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Item 7. Management’s Discussion and Analysis

2025-02-28 compared with 2024-02-29 · 104 added, 114 removed, 372 unchanged (37% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

WSFS Financial Corporation (the Company or WSFS) is a savings and loan holding company headquartered in Wilmington, Delaware.

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.

WSFS Financial Corporation (WSFS, and together with its subsidiaries, the Company) is a savings and loan holding company headquartered in Wilmington, Delaware.

Substantially all of our assets are held by our 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 $20.8 billion in assets and $89.4 billion in assets under management (AUM) and assets under administration (AUA) at December 31, 2024, 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.

A fixture in the community, WSFS Bank has been in operation for more than 191 years.

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

A fixture in the community, we have been in operation for more than 192 years.

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

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

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.

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

As of December 31, 2024, we 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.

We also had three unconsolidated subsidiaries, WSFS Capital Trust III, Royal Bancshares Capital Trust I, and Royal Bancshares Capital Trust II.

WSFS Bank had two wholly-owned subsidiaries:

The Company also has three unconsolidated subsidiaries:

WSFS Capital Trust III, 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 ® ).

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

BMCM is registered as an investment advisor with the U.S.

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

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.

Our banking business had a total loan and lease portfolio of $12.8 billion as of December 31, 2023, which was funded primarily through commercial relationships and consumer and customer generated deposits.

Our banking business had a total loan and lease portfolio of $12.8 billion as of December 31, 2024, which was funded primarily through commercial relationships and client generated deposits.

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 also offer a broad variety of consumer loan products and retail securities brokerage through our retail branches, in addition to mortgage and title services through our branches and WSFS Mortgage ® , our mortgage banking company specializing in a variety of residential mortgage and refinancing solutions.

We also offer a broad variety of consumer loan products and retail securities brokerage through our retail branches, in addition to mortgage and title services through our branches and WSFS Mortgage ® , our mortgage banking division specializing in a variety of residential mortgage and refinancing solutions.

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

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

Cash Connect ® also supports 590 owned or branded ATMs for WSFS Bank Customers, which is one of the largest branded ATM networks in our market.

Cash Connect ® also supports 567 owned or branded ATMs for WSFS Bank Clients, which is one of the largest branded ATM networks in our market.

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

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

As of December 31, 2023, we service 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, 2024, we service our Clients primarily from 114 offices located in Pennsylvania (57), Delaware (39), New Jersey (14), Florida (2), Nevada (1) and Virginia (1), our ATM network, our website at www.wsfsbank.com , and our mobile app.

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

Notable items in 2024 include the following:

• WSFS 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.

• There was an increase in the allowance for credit losses (ACL) of $34.3 million during the year ended December 31, 2023, primarily due to net loan growth across the CRE, Consumer and commercial small business leasing portfolios as well as higher provisions on our CRE, commercial small business leasing, and Upstart portfolios and the elder care portfolio within C&I.

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

• We realized a $9.5 million gain on our equity investment in Spring EQ, a digital home equity origination platform, which was sold during the fourth quarter.

• Recorded an income tax charge of $7.1 million from our decision to surrender $65.5 million of previously acquired BOLI policies.

This resulted from recent changes in the interest rate environment lowering our yields on these long-term assets and the termination of a stable value protection wrap policy.

We expect to deploy the net proceeds from the surrender into higher yielding interest-earning assets or payoff wholesale funding.

• Recorded a $5.1 million expense for the FDIC Special Assessment charged to recover losses to the Deposit Insurance Fund related to the closures of certain banks in 2023.

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

• During 2023, WSFS repurchased 1,247,178 shares of common stock under the Company's share repurchase program at an average price of $41.52 per share, for an aggregate purchase price of $51.8 million and paid dividends on our common stock of $36.7 million, returning total capital to shareholders of $88.5 million.

• Customer deposits increased $607.4 million, or 4% , driven by the Consumer and Commercial businesses, with growth in time, money market, and noninterest demand deposits.

• During the fourth quarter, WSFS completed the repayment of $800.0 million of borrowings from the Bank Term Funding Program (BTFP).

• Net loans and leases grew $413.0 million , or 3%, compared to December 31, 2023.

Increases in commercial mortgage and commercial & industrial were partially offset by decreases in construction loans, partially driven by migration into commercial mortgages.

• Returned $131.2 million of capital to shareholders through $95.4 million of share repurchases and $35.8 million of quarterly dividends.

