false000082894400008289442023-10-232023-10-23
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
October 23, 2023
Date of Report
(Date of Earliest Event Reported)
WSFS Financial Corporation
(Exact Name of Registrant as Specified in its Charter)
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Delaware | | 001-35638 | | 22-2866913 |
(State or Other Jurisdiction of incorporation) | | (SEC Commission File Number) | | (IRS Employer Identification Number) |
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500 Delaware Ave,
Wilmington, Delaware, 19801
(Address of Principal Executive Offices) (Zip Code)
Registrant’s Telephone Number, including Area Code: (302) 792-6000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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☐ | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act: |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, par value $0.01 per share | WSFS | Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 40.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operation and Financial Condition
On October 23, 2023, WSFS Financial Corporation (the “Registrant”) issued a press release to report earnings for the quarter ended September 30, 2023. A copy of the press release is furnished with this Form 8-K as Exhibit 99.1.
This information (including Exhibit 99.1) is being furnished under Item 2.02 hereof and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 7.01 Regulation FD Disclosures
The attached presentation contains information that the members of the Registrant's management will use during visits with investors, analysts, and other interested parties to assist their understanding of the Registrant from time to time throughout the fourth quarter of 2023. Other presentations and related materials will be made available as they are presented during the year. A copy of the earnings release supplement is furnished with this Form 8-K as Exhibit 99.2.
This information (including Exhibit 99.2) is being furnished under Item 7.01 hereof and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference into any filing under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Other Exhibits
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.
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| | WSFS FINANCIAL CORPORATION |
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Date: | October 23, 2023 | By: | | /s/ Arthur J. Bacci |
| | | | Arthur J. Bacci Executive Vice President, Chief Wealth Officer and Interim Chief Financial Officer |
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| | WSFS Bank Center | WSFS Bank Place | 1 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
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| | EXHIBIT 99.1 |
FOR IMMEDIATE RELEASE | | Investor Relations Contact: Andrew Basile |
| | (302) 504-9857; abasile@wsfsbank.com |
October 23, 2023 | | Media Contact: Rebecca Acevedo |
| | (215) 253-5566; racevedo@wsfsbank.com |
WSFS REPORTS 3Q 2023 EPS OF $1.22 AND ROA OF 1.45%;
SOLID LOAN GROWTH, NIM OF 4.08%, AND FEE REVENUE INCREASE OF 9%;
CONTINUED STRONG LIQUIDITY AND CAPITAL LEVELS
Wilmington, DE — WSFS Financial Corporation (Nasdaq: WSFS), the parent company of WSFS Bank, today announced its financial results for the third quarter of 2023.
Selected financial results and metrics are as follows:
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(Dollars in millions, except per share data) | | 3Q 2023 | | 2Q 2023 | | 3Q 2022 | | | | |
Net interest income | | $ | 182.6 | | | $ | 181.8 | | | $ | 176.8 | | | | | |
Fee revenue | | 72.7 | | | 66.9 | | | 62.7 | | | | | |
Total net revenue | | 255.3 | | | 248.7 | | | 239.5 | | | | | |
Provision for credit losses | | 18.4 | | | 15.8 | | | 7.5 | | | | | |
Noninterest expense | | 139.7 | | | 141.3 | | | 132.9 | | | | | |
Net income attributable to WSFS | | 74.2 | | | 68.7 | | | 73.4 | | | | | |
Pre-provision net revenue (PPNR)(1) | | 115.6 | | | 107.5 | | | 106.6 | | | | | |
Earnings per share (EPS) (diluted) | | 1.22 | | | 1.12 | | | 1.16 | | | | | |
Return on average assets (ROA) (a) | | 1.45 | % | | 1.36 | % | | 1.44 | % | | | | |
Return on average equity (ROE) (a) | | 12.6 | | | 11.8 | | | 12.4 | | | | | |
Fee revenue as % of total net revenue | | 28.4 | | | 26.8 | | | 26.1 | | | | | |
Efficiency ratio | | 54.6 | | | 56.7 | | | 55.4 | | | | | |
See “Notes”GAAP results for the quarterly periods shown included the following items that are excluded from core results.
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| | 3Q 2023 | | 2Q 2023 | | 3Q 2022 |
(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) |
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Visa derivative valuation adjustment(2) | | $ | 0.8 | | | $ | 0.01 | | | $ | 0.6 | | | $ | 0.01 | | | $ | 2.3 | | | $ | 0.03 | |
Corporate development and restructuring expense | | 0.1 | | | — | | | 2.8 | | | 0.03 | | | 2.6 | | | 0.03 | |
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(1) As used in this press release, PPNR is a non-GAAP financial measure that adjusts net income determined in accordance with GAAP to exclude the impacts of (i) income tax provision and (ii) provision for credit losses. 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.
(2) The Visa derivative valuation adjustment relates to our derivative liability established from the sale of 360,000 Visa Class B shares in 2Q 2020. The adjustment represents an expense to increase the liability and is included in Other income on the Summary Statements of Income.
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| | WSFS Bank Center | WSFS Bank Place | 2 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
CEO Commentary
Rodger Levenson, Chairman, President and CEO, said, "Our 3Q operating results reflect the continued optimization of the significant franchise investment over the past several years. Revenue growth was highlighted by solid quarterly loan growth of 3%, a NIM of 4.08%, and strong performance across our major fee businesses.
"While the Greater Philadelphia and Delaware regional economy continues to demonstrate resiliency, we anticipate continued uncertainty in the near-term outlook. In that regard, our balance sheet remains strong with an ACL coverage of 1.28%, significant liquidity capacity, and all regulatory capital ratios above “well-capitalized” levels.
"During the quarter, we were pleased to announce the expansion of our Wealth Management business in southern Delaware and the establishment of a new presence in Boca Raton, Florida with the acquisition of a registered investment advisory firm's business based in Rehoboth Beach, Delaware.
"In addition, WSFS was honored to be voted reader's pick as the Best Bank For Customer Service in 2023 in South Jersey Biz Magazine. This recognition is another tribute to our over 2,200 Associates who live our Mission: We Stand For Service every day."
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| | WSFS Bank Center | WSFS Bank Place | 3 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
Highlights for 3Q 2023:
•Core EPS(3) was $1.23 flat from 3Q 2022.
•Core ROA(3) was 1.46% compared to 1.52% for 3Q 2022.
•Core PPNR(3) of $116.4 million, or 2.28% of average assets(3) compared to $111.4 million and 2.18%, respectively, for 3Q 2022.
•Net loan growth of 3% (11% annualized) from 2Q 2023 driven by growth across the commercial portfolio and our consumer partnership with Spring EQ.
•Customer deposits decreased by $363.3 million, or 2% (9% annualized) for the quarter, driven by a $306.1 million decrease primarily in transactional trust deposits, which tend to be large and short-term in nature.
•Net interest margin of 4.08% compared to 4.11% for 2Q 2023, reflects increasing deposit betas, partially offset by higher loan yields.
•Core fee revenue (noninterest income)(3) was a record $73.4 million, an increase of $6.0 million, across all major business lines, or 9% (not annualized), compared to 2Q 2023.
•Total net credit costs were $18.2 million, driven by overall net loan growth and portfolio migration. The ACL coverage ratio was 1.28%, flat from 2Q 2023.
•WSFS Bank capital ratios remain significantly above "well-capitalized" levels, with total risk-based capital of 14.43% and Common Equity Tier 1 of 13.26%.
•WSFS repurchased 386,900 shares of common stock at an average price of $40.67 per share, totaling an aggregate of $15.7 million. The Board of Directors also approved a quarterly cash dividend of $0.15 per share.
(3) As used in this press release, core EPS, core ROA, core PPNR, core PPNR as a percent of average assets, and core fee revenue (noninterest income) are non-GAAP financial measures. These non-GAAP financial measures exclude certain pre-tax adjustments and the tax impact of such adjustments. For a reconciliation of these and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.
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| | WSFS Bank Center | WSFS Bank Place | 4 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
Third Quarter 2023 Discussion of Financial Results
Balance Sheet
The following table summarizes loan and lease balances and composition at September 30, 2023 compared to June 30, 2023 and September 30, 2022:
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Loans and Leases | | | | | | | | | | | | |
(Dollars in millions) | | September 30, 2023 | | June 30, 2023 | | September 30, 2022 |
Commercial & industrial (C&I) | | $ | 4,590 | | | 37 | % | | $ | 4,533 | | | 37 | % | | $ | 4,445 | | | 38 | % |
Commercial mortgage | | 3,646 | | | 29 | | | 3,553 | | | 29 | | | 3,280 | | | 28 | |
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Construction | | 1,043 | | | 8 | | | 955 | | | 7 | | | 1,028 | | | 9 | |
Commercial small business leases | | 606 | | | 5 | | | 590 | | | 5 | | | 535 | | | 5 | |
Total commercial loans and leases | | 9,885 | | | 79 | | | 9,631 | | | 78 | | | 9,288 | | | 80 | |
Residential mortgage | | 873 | | | 7 | | | 847 | | | 7 | | | 802 | | | 7 | |
Consumer | | 1,957 | | | 15 | | | 1,905 | | | 16 | | | 1,677 | | | 14 | |
ACL | | (176) | | | (1) | | | (172) | | | (1) | | | (146) | | | (1) | |
Net loans and leases | | $ | 12,539 | | | 100 | % | | $ | 12,211 | | | 100 | % | | $ | 11,621 | | | 100 | % |
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At September 30, 2023, WSFS’ net loan and lease portfolio increased $328.0 million, or 3% (11% annualized), when compared with June 30, 2023 due to increases of $92.9 million in commercial mortgage, $88.3 million in construction loans, $56.7 million in C&I, $51.9 million in consumer loans, primarily from Spring EQ (home equity loans), and $15.6 million in NewLane (commercial small business leases).
In line with our 2022-2024 Strategic Plan, the C&I portfolio (including owner-occupied real estate) continued to be our largest portfolio at 37% of net loans and leases. Additionally, our total commercial loan and lease portfolio continues to represent a majority of our lending portfolio at 79% of net loans and leases.
Net loans and leases at September 30, 2023 increased $918.2 million, or 8%, when compared with September 30, 2022. The increase was driven by increases of $365.3 million in commercial mortgage, $280.0 million in consumer loans, primarily from Spring EQ, $144.9 million in C&I, and $71.0 million in NewLane.
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| | WSFS Bank Center | WSFS Bank Place | 5 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
The following table summarizes customer deposit balances and composition at September 30, 2023 compared to June 30, 2023 and September 30, 2022:
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Customer Deposits | | | | | | | | | | | | |
(Dollars in millions) | | September 30, 2023 | | June 30, 2023 | | September 30, 2022 |
Noninterest demand | | $ | 4,913 | | | 31 | % | | $ | 5,462 | | | 34 | % | | $ | 6,171 | | | 37 | % |
Interest-bearing demand | | 3,028 | | | 19 | | | 2,969 | | | 18 | | | 3,462 | | | 21 | |
Savings | | 1,681 | | | 10 | | | 1,815 | | | 11 | | | 2,266 | | | 14 | |
Money market | | 4,560 | | | 29 | | | 4,375 | | | 27 | | | 3,740 | | | 22 | |
Total core deposits | | 14,182 | | | 89 | | | 14,621 | | | 90 | | | 15,639 | | | 94 | |
Customer time deposits | | 1,715 | | | 11 | | | 1,640 | | | 10 | | | 1,063 | | | 6 | |
Total customer deposits | | $ | 15,897 | | | 100 | % | | $ | 16,261 | | | 100 | % | | $ | 16,702 | | | 100 | % |
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Total customer deposits decreased $363.3 million, or 2% (9% annualized), when compared with June 30, 2023, driven by a $306.1 million decrease primarily in transactional trust deposits, which tend to be large and short-term in nature.
Customer deposits decreased by $804.8 million from September 30, 2022 primarily driven by customer utilization of excess liquidity and $312.5 million lower transactional trust deposits.
Our deposit base remains highly diverse, with more than half of our customer deposits, or 55%, from our Commercial, Small Business and Wealth Management customer relationships. The loan to deposit ratio(4) was 79% at September 30, 2023, reflecting continued capacity to fund future loan growth. Our total protected deposits(5) were 72% of total customer deposits.
Core deposits were a strong 89% of total customer deposits, and no- and low-cost checking accounts represented a robust 50% of total customer deposits at September 30, 2023, with a weighted average cost of 35bps for the quarter.
