What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2022-03-01 compared with 2021-03-01 · 193 added, 200 removed, 289 unchanged (58% of the section changed)

4 unchanged sentences

As a federal savings bank that was formerly chartered as a state mutual savings bank, WSFS Bank enjoys a broader scope of permissible activities than most other financial institutions.

A fixture in the community, we have been in operation for more than 189 years.

In addition to our focus on stellar customer experience, we have continued to fuel growth and remain a leader in our community.

A fixture in the community, WSFS Bank has been in operation for more than 189 years.

In addition to its focus on stellar customer experiences, WSFS Bank has continued to fuel growth and remain a leader in our community.

We are a relationship-focused, locally-managed, community banking institution.

1 unchanged sentence

“We Stand for Service.” Our strategy of “Engaged Associates, living our culture, making a better life for all we serve” focuses on exceeding customer expectations, delivering stellar experiences and building customer advocacy through highly-trained, relationship-oriented, friendly, knowledgeable and empowered Associates.

As of December 31, 2020, we service our customers primarily from our 112 offices located in Pennsylvania (52), Delaware (42), New Jersey (16) Virginia (1) and Nevada (1), our ATM network, our website at www.wsfsbank.com , and our mobile apps.

We have six consolidated subsidiaries:

As of December 31, 2021, we had six consolidated subsidiaries:

WSFS Bank, WSFS Wealth Management, LLC (Powdermill ® ), WSFS Capital Management, LLC (West Capital), Cypress Capital Management, LLC (Cypress), Christiana Trust Company of Delaware ® (Christiana Trust DE) and WSFS SPE Services, LLC.

We also have one unconsolidated subsidiary, WSFS Capital Trust III.

WSFS Bank has three wholly owned subsidiaries:

Beneficial Equipment Finance Corporation (BEFC), WSFS Investment Group, Inc.

(WSFS Wealth ® Investments), and 1832 Holdings, Inc., and one majority-owned subsidiary, NewLane Finance Company (NewLane Finance ® ).

We also had one unconsolidated subsidiary, WSFS Capital Trust III.

WSFS Bank had two wholly owned subsidiaries:

Beneficial Equipment Finance Corporation (BEFC) and 1832 Holdings, Inc., and one majority-owned subsidiary, NewLane Finance Company (NewLane Finance ® ).

Our banking business had a total loan and lease portfolio of $7.9 billion as of December 31, 2021, which was funded primarily through commercial relationships and retail and customer generated deposits.

We have built a $6.2 billion commercial loan and lease portfolio by recruiting seasoned commercial lenders in our markets, offering the high level of service and flexibility typically associated with a community bank and through acquisitions.

We also offer a broad variety of consumer loan products, retail securities and insurance brokerage through our retail branches, and mortgage and title services through our branches and WSFS Mortgage ® .

WSFS Mortgage ® is a mortgage banking company specializing in a variety of residential mortgage and refinancing solutions.

We also offer a broad variety of consumer loan products, retail securities and insurance brokerage through our retail branches, and mortgage and title services in collaboration with WSFS Mortgage ® .

WSFS Mortgage ® is a mortgage banking company and abstract and title company specializing in a variety of residential mortgage and refinancing solutions.

Our leasing business is conducted by NewLane Finance ® .

NewLane Finance ® originates small business leases and provides commercial financing to businesses nationwide, targeting various equipment categories including technology, software, office, medical, veterinary and other areas.

In addition, NewLane Finance ® offers new product offerings for insurance through a newly-formed subsidiary, Prime Protect, which commenced operations during the fourth quarter of 2020.

In addition, NewLane Finance ® offers captive insurance through its subsidiary, Prime Protect.

Our Cash Connect ® business is a premier provider of ATM vault cash, smart safe (safes that automatically accept, validate, record and hold cash in a secure environment) and other cash logistics services in the U.S.

Cash Connect ® manages approximately $1.6 billion in total cash and services approximately 27,900 non-bank ATMs and approximately 4,500 smart safes nationwide.

As of December 31, 2021, Cash Connect ® manages approximately $1.7 billion in total cash and services approximately 27,400 non-bank ATMs and approximately 6,300 smart safes nationwide.

Cash Connect ® provides related services such as online reporting and ATM cash management, predictive cash ordering and reconcilement services, armored carrier management, loss protection, ATM processing equipment sales and deposit safe cash logistics.

Cash Connect ® also supports over 600 owned and branded ATMs for WSFS Bank Customers, which has one of the largest branded ATM networks in our market.

As of December 31, 2021, Cash Connect ® also supports over 600 owned and branded ATMs for WSFS Bank, which has one of the largest branded ATM networks in our market.

Our Wealth Management business provides a broad array of planning and advisory services, investment management, trust services, and credit and deposit products to individual, corporate and institutional clients through multiple integrated businesses.

3 unchanged sentences

West Capital, a registered investment adviser, is a fee-only wealth management firm operating under a multi-family office philosophy to provide customized solutions to institutions and high-net-worth individuals.

The trust division of WSFS, comprised of WSFS Institutional Services ® and Christiana Trust DE, provides trustee, agency, bankruptcy administration, custodial and commercial domicile services to institutional and corporate clients.

Christiana Trust DE, a subsidiary of WSFS, provides personal trust and fiduciary services to families and individuals across the U.S.

1 unchanged sentence

WSFS Wealth Client Management serves high-net-worth clients by delivering credit and deposit products and partnering with other Wealth Management businesses to provide comprehensive solutions to clients.

As of December 31, 2021, we service our customers primarily from our 112 offices located in Pennsylvania (52), Delaware (42), New Jersey (16) Virginia (1) and Nevada (1), our ATM network, our website at www.wsfsbank.com , and our mobile apps.

Notable Items Impacting Results of Operations, Financial Condition and Business Outlook

Our results in 2020 were significantly impacted by the COVID-19 pandemic and its impact on the economic forecasts that drive the estimates we use to determine the allowance for credit losses.

Contributing to the magnitude of the pandemic's effect is our adoption, as of January 1, 2020, of, the Current Expected Credit Loss (CECL) method of accounting, which considers forward-looking information when establishing reserves for credit losses.

Notable items in 2021 include the following:

• The COVID-19 pandemic resulted in acute deterioration in the economic forecast used in our CECL modeling, resulting in additional provision for credit losses of $153.2 million for the year ended December 31, 2020.

Including the impact of our adoption of CECL, the allowance for credit losses increased by $181.2 million during the year ended December 31, 2020.

We continue to incur other costs related to COVID-19 as we navigate through the pandemic.

During the year ended December 31, 2020, we recorded $4.9 million of such other COVID-19 related costs.

The COVID-19 pandemic has also contributed to a lower interest rate environment, impacting our asset/liability management strategies.

See "Quantitative and Qualitative Disclosures About Market Risk" and "Results of Operations" for further details.

• We participated in some of the regulatory relief programs offered as a result of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, including the Paycheck Protection Program (PPP).

We have provided nearly $1.0 billion in PPP loans to more than 5,400 new and existing WSFS Customers, which resulted in $21.7 million of additional interest income from PPP loans and $3.3 million of PPP related costs during the year ended December 31, 2020.

We experienced an increase in deposits and liquidity due to these PPP loans and the current economic environment.

