WSFS FINANCIAL CORP
For the period ended Sep 30, 2024. Filed Nov 6, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 6, 2024
WSFS$78.94-0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
0001628280-24-034342
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0001628280-24-045632
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 129 previous paragraphs and 134 current paragraphs.
67 unchanged; 53 reworded; 14 added; 9 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
◦The Wealth Management business completed the conversion of its trust accounting system and Client portal as part of the Bryn Mawr Trust integration plan.
Current report
◦During the quarter, WSFS Associates surpassed the Bank's 2024 volunteer commitment goal of 24,000 hours of service.
Current report
◦During the quarter, WSFS recognized $2.3 million in revenue from our partnership with Spring EQ related to the annual earnout from the previously announced sale, recognized within Other income on the unaudited Consolidated Statements of Income.
Current report
•Nine Months Ended September 30, 2024
Current report
•Federal Home Loan Bank advances increased $43.2 million due to favorable pricing terms.
Current report
•Accrued interest payable increased $26.7 million due to the timing of interest payments on BTFP borrowings.
Current report
•Brokered deposits decreased $51.7 million due to a shift in funding sources.
Current report
(6)Excludes acquired purchase credit deteriorated loans.
Current report
•Net interest income decreased $5.1 million, primarily due to continued deposit mix shift and growth in higher priced deposit products over the past year. See “Net Interest Income” for further information.
Current report
•Noninterest income increased $17.5 million, driven by the Cash Connect®, Wealth Management, Core Banking, and Mortgage business lines. Growth in Cash Connect® was driven by bailment Customers added in the fourth quarter of 2023 and first half of 2024. Growth in Wealth Management was driven by growth across all key product lines. We also recognized revenue from our partnership with Spring EQ. See “Noninterest Income” for further information.
Current report
Three months ended September 30, 2024: During the three months ended September 30, 2024, noninterest income was $90.2 million, an increase of $17.5 million from $72.7 million during the three months ended September 30, 2023. The growth was driven by the Cash Connect®, Wealth Management, Core Banking, and Mortgage business lines. Growth in Cash Connect®of $10.6 million was driven by the addition of bailment Customers during the fourth quarter of 2023 and first half of 2024. Growth in Wealth Management of $3.4 million was driven by growth across all key product lines. We also recognized $2.3 million in revenue from our partnership with Spring EQ related to the annual earnout form the previously announced sale.
Current report
Bank Merger Review Standards
Current report
In September 2024, the Office of the Comptroller of the Currency (“OCC”) finalized a new Policy Statement Regarding Statutory Factors Under the Bank Merger Act (the “Policy Statement”), which outlines factors that the OCC will considering when evaluating a proposed bank merger transaction, including factors related to financial stability, the financial and managerial resources and future prospects of the existing and proposed institutions, and the convenience and needs of the community. The Policy Statement also lists thirteen indicators that will be present in merger applications that are more likely to be approved expeditiously, including that the resulting institution will have total assets less than $50 billion and that the target’s total assets are less than 50 percent of the acquirer’s total assets. It remains uncertain how the OCC will apply the Policy Statement to particular transactions, and the Policy Statement may make it more difficult and/or costly for us to obtain regulatory approval for an acquisition or otherwise result in more onerous conditions in approval orders than the OCC has previously imposed.
Current report
Also in September 2024, the U.S. Department of Justice (“DOJ”) withdrew from its 1995 Bank Merger Guidelines and announced that it will instead evaluate the competitive impact of bank mergers using its 2023 Merger Guidelines that apply across all industries. Compared to the 1995 Bank Merger Guidelines, the 2023 Merger Guidelines set forth more stringent concentration limits and add several largely qualitative bases on which the DOJ may challenge a merger. This change in the DOJ’s bank merger antitrust policy creates uncertainty regarding the types of transactions that the DOJ may challenge as anticompetitive.
