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Item 8. Financial Statements and Supplementary Data

2023-02-28 compared with 2022-03-01 · 504 added, 332 removed, 2033 unchanged (29% of the section changed)

11 unchanged sentences

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial condition of WSFS Financial Corporation and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements).

We have audited the accompanying consolidated statements of financial condition of WSFS Financial Corporation and subsidiaries (the Company) as of December 31, 2022 and 2021, , the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, a, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 1, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for the recognition and measurement of credit losses as of January 1, 2020 due to the adoption of ASC 326, Financial Instruments - Credit Losses .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022,based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 28, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

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Philadelphia, Pennsylvania

March 1, 2022

February 28, 2023

CONSOLIDATED STATEMENTS OF INCOME

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Interest on Federal Home Loan Bank advances 538 5 1,950

Interest on senior debt 6,497 4,998 4,717

Interest on senior and subordinated debt 8,246 6,497 4,998

Interest on trust preferred borrowings 3,482 1,274 1,751

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Net interest income 662,890 433,649 465,955

(Recovery of) provision for credit losses ( 117,087 ) 153,180 25,560

Net interest income after provision for credit losses 550,736 312,775 419,388

Provision for (recovery of) credit losses 48,089 ( 117,087 ) 153,180

Net interest income after provision for (recovery of) credit losses 614,801 550,736 312,775

Noninterest income:

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Recovery of legal settlement — ( 15,000 ) —

Recovery of fraud loss — — ( 463 )

Loss on early extinguishment of debt — 1,087 2,280

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The accompanying notes are an integral part of these Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

Year Ended December 31,

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Net change in securities held-to-maturity

Amortization of unrealized gain on securities reclassified to held-to-maturity, net of tax expense of $ 32 , $ 60 , and $ 98 , respectively

Net change in unrealized losses on securities reclassified to held-to-maturity, net of tax expense of $ 34,319 , $ 32 , and $ 60 , respectively (1)(2)

( 108,678 ) ( 101 ) ( 192 )

Net change in unfunded pension liability

Change in unfunded pension liability related to unrealized gain (loss), prior service cost and transition obligation, net of tax expense (benefit) of $ 50 , $( 585 ), and $( 1,439 ), respectively

Change in unfunded pension liability related to unrealized gain (loss), prior service cost and transition obligation, net of tax (benefit) expense of $( 5 ), $ 50 , and $( 585 ), respectively

209 97 ( 1,683 )

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Net unrealized gain arising during the period, net of tax expense of $ — , $ — , and $ 493 , respectively

— 1,560 1,877

Amortization of unrealized gain on terminated cash flow hedges, net of tax benefit

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Net change in equity method investments

Net change in other comprehensive loss of equity method investments, net of tax expense

(benefit) of $ 114 , $( 3 ), and $ — , respectively

Net change in other comprehensive income (loss) of equity method investments, net of tax expense (benefit) of $ 67 , $ 114 , and $( 3 ), respectively

213 362 ( 9 )

Total other comprehensive (loss) income ( 638,076 ) ( 93,775 ) 32,506

Total comprehensive income $ 177,667 $ 147,280 $ 187,704

Total comprehensive (loss) income $ ( 415,701 ) $ 177,667 $ 147,280

(1) Includes $ 119.8 million, net of tax benefit, of unrealized losses on transferred investment securities with a book value of $ 1.1 billion from available-for-sale to held-to-maturity for the year ended December 31, 2022 .

(2) Includes amortization of unrealized gains and losses on securities reclassified to held-to-maturity.

The accompanying notes are an integral part of these Consolidated Financial Statements

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Trust preferred borrowings 90,442 67,011

Senior debt 147,939 246,617

Senior and subordinated debt 248,169 147,939

Other borrowed funds 38,283 24,527

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Comprehensive

(Loss) Income Retained

Income (Loss) Retained

Earnings Treasury

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Balance, December 31, 2019 57,435,658 $ 575 $ 1,049,064 $ 23,501 $ 917,377 $ ( 140,211 ) $ 1,850,306 $ ( 815 ) $ 1,849,491

Cumulative change in

accounting principle — — — — ( 30,368 ) — ( 30,368 ) — ( 30,368 )

Balance, January 1, 2020 (as adjusted for change in accounting principle) 57,435,658 575 1,049,064 23,501 887,009 ( 140,211 ) 1,819,938 ( 815 ) 1,819,123

Net income (loss) — — — — 114,774 — 114,774 ( 1,454 ) 113,320

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options 140,125 1 2,031 — — — 2,032 — 2,032

Re-issuance of treasury stock in connection with BNCL merger and related items — — 687,897 — — 262,071 949,968 76 950,044

Contributions from noncontrolling shareholders — — — — — — — 23 23

Stock-based compensation expense — — 2,677 — — — 2,677 — 2,677

Repurchase of common stock, 2,132,390 shares

Repurchase of common stock (1)

— — ( 750 ) — — ( 155,082 ) ( 155,832 ) — ( 155,832 )

Balance, December 31, 2020 57,575,783 $ 576 $ 1,053,022 $ 56,007 $ 977,414 $ ( 295,293 ) $ 1,791,726 $ ( 2,246 ) $ 1,789,480

Cumulative change in

accounting principle

(Note 2) — — — — ( 30,368 ) — ( 30,368 ) — ( 30,368 )

Balance, January 1, 2020 (as adjusted for change in accounting principle) 57,435,658 575 1,049,064 23,501 887,009 ( 140,211 ) 1,819,938 ( 815 ) 1,819,123

Net income (loss) — — — — 114,774 — 114,774 ( 1,454 ) 113,320

Other comprehensive income — — — 32,506 — — 32,506 — 32,506

Net income — — — — 271,442 — 271,442 163 271,605

Other comprehensive loss — — — ( 93,775 ) — — ( 93,775 ) — ( 93,775 )

Cash dividend, $ 0.51 per share

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Issuance of common stock including proceeds from exercise of common stock options 119,893 1 1,521 — — — 1,522 — 1,522

Contributions from noncontrolling shareholders — — — — — — — 23 23

Stock-based compensation expense — — 5,694 — — — 5,694 — 5,694

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— — — — ( 35,746 ) — ( 35,746 ) — ( 35,746 )

Contributions from noncontrolling shareholders — — — — — — — ( 504 ) ( 504 )

Issuance of common stock including proceeds from exercise of common stock options 109,473 1 3,178 — — — 3,179 — 3,179

Issuance of common stock in acquisition of BMT 18,116,848 181 907,835 — — — 908,016 — 908,016

Noncontrolling interest assumed in acquisition — — — — — — — ( 913 ) ( 913 )

Stock-based compensation expense — — 6,349 — — — 6,349 — 6,349

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Adjustments to reconcile net income to net cash provided by operating activities:

(Recovery of) provision for credit losses ( 117,087 ) 153,180 25,560

Provision for (recovery of) credit losses 48,089 ( 117,087 ) 153,180

Depreciation of premises and equipment, net 24,152 15,410 14,999

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Gain on sale of securities, net — ( 331 ) ( 9,076 )

(Gain) loss on sale of other real estate owned and valuation adjustments, net ( 385 ) ( 25 ) 125

Gain on sale of other real estate owned and valuation adjustments, net ( 221 ) ( 385 ) ( 25 )

Stock-based compensation expense 6,349 5,694 2,677

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Realized loss (gain) on sale of equity investment, net — 706 ( 22,052 )

Deferred income tax expense (benefit) 39,838 ( 32,848 ) 7,074

Decrease (increase) in accrued interest receivable 2,739 ( 6,241 ) 1,406

Deferred income tax (benefit) expense ( 4,005 ) 39,838 ( 32,848 )

(Increase) decrease in accrued interest receivable ( 22,151 ) 2,739 ( 6,241 )

Increase in other assets ( 58,852 ) ( 46,378 ) ( 18,339 )

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Proceeds from sales of loans held-for-sale 501,186 991,411 824,134

(Decrease) increase in accrued interest payable ( 714 ) ( 1,653 ) 1,203

(Decrease) increase in other liabilities ( 4,807 ) 24,675 30,922

Increase (decrease) in accrued interest payable 1,196 ( 714 ) ( 1,653 )

Increase (decrease) in other liabilities 315,065 ( 4,807 ) 24,675

Increase in value of bank-owned life insurance ( 1,311 ) ( 1,048 ) ( 1,757 )

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Repayments of investment securities available-for-sale 1,015,603 697,480 606,156

Proceeds from bank-owned life insurance surrender — — 59,710

Proceeds from bank-owned life insurance death benefit 1,437 — —

Net proceeds from sale of equity investments — 4,899 85,850

Net cash from business combinations 573,745 — —

Net decrease (increase) in loans and leases 1,265,395 ( 449,091 ) 201,934

Net (increase) decrease in loans and leases ( 41,324 ) 1,453,471 ( 222,138 )

Purchases of loans held for investment ( 393,159 ) ( 188,076 ) ( 226,953 )

Purchases of FHLB stock ( 51,518 ) ( 625 ) ( 145,400 )

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Investment in premises and equipment, net ( 8,809 ) ( 6,576 ) ( 7,159 )

Net cash (used in) provided by investing activities $ ( 1,492,368 ) $ ( 874,944 ) $ 293,823

Net cash used in investing activities $ ( 137,367 ) $ ( 1,492,368 ) $ ( 874,944 )

(continued on following page)

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Financing activities:

Net increase in demand and saving deposits $ 1,760,031 $ 2,501,442 $ 69,761

Net (decrease) increase in demand and saving deposits $ ( 1,123,468 ) $ 1,760,031 $ 2,501,442

Decrease in time deposits ( 94,251 ) ( 169,871 ) ( 197,765 )

Decrease in brokered deposits ( 202,625 ) ( 29,474 ) ( 156,396 )

Increase (decrease) in brokered deposits 61,705 ( 202,625 ) ( 29,474 )

Receipts from FHLB advances 1,873,100 1,000 5,047,424

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Repurchase of common shares ( 200,083 ) ( 13,268 ) ( 155,832 )

Net cash provided by (used in) financing activities $ 1,244,924 $ 1,942,785 $ ( 432,694 )

Net cash (used in) provided by financing activities $ ( 1,039,168 ) $ 1,244,924 $ 1,942,785

(Decrease) increase in cash, cash equivalents, and restricted cash $ ( 695,681 ) $ ( 121,796 ) $ 1,082,983

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Loans transferred to portfolio from held-for-sale at fair value 97,848 72,621 34,517

Securities transferred to held-to-maturity from available-for-sale at fair value 931,421 — —

Available-for-sale securities purchased, not settled — 34,489 —

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Impact of ASC 326 Adoption:

Right of use asset — — 121,288

Lease liability — — ( 132,346 )

Impact of ASC 326 Adoption (Note 2):

Allowance for credit losses on held-to-maturity debt securities — — ( 8 )

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Substantially all of the Company's assets are held by its subsidiary, Wilmington Savings Fund Society, FSB (WSFS Bank or the Bank), is a federal savings bank organized under the laws of the United States (U.S.).

The Consolidated Financial Statements include the accounts of the Company, 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.

The Company also has one unconsolidated subsidiary, WSFS Capital Trust III (the Trust).

The Consolidated Financial Statements include the accounts of the Company, WSFS Bank, WSFS Wealth Management, LLC (Powdermill ® ), WSFS Capital Management, LLC (West Capital), Cypress Capital Management, LLC (Cypress), WSFS SPE Services, LLC, The Bryn Mawr Trust Company of Delaware (BMT-DE), and 601 Perkasie, LLC.

The Company also has three unconsolidated subsidiaries, WSFS Capital Trust III (the Trust), Royal Bancshares Capital Trust I, and Royal Bancshares Capital Trust II .

WSFS Bank has two wholly-owned subsidiaries:

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

Additionally, WSFS and the Bank acquired certain subsidiaries in the merger of Bryn Mawr Bank Corporation (BMBC) with and into WSFS on January 1, 2022, and the merger of The Bryn Mawr Trust Company with and into the Bank (collectively, the BMBC Merger), pursuant to the agreement and plan of merger, by and between WSFS and BMBC, dated as of March 9, 2021 (the BMBC Merger Agreement) that are not named herein as they are not integral or significant to our business.

On April 1, 2022, WSFS completed the merger of Christiana Trust Company of Delaware ® and BMT-DE.

The combined organization will retain and operate under The Bryn Mawr Trust Company of Delaware name.

Additionally on April 1, 2022, Bryn Mawr Equipment Finance, Inc.

merged with and into BEFC.

On April 29, 2022, the portfolio of KCMI Capital, Inc.

(KCMI), a specialized commercial lending unit acquired in the BMBC merger and not core to our overall lending strategy, was sold at par value for $ 55.5 million .

Finally, on June 30, 2022, the business of BMT Insurance Advisors (BMTIA), was sold to Patriot Growth Services, LLC.

On January 1, 2023, WSFS completed the merger and brand conversion of West Capital and Cypress and has renamed the combined entity Bryn Mawr Capital Management, LLC.

Bryn Mawr Capital Management, LLC is registered as an investment advisor with the U.S.

Securities and Exchange Commission and is a wholly-owned subsidiary of WSFS.

Founded in 1832, the Bank is one of the ten oldest bank and trust companies continuously operating under the same name in the U.S.

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Nonaccruing restructured loans remain in nonaccrual status until there has been a period of sustained repayment performance demonstrated, as noted above, and repayment is reasonably assured.

The CARES Act which was signed into law on March 27, 2020 allows financial institutions to exclude eligible loan modifications from TDR reporting.

The Consolidated Appropriations Act, 2021 modified the CARES Act to extend the TDR reporting relief period.

Under the CARES Act, as amended, eligible modifications must be related to the COVID-19 pandemic, executed on a loan that was not more than 30 days past due as of December 31, 2019 and executed between March 1, 2020 and the earlier of 60 days after the date of the termination of the national emergency or January 1, 2022.