(4) Ratio of net loans and leases to total customer deposits.
(5) Protected deposits include collateralized and FDIC insured deposits.
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| | WSFS Bank Center | WSFS Bank Place | 6 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
Net Interest Income | | | | | | | | | | | | | | | | | | | | |
| Three Months Ending |
(Dollars in millions) | | September 30, 2023 | | June 30, 2023 | | September 30, 2022 |
Net interest income before purchase accretion | | $ | 178.8 | | | $ | 178.5 | | | $ | 172.7 | |
Purchase accounting accretion | | 3.8 | | | 3.3 | | | 4.1 | |
Net interest income | | $ | 182.6 | | | $ | 181.8 | | | $ | 176.8 | |
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Net interest margin before purchase accretion | | 4.00 | % | | 4.03 | % | | 3.90 | % |
Purchase accounting accretion | | 0.08 | | | 0.08 | | | 0.09 | |
Net interest margin | | 4.08 | % | | 4.11 | % | | 3.99 | % |
Net interest income increased $0.8 million, or less than 1% (not annualized), compared to 2Q 2023 and increased $5.8 million, or 3%, compared to 3Q 2022, primarily due to the benefits of our asset-sensitive balance sheet, partially offset by increasing deposit betas.
Net interest margin decreased 3bps from 2Q 2023, primarily due to increasing deposit betas, partially offset by higher loan yields. Net interest margin increased 9bps from 3Q 2022, primarily due to the benefits of our asset-sensitive balance sheet.
Total loan yields were 6.92%, an increase of 13bps compared to 2Q 2023. Total customer deposit costs were 1.38%, an increase of 22bps compared to 2Q 2023 and customer interest-bearing deposit costs were 2.05%, an increase of 30bps compared to 2Q 2023.
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| | WSFS Bank Center | WSFS Bank Place | 7 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
Asset Quality
The following table summarizes asset quality metrics as of and for the period ended September 30, 2023 compared to June 30, 2023 and September 30, 2022.
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(Dollars in millions) | September 30, 2023 | | June 30, 2023 | | September 30, 2022 |
Problem assets (6) | $ | 543.4 | | | $ | 465.3 | | | $ | 472.9 | |
Nonperforming assets | 57.8 | | | 33.5 | | | 37.3 | |
Delinquencies | 110.8 | | | 72.8 | | | 69.3 | |
Net charge-offs | 14.3 | | | 13.1 | | | 3.2 | |
Total net credit costs (recoveries) (r) | 18.2 | | | 16.4 | | | 8.5 | |
Problem assets to total Tier 1 capital plus ACL | 23.61 | % | | 20.14 | % | | 23.17 | % |
Classified assets to total Tier 1 capital plus ACL | 16.11 | | | 15.37 | | | 15.14 | |
Ratio of nonperforming assets to total assets | 0.29 | | | 0.16 | | | 0.19 | |
Ratio of nonperforming assets (excluding accruing TDRs) to total assets | — | | | — | | | 0.10 | |
Delinquencies to gross loans | 0.87 | | | 0.59 | | | 0.59 | |
Ratio of quarterly net charge-offs to average gross loans | 0.45 | | | 0.43 | | | 0.11 | |
Ratio of allowance for credit losses to total loans and leases (q) | 1.28 | | | 1.28 | | | 1.14 | |
Ratio of allowance for credit losses to nonaccruing loans | 306 | | | 521 | | | 755 | |
See “Notes”
While overall asset quality metrics remained near historically favorable levels, leading indicators reflected the impact of the slowing economy. Problem assets to total Tier 1 capital plus ACL ratio increased to 23.61% from June 30, 2023 due to downgrades in the Construction, Commercial Mortgage - Office, and C&I portfolios. Delinquencies increased $38.0 million, or 28 bps of gross loans compared to June 30, 2023 largely due to two multi-family loans and one healthcare loan. Total delinquencies to gross loans were 87 bps.
Nonperforming assets increased $24.2 million, or 13 bps of total assets compared to June 30, 2023 primarily driven by two unrelated C&I loans that experienced significant operational challenges.
Net charge-offs were $14.3 million, or 0.45% (annualized) of average gross loans during the quarter. Approximately 60% of these charge-offs can be attributed to the Upstart and NewLane portfolios, while the remaining charge-offs were mainly linked to the loans mentioned above.
Total net credit costs were $18.2 million in the quarter compared to $16.4 million in 2Q 2023. The ACL was $176.0 million as of September 30, 2023, an increase of $4.1 million from June 30, 2023. The increases in net credit costs and ACL from the prior quarter were due to overall net loan growth. The ACL coverage ratio was 1.28%, flat from June 30, 2023.
(6) Problem assets includes all criticized, classified, and nonperforming loans as well as other real estate owned (OREO).
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| | WSFS Bank Center | WSFS Bank Place | 8 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
Core Fee Revenue
Fees continue to be resilient and well-diversified among various sources, including Wealth Management, Cash Connect®, traditional and other banking fees, capital markets and mortgage banking. Core fee revenue (noninterest income) of $73.4 million increased $6.0 million, or 9% (not annualized), compared to 2Q 2023, driven by increases of $2.0 million in core banking across consumer partnerships and BOLI income, $1.9 million in capital markets income, which can be uneven from period to period depending on market drivers, $1.2 million in Cash Connect® and $1.0 million in Wealth Management fees driven by Institutional Trust and Private Wealth Management.
Core fee revenue increased $8.5 million, or 13%, compared to 3Q 2022. The increase was primarily driven by a $5.8 million increase in Cash Connect®, $3.8 million in Wealth Management fees, and $2.8 million in capital markets fees, partially offset by a decrease of $3.7 million in core banking fees from lower returns on derivative collateral as a result of funding optimization and lower income from our consumer partnerships.
For 3Q 2023, our core fee revenue ratio(7) was 28.6% compared to 27.0% in 2Q 2023 and 26.8% in 3Q 2022.
(7) As used in this press release, core fee revenue ratio is 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.
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| | WSFS Bank Center | WSFS Bank Place | 9 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
Core Noninterest Expense(8)
Core noninterest expense of $139.6 million increased $1.1 million, or 1% (not annualized), compared to 2Q 2023. The increase is primarily due to $2.1 million in salaries and benefits and $1.0 million from Cash Connect® partially offset by decreases of $1.5 million in professional fees and $0.6 million in occupancy expenses.
Core noninterest expense increased $9.3 million, or 7%, compared to 3Q 2022. The increase is primarily due to $6.9 million in higher variable operating costs, driven by higher Cash Connect® funding costs from the rising interest rate environment, and $2.2 million from salaries and benefits.
Our core efficiency ratio(8) was 54.4% in 3Q 2023, compared to 55.5% in 2Q 2023 and 53.8% in 3Q 2022.
Income Taxes
We recorded a $22.9 million income tax provision in 3Q 2023, compared to $23.0 million in 2Q 2023 and $25.8 million in 3Q 2022.
The effective tax rate was 23.6% in 3Q 2023 compared to 25.1% in 2Q 2023 and 26.0% in 3Q 2022. The decrease in effective tax rate for 3Q 2023 compared to 2Q 2023 was primarily driven by favorable tax benefits projected from our Low Income Housing Tax Credit (LIHTC) investments and state taxes. The decrease in effective tax rate for 3Q 2023 compared to 3Q 2022 was primarily due to the favorable tax benefits described above and the impact of a discrete state tax item associated with the sale of the BMT Insurance Advisors business in 2022.
(8) As used in this press release, core noninterest expense and core efficiency ratio are non-GAAP financial measures. These non-GAAP financial measures exclude certain pre-tax adjustments and the tax impact of such adjustments. For a reconciliation of these and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.
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| | WSFS Bank Center | WSFS Bank Place | 10 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
Capital Management
Capital levels remain strong and are all substantially in excess of the “well-capitalized” regulatory benchmarks at September 30, 2023 with WSFS Bank’s Tier 1 leverage ratio of 10.72%, Common Equity Tier 1 capital ratio and Tier 1 capital ratio of 13.26%, and Total Risk-based capital ratio of 14.43%.
WSFS’ total stockholders’ equity decreased $71.9 million, or 3% (not annualized), during 3Q 2023. The decrease was primarily due to a decline in accumulated other comprehensive income (AOCI) of $124.7 million driven by market-value declines on investment securities due to the rising interest rate environment, capital returns of $24.9 million to stockholders, comprising $15.7 million from share repurchases and $9.2 million from quarterly dividends, and was partially offset by quarterly earnings of $74.2 million.
WSFS’ tangible common equity(9) decreased $76.1 million, or 6% (not annualized), compared to June 30, 2023. WSFS’ common equity to assets ratio was 11.19% at September 30, 2023, and our tangible common equity to tangible assets ratio(9) decreased by 27bps during the quarter to 6.49%, primarily due to the reasons described above.
At September 30, 2023, book value per share was $36.93, a decrease of $0.96, or 3% (not annualized), from June 30, 2023, and tangible common book value per share(9) was $20.33, a decrease of $1.12, or 5% (not annualized), from June 30, 2023.
During 3Q 2023, WSFS repurchased 386,900 shares of common stock for an aggregate of $15.7 million. As of September 30, 2023, WSFS has 5,582,593 shares, or approximately 9% of outstanding shares, remaining to repurchase under its current authorizations.
The Board of Directors approved a quarterly cash dividend of $0.15 per share of common stock. This dividend will be paid on November 17, 2023 to stockholders of record as of November 3, 2023.
(9) As used in this press release, tangible common equity, tangible common equity to tangible assets ratio and tangible common book value per share are non-GAAP financial measures. These non-GAAP financial measures exclude goodwill and intangible assets and the related tax-effected amortization. For a reconciliation of these and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.
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| | WSFS Bank Center | WSFS Bank Place | 11 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
Selected Business Segments (included in previous results):
Wealth Management
The Wealth Management segment provides a broad array of planning and advisory services, investment management, trust services, credit and deposit products to individual, corporate, and institutional clients through multiple integrated businesses.
Selected quarterly performance results and metrics are as follows:
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(Dollars in millions) | | September 30, 2023 | | June 30, 2023 | | September 30, 2022 | | | | |
Net interest income | | $ | 21.1 | | | $ | 21.5 | | | $ | 15.1 | | | | | |
(Recovery of) provision for credit losses | | (0.1) | | | (0.5) | | | — | | | | | |
Fee revenue | | 33.3 | | | 32.9 | | | 29.9 | | | | | |
Noninterest expense(10) | | 24.5 | | | 24.3 | | | 24.2 | | | | | |
Pre-tax income | | 30.0 | | | 30.5 | | | 20.9 | | | | | |
Performance Metrics | | | | | | | | | | |
Trust fee revenue (Institutional Services and BMT of DE) | | $ | 18.5 | | | $ | 17.5 | | | $ | 16.1 | | | | | |
Private wealth management fee revenue | | 14.5 | | | 14.4 | | | 13.0 | | | | | |
AUM/AUA(11) | | 77,560 | | | 67,877 | | | 61,393 | | | | | |
Wealth Management pre-tax income decreased $0.5 million compared to 2Q 2023. The decrease was primarily attributable to a higher recovery of credit losses during the prior quarter. Fee revenue increased $0.4 million, or 1%, from 2Q 2023, primarily due to continued growth in Institutional Services. Total noninterest expense increased $0.2 million compared to 2Q 2023.
Wealth Management pre-tax income increased $9.1 million compared to 3Q 2022, driven by higher net interest income and fee revenue in Institutional Services and Private Wealth Management. Fee revenue increased $3.4 million compared to 3Q 2022 due to account growth in Institutional Services and AUM in Private Wealth Management. Total noninterest expense increased $0.3 million compared to 3Q 2022.
Net AUM of $8.1 billion at the end of 3Q 2023 was flat compared to 2Q 2023, and increased $0.8 billion compared to 3Q 2022. AUM balances over the period were primarily impacted by returns in broader equity and fixed income markets.
(10) Includes intercompany allocation of expense and excludes provision for credit losses.
(11) Represents Assets Under Management and Assets Under Administration.
| | | | | | | | | | | | | | |
| | WSFS Bank Center | WSFS Bank Place | 12 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
Cash Connect®
Cash Connect® is a premier provider of ATM vault cash, smart safe and cash logistics services in the United States, servicing non-bank ATMs and smart safes nationwide and supporting ATMs for WSFS Bank Customers with one of the largest branded ATM networks in our region.