See "Financial Condition," "Results of Operations" and "Regulation" for further details.

• In June 2020, WSFS recorded net realized gains on our equity investments of $22.1 million from the sale of 360,000 Visa Class B shares.

Since our adoption of ASU 2016-01 in the first quarter of 2018, cumulative realized and unrealized gains and dividends on Visa Class B shares have totaled $78.1 million.

• During 2020, we repurchased 3,950,855 shares of WSFS common stock totaling $155.1 million, which included 2,946,507 shares totaling $116.3 million during the fourth quarter of 2020 as we resumed our common stock repurchase program.

• In December 2020, WSFS issued $150.0 million of fixed-to-floating rate senior notes due 2030 with a fixed interest rate of 2.75% for the first five years, and afterwards at an annual floating rate equal to a benchmark rate expected to be three-month term SOFR (as defined in the senior notes) plus 2.485%.

For a discussion of additional risk factors relating to COVID-19, see "Risk Factors."

Looking ahead, the continuation of the economic effects of COVID-19 and actions taken in response to it, including the impacts of loan forbearances and forgiveness and other provisions of the CARES Act and other federal and state measures, may adversely impact our business and results of operations and the operations of our borrowers, customers and business partners.

The uncertainty regarding the duration of the pandemic and the resulting economic disruption has caused increased market volatility and has led to an economic recession and a significant decrease in consumer confidence and business generally.

The continuation of these conditions including whether due to a resurgence of COVID-19 infections, particularly as the geographic areas in which we operate begin to re-open, how quickly and to what extent normal economic and operating conditions can resume, especially as a vaccine becomes widely available, as well as the impacts of the CARES Act and other federal and state measures, specifically with respect to loan forbearances, and their ultimate impact of these factors is highly uncertain at this time and we do not yet know the full extent of the impacts on our business, our operations or the global economy as a whole.

However, the decline in economic conditions generally and a prolonged negative impact on small-to-medium sized businesses, in particular, due to COVID-19 may result in an adverse effect to our business, financial condition and results of operations.

For more information about these risks and uncertainties, see “Risk Factors.”

• Bryn Mawr Trust Acquisition

◦ We recorded $13.0 million of corporate development and restructuring expenses during the year ended December 31, 2021 primarily related to our merger with Bryn Mawr Bank Corporation (BMBC), a Pennsylvania corporation and the parent holding company of The Bryn Mawr Trust Company, a Pennsylvania chartered bank and wholly owned subsidiary of BMBC.

Throughout this document, we refer to these acquired entities collectively as “Bryn Mawr Trust.”

◦ The merger was completed on January 1, 2022 with the purchase price consideration of $908 million to acquire or assume the following (at carrying value):

▪ Total assets of $5.0 billion, including $3.5 billion in loans and leases,

▪ Total liabilities of $4.4 billion, including $4.1 billion in deposits, and

▪ Total AUM and AUA of $23.6 billion.

◦ Our bank technology, branding and branch conversion is scheduled to occur later in the first quarter of 2022, with our Trust and Wealth integration expected to follow in late 2022 or early 2023.

◦ Balance Sheet

◦ On June 15, 2021, WSFS completed the redemption of $100.0 million in aggregate principal amount of our 4.50% fixed-to-floating rate senior notes due 2026 (the 2026 Notes).

We recorded a $1.1 million loss of debt extinguishment to recognize the remaining unamortized debt issue costs associated with these notes.

◦ During the year ended December 31, 2021, our balance sheet was significantly impacted by continued high levels of excess liquidity due to deposit growth stemming from strong Customer relationships across all business lines coupled with elevated loan payoffs.

We used a portion of the excess liquidity to purchase $3.5 billion of investment securities, available-for-sale, and to pay down our borrowings.

• Credit Metrics

◦ There was a reduction in the allowance for credit losses (ACL) of $134.3 million during the year ended December 31, 2021, as a result of the future recovery in our economic forecasts used in the ACL model and improved credit quality metrics with notable declines in our problem assets and delinquencies.

See “Results of Operations - Provision/Allowance for Credit Losses (ACL)” for further information.

• Other Notable Items

◦ During 2021, we recorded a $4.4 million net gain on the liquidation of our investment in Social Finance, Inc.

We used $1.0 million of the proceeds to make a contribution to the WSFS CARES Foundation to further fund support to our expanded communities.

◦ During the third quarter of 2021, we launched our strategic partnership with Upstart Holdings, Inc.

(Upstart), a leading white label lending-as-a-service platform provider specializing in risk-based priced unsecured consumer loans.

◦ In October 2021, Michelle L.

Burroughs joined the Bank as Vice President, Director of Diversity, Equity and Inclusion (DE&I), supporting WSFS in creating and delivering a work environment designed to foster a culture of inclusion and ensure the long-term sustainability of the Company’s DE&I efforts.

◦ During 2021, we resolved all outstanding legal matters associated with Nature's Healing Trust and Charter Oak.

In the fourth quarter of 2021, we recognized $15.0 million legal settlement recovery associated with Charter Oak.

FINANCIAL CONDITION

1 unchanged sentence

These increases are primarily comprised of the following (in descending order of magnitude):

• Cash, cash equivalents, and restricted cash:

Cash, cash equivalents, and restricted cash increased $1.1 billion, or 189%, primarily reflecting excess cash held due to increased deposits related to PPP loans and CARES Act payments.

• Investment securities, available-for-sale:

Investment securities, available for sale increased $584.1 million, or 30%, primarily due to $1.5 billion in purchases and favorable market-value changes on available-for-sale securities of $33.0 million, partially offset by repayments of $606.2 million and sales of $305.8 million.

• Loans, net of allowance:

Loans, net of allowance , increased $371.5 million, or 4%, which included:

◦ An increase of $751.2 million from PPP loans, in addition to growth in construction, owner-occupied commercial, and commercial small business leases, as well as an increase in home equity installment loans originated through our partnership with Spring EQ;

partially offset by

◦ A decline during the year of $423.5 million from residential and commercial real estate, primarily in the non-relationship run-off portfolios predominantly acquired from the Beneficial Bancorp, Inc.

(Beneficial) acquisition;

◦ An increase of $181.2 million in the allowance for credit losses, primarily from $153.2 million of provision for credit losses during the year due to the implementation of CECL in January 2020, as well as the acute deterioration in the economic forecast used in our CECL models related to the impact of the COVID-19 pandemic, and loan migration that occurred during the year in several specific portfolios, mainly in the accommodation, retail and food service industries.

Investment securities, available for sale increased $2.7 billion, or 106%, primarily due to $3.5 billion in purchases partially offset by repayments of $697.5 million, decreased market-values on available-for-sale securities of $93.8 million, and sales of $14.1 million.

• Loans and leases, net of allowance:

Loans and leases, net of allowance , decreased $1.0 billion, or 11%, reflecting a $782.4 million decline in commercial and industrial loans that included a $719.7 million decrease due to forgiveness of PPP loans and higher loan payoffs, a $227.8 million decline in residential loans, largely due to non-relationship run-off portfolios acquired through the Beneficial Bancorp, Inc.

(Beneficial) acquisition, and a $204.6 million decline in commercial mortgage loans due to higher loan payoffs.

Partially offsetting these decreases were $103.4 million of growth in our commercial small business leases portfolio, and a reduction of $134.3 million in our allowance for credit losses as described above.