In addition, certain regulatory agencies have issued guidance during the year stating certain loan modifications to borrowers experiencing financial distress as a result of the economic impacts created by COVID-19 may also exclude eligible loan modifications from TDR reporting.

For COVID-19 related loan modifications which met the criteria under either the CARES Act, as amended, or the interagency guidance, the Company has elected to account for and report eligible modifications under this guidance.

For additional detail regarding past due and nonaccrual loans, see Note 8.

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For additional detail regarding unfunded lending commitments, see Note 18.

Allowance for Loan and Lease Losses (Prior to the Company's Adoption of CECL)

The Company adopted the ASC 326 guidance on January 1, 2020, using the modified retrospective approach for financial assets recorded at amortized cost with the exception of purchase credit deteriorated assets, which were previously classified as purchase credit impaired accounted for under ASC 310-30, adopted using the prospective approach.

The cumulative effect of the adoption resulted in a $ 30.4 million decrease to the beginning balance of retained earnings as of January 1, 2020.

For periods prior to the adoption of CECL, the Company maintain an allowance for loan and lease losses (allowance) which represents our best estimate of probable losses within our loan portfolio.

As losses are realized, they are charged to the allowance.

We establish our allowance in accordance with guidance provided in ASC 450, Contingencies, ASC 310, and the SEC’s Staff Accounting Bulletin 102, Selected Loan Loss Allowance Methodology and Documentation Issues (SAB 102).

The allowance includes two primary components:

(i) an allowance established on loans collectively evaluated for impairment (general allowance), and (ii) an allowance established on loans individually evaluated for impairment (specific allowance).

In addition, we also maintain an allowance for acquired loans as necessary.

The general allowance is calculated on a pooled loan basis using both quantitative and qualitative factors in accordance with ASC 450.

The specific allowance is calculated on an individual loan basis when collectability of all contractually due principal and interest is no longer believed to be probable in accordance with ASC 310.

Lastly, the allowance related to acquired loans is calculated when (i) there is deterioration in credit quality subsequent to acquisition for loans accounted for under ASC 310-30, and (ii) the inherent losses in the loans exceed the remaining total loan mark recorded at the time of acquisition for loans accounted for under ASC 310-20, Receivables - Nonrefundable Fees and Other Costs.

Allowances for pooled homogeneous loans, that are not deemed impaired, are based on historical net loss experience.

Estimated losses for pooled portfolios are determined differently for commercial loan pools and retail loan pools.

Commercial loans are pooled as follows:

commercial and industrial, owner-occupied commercial, commercial mortgages and construction.

Each pool is further segmented by internally assessed risk ratings.

Loan losses for commercial loans are estimated by determining the probability of default and expected loss severity upon default.

The probability of default is calculated based on the historical rate of migration to impaired status during the last 36 quarters.

During the year ended December 31, 2019, we increased the look-back period to 36 quarters from 32 quarters used at December 31, 2018.

This increase in the look-back period allows us to continue to anchor to the fourth quarter of 2010 to ensure that the quantitative reserves calculated by the allowance for loan and lease loss model are adequately considering the losses within a full credit cycle.

Loss severity upon default is calculated as the actual loan losses (net of recoveries) on impaired loans in their respective pool during the same time frame.

Retail loans are pooled into the following segments:

residential mortgage, consumer secured and consumer unsecured loans.

Pooled reserves for retail loans are calculated based solely on average net loss rates over the same 36 quarter look-back period.

Qualitative adjustment factors consider various internal and external conditions which are allocated among loan segments and take into consideration:

• Current underwriting policies, staff and portfolio mix,

• Internal trends of delinquency, nonaccrual and criticized loans by segment,

• Risk rating accuracy, control and regulatory assessments/environment,

• General economic conditions - locally and nationally,

• Market trends impacting collateral values, and

• Competitive environment, as it could impact loan structure and underwriting.

The above factors are based on their relative standing compared to the period in which historic losses are used in quantitative reserve estimates and current directional trends.

Qualitative factors in our model can add to or subtract from quantitative reserves.

The allowance methodology uses a loss emergence period (LEP), which is the period of time between an event that triggers the probability of a loss and the confirmation of the loss.

We estimate the commercial LEP to be approximately nine quarters as of December 31, 2019.

Our residential mortgage and consumer LEP remained at four quarters as of December 31, 2019.

We evaluate LEP quarterly for reasonableness and complete a detailed historical analysis of our LEP annually for our commercial portfolio and review of the current four quarter LEP for the retail portfolio to determine the continued reasonableness of this assumption.

Our loan officers and risk managers meet at least quarterly to discuss and review the conditions and risks associated with individual problem loans.

In addition, various regulatory agencies periodically review our loan ratings and allowance for loan and lease losses and the Bank’s internal loan review department performs loan reviews.

For impaired loans, if the measure is less than the recorded investment in the loan, a related allowance is allocated for the impairment.

Impairment of troubled debt restructurings are measured at the present value of estimated future cash flows using the loan’s effective interest rate at inception or the fair value of the underlying collateral if the loan is collateral dependent.

Troubled debt restructurings consist of concessions granted to borrowers facing financial difficulty.

Loans Held for Sale

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RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Guidance Adopted in 2021

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes :

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

The guidance adds new amendments to simplify income tax accounting and removes certain exceptions and modifies the accounting for certain income tax transactions.

The guidance is effective for annual periods beginning after December 15, 2020.

Early adoption is permitted.

Adoption is required on a prospective, modified-retrospective or retrospective basis, depending on the amendment.

The Company adopted this standard on January 1, 2021, on a prospective basis with no impact to the Consolidated Financial Statements at the time of adoption.

2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions between Topic 321, Topic 323, and Topic 815:

In January 2020, the FASB issued ASU No.

The new guidance clarifies that observable transactions under the measurement alternative method (ASC 321) should be considered when applying or discontinuing the equity method of accounting (ASC 323).

The guidance also clarifies that certain non-derivative forward contracts and purchase call options to acquire securities, should be measured at fair value before settlement or exercise.

The guidance is effective for annual periods beginning after December 15, 2020.

Early adoption is permitted.

Use of the prospective method is required.

The Company adopted this standard on January 1, 2021, on a prospective basis with no impact to the Consolidated Financial Statements at the time of adoption.

The following accounting pronouncements were adopted by the Company during the year ended December 31, 2022, but do not have a material impact on the Consolidated Financial Statements:

2021-05, Leases (Topic 842), Lessors – Certain Leases with Variable Lease Payments:

In July 2021, the FASB issued ASU 2021-0 5 to amend ASC 842 to clarify the classification of certain leases with variable lease payments for lessors.

2022-06, Reference Rate Reform (Topic 848):

In January 2021, the FASB issued ASU No.

Deferral of the Sunset Date of Topic 848:

In December 2022, the FASB issued ASU No.

2022-06 which extended the period of time to ease the reference rate reform transition period to through December 31, 2024.

This pronouncement supersedes the original transition period end date as referenced in ASU No.

2020-04, Reference Rate Reform (Topic 848):

The new guidance expands and clarifies the scope of ASU No.

2020-04 to include derivatives affected by changes in interest rates used for margining, discounting, or contract price alignment, commonly referred to as the “discounting transaction.” Derivatives impacted by the discounting transaction will be eligible for certain optional expedients and exceptions related to contract modifications and hedge accounting as defined in Topic 848.

The guidance is effective upon issuance through December 31, 2022 and there was no impact to the Company at the time the guidance became effective.

The Company will apply this guidance to any derivatives affected by the discounting transaction due to reference rate reform.

There was no material accounting guidance pending adoption at December 31, 2021.

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

Accounting Guidance Pending Adoption as of December 31, 2022

2022-02, Financial Instruments – Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures:

In March 2022, the FASB issued ASU No.

2022-02 , Financial Instruments – Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures.

The guidance eliminates the accounting guidance for troubled debt restructurings (TDRs) by creditors (ASC 310-40) while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.

The guidance also requires that an entity disclose current-period write-offs by year of origination for financing receivables and net investments in leases within the scope of Topic 326.

The guidance is effective for annual periods beginning after December 15, 2022, which will be applicable to the Company in the first quarter of 2023.

Adoption is required on a prospective basis, except for the transition method related to the recognition and measurement of TDRs where the entity has to apply on a modified-retrospective basis.

BUSINESS COMBINATIONS

Bryn Mawr Bank Corporation.

On January 1, 2022, WSFS closed its acquisition of BMBC and acquired 100 % of the outstanding common stock of BMBC.

In accordance with the terms of the merger agreement, dated March 9, 2021, by and between WSFS and BMBC, each share of BMBC common stock was exchanged for 0.90 shares of WSFS common stock (with cash paid in lieu of fractional shares).

The total value of consideration paid was $ 908.0 million based on 19,903,230 shares of BMBC common stock outstanding as of December 31, 2021, the vesting of 226,643 BMBC restricted stock awards, and the closing price per share of WSFS common stock of $ 50.12 on December 31, 2021.

Results of the combined Company’s operations are included in the Consolidated Financial Statements since the date of the acquisition.

BMBC was the holding company for The Bryn Mawr Trust Company (Bryn Mawr Bank), a Pennsylvania chartered bank and wholly-owned subsidiary.

BMBC and Bryn Mawr Bank were headquartered in Bryn Mawr, Pennsylvania, a western suburb of Philadelphia, and served primarily the Greater Philadelphia region.

BMBC and its direct and indirect subsidiaries was a locally managed, premier financial services company providing retail and commercial banking;

trust administration and wealth management;

and insurance and risk management solutions.

Following the BMBC Merger, WSFS Bank is the oldest and largest, locally headquartered bank and trust company in the Greater Philadelphia and Delaware region with a full-service product suite and a balance sheet to compete with larger regional and national banks.

The BMBC Merger also allows WSFS to accelerate our long-term strategic objectives, including scale to continue to invest in our delivery and talent transformations.

The acquisition of BMBC was accounted for as a business combination using the acquisition method of accounting and, accordingly, the assets acquired, liabilities assumed and consideration transferred were recorded at their estimated fair values as of the acquisition date.

The excess of consideration transferred over the fair value of net assets acquired was recorded as goodwill, which is not amortizable nor deductible for tax purposes.

The Company allocated goodwill to its WSFS Bank segment and Wealth Management segment.

The following table summarizes the consideration transferred and the fair values of identifiable assets acquired and liabilities assumed and is considered final:

(Dollars in thousands)

Consideration Transferred:

Common shares issued ( 18,116,848 )

Cash paid to BMBC stock and option holders 16

Value of consideration 908,032

Assets acquired:

Cash and due from banks 573,761

Investment securities 500,400

Loans and leases, net 3,456,748

Premises and equipment 44,842

Deferred income taxes 6,563

Bank owned life insurance 67,525

Intangible assets 73,065

Other assets 153,592

Total assets 4,876,496

Liabilities assumed:

Deposits 4,110,122

Other borrowings 145,512

Other liabilities 124,552

Noncontrolling interest ( 913 )

Total liabilities and noncontrolling interest 4,379,273

Net assets acquired:

Goodwill resulting from acquisition of BMBC $ 410,809

The following table details the changes to goodwill recorded subsequent to acquisition:

(Dollars in thousands) Fair Value

Goodwill resulting from the acquisition of BMBC as of January 1, 2022 $ 414,337

Effects of adjustments to:

Deferred income taxes 1,870

Intangibles 1,500

Deposits ( 149 )

Other liabilities 1,352

Effect of sale of BMTIA business ( 8,101 )

Goodwill resulting from the acquisition of BMBC as of December 31, 2022

Adjustments to Goodwill were primarily related to the fair value of Wealth Management intangible assets, the subsequent sale of the BMTIA business, and the related deferred tax impacts.

Fair value estimates related to the assets and liabilities from BMBC are subject to adjustment for up to one year after the closing date of the acquisition as additional information becomes available.

Changes to the preliminary valuation of acquired assets and liabilities were recognized as adjustments to identified intangibles and goodwill.

All remeasurement adjustments were completed prior to the expiration of the remeasurement period on December 31, 2022, one year after the closing date.

The amount of goodwill recorded reflects the increased market share and related synergies that are expected to result from the acquisition, and represents the excess purchase price over the estimated fair value of the net assets acquired from BMBC.

The following is a description of the valuation methodologies used to estimate the fair values of major categories of assets acquired and liabilities assumed.

In many cases, the fair values of the assets acquired and liabilities assumed were determined by estimating the cash flows expected to result from those assets and liabilities and applying the appropriate market discount rates.

Cash and due from banks :

The estimated fair values of cash and due from banks approximate their stated value.

Investment Securities :

The acquired investment portfolio had a fair value of $ 500.4 million, primarily consisting of short-term U.S.

Treasury bills that matured subsequent to closing on January 6, 2022.

The estimated fair value approximated the stated value at maturity.

Loans and Leases :

The Company recorded $ 3.5 billion of acquired loans, which were initially recorded at their fair values as of the acquisition date.

Fair value for loans was based on a discounted cash flow methodology that considered credit loss and prepayment expectations, market interest rates and other market factors, such as liquidity, from the perspective of a market participant.

Loan cash flows were generated on an individual loan basis.

The probability of default, loss given default, exposure at default and prepayment assumptions are the key factors driving credit losses which are embedded into the estimated cash flows.

The table below presents information with respect to the fair value and unpaid principal balance of acquired loans and leases at the acquisition date.