Removed paragraphs (9)
Previous report
◦Noninterest income was $91.6 million, or 34.38% of total net revenue, and included:
Previous report
•Six Months Ended June 30, 2024
Previous report
•Other assets increased $59.5 million, primarily due to increases of $23.7 million in derivatives from our capital markets business due to changes in fair value, $13.1 million in our deferred tax asset primarily related to unrealized losses on available-for-sale securities, and $8.4 million in lease right of use asset due to additional leases entered into in 2024.
Previous report
•Goodwill and intangible assets decreased $8.4 million due to scheduled amortization of intangible assets.
Previous report
•Customer deposits decreased $131.3 million primarily due to transactional accounts, which drive notable inflows and outflows of deposits in our Trust and Commercial businesses, offset by growth in our Private Wealth Management and Consumer businesses.
Previous report
(6)Excludes acquired PCD loans.
Previous report
•Net interest income decreased $7.4 million, primarily due to lagging increases in deposit pricing following rate hikes in 2023 and a continued shift to customer time deposits. See “Net Interest Income” for further information.
Previous report
•Noninterest income increased $24.7 million, primarily due to increases in income from Cash Connect® due to additional customers added during the fourth quarter of 2023 and first half of 2024 and the higher rate environment, Wealth Management fee income, a gain on our Visa B derivative liability, post-close distributions from our investment in Spring EQ, and capital markets income. See “Noninterest Income” for further information.
Previous report
Three months ended June 30, 2024: During the three months ended June 30, 2024, noninterest income was $91.6 million, an increase of $24.7 million from $66.9 million during the three months ended June 30, 2023. The increase was primarily driven by $11.0 million from Cash Connect®due to the addition of customers during the fourth quarter of 2023 and first half of 2024 and the higher rate environment, $5.3 million in Wealth Management fees, a $3.4 million gain due to the reduction of our Visa B derivative liability established from our previous sale of 360,000 shares in 2Q 2020, a $2.0 million gain from post-close distributions from our investment in Spring EQ, and $1.8 million in capital markets income.
Reworded paragraphs (53)
Previous wording
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 $20.7 billion in assets and $84.9 billion in assets under management (AUM) and assets under administration (AUA) at June 30, 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, we have been in operation for more than 192 years. In addition to our focus on stellar customer 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.
Current wording
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 $20.9 billion in assets and $87.2 billion in assets under management (AUM) and assets under administration (AUA) at September 30, 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, we have been in operation for more than 192 years. In addition to our focus on stellar customer 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.
Previous wording
Our banking business had a total loan and lease portfolio of $13.1 billion as of June 30, 2024, which was funded primarily through commercial relationships and consumer and customer generated deposits. We have built a $10.1 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. 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. In addition, NewLane Finance® offers captive insurance through its subsidiary, Prime Protect.
Current wording
Our banking business had a total loan and lease portfolio of $13.3 billion as of September 30, 2024, which was funded primarily through commercial relationships and consumer and customer generated deposits. We have built a $10.2 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. 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. In addition, NewLane Finance® offers captive insurance through its subsidiary, Prime Protect.
Previous wording
Our Cash Connect® business is a premier provider of ATM vault cash, smart safe (safes that automatically accept, validate, record and hold cash in a secure environment) and other cash logistics services through strategic partnerships with several of the largest networks, manufacturers and service providers in the ATM industry. Cash Connect®services non-bank and WSFS-branded ATMs and smart safes nationwide, and manages approximately $1.7 billion in total cash and services approximately 33,100 non-bank ATMs and 9,400 smart safes nationwide. Cash Connect® provides related services such as online reporting and ATM cash management, predictive cash ordering and reconcilement services, armored carrier management, loss protection, ATM processing equipment sales and deposit safe cash logistics. Cash Connect®also supports 579 owned or branded ATMs for WSFS Bank Customers, which is one of the largest branded ATM networks in our market.
Current wording
Our Cash Connect® business is a premier provider of ATM vault cash, smart safe (safes that automatically accept, validate, record and hold cash in a secure environment) and other cash logistics services through strategic partnerships with several of the largest networks, manufacturers and service providers in the ATM industry. Cash Connect®services non-bank and WSFS-branded ATMs and smart safes nationwide, and manages approximately $1.6 billion in total cash and services approximately 32,400 non-bank ATMs and 9,700 smart safes nationwide. 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 569 owned or branded ATMs for WSFS Bank Customers, which is one of the largest branded ATM networks in our market.
