What changed in this filing

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Item 1. Business

2024-02-29 compared with 2023-02-28 · 164 added, 177 removed, 707 unchanged (33% of the section changed)

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Substantially all of our assets are held by the Company's subsidiary, Wilmington Savings Fund Society, FSB (WSFS Bank or the Bank), one of the ten oldest bank and trust companies in the United States (U.S.) continuously operating under the same name.

With $19.9 billion in assets and $64.5 billion in assets under management (AUM) and assets under administration (AUA) at December 31, 2022, WSFS Bank is the oldest and largest locally-managed bank and trust company headquartered in the Delaware and Greater Philadelphia region.

With $20.6 billion in assets and $84.3 billion in assets under management (AUM) and assets under administration (AUA) at December 31, 2023, WSFS Bank is the oldest and largest locally-managed bank and trust company headquartered in the Greater Philadelphia and Delaware region.

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

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

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

We are a relationship-focused and locally-managed community banking and wealth franchise, complemented by nationwide businesses.

Our mission is simple:

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

As of December 31, 2022, we serviced our Customers primarily from our 119 offices located in Pennsylvania (61), Delaware (39), New Jersey (17), Virginia (1) and Nevada (1), our ATM network, our website at www.wsfsbank.com and our mobile apps.

On January 1, 2022, WSFS and the Bank acquired certain subsidiaries in the merger of Bryn Mawr Bank Corporation (BMBC) with and into WSFS, 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.

As of December 31, 2022, the Company had seven consolidated subsidiaries:

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

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

The following pertains to these entities as of December 31, 2022:

◦ Cypress provides asset management services.

As a registered investment adviser and fee-only wealth management firm, Cypress had approximately $1.0 billion in AUM at December 31, 2022 compared to approximately $1.3 billion at December 31, 2021.

◦ West Capital, a registered investment adviser, provides fee-only wealth management services tailored to the needs of high net worth individuals operating under a multi-family office philosophy.

West Capital had approximately $810.9 million in AUM at December 31, 2022, compared to approximately $947.5 million at December 31, 2021.

As of December 31, 2023, we serviced our Customers primarily from our 114 offices located in Pennsylvania (57), Delaware (40), New Jersey (14), Florida (1), Nevada (1) and Virginia (1), our ATM network, our website at www.wsfsbank.com and our mobile app.

As of December 31, 2023, the Company had six consolidated subsidiaries:

WSFS Bank, The Bryn Mawr Trust Company of Delaware (BMT-DE), Bryn Mawr Capital Management, LLC (BMCM), WSFS Wealth Management, LLC (Powdermill ® ), WSFS SPE Services, LLC, and 601 Perkasie, LLC.

• BMT-DE, a Delaware state chartered non-depository trust company, supplements our existing Wealth Management segment by offering Delaware advantage trust services including directed trusts, asset protection trusts and dynasty trusts via centers of influence such as estate planning attorneys.

BMT-DE has approximately $53.0 billion in AUM and AUA at December 31, 2023.

• BMCM is a registered investment adviser and provides fee-only asset management services.

On January 1, 2023, WSFS subsidiaries Cypress Capital Management, LLC and West Capital Management, LLC merged and rebranded as BMCM.

In the third quarter of 2023, BMCM expanded its business in Southern Delaware and established a new presence in Boca Raton, Florida with the acquisition of a registered investment advisory firm's business based in Rehoboth Beach, Delaware.

BMCM had approximately $3.3 billion in AUM and AUA at December 31, 2023.

• Powdermill ® provides multi-family office services to affluent clientele in the local community and throughout the U.S.

• WSFS SPE Services, LLC provides commercial domicile services which include providing employees, directors, subleases of office facilities and registered agent services in Delaware and Nevada.

• 601 Perkasie, LLC was formed to hold certain tax credit investments.

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WSFS Bank had one majority-owned subsidiary, NewLane Finance Company (NewLane Finance ® ).

• BEFC was acquired during the Beneficial Bancorp, Inc.

(Beneficial) acquisition and is in the business of leasing small equipment and fixed assets.

Subsequent to the Beneficial acquisition, the leasing operations of BEFC were combined with NewLane Finance ® , described below.

• BEFC, a small equipment and fixed assets leasing company, was acquired during the Beneficial Bancorp, Inc.

(Beneficial) acquisition.

Subsequent to the Beneficial acquisition, BEFC ceased origination of new leases and its leasing operations were combined with NewLane Finance ® , described below.

• 1832 Holdings, Inc.

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WSFS Capital Trust I invested all of the proceeds from the sale of the Pooled Floating Rate Capital Securities in our Junior Subordinated Debentures.

• Royal Bancshares Capital Trust I (Trust I) and Royal Bancshares Capital Trust II (Trust II) (collectively, the Trusts) were acquired in connection with the BMBC Merger.

The Trusts 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.

Although WSFS owns $2.0 million of the common securities of the Trust, the Trust is not consolidated into the Company’s Consolidated Financial Statements as the Company is not deemed to be the primary beneficiary of the entity.

• Royal Bancshares Capital Trust I (Trust I) and Royal Bancshares Capital Trust II (Trust II) (collectively, the RBC Trusts), which were acquired from Bryn Mawr Bank Corporation.

The RBC Trusts were utilized for the sole purpose of issuing and selling capital securities representing preferred beneficial interests.

Although WSFS owns an aggregate of $0.8 million of the common securities of Trust I and Trust II, the RBC Trusts are not consolidated into the Company’s Consolidated Financial Statements as the Company is not deemed to be the primary beneficiary of these entities.

Segment Information

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WSFS Bank, Cash Connect ® and Wealth Management.

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

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

The WSFS Bank segment provides loans and leases, deposits and other financial products to commercial and consumer customers.

Cash Connect ® provides ATM vault cash, smart safe and cash logistics services in the U.S, servicing non-bank ATMs and smart safes nationwide and supporting ATMs for WSFS Bank Customers with one of the largest branded ATM networks in our region.

The Wealth Management segment provides a broad array of planning and advisor services, investment management, personal and institutional trust services, and credit and deposit products to individuals, corporate, and institutional clients.

As of December 31, 2022, WSFS Bank's banking business had a total loan and lease portfolio of $11.9 billion, which was funded primarily through commercial relationships and retail and customer-generated deposits.