Selected quarterly financial results and metrics are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | |
(Dollars in millions) | | September 30, 2023 | | June 30, 2023 | | September 30, 2022 | | | | |
Net revenue(12) | | $ | 18.0 | | | $ | 17.0 | | | $ | 12.8 | | | | | |
Noninterest expense(13) | | 16.9 | | | 16.0 | | | 10.8 | | | | | |
Pre-tax income | | 1.1 | | | 0.9 | | | 2.0 | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Performance Metrics | | | | | | | | | | |
Cash managed | | $ | 1,517 | | | $ | 1,632 | | | $ | 1,706 | | | | | |
Number of serviced non-bank ATMs and smart safes | | 33,860 | | | 34,325 | | | 34,285 | | | | | |
Number of WSFS owned and branded ATMs | | 592 | | | 679 | | | 611 | | | | | |
ROA | | 0.87 | % | | 0.72 | % | | 0.99 | % | | | | |
Cash Connect® net revenue increased $1.0 million from 2Q 2023 driven by higher smart safe and managed services volume, the rising interest rate environment, and funding source optimization (offset by higher external funding expense). Noninterest expense increased $0.9 million compared to 2Q 2023 driven by higher external funding expense and armored carrier expense year-over-year. Pre-tax income increased $0.2 million compared to 2Q 2023, driven by higher smart safe and managed services volume. ROA increased 15bps from 2Q 2023 primarily due to the same reasons.
Net Revenue increased $5.2 million and noninterest expense increased $6.1 million compared to 3Q 2022 due to the reasons described above. Pre-tax income decreased $0.9 million compared to 3Q 2022, driven by increased insurance-related expense and personnel expense. ROA decreased 12bps from 3Q 2022 with lower pre-tax income.
At the end of 3Q 2023, Cash Connect® had approximately $1.5 billion in cash managed with 19% year-over-year growth in smart safe units. Cash Connect® continues to focus on investment in its growing product lines and expand these services across the country, alongside a wide network and strong pipeline of channel partners, retailers, and top-tier financial institutions.
(12) Includes intercompany allocation of income and net interest income.
(13) Includes intercompany allocation of expense.
| | | | | | | | | | | | | | |
| | WSFS Bank Center | WSFS Bank Place | 13 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
Third Quarter 2023 Earnings Release Conference Call
Management will conduct a conference call to review 3Q 2023 results at 1:00 p.m. Eastern Time (ET) on Tuesday, October 24, 2023. Interested parties may access the conference call live on our Investor Relations website (https://investors.wsfsbank.com). For those who cannot access the live conference call, a replay will be accessible shortly after the event concludes through our Investor Relations website.
About WSFS Financial Corporation
WSFS Financial Corporation is a multibillion-dollar financial services company. Its primary subsidiary, WSFS Bank, is the oldest and largest locally-headquartered bank and trust company in the Greater Philadelphia and Delaware region. As of September 30, 2023, WSFS Financial Corporation had $20.0 billion in assets on its balance sheet and $77.6 billion in assets under management and administration. WSFS operates from 116 offices, 88 of which are banking offices, located in Pennsylvania (59), Delaware (40), New Jersey (14), Florida (1), Nevada (1) and Virginia (1) and provides comprehensive financial services including commercial banking, consumer banking, treasury management and trust and wealth management. Other subsidiaries or divisions include Arrow Land Transfer, Bryn Mawr Capital Management, LLC, Bryn Mawr Trust®, The Bryn Mawr Trust Company of Delaware, Cash Connect®, NewLane Finance®, Powdermill® Financial Solutions, WSFS Institutional Services®, WSFS Mortgage®, and WSFS Wealth® Investments. Serving the Greater Delaware Valley since 1832, WSFS Bank is one of the ten oldest banks in the United States continuously operating under the same name. For more information, please visit www.wsfsbank.com.
| | | | | | | | | | | | | | |
| | WSFS Bank Center | WSFS Bank Place | 14 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
Forward-Looking Statements
This press release contains estimates, predictions, opinions, projections and other "forward-looking statements" as that phrase is defined in the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, references to the Company's predictions or expectations of future business or financial performance as well as its goals and objectives for future operations, financial and business trends, business prospects, and management's outlook or expectations for earnings, revenues, expenses, capital levels, liquidity levels, asset quality or other future financial or business performance, strategies or expectations. The words “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “project” and similar expressions, among others, generally identify forward-looking statements. Such forward-looking statements are based on various assumptions (some of which may be beyond the Company's control) and are subject to risks and uncertainties (which change over time) and other factors which could cause actual results to differ materially from those currently anticipated. Such risks and uncertainties include, but are not limited to, difficult market conditions and unfavorable economic trends in the United States generally and in financial markets, particularly in the markets in which the Company operates and in which its loans are concentrated, including difficult and unfavorable conditions and trends related to housing markets, costs of living, unemployment levels, interest rates, supply chain issues, inflation, and economic growth; the impacts related to or resulting from recent bank failures and other economic and industry volatility, including potential increased regulatory requirements and costs and potential impacts to macroeconomic conditions; possible additional loan losses and impairment of the collectability of loans; the Company's level of nonperforming assets and the costs associated with resolving problem loans including litigation and other costs and complying with government-imposed foreclosure moratoriums; changes in market interest rates which may increase funding costs and reduce earning asset yields and thus reduce margin; the impact of changes in interest rates and the credit quality and strength of underlying collateral and the effect of such changes on the market value of the Company's investment securities portfolio; the credit risk associated with the substantial amount of commercial real estate, construction and land development, and commercial and industrial loans in the Company's loan portfolio; the extensive federal and state regulation, supervision and examination governing almost every aspect of the Company's operations and potential expenses associated with complying with such regulations; the Company's ability to comply with applicable capital and liquidity requirements, including its ability to generate liquidity internally or raise capital on favorable terms; possible changes in trade, monetary and fiscal policies and stimulus programs, laws and regulations and other activities of governments, agencies, and similar organizations, and the uncertainty of the short- and long-term impacts of such changes; any impairments of the Company's goodwill or other intangible assets; the discontinued publication of London Inter-Bank Offered Rate (LIBOR) and the transition to Secured Overnight Financing Rate (SOFR) as an alternative reference interest rate; the success of the Company's growth plans, including its plans to grow the commercial small business leasing, residential, small business and Small Business Administration (SBA) portfolios and wealth management business; the Company's ability to successfully integrate and fully realize the cost savings and other benefits of its acquisitions, manage risks related to business disruption following those acquisitions, and post-acquisition Customer acceptance of the Company's products and services and related Customer disintermediation; negative perceptions or publicity with respect to the Company generally and, in particular, the Company's trust and wealth management business; failure of the financial and operational controls of the Company's Cash Connect® and/or Wealth Management divisions; adverse judgments or other resolution of pending and future legal proceedings, and cost incurred in defending such proceedings; the Company's reliance on third parties for certain important functions, including the operation of its core systems, and any failures by such third parties; system failures or cybersecurity incidents or other breaches of the Company's network security, particularly given widespread remote working arrangements; the Company's ability to recruit and retain key Associates; the effects of problems encountered by other financial institutions that adversely affect the Company or the banking industry generally; the effects of weather, including climate change, and natural disasters such as floods, droughts, wind, tornadoes and hurricanes as well as effects from geopolitical instability, armed conflicts, public health crises and man-made disasters including terrorist attacks; the effects of regional or national civil unrest (including any resulting branch or ATM closures or damage); possible changes in the speed of loan prepayments by the Company's Customers and loan origination or sales volumes; possible changes in the speed of prepayments of mortgage-backed securities (MBS) due to changes in the interest rate environment, and the related acceleration of premium amortization on prepayments in the event that prepayments accelerate; regulatory limits on the Company's ability to receive dividends from its subsidiaries and pay dividends to its stockholders; any reputation, credit, interest rate, market, operational, litigation, legal, liquidity, regulatory and compliance risk resulting from developments related to any of the risks discussed above; any compounding effects or unexpected interaction of the risks discussed above; and other risks and uncertainties, including those discussed in the Company's Form 10-K for the year ended December 31, 2022, the Company's Form 10-Q for the quarterly period ended March 31, 2023, the Company's Form 10-Q for the quarterly period ended June 30, 2023 and other documents filed by the Company with the Securities and Exchange Commission from time to time.
The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. The Company disclaims any duty to revise or update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company for any reason, except as specifically required by law. As used in this press release, the terms "WSFS," "the Company," "registrant," "we," "us," and "our" mean WSFS Financial Corporation and its subsidiaries, on a consolidated basis, unless the context indicates otherwise.
| | | | | | | | | | | | | | |
| | WSFS Bank Center | WSFS Bank Place | 15 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
SUMMARY STATEMENTS OF INCOME (Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended | | Nine months ended |
(Dollars in thousands, except per share data) | | September 30, 2023 | | June 30, 2023 | | September 30, 2022 | | September 30, 2023 | | September 30, 2022 |
Interest income: |
Interest and fees on loans | | $ | 218,903 | | | $ | 207,884 | | | $ | 152,887 | | | $ | 620,511 | | | $ | 401,110 | |