Under the Company's share repurchase program, 2,049,739 shares of common stock were repurchased at an average price of $46.55 per share .

• Fee revenue grew by 18% , primarily driven by Cash Connect and Wealth Management, resulting in a fee revenue ratio of 32.5% compared to 28.5% for the prior year.

Wealth Management fee revenue grew 12% to a record $148.1 million.

• Recognized $4.3 million of nonrecurring income from our partnership with Spring EQ, comprised of the $2.3 million annual earnout and $2.0 million of post-close distributions related to the sale of our equity investment in Spring EQ that occurred in the fourth quarter of 2023.

• Our Wealth Management segment completed the conversions of its trust accounting system and client portal.

These conversions were executed as part of our Bryn Mawr Trust integration plan.

• The Bank and the Company continue to be well above well-capitalized across all measures of regulatory capital, with total common equity tier 1 capital of 13.88% and 13.81%, respectively, and total risk-based capital of 15.13% and 15.77%, respectively.

• BMCM expanded into southern Delaware and established a new presence in Boca Raton, Florida, after an acquisition of a woman-founded, owned and managed registered investment advisory firm based in Rehoboth Beach, Delaware.

• 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.

• In June 2024, Moody's Investor Services reaffirmed the Company's investment-grade issuer rating of Baa2 with a stable outlook and in August 2024, Kroll Bond Rating Agency reaffirmed the Company's senior unsecured debt rating of A-.

We believe the ratings reaffirmations reflect the benefits of our diversified business model, our strong capital levels, earnings, liquidity, and asset quality.

• During the year, we held our second annual "We Stand for Service Day", during which nearly 1,500 of our Associates volunteered at more than 130 community organizations across the Greater Philadelphia, Southern New Jersey and Delaware region.

In addition, WSFS Associates surpassed the Bank's 2024 volunteer commitment goal of 24,000 hours of service.

FINANCIAL CONDITION

Total assets increased $0.7 billion, or 3%, to $20.6 billion as of December 31, 2023, compared to $19.9 billion as of December 31, 2022.

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

• Net loans and leases, excluding loans held for sale, increased $823.2 million, primarily driven by growth of $450.1 million in commercial mortgages, $201.2 million in consumer loans driven by our consumer partnerships and $108.8 million in residential.

• Total cash and cash equivalents increased $255.6 million, primarily due to increased deposits.

Total assets increased $219.6 million, or 1%, to $20.8 billion as of December 31, 2024, compared to $20.6 billion as of December 31, 2023.

The increase is primarily comprised of the following (in descending order of magnitude):

• Net loans and leases held for investment increased $413.0 million, primarily due to increases of $229.4 million in commercial mortgages, $116.1 million in commercial and industrial loans, $94.3 million in residential mortgage loans, $87.6 million in owner-occupied commercial loans, and $74.3 million in consumer loans (primarily from Spring EQ home equity loans).

Construction loans decreased $203.4 million partially due to the migration of construction loans to permanent commercial mortgage and owner-occupied commercial loans.

• Other assets increased $145.1 million, primarily driven by a $63.8 million receivable due to the settlement timing of ACH payments, $18.8 million from the transfer of three properties to held for sale, an $18.3 million increase in derivatives from our Capital Markets business due to changes in fair value, $17.9 million in deferred taxes, and $12.5 million driven by new low-income housing tax credit investments.

• Total cash and cash equivalents increased $61.9 million, primarily due to increased deposits, partially offset by the repayment of borrowings from the BTFP and increased lending activity.

• Total investment securities decreased $379.3 million:

◦ Investment securities, available-for-sale decreased $246.5 million, primarily due to repayments of $354.8 million, partially offset by increased market values on available-for-sale securities of $83.7 million and $27.7 million in purchases.

• Bank-owned life insurance decreased $59.2 million primarily due to our decision to surrender certain previously-acquired BOLI policies in 2023.

Total liabilities increased $0.4 billion, or 2%, to $18.1 billion at December 31, 2023 compared to the prior year, primarily comprised of the following (in descending order of magnitude):

• Other borrowed funds increased $547.8 million primarily due to $565.0 million borrowed from the Bank Term Funding Program (BTFP) as a result of favorable terms and pricing.

• Total deposits increased $270.5 million, primarily driven by a $236.6 million increase in trust deposits.

