WSFS Financial (US:WSFS)2025-07-31 20:51markdown [PART I. Financial Information](index=5&type=section&id=PART%20I.%20Financial%20Information) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) The unaudited consolidated financial statements for WSFS Financial Corporation detail its financial performance and condition as of June 30, 2025 [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Net income attributable to WSFS increased to $72.3 million for Q2 2025, driven by net interest income growth Consolidated Statements of Income Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Interest Income** | $179,495 | $174,449 | +2.9% | $354,711 | $349,727 | +1.4% | | **Provision for Credit Losses** | $12,621 | $19,814 | -36.3% | $29,971 | $34,952 | -14.2% | | **Noninterest Income** | $88,009 | $91,598 | -3.9% | $168,906 | $167,455 | +0.9% | | **Noninterest Expense** | $159,343 | $155,768 | +2.3% | $311,138 | $304,840 | +2.1% | | **Net Income Attributable to WSFS** | $72,326 | $69,273 | +4.4% | $138,222 | $135,034 | +2.4% | | **Diluted EPS** | $1.27 | $1.16 | +9.5% | $2.39 | $2.24 | +6.7% | [Consolidated Statements of Financial Condition](index=7&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) The Consolidated Statements of Financial Condition show **total assets** at **$20.76 billion** and **total deposits** at **$17.12 billion** as of June 30, 2025 Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | $20,763,292 | $20,814,303 | -$51,011 | | **Net Loans and Leases** | $12,807,920 | $12,996,218 | -$188,298 | | **Total Deposits** | $17,121,469 | $17,029,808 | +$91,661 | | **Total Liabilities** | $18,091,074 | $18,234,927 | -$143,853 | | **Total Stockholders' Equity** | $2,672,218 | $2,579,376 | +$92,842 | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) **Net cash provided by operating activities** significantly decreased to **$45.9 million** for H1 2025, while investing activities provided **$273.8 million** Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash from Operating Activities** | $45,930 | $157,710 | | **Net cash from Investing Activities** | $273,765 | $(209,079) | | **Net cash from Financing Activities** | $(143,015) | $(19,815) | | **Net Increase (Decrease) in Cash** | $176,680 | $(71,184) | [Notes to the Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies, financial statement line items, and segment performance, including a recent loan portfolio sale - The company operates through three main segments: **WSFS Bank** (commercial and consumer banking), **Cash Connect®** (ATM and cash logistics services), and **Wealth and Trust** (investment management and trust services)[153](index=153&type=chunk)[154](index=154&type=chunk) - Subsequent to quarter-end, on July 8, 2025, the company **completed the sale of the majority of its remaining unsecured consumer lending portfolio** from its partnership with **Upstart Holdings, Inc.**[175](index=175&type=chunk) - The company **settled a lawsuit** with **Prophet Mortgage Opportunities, LP** for **$1.5 million** and is involved in another case with a potential loss range of **$0.0 to $15.0 million** related to a **default judgment**[171](index=171&type=chunk)[172](index=172&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=53&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and results of operations, highlighting stable **net interest margin** and strong capital position - **Q2 2025 EPS** was **$1.27** with a **Return on Assets (ROA)** of **1.39%**[178](index=178&type=chunk) - **Net interest margin** for **Q2 2025** was **3.89%**, a slight increase from **3.85%** in **Q2 2024**, driven by deposit repricing and reduced wholesale funding[178](index=178&type=chunk) - The company returned **$87.3 million** to shareholders in **Q2 2025** through **$77.7 million** in **share repurchases** and **$9.6 million** in **dividends**[178](index=178&type=chunk) [Financial Condition](index=55&type=section&id=Financial%20Condition) **Total assets** decreased to **$20.8 billion** at June 30, 2025, primarily due to a reduction in **net loans and leases** - **Net loans and leases** decreased by **$188.3 million**, mainly from a **$164.6 million** drop in **consumer loans** due to the transfer of the **Upstart portfolio** to held-for-sale and runoff of the **Spring EQ portfolio**[183](index=183&type=chunk) - Client deposits increased by **$91.7 million**, primarily from growth in **Trust deposits**[183](index=183&type=chunk) - **Senior and subordinated debt** decreased by **$69.9 million** due to the redemption of the **2027 Notes**[183](index=183&type=chunk) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity and capital position with **capital ratios** well above regulatory minimums