Interest on mortgage-backed securities | | 26,654 | | | 27,130 | | | 28,338 | | | 81,310 | | | 78,828 | |
Interest and dividends on investment securities | | 2,180 | | | 2,182 | | | 1,981 | | | 6,599 | | | 4,642 | |
Other interest income | | 3,402 | | | 4,573 | | | 3,359 | | | 10,871 | | | 6,142 | |
| | 251,139 | | | 241,769 | | | 186,565 | | | 719,291 | | | 490,722 | |
Interest expense: | | | | | | | | | | |
Interest on deposits | | 57,255 | | | 50,054 | | | 6,643 | | | 142,501 | | | 13,537 | |
Interest on Federal Home Loan Bank advances | | 167 | | | 1,597 | | | 42 | | | 5,135 | | | 42 | |
Interest on senior and subordinated debt | | 2,453 | | | 2,334 | | | 2,061 | | | 7,360 | | | 5,939 | |
Interest on trust preferred borrowings | | 1,764 | | | 1,635 | | | 951 | | | 4,954 | | | 2,146 | |
Interest on other borrowings | | 6,898 | | | 4,307 | | | 37 | | | 12,365 | | | 54 | |
| | 68,537 | | | 59,927 | | | 9,734 | | | 172,315 | | | 21,718 | |
Net interest income | | 182,602 | | | 181,842 | | | 176,831 | | | 546,976 | | | 469,004 | |
Provision for credit losses | | 18,414 | | | 15,830 | | | 7,454 | | | 63,255 | | | 34,693 | |
Net interest income after provision for credit losses | | 164,188 | | | 166,012 | | | 169,377 | | | 483,721 | | | 434,311 | |
Noninterest income: | | | | | | | | | | |
Credit/debit card and ATM income | | 14,869 | | | 14,430 | | | 10,993 | | | 42,660 | | | 27,446 | |
Investment management and fiduciary revenue | | 32,720 | | | 32,379 | | | 29,504 | | | 95,575 | | | 90,877 | |
Deposit service charges | | 6,534 | | | 6,277 | | | 6,262 | | | 18,850 | | | 18,158 | |
Mortgage banking activities, net | | 1,254 | | | 1,304 | | | 1,420 | | | 3,680 | | | 6,529 | |
Loan and lease fee income | | 1,621 | | | 1,190 | | | 1,425 | | | 4,183 | | | 4,457 | |
| | | | | | | | | | |
Unrealized (loss) gain on equity investment, net | | (5) | | | — | | | — | | | (9) | | | 5,988 | |
| | | | | | | | | | |
Bank-owned life insurance income | | 1,697 | | | 760 | | | 195 | | | 3,967 | | | 674 | |
Other income | | 13,978 | | | 10,531 | | | 12,852 | | | 33,760 | | | 41,125 | |
| | 72,668 | | | 66,871 | | | 62,651 | | | 202,666 | | | 195,254 | |
Noninterest expense: | | | | | | | | | | |
Salaries, benefits and other compensation | | 74,453 | | | 72,367 | | | 72,294 | | | 219,669 | | | 211,413 | |
Occupancy expense | | 9,529 | | | 10,132 | | | 9,699 | | | 30,069 | | | 30,393 | |
Equipment expense | | 10,563 | | | 10,810 | | | 9,913 | | | 31,165 | | | 30,674 | |
Data processing and operations expense | | 4,867 | | | 4,771 | | | 5,362 | | | 14,362 | | | 16,009 | |
Professional fees | | 4,612 | | | 6,118 | | | 3,561 | | | 15,169 | | | 12,285 | |
Marketing expense | | 2,049 | | | 2,165 | | | 2,082 | | | 5,930 | | | 4,985 | |
FDIC expenses | | 2,534 | | | 2,863 | | | 1,540 | | | 7,979 | | | 4,399 | |
| | | | | | | | | | |
Loan workout and other credit costs | | (189) | | | 536 | | | 1,001 | | | 292 | | | 1,103 | |
Corporate development expense | | 113 | | | 2,796 | | | 1,248 | | | 3,649 | | | 41,679 | |
Restructuring expense | | — | | | (26) | | | 1,344 | | | (787) | | | 22,792 | |
| | | | | | | | | | |
| | | | | | | | | | |
Other operating expenses | | 31,158 | | | 28,721 | | | 24,873 | | | 86,490 | | | 65,691 | |
| | 139,689 | | | 141,253 | | | 132,917 | | | 413,987 | | | 441,423 | |
Income before taxes | | 97,167 | | | 91,630 | | | 99,111 | | | 272,400 | | | 188,142 | |
Income tax provision | | 22,904 | | | 23,035 | | | 25,767 | | | 66,880 | | | 49,929 | |
Net income | | 74,263 | | | 68,595 | | | 73,344 | | | 205,520 | | | 138,213 | |
Less: Net income (loss) attributable to noncontrolling interest | | 97 | | | (83) | | | (38) | | | 272 | | | 287 | |
Net income attributable to WSFS | | $ | 74,166 | | | $ | 68,678 | | | $ | 73,382 | | | $ | 205,248 | | | $ | 137,926 | |
Diluted earnings per share of common stock: | | $ | 1.22 | | | $ | 1.12 | | | $ | 1.16 | | | $ | 3.34 | | | $ | 2.15 | |
Weighted average shares of common stock outstanding for fully diluted EPS | | 61,039,317 | | | 61,414,273 | | | 63,227,983 | | | 61,367,802 | | | 64,282,992 | |
See “Notes”
| | | | | | | | | | | | | | |
| | WSFS Bank Center | WSFS Bank Place | 16 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
SUMMARY STATEMENTS OF INCOME (Unaudited) - continued | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended | | Nine months ended |
| | September 30, 2023 | | June 30, 2023 | | September 30, 2022 | | September 30, 2023 | | September 30, 2022 |
Performance Ratios: | | | | | | | | | | |
Return on average assets (a) | | 1.45 | % | | 1.36 | % | | 1.44 | % | | 1.36 | % | | 0.89 | % |
Return on average equity (a) | | 12.64 | | | 11.81 | | | 12.40 | | | 11.89 | | | 7.41 | |
Return on average tangible common equity (a)(o) | | 23.19 | | | 21.66 | | | 22.78 | | | 22.03 | | | 13.27 | |
Net interest margin (a)(b) | | 4.08 | | | 4.11 | | | 3.99 | | | 4.15 | | | 3.46 | |
Efficiency ratio (c) | | 54.64 | | | 56.71 | | | 55.37 | | | 55.12 | | | 66.33 | |
Noninterest income as a percentage of total net revenue (b) | | 28.42 | | | 26.85 | | | 26.10 | | | 26.98 | | | 29.34 | |
See “Notes”
| | | | | | | | | | | | | | |
| | WSFS Bank Center | WSFS Bank Place | 17 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
SUMMARY STATEMENTS OF FINANCIAL CONDITION (Unaudited) | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | September 30, 2023 | | June 30, 2023 | | September 30, 2022 |
Assets: | | | | | | |
Cash and due from banks | | $ | 260,200 | | | $ | 723,034 | | | $ | 443,104 | |
Cash in non-owned ATMs | | 345,754 | | | 386,176 | | | 582,784 | |
Investment securities, available-for-sale | | 3,691,541 | | | 3,954,918 | | | 4,153,615 | |
Investment securities, held-to-maturity | | 1,068,871 | | | 1,079,768 | | | 1,121,895 | |
Other investments | | 39,466 | | | 40,309 | | | 54,742 | |
Net loans and leases (e)(f)(l) | | 12,539,062 | | | 12,211,112 | | | 11,620,866 | |
Bank owned life insurance | | 101,424 | | | 101,108 | | | 101,061 | |
Goodwill and intangibles | | 1,008,472 | | | 1,004,278 | | | 1,016,413 | |
Other assets | | 986,202 | | | 884,988 | | | 890,907 | |
Total assets | | $ | 20,040,992 | | | $ | 20,385,691 | | | $ | 19,985,387 | |
Liabilities and Stockholders’ Equity: | | | | | | |
Noninterest-bearing deposits | | $ | 4,913,517 | | | $ | 5,462,461 | | | $ | 6,170,776 | |
Interest-bearing deposits | | 10,983,747 | | | 10,798,060 | | | 10,531,250 | |
Total customer deposits | | 15,897,264 | | | 16,260,521 | | | 16,702,026 | |
Brokered deposits | | 89,105 | | | 167,435 | | | 23,182 | |
Total deposits | | 15,986,369 | | | 16,427,956 | | | 16,725,208 | |
| | | | | | |
Other borrowings | | 917,833 | | | 899,493 | | | 374,367 | |
Other liabilities | | 901,412 | | | 750,858 | | | 784,981 | |
Total liabilities | | 17,805,614 | | | 18,078,307 | | | 17,884,556 | |
Stockholders’ equity of WSFS | | 2,242,795 | | | 2,314,659 | | | 2,103,593 | |
Noncontrolling interest | | (7,417) | | | (7,275) | | | (2,762) | |
Total stockholders' equity | | 2,235,378 | | | 2,307,384 | | | 2,100,831 | |
Total liabilities and stockholders' equity | | $ | 20,040,992 | | | $ | 20,385,691 | | | $ | 19,985,387 | |
Capital Ratios: | | | | | | |
Equity to asset ratio | | 11.19 | % | | 11.35 | % | | 10.53 | % |
Tangible common equity to tangible asset ratio (o) | | 6.49 | | | 6.76 | | | 5.73 | |
Common equity Tier 1 capital (required: 4.5%; well capitalized: 6.5%) (g) | | 13.26 | | | 13.68 | | | 12.38 | |
Tier 1 leverage (required: 4.00%; well-capitalized: 5.00%) (g) | | 10.72 | | | 10.83 | | | 9.76 | |
Tier 1 risk-based capital (required: 6.00%; well-capitalized: 8.00%) (g) | | 13.26 | | | 13.68 | | | 12.38 | |
Total risk-based capital (required: 8.00%; well-capitalized: 10.00%) (g) | | 14.43 | | | 14.85 | | | 13.34 | |
Asset Quality Indicators: | | | | | | |
Nonperforming assets: | | | | | | |
Nonaccruing loans (t) | | $ | 57,460 | | | $ | 33,003 | | | $ | 19,369 | |
Troubled debt restructurings (accruing) | | — | | | — | | | 17,108 | |
Assets acquired through foreclosure | | 298 | | | 527 | | | 840 | |
Total nonperforming assets | | $ | 57,758 | | | $ | 33,530 | | | $ | 37,317 | |
Past due loans (h) | | $ | 14,357 | | | $ | 13,571 | | | $ | 24,754 | |
Troubled loans | | 78,186 | | | 51,129 | | | — | |
Allowance for credit losses | | 175,996 | | | 171,877 | | | 146,205 | |
Ratio of nonperforming assets to total assets | | 0.29 | % | | 0.16 | % | | 0.19 | % |
Ratio of nonperforming assets (excluding accruing TDRs) to total assets | | — | | | — | | | 0.10 | |
Ratio of allowance for credit losses to total loans and leases (q) | | 1.28 | | | 1.28 | | | 1.14 | |
| | | | | | |
Ratio of allowance for credit losses to nonaccruing loans | | 306 | | | 521 | | | 755 | |
Ratio of quarterly net charge-offs to average gross loans (a)(e)(i)(n) | | 0.45 | | | 0.43 | | | 0.11 | |
Ratio of year-to-date net charge-offs to average gross loans (a)(e)(i)(n) | | 0.43 | | | 0.41 | | | 0.11 | |
See “Notes”
| | | | | | | | | | | | | | |
| | WSFS Bank Center | WSFS Bank Place | 18 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
AVERAGE BALANCE SHEET (Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Three months ended |
| | September 30, 2023 | | June 30, 2023 | | September 30, 2022 |
| | Average Balance | | Interest & Dividends | | Yield/ Rate (a)(b) | | Average Balance | | Interest & Dividends | | Yield/ Rate (a)(b) | | Average Balance | | Interest & Dividends | | Yield/ Rate (a)(b) |
Assets: |
Interest-earning assets: |
Loans: (e) (j) | | | | | | | | | | | | | | | | | | |
Commercial loans and leases (p) | | $ | 5,107,501 | | | $ | 90,098 | | | 7.01 | % | | $ | 5,051,292 | | | $ | 86,073 | | | 6.85 | % | | $ | 4,895,972 | | | $ | 67,060 | | | 5.45 | % |
Commercial real estate loans (s) | | 4,611,968 | | | 82,040 | | | 7.06 | | | 4,484,162 | | | 78,018 | | | 6.98 | | | 4,262,599 | | | 53,096 | | | 4.94 | |
Residential mortgage | | 841,510 | | | 10,698 | | | 5.09 | | | 804,390 | | | 9,384 | | | 4.67 | | | 769,151 | | | 8,379 | | | 4.36 | |
Consumer loans | | 1,940,418 | | | 34,972 | | | 7.15 | | | 1,907,294 | | | 33,508 | | | 7.05 | | | 1,594,673 | | | 23,384 | | | 5.82 | |
Loans held for sale | | 54,072 | | | 1,095 | | | 8.03 | | | 45,766 | | | 901 | | | 7.90 | | | 66,103 | | | 968 | | | 5.81 | |
Total loans and leases | | 12,555,469 | | | 218,903 | | | 6.92 | | | 12,292,904 | | | 207,884 | | | 6.79 | | | 11,588,498 | | | 152,887 | | | 5.24 | |
Mortgage-backed securities (d) | | 4,602,107 | | | 26,654 | | | 2.32 | | | 4,766,207 | | | 27,130 | | | 2.28 | | | 5,243,169 | | | 28,338 | | | 2.16 | |
Investment securities (d) | | 364,565 | | | 2,180 | | | 2.64 | | | 370,530 | | | 2,182 | | | 2.62 | | | 361,113 | | | 1,981 | | | 2.57 | |
Other interest-earning assets | | 251,273 | | | 3,402 | | | 5.37 | | | 345,791 | | | 4,573 | | | 5.30 | | | 460,124 | | | 3,359 | | | 2.90 | |
Total interest-earning assets | | $ | 17,773,414 | | | $ | 251,139 | | | 5.61 | % | | $ | 17,775,432 | | | $ | 241,769 | | | 5.46 | % | | $ | 17,652,904 | | | $ | 186,565 | | | 4.21 | % |
Allowance for credit losses | | (173,052) | | | | | | | (170,968) | | | | | | | (143,943) | | | | | |
Cash and due from banks | | 277,780 | | | | | | | 255,590 | | | | | | | 242,734 | | | | | |
Cash in non-owned ATMs | | 363,131 | | | | | | | 387,889 | | | | | | | 603,780 | | | | | |
Bank owned life insurance | | 101,411 | | | | | | | 101,031 | | | | | | | 100,863 | | | | | |