• FHLB advances decreased $350.0 million due to the repayment of fixed rate FHLB term advances as part of our routine balance sheet management.

• Other liabilities decreased $68.2 million primarily due to a net decrease of $65.3 million in collateral held on derivatives and derivative liabilities driven by changes in interest rates.

• Senior and subordinated debt decreased $29.8 million due to the redemption of the 2025 Notes.

◦ Investment securities, available-for-sale decreased $335.9 million, primarily due to repayments of $350.4 million and decreased market values on available-for-sale securities of $49.8 million, partially offset by $67.4 million in purchases .

◦ Investment securities, held to maturity decreased $43.4 million primarily due to repayments, maturities and calls of $61.3 million, partially offset by $14.8 million of amortization of net unrealized losses on available-for-sale securities transferred to held-to-maturity.

• Premises and equipment decreased $18.5 million primarily driven by the transfer of three properties to held for sale.

Total liabilities increased $110.1 million, or 1%, to $18.2 billion at December 31, 2024 compared to the prior year, primarily comprised of the following (in descending order of magnitude):

• Total deposits increased $555.7 million, primarily driven by the Consumer and Commercial businesses, with growth in time, money market, and noninterest demand deposits.

• Other liabilities increased $74.3 million primarily due to an increase of $53.1 million in collateral held on derivatives and derivative liabilities and $12.8 million due to performance-based incentive increases.

• FHLB advances increased $51.0 million due to favorable pricing terms.

• Other borrowed funds decreased $562.9 million primarily due to the repayment of borrowings from the BTFP.

Stockholders’ equity increased $112.1 million to $2.6 billion at December 31, 2024 compared to the prior year.

The increase was primarily due to earnings of $269.2 million during the year and a decrease of $81.9 million in accumulated other comprehensive loss from market value increases on investment securities, partially offset by significant levels of capital return to shareholders including $54.6 million from the repurchase of shares of common stock under our stock repurchase plan and shares withheld to cover tax liabilities, and the payment of dividends on our common stock of $36.7 million.

The increase was primarily due to earnings of $263.7 million during the year, partially offset by significant capital returns to shareholders ($96.3 million from the repurchase of shares of common stock under our stock repurchase plan as well as payment of dividends on our common stock of $35.8 million), and an increase of $30.9 million in accumulated other comprehensive loss due to market value decreases on investment securities.

We repurchased 2,049,739 and 1,247,178 shares of our common stock in 2024 and 2023, respectively.

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In addition, and not included in the Bank's capital, the holding company held $275.4 million in cash to support potential dividends, acquisitions and strategic growth plans.

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

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

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Also, liquidity risk management is a primary area of examination by the banking regulators.

Funding sources to support growth and meet our liquidity needs include cash from operations, commercial, consumer, wealth and trust deposit programs, loan repayments, FHLB borrowings, repurchase agreements, BTFP borrowings, access to the Federal Reserve Discount Window, and access to the brokered deposit market as well as other wholesale funding avenues.

Funding sources to support growth and meet our liquidity needs include cash from operations, commercial, consumer, wealth and trust deposit programs, loan repayments, FHLB borrowings, repurchase agreements, access to the Federal Reserve Discount Window, and access to the brokered deposit market as well as other wholesale funding avenues.

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

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Our estimated uninsured deposits were $6.4 billion, or 38% of total customer deposits, and our estimated unprotected deposits (uninsured and uncollateralized) were $5.2 billion, or 31% of total customer deposits.

As of December 31, 2023, the Company had a readily available, secured borrowing capacity of $5.4 billion from the FHLB, $0.6 billion through the Federal Reserve Discount Window, and $1.7 billion through the BTFP.

As of December 31, 2024, the Company had a readily available, secured borrowing capacity of $5.7 billion from the FHLB and $2.4 billion through the Federal Reserve Discount Window.

In addition, the Company had $1.1 billion in unpledged securities that could be used to support additional borrowings and $0.6 billion of cash deposited with the Federal Reserve Bank.

The Company’s readily available, secured borrowing capacity to estimated unprotected deposits ratio is 202%.

During the year ended December 31, 2023, cash, cash equivalents and restricted cash increased $0.3 billion to $1.1 billion from $0.8 billion as of December 31, 2022.

During the year ended December 31, 2024, cash, cash equivalents and restricted cash increased $61.9 million to $1.2 billion from $1.1 billion as of December 31, 2023.

