell. How are you?
Hey, Dominic. I wanted to follow-up on comments you guys made with regard to some internal stress testing you performed. Wondering if you could share with us what some of your assumptions are within those more potentially adversely exposed sections like retail, food service, hotel, just the type of stress scenario, you walk through there and potentially lost content assumed?
Sure. While I can’t speak to the sub-segment level around our stress testing assumption, we do flex all elements of the portfolio, including loan growth, net interest margin compression, are obviously credit cost, which is the main driver of distress and then our cost base. I would say, as Roger mentioned, the type of environment we’re seeing now is in the acute impact to the macroeconomic conditions, particularly in the second quarter, are relatively consistent or somewhere between the adverse and severely as first portfolio as we know, not all economic environments are the same. So they affect the portfolio segments differently, owner occupied is different than investor that which is different than C&I and then consumer. But we have stressed all those appropriately given the macroeconomic drivers. We look to our own performance, our distribution and segmentation. And as we’ve laid out in the material, on Slide 9, you can see what our synthesized adverse stress would do based on a starting point of 4Q 2019.
Got it. That’s very helpful, Dominic. Thank you. And then I found Slide 8 to be particularly helpful, the reserve levels by loan bucket, but from the outside looking in both CRE and – both investor and owner occupied looked a little bit lighter than I would have thought, but obviously that doesn’t take into consideration the remaining credit mark. So I wonder if you could kind of speak to where those might shake out if you incorporate that or any just broader comments on reserve levels within CRE today?
Sure. And first, I would remind everybody, as we saw in our quarter and metrics within the portfolio, all of our credit metrics both leading in lines are incredibly strong. So, all of the provision or ACL in the first quarter was driven by the macroeconomic factors through CECL modeling. And for the most part, our portfolio being outside C&I, that’s going to be driven by the macro interest rate environment and unemployment. Most of the other segments are driven by unemployment and then CRE in particular with the forecasts around the real estate pricing indices, which have not yet moved as dramatically as what we are seeing in unemployment and GDP. So to the extent those macroeconomic conditions are forecast change as the severity and/or the duration of the economic forecast extends then it’s likely that CRE and some of those sub-segments would be more impacted. But at this point in time, we again, we haven’t seen any indication within our portfolio and some of those macroeconomic drivers aren’t indicating that stress.
Okay. That’s very helpful. I appreciate that, Dominic. Last question for me, guys. I appreciate the ring-fence of PPNR for to 2Q. Just wondering if you could within that you have touched on the expense outlook for the second quarter. Maybe just discuss some of the puts and takes there relative to 1Q and anticipation of guided lower fee income. Thank you.
Sure. The first thing I would note is the first quarter PPNR was particularly strong won by the outsized NPL that Roger mentioned. But we also had some one-timers in our cost base that also improved that number for the quarter. Going forward, the lower PPNR is primarily, first of all, driven by the 150 basis point rate decreased by the Fed followed by the lagging trend of LIBOR which was still over 100 basis points, but just recently in the last 30 to 40 days has dropped been over 50 basis points. So that obviously will play into our rate resets, particularly for May and June. And then, as we discussed, and Roger mentioned that our assumption when we lay this out, obviously things move very quickly week-to-week. We wanted to take the conservative approach to say what would impact to our fee businesses as the – if kind of a stay-at-home conditions in our region maintain. So, most of the lower PPNR is driven by those two impacts. Our cost management continues to be disciplined, particularly in this environment where we’re working from home and we’re actually seeing some small cost saves that are naturally occurring. There will be some increase throughout the year as we continue to invest in the business, including delivery transformation and some marketing dollars associated with our marketing technology investment for future growth. But for the most part, they would be relatively consistent with our initial indications from a couple of months ago, and slightly above, what I would say is the run rate from the first quarter, which is probably about $2.5 million higher than kind of a core non-interest expense that was printed.
That’s very helpful, Dominic. Thank you so much.
Thank you.
Thank you. [Operator Instructions] Our next question comes from the line of Brody Preston with Stephens. Your line is open.
Good afternoon everyone. How are you?
Good. How are you doing, Brody?
I am doing well. Thanks Dominic. I just wanted to circle back on the lease portfolio of the new lane. Could you remind us collateral is back from those new lanes, Dominic
Sure. So, primarily, it’s the products that the leases are providing sponsor that the – whether it’s the equipment for office equipment or big equipment or retail equipment, but there is only $1 residual at the end. So, most of the product is paid for and recovered through just working with the customer and channel partner.
Okay, okay. And so that’s – so I was sort of looking at on slide eight, ACL by segment, the C&I portfolio is up near 3%, but the lease portfolio is only at 134 basis points. And so I just wanted to better understand what was driving some of the differences between I guess what your CECL model is spitting out for loss content between those two books? So, on the hotel portfolio, you have a bullet there, this is the max LTV and debt service coverage ratio was 75% and 1.3x. I just wanted to clarify that that’s the max LTV and the lowest debt service coverage ratio that you’re underwriting to before this?
Sure, Steve, you’d like to address that question?
Yes, that is correct. That would be the max. So, obviously, we have LTVs that are lower and coverages that were higher at time of origination.