• Cash, cash equivalents, and restricted cash:

Cash, cash equivalents, and restricted cash decreased $121.8 million, or 7%, primarily reflecting our purchases of available-for-sale investment securities, as noted above, partially offset by elevated customer deposits due to strong relationships across all of our lending and fee based business lines.

• Loans, held for sale:

Loans, held for sale are recorded at fair value and increased $113.7 million, driven by an increase in residential mortgage loan originations.

• Other assets:

Other assets increased $33.9 million, or 13%, primarily due to an increase in our deferred tax asset from the large nondeductible provision for credit losses (as described above) combined with the taxable gain from the sale of Visa Class B shares (as described below).

• Other investments:

Other investments decreased $60.5 million, or 86%, as we sold 360,000 Visa Class B shares during the second quarter of 2020.

Loans, held for sale are recorded at fair value and decreased $84.2 million, or 43%, driven by a combination of lower origination volume and higher loans sales in our mortgage banking business.

• Investment securities, held-to-maturity:

2 unchanged sentences

• Total Deposits:

Total deposits increased $2.3 billion, or 24%, to $11.9 billion, primarily due to an increase in customer funding during the COVID-19 pandemic, which reflected elevated deposits from Customers who received PPP loans, the impact of government stimulus and lower customer spending.

The ratio of loans to customer deposits (excludes brokered deposits) was 77% at December 31, 2020 reflecting significant liquidity capacity.

• Borrowings:

Borrowings increased primarily due to the net proceeds of $147.8 million received in December 2020 from the issuance of senior notes due 2030.

• Federal funds purchased:

Federal funds purchased decreased $195.0 million, due to paydowns of these borrowings, as a result of the significant liquidity provided by the increase in customer funding, as described above.

We did not have any securities sold under repurchase agreements at December 31, 2020.

• FHLB advances:

FHLB advances decreased $106.1 million due to the termination of fixed rate FHLB term advances as part of our routine balance sheet and liquidity management.

Stockholders’ Equity

Stockholders’ equity decreased $58.6 million to $1.8 billion at December 31, 2020 compared to $1.9 billion at December 31, 2019 primarily due to decreases of $155.8 million related to share repurchases, and $24.4 million in common stock dividends paid during 2020.

These decreases in stockholders' equity were partially offset by earnings of $114.8 million during the year and $32.5 million in favorable market-value changes on available-for-sale securities.

Total deposits increased $1.4 billion, or 12%, to $13.2 billion, primarily due to an increase in customer funding, reflecting continued elevated deposits from strong customer relationships across all lending and fee based business lines, including our trust line of business in Wealth Management, which had $1.2 billion in deposits as of December 31, 2021, an increase of $750.8 million from the prior year.

The ratio of net loans and leases (including loans held for sale) to customer deposits was 60% at December 31, 2021 reflecting significant liquidity capacity.

• Senior debt:

Senior debt decreased $98.7 million due to the redemption of the 2026 Notes, as described above.

• Other liabilities:

Other liabilities increased $14.4 million, primarily due to $17.7 million reflecting the timing of settlements for debt security trades, partially offset by a decrease of $5.8 million in certain retirement plan liabilities.

Stockholders’ equity increased $147.4 million to $1.9 billion at December 31, 2021 compared to $1.8 billion at December 31, 2020.

The increase was primarily due to earnings of $271.4 million during the year, partially offset by $93.8 million in unfavorable market-value changes on available-for-sale securities, $24.2 million in common stock dividends paid and $13.3 million related to share repurchases during 2021.

We repurchased 267,309 and 3,950,855 shares of our common stock in 2021 and 2020, respectively.

We held 10,086,936 shares and 9,819,627 shares of our common stock as treasury shares at December 31, 2021 and 2020, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Capital Resources

7 unchanged sentences

Under the Prompt Corrective Action framework of the Federal Deposit Insurance Corporation Act, depository institutions that are not classified as well-capitalized are subject to various restrictions regarding capital distributions, payment of management fees, acceptance of brokered deposits and other operating activities.

At December 31, 2020, WSFS Bank was in compliance with regulatory capital requirements and all of its regulatory ratios exceeded “well-capitalized” regulatory benchmarks.

WSFS Bank’s December 31, 2020 common equity Tier 1 capital ratio of 12.50%, Tier 1 capital ratio of 12.50%, total risk based capital ratio of 13.76% and Tier 1 leverage capital ratio of 9.74%, all remain substantially in excess of “well-capitalized” regulatory benchmarks, the highest regulatory capital rating.

At December 31, 2021, the Bank was in compliance with regulatory capital requirements and all of its regulatory ratios exceeded “well-capitalized” regulatory benchmarks.

The Bank’s December 31, 2021 common equity Tier 1 capital ratio of 15.11%, Tier 1 capital ratio of 15.11%, total risk based capital ratio of 15.91% and Tier 1 leverage capital ratio of 10.44%, all remain substantially in excess of “well-capitalized” regulatory benchmarks, the highest regulatory capital rating.

In addition, and not included in the Bank's capital, the holding company held $103.7 million in cash to support potential dividends, acquisitions and strategic growth plans.

As part of our adoption of CECL, we elected the Implementation and Transition of the Current Expected Credit Losses Methodology for Allowances and Related Adjustments to the Regulatory Capital Rule and Conforming Amendments to Other Regulations , which permits the Company to phase in the day-one adverse effects on regulatory capital that may result from the adoption of CECL over a three-year period, which began for us on January 1, 2020.

In addition, the final rule revises the agencies' regulatory capital rule, stress testing rules, and regulatory disclosure requirements to reflect CECL, and makes conforming amendments to other regulations that reference allowance for credit losses.

As a result of the three-year phase-in period related to our CECL adoption, the impact (by bps) to our capital ratios were as follows:

December 31, 2020

(Dollars in thousands) As Reported Proforma (1)

Total Capital (to Risk-Weighted Assets)

Wilmington Savings Fund Society, FSB 13.76 % 13.83 % (0.07) %

WSFS Financial Corporation 13.76 % 13.82 % (0.06) %

Tier 1 Capital (to Risk-Weighted Assets)

Wilmington Savings Fund Society, FSB 12.50 % 12.58 % (0.08) %

WSFS Financial Corporation 12.50 % 12.57 % (0.07) %

Common Equity Tier 1 Capital (to Risk-Weighted Assets)

Wilmington Savings Fund Society, FSB 12.50 % 12.58 % (0.08) %

WSFS Financial Corporation 11.87 % 11.94 % (0.07) %

Tier 1 Leverage Capital

Wilmington Savings Fund Society, FSB 9.74 % 9.79 % (0.05) %

WSFS Financial Corporation 9.76 % 9.81 % (0.05) %

(1) Includes the full impact of CECL, not accounting for the three-year phase-in period we have elected to use.

In 2021, we plan to invest $17.5 million in our Delivery Transformation initiative to increase adoption and usage of digital channels aligned with our strategy.

Our organization is committed to product and service innovation as a means to drive growth and to stay ahead of changing customer demands and emerging competition.

We are focused on developing and maintaining a strong “culture of innovation” that solicits, captures, prioritizes and executes innovation initiatives, including feedback from our customers, as well as leveraging technology from product creation to process improvements.