As of December 31, 2023, WSFS Bank's banking business had a total loan and lease portfolio of $12.8 billion.

We have built a $9.9 billion commercial loan and lease portfolio by recruiting seasoned commercial lenders in our markets, offering the high level of service and flexibility typically associated with a community bank and through acquisitions.

We fund this business primarily with deposits generated through commercial relationships and consumer deposits, as well as through our digital banking platforms.

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

We fund our lending businesses primarily with deposits generated through commercial relationships and consumer deposits, as well as through our digital banking platforms.

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

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

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As of December 31, 2023, Cash Connect ® manages approximately $1.9 billion in total cash and services approximately 33,000 non-bank ATMs and approximately 8,700 smart safes nationwide.

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

As of December 31, 2022, Cash Connect ® also supports approximately 650 owned and branded ATMs for WSFS Bank, which has one of the largest branded ATM networks in our market.

As of December 31, 2023, Cash Connect ® also supports 590 owned or branded ATMs for WSFS Bank, which has one of the largest branded ATM networks in our market.

Wealth Management

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

Combined, these businesses had $84.3 billion of AUM and AUA at December 31, 2023.

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

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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.

The Bryn Mawr Trust Company of Delaware 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.

For segment financial information for the years ended December 31, 2023, 2022 and 2021, see Note 21 to the Consolidated Financial Statements in this report.

Recent Business Developments

• Continued Acquisition and Integration Efforts:

On January 1, 2022, we completed our acquisition of Bryn Mawr Bank Corporation (BMBC), a Pennsylvania corporation and the parent holding company of The Bryn Mawr Trust Company, a Pennsylvania chartered bank and wholly-owned subsidiary of BMBC.

Our bank technology, branding, and branch conversion was completed during the first quarter of 2022.

We have substantially completed our Trust and Wealth Management integration, including the organizational design and brand conversion.

Additional efforts surrounding technology integration are expected to continue into 2024.

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

WSFS DIFFERENTIATION STRATEGY

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Over the same period, customer deposits have grown 202% from $5.4 billion to $16.4 billion.

For further details, refer to the Comparative Stock Performance Graph in Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

The following factors summarize what we believe is our differentiation strategy:

We Stand for Service ® is our mission and our daily call to action.

Since 1832, WSFS has been a service-oriented, locally-managed community banking institution serving Delaware Valley families and businesses.

Since 1832, WSFS has been a service-oriented, locally-managed community banking institution serving Greater Philadelphia and Delaware region families and businesses.

We strive to meet our Customers’ evolving banking needs and to exceed their expectations each and every day.

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Engagement and Culture

Our business model is designed using the science of Human Sigma, which is built on a foundation of engagement.

Our business model is built on a foundation of engagement.

Our model begins with Associates (employees) who take ownership for their responsibilities and impact;

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"We envision a day when everyone will thrive." Our strategy, “Engaged Associates, living our culture, enriching the Communities we serve” builds upon that principal.

Our strategy in action starts a virtuous cycle whereby, as we do better, our community does better and as our community does better, we do better.

Our strategy in action starts our virtuous cycle.

It’s a simple premise that plays out in a big way every day.

Research studies validate the direct link between engagement and a company’s financial performance.

Our strategy, which drives our virtuous cycle, ensures that research and reinforces our culture that is evidenced in our Company results.

Our strategy, which drives our virtuous cycle, is built upon that research and reinforces our culture that is evidenced in our Company results.

Human Resources

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During 2023, WSFS captured the voice of our Associates and our Customers through multiple channels to measure our Associate and Customer engagement.

The 2022 full-year survey results below reflect the first-time participation from legacy BMT Associates, onboarding of BMT Customers and the continuation of our Future Forward strategy which included a phased transition to a hybrid work environment.

• Our Associate engagement survey results placed WSFS in the 88th percentile of Gallup's global overall company-level database.

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working population ratio of 2.1:1.

• Our culture of inclusion index of 4.40 placed WSFS in the top third of Gallup's global overall workgroup-level database.

• Our culture of inclusion index of 4.38 placed WSFS in the top quartile of Gallup's global overall workgroup-level database.

We believe these results reflect that Associates are encouraged to be themselves, are a valued part of their teams, experience strength-based developments, have inclusive conversations and trust in the Company's mission, values and leadership.

• 62.8% of Customers surveyed ranked WSFS a “five” out of five, strongly agreeing with the statement “WSFS is the perfect bank for people like me.” Our Customer engagement ratio was 6.1:1, which means there were 6.1 engaged Customers for every actively disengaged Customer.

• Customer loyalty remained consistent during the year, as measured by our Net Promoter Scores (NPS).

Our branch network achieved an overall NPS of 76.7 in 2022, which placed WSFS in the top quintile of Medallia's global database for transactional surveys.

In 2023, as we continue gathering and learning from Customer feedback, we will expand our Customer Survey program to consistently evaluate the experiences of our Customers and Clients across the Company.

As part of this expansion, the Bank will leverage NPS as the primary metric to measure Customer and Client engagement and loyalty.

WSFS achieved an overall NPS of 68.1 in 2023, which placed WSFS in the top quartile of Medallia's global database of financial services companies for relationship surveys.

By fostering a culture of engaged and empowered Associates, we believe we have become the employer and bank of choice in our market.

In 2023, we were honored to receive the following accolades:

• Ranked #1 in Delaware on the Forbes America's Best Banks in Each State Listing;

• Received The Gallup Exceptional Workplace Award for the sixth time;

• Named a Top Workplace in Delaware for the 16th year in a row;

• Named a Top Workplace in Philadelphia and southeastern PA for the eighth year in a row;

• Named "Best of Biz" for Online Banking by South Jersey Magazine;

• Named a 2022 honoree of The Civic 50 Greater Philadelphia by the Philadelphia Foundation, in partnership with Points of Light and other local partners;

• Selected as Voter's Choice for "Best Community Involvement" at the Delaware Small Business Chamber's Blue Ribbon Awards.

