WSFS FINANCIAL CORP Q3 FY2026 earnings call

• Net Interest Margin (NIM): Increased by 1 basis point sequentially to 3.88%, driven by loan growth and higher investment securities yields, partially offset by rising client deposit costs.
• Deposit Beta: Exited the rate cycle with a cumulative interest-bearing deposit beta of 41%. Management expects the normalized beta to settle between 45-50% through the current rate increase cycle, consistent with prior cycles.
• Fee Revenue: Core fee revenue declined 1% sequentially but grew 3% year-over-year. Wealth and Trust drove this growth, expanding double-digit for eight consecutive quarters.
• Loan Growth: Gross loans grew 1% sequentially (5% annualized). Excluding runoff from the Spring EQ portfolio, loans grew 2% sequentially and 7% year-over-year. CNI grew 1% sequentially, while residential mortgage and home equity loans rose 6% sequentially.
• Asset Quality: Delinquencies decreased 3% sequentially and 11% year-over-year to a two-year low. Net charge-offs were minimal at 3 basis points of average gross loans year-to-date. Problem assets increased $57.5 million sequentially due to downgrades in multifamily, construction, and CNI, but remain down 16% year-over-year.
• Efficiency Ratio: Improved to 56.1%, supported by expense discipline and non-recurring favorable items.
• Capital Returns: Returned $70 million to shareholders, including $60 million in share repurchases. Year-to-date, 5.6% of shares have been repurchased.

The provided transcript does not explicitly break down financial performance by distinct product segments in a tabular format with absolute revenue figures and percentage contributions. However, it provides qualitative growth metrics for key business lines: Wealth and Trust (representing ~60% of fee revenue) grew 30% year-over-year; Corporate Trust and Global Capital Markets within Institutional Services grew 45% and 48% respectively; Private Wealth grew 14%; and CashConnect fees declined year-over-year but maintained a 15% profit margin.

• Deposit Beta: Management expects an upcycled beta of 35% across the September rate increase and another hike in December, though they anticipate a normalized long-term beta of 45-50% through the full cycle.
• NIM Impact: For every 25 basis point rate increase, management expects a 2-3 basis point increase in NIM, subject to deposit pricing competition.
• Wealth and Trust Growth: The sustainable intermediate-term growth goal is double digits, acknowledging that the recent 30% surge was driven by specific tailwinds and may normalize.
• Credit Outlook: Expectations are for net charge-offs to come in slightly better than previous guidance, with no material risks identified over the next few months.

• Deposit Pricing Pressure: Continued market competition for deposits may drive up the deposit beta, impacting net interest margins.
• Interest Rate Sensitivity: While asset-sensitive, high rates could lead to demand destruction in consumer mortgage origination, slowing growth in that segment.
• CRE Refinancing Risks: Some commercial real estate projects are becoming harder to pencil out regarding debt service coverage ratios, potentially affecting maturing loans.
• C&I Competition: Increased competition in the Commercial & Industrial lending space may pressure existing clients and spreads.

Q: Russell Gunther asked about Q4 loan growth expectations and whether high rates would cause demand destruction. / A: Rodger Levenson stated that CNI growth has normalized to historical levels rather than the exceptional first-half pace. Consumer mortgage growth is expected to slow as pipelines shrink due to rates above 7%, though the company remains confident in its competitive position, likely resulting in slower growth rather than contraction.