January 1, 2022

(Dollars in thousands) Book Balance Fair Value

Commercial and industrial $ 613,197 $ 586,643

Owner-occupied commercial 513,267 503,182

Commercial mortgages 1,564,234 1,549,515

Construction 209,928 208,288

Commercial small business leases 125,770 119,119

310,092 315,454

Consumer 178,247 174,547

Total acquired loans and leases $ 3,514,735 $ 3,456,748

The table below presents the carrying amount of loans for which, at the date of acquisition, there was evidence of more than insignificant deterioration of credit quality since origination:

(Dollars in thousands) January 1, 2022

Book balance of loans at acquisition $ 235,791

Allowance for credit losses at acquisition ( 26,103 )

Non-credit related discount ( 1,421 )

Total purchase credit deteriorated (PCD) loans acquired $ 208,267

The BMBC Merger resulted in the addition of $ 49.6 million in allowance for credit losses, including the $ 26.1 million identified in the table above for PCD loans, and $ 23.5 million for non-PCD loans recorded through the provision for credit losses at the date of acquisition.

Deferred Income Taxes :

The Company recorded a deferred income tax asset (DTA) of $ 6.6 million related to tax attributes of BMBC along with the effects of fair value adjustments resulting from acquisition accounting for the combination.

The DTA’s recorded were based on the expected federal and state tax benefits of when the acquired tax attributes and purchase accounting adjustments will reverse.

In recording the DTA, consideration was given to potential limitations on the realizability of such acquired tax attributes.

There was no material change to the valuation allowance as a result of the BMBC Merger.

Trust preferred borrowings and subordinated debt :

The fair value of trust preferred borrowings and subordinated debt were determined by present valuing the expected cash flows using current market rates for similar instruments.

A fair value discount of $ 2.5 million was recognized for the trust preferred borrowings and will be recognized as an increase to interest expense over the remaining life of the borrowings.

A fair value premium of $ 0.7 million was recognized for the subordinated debt and will be recognized as a decrease to interest expense over the remaining life of the debt.

Intangible Assets :

The Company recorded $ 10.9 million of core deposit intangible (CDI) which is being amortized over ten years using a straight-line amortization methodology.

The fair value of the core deposit intangible was determined using the cost savings approach.

The cost savings approach is defined as the difference between cost of funds on deposits and the cost of an equal amount of funds from an alternative source.

The CDI fair value was determined by projecting net cash flow benefits, including assumptions related to customer attrition, discount rates, deposit interest rates, and alternative costs of funds.

Certificates of deposit accounts were valued by segregating the portfolio into pools based on remaining maturity and comparing the contractual cost of the portfolio to an identical portfolio bearing current market rates.

The valuation adjustment will be accreted or amortized to interest expense over the remaining maturities of the respective pools.

WSFS recorded $ 56.1 million of Wealth Management intangible assets that consisted of $ 53.0 million for customer relationships in our wealth management, trust and insurances lines of business, $ 2.9 million for the Bryn Mawr Trust tradename, and $ 0.2 million in non-compete agreements.

Fair value for these Wealth Management intangible assets was based on a discounted cash flow methodology projecting net cash flow benefits, including assumptions related to customer attrition, discount rates, income projections and applicable growth rate assumptions.

Corporate development expenses and Restructuring expenses

For acquisitions, the Company develops comprehensive integration plans under which it has incurred direct costs, which are expensed as incurred.

These direct costs include costs that are primarily related to:

(i) terminated contracts, (ii) consolidated facilities (including lease termination expenses), (iii) severance, (iv) marketing, and (v) professional and legal fees.

Costs related to the acquisition and restructuring are included in the Corporate development expense and Restructuring expense line items, respectively, on the Consolidated Statements of Income.

The following table details the costs identified and classified as corporate development and restructuring expenses, which are primarily related to the BMBC Merger:

Twelve months ended December 31,

(dollars in thousands) 2022

Salaries, benefits and other compensation $ 12,541

Occupancy expense 9,356

Equipment expense 20,950

Professional fees 13,025

Data processing and operations expenses 121

Marketing expense 3,133

Other operating expense, net 6,097

Total corporate development and restructuring expenses $ 65,223

During the second quarter of 2021, WSFS announced a retail banking office optimization plan that included the planned consolidation of Bryn Mawr Trust and WSFS Bank banking offices.

Most of the consolidations and rebranding of the banking offices were completed during the first quarter of 2022, which included the consolidation of 22 Bryn Mawr Trust and 12 WSFS Bank banking offices.

Costs related to this plan are included in the Corporate development expense line item on the Consolidated Statements of Income.

In addition, the Company had $ 7.5 million of premises and equipment as held-for-sale as of December 31, 2022, which is included in the Other assets line item on the Consolidated Statement of Financial Condition.

Pro Forma Income Statement (unaudited)

The following pro forma income statement for the twelve months ended December 31, 2021 presents the pro forma results of operations of the combined institution (BMBC and the Corporation) as if the BMBC Merger occurred on January 1, 2021.

The pro forma income statement adjustments are limited to the effects of fair value mark amortization and accretion and intangible asset amortization.

No cost savings or additional merger expenses have been included in the pro forma results of operations.

Twelve months ended December 31,

(dollars in thousands, except share and per share data) 2021

Net interest income $ 567,183

(Recovery of) provision for credit losses ( 115,212 )

Net interest income after provision for credit losses 682,395

Total noninterest income 271,576

Total noninterest expenses 556,524

Income before income taxes 397,447

Income tax provision 100,009

Net income $ 297,438

Per share data:

Weighted-average basic shares outstanding 65,445,251

Dilutive shares 332,765

Adjusted weighted-average diluted shares 65,778,016

Basic earnings per common share $ 4.54

Diluted earnings per common share $ 4.52

Due to the various conversions of BMBC systems since the date of acquisition, as well as other streamlining and continuing integration of BMBC's operating activities into those of the Company, reporting for revenue and net income of the former BMBC operations for the period subsequent to the acquisition is impracticable.

NONINTEREST INCOME

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This revenue stream generates fee income through monthly billing for bailment services.

Bailment fees decreased in 2021 as compared to 2020 and 2019 due to the lower interest rate environment.

Credit/debit card and ATM income also includes interchange fees.

1 unchanged sentence

These revenue streams generate fee income at the time a transaction occurs and are recorded as revenue at the time of the transaction.

Interchange fees decreased in 2021 and 2020 as compared to 2019 as a result of the Durbin Amendment which became effective for the Company on July 1, 2020.

The Durbin Amendment is a provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 that established a cap on interchange fees with respect to debit transactions for banks that, together with their affiliates, have over $10 billion in assets.

Investment management and fiduciary income

6 unchanged sentences

Investment management and fiduciary income is composed of trust fees and wealth management and advisory fees.

Trust fees are based on revenue earned from custody, escrow and trustee and trustee related services on structured finance transactions;

indenture trustee, administrative agent and collateral agent services to institutions and corporations;

Trust fees are based on revenue earned from custody, escrow, trustee and trustee related services on structured finance transactions;

indenture trustee, administrative agent and collateral agent services to individuals, institutions and corporations;

commercial domicile and independent director services;

and investment and trustee services to families and individuals across the U.S.

and investment and trustee services to families and individuals.

Most fees are flat fees, except for a portion of personal and corporate trustee fees where the Company earns a percentage on the assets under management or assets held within a trust.

This revenue stream primarily generates fee income through monthly, quarterly and annual billings for services provided.

Trust fees increased in 2021 as compared to 2020 and 2019 primarily due to increased institutional trust activity.

Wealth management and advisory fees consists of fees from Cypress, West Capital, Powdermill ® and WSFS Wealth ® Investments.

Wealth management and advisory fees consists of fees from Bryn Mawr Trust ® , Cypress, West Capital, Powdermill ® , and WSFS Wealth ® Investments.

Wealth management and advisory fees are based on revenue earned from services including asset management, financial planning, family office, and brokerage.

The fees are based on the market value of assets, are assessed as a flat fee, or are brokerage commissions.

This revenue stream primarily generates fee income through quarterly and annual billing for the services.

This revenue stream primarily generates fee income through monthly, quarterly and annual billings for the services.

Deposit service charges

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ATM loss protection 2,627 2,522 2,401

Capital markets revenue 7,859 — —

Miscellaneous products and services (1)

20,027 11,786 7,442

Total other income $ 52,624 $ 34,797 $ 29,145

Other income consists of managed service fees, which are primarily courier fees related to cash management, currency preparation, ATM loss protection and other miscellaneous products and services offered by the Bank.

(1) Includes commissions income from BMTIA in 2022.

The BMTIA business was sold during the second quarter of 2022.

Other income consists of managed service fees, which are primarily courier fees related to cash management, currency preparation, ATM loss protection, capital markets revenue, and other miscellaneous products and services offered by the Bank.

These fees are primarily generated through monthly billings or at the time of the transaction.

Through its subsidiary BMTIA, the Bank earned commissions from the sale of insurance policies, which are generally calculated as a percentage of the policy premium, and contingent income, which is calculated based on the volume and performance of the policies held by each carrier.

Obligations for the sale of insurance policies are generally satisfied at the point in time which the policy is executed and are recognized at the point in time in which the amounts are known and collection is reasonably assured.

Performance metrics for contingent income are generally satisfied over time, not exceeding one year, and are recognized at the point in time in which the amounts are known and collection is reasonably assured.

Arrangements with multiple performance obligations

34 unchanged sentences

Held-to-Maturity Debt Securities (1)

FNMA MBS $ 909,498 $ — $ 68,677 $ — $ 840,821

State and political subdivisions 201,631 532 3,372 10 198,781

2 unchanged sentences

(1) Held-to-maturity securities transferred from available-for-sale are included in held-to-maturity at amortized cost basis at the time of transfer.

The amortized cost of transferred held-to-maturity securities included net unrealized gains of $ 0.2 million at December 31, 2021, which are offset in Accumulated other comprehensive income (loss) .

The amortized cost of transferred held-to-maturity securities included net unrealized losses of $ 142.8 million at December 31, 2022, which are offset in Accumulated other comprehensive income (loss) .

At the time of transfer, there was no allowance for credit loss on the available-for-sale securities.

19 unchanged sentences

Subsequent to transfer, the securities were evaluated for credit loss.

The scheduled maturities of available-for-sale and held-to-maturity debt securities at December 31, 2021 and December 31, 2020 are presented in the table below:

The scheduled maturities of available-for-sale debt securities at December 31, 2022 and December 31, 2021 are presented in the table below:

Available-for-Sale

12 unchanged sentences

$ 5,249,882 $ 5,205,311

(1) Actual maturities could differ from contractual maturities.

As of December 31, 2022, the Company’s available-for-sale investment securities consisted of 958 securities, 955 of which were in an unrealized loss position.

As of December 31, 2022, substantially all of the Corporation’s available-for-sale investment securities were mortgage-backed securities or collateral mortgage obligations which were issued or guaranteed by U.S.

government-sponsored entities and agencies.

As of December 31, 2022 and December 31, 2021, there were no holdings of securities of any one issuer, other than the U.S.

government and its agencies, in an amount greater than 10% of shareholders’ equity.

The scheduled maturities of held-to-maturity debt securities at December 31, 2022 and December 31, 2021 are presented in the table below:

Held-to-Maturity

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The held-to-maturity debt securities are not collateral-dependent securities as these are general obligation bonds issued by cities, states, counties, or other local and foreign governments.

Investment securities with fair market values aggregating $ 2.2 billion and $ 1.3 billion were pledged as collateral for retail customer repurchase agreements, municipal deposits, and other obligations as of December 31, 2021 and December 31, 2020, respectively.

During the year ended December 31, 2021, the Company sold $ 14.1 million of debt securities categorized as available-for-sale, resulting in $ 0.3 million of realized gains and no realized losses.

During the second quarter of 2022, the Company transferred investment securities with a book value of $ 1.1 billion from available-for-sale to held-to-maturity to mitigate the impact of the rising interest rate environment to Accumulated other comprehensive income (loss) in the Company's Consolidated Statement of Changes in Stockholders' Equity.

The transfer occurred at a fair value totaling $ 931.4 million.

The amortized cost of transferred held-to-maturity securities included net unrealized losses of $ 157.6 million at June 30, 2022, which are offset in Accumulated other comprehensive income (loss) .

No gains or losses on these securities were recognized at the time of transfer.

Investment securities with fair market values aggregating $ 2.8 billion and $ 2.2 billion were pledged as collateral for investment sweep repurchase agreements, municipal deposits, and other obligations as of December 31, 2022 and December 31, 2021, respectively.

During the year ended December 31, 2022, the Company had no sales of debt securities categorized as available-for-sale.

During the year ended December 31, 2021, the Company sold $ 14.1 million of debt securities categorized as available-for-sale, resulting in $ 0.3 million of realized gains and no realized losses.

During the year ended December 31, 2019, the Company sold $ 618.2 million, of which $ 578.8 million was related to the acquisition of Beneficial.

The remaining $ 39.8 million resulted in realized gains of $ 0.3 million and no realized losses.

During the year ended December 31, 2020, the Company sold $ 305.8 million, resulting in realized gains of $ 9.1 million and no realized losses.

As of December 31, 2022 and December 31, 2021, the Company's debt securities portfolio had remaining unamortized premiums of $ 66.6 million and $ 69.4 million, respectively, and unaccreted discounts of $ 25.2 million and $ 12.7 million, respectively.

10 unchanged sentences

$ 1,530,406 $ 171,140 $ 2,562,615 $ 570,350 $ 4,093,021 $ 741,490

For debt securities in an unrealized loss position, the table below shows the gross unrealized losses and fair value by investment category and length of time that individual debt securities were in a continuous unrealized loss position at December 31, 2020.

For debt securities in an unrealized loss position and an allowance has not been recorded, the table below shows the gross unrealized losses and fair value by investment category and length of time that individual debt securities were in a continuous unrealized loss position at December 31, 2021.

Duration of Unrealized Loss Position

6 unchanged sentences

FHLMC MBS 11,227 348 1,917 168 13,144 516

GNMA MBS 4,847 71 — — 4,847 71

GSE agency notes 64,509 1,918 155,888 8,266 220,397 10,184

5 unchanged sentences

As a result, there is no allowance for credit losses recorded for available-for-sale debt securities as of December 31, 2022.