Other noninterest-earning assets | | 1,922,080 | | | | | | | 1,872,610 | | | | | | | 1,779,411 | | | | | |
Total assets | | $ | 20,264,764 | | | | | | | $ | 20,221,584 | | | | | | | $ | 20,235,749 | | | | | |
Liabilities and stockholders’ equity: | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | |
Interest-bearing deposits: | | | | | | | | | | | | | | | | | | |
Interest-bearing demand | | $ | 2,955,613 | | | $ | 7,156 | | | 0.96 | % | | $ | 3,039,257 | | | $ | 6,525 | | | 0.86 | % | | $ | 3,370,158 | | | $ | 2,179 | | | 0.26 | % |
Savings | | 1,750,809 | | | 1,521 | | | 0.34 | | | 1,873,572 | | | 1,342 | | | 0.29 | | | 2,287,227 | | | 185 | | | 0.03 | |
Money market | | 4,499,909 | | | 34,639 | | | 3.05 | | | 4,137,867 | | | 27,898 | | | 2.70 | | | 3,833,113 | | | 2,907 | | | 0.30 | |
Customer time deposits | | 1,661,885 | | | 12,828 | | | 3.06 | | | 1,578,615 | | | 10,597 | | | 2.69 | | | 1,083,290 | | | 1,230 | | | 0.45 | |
Total interest-bearing customer deposits | | 10,868,216 | | | 56,144 | | | 2.05 | | | 10,629,311 | | | 46,362 | | | 1.75 | | | 10,573,788 | | | 6,501 | | | 0.24 | |
Brokered deposits | | 88,594 | | | 1,111 | | | 4.98 | | | 307,515 | | | 3,692 | | | 4.82 | | | 24,184 | | | 142 | | | 2.33 | |
Total interest-bearing deposits | | 10,956,810 | | | 57,255 | | | 2.07 | | | 10,936,826 | | | 50,054 | | | 1.84 | | | 10,597,972 | | | 6,643 | | | 0.25 | |
Federal Home Loan Bank advances | | 11,576 | | | 167 | | | 5.72 | | | 123,297 | | | 1,597 | | | 5.20 | | | 4,979 | | | 42 | | | 3.35 | |
Trust preferred borrowings | | 90,557 | | | 1,764 | | | 7.73 | | | 90,511 | | | 1,635 | | | 7.25 | | | 90,361 | | | 951 | | | 4.18 | |
Senior and subordinated debt | | 218,304 | | | 2,453 | | | 4.49 | | | 218,247 | | | 2,334 | | | 4.28 | | | 248,332 | | | 2,061 | | | 3.32 | |
Other borrowed funds | | 604,156 | | | 6,898 | | | 4.53 | | | 390,576 | | | 4,307 | | | 4.42 | | | 39,745 | | | 37 | | | 0.37 | |
Total interest-bearing liabilities | | $ | 11,881,403 | | | $ | 68,537 | | | 2.29 | % | | $ | 11,759,457 | | | $ | 59,927 | | | 2.04 | % | | $ | 10,981,389 | | | $ | 9,734 | | | 0.35 | % |
Noninterest-bearing demand deposits | | 5,248,931 | | | | | | | 5,458,676 | | | | | | | 6,319,755 | | | | | |
Other noninterest-bearing liabilities | | 813,858 | | | | | | | 674,300 | | | | | | | 589,817 | | | | | |
Stockholders’ equity of WSFS | | 2,327,853 | | | | | | | 2,332,147 | | | | | | | 2,347,178 | | | | | |
Noncontrolling interest | | (7,281) | | | | | | | (2,996) | | | | | | | (2,390) | | | | | |
Total liabilities and equity | | $ | 20,264,764 | | | | | | | $ | 20,221,584 | | | | | | | $ | 20,235,749 | | | | | |
Excess of interest-earning assets over interest-bearing liabilities | | $ | 5,892,011 | | | | | | | $ | 6,015,975 | | | | | | | $ | 6,671,515 | | | | | |
Net interest and dividend income | | | | $ | 182,602 | | | | | | | $ | 181,842 | | | | | | | $ | 176,831 | | | |
Interest rate spread | | | | | | 3.32 | % | | | | | | 3.42 | % | | | | | | 3.86 | % |
Net interest margin | | | | | | 4.08 | % | | | | | | 4.11 | % | | | | | | 3.99 | % |
See “Notes”
| | | | | | | | | | | | | | |
| | WSFS Bank Center | WSFS Bank Place | 19 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands, except per share data) | | Three months ended | | Nine months ended |
Stock Information: | | September 30, 2023 | | June 30, 2023 | | September 30, 2022 | | September 30, 2023 | | September 30, 2022 |
Market price of common stock: | | | | | | | | | | |
High | | $45.40 | | $40.54 | | $51.76 | | $51.77 | | $56.30 |
Low | | 35.02 | | 29.59 | | 37.40 | | 29.59 | | 37.03 |
Close | | 36.50 | | 37.72 | | 46.46 | | 36.50 | | 46.46 |
Book value per share of common stock | | 36.93 | | 37.89 | | 33.96 | | | | |
Tangible common book value per share of common stock (o) | | 20.33 | | 21.45 | | 17.55 | | | | |
Number of shares of common stock outstanding (000s) | | 60,728 | | 61,093 | | 61,949 | | | | |
Other Financial Data: | | | | | | | | | | |
One-year repricing gap to total assets (k) | | 0.41% | | 2.50% | | 8.82% | | | | |
Weighted average duration of the MBS portfolio | | 6.0 years | | 5.8 years | | 6.0 years | | | | |
Unrealized losses on securities available for sale, net of taxes | | $(678,413) | | $(550,890) | | $(597,734) | | | | |
Number of Associates (FTEs) (m) | | 2,224 | | 2,219 | | 2,150 | | | | |
Number of offices (branches, LPO’s, operations centers, etc.) | | 116 | | 114 | | 119 | | | | |
Number of WSFS owned and branded ATMs | | 592 | | 679 | | 611 | | | | |
Notes:
(a)Annualized.
(b)Computed on a fully tax-equivalent basis.
(c)Noninterest expense divided by (tax-equivalent) net interest income and noninterest income.
(d)Includes securities held-to-maturity (at amortized cost) and securities available-for-sale (at fair value).
(e)Net of unearned income.
(f)Net of allowance for credit losses.
(g)Represents capital ratios of Wilmington Savings Fund Society, FSB and subsidiaries. Capital Ratios for the current quarter are to be considered preliminary until the Call Reports are filed.
(h)Accruing loans which are contractually past due 90 days or more as to principal or interest. Balance includes student loans, which are U.S. government guaranteed with little risk of credit loss.
(i)Excludes loans held for sale.
(j)Nonperforming loans are included in average balance computations.
(k)The difference between projected amounts of interest-sensitive assets and interest-sensitive liabilities repricing within one year divided by total assets, based on a current interest rate scenario.
(l)Includes loans held for sale and reverse mortgages.
(m)Includes seasonal Associates, when applicable.
(n)Excludes reverse mortgage loans.
(o)The Company uses non-GAAP (United States Generally Accepted Accounting Principles) financial information in its analysis of the Company’s performance. The Company’s management believes that these non-GAAP financial measures provide a greater understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented. The Company’s management believes that investors may use these non-GAAP financial measures to analyze the Company’s financial performance without the impact of unusual items or events that may obscure trends in the Company’s underlying performance. This non-GAAP data should be considered in addition to results prepared in accordance with GAAP, and is not a substitute for, or superior to, GAAP results. For a reconciliation of these and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.
(p)Includes commercial & industrial loans and commercial small business leases.
(q)Represents amortized cost basis for loans, leases and held-to-maturity securities.
(r)Includes provision for credit losses, loan workout expenses, OREO expenses and other credit costs.
(s)Includes commercial mortgage and commercial construction loans.
(t)Includes nonaccruing troubled loans beginning in 2023 and nonaccruing troubled debt restructurings prior to 2023.
| | | | | | | | | | | | | | |
| | WSFS Bank Center | WSFS Bank Place | 20 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Dollars in thousands, except per share data)
(Unaudited)
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Non-GAAP Reconciliation (o): | | Three months ended | | Nine months ended |
| | September 30, 2023 | | June 30, 2023 | | September 30, 2022 | | September 30, 2023 | | September 30, 2022 |
Net interest income (GAAP) | | $ | 182,602 | | | $ | 181,842 | | | $ | 176,831 | | | $ | 546,976 | | | $ | 469,004 | |
Core net interest income (non-GAAP) | | 182,602 | | | 181,842 | | | 176,831 | | | 546,976 | | | 469,004 | |
Noninterest income (GAAP) | | 72,668 | | | 66,871 | | | 62,651 | | | 202,666 | | | 195,254 | |
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(Plus)/less: Unrealized (loss) gain on equity investments, net | | (5) | | | — | | | — | | | (9) | | | 5,988 | |
| | | | | | | | | | |
Plus: Visa derivative valuation adjustment | | (750) | | | (552) | | | (2,285) | | | (1,855) | | | (2,285) | |
Core fee revenue (non-GAAP) | | $ | 73,423 | | | $ | 67,423 | | | $ | 64,936 | | | $ | 204,530 | | | $ | 191,551 | |
Core net revenue (non-GAAP) | | $ | 256,025 | | | $ | 249,265 | | | $ | 241,767 | | | $ | 751,506 | | | $ | 660,555 | |
Core net revenue (non-GAAP)(tax-equivalent) | | $ | 256,412 | | | $ | 249,633 | | | $ | 242,327 | | | $ | 752,904 | | | $ | 661,771 | |
Noninterest expense (GAAP) | | $ | 139,689 | | | $ | 141,253 | | | $ | 132,917 | | | $ | 413,987 | | | $ | 441,423 | |
| | | | | | | | | | |
| | | | | | | | | | |
Less: Corporate development expense | | 113 | | | 2,796 | | | 1,248 | | | 3,649 | | | 41,679 | |
(Plus)/less: Restructuring expense | | — | | | (26) | | | 1,344 | | | (787) | | | 22,792 | |
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Core noninterest expense (non-GAAP) | | $ | 139,576 | | | $ | 138,483 | | | $ | 130,325 | | | $ | 411,125 | | | $ | 376,952 | |
Core efficiency ratio (non-GAAP) | | 54.4 | % | | 55.5 | % | | 53.8 | % | | 54.6 | % | | 57.0 | % |
Core fee revenue ratio (non-GAAP) (b) | | 28.6 | % | | 27.0 | % | | 26.8 | % | | 27.2 | % | | 28.9 | % |
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| | End of period | | | | |
| | September 30, 2023 | | June 30, 2023 | | September 30, 2022 | | | | |
Total assets (GAAP) | | $ | 20,040,992 | | | $ | 20,385,691 | | | $ | 19,985,387 | | | | | |
Less: Goodwill and other intangible assets | | 1,008,472 | | | 1,004,278 | | | 1,016,413 | | | | | |
Total tangible assets (non-GAAP) | | $ | 19,032,520 | | | $ | 19,381,413 | | | $ | 18,968,974 | | | | | |
Total stockholders’ equity of WSFS (GAAP) | | $ | 2,242,795 | | | $ | 2,314,659 | | | $ | 2,103,593 | | | | | |
Less: Goodwill and other intangible assets | | 1,008,472 | | | 1,004,278 | | | 1,016,413 | | | | | |
Total tangible common equity (non-GAAP) | | $ | 1,234,323 | | | $ | 1,310,381 | | | $ | 1,087,180 | | | | | |
| | | | | | | | | | |
Tangible common book value per share: | | | | | | | | |
Book value per share (GAAP) | | $ | 36.93 | | | $ | 37.89 | | | $ | 33.96 | | | | | |
Tangible common book value per share (non-GAAP) | | 20.33 | | | 21.45 | | | 17.55 | | | | | |
Tangible common equity to tangible assets: | | | | | | | | |
Equity to asset ratio (GAAP) | | 11.19 | % | | 11.35 | % | | 10.53 | % | | | | |
Tangible common equity to tangible assets ratio (non-GAAP) | | 6.49 | | | 6.76 | | | 5.73 | | | | | |
| | | | | | | | | | | | | | |
| | WSFS Bank Center | WSFS Bank Place | 21 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-GAAP Reconciliation - continued (o): | | Three months ended | | Nine months ended |
| | September 30, 2023 | | June 30, 2023 | | September 30, 2022 | | September 30, 2023 | | September 30, 2022 |
GAAP net income attributable to WSFS | | $ | 74,166 | | | $ | 68,678 | | | $ | 73,382 | | | $ | 205,248 | | | $ | 137,926 | |
Plus/(less): Pre-tax adjustments: Unrealized (loss)/gain on equity investments, net, Visa derivative valuation adjustment, and corporate development and restructuring expense | | 868 | | | 3,322 | | | 4,877 | | | 4,726 | | | 60,768 | |
| | | | | | | | | | |
(Plus)/less: Tax impact of pre-tax adjustments | | (232) | | | (798) | | | (750) | | | (1,293) | | | (13,294) | |
Adjusted net income (non-GAAP) attributable to WSFS | | $ | 74,802 | | | $ | 71,202 | | | $ | 77,509 | | | $ | 208,681 | | | $ | 185,400 | |