As part of our adoption of the CECL methodology in 2020, we elected to phase in the day-one adverse effects on regulatory capital that may result from the adoption of CECL over a three-year period, as permitted under a final rule of the federal banking agencies.

We manage our liquidity and funding needs through our Treasury function and our Asset/Liability Committee.

3 unchanged sentences

In addition, we have a large portfolio of high-quality, liquid investments, primarily short-duration mortgage-backed securities, that provide a near-continuous source of cash flow to meet current cash needs, or can be sold to meet larger discrete needs for cash.

We believe these sources are sufficient to meet our funding needs as well as maintain required and prudent levels of liquidity over the next twelve months.

During the year ended December 31, 2020, cash, cash equivalents and restricted cash increased $1.1 billion to $1.7 billion from $571.8 million as of December 31, 2019.

Cash provided by operating activities was $15.1 million, primarily reflecting the cash impact of earnings and gains of $22.8 million from the sale of debt and equity securities (including Visa Class B shares), offset by a $118.1 million increase in net activity from loans held for sale during the year ended December 31, 2020.

Cash used in investing activities was $874.9 million primarily due to net purchases of available-for-sale debt securities of $848.5 million and $449.1 million from increased lending activity related to PPP loans in 2020 (net of forgiveness), partially offset by proceeds of $305.8 million from sales of debt securities and net proceeds of $85.9 million from the sale of Visa Class B shares.

Cash provided by financing activities was $1.9 billion, primarily due to a $2.3 billion net increase in deposits, as a result of the increase in customer funding discussed above, and $147.8 million from the issuance of senior notes due 2030, partially offset by $195.0 million for repayment of federal funds purchased, $155.8 million for repurchases of common stock under the previously announced stock repurchase plan, $106.1 million for repayment of FHLB advances due to the termination of fixed rate FHLB term advances as part of our routine balance sheet and liquidity management and common stock dividends of $24.4 million.

We believe these sources are sufficient to meet our funding needs as well as maintain required and prudent levels of liquidity over the next twelve months and beyond.

During the year ended December 31, 2021, cash, cash equivalents and restricted cash decreased $121.8 million to $1.5 billion from $1.7 billion as of December 31, 2020.

Cash provided by operating activities was $125.6 million, primarily reflecting the cash impact of earnings.

Cash used in investing activities was $1.5 billion primarily due to net purchases of available-for-sale debt securities of $2.8 billion partially offset by $1.3 billion from decreased lending activity related to PPP loan forgiveness and meaningful payoffs and paydowns in the commercial loan portfolio.

Cash provided by financing activities was $1.2 billion, primarily due to a $1.4 billion net increase in deposits, as a result of the increase in customer funding discussed above, partially offset by the redemption of $100.0 million in aggregate principal amount of the 2026 Notes, liquidity management and common stock dividends of $24.2 million, $13.3 million for repurchases of common stock under the previously announced stock repurchase plan, and $6.6 million for repayment of FHLB advances due to the termination of fixed rate FHLB term advances as part of our routine balance sheet management.

Our primary cash contractual obligations relate to operating leases, long-term debt, credit obligations, and data processing.

At December 31, 2021, we had $250.5 million in total contractual payments for ongoing leases have remaining lease terms of less than 1 year to 40 years, which includes renewal options that are exercised at our discretion.

For additional information on our operating leases see Note 9 to the Consolidated Financial Statements.

At December 31, 2021, we had no FHLB advances, and obligations for principal payments on long-term debt included $67.0 million for our trust preferred borrowings, due June 1, 2035, and $150.0 million for our senior debt, due December 15, 2030.

We are also contractually obligated make interest payments on our long-term debt through their respective maturities.

For additional information regarding long-term debt, see Note 12 to the Consolidated Financial Statements.

At December 31, 2021, the Company had total commitments to extend credit of $2.5 billion, which are generally one year commitments.

For additional information regarding commitments to extend credit, see Note 17 to the Consolidated Financial Statements.

In 2022, we plan to invest approximately $15 million in our Delivery Transformation initiative to increase adoption and usage of digital channels aligned with our strategy.

Our organization is committed to product and service innovation as a means to drive growth and to stay ahead of changing customer demands and emerging competition.

NONPERFORMING ASSETS

9 unchanged sentences

(Dollars in thousands) 2021 2020

2019 2018 2017 2016

Nonaccruing loans:

13 unchanged sentences

Residential — 25

11,035 12,745 104 105 285

Total past due loans $ 9,991 $ 16,694

2 unchanged sentences

Ratio of nonaccruing loans to total gross loans and leases (4)

0.46 0.27 0.62 0.76 0.51

Ratio of nonperforming assets to total assets 0.21 0.42

1 unchanged sentence

Ratio of allowance for credit losses to total nonperforming assets (5)

378 120 83 69 97

(1) Includes the impact of our adoption of CECL on January 1, 2020.

(1) Accruing loans only, which includes acquired nonimpaired loans.

6 unchanged sentences

(6) Balance excludes COVID-19 modifications.

Nonperforming assets increased $20.7 million between December 31, 2019 and December 31, 2020.

Non-performing loans increased $19.0 million, primarily due to the move to non-accrual of one large CRE investor loan for $15.1 million, which occurred in the fourth quarter of 2020.

Restructured loans at December 31, 2020 slightly increased by $1.3 million compared to December 31, 2019.

The ratio of nonperforming assets to total assets increased from 0.32% at December 31, 2019 to 0.42% at December 31, 2020.

Nonperforming assets decreased $27.4 million between December 31, 2020 and December 31, 2021.

Non-performing loans decreased $25.3 million, primarily from $15.8 million of net collections and charge-off activity on three commercial and industrial relationships during the fourth quarter of 2021 and the payoff of one commercial real estate relationship of approximately $15.1 million in the first quarter.

Restructured loans at December 31, 2021 decreased by $1.3 million compared to December 31, 2020.

The ratio of nonperforming assets to total assets decreased from 0.42% at December 31, 2020 to 0.21% at December 31, 2021.

The following table provides an analysis of the change in the balance of nonperforming assets during the last two years:

11 unchanged sentences

In general, this system utilizes guidelines established by federal regulation.

In response to the COVID-19 pandemic, the CARES Act was enacted to provide certain measures to support individuals and businesses in maintaining solvency through monetary relief, including in the form of financing and automatic forbearance.

During 2020, we put significant effort into evaluating the needs of our Customers and offering targeted relief through loan modifications.

Our modified loans, most of which were short-term in duration, decreased significantly from the amounts reported for the second quarter of 2020.

The following table summarizes the COVID-19 related loan modifications by portfolio segment as of December 31, 2020, September 30, 2020, and June 30, 2020:

December 31, 2020 September 30, 2020 June 30, 2020

(Dollars in thousands) Loan Balances % of Portfolio Loan Balances % of Portfolio Loan Balances % of Portfolio

Commercial and industrial (1)

$ 49,038 2 % $ 139,856 7 % $ 675,724 30 %

Owner-occupied commercial — — % 10,643 1 % 380,432 28 %

Commercial mortgages 16,008 1 % 53,122 2 % 700,889 32 %

Construction 8,740 1 % 1,748 — % 109,861 17 %

Residential 13,717 2 % 34,985 4 % 86,581 9 %

Consumer (2)(3)

27,291 2 % 42,406 4 % 65,162 7 %

$ 114,794 1 % $ 282,760 3 % $ 2,018,649 24 %

(1) Includes modifications of leases with balances of $0.2 million, $0.2 million, and $39.3 million at December 31, 2020, September 30, 2020, and June 30, 2020, respectively.