At December 31, 2021 and December 31, 2020, held-to-maturity debt securities had an amortized cost basis of $ 90.6 million and $ 111.7 million, respectively.

The held-to-maturity debt security portfolio primarily consists of highly rated municipal bonds.

At December 31, 2022 and December 31, 2021, held-to-maturity debt securities had an amortized cost basis of $ 1.1 billion and $ 90.6 million, respectively.

The held-to-maturity debt security portfolio primarily consists of mortgage-backed securities which were issued or guaranteed by U.S.

government-sponsored entities and agencies and highly rated municipal bonds.

The Company monitors credit quality of its debt securities through credit ratings.

The following table summarizes the amortized cost of debt securities held-to-maturity as of December 31, 2022, aggregated by credit quality indicator:

(Dollars in thousands) State and political subdivisions Foreign bonds

(Dollars in thousands) FNMA MBS State and political subdivisions Foreign bonds

A+ rated or higher $ — $ 201,631 $ 500

7 unchanged sentences

The Company reviewed its held-to-maturity debt securities by major security type for potential credit losses.

There was no activity in the allowance for credit losses for foreign bond debt securities for the twelve months ended December 31, 2021 and 2020.

There was no activity in the allowance for credit losses for FNMA MBS and foreign bond debt securities for the twelve months ended December 31, 2022 and 2021.

The following table presents the activity in the allowance for credit losses for state and political subdivisions debt securities for the twelve months ended December 31, 2022 and 2021:

3 unchanged sentences

Beginning balance $ 4 $ 6

Impact of adoption ASC 326 — 8

Provision for credit losses 6 ( 2 )

Charge-offs, net — —

Ending balance $ 10 $ 4

3 unchanged sentences

The Company had equity investments with a fair value of $ 26.1 million and $ 10.5 million as of December 31, 2022 and December 31, 2021, respectively.

During the twelve months ended December 31, 2022, total net gains on equity investments of $ 6.0 million were recorded from the Company's investment in Cred.ai in June 2022.

During the twelve months ended December 31, 2021, total net gains on equity investments of $ 4.4 million were recorded from the sale of the Company's investment in Social Finance, Inc.

(SoFi) in July 2021.

This included a realized loss of $ 0.7 million which was recorded in Realized loss (gain) on equity investments, net in the Consolidated Statements of Income at the time of sale.

This included a net realized loss of $ 0.7 million which was recorded in Realized loss (gain) on equity investments, net in the Consolidated Statements of Income at the time of sale.

During the twelve months ended December 31, 2020, total net gains on equity investments of $ 22.8 million were recorded in the Company's Consolidated Statements of Income.

This included a net realized gain of $ 22.1 million which was recorded in Realized loss (gain) on equity investments, net for the sale of Visa Class B shares in June 2020.

During the twelve months ended December 31, 2019, total net gains on equity investments of $ 26.2 million were recorded in the Company's Consolidated Statements of Income.

LOANS AND LEASES

The following table shows the Company's loan portfolio by category:

17 unchanged sentences

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY INFORMATION

The following tables provide the activity of the Company's allowance for credit losses and loan and lease balances for the years ended December 31, 2021 and December 31, 2020 in accordance with ASC 326.

During 2021, the decrease to the allowance for credit losses was primarily due to positive impacts on the economic forecasts and significantly improved credit quality metrics that reverted the Company's problem assets, nonperforming assets and delinquencies to at or near the levels prior to the COVID-19 pandemic.

The following tables provide the activity of the Company's allowance for credit losses and loan and lease balances for the years ended December 31, 2022, December 31, 2021, and December 31, 2020.

During 2022, the increase was primarily due to an initial ACL of $ 49.6 million recorded in connection with the BMBC Merger and loan growth during the year.

The initial $ 49.6 million ACL recorded includes $ 23.5 million related to non-PCD loans, or the initial provision for credit loss recorded, and $ 26.1 million related to PCD loans, which does not have an initial income statement impact, but adjusts the amortized cost basis of the loans at acquisition (i.e., a balance sheet gross-up).

(Dollars in thousands) Commercial and Industrial (1)

3 unchanged sentences

Beginning balance $ 49,967 $ 4,574 $ 11,623 $ 1,903 $ 3,352 $ 23,088 $ 94,507

Initial allowance on acquired PCD loans 22,614 595 2,684 71 61 78 26,103

Charge-offs ( 19,004 ) ( 179 ) ( 581 ) — ( 186 ) ( 7,520 ) ( 27,470 )

1 unchanged sentence

(Credit) provision (4)

( 295 ) 751 7,524 2,446 776 36,881 48,083

Ending balance $ 59,394 $ 6,019 $ 21,473 $ 6,987 $ 4,668 $ 53,320 $ 151,861

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

(4) Includes $ 23.5 million initial provision for credit losses on non-PCD loans.

(Dollars in thousands) Commercial and Industrial (1)

3 unchanged sentences

Allowance for credit losses

Beginning balance, prior to adoption of ASC 326 $ 22,849 $ 4,616 $ 7,452 $ 3,891 $ 1,381 $ 7,387 $ 47,576

Impact of adoption ASC 326 (4)

19,747 ( 1,472 ) 1,662 681 7,522 7,715 35,855

Beginning balance $ 150,875 $ 9,615 $ 31,071 $ 12,190 $ 6,893 $ 18,160 $ 228,804

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

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

Provision (credit) 114,412 6,665 21,903 7,582 ( 2,011 ) 4,629 153,180

(Credit) provision ( 86,072 ) ( 5,118 ) ( 19,644 ) ( 7,814 ) ( 4,330 ) 5,891 ( 117,087 )

Ending balance $ 49,967 $ 4,574 $ 11,623 $ 1,903 $ 3,352 $ 23,088 $ 94,507

10 unchanged sentences

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

(4) Includes $ 0.1 million for the initial allowance on loans purchased with credit deterioration.

The following table provides the activity of the allowance for loan and lease losses and loan and lease balances for the year ended 2019 under the incurred loss model:

(Dollars in thousands) Commercial and Industrial (1)

Construction Residential (2)

Consumer Total

Year Ended December 31, 2020

Allowance for loan and lease losses

Beginning balance $ 14,211 $ 5,057 $ 6,806 $ 3,712 $ 1,428 $ 8,325 $ 39,539

Beginning balance, prior to adoption of ASC 326 $ 22,849 $ 4,616 $ 7,452 $ 3,891 $ 1,381 $ 7,387 $ 47,576

Impact of adoption ASC 326 (4)

19,747 ( 1,472 ) 1,662 681 7,522 7,715 35,855

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

1 unchanged sentence

Provision (credit) 114,412 6,665 21,903 7,582 ( 2,011 ) 4,629 153,180

Provision for acquired loans 298 185 89 10 233 272 1,087

Ending balance $ 150,875 $ 9,615 $ 31,071 $ 12,190 $ 6,893 $ 18,160 $ 228,804

Period-end allowance allocated to:

Individually evaluated for impairment $ 1,179 $ 23 $ — $ — $ 463 $ 176 $ 1,841

Collectively evaluated for impairment 21,664 4,383 7,387 3,867 824 7,210 45,335

Acquired loans evaluated for impairment 6 210 65 24 94 1 400

Loans evaluated on an individual basis $ 1 $ — $ 13 $ — $ — $ — $ 14

Loans evaluated on a collective basis 150,874 9,615 31,058 12,190 6,893 18,160 228,790

Ending balance $ 150,875 $ 9,615 $ 31,071 $ 12,190 $ 6,893 $ 18,160 $ 228,804

Period-end loan balances:

Individually evaluated for impairment (3)

$ 11,158 $ 4,060 $ 1,753 $ — $ 12,151 $ 7,467 $ 36,589

Collectively evaluated for impairment 1,619,549 971,694 1,105,174 437,999 145,582 899,724 5,179,722

Acquired nonimpaired loans 603,157 313,955 1,107,379 142,592 834,820 219,413 3,221,316

Acquired impaired loans 1,564 6,757 8,670 491 7,326 2,127 26,935

Loans evaluated on an individual basis $ 14,048 $ 6,496 $ 20,309 $ 79 $ 5,921 $ 2,371 $ 49,224

Loans evaluated on a collective basis 2,935,255 1,326,231 2,065,753 716,196 758,472 1,163,546 8,965,453

Ending balance $ 2,949,303 $ 1,332,727 $ 2,086,062 $ 716,275 $ 764,393 $ 1,165,917 $ 9,014,677

$ 2,235,428 $ 1,296,466 $ 2,222,976 $ 581,082 $ 999,879 $ 1,128,731 $ 8,464,562

(1) Includes commercial small business leases.

(2) Period-end loan balance excludes reverse mortgages at fair value of $ 16.6 million as of December 31, 2019.

(3) The difference between this amount and nonaccruing loans represents accruing troubled debt restructured loans which are considered to be impaired loans of $ 14.3 million as of December 31, 2019.

(4) Ending loan balances do not include net deferred fees.

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

(2) Period-end loan balance excludes reverse mortgages at fair value of $ 10.1 million.

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

(4) Includes $ 0.1 million for the initial allowance on loans purchased with credit deterioration.

The following tables show nonaccrual and past due loans presented at amortized cost at the date indicated:

13 unchanged sentences

% of Total Loans 0.26 % 0.14 % 0.40 % 99.41 % 0.19 % 100.00 %

(1) Nonaccrual loans with an allowance totaled less than $ 0.1 million.

(1) There were no nonaccrual loans with an allowance as of December 31, 2022.

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

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

Interest income of $ 0.8 million was recognized on individually reviewed loans during 2021 and 2020.

Interest income of $ 1.0 million was recognized on individually reviewed loans during 2022 compared to $ 0.8 million during 2021 and 2020.

As of December 31, 2022, there were 45 residential loans and 8 commercial loans in the process of foreclosure.

3 unchanged sentences

Loan workout and OREO expenses recognized were $ 0.4 million in 2022, $ 1.5 million in 2021, and $ 3.2 million in 2020.

Loan workout and OREO expenses are included in Loan workout and other credit costs on the Consolidated Statement of Income.

Loan workout and OREO expenses are included in Loan workout and other credit costs on the Consolidated Statements of Income.

Credit Quality Indicators

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Total TDRs $ 21,743 $ 14,960

Approximately $ 0.2 million and less than $ 0.1 million in related reserves have been established for these loans at December 31, 2021 and December 31, 2020, respectively.

Approximately $ 0.6 million and $ 0.2 million in related reserves have been established for these loans at December 31, 2022 and December 31, 2021, respectively.

The following tables present information regarding the types of loan modifications made and the balances of loans modified as TDRs during the years ended December 31, 2022 and 2021:

24 unchanged sentences

$ 10,014 $ 10,014 $ 1,731 $ 1,731

(1) During the year ended December 31, 2021, the TDRs in the table above resulted in a less than $ 0.1 million increase in the allowance for credit losses, and no additional charge-offs.

(1) During the year ended December 31, 2022, the TDRs in the table above resulted in a $ 0.5 million increase in the allowance for credit losses, and no additional charge-offs.

During the year ended December 31, 2022, no TDRs defaulted that had received troubled debt modification during the past twelve months.

(2) During the year ended December 31, 2020 the TDRs in the table above resulted in a $ 0.5 million decrease in the allowance for credit losses, respectively, and no additional charge-offs.

(2) During the year ended December 31, 2021 the TDRs in the table above resulted in a less than $ 0.1 million increase in the allowance for credit losses, and no additional charge-offs.

During the year ended December 31, 2021, no TDRs defaulted that had received troubled debt modification during the past twelve months.

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Right-of-use assets $ 138,182 $ 144,134

Total $ 144,134 $ 150,985

Lease liabilities $ 158,269 $ 159,526

Total $ 159,526 $ 166,451

Lease term and discount rate of operating leases

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Interest income from direct financing leases where the Company is a lessor is recognized in Interest and fees on loans and leases on the Consolidated Statements of Income.

The allowance for credit losses on finance leases are included within (Recovery of) provision for credit losses on the Consolidated Statements of Income.

The allowance for credit losses on finance leases are included within Provision for (recovery of) credit losses on the Consolidated Statements of Income.

The components of direct finance lease income are summarized in the table below:

28 unchanged sentences

December 31, 2021 452,629 20,199 472,828

Goodwill from business combinations 297,646 116,691 414,337

Goodwill adjustments (1)

3,311 ( 6,839 ) ( 3,528 )

December 31, 2022 $ 753,586 $ 130,051 $ 883,637

Other intangible assets

(1) Goodwill adjustments include the remeasurements as noted in Note 3 and Wealth Management includes the impact of the sale of the BMTIA business.

ASC 350 requires that an acquired intangible asset be separately recognized if the benefit of the intangible asset is obtained through contractual or other legal rights, or if the asset can be sold, transferred, licensed, rented or exchanged, regardless of the acquirer’s intent to do so.

5 unchanged sentences

Customer relationships 68,281 ( 12,937 ) 55,344 7 - 15 years

Non-compete agreements 200 ( 200 ) — 1 year

Tradename 2,900 — 2,900 indefinite

Loan servicing rights (1)

4 unchanged sentences

Customer relationships 15,281 ( 7,876 ) 7,405 7 - 15 years

Non-compete agreements 221 ( 190 ) 31 5 years

Loan servicing rights (2)

1 unchanged sentence

Total intangible assets $ 115,763 $ ( 41,360 ) $ 74,403

(1) Includes reversal of impairment losses of $ 0.3 million for the year ended December 31, 2021.

(1) Includes impairment losses of $ 0.3 million for the year ended December 31, 2022.

(2) Includes reversal of impairment losses of $ 0.3 million for the year ended December 31, 2021.