• Received The Gallup Exceptional Workplace Award for the seventh time;

• Named to Forbes' list of America's Best Banks for the fourth year in a row;

• Named a 2023 honoree of The Civic 50 Greater Philadelphia by the Philadelphia Foundation, in partnership with Points of Light and other local partners, for the second year in a row;

• Selected as Reader's Pick for Named "Best of Biz" for Customer Service in South Jersey Magazine;

• Recognized in Newsweek's List of America's Best Regional Banks and Credit Unions 2024;

• Named one of America's Best Midsize Employers in 2023 by Forbes.

During 2023, our Associates continued to embody our strategy through the following community enrichment activities:

• Volunteered more than 18,000 hours during 2023 through Team WSFS, our corporate volunteer program;

• In June, we held our first-ever "We Stand for Service Day", during which approximately 1,200 of our Associates provided nearly 5,000 hours of service to more than 80 nonprofit and community organizations across the Greater Philadelphia, Southern New Jersey and Delaware region.

• We contributed $4.9 million to the WSFS CARES Foundation, the charitable giving arm of WSFS Bank, to enhance community support activities, which included a one-time $2.0 million special contribution in the fourth quarter.

• The WSFS CARES Foundation provided grants and donations totaling more than $2.7 million to more than 390 community organizations located across Delaware, New Jersey and Pennsylvania, bolstering our key pillars of support including community investments, affordable housing, revitalization and business economic empowerment, education and leadership development, and strengthening those in need.

Diversity, Equity and Inclusion

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During 2023, the Company completed the following Diversity, Equity, and Inclusion (DEI) accomplishments:

• Successfully relaunched the WSFS Diversity, Equity, and Inclusion Steering Committee (DISC), which includes DEI Strategic Pillars as well as our six active Resource Groups:

ADAPT – Advocate.

APPN – Asian Pacific-Islander Professional Network;

BOLD – Black Organization for Leadership and Development;

HOLA – Hispanic Organization for Leadership and Advancement;

PRIDE – LGBTQIA+ Community;

WIN – Women's Inclusion Network;

• Successfully relaunched our DEI intranet page with Associate resources and information;

• Shared our DEI S.E.R.V.I.C.E.

video internally and externally;

• Created Associate-authored articles and resources for cultural holidays and months;

• Integrated DEI into new hire education;

• The Forum of Executive Women again recognized WSFS as one of its Champions of Board Diversity for having at least 30% women on our Board of Directors;

• WSFS was honored by The Fund for Women & Girls with its Corporate Champion of Change Award for its commitment to creating an inclusive workplace environment by supporting Associates from diverse communities and backgrounds;

Michelle Burroughs, Senior Vice President & Chief Diversity Officer at WSFS, was recognized by the Philadelphia Business Journal as part of its Diversity in Business Awards.

• The number of Associates engaged as members of one or more Resource groups more than doubled compared to 2022.

• Launched the inaugural cohort of a formalized, 9-month mentoring program for Associates in Resource Groups.

• Implemented monthly challenges to increase leadership opportunities to engage in DEI trainings, conversations, and activities.

• Developed an interactive DEI scorecard to assist with monitoring trends and reporting data for each Executive Leadership Team member.

• Facilitated Implicit Bias and Ally Training to Associates.

• Successfully launched an external DEI page on the company website.

• Integrated the ability to display pronouns into email signatures.

• Established DEI engagement goals for Executive Leadership Team.

• Implemented a recognition program which allows Associates the opportunity to recognize colleagues for demonstrating behaviors that promote inclusion and belonging.

Community Banking Model

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• One primary point of contact:

Each of our relationship managers is responsible for understanding his or her Customers’ needs and bringing together the right resources in WSFS Bank to meet those needs.

Each of our relationship managers is responsible for understanding their Customers’ needs and bringing together the right resources in WSFS Bank to meet those needs.

• A customized approach to serving our Customers:

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• Products and services that our Customers value:

This includes a broad array of banking, cash management and trust and wealth management products, as well as a legal lending limit high enough to meet the credit needs of our Customers, especially as they grow.

This includes a broad array of banking, treasury management, capital markets and trust and wealth management products, as well as a legal lending limit high enough to meet the credit needs of our Customers, especially as they grow.

• Rapid response and a company that is easy to do business with:

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Our Diversified Business

Diversified Revenue Streams

With over 25 discrete lines of business, our diversified revenue model is a key differentiator for the Company.

We focus on relationship-based lending which provides the potential for higher profit margins, more resilient deposits and strong consumer relationships.

In addition, our diversified fee revenue businesses, which include banking fees, Wealth, Trust, Cash Connect ® , and capital markets, account for 32.8% of our noninterest income and further differentiate us from our peers and provide additional growth opportunities for the Company.

Balance Sheet Management

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This manifests itself in:

• Prudent capital levels - Maintaining prudent capital levels is key to our operating philosophy.

At December 31, 2022 all regulatory capital levels for the Bank were in excess of "well-capitalized" levels.

For the capital position of the Bank and the Company, refer to Note 14 of the Consolidated Financial Statements.

At December 31, 2022, the Company's common equity to assets ratio was 11.07% and its tangible common equity to tangible assets ratio, which is a non-GAAP financial measure, was 6.31%.

For a reconciliation of tangible common equity and tangible assets to net income and total assets, the most comparable measures in accordance with U.S.

generally accepted accounting principles (GAAP), refer to “Reconciliation of non-GAAP financial measures included in Item 1” located at the end of this section.

• Disciplined lending - We maintain discipline in our lending with a particular focus on portfolio diversification and granularity.

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Mindful of this balance, we prudently, but aggressively, manage our capital.

We continue to execute our current Board-approved share repurchase plans, as well as any future Board-approved share repurchase plans, including opportunistically repurchasing shares, based on current valuation levels, above our stated practice of returning a minimum of 35% of annual core net income to stockholders through dividends and share repurchases.

Maintaining prudent capital levels is key to our operating philosophy.

At December 31, 2023 all regulatory capital levels for the Bank were in excess of "well-capitalized" levels.

For the capital position of the Bank and the Company, refer to Note 13 of the Consolidated Financial Statements.

At December 31, 2023, the Company's common equity to assets ratio was 12.03% and its tangible common equity to tangible assets ratio, which is a non-GAAP financial measure, was 7.52%.

For a reconciliation of tangible common equity and tangible assets to net income and total assets, the most comparable measures in accordance with U.S.

generally accepted accounting principles (GAAP), refer to “Reconciliation of non-GAAP financial measures included in Item 1” located at the end of this section.

