WSFS Financial Corporation Q4 FY2025 earnings call

• WSFS had strong financial performance in Q4 2025 with core EPS of $1.43, up meaningfully YOY. Full year 2025 core EPS was $5.21.
• Net interest margin was 3.83% in Q4, down 8bps linked quarter but up 3bps YOY, absorbing 75bps of rate cuts since Q4 2024.
• Core fee revenue grew 2% linked quarter and 8% YOY, driven by double-digit growth in Wealth & Trust, capital markets, and home lending.
• Wealth & Trust business grew 13% YOY, with WSFS Institutional Services up 29% and BMT of Delaware up 24%.
• Total gross loans grew 2% linked quarter or 9% annualized, driven by broad-based growth.
• Asset quality improved with problem assets at lowest level in over 2 years, nonperforming assets down ~40% YOY.
• Returned $119 million of capital in Q4, with $109 million in buybacks.

For the fourth quarter, WSFS delivered a core earnings per share of $1.43, core ROA of 1.42% and core return on tangible common equity of 18%. Net interest margin was 3.83% for the quarter, down 8 basis points linked quarter. Core fee revenue increased 2% linked quarter and 8% year-over-year. Wealth & Trust business grew 13% year-over-year. Total gross loans grew 2% linked quarter. Noninterest-bearing deposits grew 6% linked quarter and represent 32% of total client deposits. Wealth & Trust contributed 29% growth in WSFS Institutional Services and 24% growth in BMT of Delaware.

• Expect core ROA of approximately 1.40% and double-digit growth in core EPS for 2026.
• Mid-single-digit loan growth overall, with low single-digit growth in consumer portfolio.
• Continued mid-single-digit deposit growth from 4Q levels.
• NIM outlook is approximately 3.80% for 2026, incorporating 3 rate cuts.
• Net charge-offs expected to be 35 to 45 basis points of average loans, consistent with 2025 results.
• Efficiency ratio expected in the high 50s for 2026, with focus on expense discipline but investment in franchise.

• Interest rate fluctuations could impact net interest margin.
• Economic uncertainties may affect loan growth and deposit repricing.
• Commercial loan losses may remain uneven despite improvement in problem assets.

Q: On the loan growth, can you talk a little bit about the better commercial trends?

A: In commercial, pipeline built in Q3, with strong originations in Q4 due to clarity on legislative front and passage of tax bill. Feel good about momentum going forward.

Q: This was a really strong quarter in terms of buybacks. What are kind of your parameters there?

A: Primarily look at CET1 and TCE, also consider price dip opportunities. Approach is to return roughly 100% of net income, but adjust based on macro environment and investment opportunities.

Q: On Cash Connect, what type of revenue hit are you guys anticipating here?

A: Interest rates have an impact, but offset by expense actions. Roughly $2.5 million annual impact per 25 basis point rate cut. Also driving margin through pricing, expense optimization, and growing Smart Safes business.

Q: Just at a high level, you over the past year or so, exited a couple of businesses where the risk-adjusted returns aren't there. Are there any things that you're continuing to evaluate that you could share?

A: Continue to evaluate through 'relook' initiative, shedding low scale, low profitability businesses. Evaluate strategic fit of various business parts ongoing.

Q: I wanted to look at sort of risk-adjusted returns in the loan portfolio, and particularly as Upstart is now behind you. Do you see those getting stronger?

A: Focus on real estate secured consumer portfolio and C&I relationship product in commercial. Competitive advantage in relationship, service, and responsiveness. Also looking to get more out of client relationships through referrals.

Q: I want to step back and understand the driver behind your strong noninterest-bearing deposit growth in the quarter. Is it a function of your overall institutional trust market increasing?

A: Noninterest deposit growth expected to be consistent with interest bearing deposit growth. Growth came from trust and private banking, but broad-based across business with consumer, trust/private banking, and commercial contributing.

Q: Hopping on to try to clarify something. Is the double-digit EPS growth on core or reported EPS?

A: It's on core relative to core.

Q: A quick question on the NIM with that guide has there been any shifts in your hedging profile?

A: About $1.3 billion of hedges in the money, with another rate cut expected to have $1.5 billion in the money. Securities portfolio yielding ~2.35%-2.4% and reinvested at ~4.3%-4.4% providing uplift.

Q: And with that, you described really strong deposit growth with this outlook. Where do you see all the growth across all your other businesses?

A: Continued mid-single-digit deposit growth expected, with institutional services continuing to increase share as a growth engine, referrals from commercial and wealth, and growth in C&I portfolio and small business contributing.