(2) Includes modifications of education loans with balances of $17.1 million, $27.7 million, and $29.3 million at December 31, 2020, September 30, 2020, and June 30, 2020, respectively.

(3) Includes modifications of credit card loans with balances of $0.1 million, $0.1 million, and $0.3 million at December 31, 2020, September 30, 2020, and June 30, 2020, respectively.

RESULTS OF OPERATIONS

2 unchanged sentences

2021 compared with 2020

We recorded net income attributable to WSFS of $114.8 million, or $2.27 per diluted common share, for the year ended December 31, 2020, a decrease of $34.0 million compared to $148.8 million, or $3.00 per diluted common share, for the year ended December 31, 2019.

• Net interest income for the year ended December 31, 2020 was $466.0 million, an increase of $21.0 million compared to 2019, primarily due to decreases in rates on deposits, the impact of PPP loans, and lower interest on borrowings.

We recorded net income attributable to WSFS of $271.4 million, or $5.69 per diluted common share, for the year ended December 31, 2021, an increase of $156.7 million compared to $114.8 million, or $2.27 per diluted common share, for the year ended December 31, 2020.

• Net interest income for the year ended December 31, 2021 was $433.6 million, a decrease of $32.3 million compared to 2020, primarily due to lower purchase accounting accretion, the lower interest rate environment and balance sheet mix, as well as the impact of PPP loans.

See “Net Interest Income” for further information.

• Our provision for credit losses increased $127.6 million in 2020, primarily due to the COVID-19 pandemic and its impact on the economic forecast used in our CECL modeling.

• Our provision for credit losses decreased $270.3 million in 2021, primarily due to positive impacts in the economic forecast included in our CECL modeling and improved credit quality metrics reflecting overall declines in problem assets and delinquencies, partially offset by new loan originations.

See “Provision/Allowance for Credit Losses” for further information.

• Noninterest income increased $12.9 million in 2020, primarily due to growth across most of our business lines with the full impact of the Beneficial acquisition during the year ended December 31, 2020 as well as an increase in the sale of MBS compared to the prior period.

Partially offsetting these increases were lower interchange fees (as a result of the Durbin Amendment impacting us beginning July 2020), the net change in realized and unrealized gains from Visa Class B shares and lower deposit service charges.

• Noninterest income decreased $15.5 million in 2021, primarily due to the impact from the sale of Visa Class B shares in the prior year, lower securities gains, a decline in our mortgage banking business, and lower interchange fees due to the impact of the Durbin Amendment on 2021 results.

These decreases were partially offset by higher revenues from Wealth Management, other income and traditional banking fees, and total net gains on equity investments.

See “Noninterest Income” for further information.

• Noninterest expense decreased $44.3 million in 2020, primarily reflecting a decrease in net corporate development and restructuring costs related to our acquisition of Beneficial in 2019, partially offset by higher expenses related to overall growth of the Company, such as employee-related costs and professional fees, as well as increased credit-related costs (including loan workout expenses, OREO expenses and other credit costs), additional contributions to the WSFS Community Foundation and the loss on early extinguishment of debt.

• Noninterest expense increased $9.7 million in 2021, primarily reflecting an increase in salaries and benefits due to higher salaries and franchise growth, higher net corporate development and restructuring costs related to our acquisition of Bryn Mawr Trust and higher equipment expense, partially offset by the Charter Oak legal settlement recovery in December 2021, and decreases in loan workout and other credit costs, professional fees, and other operating expenses.

See “Noninterest Expense” for further information.

7 unchanged sentences

Commercial loans and leases $ 3,801,816 $ 183,782 4.84 % $ 4,174,451 $ 221,595 5.32 %

Commercial real estate loans 2,827,875 125,811 4.45 2,597,508 147,486 5.68

Residential mortgage 910,263 53,780 5.91 934,250 51,882 5.55

Commercial mortgage loans 2,770,241 113,979 4.11 2,827,875 125,811 4.45

Residential 636,443 42,063 6.61 910,263 53,780 5.91

Consumer 1,134,569 49,330 4.35 1,144,435 55,304 4.83

42 unchanged sentences

(4) Includes federal funds purchased.

Net interest income increased $21.0 million, or 5%, to $466.0 million in 2020, from 2019 primarily due to $29.5 million from lower funding costs primarily due to deposit repricing, $21.7 million increase in PPP income and $4.0 million in higher purchase accounting accretion, primarily offset by a $31.2 million decrease due to the lower rate environment and $3.0 million from a decline in excess liquidity.

Net interest income decreased $32.3 million, or 7%, to $433.6 million in 2021, from 2020 primarily due to a $20.9 million decrease in purchase accounting accretion, a net decline of $8.2 million due to a full year impact of the lower rate environment and change in balance sheet mix from optimization of excess customer liquidity, and $3.2 million lower PPP income.

Net interest margin decreased 73 bps to 3.23% in 2021 from 3.96% in 2020.

The decrease was primarily due to a 69 bps net decline from the lower interest rate environment and balance sheet mix, 9 bps decline in excess liquidity and 3 bps from PPP, partially offset by a 33 bps increase resulting from lower funding costs.

The decrease was primarily due to a 59 bps net decline from the lower interest rate environment and balance sheet mix and 23 bps from lower purchase accounting accretion, partially offset by 9 bps from the impact of PPP loans.

The following table provides certain information regarding changes in net interest income attributable to changes in the volumes of interest-earning assets and interest-bearing liabilities and changes in the rates for the periods indicated.

9 unchanged sentences

$ (18,805) $ (19,008) $ (37,813)

Commercial real estate loans 12,268 (33,943) (21,675)

Residential mortgage (1,369) 3,267 1,898

Commercial mortgage loans (2,492) (9,340) (11,832)

Residential (17,551) 5,834 (11,717)

Consumer (477) (5,497) (5,974)

4 unchanged sentences

Other interest-earning assets 1,466 (686) 780

Favorable (unfavorable) 74,826 (81,513) (6,687)

Unfavorable (10,829) (47,207) (58,036)

Interest expense:

8 unchanged sentences

Other borrowed funds (188) (280) (468)

(Favorable) unfavorable 820 (28,514) (27,694)

Favorable (2,628) (23,102) (25,730)

Net change, as reported $ (8,201) $ (24,105) $ (32,306)

1 unchanged sentence

(2) Includes a tax-equivalent income adjustment related to municipal bonds.

Provision/Allowance for Credit Losses

We maintain an allowance for credit losses at an appropriate level based on our assessment of estimable and probable losses in the loan portfolio, which we evaluate in accordance with applicable accounting principles, as discussed further in “Nonperforming Assets.” Our evaluation is based on a review of the portfolio and requires significant, complex and difficult judgments.

For the year ended December 31, 2020, we recorded a provision for credit losses of $153.2 million, an increase of $127.6 million compared to $25.6 million in 2019.