Previous wording
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. Combined, these businesses had$84.9 billion of AUM and AUA at June 30, 2024.
Current wording
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. Combined, these businesses had$87.2 billion of AUM and AUA at September 30, 2024.
Previous wording
As of June 30, 2024, we service our customers primarily from 114 offices located in Pennsylvania (57), Delaware (39), New Jersey (14), Florida (2) and Nevada (1) and Virginia (1), our ATM network, our website atwww.wsfsbank.com and our mobile app.
Current wording
As of September 30, 2024, we service our customers 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 atwww.wsfsbank.com and our mobile app.
Previous wording
Highlights and Other Notables Items for Three and Six Months Ended June 30, 2024
Current wording
Highlights and Other Notables Items for Three and Nine Months Ended September 30, 2024
Previous wording
◦WSFS repurchased 897,461 sharesof common stock under the Company's share repurchase programs at an average price of$44.20 per share, for an aggregate purchase price of approximately$39.7 million.
Current wording
◦WSFS repurchased 266,672 sharesof common stock under the Company's share repurchase programs at an average price of$51.82 per share, for an aggregate purchase price of approximately$13.8 million.
Previous wording
◦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 13.07% and 13.29%, respectively, and total risk-based capital of 14.32% and 15.34%, respectively.
Current wording
◦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 13.46% and 13.56%, respectively, and total risk-based capital of 14.71% and 15.61%, respectively.
Previous wording
◦Net loans and leases grew$362.7 million, or 6% annualized, compared to December 31, 2023.
Current wording
◦Net loans and leases grew$541.5 million, or 6% annualized, compared to December 31, 2023.
Previous wording
◦The allowance for credit losses (ACL) on loans and leases increased $12.1 million when compared to December 31, 2023, primarily due to higher provision on our commercial mortgages portfolio.
Current wording
◦The allowance for credit losses (ACL) on loans and leases increased $11.4 million when compared to December 31, 2023, primarily due to higher provision on our commercial mortgages portfolio.
Previous wording
◦During the six months ended June 30, 2024, WSFS had capital returns of $78.7 million to stockholders, comprised of $60.7 million from share repurchases and$18.1 million from quarterly dividends.
Current wording
◦During the nine months ended September 30, 2024, WSFS had capital returns of $101.5 million to stockholders, comprised of $74.5 million from share repurchases and$27.0 million from quarterly dividends.
Previous wording
▪Post-close distributions of $2.0 million related to the sale of our equity interests in Spring EQ that occurred in the fourth quarter of 2023.
Current wording
◦During the year, WSFS recognized $4.3 million of nonrecurring income from our partnership with Spring EQ, comprised of the $2.3 million annual earnout mentioned above and post-close distributions of $2.0 million related to the sale of our equity investment in Spring EQ that occurred in the fourth quarter of 2023.
Previous wording
◦During the quarter, 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.
Current wording
◦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.
Previous wording
Total assets increased $149.9 million to $20.7 billion at June 30, 2024 compared to December 31, 2023. This increase is primarily comprised of the following:
Current wording
Total assets increased $310.5 million to $20.9 billion at September 30, 2024 compared to December 31, 2023. This increase is primarily comprised of the following:
Previous wording
•Net loans and leases held for investment increased $362.7 million, primarily due to increases of $99.1 million in commercial and industrial and $94.3 million in consumer loans primarily from Spring EQ home equity loans. Commercial mortgages increased $233.6 million with a corresponding decrease of $156.3 million in construction due to the migration of construction loans to permanent commercial mortgages. Additionally, owner-occupied commercial loans increased $54.6 million and residential mortgage loans increased $29.7 million.