and significant **borrowing capacity** Regulatory Capital Ratios as of June 30, 2025 | Ratio | WSFS Financial Corp. | WSFS Bank | Well-Capitalized Minimum | | :--- | :--- | :--- | :--- | | **Common Equity Tier 1 Capital** | 14.07% | 13.11% | 6.50% | | **Tier 1 Capital** | 14.07% | 13.11% | 8.00% | | **Total Capital** | 15.86% | 14.35% | 10.00% | | **Tier 1 Leverage Capital** | 11.04% | 10.29% | 5.00% | - **Book value per share** increased to **$47.71** from **$44.15** at year-end 2024, and **tangible book value per share** (non-GAAP) increased to **$30.32** from **$27.30**[182](index=182&type=chunk) - Estimated **unprotected deposits** (uninsured and uncollateralized) were **$5.4 billion**, or **31%** of **total client deposits**[189](index=189&type=chunk) [Nonperforming Assets](index=58&type=section&id=Nonperforming%20Assets) **Nonperforming assets** decreased to **$106.2 million** at June 30, 2025, improving the **ratio of NPA to total assets** to **0.51%** Nonperforming Assets (in thousands) | Category | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Total nonaccruing loans** | $105,236 | $122,181 | | **Other real estate owned** | $930 | $5,204 | | **Total nonperforming assets** | $106,166 | $127,385 | | **Ratio of NPA to total assets** | 0.51% | 0.61% | [Results of Operations](index=61&type=section&id=Results%20of%20Operations) **Net income attributable to WSFS** increased for **Q2 2025**, driven by higher **net interest income** and lower **provision for credit losses** - **Q2 2025** vs **Q2 2024**: **Net interest income** increased by **$5.0 million**, while the **provision for credit losses** decreased by **$7.2 million**[202](index=202&type=chunk) - **Q2 2025** vs **Q2 2024**: **Noninterest income** decreased by **$3.6 million**, primarily due to a decline in **Cash Connect® revenue** and a prior-year gain on a **Visa derivative**[202](index=202&type=chunk) - **Q2 2025** vs **Q2 2024**: **Noninterest expense** increased by **$3.6 million**, mainly from higher **salaries and benefits**, partially offset by lower **Cash Connect® external funding costs**[202](index=202&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=68&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's **market risk** primarily arises from **interest rate risk**, which is actively monitored and managed - Information regarding **market risk** is incorporated by reference from the '**Interest Rate Sensitivity**' section within **Item 2 of the MD&A**[229](index=229&type=chunk) [Controls and Procedures](index=68&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's **disclosure controls and procedures** were effective as of June 30, 2025, with no **material changes** to **internal control over financial reporting** - The **CEO and CFO** concluded that as of June 30, 2025, the company's **disclosure controls and procedures** were effective[235](index=235&type=chunk) - No **material changes** to **internal control over financial reporting** occurred during the second quarter of 2025[235](index=235&type=chunk) [PART II. Other Information](index=68&type=section&id=PART%20II.%20Other%20Information) [Legal Proceedings](index=68&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding **legal proceedings** is detailed in **Note 17** to the Consolidated Financial Statements, including a recent settlement - Details on **legal proceedings** are incorporated by reference from **Note 17 of the financial statements**[232](index=232&type=chunk) [Risk Factors](index=68&type=section&id=Item%201A.%20Risk%20Factors) No **material changes** to the **risk factors** disclosed in the company's **Annual Report on Form 10-K** for 2024 were reported - No **material changes** to **risk factors** were reported since the **2024 Annual Report on Form 10-K**[233](index=233&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=68&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **1,556,199 shares** of **common stock** in **Q2 2025** as part of a new **share repurchase program** Share Repurchases for Q2 2025 | Month | Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | April 2025 | 1,012,199 | $47.98 | | May 2025 | 274,000 | $54.07 | | June 2025 | 270,000 | $53.07 | | **Total** | **1,556,199** | **$49.93** | - In **Q2 2025**, the Board approved a new **share repurchase program** for up to **5,769,334 shares**, representing **10%** of outstanding shares as of March 31, 2025[234](index=234&type=chunk) [Other Information](index=69&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a **Rule 10b5-1 trading arrangement** during the reporting period - No director or officer adopted or terminated a **Rule 10b5-1 trading arrangement** during the reporting period[240](index=240&type=chunk)