We continue to execute our current Board-approved share repurchase plans, as well as any future Board-approved share repurchase plans, including opportunistically repurchasing shares, based on current valuation levels, above our stated practice of returning a minimum of 35% of annual net income to stockholders through dividends and share repurchases.

Performance Expectations and Alignment with Stockholder Priorities

We are focused on high-performing, long-term financial goals.

We define “high-performing” as the top quintile of a relevant peer group in return on assets (ROA).

Management incentives are, in large part, based on driving performance of ROA as well as return on average tangible common equity (ROTCE), which is a non-GAAP financial measure, and EPS growth.

We define “high-performing” as the top quintile of a relevant peer group in key financial metrics.

Management incentives are, in large part, based on driving performance of ROA as well as return on average tangible common equity (ROTCE), which is a non-GAAP financial measure, and EPS.

More details on management incentive plans will be included in the proxy statement for our 2024 Annual Meeting of Stockholders.

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Core ROA, which excludes non-core items and is a non-GAAP financial measure, was 1.38% for the year ended December 31, 2023.

Core ROA for 2022 excludes (i) unrealized gains on equity investments, (ii) valuation adjustments related to our derivative liability established from the sale of 360,000 Visa Class B shares in 2Q 2020, and (iii) corporate development and restructuring expense.

Core ROA for 2023 excludes (i) realized/unrealized gains on equity investments, (ii) valuation adjustments related to our derivative liability established from the sale of 360,000 Visa Class B shares in 2Q 2020, (iii) FDIC special assessment, (iv) corporate development and restructuring expense, (v) certain contributions to the WSFS CARES Foundation, and (vi) income tax adjustments related to bank-owned life insurance (BOLI) policy surrender.

For a reconciliation of Core ROA to ROA, the most comparable GAAP measure, refer to “Reconciliation of non-GAAP financial measures included in Item 1” located at the end of this section.

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We plan to continue to grow by:

• Developing talented, service-focused Associates:

• Recruiting and developing talented, service-focused Associates:

We have successfully recruited Associates with strong ties to, and the passion to serve, their communities to enhance our service in existing markets and to provide a strong start in new communities.

We also focus on developing talent and leadership from our current Associate base to better equip those Associates for their jobs and prepare them for leadership roles at WSFS.

Our strategy continues to be diligent on attracting, retaining and rewarding the best talent, which we believe has positioned us well in the current climate of the Great Resignation that has seen many employees of U.S.

companies reconsider their priorities and voluntarily resign.

• We are committed to building Associate Engagement and Customer Advocacy as a way to differentiate ourselves and grow our franchise.

We also focus on developing talent and leadership from our current Associate base to better prepare those Associates for their roles and to ensure we have bench strength across our various lines of business.

Our strategy continues to be diligent on attracting, retaining and rewarding the best talent, which we believe has positioned us well in the current climate.

• We are committed to building Associate engagement and Customer loyalty and advocacy as a way to differentiate ourselves and grow our franchise.

• Building fee income through investment in and growth of our Wealth Management and Cash Connect ® segments.

◦ After successfully integrating the Bryn Mawr Trust business during 2022, Wealth Management AUA/AUM ended 87% above 2021 balances.

WSFS Institutional Services ® ended 2022 as the securitization industry's fifth most active trustee for U.S.

Asset and Mortgage Backed Securities according to Asset-Backed Alert’s ABS Database.

◦ Cash Connect ® saw increased fee revenue due to the rising interest rate environment and continued growth in the smart safe space.

◦ Wealth Management AUA/AUM ended 2023 31% above 2022 balances.

WSFS Institutional Services ® ended 2023 as the securitization industry's fourth most active trustee for U.S.

Asset and Mortgage Backed Securities by number of deals completed according to Asset-Backed Alert’s ABS Database.

◦ Cash Connect ® saw increased fee revenue due to the rising interest rate environment, increasing market share in the ATM vault cash space, and continued growth in the smart safe space.

The division, in partnership with our retail strategy, continued to serve the Greater Philadelphia and the Delaware region through the WSFS ATM network.

The number of owned and branded ATMs was 686 as of December 31, 2022.

The number of owned or branded ATMs was 590 as of December 31, 2023.

• Continuing strong growth in commercial and consumer lending by:

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◦ Adding seasoned lending professionals that have helped us win customers in our Delaware, southeastern Pennsylvania and southern New Jersey markets.

◦ Leveraging our strategic lending partnerships, including Spring EQ, LLC, Upstart, LendKey Technologies, Inc, and Cred Technologies (cred.ai).

◦ Leveraging our strategic partnerships, including Spring EQ, LLC, Upstart, LendKey Technologies, Inc, and Cred Technologies (cred.ai).

• Continuing to grow deposits by:

◦ Offering products through an expanded and updated branch network, increasing our market presence in Philadelphia, southeastern Pennsylvania and southern New Jersey.

◦ Providing a stellar experience to our Customers.

◦ Further expanding our Commercial, Small Business, and Wealth Management Customer relationships with deposit and cash management products.

◦ Providing a stellar experience to our Customers and offering products through our branch network, increasing our market presence in Delaware, southeastern Pennsylvania and southern New Jersey.

◦ Further expanding our Commercial and Small Business Customer relationships with deposit and cash management products.

◦ Expanding services within WSFS Institutional Services ® and increasing cross-sell opportunities within Private Wealth Management.

◦ Finding creative ways to build deposit market share such as targeted marketing programs.

• Enhancing our capabilities to serve the needs of our Customers through our Capital Markets division by:

◦ Making strategic investments to build our Interest Rate Derivatives, Foreign Exchange, and Trade Finance lines of business.

◦ Employing products and services that enable customers to better manage their own market risk exposures, providing additional sources of non-interest fee income for the Company.

◦ Making continued investments in a team of highly experienced markets personnel and improved technology solutions.

◦ Delivering the capabilities of a globally capable financial institution with a locally headquartered team that is fully embedded in the WSFS culture.

• Seeking targeted, strategic opportunities in our non-banking businesses while we focus on optimizing our recent franchise investments.

