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WSFS FINANCIAL CORP (WSFS)·Q2 2025 Earnings Summary

Executive Summary

  • WSFS delivered a solid quarter: EPS $1.27, ROA 1.39%, and NIM 3.89%; core fee revenue rose 9% QoQ to $88.0M, led by Wealth & Trust and mortgage/capital markets .
  • EPS beat S&P Global consensus by $0.14 (1.27 vs 1.13); revenue (S&P definition) missed by ~$11.6M (254.9 vs 266.5), reflecting definitional differences versus company “total net revenue” of $267.5M; we anchor estimate comparisons to S&P [Values retrieved from S&P Global]* .
  • Guidance raised: FY core ROA to ~1.30% (from ~1.25%) and NIM to ~3.85% (from ~3.80%); fee revenue growth trimmed to low-single digits, still double-digit in Wealth & Trust; net charge-offs maintained at 35–45 bps excluding Upstart impacts .
  • Strategic actions: sale of $98.1M Upstart loans (write-down ~$8.1M) accelerating runoff; buybacks of 1.56M shares (2.7% of Q1 shares) in Q2 and $149.9M capital returned YTD support ROTCE momentum and TBV/share growth .

What Went Well and What Went Wrong

What Went Well

  • Fee franchises drove the quarter: “continued strong performance in our fee-based businesses,” with core fee revenue up 9% QoQ; Wealth & Trust fee revenue rose 17% YoY, with Institutional Services and BMT of DE strong .
  • Margin resilience: NIM improved to 3.89% (+1 bp QoQ, +4 bps YoY) on deposit repricing and wholesale funding optimization; client deposit costs fell 8 bps to 1.63% QoQ .
  • Capital return and book value: repurchased 1.56M shares ($77.7M) in Q2; TBV/share increased to $30.32, +4% QoQ and +20% YoY, supported by lower AOCI and earnings .

What Went Wrong

  • Upstart portfolio accelerated exit: loans transferred to HFS with ~$8.1M write-down; contributed to lower loan yields and NCOs, though credit costs improved QoQ .
  • Delinquencies ticked up: DLQ rose to $158.0M (1.22% of gross loans), although a $5.7M relationship fully paid off in July; commercial credit losses were minimal excluding Upstart/NewLane .
  • Cash Connect headwinds: lower bailment volumes and rate environment reduced net revenue YoY, though margins improved (net profit margin 15.6% including insurance recovery; ~8.0% normalized) .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
EPS ($, Diluted)$1.158 $1.080 $1.120 $1.270
Total Net Revenue ($USD Millions)$266.0 $261.5 $256.1 $267.5
Net Interest Margin (%)3.85 3.80 3.88 3.89
Efficiency Ratio (%)58.5 64.6 59.2 59.5
ROA (%)1.34 1.21 1.29 1.39

Results vs S&P Global consensus:

MetricQ2 2024Q4 2024Q1 2025Q2 2025
EPS – Consensus$1.04*$0.99*$1.04*$1.13*
EPS – Actual$1.08*$1.11*$1.13*$1.27*
Revenue – Consensus ($USD)$254.5M*$264.4M*$235.3M*$266.5M*
Revenue – Actual ($USD)$246.2M*$253.5M*$238.8M*$254.9M*

Values retrieved from S&P Global.*
Company-reported “Total net revenue” equals $267.5M in Q2 2025; S&P’s “Revenue” definition differs for banks, which creates apparent variance .

Segment breakdown (selected):

Segment MetricQ2 2024Q4 2024Q1 2025Q2 2025
Wealth & Trust Fee Rev ($M)$38.2 $40.3 $39.9 $44.5
Wealth & Trust Pre-tax ($M)$28.6 $33.1 $29.4 $30.7
AUM/AUA ($USD Millions)$84,938 $89,425 $89,633 $92,386
Cash Connect Net Rev ($M)$27.6 $21.8 $21.5 $21.1
Cash Connect Pre-tax ($M)$2.0 $(3.4) $1.6 $3.3
Cash Connect Units (Non-bank ATMs+Safes)42,524 38,574 38,214 36,494

Key KPIs:

KPIQ2 2024Q4 2024Q1 2025Q2 2025
Client Deposit Cost (%)1.83 1.83 1.71 1.63
Interest-bearing Deposit Cost (%)2.65 2.65 2.43 2.38
Total Loan Yield (%)7.02 6.80 6.67 6.60
Noninterest Demand Deposits (% total)29 29 29 31
CET1 (%)13.29 13.88 14.10 14.07
TBV/Share ($)$25.20 $27.30 $29.25 $30.32
NCOs (% avg loans, annualized)0.44 0.31 0.76 0.30
NPA (% total assets)0.32 0.61 0.57 0.51
Core Fee Rev Ratio (%)33.0 31.8 31.5 32.8