In connection with the BMBC Merger on January 1, 2022, the Company recorded $ 10.9 million of core deposit intangibles, $ 53.0 million of customer relationships, $ 2.9 million for the Bryn Mawr Trust tradename, $ 0.2 million in non-compete agreements, and $ 3.3 million of loan servicing rights.

See Note 3 to the Consolidated Financial Statements for additional information on intangible assets recorded in connection with the BMBC Merger.

The Company recognized amortization expense on other intangible assets of $ 15.7 million, $ 10.6 million and $ 10.9 million for the years ended December 31, 2022, 2021 and 2020, respectively.

11 unchanged sentences

The value of the Company's mortgage servicing rights was $ 2.1 million and $ 0.5 million at December 31, 2022 and 2021, respectively, and the value of its SBA loan servicing rights was $ 4.0 million and $ 2.8 million at December 31, 2022 and 2021, respectively.

Changes in the value of these servicing rights resulted in a reversal of impairment losses of $ 0.3 million during 2021 and an impairment loss of $ 0.2 million during 2020.

In connection with the BMBC Merger, the Company acquired $ 2.0 million of mortgage servicing rights and $ 1.3 million of SBA loan servicing rights.

Changes in the value of these servicing rights resulted in impairment losses of $ 0.3 million during 2022 and a reversal of impairment losses of $ 0.3 million during 2021.

Revenues from originating, marketing and servicing mortgage loans as well as valuation adjustments related to capitalized mortgage servicing rights are included in Mortgage Banking Activities, Net in the Consolidated Statements of Income and revenues from the Company's SBA loan servicing rights are included in Loan fee income, in the Consolidated Statements of Income.

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Total certificates of deposit $ 1,102,013 $ 988,974

(1) Represents certificates of deposit balances in excess of $ 0.1 million from individuals, businesses and municipalities.

(1) Represents certificates of deposit balances in excess of $ 250 thousand from individuals, businesses and municipalities.

The following table is a summary of interest expense on deposits by category:

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Trust preferred borrowings 90,442 6.63 90,442 90,337 3.85

Senior debt 147,939 2.94 246,763 192,243 3.38

Senior and subordinated debt 248,169 4.51 248,566 248,389 3.32

Other borrowed funds 38,283 0.10 38,283 35,473 0.10

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Federal Home Loan Bank Advances

Advances from the FHLB matured in January 2021, with an interest rate of 2.60 %.

As of December 31, 2022, advances from the FHLB totaled $ 350.0 million with rates ranging from 4.45 % to 4.50 %.

All FHLB advances had original maturities of less than one year.

Pursuant to collateral agreements with the FHLB, advances are secured by qualifying loan collateral, qualifying fixed-income securities, FHLB stock and an interest-bearing demand deposit account with the FHLB.

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These securities are currently callable and have a maturity date of June 1, 2035.

In connection with the BMBC Merger, WSFS acquired Royal Bancshares Capital Trust I (Trust I) and Royal Bancshares Capital Trust II (Trust II) (collectively, the Trusts), which were utilized for the sole purpose of issuing and selling capital securities representing preferred beneficial interests.

Although WSFS owns an aggregate of $ 774.0 thousand of the common securities of Trust I and Trust II, the Trusts are not consolidated into the Corporation’s Consolidated Financial Statements as the Corporation is not deemed to be the primary beneficiary of these entities.

Inclusive of the fair value marks, WSFS assumed junior subordinated debentures to the Trusts with a carrying value of $ 11.7 million each, totaling $ 23.4 million.

The junior subordinated debentures incur interest at a coupon rate of 6.92 % as of December 31, 2022.

The rate resets quarterly based on 3-month LIBOR plus 2.15 %.

Each of Trust I and Trust II issued an aggregate principal amount of $ 12.5 million of capital securities initially bearing fixed and/or fixed/floating interest rates corresponding to the debt securities held by each Trust to an unaffiliated investment vehicle and an aggregate principal amount of $ 387.0 thousand of common securities bearing fixed and/or fixed/floating interest rates corresponding to the debt securities held by each Trust to the Company.

The Company has fully and unconditionally guaranteed all of the obligations of the Trusts, including any distributions and payments on liquidation or redemption of the capital securities.

The rights of holders of common securities of the Trusts are subordinate to the rights of the holders of capital securities only in the event of a default;

otherwise, the common securities’ economic and voting rights are pari passu with the capital securities.

The capital and common securities of the Trusts are subject to mandatory redemption upon the maturity or call of the junior subordinated debentures held by each.

Unless earlier dissolved, the Trusts will dissolve on December 15, 2034.

The junior subordinated debentures are the sole assets of Trusts, mature on December 15, 2034, and may be called at par by the Company any time.

The Company records its investments in the Trusts’ common securities of $ 387.0 thousand each as investments in unconsolidated entities and records dividend income upon declaration by Trust I and Trust II.

Senior and Subordinated Debt

On June 13, 2016, the Company issued $ 100.0 million of senior notes due 2026 (the 2026 Notes).

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The remaining net proceeds from the issuance of the 2030 Notes are being used for general corporate purposes, including, but not limited to, financing organic growth, acquisitions, repurchases of common stock, and redemption of outstanding indebtedness.

The carrying value of the 2030 Notes, inclusive of deferred issuance costs, was $ 148.2 million as of December 31, 2022.

In connection with the BMBC Merger, the Company assumed $ 30.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes due 2025 (the 2025 Notes) which were issued in a private placement to institutional accredited investors on August 6, 2015.

The 2025 Notes mature on August 15, 2025, and currently bear interest at a variable rate that resets quarterly to a level equal to the then-current three-month LIBOR rate plus 3.068 % until August 15, 2025, or any early redemption date.

The interest rate of the 2025 Notes was 7.837 % as of December 31, 2022.

The carrying value of the 2025 Notes, inclusive of purchase accounting marks, was $ 30.0 million as of December 31, 2022.

In connection with the BMBC Merger, the Company assumed $ 70.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes due 2027 (the 2027 Notes) which were issued by BMBC in an underwritten public offering on December 13, 2017.

The 2027 Notes mature on December 15, 2027, and currently bear interest at an annual fixed rate of 6.82 % until and including December 14, 2022, and will thereafter bear interest at a variable rate that will reset quarterly to a level equal to the then-current three-month LIBOR rate plus 2.05 % until December 15, 2027, or any early redemption date.

The carrying value of the 2027 Notes, inclusive of purchase accounting marks, was $ 70.0 million as of December 31, 2022.

Other Borrowed Funds

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As of December 31, 2022, the Company's capital structure includes one class of stock, $ 0.01 par common stock outstanding with each share having equal voting rights.

In 2005, the Trust, the Company's unconsolidated subsidiary, issued Pooled Floating Rate Securities at a variable interest rate of 177 basis points over the three-month LIBOR rate with a scheduled maturity of June 1, 2035.

In 2005, the Trust issued Pooled Floating Rate Securities at a variable interest rate of 177 basis points over the three-month LIBOR rate with a scheduled maturity of June 1, 2035.

The par value of these securities is $ 2.0 million and the aggregate principal is $ 67.0 million.

The proceeds from the issue were invested in Junior Subordinated Debentures issued by the Company.

These securities are treated as borrowings with interest included in Interest on trust preferred borrowings on the Consolidated Statements of Income and included in Trust preferred borrowings in the Consolidated Statements of Financial Condition.

At December 31, 2022, the coupon rate of the Trust securities was 6.53 %.

The effective rate will vary due to fluctuations in interest rates.

When infused into the Bank, the Trust preferred borrowings issued in 2005 qualify as Tier 1 capital.

Inclusive of the fair value marks, WSFS assumed junior subordinated debentures to the Trusts with a carrying value of $ 11.7 million each, totaling $ 23.4 million.

The junior subordinated debentures incur interest at a coupon rate of 6.92 % as of December 31, 2022.

The rate resets quarterly based on 3-month LIBOR plus 2.15 %.

The Trust preferred borrowings issued in 2005 and acquired through the BMBC Merger qualify as Tier 2 capital.

The Trust preferred borrowings issued in 2005 were previously Tier 1 capital, but migrated to Tier 2 capital following the BMBC Merger and impacts of 12 C.F.R.

§ 217.300(c)(2)(i).

The Bank is prohibited from paying any dividend or making any other capital distribution if, after making the distribution, the Bank would be under-capitalized within the meaning of the Prompt Corrective Action regulations.

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During the year ended December 31, 2022, the Company repurchased 4,151,117 common shares at an average price of $ 46.78 per share as part of its share buy-back program approved by the Board of Directors.

The program is consistent with the Company's intent to return a minimum of 25 % of annual net income to stockholders through dividends and share repurchases while maintaining capital ratios in excess of regulatory minimums, and in the case of the Bank, the “well-capitalized” benchmarks.

The program is consistent with the Company's intent to return a minimum of 35 % of annual core net income to stockholders through dividends and share repurchases while maintaining capital ratios in excess of regulatory minimums, and in the case of the Bank, the “well-capitalized” benchmarks.

ASSOCIATE BENEFIT PLANS

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The Company recognizes its service cost in Salaries, benefits and other compensation and the other components of net periodic benefit cost in Other operating expenses in the Consolidated Statements of Income.

ASC 715 requires that the Company recognizes the funded status of its defined benefit postretirement plan in the statement of financial condition, with a corresponding adjustment to accumulated other comprehensive (loss) income, net of tax.

The adjustment to accumulated other comprehensive (loss) income at adoption represented the net unrecognized actuarial losses and unrecognized transition obligation remaining from the initial adoption of ASC 715, all of which were previously netted against the plan’s funded status in the statement of financial condition pursuant to the provisions of ASC 715.

The adjustment to accumulated other comprehensive income (loss) at adoption represented the net unrecognized actuarial losses and unrecognized transition obligation remaining from the initial adoption of ASC 715, all of which were previously netted against the plan’s funded status in the statement of financial condition pursuant to the provisions of ASC 715.

These amounts will be subsequently recognized as net periodic pension costs pursuant to the Company's historical accounting policy for amortizing such amounts.

Further, actuarial gains and losses that arise in subsequent periods, and are not recognized as net periodic pension cost in the same periods, will be recognized as a component of other comprehensive income.

Those amounts will be subsequently recognized as a component of net periodic pension cost on the same basis as the amounts recognized in accumulated other comprehensive income at adoption of ASC 715.

Those amounts will be subsequently recognized as a component of net periodic pension cost on the same basis as the amounts recognized in accumulated other comprehensive income (loss) at adoption of ASC 715.

The following disclosures relating to postretirement medical benefits were measured at December 31:

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Net amount recognized $ 1,908 $ 966 $ 811

Components of net periodic cost (benefit):

Components of net periodic (benefit) cost:

Service cost $ 52 $ 67 $ 61

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Net gain recognition ( 84 ) ( 20 ) ( 36 )

Net periodic cost (benefit) $ 25 $ 16 $ ( 7 )

Net periodic (benefit) cost $ ( 57 ) $ 25 $ 16

Assumption used to determine net periodic benefit cost:

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The following disclosures relating to Alliance pension benefits were measured at:

(Dollars in thousands) June 30, 2020 December 31, 2019

(Dollars in thousands) June 30, 2020

Change in benefit obligation:

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Settlements ( 7,272 )

Disbursements — ( 231 )

Actuarial loss 274

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Settlements ( 7,272 )

Benefits paid — ( 231 )

Administrative expenses — ( 33 )

Fair value of plan assets at end of period $ —

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Amounts recognized in accumulated other comprehensive income (1) :

Net loss $ — $ ( 279 )

Components of net periodic cost (benefit):

Components of net periodic cost:

Service cost $ 17

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Expected return on plan assets ( 196 )

Settlements — 16

Plan settlement loss 1,431

Net gain recognition — —

Net periodic cost (benefit) $ 1,357 $ ( 162 )

Net periodic cost $ 1,357

(1) Before tax effects

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Amendments — — ( 83 ) —

Actuarial (loss) gain ( 4,420 ) ( 442 ) 11,499 ( 520 )

Actuarial gain ( 26,233 ) ( 3,346 ) ( 4,420 ) ( 442 )

Benefits paid ( 5,736 ) ( 1,336 ) ( 5,185 ) ( 1,171 )

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Amounts recognized in accumulated other comprehensive income (1) :

Net loss $ 6,882 $ 87 $ 6,635 $ 517

Net loss (gain) $ 10,658 $ ( 3,259 ) $ 6,882 $ 87

Components of net periodic (benefit) cost:

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Large cap $ 3,721 $ — $ — $ 3,721 4.7 %

Mid cap 75 — — 75 0.1

Small cap 59 — — 59 0.1

International 6,651 — — 6,651 8.4

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Government Agencies — 17,259 — 17,259 21.8

Pooled separate accounts 123 — — 123 0.2

Accrued Income 161 — — 161 0.1

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Total $ 96,718 $ 11,524 $ — $ 108,242 100.0 %

As of December 31, 2021, pension and postretirement plan assets were comprised of investments in equity and fixed income mutual funds.

As of December 31, 2022, pension and postretirement plan assets were comprised of investments in equity mutual funds, fixed income mutual funds, and pooled separate accounts.

The Bank’s consolidated pension plan investment policy pro vides that assets are to be managed over a long-term investment horizon to ensure that the chances and duration of investment losses are carefully weighed against the long-term potential for asset appreciation.

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(2) an Early Retirement Window Plan with a corresponding liability of $ 0.1 million for both December 31, 2022 and 2021;

(3) a Supplemental Executive Retirement Plan with a corresponding liability of $ 1.4 million for both December 31, 2021 and 2020, and;

(3) a Supplemental Executive Retirement Plan with a corresponding liability of $ 1.3 million and $ 1.4 million for December 31, 2022 and 2021, respectively, and;

(4) a Post-Retirement Medical Plan with a corresponding liability of $ 0.1 million for both December 31, 2022 and 2021.