Yes, okay. Then on the $0.5 million decrease in third-party funding costs that you had in cash connect, just wanted to clarify, is there more to come here, Dominic, like as these as the cost move lower and what’s the average cost of the third-party funds?
Sure. So, a couple of points. First, the first quarter impact to cash connect was primarily rate environment driven and we positioned that business to be rate neutral. So, the decrease in funding costs was commensurate with the – primarily the interest rate environment. We don’t disclose that third-party funding pricing, but it is commensurate with – and slightly above our internal cost of funds.
Okay, great. And then how much of the – I guess just in terms of your mobile usage, it’s up pretty dramatically. So I just want to better understand, how are you thinking about potential brands rationalization in the aftermath of this?
Yes, so I think for certain, what we’ve observed over the last month and a half is that, what we believed in, were planning, planning and are investing in with regard to delivery transformation is that customer behaviors will shift. Clearly, this environment has accelerated that and reinforced kind of our position to do so. We are able and as laid out in the supplement, service our customers in this environment through reduced branch count, increased use of our mobile product along with supplemental myWSFS mobile product along with the call center. So I think we’re all learning a lot on how to work in this environment. We are clearly seeing our customers able to adapt to this environment significantly and we are actively evaluating, all post COVID realities and implications for our customers foremost, which is our priority and how best to operationalize through the bank.
Okay, great. And then the last one for me, it’s nice to see the wealth management and trust assets up it’s been down pretty much across the industry. And so wanted to know, what drove that if it was maybe one big – one new big client coming in or if anything was tied to bankruptcy? And can you just remind us of the timing in terms of inter-quarter when those fees typically come in?
Sure. Art, perhaps would you like to handle that question on wealth?
Sure. This is Art. And thanks for the question. I think we’ve continued through the first quarter is pretty strong performance in both our corporate trust business. We had a very solid fourth quarter on the personal trust business. In terms of AUM, it’s not been anyone customer, I think the referral program we’ve instituted working with the commercial bankers. We’ve seen an uptick in referrals. From that, we’ve seen referrals coming in from existing clients, as well as just getting strong market performance to at least early March, really contributed to the increase in AUM. I think there was one more question. And –
Yes. Just the timing of when those fees come in the corner?
Yes, we – for the advisory businesses, we usually go in advance at the beginning of the quarter. So, March 31, would have been the billing for second quarter and obviously that that will be slightly down, given the – the market through the end of March was down.
Okay, great. Thank you very much for taking my questions, everyone there. I appreciate it.
Thank you.
Thank you very much.
Thank you. Our next question comes from the line of Erik Zwick with Boenning and Scattergood. Your line is open.
Good afternoon.
Hi, Erik. How are you?
I’m doing well. Hope you are as well. I apologize. I had some connectivity issues there for a few minutes. So – probably as some of my questions were already asked and answered. With regard to the PPP program, do you have a – can you give us any color regarding the dollar amount of kind of remaining applications you have and how much of that you would expect to be funded during the second round of the – of the program?
Steve, would you like to address that?
Right. So this is…
I apologize. I was on mute. I apologize.
I was going to pinch it for you, Steve. But go ahead.
The first round, as you saw in the information process, around 2,400 applications for around $770 million, all that has been funded at this point, except for a couple of million dollars. We had teed up 1,800 applications for round two. And through kind of late morning, mid day, today, we had processed and received approval for 868 of those 1,800 for an additional $86 million. I don’t have the total round two. What that 1,800 would have totaled, I can – we can circle back with you on that question, unless someone else on the line on our team has….
Yes, this is Roger. So as Steve mentioned, in round one, our average loan size was a little over 300,000. We believe based on the applications received that we’re in the middle of processing, it’s the second round that will be a little under 100,000, which I think demonstrates the fact and the need for the second round, so they could get to the smaller customers.
Great. That’s helpful. And then just the last question for me, with regard to non-interest income and some of the line items that are potentially sensitive to the COVID environment and thinking about credit, debit card, fees and deposit service charges, any kind of sense for, is there additional pressure on those line items in 2Q, relative to 1Q, just given that we’re likely to see a full quarter impact?
Sure, good question. I would say absolutely. We think back that really 10 of the 12 weeks in the first quarter was business as usual. And it really wasn’t until the end of March that I think most areas, particularly across the country, were in a stay at home situation for a period of time. So, whether it’s at Cash Connect or our own customers in our local footprint, transaction and ATM transactions are down without a doubt. And then that would extend through March and then likely recover as we see the reopening of the economy in phases. But most likely, we will see it in that credit, debit card and ATM transaction line, potentially in mortgage banking to the extent either from an interest rate environment and/or an ability to do in-home appraisals, etcetera, would be impacted as well.
Great. Thank you for taking my questions.
Thank you.
Thank you. And with no further questions in the queue, I would now like to turn the conference back over to Mr. Rodger Levenson.
Thank you, operator. Dominic and I will be participating in an investor conference via teleconferencing next week. And, as always, we’re available for additional questions after the call. Thanks very much for your interest in support and WSFS and we wish everybody have a good day. Thank you.
Ladies and gentlemen, this does conclude today’s conference. Thank you for your participation. You may now disconnect. Everyone have a wonderful day. Thank you.