• Continuing investment in our franchise to increase adoption and usage of digital channels aligned with our strategy by

◦ Enabling business outcomes through optimizing and leveraging the full capabilities of current and future Delivery Transformation and Technology investments to increase Associate efficiencies and improve the overall Customer experience.

◦ Enabling business outcomes through optimizing and leveraging the full capabilities of current and future investments in our franchise to increase Associate efficiencies and improve the overall Customer experience.

◦ Building out Salesforce to support our customer relationship management with focus on change management, adoption and governance

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◦ Advancing how we use data, the deployment of artificial intelligence, and predictive modeling to create operational efficiencies and redesign business models

◦ Continue to build upon people, process and controls within a focus on Information Security and Fraud prevention

• Seeking targeted, strategic opportunities in our non-banking businesses while we focus on optimizing our recent franchise investments.

◦ Continue to build upon people, processes and controls within a focus on information security and fraud prevention

Disciplined Cost Management

We maintain a disciplined cost management strategy while continuing to make prudent investments in our businesses through the lens of our Strategic Plan.

This was evident in management's execution of the cost synergies and branch optimization plan following the acquisition of Bryn Mawr Trust.

Further, we have experienced and continue to anticipate increased costs as a result of our previously announced Delivery Transformation initiative and investment in marketing technology, fully supported by business cases indicating strong return on investment, and driving our future growth.

This is evident in management's continued investment in the franchise, fully supported by business cases indicating strong return on investment, and driving our future growth.

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

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We intend to continue to leverage technology and innovation to grow our business and to successfully execute on our strategy.

In 2019, we embarked on a multi-year Delivery Transformation initiative focused on melding our physical and digital delivery, consistent with our brand, by enabling our Associates with the latest technology and actionable data to better serve our Customers.

Industry and customer behavior trends continue to shift as observed in reduced branch traffic and increased digital channel adoption.

We maintain an organizational philosophy of continuous, prudent investment in technology to continue to meet our customer needs.

We focus on melding our physical and digital delivery, consistent with our brand, by enabling our Associates with the latest technology and actionable data to better serve our Customers.

Industry and customer behavior trends continue to shift as observed in reduced branch traffic and increased digital channel adop tion.

As such, we have concluded that we need to stay nimble as we transform our delivery channels to meet these new expectations.

Our transformation includes optimizing our physical branch network and making strategic investments in meaningful technology solutions, supported by specialized talent.

Our continued investment includes optimizing our physical branch network and making strategic investments in meaningful technology solutions, supported by specialized talent.

Those investments are expected to provide our Customers with leading edge products and elevate our Associates, as they strive to serve in a competitive and compelling way.

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CREDIT EXTENSION ACTIVITIES

Over the past several years we have focused on growing the more profitable, relationship-oriented segments of our loan portfolio.

Over the past several years we have focused on growing the more profitable, relationship-oriented segments of our loan portfolio as well as growing our consumer portfolio primarily through our consumer partnerships.

Our current portfolio lending activity is concentrated on small- to mid-sized businesses in the mid-Atlantic region of the U.S., primarily in Delaware, southeastern Pennsylvania, southern New Jersey, Maryland and northern Virginia.

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Commercial and industrial $ 2,540,070 20.2 % $ 2,575,345 21.9 %

$ 2,575,345 21.9 % $ 1,918,043 24.6 %

Owner-occupied commercial 1,886,087 15.0 1,809,582 15.4

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$ 12,583,202 100.0 % $ 11,759,992 100.0 %

(1) Includes $3.8 million and $31.5 million of PPP loans at December 31, 2022 and 2021, respectively.

(1) Includes reverse mortgages, at fair value of $2.8 million and $2.4 million at December 31, 2023 and 2022, respectively .

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Total loans and leases $ 1,209,639 $ 4,875,087 $ 4,202,467 $ 2,479,325 $ 12,766,518

(1) Includes $3.8 million of PPP loans.

(1) Excludes reverse mortgages at fair value of $2.8 million.

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Generally, this portfolio is diversified by property type, with no type representing more than 30% of the portfolio.

The largest type is retail-related (non-mall, neighborhood shopping centers and other retail) with balances of $2.4 billion at December 31, 2022.

The average size of a loan in the commercial mortgage portfolio is $1.0 million and only 28 loans are greater than $12.0 million, with five loans greater than $24.0 million.

The three largest types are retail-related (non-mall, neighborhood shopping centers and other retail), residential multi-family, and office with outstanding balances of $1.1 billion, $1.0 billion and $0.7 billion at December 31, 2023, respectively.

The average size of a loan in the commercial mortgage portfolio is $1.1 million and only 46 loans are greater than $12.0 million, with eight loans greater than $24.0 million.

We offer commercial construction loans to developers.

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Extensions of credit include outstanding loans as well as contractual commitments to advance funds, such as standby letters of credit.

At December 31, 2022, no borrower had collective (relationship) total extensions of credit exceeding these legal lending limits.

Our internal "House Limit" to any one borrowing relationship is $100.0 million.

At December 31, 2023, no borrower had collective (relationship) total extensions of credit exceeding either the legal lending limits or our internal limit.

Residential Lending

Generally, we originate held-for-sale residential first mortgage loans with loan-to-value ratios of up to 80% and require private mortgage insurance or government guarantee for up to 35% of the mortgage amount for mortgage loans with loan-to-value ratios exceeding 80%.

On a very limited basis, we have originated or purchased loans with loan-to-value ratios exceeding 80% without a private mortgage insurance requirement or government guarantee.

Any such loans are originated for sale into the secondary market.

On a limited basis, we have originated loans with loan-to-value ratios exceeding 80% without a private mortgage insurance requirement or government guarantee.

Any such loans are either originated for sale into the secondary market or held for investment.

At December 31, 2023, the balance of all such loans was approximately $123.9 million.

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The majority of our adjustable-rate, residential loans have interest rates that adjust yearly or bi-yearly after an initial period.

The change in rate for the first adjustment date could be higher than the typical limited rate change of two percentage points at each subsequent adjustment date.

Adjustments are generally based upon a margin (as of December 31, 2022, ranging from 2.50% to 2.75% for the U.S Treasury, and 2.75% for the Standard Overnight Finance Rate) over the weekly average yield on U.S.