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Total $ 77,961 $ 86,095 $ 31,636

Current federal income taxes include taxes on income that cannot be offset by net operating loss carryforwards.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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Investments 1,579 2,038

Net operating losses 3,315 96

Derivatives 3,521 4,181

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Deferred tax liabilities:

Unrealized gains on available-for-sale securities $ — $ ( 18,997 )

Legal settlement — ( 3,150 )

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Net deferred tax asset $ 250,756 $ 38,968

(1) Other deferred tax assets includes deferred gains and net operating losses.

(2) Other deferred tax liabilities includes derivatives and reverse mortgages.

Included in the table above is the effect of certain temporary differences for which no deferred tax expense or benefit was recognized.

In 2021, such items consisted primarily of $ 10.6 million of unrealized losses on certain investments in debt and equity securities accounted for under ASC 320 and $ 1.5 million of unrealized losses related to postretirement benefit obligations accounted for under ASC 715.

In 2020, they consisted primarily of $ 19.0 million of unrealized gains on certain investments in debt and equity securities and $ 1.6 million of unrealized losses related to postretirement benefit obligations.

(1) Other deferred tax assets includes deferred gains and tax credits in 2022 and 2021, and reverse mortgages in 2022.

(2) Other deferred tax liabilities includes derivatives and partnership investments in 2022 and 2021, and reverse mortgages in 2021.

Included in the table above are deferred taxes recorded in accumulated OCI.

At December 31, 2022, such items consisted primarily of deferred tax assets of $ 212.2 million of unrealized losses on certain investments in debt securities accounted for under ASC 320 and $ 1.5 million of unrealized losses related to postretirement benefit obligations accounted for under ASC 715.

At December 31, 2021, the deferred tax assets consisted primarily of $ 10.6 million of unrealized gains on certain investments in debt securities and $ 1.5 million of unrealized losses related to postretirement benefit obligations.

Based on the Company's history of prior earnings and its expectations of the future, it is anticipated that operating income and the reversal pattern of its temporary differences will, more likely than no t, be sufficient to realize a net deferred tax asset of $ 250.8 million at December 31, 2022.

Pursuant to accounting guidance, The Company is not required to provide deferred taxes on Beneficial’s tax loan loss reserve as of December 31, 1987.

As of December 31, 2021, Beneficial had unrecognized deferred income taxes of approximately $ 1.7 million with respect to this reserve.

This reserve could be recognized as taxable income and create a current and/or deferred tax liability using the income tax rates then in effect if one of the following occur:

(1) the Bank’s retained earnings represented by this reserve are used for distributions in liquidation or for any other purpose other than to absorb losses from bad debts;

(2) the Bank fails to qualify as a Bank, as provided by the Internal Revenue Code;

or (3) there is a change in federal tax law.

The Company reduces the carrying amounts of deferred tax assets by a valuation allowance if, based on the available evidence, it is more likely than not that such assets will not be realized.

The need to establish valuation allowances for deferred tax assets is assessed quarterly.

In assessing the requirement for, and amount of, a valuation allowance in accordance with the more likely than not standard for all periods, the Company considers all positive and negative evidence related to the realization of the deferred tax assets.

This assessment considers, among other matters, the generation of future profitability, the reversal of deferred tax liabilities, and tax planning strategies.

The Company has $ 15.8 million of remaining Federal NOLs.

Such NOLs expire beginning in 2030 and, due to Internal Revenue Service (IRS) limitations, $ 2.8 million are being utilized each year.

Accordingly, the Company fully expects to utilize all of these NOLs.

The Company has no state NOLs.

Finally, the Company has $ 0.5 million of alternative minimum tax credits that have no expiration date and are fully expected to be utilized.

A reconciliation showing the differences between the Company's effective tax rate and the U.S.

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Nondeductible compensation 0.2 — —

Nondeductible goodwill 0.5 — —

Other ( 0.1 ) ( 0.1 ) —

Effective tax rate 25.9 % 24.1 % 21.8 %

As a result of the adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, the Company recorded $ 0.4 million of income tax benefit in 2021, compared to less than $ 0.1 million of income tax expense and $ 2.0 million of income tax benefit in 2020 and 2019, respectively, related to excess tax benefits from stock compensation.

This accounting standard will result in volatility to future effective tax rates.

The Company has $ 0.5 million of remaining Federal NOLs.

Such NOLs expire beginning in 2030 and, due to Internal Revenue Service (IRS) limitations, $ 0.1 million are being utilized each year.

Accordingly, the Company fully expects to utilize all of these NOLs.

The Company has no state NOLs.

Section 2303(b) of the CARES act provides the Company with an opportunity to carry back net operating losses (NOLs) arising from 2018, 2019 and 2020 to the prior five tax years.

The Company has such NOLs reflected on its balance sheet as a portion of its current tax receivables, which were previously valued at the federal corporate income tax rate of 21%.

However, the provisions of the CARES Act provide for NOL carryback claims to be calculated based on a rate of 35%, which was the federal corporate tax rate in effect for the carryback years.

Consequently, effective March 31, 2020, the Company has revalued the benefit from its NOLs to reflect a 35% tax rate, which resulted in the recognition of an additional $ 1.7 million income tax benefit and deferred tax asset on the Company's Consolidated Statements of Financial Condition.

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return.

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The Company records interest and penalties on potential income tax deficiencies as income tax expense.

The Company's federal and state tax returns for the 2018 through 2021 tax years are subject to examination as of December 31, 2021, while tax years 2018 through 2021 generally remain subject to examination by state taxing jurisdictions.

The Company's federal and state tax returns for the 2019 through 2022 tax years are subject to examination as of December 31, 2022.

No federal or state income tax return examinations are currently in process.

The Company does no t expect to record or realize any material unrecognized tax benefits during 2023.

As a result of the adoption of ASC 326 - Credit Losses on January 1, 2020, the tax impact relating to the incremental provision for expected credit losses from financial assets held at amortized cost has been reflected as a credit to retained earnings to reflect the tax impact of increased credit reserves.

Accordingly, $ 8.5 million of such impact has been reflected as an income tax credit and deferred tax asset on the Company's Consolidated Statements of Financial Condition.

Section 2303(b) of the CARES act provides the Company with an opportunity to carry back net operating losses (NOLs) arising from 2018, 2019 and 2020 to the prior five tax years.

The Company has such NOLs reflected on its balance sheet as a portion of its current tax receivables, which were previously valued at the federal corporate income tax rate of 21%.

However, the provisions of the CARES Act provide for NOL carryback claims to be calculated based on a rate of 35%, which was the federal corporate tax rate in effect for the carryback years.

The amortization of the low-income housing credit investments has been reflected as income tax expense in the amount of $ 4.8 million for the year ended December 31, 2022, compared to $ 3.6 million and $ 3.3 million for the years ended December 31, 2021 and December 31, 2020, respectively.

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STOCK-BASED COMPENSATION

The Company's stock incentive plans provide for the granting of stock options, stock appreciation rights, performance awards, restricted stock, restricted stock units (RSUs), and other stock based awards or cash incentives that are consistent with the purpose of the incentive plans and interests of the Company.

The Company's stock incentive plans provide for the granting of stock options, stock appreciation rights, performance awards, restricted stock, restricted stock units (RSUs), performance-based restricted stock units (PSUs) and other stock based awards or cash incentives that are consistent with the purpose of the incentive plans and interests of the Company.

Upon stockholder approval in 2018, the 2013 Incentive Plan (2013 Plan) was replaced by the 2018 Incentive Plan (2018 Plan).

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The 2018 Plan will terminate on the tenth anniversary of its effective date, after which no awards may be granted.

The number of shares reserved for issuance under the 2018 Plan is 3,000,000 , of which 1,584,835 shares were available for future grants at December 31, 2021.

The number of shares reserved for issuance under the 2018 Plan is 3,000,000 .

In addition, in connection with the BMBC Merger, an additional 261,709 shares were transferred into the 2018 Plan from the Bryn Mawr Incentive Plan and the Bryn Mawr Retainer Plan, which were assumed by the Company.

At December 31, 2022, 869,838 shares were available for future grants under the 2018 Plan.

Generally, all time-based awards become fully vested and outstanding stock options and stock appreciation rights become exercisable immediately in the event of a change in control, as defined in the plans.

During February 2022, the Board of Directors and the Personnel and Compensation Committee (the Committee) approved the Executive Leadership Team Incentive Plan (ELTIP), which provides for new cash and equity awards designed to recognize the rewards and efforts of the Company's executive leadership team for the Company's achievement of certain key measures of short-term success and the value of such success to the Company's longer-term performance.

Awards under the ELTIP include short-term incentive (STI) cash bonus awards and long-term incentive (LTI) awards of RSUs and PSUs that will be issued under the Company's 2018 Incentive Plan.

LTI awards under the ELTIP will be awarded to the CEO and Executive Vice Presidents that directly report to the Chairman, CEO and President in the form of RSUs that vest in equal annual installments over a three-year service period, and PSUs that vest based on a service condition defined as the achievement of a three-year service period and a performance condition based on the Company's cumulative core ROA performance over a three-year period relative to the KBW Nasdaq Regional Bank Index (the KRX Index) for the same period.

Total stock-based compensation expense recognized was $ 9.0 million ($ 6.7 million after tax) for 2022, $ 6.3 million ($ 4.8 million after tax) for 2021, and $ 3.1 million ($ 2.5 million after tax) for 2020.

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Stock options are granted with an exercise price not less than the fair market value of the Company's common stock on the date of the grant.

No stock options were granted during 2022.

All stock options granted during 2021 and 2020 vest in 25 % per annum increments, start to become exercisable in April of the year following the year of grant, and expire between five and seven years from the grant date.

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The assumptions used to determine the grant date fair value for options issued during 2021 and 2020 are presented below:

2021 2020 2019

Expected term (in years) 5.5 5.5

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Outstanding at beginning of year 465,424 $ 41.39 4.52 $ 4,243

Granted 105,164 51.84

Exercised ( 36,397 ) 26.43

Forfeited ( 67,312 ) 40.53

Expired ( 5,400 ) 51.84

Outstanding at end of year 356,315 42.92 3.43 1,562

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Exercisable at end of year 224,387 42.04 2.79 1,038

The weighted-average fair value of options granted was $ 10.44 in 2021, $ 7.19 in 2020 and $ 10.26 in 2019.

The weighted-average fair value of options granted was $ 10.44 in 2021 and $ 7.19 in 2020.

The aggregate intrinsic value of options exercised was $ 0.8 million in 2022, $ 1.9 million in 2021, and $ 1.8 million in 2020.

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Nonvested at beginning of period 245,462 $ 43.28 $ 9.09

Granted 105,164 51.84 10.44

Vested ( 98,893 ) 42.98 9.21

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Restricted Stock Units

RSUs are granted at no cost to the recipient and generally vest over a four year period.

All outstanding awards granted to senior executives vest over no less than a four year period.

RSUs are granted at no cost to the recipient and generally vest over a four year period, with the exception of RSUs from the ELTIP which vest over a three year period.

All outstanding awards granted to senior executives vest over no less than a three year period.

The 2013 and 2018 Plans allow for awards with vesting periods less than four years , subject to Board approval.

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The total fair value of RSUs that vested was $ 4.5 million in 2022, $ 1.9 million in 2021, and $ 1.9 million in 2020.

Performance Stock Units

PSUs are granted at no cost to the recipient and vest based on both service and performance conditions.

The service condition is defined as the achievement of a three-year service period between January 1, 2022 and December 31, 2024.

The service condition can be waived at the discretion of the Committee.

The performance condition is based on the Company's cumulative core ROA performance over a three-year period relative to the KRX Index for the same period.

The actual number of shares that will vest at the end of the three-year period will be based on the core ROA performance over the three-year period relative to the KRX Index.

If such performance is at the 25th percentile, 50th percentile, 75th percentile and 100th percentile, grantees will receive 25 %, 50 %, 75 %, and 100 % of their maximum award grant, respectively.

The fair value of PSUs is equal to the fair value of the common stock on the date of grant.

The expense related to PSUs granted to Associates is recognized in Salaries, benefits and other compensation on an accrual basis over the requisite service period if the performance condition is probable and the service condition is met.

The weighted-average fair value of PSUs granted was $ 49.76 in 2022.

The total amount of compensation cost to be recognized relating to nonvested performance stock units (based on current performance estimates) was $ 2.1 million as of December 31, 2022.

The weighted-average period over which the cost is expected to be recognized is 2.00 years.

During 2022, the Company recognized $ 0.9 million of compensation cost related to these awards.

The following table summarizes the Company’s PSUs and changes during the year:

Weighted Average

Grant-Date Fair

Value per Unit

Balance at December 31, 2021 — $ —

Granted 102,885 49.76

Forfeited ( 7,365 ) 49.76

Balance at December 31, 2022 95,520 49.76

Integration Performance RSU Plan :

In February 2019, the Board of Directors approved the Integration Performance RSU Plan (“the Integration Plan”), in which certain senior executives were granted awards based on the achievement of three defined goals measuring the success of the integration of Beneficial and execution of the Company's strategic goals over the five-year period ending 2023.

The Plan provides for a three-year performance achievement period beginning in 2021 and ending in 2023.

If any or all of a portion of RSUs vest prior to 2023, there will be an additional time-based vesting requirement though the end of 2023.

The Performance RSUs were granted on February 28, 2019, and the Company accrues expense for this Plan based on the estimated probability of achievement of the three defined performance goals.

During 2021, the Company recognized $ 0.3 million of compensation expense related to these awards.

The Plan provided for a three-year performance achievement period beginning in 2021 and ending in 2023.

In February 2022, the Integration Plan was terminated.

