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WSFS FINANCIAL CORP (WSFS)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered a clean beat: core EPS $1.13 vs S&P Global consensus $1.04* and revenue $238.8mm vs $235.2mm*, driven by 8bps NIM expansion to 3.88% and disciplined deposit repricing, with core PPNR up 11% QoQ to $104.6mm .
  • Wealth & Trust maintained strong momentum (+19% YoY fee revenue), offsetting softer Cash Connect volumes; efficiency improved to ~59% from ~64% in Q4 as seasonal and one-time costs rolled off .
  • Credit costs rose on a single legacy office-related C&I charge-off ($15.9mm), taking NCOs to 0.76% annualized; excluding this, NCOs would have been 0.27%, with Upstart and NewLane losses continuing to decline .
  • Capital deployment accelerates: $53.8mm buybacks (1.03mm shares at $52.37), dividend raised 13% to $0.17, and authorization expanded to repurchase ~14% of outstanding shares; medium-term CET1 target set to ~12% (from 14.10% current), implying ongoing buyback capacity subject to macro .
  • Near-term stock catalysts: continued deposit cost declines, hedging floors limiting NIM compression on further rate cuts, Wealth & Trust share gains, and buyback pace tied to CET1 glide path and macro clarity .

What Went Well and What Went Wrong

What Went Well

  • NIM expanded 8bps QoQ to 3.88% as total deposit costs fell 12bps and $70mm sub-debt was redeemed, lifting core PPNR to $104.6mm and efficiency to ~59% .
  • Wealth & Trust fee revenue grew 19% YoY (Institutional Services and BMT of DE strength), with pre-tax income of $29.4mm; AUM/AUA held at ~$89.6bn .
  • Management emphasizing shareholder returns and confidence: “Board approved a 13% increase in the quarterly dividend to $0.17 per share, along with an additional share repurchase authorization of 10% of our outstanding shares…” .

What Went Wrong

  • Net charge-offs increased to 0.76% annualized on a single office-related C&I charge-off ($15.9mm), elevating total net credit costs to $17.6mm; problem assets ticked up and delinquencies rose to 1.13% of gross loans .
  • Cash Connect volumes softened (serviced non-bank ATMs/smart safes down ~17% YoY to 38,214) and net revenue dipped to $21.5mm, though margins improved with pricing and lower cost of funds .
  • Loans were essentially flat QoQ (gross down $78mm) as clients paused expansion amid macro and policy uncertainty; CRE multi-family downgrades increased problem assets but remained current and well-collateralized .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Net Interest Income ($mm)$175.3 $178.2 $175.2
Fee Revenue ($mm)$75.9 $83.3 $80.9
Total Net Revenue ($mm)$251.1 $261.5 $256.1
Provision for Credit Losses ($mm)$15.1 $8.0 $17.4
Noninterest Expense ($mm)$149.1 $169.1 $151.8
Net Income Attributable to WSFS ($mm)$65.8 $64.2 $65.9
EPS (Diluted, $)$1.09 $1.09 $1.12
Core EPS (Diluted, $)$1.11 $1.11 $1.13
ROA (%)1.28% 1.21% 1.29%
NIM (%)3.84% 3.80% 3.88%
Efficiency Ratio (%)59.28% 64.57% 59.16%

Performance vs. Estimates (S&P Global)

MetricQ1 2025 ConsensusQ1 2025 Actual
Primary EPS Consensus Mean ($)1.04*1.13*
Revenue Consensus Mean ($mm)235.25*238.76*
Primary EPS – # of Estimates5*—
Revenue – # of Estimates4*—

Values retrieved from S&P Global.*

Segment Breakdown

Segment MetricQ1 2024Q4 2024Q1 2025
Wealth & Trust – Fee Revenue ($mm)$33.5 $40.3 $39.9
Wealth & Trust – Noninterest Expense ($mm)$26.4 $29.9 $30.0
Wealth & Trust – Pre-tax Income ($mm)$26.5 $33.1 $29.4
Cash Connect – Net Revenue ($mm)$24.1 $21.8 $21.5
Cash Connect – Noninterest Expense ($mm)$23.3 $25.2 $19.9
Cash Connect – Pre-tax Income ($mm)$0.8 $(3.4) $1.6

KPIs

KPIQ1 2024Q4 2024Q1 2025
NPA / Total Assets (%)0.33 0.61 0.57
Delinquencies / Gross Loans (%)0.81 0.92 1.13
Quarterly NCOs / Avg Gross Loans (%)0.27 0.31 0.76
ACL / Total Loans (%)1.48 1.48 1.43
Average Loan Yield (%)7.02 6.80 6.67
Interest-Bearing Deposit Cost (%)2.55 2.65 2.43
Loan-to-Deposit Ratio (%)—77 77