Cash provided by operating activities was $219.9 million, primarily reflecting the cash impact of earnings.

Cash used for investing activities was $326.3 million primarily due to a $486.8 million net increase in loans and leases and purchases of loans held for investment of $313.4 million.

Cash used for investing activities was $66.7 million primarily due to purchases of loans held for investment of $269.6 million and a $138.3 million net increase in loans and leases.

These outflows were partially offset by net repayments of available-for-sale and held-to-maturity debt securities of $283.0 million and $61.3 million, respectively.

Cash provided by financing activities was $344.9 million, primarily due to the borrowing of $565.0 million from the BTFP and a $252.5 million net increase in deposits, partially offset by $350.0 million for the repayment of fixed rate FHLB term advances, $54.6 million for repurchases of common stock under the previously announced stock repurchase plan, common stock dividends of $36.7 million, and the $30.0 million redemption of the 2025 Notes

Cash used by financing activities was $91.2 million, primarily due to the net repayment of $565.0 million of BTFP borrowings, $96.3 million for repurchases of common stock under the previously announced stock repurchase plan, and common stock dividends of $35.8 million, partially offset by a $557.7 million net increase in deposits and $51.0 million for the receipt of fixed rate FHLB term advances.

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

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

At December 31, 2023, we had obligations for principal payments on long-term debt including $67.0 million for our trust preferred borrowings, due June 1, 2035, $70.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes due 2027, and $150.0 million for our senior debt, due December 15, 2030.

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.

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.

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

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.

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.

At December 31, 2024, we had obligations for principal payments on long-term debt including $51.0 million of FHLB advances, $67.0 million for our trust preferred borrowings, due June 1, 2035, $23.8 million for our trust preferred borrowings, due December 15, 2034, $70.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes due 2027, and $150.0 million for our senior debt, due December 15, 2030.

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

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NONPERFORMING ASSETS

Nonperforming assets include nonaccruing loans, OREO and restructured loans.

Nonperforming assets include nonaccruing loans and OREO.

Nonaccruing loans are those on which we no longer accrue interest.

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Past due loans are defined as loans contractually past due 90 days or more as to principal or interest payments but which remain in accrual status because they are considered well secured and in the process of collection.

The following table shows our nonperforming assets and past due loans at the dates indicated:

Troubled loans are loans modified in the form of principal forgiveness, interest rate reduction, an other-than-insignificant payment delay, or a term extension to borrowers experiencing financial difficulty.

The following table shows our nonperforming assets, past due loans, and troubled loans at the dates indicated:

At December 31,

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Other real estate owned 5,204 1,569

Restructured loans (2)

Total nonperforming assets $ 127,385 $ 75,754

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Commercial $ 1,812 $ 1,552

10,032 15,513

Residential 15 —

Total past due loans $ 9,202 $ 11,584

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Ratio of allowance for credit losses to total nonperforming assets (7)

(1) Includes nonaccrual loans held-for-sale.

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

Nonaccruing Troubled Debt Restructurings (TDRs) are included in their respective categories of nonaccruing loans.

(3) Includes delinquent, but still accruing, U.S.

(1) Includes nonaccruing troubled loans.

(2) Includes nonaccrual loans held-for-sale as of December 31, 2023

(3) Includes U.S.

government guaranteed student loans with little risk of credit loss.

(4) Loans with certain modifications (as prescribed in ASU No.

2022-02) to borrowers experiencing financial difficulty.

(5) Includes troubled loan held-for-sale.

(6) Represents amortized cost basis for loans, leases and held-to-maturity securities.

(4) Represents loans with certain modifications (as prescribed in ASU 2022-02) to borrowers experiencing financial difficulty.

(5) Represents amortized cost basis for loans and leases.

(6) Total loans exclude loans held for sale and reverse mortgages.

(8) Excludes acquired PCD loans.

(7) Excludes acquired purchase credit deteriorated loans.

Nonperforming assets increased $51.6 million between December 31, 2023 and December 31, 2024.

This increase was primarily due to the transfer in of seven commercial relationships totaling $61.1 million and two CRE relationships totaling $19.4 million during the period.

These inflows were partially offset by partial charge-offs on some of the C&I relationships totaling $20.7 million, several smaller payoffs and the continued collection of principal payments on the majority of these loans.