In connection with the termination of the Integration Plan, the portion of the related Integration Performance-Based RSU Awards (the Integration Awards) attributable to core ROA was terminated, the Gallup Q12 performance goal was met, and the Committee exercised its discretion under the Integration Plan to deem the Gallup CE3 performance goal met.

Thus, 20 % of the restricted stock units subject to the Integration Awards will performance vest and become subject to service-based vesting conditions.

Beneficial Acquisition Success Plan:

On December 10, 2020, the Board of Directors approved the Beneficial Acquisition Success Plan (the “Success Plan”), which is designed to recognize and reward the Company’s achievement of certain key measures of near-term success related to Beneficial and the efforts of the Company’s senior leaders and the value of such success to the Company’s longer term performance.

On December 10, 2020, the Board of Directors approved the Beneficial Acquisition Success Plan (the Success Plan), which was designed to recognize and reward the Company’s achievement of certain key measures of near-term success related to Beneficial and the efforts of the Company’s senior leaders and the value of such success to the Company’s longer term performance.

The key measures of success related to Beneficial include acquisition economics, one-time acquisition costs, banking location integration and optimization, customer deposit retention, and cost synergies.

Awards under the Success Plan have been awarded as RSUs vesting in equal annual installments over three years .

Awards under the Success Plan were awarded as RSUs vesting in equal annual installments over three years .

The Company granted 66,703 RSUs under the Success Plan on December 10, 2020.

During 2022, the Company recognized $ 0.7 million of compensation expense related to these awards.

Awards from both the Integration Plan and the Success Plan will be issued under the Company’s 2018 Incentive Plan.

Awards from the Integration Plan and the Success Plan were issued under the Company’s 2018 Incentive Plan.

COMMITMENTS AND CONTINGENCIES

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At December 31, 2022, the Company had total commitments to extend credit of $ 2.8 billion.

Commitments for consumer lines of credit were $ 731.9 million of which, $ 600.7 million were secured by real estate.

Commitments for consumer lines of credit were $ 1.0 billion of which, $ 913.0 million were secured by real estate.

Residential loan commitments generally have closing dates within a one month period but can be extended to six months .

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Repurchases and losses have been rare and no provision is made for losses at the time of sale.

There were no repurchases for the years ended December 31, 2021 and 2020.

There were two repurchases for $ 0.8 million during the year ended December 31, 2022 and no repurchases during the same period in 2021.

Unfunded Lending Commitments

At December 31, 2022 and December 31, 2021, the allowance for credit losses of unfunded lending commitments was $ 11.9 million and $ 7.4 million, respectively.

A provision release for unfunded lending commitments of $ 0.8 million was recognized during the year ended December 31, 2021, and a provision expense for unfunded lending commitments of $ 3.7 million was recognized during year ended December 31, 2020.

A provision expense for unfunded lending commitments of $ 0.3 million was recognized during the year ended December 31, 2022, and a provision release for unfunded lending commitments of $ 0.8 million was recognized during year ended December 31, 2021.

FAIR VALUE DISCLOSURES OF FINANCIAL ASSETS AND LIABILITIES

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These inputs are based on pricing information obtained from wholesale mortgage banks and brokers and applied to loans with similar interest rates and maturities.

Other assets include the fair value of interest rate products and derivatives on the residential mortgage held for sale loan pipeline.

Other assets include the fair value of interest rate products, derivatives on the residential mortgage held for sale loan pipeline, and risk participation agreements.

Valuation of interest rate products is obtained from an independent pricing service and also from the derivative counterparty.

Valuation of the derivative related to the residential mortgage held for sale loan pipeline is based on valuation of the loans held for sale portfolio as described above in Loans held for sale .

Valuation of risk participation agreements are obtained from an independent pricing service.

Other liabilities

Other liabilities include the fair value of interest rate products, derivatives on the residential mortgage held for sale loan pipeline and derivative related to the sale of certain Visa Class B common shares.

Other liabilities include the fair value of interest rate products, derivatives on the residential mortgage held for sale loan pipeline, foreign exchange forward contracts, risk participation agreements, and derivative related to the sale of certain Visa Class B common shares.

Valuation of interest rate products is obtained from an independent pricing service and also from the derivative counterparty.

Valuation of the derivative related to the residential mortgage held for sale loan pipeline is based on valuation of the loans held for sale portfolio as described above in Loans held for sale.

Valuation of foreign exchange forward contracts and risk participation agreements are obtained from an independent pricing service.

Valuation of the derivative related to the sale of certain Visa Class B common shares is based on:

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The carrying amounts of interest receivable approximate fair value.

Other assets include the fair value of interest rate products and derivatives on the residential mortgage held for sale loan pipeline (see discussion in “Fair Value of Financial Assets and Liabilities” section above).

Other assets include the fair value of interest rate products, derivatives on the residential mortgage held for sale loan pipeline, and risk participation agreements (see discussion in “Fair Value of Financial Assets and Liabilities” section above).

The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, money market and interest-bearing demand deposits, is assumed to be equal to the amount payable on demand.

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Other liabilities

Other liabilities include the fair value of interest rate products, derivatives on the residential mortgage held for sale loan pipeline, and derivative related to the sale of certain Visa Class B common shares (see discussion in “Fair Value of Financial Assets and Liabilities” section above).

Assets measured at fair value using significant unobservable inputs (Level 3)

The following table provides a description of the valuation technique and significant unobservable inputs for the Company's assets classified as Level 3 and measured at fair value on a nonrecurring basis:

Financial instruments measured at fair value using significant unobservable inputs (Level 3)

The following table provides a description of the valuation techniques and significant unobservable inputs for the Company's financial instruments classified as Level 3:

(Dollars in thousands) December 31, 2022

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Other real estate owned 833 Fair market value of collateral Costs to sell 10.0 %

Other assets (Risk participation agreements purchased) 81 Credit Value Adjustment CDS Spread and Loss Given Default (LGD) CDS spread:

110 - 250 bps ( 205 bps)

– % - 30 % ( 30 %)

Other liabilities (Risk participation agreements sold) 2 Credit Value Adjustment CDS Spread and Loss Given Default (LGD) CDS spread:

1 - 250 bps ( 158 bps)

Other liabilities 17,100 Discounted cash flow Timing of Visa litigation resolution 1 - 5.75 years ( 3.61 years or 4Q 2025)

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Accrued interest receivable Level 2 74,448 74,448 41,596 41,596

Other assets Level 2 5,153 5,153 14,448 14,448

Other assets Levels 2, 3 156,993 156,993 5,153 5,153

Financial liabilities:

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Interest rate products 1,794,678 Other liabilities ( 156,414 )

Risk participation agreements 4,214 Other liabilities ( 3 )

Interest rate lock commitments with customers 24,673 Other assets 385

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Forward sale commitments 20,719 Other liabilities ( 54 )

FX forwards 4,177 Other assets 38

FX forwards 3,052 Other liabilities ( 45 )

Risk participation agreements sold 68,459 Other liabilities ( 2 )

Risk participation agreements purchased 87,168 Other assets 81

Financial derivative related to sales of certain Visa Class B shares 113,177 Other liabilities ( 17,100 )

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Interest rate products 54,834 Other liabilities ( 2,847 )

Risk participation agreements 4,372 Other liabilities ( 10 )

Interest rate lock commitments with customers 102,264 Other assets 1,991

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Forward sale commitments 67,032 Other liabilities ( 116 )

Risk participation agreements 4,214 Other liabilities ( 3 )

Financial derivative related to sales of certain Visa Class B shares 113,177 Other liabilities ( 20,252 )

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Cash Flow Hedges of Interest Rate Risk

The Company's objectives in using interest rate derivatives are to add stability to interest income and to manage its exposure to interest rate movements.

To accomplish these objectives, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy.

Interest rate swaps designated as cash flow hedges involve the receipt of fixed amounts from a counterparty in exchange for the Company making variable-rate payments over the life of the agreements without exchange of the underlying notional amount.

Changes to the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecast transaction affects earnings.

During the first half of 2020, such derivatives were used to hedge the variable cash flows associated with a variable rate loan pool.

In 2020, the Company terminated its three interest rate derivatives that were designated as cash flow hedges for a net gain of $ 1.3 million, recognized in accumulated other comprehensive income (loss).

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During the next twelve months, the Company estimates that $ 0.1 million will be reclassified as an increase to interest income.

During the year ended December 31, 2021, $ 0.5 million was reclassified into interest income.

The table below presents the effect of the cash flow hedges on the Consolidated Statements of Income for the year ended December 31, 2020 and 2019.

During the year ended December 31, 2022, $ 0.2 million was reclassified into interest income compared to $ 0.5 million during the same period in 2021.

The table below presents the effect of the cash flow hedges on the Consolidated Statements of Income for the year ended December 31, 2020.

Amount of Gain Recognized in OCI on Derivative (Effective Portion) Location of Gain Reclassified from Accumulated OCI into Income (Effective Portion)

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Derivatives not designated as hedging instruments:

Back-to-Back Swap Transactions

The Company entered into agreements with two unrelated financial institutions whereby the Company enters into an interest rate swap transaction with the customer and offsets that transaction with another counterparty.

Derivative financial instruments related to back-to-back swaps are recorded at fair value and are not designated as accounting hedges.

Swap Guarantees

The Company entered into agreements with six unrelated financial institutions whereby those financial institutions entered into interest rate derivative contracts (interest rate swap transactions) directly with customers referred to them by the Company.

Under the terms of the agreements, those financial institutions have recourse to us for any exposure created under each swap transaction, only in the event that the customer defaults on the swap agreement and the agreement is in a paying position to the third-party financial institution.

This is a customary arrangement that allows us to provide access to interest rate swap transactions for our customers without creating the swap ourselves.

These swap guarantees are accounted for as credit derivatives.

At December 31, 2021 and December 31, 2020, there were 261 and 234 variable-rate to fixed-rate swap transactions between the third-party financial institutions and the Company's customers, respectively.

The initial notional aggregate amount was approximately $ 1.1 billion at both December 31, 2021 and December 31, 2020.

At December 31, 2021, the swap transactions remaining maturities ranged from under 1 year to 14 years.

At December 31, 2021, 193 of these customer swaps were in a paying position to third parties for $ 35.8 million, with our swap guarantees having a fair value of $ 13.1 million.

At December 31, 2020, 231 of these customer swaps were in a paying position to third parties for $ 81.6 million, with the Company's swap guarantees having a fair value of $ 12.8 million.

However, for both periods, none of the Company's customers were in default of the swap agreements.

Customer Derivatives – Interest Rate Swaps

The Company enters into interest rate swaps with commercial loan customers wishing to manage interest rate risk.

The Company then enters into corresponding swap agreements with swap dealer counterparties to economically hedge the exposure arising from these contracts.

The interest rate swaps with both the customers and third parties are not designated as hedges under ASC 815, Derivatives and Hedging (ASC 815) and are marked to market through earnings.

As the interest rate swaps are structured to offset each other, changes to the underlying benchmark interest rates considered in the valuation of these instruments do not result in an impact to earnings;

however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings as required by ASC 820.

As of December 31, 2022, there were no fair value adjustments related to credit quality.

Derivative Financial Instruments from Mortgage Banking Activities

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Total $ 2,791 $ ( 2,955 ) $ ( 5,736 )

Foreign Exchange Forward Contracts

The Company enters into foreign exchange forward contracts (FX forwards) with customers to exchange one currency for another on an agreed date in the future at an agreed exchange rate.

The Corporation then enters into corresponding FX forwards with swap dealer counterparties to economically hedge its exposure on the exchange rate component of the customer agreements.

The FX forwards with both the customers and third parties are not designated as hedges under ASC 815 and are marked to market through earnings.

Exposure to gains and losses on these contracts increase or decrease over their respective lives as currency exchange and interest rates fluctuate.

As the FX forwards are structured to offset each other, changes to the underlying term structure of currency exchange rates considered in the valuation of these instruments do not result in an impact to earnings;

however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings as required by ASC 820.

As of December 31, 2022, there were no fair value adjustments related to credit quality.

Risk Participation Agreements

The Company may enter into a risk participation agreement (RPA) with another institution as a means to assume a portion of the credit risk associated with a loan structure which includes a derivative instrument, in exchange for fee income commensurate with the risk assumed.

This type of derivative is referred to as an “RPA sold.” In addition, in an effort to reduce the credit risk associated with an interest rate swap agreement with a borrower for whom the Corporation has provided a loan structured with a derivative, the Corporation may purchase an RPA from an institution participating in the facility in exchange for a fee commensurate with the risk shared.

This type of derivative is referred to as an “RPA purchased.”

The following are not included in the tables in Fair Values of Derivative Instruments :

Swap Guarantees

The Company entered into an agreement with one unrelated financial institution whereby that financial institution entered into interest rate derivative contracts (interest rate swap transactions) directly with customers referred to them by the Company.

This is a customary arrangement that allows us to provide access to interest rate swap transactions for our customers without creating the swap ourselves.

These swap guarantees are accounted for as credit derivatives.

At December 31, 2022 and December 31, 2021, there were 209 and 261 variable-rate to fixed-rate swap transactions between the third-party financial institutions and the Company's customers, respectively.

The initial notional aggregate amount was approximately $ 0.8 billion and $ 1.1 billion at December 31, 2022 and December 31, 2021, respectively.

At December 31, 2022, the swap transactions remaining maturities ranged from under 1 year to 13 years.

At December 31, 2022, none of these customer swaps were in a paying position to third parties, with our swap guarantees having a fair value of $ 10.4 million.

At December 31, 2021, 193 of these customer swaps were in a paying position to third parties for $ 35.8 million, with the Company's swap guarantees having a fair value of $ 13.1 million.

However, for both periods, none of the Company's customers were in default of the swap agreements.

Credit-risk-related Contingent Features

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The Company also has agreements with certain derivative counterparties that contain a provision where if it fails to maintain its status as a well-capitalized or adequately capitalized institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements.