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quarterly Dividend per Share ($)Ongoing$0.15 (Q4 2024) $0.17 (Q1 2025) Raised
Share Repurchase Authorization (% of shares)Ongoing~6% remaining (Dec 31, 2024) ~14% available (Mar 31, 2025) Raised
CET1 Capital Target (%)Medium-termNot disclosed~12% medium-term target New framework
Net Charge-offs Guidance (bps)FY 202535–45 bps (referenced by analyst to YE guidance) Management reiterated underlying portfolios align; formal update at midyear Maintained (update pending)
Formal Financial GuidanceFY 2025Historically provided midyearNo update in Q1; will provide after Q2 Maintained cadence

Earnings Call Themes & Trends

TopicQ-2 (Q3 2024)Q-1 (Q4 2024)Current (Q1 2025)Trend
NIM management & hedgingCompleted $1.5bn floors; mitigation of rate cuts NIM 3.80% with deposit repricing NIM 3.88%; floors increasingly in-the-money with further cuts Improving margin resilience
Deposit betas & pricingProactive repricing plan Cost declines underway (1.83% total) Interest-bearing beta ~38%; further upside targeted Continued beta capture
Cash ConnectMarket share gains; ROA focus Client termination headwind; adjusted profitability Profit margin >7%; pricing actions; volumes softer Margin improving, volumes softer
Wealth & TrustRecord platform investments; system upgrades Record fee revenue; double-digit growth +19% YoY fees; strong Institutional Services & BMT of DE Sustained growth
Credit/CRE exposureLumpy NPAs; rigorous review NPAs up; provisioning normalized One-off office-related charge-off; underlying losses declining Isolated event, core stable
Capital returnsFocus on organic growth; selective M&A Buybacks/dividend; equity down on AOCI Buybacks + dividend hike; CET1 glide path to 12% Accretive capital deployment
Macro/tariffs visibilityRate path sensitivity disclosed Rate cuts impacted yields/costs Clients paused projects; monitoring tariff policy impacts Visibility constrained near term

Management Commentary

  • CEO: “WSFS continued to perform well… core EPS of $1.13 and core ROA of 1.29%. These results were driven by the net interest margin of 3.88%, which expanded 8bps… Loans and deposits were essentially flat… Core fee revenue grew 6% YoY, driven by… Wealth and Trust… Board approved a 13% increase in the quarterly dividend… and an additional share repurchase authorization…” .
  • CFO: “Funding costs benefited from a 12bps reduction in total deposit costs… and the redemption of $70 million in higher-priced sub debt… We will be targeting a CET1 ratio of 12% in the medium term with a gradual multiyear glide path” .
  • CFO on hedging and NIM: “We have $1.5 billion of floor options… With every successive rate cut, more become in the money… the impact to our NIM of every rate cut is going to be lower” .

Q&A Highlights

  • Guidance cadence: No Q1 guidance update; plan to update after Q2 given volatility .
  • Net charge-offs outlook: Q1 charge-offs outside the 35–45bps guide due to one-off loan; excluding it, NCOs ~27bps (19bps ex-Upstart), with declines in Upstart/NewLane losses .
  • Expense run-rate: Q1 core NIE ~$152mm included ~$4mm one-time incentive reversal and ~$4mm timing items; run-rate seen around ~$160mm (between Q4 and Q1) .
  • Commercial growth: Pipeline consistent; clients delaying expansions amid uncertainty (60–90 days pauses) .
  • Tariffs/regulatory: Monitoring potentially impacted C&I relationships; no underwriting changes yet given evolving policies .
  • Cash Connect profitability: Pricing actions and lower rate environment improve margins; ~+$0.4mm annualized ROA per rate cut; expect margin to trend higher despite volume volatility .

Estimates Context

  • WSFS beat Wall Street consensus on EPS and revenue for Q1 2025: EPS $1.13 vs $1.04*, revenue $238.8mm vs $235.2mm*; 5 EPS estimates and 4 revenue estimates underpin Q1 consensus*. With NIM resilience and fee growth, near-term estimate revisions should bias modestly upward, tempered by higher credit costs from the isolated charge-off*. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • NIM resilience and deposit repricing remain tailwinds; floors materially dampen downside from additional rate cuts .
  • Wealth & Trust is a durable growth engine (Institutional Services/BMT of DE), supporting diversified revenue and improving efficiency .
  • Credit normalization is manageable; Q1 spike tied to a single legacy office-related C&I loan with underlying portfolios trending better, particularly Upstart/NewLane .
  • Capital returns are accelerating amid a CET1 glide path to ~12%; buybacks and dividend increase provide tangible support to TSR, with discretion based on macro .
  • Cash Connect profitability improving via pricing and lower cost of funds; watch volumes and client mix, but ROA trend is upward .
  • Commercial loan demand is in a holding pattern pending macro/policy clarity; pipeline intact, suggesting a rebound once visibility improves .
  • Near-term trading: Positive skew on margin/fee beats and capital returns; monitor credit headlines (CRE office) and macro/tariff developments as potential volatility drivers .