The ratio of nonperforming assets to total assets slightly increased from 0.22% at December 31, 2022 to 0.37% at December 31, 2023.

This increase was primarily due to the transfer in of three commercial mortgage relationships totaling $74.1 million and two commercial and industrial relationships totaling $37.7 million during the period.

These inflows were partially offset by partial charge-offs on some of the commercial mortgage and commercial and industrial relationships totaling $14.2 million, several smaller payoffs, and the continued collection of principal payments on the majority of these loans.

The ratio of nonperforming assets to total assets increased from 0.37% at December 31, 2023 to 0.61% at December 31, 2024.

The following table summarizes the changes in nonperforming assets during the periods indicated:

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2024 compared with 2023

We recorded net income attributable to WSFS of $269.2 million, or $4.40 per diluted common share, for the year ended December 31, 2023, a increase of $46.8 million compared to $222.4 million, or $3.49 per diluted common share, for the year ended December 31, 2022.

• Net interest income for the year ended December 31, 2023 was $725.1 million, an increase of $62.2 million compared to 2022, primarily due to the the benefits of our asset-sensitive balance sheet and an increase from the balance sheet size and mix.

The increase was partially offset by lower purchase accounting accretion.

We recorded net income attributable to WSFS of $263.7 million, or $4.41 per diluted common share, for the year ended December 31, 2024, a decrease of $5.5 million compared to $269.2 million, or $4.40 per diluted common share, for the year ended December 31, 2023.

• Net interest income for the year ended December 31, 2024 was $705.4 million, a decrease of $19.7 million compared to 2023, primarily due to continued deposit mix shift and growth in higher priced deposit products over the past year, partially offset by higher loan volumes and yields.

See “Net Interest Income” for further information.

• Our provision for credit losses increased $40.0 million in 2023, primarily due to higher provisions on our CRE, commercial small business leasing, and Upstart portfolios as well as our elder care portfolio within C&I.

• Our provision for credit losses decreased $26.7 million in 2024, primarily driven by a lower provision on our consumer portfolio due to the runoff of our Upstart portfolio and higher provisions on our owner-occupied and construction portfolios in the prior year, partially offset by loan growth.

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

• Noninterest income increased $29.7 million in 2023, primarily due to increases in income from Cash Connect ® , Wealth Management fee income, a realized gain from our investment in Spring EQ, and capital markets income.

These increases were partially offset by decreases in other banking fees and mortgage banking activities, and unrealized gains on equity investments and income from BMTIA (business sold in 2022).

• Noninterest income increased $51.0 million in 2024, primarily due to increases from Cash Connect ® driven by higher ATM bailment volume and growth in smart safes, Wealth Management driven by WSFS Institutional Services ® and Bryn Mawr Capital Management, mortgage banking income, and a gain on our Visa B derivative liability.

See “Noninterest Income” for further information.

• Noninterest expense decreased $12.7 million in 2023, primarily due to net corporate development and restructuring costs incurred in 2022, partially offset by increases in other operating expenses driven by Cash Connect®, FDIC expenses, salaries and benefits costs, and professional fees.

• Noninterest expense increased $76.1 million in 2024, primarily due to increases in salaries and benefits from annual performance-based increases, talent additions in key business lines and increased medical benefits costs, Cash Connect ® funding costs, and equipment expense as we continued to invest in technology, including a new Trust accounting system and client portal.

These increases were partially offset by decreases in occupancy expense and FDIC expenses related to the FDIC special assessment charged in 2023 to recover losses to the Deposit Insurance Fund related to closures of certain banks.

See “Noninterest Expense” for further information.

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Total interest-bearing deposits 11,563,177 308,676 2.67 10,955,751 209,820 1.92

Federal Home Loan Bank advances 103,268 5,348 5.18 12,841 538 4.19

Federal Home Loan Bank (FHLB) advances 56,855 2,967 5.22 103,268 5,348 5.18

Trust preferred borrowings 90,730 6,910 7.62 90,534 6,736 7.44

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(4) Includes federal funds purchased.

Net interest income increased $62.2 million, or 9%, to $725.1 million in 2023, compared to 2022 primarily due to a $60.6 million increase from the benefits of our asset-sensitive balance sheet and a $4.0 million increase from the balance sheet size and mix, offset by a $2.4 million decrease in purchase accounting accretion.

Net interest margin increased 40 bps to 4.11% in 2023 from 3.71% in 2022.