The Company has minimum collateral posting thresholds with certain of its derivative counterparties, and has posted collateral of $ 6.2 million in securities and $ 5.1 million in cash against its obligations under these agreements.

The Company has minimum collateral posting thresholds with certain of its derivative counterparties, and has posted collateral of $ 4.7 million in cash against its obligations under these agreements.

If the Company had breached any of these provisions at December 31, 2022, it could have been required to settle its obligations under the agreements at the termination value.

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Any related party loans exceeding $ 0.5 million require review and approval by the Board of Directors.

There was one related party loan exceeding $ 0.5 million originated and sold during the year ended December 31, 2021 as compared to two related party loans exceeding $ 0.5 million originated and sold during the year ended December 31, 2020.

During 2021, all new loans and credit line advances to related parties were $ 0.8 million and repayments were less than $ 0.1 million.

There was no related party loan exceeding $ 0.5 million originated during the year ended December 31, 2022 as compared to one related party loans exceeding $ 0.5 million originated and sold during the year ended December 31, 2021.

During 2022, all new loans and credit line advances to related parties were $ 5.1 million and repayments were $ 1.7 million.

The outstanding balances of loans to related parties at December 31, 2022 and 2021 were $ 3.9 million and $ 0.4 million, respectively.

Total deposits from related parties at December 31, 2021 and 2020 were $ 5.8 million and $ 8.3 million, respectively.

Total deposits from related parties at December 31, 2022 and 2021 were $ 5.8 million.

SEGMENT INFORMATION

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WSFS Bank, Cash Connect ® , and Wealth Management.

The WSFS Bank segment provides financial products to commercial and retail customers.

Retail and Commercial Banking, Commercial Real Estate Lending and other banking business units are operating departments of WSFS Bank.

The WSFS Bank segment provides financial products to commercial and consumer customers.

Consumer and Commercial Banking, Commercial Real Estate Lending and other banking business units are operating departments of WSFS Bank.

These departments share the same regulators, the same market, many of the same customers and provide similar products and services through the general infrastructure of the Bank.

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The Company's Cash Connect ® segment provides ATM vault cash, smart safe and other cash logistics services through strategic partnerships with several of the largest networks, manufacturers and service providers in the ATM industry.

Cash Connect ® services non-bank and WSFS-branded ATMs and retail safes nationwide.

Cash Connect ® services non-bank and WSFS-branded ATMs and smart safes nationwide.

The balance sheet category Cash in non-owned ATMs includes cash from which fee income is earned through bailment arrangements with customers of Cash Connect ® .

The Wealth Management segment 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.

WSFS Wealth ® Investments provides financial advisory services along with insurance and brokerage products.

Cypress, a registered investment adviser, is a fee-only wealth management firm managing a “balanced” investment style portfolio focused on preservation of capital and generating current income.

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, corporate clients and special purpose vehicles.

Christiana Trust DE also provides personal trust and fiduciary services to families and individuals across the U.S.

Bryn Mawr Trust ® is our predominant Private Wealth Management brand, providing advisory, investment management and trustee services to institutions, affluent and high-net-worth individuals.

The Bryn Mawr Trust Company of Delaware, formed by the merger of BMT-DE and Christiana Trust DE on April 1, 2022, provides personal trust and fiduciary services to families and individuals across the U.S.

and internationally.

WSFS Institutional Services ® provides trustee, agency, bankruptcy administration, custodial and commercial domicile services to institutional, corporate clients and special purpose vehicles.

Private Wealth Management serves high-net-worth clients and institutions by providing trustee and advisory services, financial planning, customized investment strategies, brokerage products such as annuities and traditional banking services such as credit and deposit products tailored to its clientele.

Private Wealth Management includes businesses that operate under the bank’s charter, through a broker/dealer and as a registered investment advisor (RIA).

It generates revenue through fee-only arrangements, net interest income and other fee-only services such as estate administration, trust tax planning and custody.

Powdermill® is a multi-family office specializing in providing independent solutions to high-net-worth individuals, families and corporate executives through a coordinated, centralized approach.

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

BMTIA was a full-service insurance agency, through which the Bank offered insurance and related products and services to its customer base.

This included casualty, property and allied insurance lines, as well as life insurance, annuities, medical insurance and accident and health insurance for groups and individuals.

The BMTIA business was sold to Patriot Growth Insurance Services, LLC in June 2022.

The following tables show segment results for the years ended December 31, 2022, 2021, and 2020:

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Noninterest expenses 465,999 36,777 71,550 574,326

(Recovery of) provision for credit losses ( 113,715 ) — ( 3,372 ) ( 117,087 )

Provision for credit losses 47,921 — 168 48,089

Total external customer expenses 551,313 36,777 75,250 663,340

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Consolidated net income $ 222,648

Net loss attributable to noncontrolling interest 163

Net income attributable to noncontrolling interest 273

Net income attributable to WSFS $ 222,375

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Noninterest expenses 328,277 29,465 20,774 378,516

Provision for credit losses 149,453 — 3,727 153,180

Recovery of credit losses ( 113,715 ) — ( 3,372 ) ( 117,087 )

Total external customer expenses 236,620 29,465 18,064 284,149

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Consolidated net income $ 271,605

Net loss attributable to noncontrolling interest ( 1,454 )

Net income attributable to noncontrolling interest 163

Net income attributable to WSFS $ 271,442

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Noninterest expenses 310,799 28,421 29,624 368,844

Provision for loan and lease losses 24,884 — 676 25,560

Provision for credit losses 149,453 — 3,727 153,180

Total external customer expenses 506,680 28,421 35,373 570,474

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23,252 15,279 9,301

(Loss) income before equity in undistributed income of subsidiaries ( 5,480 ) 198,200 241,894

Equity in undistributed income (loss) of subsidiaries 276,208 ( 84,346 ) ( 92,020 )

Income (loss) before equity in undistributed income of subsidiaries 233,883 ( 5,480 ) 198,200

Equity in undistributed (loss) income of subsidiaries ( 12,672 ) 276,208 ( 84,346 )

Income before taxes 221,211 270,728 113,854

Income tax (benefit) provision ( 714 ) ( 920 ) 1,065

Income tax benefit ( 1,164 ) ( 714 ) ( 920 )

Net income attributable to WSFS $ 222,375 $ 271,442 $ 114,774

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Investment in subsidiaries 2,320,474 2,045,080

Investment in the Trust 2,011 2,011

Investment in Trusts (1)

Other assets 16,944 4,514

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Trust preferred borrowings $ 90,442 $ 67,011

Senior debt 147,939 246,617

Senior and subordinated debt 248,169 147,939

Accrued interest payable 1,168 298

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Capital in excess of par value 1,974,210 1,058,997

Accumulated other comprehensive (loss) income ( 37,768 ) 56,007

Accumulated other comprehensive loss ( 675,844 ) ( 37,768 )

Retained earnings 1,411,243 1,224,614

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Total liabilities and stockholders’ equity of WSFS $ 2,546,044 $ 2,155,313

(1) Includes WSFS Capital Trust III, Royal Bancshares Capital Trust I, and Royal Bancshares Capital Trust II.

Condensed Statements of Cash Flows

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Net income attributable to WSFS $ 222,375 $ 271,442 $ 114,774

Adjustments to reconcile net income to net cash provided by operating activities:

Equity in undistributed (income) loss of subsidiaries ( 276,208 ) 84,346 92,020

Adjustments to reconcile net income to net cash provided by (used for) operating activities:

Equity in undistributed loss (income) of subsidiaries 12,672 ( 276,208 ) 84,346

Realized loss on sale of equity investments — 706 —

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Decrease (increase) in other assets 2,569 10,910 ( 4,537 )

(Decrease) increase in other liabilities ( 6,690 ) 7,684 6,012

Net cash (used for) provided by operating activities $ ( 5,229 ) $ 203,884 $ 246,733

Increase (decrease) in other liabilities 812 ( 6,690 ) 7,684

Net cash provided by (used for) operating activities $ 233,049 $ ( 5,229 ) $ 203,884

Investing activities:

Net cash for business combinations $ 101,734 $ — $ —

Net cash used for investing activities $ — $ — $ ( 93,990 )

Net cash provided by investing activities $ 101,734 $ — $ —

Financing activities:

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Net cash used for financing activities $ ( 232,650 ) $ ( 135,988 ) $ ( 30,389 )

(Decrease) increase in cash and cash equivalents $ ( 141,217 ) $ 173,495 $ 40,849

Increase (decrease) in cash and cash equivalents $ 102,133 $ ( 141,217 ) $ 173,495

Cash and cash equivalents at beginning of period 103,708 244,925 71,430

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Balance, December 31, 2020 $ 59,882 $ 276 $ ( 4,788 ) $ 646 ( 9 ) $ 56,007

Other comprehensive income (loss) before reclassifications 39,853 — ( 1,445 ) 1,560 ( 9 ) 39,959

Other comprehensive (loss) income before reclassifications ( 93,503 ) — 162 — 362 ( 92,979 )

Amounts reclassified from accumulated other comprehensive (loss) income ( 252 ) ( 101 ) ( 65 ) ( 378 ) — ( 796 )

Net current-period other comprehensive income (loss) 32,955 ( 192 ) ( 1,471 ) 1,223 ( 9 ) 32,506

Net current-period other comprehensive (loss) income ( 93,755 ) ( 101 ) 97 ( 378 ) 362 ( 93,775 )

Balance, December 31, 2021 $ ( 33,873 ) $ 175 $ ( 4,691 ) $ 268 $ 353 $ ( 37,768 )

Other comprehensive (loss) income before reclassifications (2)

Amounts reclassified from accumulated other comprehensive (loss) income ( 252 ) ( 101 ) ( 65 ) ( 378 ) — ( 796 )

Net current-period other comprehensive income (loss) ( 93,755 ) ( 101 ) 97 ( 378 ) 362 ( 93,775 )

( 529,660 ) ( 119,769 ) 318 — 213 ( 648,898 )

Amounts reclassified from accumulated other comprehensive income (loss) — 11,091 ( 109 ) ( 160 ) — 10,822

Net current-period other comprehensive (loss) income ( 529,660 ) ( 108,678 ) 209 ( 160 ) 213 ( 638,076 )

Balance, December 31, 2022 $ ( 563,533 ) $ ( 108,503 ) $ ( 4,482 ) $ 108 $ 566 $ ( 675,844 )

(1) Cash flow hedges were terminated as of April 1, 2020.

Components of other comprehensive income that impact the Consolidated Statements of Income are presented in the table below.

(2) Includes $ 119.8 million, net of tax, of unrealized losses on transferred investment securities from available-for-sale to held-to-maturity.

Components of other comprehensive income (loss) that impact the Consolidated Statements of Income are presented in the table below.

Twelve Months Ended December 31, Affected line item in

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In addition, the Company's defense of litigation claims may result in legal fees, which it expenses as incurred.

As previously disclosed, on February 27, 2018, the Company entered into a settlement agreement with Universitas Education, LLC (Universitas) to resolve arbitration claims related to services provided by Christiana Bank and Trust Company (CB&T), as Insurance Trustee of the Charter Oak Trust, prior to CB&T's acquisition by the Company in December 2010.

In accordance with the litigation settlement, the Company paid Universitas $ 12.0 million to fully settle the claims.

During the third quarter of 2018, WSFS recovered $ 7.9 million in settlement and legal costs from insurance carriers that provided coverage relating to the Universitas matter.

Thereafter, WSFS filed suit to recover the remaining amounts relating to the Universitas proceeding, including the Universitas settlement payment, legal fees and related costs, by enforcing the indemnity right in the 2010 purchase agreement by which WSFS acquired CB&T.

In the fourth quarter of 2021, WSFS agreed to a $ 15.0 million settlement of the indemnity litigation, which with prior recoveries, resulted in a complete recovery of the $ 12.0 million paid to Universitas and of all litigation costs incurred by WSFS in the Universitas arbitration and all related lawsuits, including the indemnity litigation, plus an amount allocable to prejudgment interest.

In March 2017, Nature’s Healing Trust (NHT) filed a complaint against WSFS Bank in the Delaware Court of Chancery.

NHT asserts that WSFS Bank failed to provide timely notice concerning the possible lapse of two life settlement policies (aggregate face amount of $ 6.3 million) held in the trust.

NHT asserted claims against WSFS Bank for breach of contract, breach of fiduciary duty, and negligence, and sought the face value of the policies.

WSFS Bank disputed the factual allegations and denied liability.

On August 5, 2021, WSFS Bank reached a settlement with NHT, under which WSFS paid no damages and each of the parties agreed to dismiss and release all of their claims against the other.

The parties incurred their own attorney's fees and costs.

There were no material changes or additions to other significant pending legal or other proceedings involving the Company other than those arising out of routine operations.

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The Company evaluated subsequent events in accordance with ASC Topic 855 and determined that the following qualifies as a non-recognized subsequent event:

Bryn Mawr Trust Acquisition

On January 1, 2022, WSFS, the parent holding company of WSFS Bank, completed its previously announced merger with Bryn Mawr Bank Corporation (BMBC), pursuant to the Agreement and Plan of Merger, dated as of March 9, 2021, by and between WSFS and BMBC, a Pennsylvania corporation and the parent holding company of The Bryn Mawr Trust Company (collectively, "Bryn Mawr Trust").

The purchase price consideration of $ 908 million was made at closing;

however, due to the limited time since the closing, the related acquisition accounting is incomplete at this time.

Extinguishment of Debt

On February 15, 2023, the Company completed the redemption of the $ 30.0 million of fixed-to-floating rate subordinated notes due 2025 (the 2025 Notes) acquired from Bryn Mawr Trust.

The 2025 Notes were redeemed at a price of 100 %, plus accrued and unpaid interest through the date of redemption.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data