Current wording
•Net loans and leases held for investment increased $541.5 million, primarily due to increases of $125.9 million in consumer loans primarily from Spring EQ home equity loans, $117.6 million in owner-occupied commercial loans, $99.2 million in commercial and industrial loans and $70.1 million in residential mortgage loans. Commercial mortgages increased $347.9 million with a corresponding decrease of $229.7 million in construction due to the migration of construction loans to permanent commercial mortgages.
Previous wording
•Total investment securities decreased $214.3 million:
Current wording
•Total investment securities decreased $141.7 million:
Previous wording
◦Investment securities, available-for-sale decreased $194.6 million, primarily due to repayments, maturities and calls of $169.5 million and decreased market values of $64.6 million, partially offset by purchases of $41.1 million.
Current wording
◦Investment securities, available-for-sale decreased $109.4 million, primarily due to repayments, maturities and calls of $262.8 million, partially offset by increased market values of $104.1 million and purchases of $51.6 million.
Previous wording
◦Investment securities, held-to-maturity decreased $19.7 million, primarily due to repayments, maturities and calls of $28.6 million, partially offset by $7.3 million of amortization of net unrealized losses on available-for-sale securities transferred to held-to-maturity.
Current wording
◦Investment securities, held-to-maturity decreased $32.3 million, primarily due to repayments, maturities and calls of $45.8 million, partially offset by $11.2 million of amortization of net unrealized losses on available-for-sale securities transferred to held-to-maturity.
Previous wording
•Total cash and cash equivalents decreased $71.2 million, primarily due to a shift to external funding sources in our Cash Connect® business.
Current wording
•Total cash and cash equivalents decreased $102.0 million, due to loan growth and a shift to external funding sources in our Cash Connect® business, partially offset by an increase in wholesale funding.
Previous wording
Total liabilities increased $141.3 million to $18.3 billion at June 30, 2024 compared to December 31, 2023. This increase is primarily comprised of the following:
Current wording
Total liabilities increased $113.3 million to $18.2 billion at September 30, 2024 compared to December 31, 2023. This increase is primarily comprised of the following:
Previous wording
•Other borrowed funds increased $224.7 million, primarily due to $235.0 million borrowed from the Bank Term Funding Program (BTFP) as a result of favorable terms and pricing.
Current wording
•Other borrowed funds increased $136.6 million, primarily due to $135.0 million borrowed from the Bank Term Funding Program (BTFP) as a result of favorable terms and pricing.
Previous wording
•Other liabilities increased $67.1 million, primarily due to increases of $70.2 million in collateral held on derivatives and derivative liabilities, partially offset by a decrease of $5.1 million due to the reduction of our Visa B derivative liability.
Current wording
•Other liabilities decreased $46.4 million, primarily due to a decrease of $54.4 million in collateral held on derivatives and derivative liabilities, partially offset by an increase of $5.7 million in our lease liabilities related to new leases and extensions.
Previous wording
Stockholders’ equity of WSFS increased $11.9 million between December 31, 2023 and June 30, 2024. This increase was primarily due to $135.0 million of earnings, partially offset by $60.7 million from the repurchase of shares of common stock under our stock repurchase plan, an increase of $48.9 million in accumulated other comprehensive loss driven bymarket value decreases on available-for-sale mortgage-backed securities, and the payment of dividends on our common stock of $18.1 million.
Current wording
Stockholders’ equity of WSFS increased $200.6 million between December 31, 2023 and September 30, 2024. This increase was primarily due to $199.5 million of earnings and a decrease of $94.0 million in accumulated other comprehensive loss driven by market value increases on available-for-sale mortgage-backed securities, partially offset by $74.5 million from the repurchase of shares of common stock under our stock repurchase plan and the payment of dividends on our common stock of $27.0 million.
Previous wording
Book value per share of common stock was $42.01 at June 30, 2024, an increase of $1.08 from $40.93 at December 31, 2023. Tangible book value per share of common stock (a non-GAAP financial measure) was $25.20 at June 30, 2024, an increase of $0.87 from $24.33 at December 31, 2023. We believe tangible book value per common share helps management and investors better understand and assess changes from period to period in stockholders’ equity exclusive of changes in intangible assets. This non-GAAP measure should be considered in addition to results prepared in accordance with Generally Accepted Accounting Principles in the U.S. (GAAP), and is not a substitute for, or superior to, GAAP results. For a reconciliation of tangible book value per common share to book value per share in accordance with GAAP, see "Reconciliation of Non-GAAP Measure to GAAP Measure."
