WSFS Financial : 1Q 2025 WSFS Earnings Release

Published: 2025-04-24 16:42:38 ET WSFS

WSFS Bank Center

WSFS Bank Place

500 Delaware Avenue

1818 Market Street

Wilmington, DE 19801

Philadelphia, PA 19103

FOR IMMEDIATE RELEASE

EXHIBIT 99.1

Investor Relations Contact: Andrew Basile

(302) 504-9857; [email protected]

April 24, 2025

Media Contact: Connor Peoples

(215) 864-5645; [email protected]

WSFS REPORTS 1Q 2025 EPS OF $1.12, ROA OF 1.29% AND NIM OF 3.88%;

BOARD APPROVED 13% DIVIDEND INCREASE AND

ADDITIONAL 10% SHARE REPURCHASE AUTHORIZATION

Wilmington, DE - WSFS Financial Corporation (Nasdaq: WSFS), the parent company of WSFS Bank, today announced its financial results for the first quarter of 2025.

Selected financial results and metrics are as follows:

(Dollars in millions, except per share data)

1Q 2025

4Q 2024

1Q 2024

Net interest income

175.2

178.2

175.3

Fee revenue

80.9

83.3

75.9

Total net revenue

256.1

261.5

251.1

Provision for credit losses

17.4

8.0

15.1

Noninterest expense

151.8

169.1

149.1

Net income attributable to WSFS

65.9

64.2

65.8

Pre-provision net revenue (PPNR)(1)

104.3

92.4

102.1

Earnings per share (EPS) (diluted)

1.12

1.09

Return on average assets (ROA) (a)

1.29 %

1.21 %

1.28 %

Return on average equity (ROE) (a)

10.1

9.7

10.7

Fee revenue as % of total net revenue

31.5

31.8

30.2

Efficiency ratio

59.2

64.6

59.3

See "Notes"

GAAP results for the quarterly periods shown included items that are excluded from core results. Below is a summary of the financial effects of these items. For additional detail, refer to the Non-GAAP Reconciliation in the back of this earnings release.

1Q 2025

4Q 2024

1Q 2024

(Dollars in millions, except per share data)

Total (pre-

Per share

Total (pre-

Per share

Total (pre-

Per share

tax)

(after-tax)

tax)

(after-tax)

tax)

(after-tax)

Fee revenue

0.1

(0.6)

(0.01)

Noninterest expense

0.3

2.1

0.03

1.5

0.02

Income tax impacts

(0.1)

(0.4)

(0.01)

(0.5)

(0.01)

WSFS Bank Center

WSFS Bank Place

500 Delaware Avenue

1818 Market Street

Wilmington, DE 19801

Philadelphia, PA 19103

CEO Commentary

Rodger Levenson, Chairman, CEO and President, said, "Despite uncertain economic conditions, WSFS continued to perform well in the first quarter with a core EPS(2) of $1.13 and a core ROA(2) of 1.29%.

"These results were driven by the net interest margin of 3.88%, which expanded 8bps from the previous quarter. Loans and deposits were essentially flat, reflecting expected seasonal activity and overall caution from Clients.

"Core fee revenue(2) grew 6% from the first quarter of 2024, driven by continued strong performance in the Wealth and Trust segment which grew 19% year-over-year.

"Credit metrics remained stable, excluding the impact of a charge-off related to an existing non- performing office-related credit. In light of the recent slowing of economic activity, we continue to closely monitor asset quality.

"As part of our normal capital planning process, the Board approved a 13% increase in the quarterly dividend to $0.17 per share, along with an additional share repurchase authorization of 10% of our outstanding shares as of quarter-end. These actions allow us to enhance shareholder value via the return of excess capital with increased flexibility of buybacks, depending on business performance and economic conditions."

WSFS Bank Center

WSFS Bank Place

500 Delaware Avenue

1818 Market Street

Wilmington, DE 19801

Philadelphia, PA 19103

Highlights for 1Q 2025:

WSFS Bank Center

WSFS Bank Place

500 Delaware Avenue

1818 Market Street

Wilmington, DE 19801

Philadelphia, PA 19103

First Quarter 2025 Discussion of Financial Results

Balance Sheet

The following table summarizes loan and lease balances and composition at March 31, 2025 compared to December 31, 2024 and March 31, 2024:

Loans and Leases

(Dollars in millions)

March 31, 2025

December 31, 2024

March 31, 2024

Commercial & industrial (C&I)(4)