The change in rate for the first adjustment date could be higher than the typical limited rate change of two percentage points per annum at each subsequent adjustment date.

Adjustments are generally based upon a margin (as of December 31, 2023, ranging from 2.75% for the U.S Treasury, and 2.75% to 3.00% for the Standard Overnight Finance Rate) over the weekly average yield on U.S.

Treasury securities adjusted to a constant maturity, as published by the Board of Governors of the Federal Reserve System (the Federal Reserve).

Usually, the maximum rate on these loans is five percent above the initial interest rate.

Usually, the maximum rate on these loans is 5.0% above the initial interest rate.

We underwrite adjustable-rate loans under standards consistent with private mortgage insurance and secondary market underwriting criteria.

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The recourse is limited to a pro rata portion of the premium paid by the investor for that loan, less any prepayment penalty collectible from the borrower.

There were two loans repurchased in 2022 for $0.8 million, and no repurchases in 2021 and 2020.

There was one loan repurchased in 2023 for $0.8 million, two repurchased in 2022 for $0.8 million, and none repurchased in 2021.

Consumer Lending

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From time to time, we have purchased whole loans and loan participations in accordance with our ongoing asset and liability management objectives.

There were no purchases in 2022 related to our Community Reinvestment Act (CRA) obligations compared to $2.3 million of purchases in 2021.

There were no purchases in 2023 or 2022 related to our Community Reinvestment Act (CRA) obligations.

We sell most newly originated mortgage loans in the secondary market to generate fee income and to manage our overall balance sheet mix.

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At December 31, 2023, we serviced $248.3 million of residential first mortgage loans and reverse mortgage loans for others, compared to $286.4 million at December 31, 2022.

At December 31, 2022, we had $233.7 million of residential first mortgage loans serviced by others.

At December 31, 2023, we had $211.3 million of residential first mortgage loans serviced by others, compared to $233.7 million at December 31, 2022.

We also serviced residential first mortgage loans and reverse mortgage loans for our own portfolio totaling $659.4 million and $528.2 million at December 31, 2023 and 2022, respectively.

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During 2023 and 2022, we originated $3.3 million and $0.8 million in reverse mortgages, respectively.

Our consumer lending activity is conducted through our branch offices, our partnerships with Spring EQ, Upstart, and LendKey and referrals from other parts of our business.

We originate a variety of consumer credit products including home improvement loans, home equity lines of credit, automobile loans, unsecured lines of credit and other secured and unsecured personal installment loans.

Our consumer lending activity is conducted through our branch offices, our website, our partnerships with Spring EQ, Upstart, and LendKey and referrals from other parts of our business.

We originate a variety of consumer credit products including home equity loans, home equity lines of credit, automobile loans, unsecured lines of credit and other secured and unsecured personal installment loans.

Fee Income from Lending Activities

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Loan fee income was mainly due to fee accretion on new and existing loans (including the acceleration of the accretion on loans that paid early), loan growth and prepayment penalties.

The higher loan fee income in 2021 and 2020 was concentrated in commercial and industrial due to $15.4 million and $15.6 million in fees earned on PPP loans, respectively.

LOAN AND LEASE LOSS EXPERIENCE, PROBLEM ASSETS AND DELINQUENCIES

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We manage our portfolio to identify problem loans as promptly as possible and take immediate actions to minimize losses.

To accomplish this, our Risk Management Administration and Credit and Asset Recovery departments monitor the asset quality of our loans and real estate portfolios and reports such information to the Retail Credit Quality Committee, Credit Policy Committee, the Finance Division, and the Audit Committee of our Board of Directors.

To accomplish this, our Risk Management Administration and Credit and Asset Recovery departments monitor the asset quality of our loans and real estate portfolios and reports such information to the Consumer Credit Quality Committee, Credit Policy Committee, the Finance Division, and the Audit Committee of our Board of Directors.

SOURCES OF FUNDS

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• Federal funds purchased

• Federal Reserve Bank Term Funding Program (BTFP)

• Federal Home Loan Bank (FHLB) borrowings

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As a member of the FHLB, we are able to obtain FHLB advances.

At December 31, 2022, we had $350.0 million FHLB advances compared to no FHLB advances at December 31, 2021.

At December 31, 2023, we had no FHLB advances compared to $350.0 million of FHLB advances at December 31, 2022.

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

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In 2005, the Company issued $67.0 million of aggregate principal amount of Pooled Floating Rate Securities at a variable interest rate of 177 basis points over the three-month LIBOR rate.

The reference rate on these securities was updated to three-month term SOFR upon the discontinuation of LIBOR on June 30th, 2023.

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.

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.

Royal Bancshares Capital Trust I (Trust I) and Royal Bancshares Capital Trust II (Trust II) (collectively, the RBC Trusts), which were acquired from Bryn Mawr Bank Corporation, were utilized for the sole purpose of issuing and selling capital securities representing preferred beneficial interests.

WSFS assumed junior subordinated debentures to the RBC Trusts with a current carrying value of $11.8 million each, totaling $23.6 million, inclusive of the fair value marks.

The junior subordinated debentures incur interest at a coupon rate of 7.80% as of December 31, 2023.

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;

The rate resets quarterly based on three-month term SOFR plus 2.41%.

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 $0.4 million 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 RBC Trusts, including any distributions and payments on liquidation or redemption of the capital securities.

The rights of holders of common securities of the RBC 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.

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

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

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

The Company records its investments in the RBC Trusts’ common securities of $0.4 million each as investments in unconsolidated entities and records dividend income upon declaration by Trust I and Trust II.

Senior and Subordinated Debt

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The 2030 Notes may be redeemed beginning December 15, 2025 at 100% of principal plus accrued and unpaid interest.

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 Company assumed $30.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes due 2025 (the 2025 Notes) from Bryn Mawr Bank Corporation, which were issued in a private placement to institutional accredited investors on August 6, 2015.

Effective February 15, 2023, the Company redeemed all remaining outstanding principal amount of the 2025 Notes.

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 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 2025 Notes bore interest at a variable rate that reset quarterly to a level equal to the then-current three-month LIBOR plus an issuance spread of 3.068%.

The Company assumed $70.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes due 2027 (the 2027 Notes) from Bryn Mawr Bank Corporation, which were issued by Bryn Mawr Bank Corporation in an underwritten public offering on December 13, 2017.