The increase was primarily due to acute deterioration in the economic forecast used in our CECL models related to the impact of COVID-19 pandemic, and enhanced loan reviews which resulted in risk migration that occurred during the year in several specific portfolios, mainly in the accommodation and food service industries.

The allowance for credit losses increased to $228.8 million at December 31, 2020 from $47.6 million at December 31, 2019.

Of this increase, $35.9 million was due to our adoption of CECL as of January 1, 2020 and $153.2 million was due to the additional provision for credit losses during the year ended December 31, 2020.

Investment Securities

The following table details the maturity and weighted average yield of the available for sale investment portfolio as of December 31, 2021:

(Dollars in thousands) Maturing During 2022 Maturing From 2023 Through 2026 Maturing From 2027 Through 2031 Maturing After 2031 Total

Collateralized mortgage obligations (CMO)

Amortized cost $ 1,507 $ 25,483 $ 52,301 $ 507,539 $ 586,830

Weighted average yield 2.00 % 2.22 % 1.98 % 1.59 % 1.65 %

Fannie Mae (FNMA) mortgage-backed securities (MBS)

Amortized cost 1,530 75,441 102,188 4,096,148 4,275,307

Weighted average yield 2.57 % 2.28 % 1.66 % 1.71 % 1.71 %

Freddie Mac (FHLMC) MBS

Amortized cost — — 25,898 113,810 139,708

Weighted average yield — % — % 2.11 % 2.91 % 2.76 %

Ginnie Mae (GNMA) MBS

Amortized cost — — 1,034 16,422 17,456

Weighted average yield — % — % 3.00 % 2.49 % 2.52 %

Government-sponsored enterprises (GSE)

Amortized cost — — 47,454 183,127 230,581

Weighted average yield — % — % 1.28 % 1.29 % 1.28 %

Total amortized cost $ 3,037 $ 100,924 $ 228,875 $ 4,917,046 $ 5,249,882

Weighted average yield 2.29 % 2.27 % 1.71 % 1.70 % 1.71 %

As of December 31, 2021, WSFS does not have any tax-exempt securities within the available for sale investment portfolio.

Yields are calculated on a weighted average basis using the investments amortized cost and respective average yields for each investment category.

Expected maturities of mortgage-backed securities may differ from contractual maturities due to calls or prepay obligations.

Provision/Allowance for Credit Losses (ACL)

We maintain an ACL at an appropriate level based on our assessment of estimable and probable losses in the loan portfolio, which we evaluate in accordance with applicable accounting principles, as discussed further in “Nonperforming Assets.” Our evaluation is based on a review of the portfolio and requires significant, complex and difficult judgments.

For the year ended December 31, 2021, we recorded a recovery of credit losses of $117.1 million, a net change of $270.3 million, compared to the provision for credit losses of $153.2 million in 2020.

The ACL was $94.5 million at December 31, 2021 compared to $228.8 million at December 31, 2020.

The decrease of the ACL was due to positive impacts in our economic outlook from our ACL modeling and improved credit quality metrics reflecting overall declines in problem assets and delinquencies, offset by new loan originations.

The ratio of allowance for credit losses to total loans and leases was 1.19% at December 31, 2021 and 2.51% at December 31, 2020.

During the years ended December 31, 2020 and 2019, net charge-offs totaled $7.8 million, or 0.09% of average loans, and $17.5 million or 0.22% of average loans, respectively.

The following chart details the changes in the ACL from December 31, 2020 to December 31, 2021:

(1) Other includes changes that can affect future cash flows that impact ACL, such as changes to maturity dates and payment schedules.

The following tables detail the allocation of the ACL and show our net charge-offs (recoveries) by portfolio category:

(Dollars in thousands) Commercial and Industrial (1)

Commercial Commercial

Mortgages Construction Residential (2)

As of December 31, 2021

Allowance for credit losses $ 49,967 $ 4,574 $ 11,623 $ 1,903 $ 3,352 $ 23,088 $ 94,507

% of ACL to total ACL 53 % 5 % 12 % 2 % 4 % 24 % 100 %

Loan portfolio balance $ 2,270,319 $ 1,341,707 $ 1,881,510 $ 687,213 $ 546,667 $ 1,158,573 $ 7,885,989

% to total loans and leases 28 % 17 % 24 % 9 % 7 % 15 % 100 %

Year ended December 31, 2021

Charge-offs $ 23,592 $ 83 $ 73 $ 2,473 $ — $ 2,094 $ 28,315

Recoveries 8,756 160 269 — 789 1,131 11,105

Net charge-offs (recoveries) $ 14,836 $ (77) $ (196) $ 2,473 $ (789) $ 963 $ 17,210

Average loan balance $ 2,463,933 $ 1,337,883 $ 1,994,995 $ 775,246 $ 628,411 $ 1,134,569 $ 8,335,037

Ratio of net charge-offs (recoveries) to average gross loans 0.60 % (0.01) % (0.01) % 0.32 % (0.13) % 0.08 % 0.21 %

(Dollars in thousands) Commercial and Industrial (1)

Commercial Commercial

Mortgages Construction Residential (2)

As of December 31, 2020

Allowance for credit losses $ 150,875 $ 9,615 $ 31,071 $ 12,190 $ 6,893 $ 18,160 $ 228,804

% of ACL to total ACL 66 % 4 % 14 % 5 % 3 % 8 % 100 %

Loan portfolio balance $ 2,949,303 $ 1,332,727 $ 2,086,062 $ 716,275 $ 774,455 $ 1,158,573 $ 9,024,739

% to total loans and leases 32 % 15 % 23 % 8 % 9 % 13 % 100 %

Year ended December 31, 2020

Charge-offs $ 10,388 $ 336 $ 104 $ — $ 229 $ 2,464 $ 13,521

Recoveries 4,255 142 158 36 230 893 5,714

Net charge-offs (recoveries) $ 6,133 $ 194 $ (54) $ (36) $ (1) $ 1,571 $ 7,807

Average loan balance $ 2,854,798 $ 1,319,653 $ 2,173,632 $ 654,243 $ 895,551 $ 1,144,435 $ 9,042,312

Ratio of net charge-offs (recoveries) to average gross loans 0.21 % 0.01 % NMF (0.01) % NMF 0.14 % 0.09 %

(1) Includes commercial small business leases and PPP loans.

(2) Excludes reverse mortgages.

(3) Includes home equity lines of credit, installment loans unsecured lines of credit and education loans.

Noninterest Income

Noninterest income increased $12.9 million, or 7%, to $201.0 million in 2020 from $188.1 million in 2019.

The increase in noninterest income is primarily comprised of the following:

• a $19.1 million increase in mortgage banking activities due to improved secondary market conditions and increased volume from refinancings resulting from the lower interest rate environment;

• an $8.7 million increase in securities gains, net;

• a $6.5 million increase in investment management and fiduciary revenue driven by trust and wealth services revenue;

• a $15.4 million decrease in credit/debit card and ATM income primarily due to less interchange fees (as a result of the Durbin Amendment impacting us beginning July 1, 2020), and the impact of a lower interest rate environment;

• a $3.4 million decrease in the amount of net realized and unrealized gain on equity investments, which includes the combination of higher unrealized gains compared to the prior period partially offset by the gain on sale of 360,000 Visa Class B shares that occurred in the second quarter of 2020;

• a $3.0 million decrease in deposit service charges due to lower transaction volume in 2020 as a result of the COVID-19 pandemic.