4,651

36 %

4,652

36 %

4,489

35 %

Commercial mortgage

3,982

4,031

3,877

Construction

869

832

1,056

Commercial small business leases

636

648

634

Total commercial loans and leases

10,138

10,163

10,056

Residential mortgage

992

888

Consumer

2,033

2,086

2,066

Gross loans and leases

13,163

102 %

13,241

102 %

13,010

102 %

ACL

(188)

(2)

(195)

(2)

(193)

(2)

Net loans and leases

12,975

100 %

13,046

100 %

12,817

100 %

At March 31, 2025, WSFS' gross loan and lease portfolio decreased $78.4 million, or 1% (2% annualized), when compared with December 31, 2024. Excluding the continued runoff of the Spring EQ and Upstart portfolios, gross loans and leases decreased $12.8 million, or less than 1% annualized, as some borrowers delayed actions given uncertainty in the macroeconomic and policy environment. The decline was primarily driven by a decrease of $48.6 million in commercial mortgage, partially offset by a $36.6 million increase in construction loans.

Gross loans and leases at March 31, 2025 increased $153.2 million, or 1%, when compared with March 31, 2024. Total commercial loans and leases grew $82.5 million, or 1%, driven by increases of $162.3 million (4%) in C&I and $105.2 million (3%) in commercial mortgage. These increases were partially offset by a $187.7 million decrease in construction loans, partially driven by migration into commercial mortgages and C&I loans (including owner-occupied real estate). Residential mortgage increased $104.0 million, or 12%, due to the retention of certain loans based on favorable yields and relationship opportunities, and consumer loans decreased $33.3 million, or 2%, primarily due to runoff in the Upstart portfolio.

WSFS Bank Center

WSFS Bank Place

500 Delaware Avenue

1818 Market Street

Wilmington, DE 19801

Philadelphia, PA 19103

The following table summarizes client deposit balances and composition at March 31, 2025 compared to December 31, 2024 and March 31, 2024:

Client Deposits

(Dollars in millions)

March 31, 2025

December 31, 2024

March 31, 2024

Noninterest demand

4,947

29 %

4,988

29 %

4,653

29 %

Interest-bearing demand

2,882

2,973

2,856

Savings

1,463

1,466

1,577

Money market

5,487

5,472

5,206

Total core deposits

14,779

14,899

14,292

Time deposits

2,100

2,131

1,895

Total client deposits

16,879

100 %

17,030

100 %

16,187

100 %

Total client deposits decreased by $150.7 million, or 1% (4% annualized), when compared with December 31, 2024, primarily due to seasonality and expected outflows in Trust deposits, partially offset by growth from Consumer Banking. Noninterest demand deposits comprised 29% of client deposits, consistent with recent levels and reflecting the strength of our core deposit base.

Total client deposits increased by $691.9 million, or 4%, from March 31, 2024, driven by broad-based growth across the Consumer, Commercial, and Trust businesses, with growth in noninterest demand, money market, and time deposits. Noninterest demand deposits increased 6% compared to March 31, 2024.

Core deposits were 88% of total client deposits, with a weighted average cost of 138bps for the quarter. No- and low-cost checking accounts represented 46% of total client deposits with a weighted average cost of 38bps for the quarter.

The deposit base remains well-diversified, with 50% of quarterly average client deposits coming from the Commercial, Small Business, and Wealth and Trust business lines. The loan-to-deposit ratio(5) was 77% at March 31, 2025, providing continued capacity to fund future loan growth.

WSFS Bank Center

WSFS Bank Place

500 Delaware Avenue

1818 Market Street

Wilmington, DE 19801

Philadelphia, PA 19103

Net Interest Income

Three Months Ending

(Dollars in millions)

March 31, 2025

December 31, 2024

March 31, 2024

Net interest income before purchase accretion

173.1

175.8

173.1

Purchase accounting accretion

2.1

2.4

2.2

Net interest income

175.2

178.2

175.3

Net interest margin before purchase accretion

3.83 %

3.75 %

3.79 %

Purchase accounting accretion

0.05

Net interest margin

3.88 %

3.80 %

3.84 %

Net interest income decreased $3.0 million, or 2% (not annualized), compared to 4Q 2024, driven by lower loan yields due to the full quarter impact of the Fed rate cuts in late 2024, typical impacts from day- count in the first quarter, and lower loan volume. The decrease was partially offset by lower deposit and wholesale funding costs. Net interest income decreased $0.1 million compared to 1Q 2024.

Total loan yields were 6.67%, a decrease of 13bps when compared to 4Q 2024, due to the rate cuts in late 2024. Total client deposit costs were 1.71%, a decrease of 12bps, while interest-bearing deposit costs were 2.43%, a decrease of 22bps compared to the prior quarter. The deposit cost decreases reflect deposit repricing actions taken in response to the Fed rate cuts.

Net interest margin of 3.88%, an increase of 8bps compared to 4Q 2024 and 4bps from 1Q 2024, reflects the aforementioned deposit repricing actions and a reduction in wholesale funding, partially offset by the lower loan yields mentioned above.

WSFS Bank Center

WSFS Bank Place

500 Delaware Avenue

1818 Market Street

Wilmington, DE 19801

Philadelphia, PA 19103

Asset Quality

(Dollars in millions)

March 31, 2025

December 31, 2024

March 31, 2024

Problem assets(6)

683.7

645.0

573.2

Delinquencies

147.7

121.8

104.5

Nonperforming assets

116.9

127.4

67.2

Net charge-offs

24.6

10.2

8.6

Total net credit costs (r)

17.6

8.7

16.2

Problem assets to total Tier 1 capital plus ACL

27.83 %

26.21 %

23.42 %

Classified assets to total Tier 1 capital plus ACL

20.80

21.40

17.56

Ratio of nonperforming assets to total assets

0.57

0.61

0.33

Delinquencies to gross loans (n)

1.13

0.92

0.81

Ratio of quarterly net charge-offs to average gross loans

0.76

0.31

0.27

Ratio of allowance for credit losses to total loans and leases (q)

1.43

1.48

Ratio of allowance for credit losses to nonaccruing loans

168

160

292

See "Notes"

Problem assets to total Tier 1 capital plus ACL ratio was 27.83%, an increase of 162bps compared to December 31, 2024, primarily driven by downgrades to two multifamily relationships which are well- collateralized and remain current.

Delinquencies of $147.7 million, or 113bps of gross loans, increased $25.9 million, or 21bps, compared to December 31, 2024, primarily due to increased delinquencies in the C&I portfolio.

Net charge-offs increased $14.3 million to $24.6 million, or 76bps (annualized) of average gross loans during the quarter, driven by a $15.9 million charge-off of an existing nonperforming C&I loan to a fund that is invested in office properties. Excluding this loan, net charge-offs would have been 27bps of average gross loans during the quarter, reflecting continued decreases in charge-offs related to NewLane and Upstart.

Nonperforming assets decreased $10.5 million, or 4bps of total assets, compared to December 31, 2024, primarily due to the charge-off mentioned above, partially offset by the migration of a land development loan.

Total net credit costs were $17.6 million in the quarter, an increase of $8.9 million, compared to $8.7 million in 4Q 2024, primarily driven by the aforementioned charge-off.

The ACL was $188.1 million as of March 31, 2025, a decrease of $7.2 million from December 31, 2024, which includes an $8.4 million release related to the charge-off mentioned above and $2.8 million from the continued runoff of the Upstart portfolio. The ACL coverage ratio was 1.43%, a decrease of 5bps compared to December 31, 2024. Excluding the impacts of the C&I charge-off and Upstart runoff, the ACL coverage ratio would have increased 3bps, primarily due to economic forecast changes.

WSFS Bank Center

WSFS Bank Place

500 Delaware Avenue

1818 Market Street

Wilmington, DE 19801

Philadelphia, PA 19103

Core Fee Revenue(7)

Core fee revenue (noninterest income) of $80.9 million decreased $2.3 million, or 3% (not annualized), compared to $83.2 million from 4Q 2024. The decrease was driven by declines of $0.8 million in Cash Connect® fees primarily due to lower bailment volume and the lower interest rate environment (which was more than offset in noninterest expense), $0.6 million in Private Wealth Management due to lower AUM- based fees, and $0.7 million in other bank fees. The decrease was partially offset by modest increases in Institutional Services and WSFS Mortgage fees.

Core fee revenue increased $4.4 million, or 6%, compared to 1Q 2024. The increase was primarily driven by a 19% increase in Wealth and Trust, with double-digit increases in Institutional Services and BMT of DE. The increase was partially offset by a decline in Cash Connect® and Capital Markets fees. The decline in Cash Connect® was primarily due to the impact of interest rates and lower managed service volumes, partially offset by higher bailment volumes.

For 1Q 2025, our core fee revenue ratio(7) was 31.5% compared to 31.8% in 4Q 2024 and 30.3% in 1Q 2024. Fee revenue is a competitive differentiator providing a well-diversified source of revenue with further growth opportunities expected.

GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.

WSFS Bank Center

WSFS Bank Place

500 Delaware Avenue

1818 Market Street

Wilmington, DE 19801

Philadelphia, PA 19103

Core Noninterest Expense(8)

Core noninterest expense of $151.5 million decreased $15.5 million, or 9% (not annualized), compared to 4Q 2024. Cash Connect® accounted for $5.3 million of the decrease, including $2.8 million from external funding costs due to seasonally lower volumes and lower rates, as well as $1.9 million from nonrecurring items related to a Client termination in the fourth quarter. In addition, salaries and benefits declined by $5.0 million, reflecting lower incentive payments made for 2024 and lower medical costs. Professional fees decreased from an elevated level in the fourth quarter by $2.4 million due to lower legal, compliance, and risk-related fees.

Core noninterest expense increased $3.9 million, or 3%, compared to 1Q 2024. The increase was largely driven by $6.7 million in higher salaries and benefits as a result of talent additions in key business areas, performance-based increases, and higher medical costs. This increase was partially offset by a $2.6 million decrease in Cash Connect® external funding costs.

Our core efficiency ratio(8) was 59.0% in 1Q 2025, compared to 63.8% in 4Q 2024 and 58.6% in 1Q 2024.

Income Taxes

We recorded a $21.1 million income tax provision in 1Q 2025, compared to $20.2 million in 4Q 2024 and $21.2 million in 1Q 2024. The increase compared to 4Q 2024 and the decrease compared to 1Q 2024 is primarily due to income before taxes.

The effective tax rate was 24.3% in 1Q 2025 compared to 23.9% in 4Q 2024 and 24.4% in 1Q 2024. The increase in effective tax rate compared to 4Q 2024 is attributable to higher state taxes and reduced federal tax credits.

WSFS Bank Center

WSFS Bank Place

500 Delaware Avenue

1818 Market Street

Wilmington, DE 19801

Philadelphia, PA 19103

Capital Management

In line with our annual capital planning process, the Board of Directors approved a 13% increase in the quarterly cash dividend to $0.17 per share of common stock and an incremental share repurchase authorization of 10% of outstanding shares as of March 31, 2025. The dividend will be paid on May 23, 2025 to stockholders of record as of May 9, 2025. As a result of the incremental authorization, WSFS had 8,033,974 shares, or approximately 14% of outstanding shares as of March 31, 2025, available for repurchase. Capital levels remain strong and are all substantially in excess of the "well-capitalized" regulatory benchmarks at March 31, 2025, with Common Equity Tier 1 capital ratio and Tier 1 capital ratio of 14.10%, Tier 1 leverage ratio of 11.17%, and Total Risk-based capital ratio of 15.89%.

During 1Q 2025, WSFS repurchased 1,027,214 shares of common stock for an aggregate of $53.8 million and paid quarterly dividends of $8.8 million. Total capital returned to stockholders through share repurchases and quarterly dividends was $62.6 million.

WSFS' total stockholders' equity increased $81.9 million, or 3% (not annualized), during 1Q 2025. The increase was primarily due to a decrease in accumulated other comprehensive loss of $75.4 million, driven by market-value increases on available-for-sale investment securities, and quarterly earnings of $65.9 million. The increase was partially offset by capital returns of $62.6 million to stockholders.

WSFS' tangible common equity(9) increased $86.1 million, or 5% (not annualized), compared to December 31, 2024, primarily due to the reasons described above. WSFS' common equity to assets ratio increased 56bps to 13.00% during the quarter, and our tangible common equity to tangible assets ratio(9) was 8.63% at March 31, 2025, an increase of 55bps, compared to the prior quarter.

At March 31, 2025, book value per share was $46.31, an increase of $2.16, or 5% (not annualized), from December 31, 2024, and tangible book value per share was $29.25, an increase of $1.95, or 7% (not annualized), from December 31, 2024. These increases were due to the reasons described above. Book value per share increased $5.14, or 12%, and tangible book value per share increased $4.73, or 19%, compared to 1Q 2024.

Disclaimer

WSFS Financial Corporation published this content on April 24, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 24, 2025 at 20:39 UTC.