Core Earnings Per Share: $1.13 Core Return on Assets (ROA): 1.29% Core Pre-Provision Net Revenue (PPNR): $104.6 million Core Return on Tangible Common Equity: 16.97% Core Net Interest Margin: Expanded 8 basis points to 3.88% Total Funding Costs: Reduced by 15 basis points to 1.77% Total Deposit Cost: 1.71% Interest-Bearing Deposit Beta: 38% Core Fee Revenue Growth: 6% year-over-year Wealth and Trust Growth: 19% year-over-year Core Efficiency Ratio: 59% Gross Loans: Down less than 1% in the quarter Client Deposits: Declined 1% in the quarter; up 4% year-over-year Non-Interest Bearing Deposits: Up 6% year-over-year Loan to Deposit Ratio: 77% Total Net Credit Costs: $17.6 million Net Charge-Offs: $24.6 million ACL Coverage Ratio: 1.43% Common Equity Tier 1 (CET1) Ratio: 14.1% Tangible Common Equity (TCE) Ratio: 8.63% Capital Returned: $62.6 million, including $53.8 million in buybacks and $8.8 million in dividends Quarterly Dividend Increase: 13% to $0.17 per share Share Repurchase Authorization: 10% of outstanding shares

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Release Date: April 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

WSFS Financial Corp (NASDAQ:WSFS) reported a solid start to 2025 with core earnings per share of $1.13, core ROA of 1.29%, and core return on tangible common equity of 16.97%, all showing improvements from the prior quarter. The core net interest margin expanded by 8 basis points to 3.88%, benefiting from a reduction in total funding costs and deposit repricing actions. Core fee revenue grew 6% year-over-year, driven by a 19% increase in wealth and trust services. WSFS Financial Corp (NASDAQ:WSFS) announced a 13% increase in the quarterly dividend to $0.17 per share and authorized an additional share repurchase of 10% of outstanding shares. The company maintained strong capital ratios, with CET1 at 14.1% and TCE at 8.63%, and returned $62.6 million of capital in the first quarter through buybacks and dividends.

Negative Points

Gross loans were down less than 1% in the quarter, with commercial loans remaining flat as clients postponed investments due to macroeconomic uncertainty. Client deposits declined by 1% in the quarter, primarily due to seasonality and expected outflows in trust. Total net credit costs increased to $17.6 million, driven by a $15.9 million charge-off of a non-performing office-related C&I loan acquired from Bryn Mawr Trust. The company experienced a decline in cash connect fees quarter-over-quarter due to seasonally lower volumes and the impact of lower interest rates. There was an increase in delinquencies and problem loans, although no specific sector or large loan was identified as a concern.

Story Continues

Q & A Highlights

Q: Why was there no updated guidance in the earnings deck this quarter? A: David Burg, CFO, explained that WSFS typically updates guidance after the second quarter due to the volatile environment and early stage of the year. There is nothing to read into the absence of guidance this quarter.

Q: How should we think about net charge-offs given the recent isolated credit issue? A: David Burg, CFO, noted that the recent charge-off was a one-time event related to an acquired loan. Excluding this, net charge-offs were at 27 basis points, and other portfolios are performing as expected.

Q: Can you provide insights on the expense line and how it shapes up for future quarters? A: David Burg, CFO, mentioned that the first quarter had some one-time and timing items, making it lower than the run rate. The expected run rate is around $160 million, considering these adjustments.

Q: What are the expectations for commercial growth given the current macroeconomic uncertainty? A: Rodger Levenson, CEO, stated that while customers are performing well, they are cautious about expansion due to market volatility. The pipeline remains consistent, and growth is expected once the outlook stabilizes.

Q: How do you view the impact of potential interest rate cuts on the Cash Connect business? A: David Burg, CFO, explained that interest rate cuts would improve Cash Connect's profitability, with an estimated $400,000 annualized improvement per rate cut. Efforts to increase pricing and manage expenses are ongoing to enhance margins.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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