WSFS Financial Corporation

are Roger Levinson, Chairman, President, and CO, and Art Bocci, Chief Operating Officer. Prior to reviewing our financial results, I would like to read our safe harbor statement. Our discussion today will include information about management's view of our future expectations, plans, and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements due to risks and uncertainties including, but not limited to, the risk factors included in our annual report in Form 10-K, and our most recent quarterly reports in Form 10-Q, as well as other documents we'll periodically file with the Securities and Exchange Commission. All comments made during today's call are subject to the Safe Harbor Statement. I will now turn to our financial results. Our businesses continue to perform very well in the quarter, providing us with strong momentum moving into 2025. 4Q results included a quarter earnings per share of $1.11, core return on assets of 1.24%, and core return on tangible common equity of 16.55%. These results cap the successful 2024 with full-year core earnings per share of $4.39, core return on assets of 1.26%, and core return on tangible common equity of 17.83%. Our results for the quarter included the termination of a relationship with a longstanding Cash Connect client as a result of adverse events in the client's overall business portfolio. This termination resulted in a negative 4.7 million pre-tax impact to our financials, with a 2.8 million impact to core fee revenue and a 1.9 million impact to core non-interest expense. This event is an isolated incident that does not have a broader bearing on the Cash Connect business. The team acted proactively to protect our interests, and we will be working to recover this loss through insurance and other avenues where appropriate. Despite the Cash Connect event, Wisfis delivered year-over-year core fee revenue growth of 7% in 4Q, powered by the Wealth & Trust business, which delivered a record fee quarter of $40 million on double-digit growth. For the full year 2024, the company achieved core fee growth of 19% relative to the prior year. Core net interest margin was 3.80 for the quarter, up two basis points link quarter, despite the interest rate cuts that we experienced in 4Q 2024. We actively managed our deposit repricing and achieved an interest bearing deposit beta of 26% for the quarter, with an exit beta as of the end of December of 35%. Customer deposits grew 4% link quarter driven by broad-based growth across the wealth and trust, consumer, and commercial business lines. Non-interest-bearing deposits grew 6% lean quarter and comprised 31% of average deposits in 4Q. Loans declined 1% lean quarter, driven by higher seasonal payoffs and business sales. On a year-over-year basis, loans grew 3%, with mid-single-digit growth in CNI and commercial mortgage. We continue to have a strong originations pipeline while our business sales present important opportunities for our wealth business to expand client relationships. We finished the year with a loan-to-deposit ratio of 77%, providing ample balance sheet flexibility and capacity to fund future growth. Our total net credit costs of $8.7 million decreased by $11.4 million from the prior quarter. This decrease reflects improvements in early-stage metrics of problem assets and delinquencies, as well as lower net charge-offs. Excluding our upstart portfolio, which is in runoff, we recorded net charge-offs of 20 basis points for the quarter and 27 basis points for the year. Non-performing assets increased quarter over quarter due to the migration of one relationship with two loans, but we believe these loans are well-collateralized based on current valuations. Our ACL coverage at the end of the year remains at 1.48%. On the last page of the supplement, we provided our outlook for 2025, which assumes one 25 basis point rate cut in June. Overall, we expect to deliver another year of high performance and growth with a full year core return on assets of approximately 1.25%. We expect mid single digit loan growth in our commercial portfolio and flat growth in our consumer portfolio. Our consumer portfolio will be impacted by the runoff of our upstart and spring EQ partnership portfolios, which will be offset by WSFIS originated loan growth. We expect continued broad based deposit growth across our businesses in 2025, building on our recent momentum. Our outlook is for deposit growth in the low single digits from our very strong levels in 4Q. Our outlook for net interest margin is approximately 3.80 for the year, consistent with the level in 4Q, and this incorporates an additional interest rate cut in June. We will continue to focus on deposit repricing opportunities and expect to finish the year with an interest bearing deposit beta of approximately 40%. We continue to see strong momentum and growth opportunities in our fee businesses, which contribute almost a third of our total revenue. We expect our wealth and trust business to grow double digits as we capitalize on talent additions and technology investments made in 2024. Our overall fee revenue will grow mid-single digits as CashConnect revenues are expected to decline as a result of the interest rate reductions. As a reminder, this revenue decline is more than offset in CashConnect's funding costs, resulting in a higher profit margin for the business in 2025. Net charges are expected to be between 35 to 45 basis points of average loans for the year, as the industry continues to see the normalization of credit. Our commercial portfolio continues to perform well, but losses may remain uneven in 2025. We expect net charge-offs associated with Upstart to continue to decline as the portfolio runs off. And lastly, we will continue to leverage opportunities to invest in the franchise while prudently managing our expense base. While we may have fluctuations on our efficiency ratio quarter to quarter, our outlook for the full year is for an efficiency ratio of 60%. We're excited about the future and remain very committed to delivering high performance. Thank you, and we will now open the line for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, can you press star followed by the number one on your touch-tone phone, and you will hear a prompt that your hand has been raised. Should you wish to withdraw, Time to press the star followed by the number one. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Our first question comes from the line of Russell from Stevens. Please go ahead.

Hey, good afternoon, guys. Hey, Russell. Hey, Russell. I wanted to start on the expense outlook, appreciate the efficiency guide for the year. Could you give some thought to us around how you're thinking about dollar expenses, how that 4Q would kind of shake out as a run, right? I hear you lumpy quarter on quarter, but sort of what's embedded in the top line guide provided earlier and as a bit of a follow-up, just what type of margin of error are you assuming on the efficiency guide? I think for the past year, we were maybe 90 bps above the plus or minus range.