The 2027 Notes mature on December 15, 2027, and had a fixed annual interest of 4.25% until and including December 14, 2022, and currently bear interest at a variable rate of 7.70%.

The variable rate will reset quarterly to a level equal to the three-month term SOFR plus 2.31% until December 15, 2027, or any early redemption date.

Reconciliation of non-GAAP financial measures included in Item 1

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Unrealized gains on equity investments, net (329)

Realized gain on sale of equity investment, net (9,493)

Visa derivative valuation adjustment 2,460

FDIC special assessment 5,052

Corporate development and restructuring expenses 3,701

Contribution to WSFS CARES Foundation 2,000

Tax adjustments:

BOLI surrender 7,056

Tax impact of pre-tax adjustments (764)

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Transition from London Inter-Bank Offered Rate (LIBOR)

In 2014, a committee of private-market derivative participants and their regulators, the Alternative Reference Rate Committee (ARRC), was convened by the Federal Reserve to identify an alternative reference interest rate to replace LIBOR.

In June 2017, the ARRC announced the Secured Overnight Financing Rate (SOFR), a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities, as its preferred alternative to LIBOR.

The United Kingdom Financial Conduct Authority (FCA), ceased publishing most LIBOR settings as of January 1, 2022, however, the FCA will continue to publish five U.S.

LIBOR settings through mid-2023.

The Federal Reserve has continued to encourage banks to transition away from LIBOR as soon as practicable and the federal banking agencies have encouraged banking organizations to cease entering into new contracts that use U.S.

LIBOR as a reference rate by no later than December 31, 2021, and to ensure existing contracts have robust fallback language that includes a clearly defined alternative reference rate.

The Federal Reserve Bank of New York has published SOFR rates on a daily basis since April 2018 and has published SOFR "term rates" daily since early 2020.

The International Swaps and Derivatives Association, which develops standardized language for the derivatives contracts that we enter into, has developed language that took effect in January 2021 replacing LIBOR with alternative risk-free benchmark rates, including SOFR for derivative contracts denominated in U.S.

In 2021 the ARRC announced the SOFR program, which created a phased transition for switching trading conventions from USD LIBOR to SOFR for multiple financial instruments during the second half of 2021.

The program is intended to migrate the market from LIBOR and create liquidity in SOFR.

Given LIBOR’s extensive use across financial markets, the transition away from LIBOR presents various risks and challenges to financial markets and institutions, including to the Company.

The Company’s commercial and consumer businesses issue, trade, and hold various products that are indexed to LIBOR.

As of December 31, 2022, the Company had approximately $2.7 billion of loans and $2.0 billion of derivatives that are utilized for customer guarantees, indexed to LIBOR, that mature after 2022.

In addition, the Company had approximately $192.8 million of debt securities indexed to LIBOR as of December 31, 2022, including $ 30.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes due 2025 that were redeemed in full on February 15, 2023.

The Company had one investment security totaling $0.5 million, and no repurchase and resale agreements or FHLB advances indexed to LIBOR as of December 31, 2022.

Due to the uncertainty surrounding the future of LIBOR, it is expected that the transition will span several reporting periods through June 2023.

A cross-functional team from Finance, Commercial and Consumer Lending, Risk and IT is leading our efforts to monitor this activity and evaluate the related risks and potential process changes arising from the transition from LIBOR.

An internal risk assessment was completed and the cross-functional team is working towards the migration of our existing contracts and system implementation.

Our variable or floating rate instruments currently use LIBOR and give us discretion to determine a replacement benchmark rate if LIBOR becomes unavailable.

In the first quarter of 2022, the Bank began utilizing Term SOFR as a replacement to LIBOR.

Term SOFR was identified as the primary successor for 1 month and 3 month LIBOR due to operational similarities and ease of conversion.

We are still considering the appropriate transition for our legacy contracts;

however, we have begun to shift new products primarily to Term SOFR and are actively migrating the existing LIBOR indexed loan portfolio away from the LIBOR index.

For additional information related to the potential impact surrounding the transition from LIBOR on the Company’s business, see "Risk Factors."

LIBOR, a benchmark interest rate that was widely referenced in the past, is no longer published as of June 30, 2023.

Financial market regulators had taken steps in previous years to prepare for the transition away from LIBOR and to encourage banks and other market participants to do the same.

The United Kingdom Financial Conduct Authority (FCA) caused several LIBOR settings to cease publication after December 31, 2021 and the remaining settings to cease publication after June 30, 2023.

The Adjustable Interest Rate (LIBOR) Act and implementing regulations of the Federal Reserve created a set of default rules for preexisting contracts that reference LIBOR, and created a safe harbor from liability for persons who elected to use the Secured Overnight Financing Rate (SOFR) as the replacement rate in a contract that references LIBOR.

The Company’s commercial and consumer businesses used various products that were indexed to LIBOR.

Most of these instruments gave the Company discretion to determine a replacement benchmark rate when LIBOR became unavailable.

This discretion combined with the LIBOR Act's safe harbor allowed the Company to select and migrate to SOFR as a replacement to LIBOR in the first quarter of 2022.

Currently, the Company's new variable rate loan products are primarily originated in SOFR.

Regulation of the Company

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In addition, pursuant to the Dodd-Frank Act, the capital rules for savings and loan holding companies are no less stringent than those that apply to their subsidiary savings associations.

The principal sources of the Company’s cash are debt issuances and dividends from the Bank, supplemented by dividends from its other operating subsidiaries (including Powdermill ® , Bryn Mawr Capital Management, LLC, The Bryn Mawr Trust Company of Delaware, and WSFS SPE Services, LLC).

The principal sources of the Company’s cash are debt issuances and dividends from the Bank, supplemented by dividends from its other operating subsidiaries (including Bryn Mawr Capital Management, LLC, Powdermill ® , WSFS SPE Services, LLC and The Bryn Mawr Trust Company of Delaware).

Our earnings and activities are affected by federal, state and local laws and regulations.

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Certain deductions and adjustments are necessary for both additional Tier 1 capital and Tier 2 capital.

In December 2018, the federal banking agencies issued a final rule that allows institutions to elect to phase in the regulatory capital effects of the Current Expected Credit Losses (CECL) accounting standard over three years.