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GAAP return on average assets (ROA) | | 1.45 | % | | 1.36 | % | | 1.44 | % | | 1.36 | % | | 0.89 | % |
Plus/(less): Pre-tax adjustments: Unrealized (loss)/gain on equity investments, net, Visa derivative valuation adjustment, and corporate development and restructuring expense | | 0.02 | | | 0.07 | | | 0.10 | | | 0.03 | | | 0.39 | |
| | | | | | | | | | |
(Plus)/less: Tax impact of pre-tax adjustments | | (0.01) | | | (0.02) | | | (0.02) | | | (0.01) | | | (0.08) | |
Core ROA (non-GAAP) | | 1.46 | % | | 1.41 | % | | 1.52 | % | | 1.38 | % | | 1.20 | % |
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| | | | | | | | | | |
Earnings per share (diluted) (GAAP) | | $ | 1.22 | | | $ | 1.12 | | | $ | 1.16 | | | $ | 3.34 | | | $ | 2.15 | |
Plus/(less): Pre-tax adjustments: Unrealized (loss)/gain on equity investments, net, Visa derivative valuation adjustment, and corporate development and restructuring expense | | 0.01 | | | 0.05 | | | 0.08 | | | 0.08 | | | 0.95 | |
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(Plus)/less: Tax impact of pre-tax adjustments | | — | | | (0.01) | | | (0.01) | | | (0.02) | | | (0.22) | |
Core earnings per share (non-GAAP) | | $ | 1.23 | | | $ | 1.16 | | | $ | 1.23 | | | $ | 3.40 | | | $ | 2.88 | |
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Calculation of return on average tangible common equity: | | | | | | | | |
GAAP net income attributable to WSFS | | $ | 74,166 | | | $ | 68,678 | | | $ | 73,382 | | | $ | 205,248 | | | $ | 137,926 | |
Plus: Tax effected amortization of intangible assets | | 2,984 | | | 2,884 | | | 2,906 | | | 8,748 | | | 8,827 | |
Net tangible income (non-GAAP) | | $ | 77,150 | | | $ | 71,562 | | | $ | 76,288 | | | $ | 213,996 | | | $ | 146,753 | |
Average stockholders’ equity of WSFS | | $ | 2,327,853 | | | $ | 2,332,147 | | | $ | 2,347,178 | | | $ | 2,307,002 | | | $ | 2,489,860 | |
Less: Average goodwill and intangible assets | | 1,007,803 | | | 1,006,972 | | | 1,018,592 | | | 1,008,463 | | | 1,011,306 | |
Net average tangible common equity | | $ | 1,320,050 | | | $ | 1,325,175 | | | $ | 1,328,586 | | | $ | 1,298,539 | | | $ | 1,478,554 | |
Return on average tangible common equity (non-GAAP) | | 23.19 | % | | 21.66 | % | | 22.78 | % | | 22.03 | % | | 13.27 | % |
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| | | | | | | | | | | | | | |
| | WSFS Bank Center | WSFS Bank Place | 22 |
| 500 Delaware Avenue, | 1818 Market St, | |
| Wilmington, Delaware 19801 | Philadelphia, PA 19103 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-GAAP Reconciliation - continued (o): | | Three months ended | | Nine months ended |
| | September 30, 2023 | | June 30, 2023 | | September 30, 2022 | | September 30, 2023 | | September 30, 2022 |
Calculation of PPNR: |
Net income (GAAP) | | $ | 74,263 | | | $ | 68,595 | | | $ | 73,344 | | | $ | 205,520 | | | $ | 138,213 | |
Plus: Income tax provision | | 22,904 | | | 23,035 | | | 25,767 | | | 66,880 | | | 49,929 | |
Plus: Provision for credit losses | | 18,414 | | | 15,830 | | | 7,454 | | | 63,255 | | | 34,693 | |
PPNR (non-GAAP) | | $ | 115,581 | | | $ | 107,460 | | | $ | 106,565 | | | $ | 335,655 | | | $ | 222,835 | |
Plus/(less): Pre-tax adjustments: Unrealized (loss)/gain on equity investments, net, Visa derivative valuation adjustment, and corporate development and restructuring expense | | 868 | | | 3,322 | | | 4,877 | | | 4,726 | | | 60,768 | |
Core PPNR (non-GAAP) | | $ | 116,449 | | | $ | 110,782 | | | $ | 111,442 | | | $ | 340,381 | | | $ | 283,603 | |
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Calculation of core PPNR to average assets: |
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Core PPNR (non-GAAP) | | $ | 116,449 | | | $ | 110,782 | | | $ | 111,442 | | | $ | 340,381 | | | $ | 283,603 | |
Total average assets | | 20,264,764 | | | 20,221,584 | | | 20,235,749 | | | 20,163,889 | | | 20,661,638 | |
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Core PPNR to average assets | | 2.28 | % | | 2.20 | % | | 2.18 | % | | 2.26 | % | | 1.84 | % |
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1 WSFS Financial Corporation 3Q 2023 Earnings Release Supplement October 2023 Exhibit 99.2
2 Forward Looking Statements & Non-GAAP Forward Looking Statements: This presentation contains estimates, predictions, opinions, projections and other "forward-looking statements" as that phrase is defined in the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, references to the Company's predictions or expectations of future business or financial performance as well as its goals and objectives for future operations, financial and business trends, business prospects, and management's outlook or expectations for earnings, revenues, expenses, capital levels, liquidity levels, asset quality or other future financial or business performance, strategies or expectations. The words “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “project” and similar expressions, among others, generally identify forward-looking statements. Such forward-looking statements are based on various assumptions (some of which may be beyond the Company's control) and are subject to significant risks and uncertainties (which change over time) and other factors, including the impacts related to or resulting from recent bank failures and other economic and industry volatility, including potential increased regulatory requirements and costs and potential impacts to macroeconomic conditions, the uncertain effects of public health crises, inflation, interest rates and actions taken in response thereto on our business, results of operations, capital and liquidity, which could cause actual results to differ materially from those currently anticipated. Such risks and uncertainties are discussed in detail in the Company's Form 10-K for the year ended December 31, 2022, Form 10-Q for the quarter ended March 31, 2023, Form 10-Q for the quarter ended June 30, 2023, and other documents filed by the Company with the Securities and Exchange Commission from time to time. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date on which they are made, and the Company disclaims any duty to revise or update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company for any reason, except as specifically required by law. As used in this presentation, the terms "WSFS", "the Company", "registrant", "we", "us", and "our" mean WSFS Financial Corporation and its subsidiaries, on a consolidated basis, unless the context indicates otherwise. Non-GAAP Financial Measures: This presentation contains financial measures determined by methods other than in accordance with accounting principles generally accepted in the United States (“GAAP”). These non-GAAP measures include Core Earnings Per Share (“EPS”), Core Net Income, Core Efficiency ratio, Pre-provision Net Revenue (“PPNR”), Core PPNR, PPNR to average assets ratio, Core PPNR to average assets ratio, Core Return on Assets (“ROA”), core net interest income, Core Net Interest Margin (“NIM”), Tangible Common Equity (“TCE”), tangible assets, tangible equity, Return on Tangible Common Equity (“ROTCE”), Core ROTCE, Core Fee Revenue, Core Fee Revenue ratio, and Effective AOCI. The Company’s management believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented. The Company’s management believes that investors may use these non-GAAP measures to analyze the Company’s financial performance without the impact of unusual items or events that may obscure trends in the Company’s underlying performance. This non-GAAP data should be considered in addition to results prepared in accordance with GAAP, and is not a substitute for, or superior to, GAAP results. For a reconciliation of these non- GAAP measures to their comparable GAAP measures, see the Appendix. Trade names, trademarks and service marks of other companies appearing in this presentation are the property of their respective holders.
3 3Q 2023 Financial Highlights 3Q 2023 Highlights: • Net loan growth of $328mm or 3% from prior quarter • Customer deposits declined $364mm or 2% in the quarter • Driven by $306mm decline in transactional trust deposits • Net loan-to-deposit ratio of 79% • NIM of 4.08%; reflects increasing deposit betas partially offset by higher loan yields • Diversified core fee revenue1 of $73.4mm, increased 9% quarter- over-quarter; represents a record high for a quarter • Net credit costs of $18.2mm driven by overall net loan growth and portfolio migration • Regulatory capital levels remain significantly above “well-capitalized” 1 These are non-GAAP financial measures and should be considered along with results prepared in accordance with GAAP, and not as a substitute for GAAP results. See Appendix for reconciliation to GAAP financial information. 2 Excludes net income that is attributable to noncontrolling interest 3 Tax-equivalent Reported Core1 $ in millions (except per share amounts) 3Q23 2Q23 3Q23 2Q23 EPS $1.22 $1.12 $1.23 $1.16 ROA 1.45% 1.36% 1.46% 1.41% Net Income2 $74.2 $68.7 $74.8 $71.2 PPNR %1 2.26% 2.13% 2.28% 2.20% ROTCE1 23.19% 21.66% 23.38% 22.42% NIM 4.08% 4.11% 4.08% 4.11% Fee Revenue %3 28.4% 26.8% 28.6% 27.0% Efficiency Ratio 54.6% 56.7% 54.4% 55.5% ACL Ratio 1.28% 1.28% 1.28% 1.28% Bank CET1 13.26% 13.68% 13.26% 13.68%
4 Deposits Highlights Consumer 45% Commercial 24% Small Business 17% Trust 6% Wealth 7%Other 1% Total Customer Deposit Mix 6% 10% 11% 36% 38% 39% 21% 18% 19% 37% 34% 31% 0% 20% 40% 60% 80% 100% 3Q22 2Q23 3Q23 Noninterest Interest-bearing Savings/MM Time No and low interest DDA (WAC 35bps) represent 50% of customer deposits ($ in millions) Sept 2023 Jun 2023 Sept 2022 3Q 2023 $ Growth Trans. Trust Δ Adj.1 3Q23 $ Growth Adj1 Annual. % Growth Noninterest Demand $4,913 $5,462 $6,171 ($549) (298) (251) (18%) Interest-bearing Demand 3,028 2,969 3,462 59 0 59 8% Savings 1,681 1,815 2,266 (134) 0 (134) (29%) Money Market 4,560 4,375 3,740 185 (8) 193 17% Total Core Deposits $14,182 $14,621 $15,639 ($439) ($306) ($133) (4%) Customer Time Deposits 1,715 1,640 1,063 652 0 652 158% Total Customer Deposits $15,897 $16,261 $16,702 ($364) ($306) ($58) (1%) Deposits by Product - 3Q23 vs 2Q23 • $58mm (1% annualized) decline in customer deposits when excluding short- term transactional trust deposits • 31% Customer deposits are non-interest bearing; still above pre-COVID levels • 63% insured and 72% protected deposits2 • Over 475,000 customer accounts; total average balance of ~$33,000 • Consumer (84% of accounts);average balance of ~$18,000 • Non-Consumer (16% of accounts); average balance of ~$115,000 Customer Deposits By Business Line 1 Adjusted for transactional trust deposits 2 Insured/Protected deposits accounts for FDIC insured and collateralized/other protected deposits Highly diversified deposit base and strong funding mix
5 Loan Portfolio Trends • Commercial loan growth of $254 million or 3% (10% annualized) • Commercial line utilization of 38.3% • Consumer loan growth of $52 million driven by our Spring EQ partnership product (home equity loans) • Upstart portfolio declined $3 million to $232 million; ~2% of total gross loans Disciplined loan growth driven by Commercial segment Gross Loan Portfolio Composition 1 C&I loans includes Owner-Occupied C&I Loans Commercial Mortgages (CRE) Construction Loans Commercial Leases Residential Mortgage Traditional Consumer Consumer Partnerships 29% 36% 8% 5% 7% 6% 9% Commercial 78% Resi-Mortgage 7% Consumer Lending 15% ($ in millions) Sept 2023 Jun 2023 Sept 2022 3Q23 $ Growth Annualized % Growth C & I Loans1 $4,590 $4,533 $4,445 $57 5% Commercial Mortgages (CRE) 3,646 3,553 3,280 93 10% Construction Loans 1,043 955 1,028 88 37% Commercial Leases 606 590 535 16 11% Total Commercial Loans $9,885 $9,631 $9,288 $254 10% Residential Mortgage (HFS/HFI) 873 847 802 26 12% Consumer Loans 1,957 1,905 1,677 52 11% Total Gross Loans $12,715 $12,383 $11,767 $332 11% Loans - 3Q23 vs 2Q23 1