Current wording
Book value per share of common stock was $45.37 at September 30, 2024, an increase of $4.44 from $40.93 at December 31, 2023. Tangible book value per share of common stock (a non-GAAP financial measure) was $28.56 at September 30, 2024, an increase of $4.23 from $24.33 at December 31, 2023. We believe tangible book value per common share helps management and investors better understand and assess changes from period to period in stockholders’ equity exclusive of changes in intangible assets. This non-GAAP measure should be considered in addition to results prepared in accordance with Generally Accepted Accounting Principles in the U.S. (GAAP), and is not a substitute for, or superior to, GAAP results. For a reconciliation of tangible book value per common share to book value per share in accordance with GAAP, see "Reconciliation of Non-GAAP Measure to GAAP Measure."
Previous wording
Not included in the Bank’s capital, WSFS separately held $330.5 million in cash to support share repurchases, potential dividends, acquisitions, strategic growth plans and other general corporate purposes.
Current wording
Not included in the Bank’s capital, WSFS separately held $307.4 million in cash to support share repurchases, potential dividends, acquisitions, strategic growth plans and other general corporate purposes.
Previous wording
As of June 30, 2024, the Company had$1.0 billion in cash, cash equivalents, and restricted cash. As of June 30, 2024, our estimated uninsured deposits were $6.0 billion, or 37% of total customer deposits, and our estimated unprotected deposits (uninsured and uncollateralized) were $5.2 billion, or 32% of total customer deposits.
Current wording
As of September 30, 2024, the Company had$1.0 billion in cash, cash equivalents, and restricted cash. As of September 30, 2024, our estimated uninsured deposits were $6.1 billion, or 37% of total customer deposits, and our estimated unprotected deposits (uninsured and uncollateralized) were $4.9 billion, or 30% of total customer deposits.
Previous wording
As of June 30, 2024, the Company had a readily available, secured borrowing capacity of $5.3 billion from the FHLB and $1.8 billion through the Federal Reserve Discount Window. In addition, the Company had $1.7 billion in unpledged securities that could be used to support additional borrowings and $0.4 billion of cash deposited with the Federal Reserve Bank.
Current wording
As of September 30, 2024, the Company had a readily available, secured borrowing capacity of $5.6 billion from the FHLB and $2.0 billion through the Federal Reserve Discount Window. In addition, the Company had $1.4 billion in unpledged securities that could be used to support additional borrowings and $0.3 billion of cash deposited with the Federal Reserve Bank.
Previous wording
Our primary cash contractual obligations relate to operating leases, long-term debt, credit obligations, and data processing. At June 30, 2024, we had $224.7 million in total contractual payments for ongoing leases that have remaining lease terms of less than one year to 21 years, which includes renewal options that are exercised at our discretion. For additional information on our operating leases, see Note 8 to the unaudited Consolidated Financial Statements. At June 30, 2024, 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. At June 30, 2024, we had advances of $800 million under the BTFP, due January 2025. 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. Inclusive of the fair value marks, WSFS assumed junior subordinated debentures owed to the RBC Trusts with a current carrying value of $11.9 million each, totaling $23.7 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. We are also contractually obligated to make interest payments on our long-term debt through their respective maturities.