In addition, as a result of the CARES Act enacted on March 27, 2020 in response to the COVID-19 pandemic, the federal bank regulatory agencies issued rules that allow banking organizations that implemented CECL in 2020 to elect to mitigate the effects of the CECL accounting standard on their regulatory capital for two years.

This two-year delay is in addition to the three-year transition period that the agencies had already made available.

We elected to phase in the regulatory capital effects of CECL over three years, January 1, 2020 through December 31, 2022, and did not defer the effects of CECL for two years before the three-year phase-in period.

The capital ratios for the Bank and the Company, as of December 31, 2023, indicate regulatory capital levels in excess of the regulatory minimums and the levels necessary for the Bank to be considered “well-capitalized.”

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The methodology that the FDIC uses to calculate assessment amounts is also based on whether the Deposit Insurance Fund has met the FDIC's designated reserve ratio, which is currently 2%, and the minimum reserve ratio of 1.35% set forth in the Dodd-Frank Act.

Since the outbreak of the COVID-19 pandemic, the amount of total estimated insured deposits has grown very rapidly while the funds in the DIF have grown at a normal rate, causing the DIF reserve ratio to fall below the statutory minimum of 1.35%.

Since the outbreak of the COVID-19 pandemic, the amount of total estimated insured deposits has grown very rapidly while the funds in the FDIC's Deposit Insurance Fund (DIF) have grown at a normal rate, causing the DIF reserve ratio to fall below the statutory minimum of 1.35%.

The FDIC adopted a restoration plan in September 2020, which it amended in June 2022, to restore the DIF reserve ratio to at least 1.35% by September 30, 2028.

1 unchanged sentence

The increased assessment rate schedules will remain in effect unless and until the reserve ratio of the DIF meets or exceeds 2%.

As a result of the new rule, the FDIC insurance costs of insured depository institutions, including the Bank, will generally increase

As a result of the new rule, the FDIC insurance costs of insured depository institutions, including the Bank, have increased.

On November 16, 2023, the FDIC approved a final rule to implement a special deposit insurance assessment to recover losses to the DIF arising from the protection of uninsured depositors following the receiverships of failed institutions in the spring of 2023.

Under the final rule, the assessment base for the special assessment is equal to an insured depository institution’s estimated uninsured deposits, reported for the quarter ended December 31, 2022, minus the first $5 billion in estimated uninsured deposits.

As of December 31, 2022, the Bank had approximately $6.9 billion of estimated uninsured deposits.

The FDIC will collect the special assessment over eight quarterly assessment periods starting with the first quarter of 2024, at a quarterly rate of 3.36 basis points (0.0336%).

We recognized the entire special assessment expense of approximately $5.1.million in the fourth quarter of 2023.

However, depending on future adjustments to the DIF’s estimated loss, the FDIC has retained the ability to cease collection early, extend the special assessment collection period, or impose a one-time final shortfall assessment.

The FDIC may terminate the deposit insurance of any insured depository institution, including the Bank, if it determines after a hearing that the institution has engaged or is engaging in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, order or any condition imposed by an agreement with the FDIC.

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Branch Office Network

The Bank maintains branch offices in three states, Delaware, Pennsylvania and New Jersey.

The Bank maintains branch offices in three states:

Delaware, Pennsylvania and New Jersey.

A federal savings association may open new branch offices in any state or relocate branch offices.

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Since the CFPB first began operations, the CFPB's supervisory, enforcement, and rulemaking priorities have shifted as its leadership has changed, and we are unable to predict what effect, if any, future changes to the CFPB's leadership and priorities may have on the Bank.

Since its creation in 2011, the CFPB has issued a number of significant rules, including rules that affect nearly every aspect of the residential mortgage lending and servicing process, from origination through maturity or foreclosure.

The CFPB has issued a number of significant rules, including rules that affect nearly every aspect of the residential mortgage lending and servicing process, from origination through maturity or foreclosure.

Among other things, the rules require home mortgage lenders to:

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The Bank became subject to these rules beginning July 1, 2020.

In October 2023, the Federal Reserve proposed changes to its rules implementing the Durbin Amendment that would decrease the maximum interchange fees that an issuer may receive for an electronic debit transaction to the sum of 14.4 cents and four basis points multiplied by the value of the transaction, and increase the fraud prevention adjustment to 1.3 cents.

We are evaluating the impact of the proposal.

Privacy and Cybersecurity

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The Bank received a rating of “Outstanding” in its most recent performance evaluation.

On May 5, 2022 the federal banking agencies issued a proposed rule that would substantially revise how they evaluate an insured depository institution’s record of satisfying the credit needs of its entire communities, including low- and moderate- income individuals and neighborhoods, under the CRA.

If this rule is finalized as proposed, it may become more challenging and/or costly for insured depository institutions to achieve an “Outstanding” or “Satisfactory” CRA rating, which could negatively impact our ability to obtain regulatory approval for an acquisition.

On December 15, 2021, the OCC adopted a final rule, which took effect on January 1, 2022, to rescind changes to the OCC’s CRA regulations that the agency had adopted in June 2020 and to restore the CRA standards that previously applied to OCC-regulated institutions.

The federal banking agencies have indicated their intent to engage in an interagency rulemaking process to modernize the CRA regulatory framework.

On October 24, 2023, the Federal Reserve, FDIC, and OCC issued a final rule revising their framework for evaluating banks’ records of community reinvestment under the CRA.

Under the revised framework, banks with assets of at least $2 billion, such as the Bank, are considered large banks and their retail lending, retail services and products, community development financing, and community development services will be subject to periodic evaluation.

Depending on a large bank’s geographic distribution of lending, the evaluation of retail lending may include assessment areas in which the bank extends loans but does not operate any deposit-taking facilities, in addition to assessment areas in which the bank has deposit taking facilities.

The rule becomes effective April 1, 2024.

Compliance with most provisions of the final rule will be required beginning January 1, 2026, and compliance with the remaining provisions will be required beginning January 1, 2027.

We are evaluating the impact of the final rule, including whether it will make it more challenging and/or costly for the Bank to achieve an “Outstanding” or “Satisfactory” CRA rating, which could negatively impact our ability to obtain regulatory approval for an acquisition.

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 1. Business