WSFS Financial Corp. reported sharply higher earnings in the second quarter from some profitable balance sheet moves and an increase in its net interest margin.

For the second quarter, WSFS earned $3.2 million, a 98% increase from the year-earlier period. Six-month earnings soared 117% as well.

"Continued asset quality improvements and 1994's investment growth strategy have favorably affected net interest income in 1995, offsetting operating expenses," said Marvin N. Schoenhals, chief executive of the Wilmington, Del., holding company for Wilmington Savings Fund Society FSB.

The company's earnings were also bolstered by higher income-tax benefits from net operating loss carryforwards, Mr. Schoenhals added. He said the company is "presently taking actions to mitigate the adverse effects of becoming fully taxable."

The company has been moving to increase fee-based businesses and reduce costs. Recently, $1.3 billion-asset WSFS bought a $50 million portfolio of discounted commercial real estate loans.

WSFS also is in the midst of selling $192 million in deposits from its Philadelphia franchise to Commonwealth Savings Bank, for a $10 million gain.

On Monday the company announced it was buying American Finance and Investment Inc., a national mortgage broker that uses an 800 number in offering consumers loans.

AFI, as it's known, is also launching an on-line mortgage service, where consumers can get mortgage information over their personal computer and, eventually, access a number of consumer lending products.

"They're finding things a little off the beaten path," said John Bailey, an analyst at Friedman Billings Ramsey & Co. in Washington.

Nonperforming assets, which caused serious trouble at WSFS in the late '80s, fell from $41 million at the end of 1994 to $30.7 million, or 2.36% of total assets. The company said the decrease was the result of problem asset sales and the return of $4.4 million of commercial real estate loans to performing status.

Total assets at WSFS rose $106 million from the year-earlier period, a result of the increases in investment securities as the company boosts liquidity to fund the deposit sale.

WSFS increased its brokered deposits by $65 million during the quarter. Jerry Holbrook, controller, said the company increased the brokered deposits as a source of funds for the deposit sale.

"We're building liquidity, and the price was right," he said.

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