The increase was primarily due to 24 bps increase from the balance sheet size and mix and 17 bps from the benefits of our asset-sensitive balance sheet, partially offset by 1 bp from lower purchase accounting accretion.

Net interest income decreased $19.7 million, or 3%, to $705.4 million in 2024, compared to 2023 primarily due to continued deposit mix shift and growth in higher priced deposit products, partially offset by higher loan volumes and yields.

Net interest margin decreased 29 bps to 3.82% in 2024 from 4.11% in 2023.

The decrease was primarily due to 54 bps decrease from the mix shift and growth in higher priced deposit products, partially offset by 21 bps from higher loan yields.

While average loan yields were higher year-over-year for 2024, as a result of the interest rate environment further described within "Item 1A.

Risk Factors," loan yields ended the year below the full-year average.

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

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Customer time deposits 14,316 25,371 39,687

Brokered certificates of deposits 6,916 2,535 9,451

Brokered deposits (8,419) (1,467) (9,886)

FHLB advances (2,422) 41 (2,381)

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Weighted average yield — % 2.89 % 4.91 % 3.51 % 3.50 %

Government-sponsored enterprises (GSE)

Government-sponsored enterprises (GSE) agency notes

Amortized cost $ — $ 4,999 $ 217,870 $ — $ 222,869

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Provision/Allowance for Credit Losses (ACL)

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

For the year ended December 31, 2023, we recorded a provision for credit losses of $88.1 million, a net change of $40.0 million, compared to the provision of credit losses of $48.1 million in 2022.

The increase was primarily due to higher provisions on our CRE, commercial small business leasing, and Upstart portfolios as well as our elder care portfolio within C&I.

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

For the year ended December 31, 2024, we recorded a provision for credit losses of $61.4 million, a net change of $26.7 million, compared to a provision for credit losses of $88.1 million in 2023.

The decrease was primarily driven by a lower provision on our consumer portfolio due to the runoff of our Upstart portfolio and higher provisions on our owner-occupied and constructions portfolios in 2023 driven by economic uncertainty in the commercial real estate market, partially offset by loan growth.

The ACL was $195.3 million at December 31, 2024 compared to $186.1 million at December 31, 2023.

The increase of the ACL was primarily due to net loan growth across the CRE, Consumer, and commercial small business leasing portfolios and the higher provisions noted above.

The increase of the ACL was primarily due to net loan growth, as well as increases in criticized loan levels in the commercial mortgages portfolio and specific reserves on certain commercial loans.

The ratio of allowance for credit losses to total loans and leases was 1.48% at December 31, 2024 and 1.46% at December 31, 2023.

Net charge-offs were $52.3 million for the year ended December 31, 2024 compared to $53.8 million for the year-ended December 31, 2023.

The increase in net charge-offs was primarily driven by our Upstart and commercial small business leasing portfolios.

The decrease in net charge-offs was primarily driven by our commercial and industrial portfolio, offset by higher charge-offs in commercial mortgages and commercial small business leases portfolios.

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

(Dollars in thousands) Commercial and Industrial (1)

(Dollars in thousands) Commercial and Industrial Owner-

Commercial Commercial

Mortgages Construction Residential (2)

Mortgages Construction Commercial Small Business Leases Residential (1)

As of December 31, 2024

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Average loan balance $ 2,586,833 $ 1,937,449 $ 3,991,686 $ 945,491 $ 637,036 $ 908,368 $ 2,088,699 $ 13,095,562

Ratio of net charge-offs (recoveries) to average gross loans 1.03 % 0.01 % 0.01 % 0.03 % (0.03) % 1.08 % 0.44 %

(Dollars in thousands) Commercial and Industrial (1)

Ratio of net charge-offs (recoveries) to average gross loans 0.33 % NMF 0.14 % — % 2.72 % (0.01) % 1.00 % 0.40 %

(Dollars in thousands) Commercial and Industrial Owner-

Commercial Commercial

Mortgages Construction Residential (2)

Mortgages Construction Commercial Small Business Leases Residential (1)

As of December 31, 2023

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Ratio of net charge-offs (recoveries) to average gross loans 0.73 % 0.01 % 0.01 % 0.03 % 2.32 % (0.03) % 1.08 % 0.44 %

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

(1) Excludes reverse mortgages.

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Noninterest income increased $51.0 million to $340.9 million in 2024 from $289.9 million in 2023.