Noninterest income decreased $15.5 million to $185.5 million in 2021 from $201.0 million in 2020.

This decrease reflects a decrease in Realized (loss) gain on equity investments, net due to the $22.1 million gain on Visa Class B shares that occurred in June 2020, an $8.7 million decrease in Securities gains, net, a $7.0 million decrease in mortgage banking activities due to a decline in volume compared to the historically higher levels in the prior year, and a $5.5 million decrease in Credit/debit card and ATM income primarily as a result of the Durbin Amendment enacted on July 1, 2020.

Partially offsetting these decreases were increases of $13.4 million in Wealth Management revenues driven by our institutional trust business, $5.7 million from other income, primarily from Cash Connect ® and gains on the sale of SBA loans, $5.1 million from higher traditional banking fees, and $4.4 million of net gains from the sale of our SoFi investment.

Noninterest Expenses

Noninterest expense in 2020 decreased $44.3 million to $368.8 million from $413.1 million in 2019.

The decrease in noninterest is primarily comprised of the following:

• a $67.0 million decrease in net corporate development and restructuring costs as compared to the prior period related to our acquisition of Beneficial in 2019;

• an $11.8 million increase in salary-related expenses, and $7.6 million in professional fees to support our Delivery Transformation initiative, process improvements and overall growth of the Company;

• a $3.3 million increase in credit-related costs, driven by the increase in the unfunded commitment reserve expense in the current period;

• a $3.0 million contribution to the WSFS Community Foundation during the first quarter of 2020;

• a $2.3 million loss on early extinguishment of FHLB debt, as described above.

Noninterest expense increased $9.7 million to $378.5 million in 2021 from $368.8 million in 2020.

The increase was primarily due to a $19.9 million increase in Salaries, benefits and other compensation as a result of higher salaries and incentive compensation due to franchise growth, an $8.2 million increase in net corporate development and restructuring costs related to our acquisition of Bryn Mawr Trust, and a $5.2 million increase in Equipment expense including higher third-party software expenses related to our ongoing delivery transformation initiatives.

These increases were partially offset by the $15.0 million recovery of legal settlement previously mentioned, a $6.2 million decrease in Loan workout and other credit costs due to the release of reserves on our unfunded commitments driven by improved credit metrics and higher loan workout costs in the prior period, a $3.1 million decrease in professional fees, and a $1.9 million decrease in Other operating expense, primarily due to $2.0 million in lower contributions to the WSFS CARES Foundation when compared to the prior year.

We recorded $86.1 million of income tax expense for the year ended December 31, 2021 compared to $31.6 million for the year ended December 31, 2020.

The increase in income tax expense was primarily driven by an increase in income before taxes of $212.7 million for the year ended December 31, 2021 compared to the year ended December 31, 2020.

The effective tax rates for the years ended December 31, 2021 and 2020 were 24.1% and 21.8%, respectively.

The effective tax rate for year ended December 31, 2020 decreased primarily due to lower nondeductible expenses associated with the acquisition of Beneficial which occurred during 2019.

The effective tax rate for year ended December 31, 2021 increased primarily due to higher nondeductible expenses associated with the acquisition of Bryn Mawr Trust which occurred on January 1, 2022.

Nondeductible acquisition costs of $3.9 million were recognized during the year ended December 31, 2021, whereas none were incurred in the same period in 2020.

In addition, we recognized $1.7 million in tax benefits during the year ended December 31, 2020 related to tax law changes contained in the CARES Act (see "Regulation - Coronavirus Aid, Relief, and Economic Security (CARES) Act"), related to the ability to carry back certain acquired net operating losses to prior years where the statutory tax rate was higher than the current statutory tax rate.

Further and partially offsetting the favorable tax benefits above, the tax benefit related to stock-based compensation activity for the year ended December 31, 2020 decreased compared to the prior year.

We recorded less than $0.1 million of income tax expense during the year ended December 31, 2020 compared to $2.0 million of income tax benefits for the same period in 2019.

Further, the tax benefit related to stock-based compensation activity for the year ended December 31, 2021 increased compared to the prior year.

We recorded $0.4 million of income tax benefit during the year ended December 31, 2021 compared to less than $0.1 million of income tax expense for the same period in 2020.

The effective tax rate reflects the recognition of certain tax benefits in the financial statements including those benefits from tax-exempt interest income, federal low-income housing/research and development tax credits, and excess tax benefits from recognized stock compensation.

9 unchanged sentences

WSFS Bank Segment

The WSFS Bank segment income before taxes decreased $49.3 million, or 30%, in 2020 compared to 2019 due primarily to a $124.6 million increase in the provision for credit losses due to the CECL implementation, the impact of COVID-19 on the economic forecasts used in our CECL model and loan migration that occurred during the year in several specific portfolios, as previously mentioned.

These credit losses were partially offset by a decrease in external operating expenses of $37.6 million or 11%, primarily driven by cost synergies since the Beneficial acquisition, an increase in external net interest income of $19.5 million, or 4%, reflecting lower funding costs from deposit repricing, and an increase of $17.7 million, or 19%, in external noninterest income primarily due to the realized/unrealized gains on equity investments from our investments in Visa Class B shares, and growth in our mortgage business due to the lower interest rates environment and its impact on customer demand.

The WSFS Bank segment income before taxes increased $181.1 million, or 160%, in 2021 compared to 2020 due primarily to a $263.2 million decrease in the provision for credit losses due to positive impacts in our economic outlook from our ACL modeling and improved credit quality metrics reflecting overall declines in problem assets and delinquencies, offset by new loan originations.

The decrease in the provision for credit losses was partially offset by an increase in external operating expenses of $17.5 million or 6%, to support franchise growth, a decrease in external net interest income of $33.3 million, or 7%, and a decrease of $31.3 million, or 28%, in external noninterest income primarily due to a decrease in the realized/unrealized gains on equity investments including the gain on Visa Class B shares previously mentioned, and a decline in our mortgage business from the prior year.

Cash Connect ® Segment

1 unchanged sentence

During 2021, the Cash Connect ® segment focused on expanding smart safe and ATM managed services to increase fee income and margins.

This focus on improving margin and moving to off balance sheet cash resulted in a full-year 2020 ROA of 1.97%, an increase of 68 bps in comparison with full-year 2019.

This focus on improving margin and growing on balance sheet remote cash capture volume resulted in a full-year 2021 ROA the Cash Connect ® segment of 1.68%, a decrease of 29 bps in comparison with full-year 2020.

Cash Connect ® had $1.7 billion and $1.6 billion in total cash managed at December 31, 2021 and 2020, respectively.

1 unchanged sentence

Wealth Management Segment

The Wealth Management segment income before taxes decreased $3.3 million in 2020 compared to 2019, impacted by the CECL implementation on its private banking business, which resulted in an increase of $3.1 million in the provision for credit losses.

Wealth Management's 2019 results also included $1.7 million of net interest income from a large short-term noninterest bearing trust deposit.

These decreases were partially offset higher noninterest income in 2020 attributed to institutional trust activity and AUM growth from both equity market performance and strong net client cash inflows.

