WSFS Financial Corporation (WSFS) Earnings

Management highlights

- Overall Financial Performance • Core EPS of $1.66, core ROA of 1.55%, and core return on tangible common equity of 20.2%, all above Q1 2026 levels excluding a prior disclosed loan recovery • Year-over-year core net income increased 19%, core pre-provision net revenue increased 10%, core EPS grew 31%, and tangible book value per share grew 13% • Core results exclude a $1.8 million net income reduction and $0.03 EPS reduction from an equity investment write-down, and exclude the prior gain from credit card portfolio sale • Net interest margin expanded 4 basis points quarter-over-quarter to 3.87%, driven by a 4 basis point reduction in client deposit costs and higher investment security yields; interest-bearing deposit beta remained at 46% - Asset Quality • Problem assets decreased 6% quarter-over-quarter and 31% year-over-year due to commercial loan payoffs • Total delinquencies decreased 5% quarter-over-quarter and nearly 40% year-over-year, with accruing delinquencies totaling $26 million at quarter end • Non-performing assets decreased 8% quarter-over-quarter and nearly 25% year-over-year • Net charge-offs totaled $7.1 million (21 basis points of average loans); excluding Q1 loan recovery impacts, net charge-offs fell $5.1 million quarter-over-quarter driven by lower commercial charges - Capital Return & Strategy • Returned $77 million of capital to shareholders in Q2, including $66 million in share repurchases • Year-to-date 2026, the company has repurchased over 4% of outstanding shares and returned approximately 100% of net income to shareholders • Maintains a strategic focus on growing high-value relationship businesses (especially CNI, wealth and institutional trust) and exiting non-core, low-profit businesses

Guidance

- Full-year 2026 guidance now assumes no Federal funds rate changes for the remainder of the year - ROA guidance is raised to 1.50% with potential upside from continued strong performance and growth - Deposit growth guidance is raised from mid-single digits to high single digits, reflecting strong current growth momentum - Net interest margin (NIM) guidance is improved to approximately 3.85%, reflecting the updated rate forecast and solid deposit/loan momentum - Fee revenue excluding Cash Connect guidance is raised from mid-single digits to high single digits, reflecting strong momentum and market share gains in wealth and institutional services - Full-year net charge-off guidance is lowered to 15-25 basis points of average loans (down from prior outlook), reflecting strong current asset quality momentum - Full-year efficiency ratio guidance remains unchanged at high 50s, with continued expense discipline and planned investments in the franchise that may create quarter-to-quarter variability due to normal seasonality

Segment performance

Core fee revenue contributes approximately 33% of total revenue. Wealth and trust fee revenue grew 17% year-over-year, driven by 20% year-over-year growth in the Bryn Mawr Trust Company of Delaware personal trust business from new account growth. Within institutional services (part of wealth/fee business), corporate trust fee revenue grew 28% year-over-year and global capital markets fee revenue grew 58% year-over-year, with WSFS ranking third for most active ABS and MBS trustee by deal count in H1 2026, increasing market share to 14% from 11.7% in 2025. Capital markets within the commercial division delivered double-digit revenue growth quarter-over-quarter and year-over-year. Cash Connect fees declined year-over-year due to interest rate cuts and lower volumes, but achieved a 15% profit margin for the second consecutive quarter. Commercial and Industrial (CNI) loans grew 2% quarter-over-quarter (8% annualized). Consumer home lending saw 10% quarter-over-quarter and 23% year-over-year growth for residential mortgages and home equity loans. Total client deposits grew 3% quarter-over-quarter and 11% year-over-year, with non-interest bearing deposits growing 10% quarter-over-quarter and now representing 37% of total client deposits (up from 31% year-over-year).

Risks & headwinds

- Elevated deposit competition in the market, which may pressure deposit pricing and increase deposit costs going forward - Continued challenging pricing and market conditions in the residential lending segment driven by recent interest rate movements - The office commercial real estate segment remains a challenging market, despite no widespread systemic credit issues for the firm's portfolio - Medical/healthcare benefit costs are a growing source of cost pressure, and periodic unexpected fraud spikes can create unplanned expense variability - High growth in non-interest bearing deposits from institutional services transactional activity is not expected to continue at the current pace, which may slow overall deposit growth - While there are no widespread credit themes, individual commercial client credit challenges remain possible, leading to uneven loss results in the commercial portfolio - AOCI (Accumulated Other Comprehensive Income) remains exposed to interest rate volatility, which can impact reported capital levels

Analyst Q&A

• Q: With widespread industry expectations of margin headwinds from higher deposit costs, what is your outlook for WSFS's deposit cost trajectory, and how does this align with your updated stable NIM guidance? /

  A: WSFS has successfully reduced deposit costs so far this year, aided by its strong liquidity position that allowed it to let higher-cost certificates of deposit run off in H1. While the company remains well positioned to manage competitive pressures, it acknowledges that competition for deposits has increased substantially over the past six months, and it may need to raise deposit rates in some segments to remain competitive and grow. This creates modest upward pressure on deposit costs, but management expects NIM will remain stable overall.

• Q: Can you explain how loan pricing is holding up amid rising competition, across your commercial and consumer segments? /

  A: In commercial, CNI (WSFS's flagship growth business) has always been highly competitive, and the firm does not compete on price alone; it differentiates through superior service, relationship focus, and responsiveness, and targets accretive, mid-single digits growth through the cycle. In consumer, the firm has exited non-core credit businesses and focused on residential lending, where pricing has become more challenging overall due to recent interest rate movements, a broad market dynamic.

• Q: Could you share your updated thinking on capital allocation priorities between share buybacks, organic investment, and potential M&A? /

  A: Investing in organic growth of the core business is the first priority, as it delivers the best long-term returns for shareholders. At current capital levels, WSFS has excess capital and expects to continue returning ~100% of net income to shareholders over multi-quarter periods, aligned with its current framework. For M&A, the firm will consider opportunities that are accretive to its strategic plan (especially in wealth), but the bar is high for deals that would divert focus and resources away from large existing organic growth opportunities in its current footprint.

• Q: What is driving the strong growth in corporate trust/institutional services, and can you speak to the sustainability of this rapid growth? /

  A: The ABS/MBS securitization market (the core of corporate trust) is growing 20-30% industry-wide, and WSFS has outperformed that growth by gaining market share. WSFS differentiates by offering large-bank balance sheet strength with a more nimble, higher-service model than bigger competitors, which resonates with clients and creates a virtuous cycle of more wins as its reputation grows. While the current pace of market growth is not expected to continue indefinitely, management expects to keep gaining share in this growing market long-term.