Current wording
Our primary cash contractual obligations relate to operating leases, long-term debt, credit obligations, and data processing. At September 30, 2024, we had $219.9 million in total contractual payments for ongoing leases that have remaining lease terms of less than one year to 21 years, which includes renewal options that are exercised at our discretion. For additional information on our operating leases, see Note 8 to the unaudited Consolidated Financial Statements. At September 30, 2024, we had obligations for principal payments on long-term debt including $43.2 million of FHLB advances, $67.0 million for our trust preferred borrowings, due June 1, 2035, $70.0 million of fixed-to-floating rate subordinated notes due 2027, and $150.0 million for our senior debt, due December 15, 2030. At September 30, 2024, we had advances of $700.0 million under the BTFP, due January 2025. On October 11, 2024 and October 18, 2024, WSFS Bank executed repayments of advances under the Bank Term Funding Program (BTFP) totaling $700.0 million of principal and $25.1 million of accrued interest. 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. Inclusive of the fair value marks, WSFS assumed junior subordinated debentures owed to the RBC Trusts with a current carrying value of $11.9 million each, totaling $23.8 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. We are also contractually obligated to make interest payments on our long-term debt through their respective maturities.
Previous wording
Commitments to extend credit provide for financing on predetermined terms as long as the customer continues to meet specific criteria. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being completely drawn upon, the total commitment amounts do not necessarily represent future cash requirements. At June 30, 2024, the Company had total commitments to extend creditof $4.0 billion, which are generally one year commitments.
Current wording
Commitments to extend credit provide for financing on predetermined terms as long as the customer continues to meet specific criteria. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being completely drawn upon, the total commitment amounts do not necessarily represent future cash requirements. At September 30, 2024, the Company had total commitments to extend creditof $4.1 billion, which are generally one year commitments.
Previous wording
Nonperforming assets decreased $10.4 million between December 31, 2023 and June 30, 2024. This decrease was primarily driven by favorable resolutions and paydowns of multiple loans during the year and a charge-off on a commercial mortgage relationship. The ratio of nonperforming assets to total assets decreased from 0.37% at December 31, 2023 to 0.32% at June 30, 2024.
Current wording
Nonperforming assets increased $15.6 million between December 31, 2023 and September 30, 2024. This increase was primarily driven by the addition of two C&I relationships during the third quarter, partially offset by favorable resolutions and paydowns of multiple loans during the year and a charge-off on a commercial mortgage relationship. The ratio of nonperforming assets to total assets increased from 0.37% at December 31, 2023 to 0.44% at September 30, 2024.
Previous wording
Our primary objective in managing interest rate risk is to minimize the adverse impact of changes in interest rates on net interest income and capital, while maximizing the yield/cost spread on our asset/liability structure. Interest rates are partly a function of decisions by the Federal Open Market Committee (FOMC) on the target range for the federal funds rate, and these decisions are sometimes difficult to anticipate. The FOMC raised the federal funds target rate four times in 2023 for a total of 100 basis points and has suggested it may lower interest rates in 2024. In order to manage the risks associated with changes or possible changes in interest rates, we rely primarily on our asset/liability structure.
Current wording
Our primary objective in managing interest rate risk is to minimize the adverse impact of changes in interest rates on net interest income and capital, while maximizing the yield/cost spread on our asset/liability structure. Interest rates are partly a function of decisions by the Federal Open Market Committee (FOMC) on the target range for the federal funds rate, and these decisions are sometimes difficult to anticipate. The FOMC lowered the federal funds target rate once in 2024 for a total of 50 basis points and increased the target rate four times in 2023 for a total of 100 basis points, and has suggested it may continue lowering interest rates further in 2024. In order to manage the risks associated with changes or possible changes in interest rates, we rely primarily on our asset/liability structure.
Previous wording
Our primary tool for achieving our asset/liability management strategies is to match maturities or repricing periods of interest rate-sensitive assets and liabilities to promote a favorable interest rate spread and mitigate exposure to fluctuations in interest rates. We regularly review our interest rate sensitivity and adjust the sensitivity within acceptable tolerance ranges. At June 30, 2024, interest-bearing liabilities exceeded interest-earning assets that mature or reprice within one year (interest-sensitive gap) by $62.0 million. Our interest-sensitive assets as a percentage of interest-sensitive liabilities within the one-year window was 99.32% at June 30, 2024 compared with 99.67% at December 31, 2023. Likewise, the one-year interest-sensitive gap as a percentage of total assets was (0.30)% at June 30, 2024 compared with (0.14)% at December 31, 2023.
Current wording
Our primary tool for achieving our asset/liability management strategies is to match maturities or repricing periods of interest rate-sensitive assets and liabilities to promote a favorable interest rate spread and mitigate exposure to fluctuations in interest rates. We regularly review our interest rate sensitivity and adjust the sensitivity within acceptable tolerance ranges. At September 30, 2024, interest-bearing liabilities exceeded interest-earning assets that mature or reprice within one year (interest-sensitive gap) by $162.4 million. Our interest-sensitive assets as a percentage of interest-sensitive liabilities within the one-year window was 98.25% at September 30, 2024 compared with 99.67% at December 31, 2023. Likewise, the one-year interest-sensitive gap as a percentage of total assets was (0.78)% at September 30, 2024 compared with (0.14)% at December 31, 2023.
Previous wording
Three months ended June 30, 2024: Net income for the three months ended June 30, 2024 was $69.3 million, compared to $68.7 million for the three months ended June 30, 2023.
Current wording
Three months ended September 30, 2024: Net income for the three months ended September 30, 2024 was $64.4 million, compared to $74.2 million for the three months ended September 30, 2023.
Previous wording
•Our provision for credit losses increased $4.0 million, primarily due to a higher provision on our commercial mortgages portfolio. See “Allowance for Credit Losses” for further information.
Current wording
•Our provision for credit losses was flat. See “Allowance for Credit Losses” for further information.
Previous wording
•Noninterest expense increased $14.5 million, primarily due to higher salaries and benefits and Cash Connect® funding costs associated with a shift towards external funding, partially offset by decreases in net corporate development and restructuring costs, loan workout and OREO expenses, and professional fees.
Current wording
•Noninterest expense increased $24.0 million, primarily due to higher salaries and benefits from annual performance-based increases and talent additions in key business lines and Cash Connect® funding costs associated with a shift towards external funding.
Previous wording
•Income tax provision decreased $1.8 million, primarily due to the $1.2 million decrease in pre-tax income, the benefit from solar and other tax credit investments, and lower state income taxes.
Current wording
•Income tax provision decreased $1.8 million, primarily due to the $11.7 million decrease in pre-tax income, partially offset by higher state income taxes.
Previous wording
Six months ended June 30, 2024: Net income for the six months ended June 30, 2024 was $135.0 million, compared to $131.1 million for the six months ended June 30, 2023.
Current wording
Nine months ended September 30, 2024: Net income for the nine months ended September 30, 2024 was $199.5 million, compared to $205.2 million for the nine months ended September 30, 2023.
Previous wording
•Net interest income decreased $14.6 million during the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to the reasons described above. See “Net Interest Income” for further information.
Current wording
•Net interest income decreased $19.7 million during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to the reasons described above. See “Net Interest Income” for further information.
Previous wording
•Our provision for credit losses for the six months ended June 30, 2024 decreased $9.9 million compared to the six months ended June 30, 2023, due to lower losses across most of our commercial loan portfolios and our consumer portfolio, partially offset by higher losses on our commercial mortgages portfolio. See “Allowance for Credit Losses” for further information.
Current wording
•Our provision for credit losses for the nine months ended September 30, 2024 decreased $9.9 million compared to the nine months ended September 30, 2023, due to lower losses within our commercial and industrial loan portfolio and our residential and consumer loan portfolios, partially offset by higher losses on our commercial mortgages and commercial small business leases portfolios. See “Allowance for Credit Losses” for further information.
Previous wording
•Noninterest income for the six months ended June 30, 2024 increased $37.5 million compared to the six months ended June 30, 2023, primarily due to increases from Cash Connect®, Wealth Management fee income, a gain on our Visa B derivative liability, capital markets income, post-close distributions from our investment in Spring EQ, and mortgage banking activities. See “Noninterest Income” for further information.
Current wording
•Noninterest income for the nine months ended September 30, 2024 increased $54.9 million compared to the nine months ended September 30, 2023, primarily due to increases from Cash Connect®, Wealth Management fee income, revenue from our partnership with Spring EQ, a gain on our Visa B derivative liability, mortgage banking activities, and capital markets income. See “Noninterest Income” for further information.
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