6 3 Commercial Loan Composition1 1 As defined by the North American Industry Classification System (NAICS) 2 Based on the underlying real estate collateral 3 Office portfolio excludes Medical Office CRE 2 Flex, Warehouse, Self- Storage, General Industrial, 9% Special Use & Other, 9% Medical Office, 2% Residential 1-4, 12% Residential Multi-Family, 28% Office3, 15% Retail, 25% Hotels, 12% Other Services (except Public Admin), 10% Healthcare & Social Assistance, 9% Construction, 9% Manufacturing, 7% Retail Trade, 7% Finance & Insurance, 8% Professional, Science & Tech. Services, 5% Food Services, 5% Wholesale Trade, 4% Other, 17% C&I and Owner-Occupied1 $4.6 billion CRE and Construction2 $4.7 billion Real Estate Rental and Leasing, 7% • Well diversified and granular loan portfolios • Average Commercial loan size is ~$600K • Over 95% of Commercial relationships have deposit and/or Wealth accounts • CRE Retail primarily comprised of grocery-anchored loans • Office represents 5.4% of total loans3 • ~$215 million or 2% of total loans are Shared National Credit (SNC) loans • Spread over 8 industries • Average loan size of $5.4 million • No Office loans Highly diversified C&I, Owner-Occupied, CRE, and Construction Portfolios
7 Investment Portfolio Long-term disciplined policies on Investment Portfolio concentrations, IRR, and Capital support optionality 1 Investment portfolio value includes market value AFS and book value of HTM 2 This is a non-GAAP financial measure and should be considered along with results prepared in accordance with GAAP, and not as a substitute for GAAP results. See Appendix for reconciliation to GAAP financial information • Allowing portfolio to run off to ~18% of total assets over time • Forecast cash flows of ~$1.0B over the next 24 months • Portfolio yield of 2.36%; funds being redeployed in higher yielding loans • Cashflows sufficient to fund loan growth of ~3.5% annualized • Investments are high quality, marketable investment grade securities • >95% in Agency MBS and Agency Notes Investments Investment Portfolio1 $4.76B % of Total Assets 24% AOCI ($780.7mm) Effective AOCI2,3 ($915.2mm) Portfolio Duration4 6.0yrs Portfolio Cashflow per yr. ~$500mm AFS Agency MBS Agency CMOs GNMA MBS/CMOs Agency Debent. HTM Agency MBS Munis $3.69B $1.07B $0.8 $0.7 $0.5 $0.0 $0.3 $0.5 $0.8 4Q23 2024 2025 Bi lli on s Projected AOCI Accretion5 AOCI Projected Runoff 3 Effective AOCI ($915.2mm) includes AFS, HTM, and HTM unrecognized MTM; reported AOCI of ($780.7mm) 4 Weighted average duration of the MBS portfolio 5 Projected AOCI accretion assumes a flat rate environment
8 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 0.15% 0.35% 0.80% 1.16% 1.38% 5.12% 5.98% 6.42% 6.69% 6.81% 2.0% 4.0% 6.0% 8.0% 0.0% 1.0% 2.0% 3.0% 4.0% 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 Lo an Y ie ld (% ) Cu st om er D ep os it Co st (% ) Total Deposit Cost Total Loans Ex PAA Yield Deposit Betas3 Net Interest Margin Trends Strong NIM driven by asset sensitive balance sheet, favorable funding mix, and competitive betas Average Deposit Cost and Loan Yield 1 Includes non-interest and interest-bearing; interest-bearing deposits include demand, money market, savings, and customer time deposits 2 Average total loans yield excludes PAA 3 Deposit betas are cumulative customer deposits for the current cycle; Federal Funds Target rates are end-of-period value 21 3.99% 4.49% 4.25% 4.11% 4.08% 7% 15% 28% 35% 39% 4% 9% 19% 23% 27% 3.25% 4.50% 5.00% 5.25% 5.50% -1.5% 0.5% 2.5% 4.5% 6.5% -10% 10% 30% 50% 70% 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 Fe de ra l F un ds T ar ge t R at e De po sit B et a Interest-bearing Dep Beta Total Dep Beta Fed Funds Target
9 $20 $16 $15 $15 $19 $15 $18 $18 $20 $21 $30 $31 $31 $32 $33 $65 $65 $64 $67 $73 $- $10 $20 $30 $40 $50 $60 $70 $80 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 Co re F ee R ev en ue ( $m m )2 Banking Cash Connect Wealth Management3 Core Fee Revenue1 Trends Diversified and resilient core fee revenue increased $6.0 million or 9% quarter-over-quarter 1 This is a non-GAAP financial measure and should be considered along with results prepared in accordance with GAAP, and not as a substitute for GAAP results. See Appendix for reconciliation to GAAP financial information. 2 Tax-equivalent basis and excludes PPP revenue 3 Banking includes deposit service charges, SBA loan sales, loan and lease fees, credit and debit revenue, capital markets, mortgage, and other banking related fees • Over 25 discrete lines of business and products within our three main segments: Banking, Wealth Management, and Cash Connect® • Record core fee revenue of $73.4mm in the quarter • 28.6% core fee revenue ratio provides earnings stability through interest rate and credit cycles, and economic environments Wealth Management: Driven by Institutional Trust and Bryn Mawr Capital Management growth Cash Connect®: Driven by rate environment dynamics and continued growth in smart safes Banking: Driven by Capital Markets, Spring EQ fee revenue, and Mortgage growth ®
10 Asset Quality 1 Prior to 1Q23, NPA included accruing TDRs 2 Concentration limits are based on relationship exposure, and Tier-1 + ACL; as of September 30, 2023 3 Based on relationship’s outstanding balances 4 Defined as the sum of CRE and Construction (excluding Owner-Occupied) $473 $462 $417 $465 $543 23.17% 21.44% 18.65% 20.14% 23.61% 10% 15% 20% 25% 30% 35% 40% $300 $400 $500 $600 $700 $800 3Q22 4Q22 1Q23 2Q23 3Q23 M ill io ns Problem Assets % of Tier 1 capital plus ACL Problem Assets $37 $43 $33 $34 $58 0.19% 0.22% 0.16% 0.16% 0.29% 0.0% 0.1% 0.2% 0.3% 0.4% 0.5% $0 $20 $40 $60 $80 $100 3Q22 4Q22 1Q23 2Q23 3Q23 M ill io ns Nonperforming Assets % of Total Assets Nonperforming Assets1 $69 $61 $101 $73 $111 0.59% 0.51% 0.83% 0.59% 0.87% 0.0% 0.3% 0.6% 0.9% 1.2% 1.5% $0 $25 $50 $75 $100 $125 $150 $175 $200 3Q22 4Q22 1Q23 2Q23 3Q23 M ill io ns Delinquencies % of Gross Loans Delinquencies $2 $4 $6 $8 $8$3 $4 $6 $5 $6 0.11% 0.26% 0.40% 0.43% 0.45% -0.2% 0.0% 0.2% 0.4% 0.6% 0.8% $0 $4 $8 $12 $16 $20 $24 3Q22 4Q22 1Q23 2Q23 3Q23 M ill io ns Upstart/NewLane Other % of Avg. Gross Loans Net Charge-offs • Problem Assets: Increased due to downgrades in the Construction, Office, and C&I portfolios • Nonperforming Assets: Driven primarily by two C&I loans • Delinquencies: Increase due to three loans in our Commercial portfolio in the quarter • Net Charge-Offs: Essentially flat with prior period • 19bps excluding Upstart and NewLane 3Q 2023 Performance • 21 distinct concentration limits; all in compliance • House limit of $100 million (no relationships > limit) • 22 Relationships over $50 million; <12% Gross Loans3 • CRE4 concentration: 226% (300% limit) • Construction concentration: 65% (100% limit) • Retail Unsecured concentration: 19% (20% limit) Concentration Limits2
11 $0.0 $0.1 $0.2 $0.3 $0.4 $0.5 $0.6 2023 2024 2025 2026 2027 Bi lli on s Volume of Maturing CRE Loans by Industry Office Multi-Family Industrial Flex Retail Single Family Other 3.3% 9.6% 8.7% 8.0% 11.6% Credit Risk Management – CRE Details • $3.7 billion outstanding; $3.8 billion exposure • $1.2 million average loan exposure • 58% of the portfolio has fixed rates; ~70% of variable rate loans are swapped, resulting in effectively ~90% of portfolio having fixed rate • 54% portfolio average LTV at origination • 3% problem loans; 80% of loans include recourse CRE Portfolio 1 Inclusive of Office-related Construction 2 Office CRE portfolio excludes $94.2 million ($96.0 million exposure) of Medical Office CRE 3 CBD is Central Business District Disciplined underwriting and diversified portfolio Staggered maturities reduces repricing risk • 13% of CRE and 17% of Office portfolio maturing in 2023 and 2024 • Reviewed all $5 million or larger CRE loans maturing in the next two years with consideration for rising interest rates • <15% are considered elevated risk (Under 1.05 DSCR) • $687.3 million outstanding; $745.2 million exposure2 • $1.9 million average loan exposure • 77% Suburban and 23% Urban; 8% of Office is in CBD3 • 13 loans over $10 million each; largest ~$28 million • 62% portfolio average LTV at origination • 6% Problem loans; 85% of loans include recourse • <1% in nonperforming assets Office Portfolio1 58.7% of CRE loans maturing in 2028 or after Portfolio Maturity %
12 ACL Ratio $145 $150 $155 $160 $165 $170 $175 $180 $185 6/30/2023 Economic Impact Net Loan Growth Migration / Other 9/30/2023 3Q 2023 ACL ($mm) ($6) $172 $5 $176 $5 1 Source: Oxford Economics as of September 2023 2 Percentages are over amortized cost of loans and HTM securities 3 Hotel loan balances are included in the C&I and Construction segments 4 Commercial excludes Leasing ACL Overview ACL and Coverage Ratio by Segment 3Q 2023 ACL Commentary 1.28% • ACL coverage ratio of 1.28% and 1.46% including estimated remaining credit mark on the acquired loan portfolio • Forecast continues to assume recessionary period into 2024 • FY GDP forecast of 2.1% in 2023 and 0.2% in 20241 • FY Unemployment forecast of 3.7% in 2023 and 4.8% in 20241 1.28% 1.12% 2.11% 1.28% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 ACL % By Portfolio and Total2 Commercial Consumer and Leasing Total ACL% 4 ($ millions) $ % $ % $ % C&I3 $51.9 1.97% $52.4 2.00% $51.7 1.96% Owner Occupied $6.0 0.63% $6.3 0.34% $7.9 0.41% CRE Investor $21.5 0.66% $31.9 0.90% $33.2 0.91% Construction3 $6.5 0.34% $9.2 0.97% $11.3 1.08% Mortgage $4.8 0.64% $5.0 0.61% $5.4 0.63% Leases $8.0 1.49% $10.4 1.76% $10.0 1.65% HELOC & HEIL $7.0 1.24% $8.4 1.31% $8.2 1.26% Consumer Partnerships $36.4 4.40% $45.5 4.19% $46.1 4.09% Other $4.1 0.29% $2.8 0.19% $2.2 0.17% TOTAL $146.2 1.14% $171.9 1.28% $176.0 1.28% September 30, 2022 June 30, 2023 September 30, 2023
13 Capital and Liquidity All capital ratios remain strong and significantly above “well-capitalized”; Substantial liquidity capacity with only 7% utilization of current funding capacity • $9.2 billion of available funding capacity • $6.9 billion readily available/secured (92% unused capacity) • Wholesale borrowed of $0.7 billion (93% unused capacity) • Majority of wholesale utilized from Bank Term Funding Program ($0.56B) • Utilizing 7% Brokered Deposits capacity; internally limited to 8% of total funding 7% Utilized $9.2B Available $1.0 $1.6 $1.3 $1.0 $1.1 $0.7 $0.8 $1.1 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 Bank Leverage Bank TRBC Bank Tier 1 Bank CET1 Well-Capitalized Excess Capital 3Q23 Capital Ratio Breakdown ($B) 10.72% 14.43% 13.26% 13.26%