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core ROAFY 2025~1.25% ~1.30% Raised
NIMFY 2025+/-3.80% ~3.85% Raised
Loan GrowthFY 2025Mid-single digit (Commercial), Consumer flat (partnership runoff) Low-single digit Commercial; Consumer flat excl. Upstart Lowered/clarified
Deposit GrowthFY 2025Low-single digit Low-single digit Maintained
Fee Revenue GrowthFY 2025Mid-single digit; double-digit in Wealth & Trust Low-single digit overall; double-digit in Wealth & Trust Lowered overall; Wealth maintained
Net Charge-offsFY 20250.35%–0.45% of avg loans (~5 bps Upstart) 0.35%–0.45% excluding Upstart impacts Clarified (ex-Upstart)
Efficiency RatioFY 2025+/-60% +/-60% Maintained
Tax RateFY 2025~24% 24% assumed in outlook Maintained
Capital ReturnMulti-yearCET1 target ~12%, glide path via buybacks Reiterated; >100% of YTD net income returned Reinforced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q2 2025)Trend
NIM sensitivity to rate cutsQ4: deposit repricing drove NIM stabilization; Q1: NIM 3.88% on repricing CFO: 25 bp cut → 2–3 bps temporary NIM impact; mitigated to ~1 bp as betas catch up; Upstart sale ~2 bps NIM drag near term Slight near-term pressure, manageable
Deposit betas and pricingQ4/Q1: active repricing; noninterest deposits ~31% Q2 deposit beta 43%; client deposit cost down to 1.63% Improving funding costs
Loan growth mixQ1: CRE selective; C&I emphasized Strong C&I fundings; consumer/mortgage growth; CRE payoffs in multifamily/office Tilt to C&I and consumer/mortgage
Cash Connect profitabilityQ4: client termination hurt; Q1: margins improving Insurance recovery; normalized margins trending toward teens; volumes lower Margin improvement despite volume decline
Wealth & Trust momentumQ4: record revenue; Q1: +19% YoY +17% YoY; ACL built on receivables as scale grows Structural growth; prudent risk management
Tariffs/macro sentimentQ1: mild uptick in optimism; projects resuming CEO: cautious but improving borrower sentiment Gradual improvement

Management Commentary

  • “WSFS performed very well in the second quarter with a core EPS of $1.27 and a core ROA of 1.38%. These results were driven by continued strong performance in our fee-based businesses… The net interest margin of 3.89% improved 1bp… Client deposits grew 6% (annualized)… solid growth in C&I loan fundings along with our WSFS-originated Consumer Lending portfolio.” — Rodger Levenson, Chairman, CEO and President .
  • “Core net interest margin expanded one basis point to 3.89%… deposit beta of 43% for the quarter… lower loan yields primarily driven by the announced Upstart sale… Core fee revenue grew 9% quarter over quarter.” — David Burg, CFO .
  • “We’re raising our NIM outlook to approximately 3.85%… increasing our ROA outlook… continue to execute buybacks as part of a multiyear glide path to our CET1 capital target of 12%.” — David Burg, CFO .

Q&A Highlights

  • NIM path and rate cuts: CFO quantified near-term NIM impact per 25 bp cut (2–3 bps) with mitigation over subsequent quarters; Upstart sale adds ~2 bps temporary NIM drag; securities rollovers add ~4 bps/year uplift .
  • Loan growth focus: Continued lean into C&I with selective CRE, maintaining pricing discipline and sponsor quality; borrower sentiment modestly improving despite tariff uncertainties .
  • Capital deployment: Buybacks prioritized amid excess capital; openness to M&A with higher bar for depository deals; emphasis on fee business opportunities (Wealth & Trust) .
  • Expenses/efficiency: Q2 is a good “run-rate” baseline with moderate growth from tech and talent investments; one-time insurance recovery in Cash Connect helped Q2 .

Estimates Context

  • EPS beat in Q2 2025: Actual $1.27 vs S&P consensus $1.13; prior quarters also beat by $0.04–$0.12 depending on period [Values retrieved from S&P Global]*.
  • Revenue (S&P definition) missed: Actual $254.9M vs consensus $266.5M in Q2 2025; company-reported “Total net revenue” was $267.5M reflecting definitional differences for banks [Values retrieved from S&P Global]* .
MetricQ2 2024Q4 2024Q1 2025Q2 2025
EPS – Consensus$1.04*$0.99*$1.04*$1.13*
EPS – Actual$1.08*$1.11*$1.13*$1.27*
Revenue – Consensus ($USD)$254.5M*$264.4M*$235.3M*$266.5M*
Revenue – Actual ($USD)$246.2M*$253.5M*$238.8M*$254.9M*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • High-quality beat on EPS driven by margin discipline and fee revenue scale; core franchises (Wealth & Trust) continue to diversify and stabilize earnings power .
  • NIM outlook raised to ~3.85% even with expected rate cuts; deposit cost management (beta 43%) and funding optimization underpin resilience through 2H25 .
  • Credit normalizing: NCOs fell to 30 bps; Upstart exit largely behind; commercial losses minimal excluding NewLane/Upstart; watch DLQ uptick but note subsequent payoff in July .
  • Capital returns and TBV accretion remain a catalyst: >$149.9M YTD returned; TBV/share up 20% YoY; buybacks support ROTCE and per-share metrics through CET1 glide path .
  • Cash Connect profitability improving despite volume declines; pricing actions and funding cost relief drive higher margins—monitor sustainability as rates evolve .
  • Guidance reset reflects confidence: ROA/NIM raised; fee growth moderated ex-wealth; positioning for low-single-digit balance sheet growth with selectivity in CRE and emphasis on C&I .
  • Near-term trading: EPS beats vs consensus and guidance raise are likely positive; revenue definitional variance vs S&P could muddy headline prints—focus on NIM trajectory, fee momentum, and buybacks as stock drivers .

Additional References

  • Upstart sale disclosure (pre-announcement): net charge-off ~$4.3M against $9.1M reserves, provision release ~$4.8M; portfolio had $98.1M book at 5/31/25 .
  • Ratings affirmed: KBRA A- senior unsecured debt with stable outlook, citing diversified fee revenue and strong funding/capital .
  • Wilmington lease renewal: continued local commitment; AUM/AUA and asset footprint updated context .