This increase reflects a $26.9 million increase from Cash Connect ® driven by the rising rate environment and continued growth in the smart safe space, $10.2 million increase in Wealth Management revenue, a $9.5 million gain realized from our investment in Spring EQ, and $4.0 million in capital markets income.

The increase was partially offset by a $10.6 million decrease in other banking fees, including fees associated with our consumer lending partnerships, gain on sale of SBA loans and traditional bank service fees, and a $2.5 million decrease in mortgage banking activities.

In addition to these decreases, we recognized $6.0 million of unrealized gains on equity investments and $2.6 million from BMTIA in 2022.

This increase reflects a $32.1 million increase from Cash Connect ® driven by higher ATM bailment volume from new clients added in the fourth quarter of 2023 and first quarter of 2024 and growth in smart safes, $15.2 million in Wealth Management revenue driven by WSFS Institutional Services ® and Bryn Mawr Capital Management, $2.8 million in mortgage banking fees, and a $2.8 million net gain on our Visa B derivative liability established from our previous sale of 360,000 shares in 2Q 2020.

Our diverse fee-based businesses support sustainability of noninterest income through economic cycles.

Noninterest Expenses

Noninterest expense decreased $12.7 million to $561.6 million in 2023 from $574.3 million in 2022.

The decrease was primarily due to $61.5 million lower net corporate development and restructuring costs, partially offset by increases of $29.5 million in other operating expense driven by higher variable operating costs from Cash Connect ® , $9.8 million in FDIC expenses which includes the $5.1 million FDIC special assessment charged to recover losses to the Deposit Insurance Fund related to closures of certain banks in 2023, $5.3 million in salaries and benefits costs, and $2.7 million in professional fees.

Noninterest expense increased $76.1 million to $637.7 million in 2024 from $561.6 million in 2023.

The increase was primarily due to increases of $43.5 million in salaries and benefits costs from annual performance-based increases, talent additions in key business lines and higher medical benefits costs, $37.1 million in other operating expense driven by higher funding costs from Cash Connect ® , and $5.5 million in equipment expense as we continued to invest in technology, including a new Trust accounting system and client portal.

These increases were partially offset by a $4.6 million decrease in occupancy expense and a $3.7 million decrease in FDIC expenses related to the FDIC special assessment charged in 2023 to recover losses to the Deposit Insurance Fund related to closures of certain banks.

We recorded $83.8 million of income tax expense for the year ended December 31, 2024 compared to $96.2 million for the year ended December 31, 2023.

The increase in income tax expense was primarily driven by an increase in income before taxes of $64.7 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.

The decrease in income tax expense was primarily driven by a decrease in income before taxes of $18.0 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The effective tax rates for the years ended December 31, 2024 and 2023 were 24.1% and 26.3%, respectively.

The effective tax rate for year ended December 31, 2023 increased primarily due to our decision to surrender certain BOLI policies in 2023 that resulted in $7.1 million of tax expense.

In addition, the 2022 effective tax rate reflects the impact of the write-off of $6.7 million of nondeductible goodwill related to the sale of the BMT Insurance Advisors business.

Further, the tax expense associated with nondeductible acquisition costs in 2023 decreased compared to 2022.

There were no nondeductible acquisition costs during the year ended December 31, 2023 compared to $1.8 million incurred in 2022.

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

These tax benefits are offset by the tax effect of stock-based compensation expense related to incentive stock options, nondeductible acquisition costs and a provision for state income tax expense.

The effective tax rate for year ended December 31, 2024 decreased primarily due to our decision to surrender certain BOLI policies in 2023 that resulted in $7.1 million of tax expense.

The effective tax rate reflects the recognition of certain tax benefits in the financial statements including those benefits from tax-exempt interest income, income from bank-owned life insurance policies, various federal income tax credits, and excess tax benefits from recognized stock compensation.

These tax benefits are offset by the tax effect of stock-based compensation expense related to incentive stock options, and a provision for state income tax expense.

We frequently analyze our projections of taxable income and make adjustments to our provision for income taxes accordingly.

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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.

The WSFS Bank segment provides loans and leases and other financial products to Commercial and Consumer Clients.

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 ATM industry.