The Wealth Management segment income before taxes increased $30.7 million in 2021 compared to 2020, reflecting significant growth in our institutional trust activity and AUM growth from equity market performance, and $13.3 million of the overall $15.0 million recovery of legal settlement related to Charter Oak.

WSFS Institutional Services® ended 2021 as the securitization industry's fourth most active trustee for U.S.

ABS and MBS according to Asset-Backed Alert’s ABS Database, an improvement from sixth most active in the prior year.

Segment financial information for the years ended December 31, 2021, 2020 and 2019 is provided in Note 21 to the Consolidated Financial Statements.

9 unchanged sentences

(Dollars in thousands) Less than

Five to Fifteen Years Over Fifteen Years Total

Interest-rate sensitive assets:

1 unchanged sentence

$ 2,965,358 $ 1,098,580 $ 281,560 $ 11,259 $ 4,356,757

Commercial real estate loans (2)

Commercial mortgage loans (2)

1,173,254 557,367 159,057 7,051 1,896,729

Residential loans (1) (2)

Residential (1)(2)

182,103 265,950 111,403 7,681 567,137

12 unchanged sentences

Customer time deposits 717,678 269,525 732 — 987,935

FHLB advances 6,623 — — 6,623

Trust preferred borrowings 67,011 — — — 67,011

3 unchanged sentences

$ 5,633,470 $ 417,464 $ 732 $ — $ 6,051,666

Off-balance sheet instruments:

$ — $ — $ — $ —

Excess (deficiency) of interest-rate sensitive assets over interest-rate liabilities (interest-rate sensitive gap) $ 1,873,356 $ 3,436,411 $ 1,613,945 $ 6,923,712

Excess of interest-rate sensitive assets over interest-rate liabilities (interest-rate sensitive gap) $ 1,149,348 $ 4,685,314 $ 2,440,360 $ 83,003 $ 8,358,025

One-year interest-rate sensitive assets/interest-rate sensitive liabilities 120.40 %

14 unchanged sentences

Changes in deposit rates are generally subject to local market conditions and our discretion and are not indexed to any particular rate.

OFF BALANCE SHEET ARRANGEMENTS

We have no off balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

For a description of certain financial instruments to which we are party and which expose us to certain credit risk not recognized in our financial statements, see Note 18 to the Consolidated Financial Statements.

IMPACT OF INFLATION AND CHANGING PRICES

Impact of Inflation

Our Consolidated Financial Statements have been prepared in accordance with GAAP, which require the measurement of financial position and operating results in terms of historical dollars without consideration of the changes in the relative purchasing power of money over time due to inflation.

3 unchanged sentences

Interest rates do not necessarily move in the same direction or the same extent as the price of goods and services.

CONTRACTUAL OBLIGATIONS

At December 31, 2020, we had contractual obligations relating to operating leases, long-term debt, data processing and credit obligations.

These obligations are summarized below.

See Notes 10, 13 and 18 to the Consolidated Financial Statements for further information.

(Dollars in thousands) Total 2021 2022-2023 2024-2025 2026 and

Commitments to extend credit (1)

$ 2,351,630 $ 2,351,630 $ — $ — $ —

FHLB advances 6,623 6,623 — — —

Principal payments on long term debt (2)(3)

250,000 — — — 250,000

Interest payments on long term debt (4)

66,000 8,625 17,250 17,250 22,875

Operating lease obligations 263,140 17,013 34,069 31,839 180,219

Data processing obligations 29,918 9,262 15,792 4,864 —

Total $ 2,967,311 $ 2,393,153 $ 67,111 $ 53,953 $ 453,094

(1) Includes loan commitments and commercial standby letters of credit.

Does not reflect commitments to sell residential mortgages.

(2) The 2016 senior notes are redeemable on June 15, 2021 or on any interest payment date thereafter.

(3) The 2020 senior notes are redeemable on December 15, 2025 or on any interest payment date thereafter.

(4) To calculate payments due for interest, we assumed that interest rates were unchanged from December 31, 2020 through maturity.

OFF BALANCE SHEET ARRANGEMENTS

For a description of certain financial instruments to which we are party and which expose us to certain credit risk not recognized in our financial statements, see Note 17 to the Consolidated Financial Statements.

CRITICAL ACCOUNTING ESTIMATES

7 unchanged sentences

Actual results may differ from these estimates.

The following critical accounting policies involve more significant judgments and estimates.

We have reviewed these critical accounting policies and estimates with the Audit Committee.

The following critical accounting policy involves more significant judgments and estimates.

We have reviewed this critical accounting policy and estimates with the Audit Committee.

Allowance for Credit Losses

We maintain an allowance for credit losses which represents our best estimate of expected losses in our financial assets, which include loans, leases and held-to-maturity debt securities.

We establish our allowance in accordance with guidance provided in ASC 326, Financial Instruments – Credit Losses , as adopted on January 1, 2020.

The allowance includes two primary components:

We maintain an allowance for credit losses (ACL) which represents our best estimate of expected losses in our financial assets, which include loans, leases and held-to-maturity debt securities.

We establish our allowance in accordance with guidance provided in ASC 326, Financial Instruments – Credit Losses.

The ACL includes two primary components:

(i) an allowance established on financial assets which share similar risk characteristics collectively evaluated for credit losses (collective basis), and (ii) an allowance established on financial assets which do not share similar risk characteristics with any loan segment and is individually evaluated for credit losses (individual basis).

1 unchanged sentence

Our evaluation is based upon a continuous review of our financial assets, with consideration given to evaluations resulting from examinations performed by regulatory authorities.

See Note 8 to the Consolidated Financial Statements, for further discussion of the allowance for credit losses.

Recent Accounting Pronouncements

See Note 7 to the Consolidated Financial Statements, for further discussion of the ACL.

The calculation of expected credit losses is determined using a single scenario third-party economic forecast to adjust the calculated historical loss rates of the portfolio segments to incorporate the effects of current and future economic conditions.

The determination of the appropriate level of the ACL inherently involves a high degree of subjectivity and requires us to make significant estimates, including modeling methodology, historical loss experience, relevant available information from internal and external sources relating to qualitative adjustment factors, prepayment speeds and reasonable and supportable forecasts about future economic conditions.

The Company's economic forecast considers the general health of the economy, the interest rate environment, real estate pricing and market risk

The ACL may increase or decrease due to changes in economic conditions affecting borrowers and macroeconomic variables that our financial assets are more susceptible to, including unforeseen events such as natural disasters and pandemics, new information regarding existing financial assets, identification of additional problems assets, the fair value of underlying collateral, and other factors.

These changes, both within and outside the Control’s control, may frequently update and have a material impact to our financial results.

Because current economic conditions and forecasts can change and future events are inherently difficult to predict, the anticipated amount of estimated credit losses on our financial assets, and therefore the appropriateness of the ACL, could change significantly.

It is difficult to estimate how potential changes in any one economic factor or input might affect the overall ACL because a wide variety of factors and inputs are considered in these estimates and changes in those factors and inputs considered may not occur at the same rate and may not be consistent across the Company’s portfolio mix and segmentation.

Additionally, changes in factors and inputs may be directionally inconsistent, such that improvement in one factor may offset deterioration in others.

As of December 31, 2021, the Company believes that its ACL was adequate.

For information on Recent Accounting Pronouncements see Note 2 to the Consolidated Financial Statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis