WSFS Financial Corp. (NASDAQ:WSFS) Q3 2020 Earnings Conference Call - Final Transcript
Oct 23, 2020 • 01:00 pm ET
significantly during the quarter and currently stands at 3% of overall loans. Delinquencies, non-performers and charge-offs remain at low levels. As a result of the completion of our targeted portfolio reviews started in the second quarter, total problem assets, which include all criticized, classified and non-performing loans, increased to 49% of Tier 1 capital plus ACL. Just over half of the problem loans are in the hotel, retail, retail real estate and foodservice portfolios, which have seen the biggest impact of the pandemic.
ACL coverage of 2.74%, excluding PPP, was flat to the second quarter and stands at 3.22% when including the remaining credit mark on our acquired portfolios. The provision in the quarter reflected relatively consistent economic forecasts versus prior quarter expectations and overall stable portfolio performance. The risk rating migration in the quarter was primarily incorporated into our second quarter provisioning. Future loss content will be dependent upon the path of the economic recovery and potential additional stimulus.
Despite a very strong capital position, we prudently suspended share repurchases in the second quarter due to the significant uncertainty at the onset of the pandemic. With improved visibility into the near-term operating environment, solid operating performance and significant capital and ACL levels, the Board approved the resumption of share repurchases in the fourth quarter. At current trading ranges, the IRR on share repurchases is very compelling and we therefore intend to be aggressive buyers of our stock.
Looking ahead, in the fourth quarter, we see a modest decline in core pre-provision net revenue based upon anticipated lower purchase loan accretion, a seasonal decline in mortgage revenue and continued franchise investment. This outlook envisions a continuation of the current economic recovery and 20% of PPP loan forgiveness. As has been our recent practice, we will provide our outlook on 2020 when we announce our fourth quarter results in January.
In conclusion, while the macro longer-term outlook will be determined by the length and path of the economic recovery, our entire company remains focused and energized on realizing the growth opportunity in front of us as the largest locally headquartered bank in the Philadelphia and Delaware Valley region.
Thank you. I will now turn it over to Dominic to facilitate Q&A.
Dominic C. Canuso
Thanks, Roger. Kevin, if you can open the line for questions?