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WSFS Bank Segment

The WSFS Bank segment income before taxes increased $38.9 million, or 18%, in 2023 compared to 2022 primarily due to an $80.0 million increase in net external customer interest income due to the rising interest rate environment and a decrease in external operating expenses of $40.3 million, primarily driven by lower corporate development and restructuring costs, or 9%, partially offset by increases in inter-segment interest expense of $52.2 million and provision for credit losses of $39.6 million.

The WSFS Bank segment income before taxes decreased $22.0 million, or 9%, in 2024 compared to 2023.

The decrease was driven by an increase in salaries, benefits, and other compensation of $34.5 million, or 15%, largely due to talent additions in key business lines including Commercial and Technology, and a decrease in net external client interest income of $11.6 million, or 2%, driven by growth in higher-priced deposit products, partially offset by higher loan yields.

The decrease in income before taxes was partially offset by a $26.8 million, or 31%, decrease in provision for credit losses, primarily due to lower provision on our consumer portfolio due to the runoff of our Upstart portfolio and higher provisions on our owner-occupied and constructions portfolios in 2023 driven by economic uncertainty in the commercial real estate market, partially offset by loan growth.

WSFS Bank segment net loans and leases held for investment increased by $0.4 billion to $12.6 billion, driven by commercial loan growth within the commercial mortgage, commercial and industrial, and owner-occupied portfolios, residential mortgage loans and consumer loans (primarily from Spring EQ home equity loans), and was partially offset by a decrease in construction loans partially due to the migration to permanent commercial mortgage and owner-occupied commercial loans.

Customer deposits increased by $0.6 billion to $14.6 billion, driven by growth in money market and time deposits.

Cash Connect ® Segment

The Cash Connect ® segment income before taxes decreased to $1.0 million in 2024 from $4.2 million in 2023.

During 2023, the Cash Connect ® segment focused on expanding smart safe and ATM managed services to increase fee income while optimizing funding source composition and operational efficiency in the rapidly rising interest rate environment.

The interest rate environment materially increased vault operating expenses, resulting in a full-year 2023 ROA for the Cash Connect ® segment of 0.80%, a decrease of 21bps in comparison with full-year 2022.

The decrease was primarily due to one-time charges during 2024 associated with the termination of a longstanding Client relationship during the fourth quarter totaling $4.7 million, partially offset by higher ATM bailment volume from new clients added in the fourth quarter of 2023 and first quarter of 2024 and double digit growth in smart safes.

The full-year 2024 ROA for the Cash Connect ® segment decreased 63 bps to 0.17% compared to 0.80% for the full-year 2023 primarily due to the termination of the vault cash relationship described above.

Cash Connect ® had $1.6 billion in total cash managed at December 31, 2024 and $1.9 billion at December 31, 2023.

At year-end 2023, Cash Connect ® serviced approximately 33,000 non-bank ATMs compared to approximately 26,300 at year-end 2022 as a result of a large industry participant exiting their ATM cash vault business and approximately 8,700 smart safes nationwide compared to approximately 7,500 smart safes at year-end 2022.

At year-end 2024, Cash Connect ® serviced approximately 28,600 non-bank ATMs compared to approximately 33,000 at year-end 2023 and approximately 10,000 smart safes nationwide compared to approximately 8,700 smart safes at year-end 2023.

Wealth Management Segment

The Wealth Management segment income before taxes increased $28.9 million in 2023 compared to 2022, primarily attributable to growth in our institutional trust activity.

The Wealth Management segment income before taxes increased $7.2 million in 2024 compared to 2023, primarily attributable to growth in our institutional trust activity and Bryn Mawr Capital Management, partially offset by increases in salaries and benefits as a result of talent additions to support future growth.

At December 31, 2024, Wealth Management had AUA/AUM of $89.4 billion, a 15% increase from 2023 balances.

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$ 8,920,819 $ 155,874 $ 527 $ — $ 9,077,220

(Shortfall) excess of interest-rate sensitive assets over interest-rate liabilities (interest-rate sensitive gap) $ (29,409) $ 4,891,159 $ 4,041,187 $ 1,013,454 $ 9,916,391

Excess of interest-rate sensitive assets over interest-rate liabilities (interest-rate sensitive gap) $ 470,724 $ 5,061,292 $ 3,867,261 $ 835,419 $ 10,234,696

One-year interest-rate sensitive assets/interest-rate sensitive liabilities 105.28 %

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As of December 31, 2024, the Company believes that its ACL was adequate.

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

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

What changed 10-K

Item 7. Management’s Discussion and Analysis