14 3 2023 Core Outlook Loan Growth Mid-to-high single digit On Track Deposit Growth Flat-to-low single digit decrease On Track Net Interest Margin Range of 3.95%-4.05% Trending Modestly Higher Fee Revenue Growth Mid-single digit Trending Modestly Higher Provision Costs 0.60% - 0.70% On Track Efficiency Ratio Mid-to-high 50s % On Track PPNR % +/- 2.10% Trending Modestly Higher ROA2 +/- 1.25% Trending Modestly Higher 1 The Company is not able to reconcile the forward-looking non-GAAP estimates set forth above to their most directly comparable GAAP estimates without unreasonable efforts because it is unable to predict, forecast or determine the probable significance of the items impacting these estimates with a reasonable degree of accuracy 2 25% effective tax rate assumed Focused on delivering sustainable high-performing Core ROA in a challenging operating environment 3Q23 Commentary for FY23 Driven by Commercial segments and moderated Consumer loan growth Continued excess liquidity normalization Higher loan yields, forecasted deposit betas, and lower deposit attrition; 4Q exit range of 3.90%-4.00% Driven by Cash Connect, Capital Markets, and Wealth Management Economic forecast and higher loan growth Continued franchise investment and cost discipline Relatively strong NIM and fee revenue ratio; 4Q exit range of 1.90%-2.00% 4Q exit range of 1.10%-1.20%; 4Q includes impact of Special FDIC assessment FY23 Core Outlook1 as of 2Q23 3Q23 Status Update Outlook assumes no further changes in Fed Funds rate in 2023
15 Non-GAAP Financial Information Appendix:
16 Non-GAAP Information This presentation contains financial measures determined by methods other than in accordance with accounting principles generally accepted in the United States (GAAP). This presentation may include the following non-GAAP measures: • Adjusted Net Income (non-GAAP) attributable to WSFS is a non-GAAP measure that adjusts net income determined in accordance with GAAP to exclude the unrealized losses on equity investments, net, Visa derivative valuation adjustment, and corporate development and restructuring expense; • Core noninterest income, also called Core Fee Revenue, is a non-GAAP measure that adjusts noninterest income as determined in accordance with GAAP to exclude the impact of unrealized (loss) gain on equity investments, net, and Visa derivative valuation adjustment; • Core fee revenue ratio (%) is a non-GAAP measure that divides (i) Core Fee Revenue by (ii) Core Net Revenue (tax-equivalent); • Core net interest income is a non-GAAP measure that adjusts net interest income to exclude the impact of certain dividends; • Core Earnings Per Share (EPS) is a non-GAAP measure that divides (i) Adjusted Net Income (non-GAAP) attributable to WSFS by (ii) weighted average shares of common stock outstanding for the applicable period; • Core Net Revenue is a non-GAAP measure that adds (i) core net interest income and (ii) Core Fee Revenue; • Core noninterest expense is a non-GAAP measure that adjusts noninterest expense as determined in accordance with GAAP to exclude corporate development and restructuring expenses; • Core Efficiency Ratio is a non-GAAP measure that divides (i) core noninterest expense by (ii) the sum of core interest income and Core Fee Revenue; • Core Return on Average Assets (ROA) is a non-GAAP measure that divides (i) Adjusted Net Income (non-GAAP) attributable to WSFS by (ii) average assets for the applicable period; • Tangible Common Equity (TCE) is a non-GAAP measure and is defined as total stockholders’ equity of WSFS less goodwill and other intangible assets; • TCE Ratio is a non-GAAP measure that divides (i) TCE by (ii) tangible assets; • Tangible assets is a non-GAAP measure and is defined as total assets less goodwill and other intangible assets; • Return on average tangible common equity (ROTCE) is a non-GAAP measure and is defined as net income allocable to common stockholders divided by tangible common equity; • Core ROTCE is a non-GAAP measure that is defined as adjusted net income (non-GAAP) attributable to WSFS divided by tangible common equity; • Net tangible income is a non-GAAP measure that adjusts net income determined in accordance with GAAP to exclude the impact of the amortization of intangible assets; • Core net tangible income is a non-GAAP measure that adjusts adjusted net income (non-GAAP) attributable to WSFS to exclude the impact of the amortization of intangible assets • Pre-provision Net Revenue (PPNR) is a non-GAAP measure that adjusts net income determined in accordance with GAAP to exclude the impacts of (i) income tax provision and (ii) provision for credit losses; • Core PPNR is a non-GAAP measure that adjusts PPNR to exclude the impact of unrealized losses on equity investments, net, Visa derivative valuation adjustment, and corporate development and restructuring expenses; • PPNR % is a non-GAAP measure that divides (i) PPNR (annualized) by (ii) average assets for the applicable period; • Core PPNR % is a non-GAAP measure that divides (i) core PPNR (annualized) by (ii) average assets for the applicable period; and • Core Return on Average Equity (ROE) is a non-GAAP measure that divides (i) Adjusted Net Income (non-GAAP) attributable to WSFS by (ii) average stockholders’ equity for the applicable period. • Effective AOCI is a non-GAAP measure that adds (i) unrealized losses on AFS securities, (ii) unrealized holding losses on securities transferred from AFS to HTM, and (iii) unrecognized fair value losses on HTM securities; • Adjusted risk weighted assets is a non-GAAP measure that adjusts the Bank’s risk weighted assets determined in accordance with GAAP to exclude our AFS and HTM securities; • Adjusted average assets is a non-GAAP measure that adjusts the Bank’s average assets determined in accordance with GAAP to exclude our AFS and HTM securities; • Adjusted tangible assets is a non-GAAP measure that adjusts risk weighted assets determined in accordance with GAAP to exclude our AFS and HTM securities ; • Adjusted TCE is a non-GAAP measure that adjusts TCE to exclude unrecognized fair value losses on HTM securities; • Adjusted TCE ratio is a non-GAAP measure (i) adjusted TCE by (ii) adjusted tangible assets; • Adjusted total risk-based capital is a non-GAAP measure that adjusts total risk-based capital determined in accordance with GAAP to exclude effective AOCI; • Adjusted total risk-based capital ratio is a non-GAAP measure that divides (i) adjusted total risk-based capital by (ii) adjusted risk weighted assets; • Adjusted common equity Tier 1 capital is a non-GAAP measure that adjusts common equity Tier 1 capital determined in accordance with GAAP to exclude effective AOCI; • Adjusted common equity Tier 1 capital ratio is a non-GAAP measure that divides (i) adjusted common equity Tier 1 capital by (ii) adjusted risk weighted assets; • Adjusted Tier 1 capital is a non-GAAP measure that adjusts Tier 1 capital determined in accordance with GAAP to exclude effective AOCI; • Adjusted Tier 1 leverage ratio is a non-GAAP measure that divides (i) adjusted Tier 1 capital by (ii) adjusted average assets.
17 Appendix: Non-GAAP Financial Information Three Months Ended (dollars in thousands) September 30, 2023 June 30, 2023 September 30, 2022 Net interest income (GAAP) $ 182,602 $ 181,842 $ 176,831 Core net interest income (non-GAAP) $ 182,602 $ 181,842 $ 176,831 Noninterest income (GAAP) $ 72,668 $ 66,871 $ 62,651 (Plus)/less: Unrealized (loss) gain on equity investments, net (5) — — Plus: Visa derivative valuation adjustment (750) (552) (2,285) Core fee revenue (non-GAAP) $ 73,423 $ 67,423 $ 64,936 Core net revenue (non-GAAP) $ 256,025 $ 249,265 $ 241,767 Core net revenue (non-GAAP) (tax- equivalent) $ 256,412 $ 249,633 $ 242,327 Noninterest expense (GAAP) $ 139,689 $ 141,253 $ 132,917 Less: Corporate development expense 113 2,796 1,248 (Plus)/less: Restructuring expense — (26) 1,344 Core noninterest expense (non-GAAP) $ 139,576 $ 138,483 $ 130,325 Core efficiency ratio (non-GAAP) 54.4 % 55.5 % 53.8 % Core fee revenue ratio (non-GAAP)(tax- equivalent) 28.6 % 27.0 % 26.8 % Three Months Ended (dollars in thousands) September 30, 2023 June 30, 2023 September 30, 2022 Calculation of tangible common equity ratio: Total Assets (GAAP) $ 20,040,992 $ 20,385,691 $ 19,985,387 Less: Goodwill and other intangible assets 1,008,472 1,004,278 1,016,413 Total tangible assets (non-GAAP) $ 19,032,520 $ 19,381,413 $ 18,968,974 Total stockholders’ equity of WSFS (GAAP) $ 2,242,795 $ 2,314,659 $ 2,103,593 Less: Goodwill and other intangible assets 1,008,472 1,004,278 1,016,413 Total tangible common equity (non-GAAP) $ 1,234,323 $ 1,310,381 $ 1,087,180 Equity to asset ratio (GAAP) 11.19 % 11.35 % 10.53 % Tangible common equity to tangible assets ratio (non-GAAP) 6.49 % 6.76 % 5.73 %
18 Appendix: Non-GAAP Financial Information Three Months Ended (dollars in thousands, except per share data) September 30, 2023 June 30, 2023 September 30, 2022 GAAP net income attributable to WSFS $ 74,166 $ 68,678 $ 73,382 Plus/(less): Pre-tax adjustments1 868 3,322 4,877 (Plus)/less: Tax impact of pre-tax adjustments (232) (798) (750) Adjusted net income (non-GAAP) attributable to WSFS $ 74,802 $ 71,202 $ 77,509 Net income (GAAP) $ 74,263 $ 68,595 $ 73,344 Plus: Income tax provision 22,904 23,035 25,767 Plus: Provision for credit losses 18,414 15,830 7,454 PPNR (Non-GAAP) 115,581 107,460 106,565 Plus/(less): Pre-tax adjustments1 868 3,322 4,877 Core PPNR (Non-GAAP) $ 116,449 $ 110,782 $ 111,442 Average Assets $ 20,264,764 $ 20,221,584 $ 20,235,749 PPNR % (Non-GAAP) 2.26 % 2.13 % 2.09 % Core PPNR % (Non-GAAP) 2.28 % 2.20 % 2.18 % GAAP return on average assets (ROA) 1.45 % 1.36 % 1.44 % Plus/(less): Pre-tax adjustments1 0.02 0.07 0.10 (Plus)/less: Tax impact of pre-tax adjustments (0.01) (0.02) (0.02) Core ROA (non-GAAP) 1.46 % 1.41 % 1.52 % Earnings per share (diluted)(GAAP) $ 1.22 $ 1.12 $ 1.16 Plus/(less): Pre-tax adjustments1 0.01 0.05 0.08 (Plus)/less: Tax impact of pre-tax adjustments — (0.01) (0.01) Core earnings per share (non-GAAP) $ 1.23 $ 1.16 $ 1.23 1 Pre-tax adjustments include unrealized (loss)/gain on equity investments, net, Visa derivative valuation adjustment, and corporate development and restructuring expense
19 Appendix: Non-GAAP Financial Information Three Months Ended (dollars in thousands) September 30, 2023 June 30, 2023 September 30, 2022 Calculation of return on average tangible common equity: GAAP net income attributable to WSFS $ 74,166 $ 68,678 $ 73,382 Plus: Tax effected amortization of intangible assets 2,984 2,884 2,906 Net tangible income (non-GAAP) $ 77,150 $ 71,562 $ 76,288 Average stockholders' equity of WSFS $ 2,327,853 $ 2,332,147 $ 2,347,178 Less: Average goodwill and intangible assets 1,007,803 1,006,972 1,018,592 Net average tangible common equity $ 1,320,050 $ 1,325,175 $ 1,328,586 Return on average equity (GAAP) 12.64 % 11.81 % 12.40 % Return on average tangible common equity (non-GAAP) 23.19 % 21.66 % 22.78 % Calculation of core return on average tangible common equity: Adjusted net income (non-GAAP) attributable to WSFS $ 74,802 $ 71,202 $ 77,509 Plus: Tax effected amortization of intangible assets 2,984 2,884 2,906 Core net tangible income (non-GAAP) $ 77,786 $ 74,086 $ 80,415 Net average tangible common equity $ 1,320,050 $ 1,325,175 $ 1,328,586 Core return on average equity (non-GAAP) 12.75 % 12.25 % 13.10 % Core return on average tangible common equity (non-GAAP) 23.38 % 22.42 % 24.01 % Three Months Ended (dollars in thousands) September 30, 2023 Calculation of effective AOCI: Unrealized losses on AFS securities $ (678,413) Unrealized losses on securities transferred from AFS to HTM (95,579) Unrecognized fair value on HTM securities (141,192) Effective AOCI (non-GAAP) $ (915,184)
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