WSFS Financial Corporation

I'll be your conference operator today. At this time I'd like to welcome you to the W. S. F. S. financial corporation third quarter earnings call. All lines have been placed on mute to prevent any background noise and after the speakers remarks there will be a question and answer session. If you'd like to ask a question at that time please press star then the number one on your telephone keypad. If you'd like to withdraw your question at any time please press star one again. Thank you. I'd now like to turn the call over to your host today, to Mr. David Berg, Chief Financial Officer. Sir, you may begin.

David Berg, Chief Financial Officer, Great. Thank you very much, and good afternoon, everyone, and thank you for joining our third quarter 2025 earnings call. Our earnings release and earnings release supplement, which we'll refer to on today's call, can be found in the investor relations section of our company website. With me on this call are Roger Levinson, Chairman, President, and CEO, and Arbaci, 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 our management's view of 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 an annual report on Form 10-K and our most recent quarterly reports on Form 10-Q. as well as other documents were periodically filed with the SEC. All comments made during today's call are subject to the safe harbor statement. I will now turn to our financial results. During the third quarter, WSFIS continued to demonstrate the strength of our franchise and diverse business model. The company delivered a core EPS of $1.40, core return on assets of 1.40%, and core return on tangible common equity of 18.7, which are all up versus the second quarter. On a year-over-year basis, core net income increased 21%, core PPNR grew 6%, and core earnings per share increased 30%. In addition, our tangible book value per share increased by 12%. Net interest margin expanded two basis points to 3.91% quarter over quarter. This reflects a reduction in total funding cost of two basis points with a deposit beta of 37%. Given the September rate cut, our exit beta for September is 43%, which reflects the repricing actions taken after the rate cut. Net interest margin for the quarter benefited from an interest recovery from a previously non-performing loan, which added about four basis points. Core fee revenue was flat quarter over quarter, as our results were impacted by two previously announced strategic exits in wealth and trust, as well as the spring EQ earn out from last quarter. Excluding these items, core fee revenue grew 5% quarter-over-quarter, primarily driven by capital markets and Cash Connect. Our wealth and trust business continues to perform very well and grew 13% year-over-year. Total client deposits increased 1% in quarter, driven by a commercial business. On a year-over-year basis, client deposits grew 5%, driven by growth across consumer, commercial, wealth, and trust. Importantly, Non-interest deposits grew 12% year over year and continued to represent over 30% of our total client deposits. Loans were down 1% in the quarter, driven by the previously announced sale of the upstart loan portfolio and continued runoff in our spring EQ portfolio. Excluding these items, loans were generally flat this quarter, but we saw solid momentum in several areas. Our residential mortgage and WSFIS originated consumer loan portfolios both delivered strong growth with the link quarter increases of 5% and 3% respectively. These results reflect the momentum of our home lending business, as well as the learnings attained from our partnership with Spring EQ. In commercial, new funding this quarter will offset by lower line utilization and the payoff of problem loans, which supported improvements in our asset quality. Importantly, our commercial pipeline remains strong across both CNI and commercial real estate, increasing to approximately $300 million. We saw a meaningful improvement across our asset quality metrics during the quarter. Total net credit costs were 8.4 million this quarter, down 5.9 million compared to the prior quarter. Net charge-offs were 30 basis points for the quarter and 21 basis points when excluding new lane. Importantly, we saw a decline in problem assets, delinquencies, and non-performing assets this quarter. NPAs declined by over 30% to 35 basis points, driven by two large payoffs with no additional losses. while delinquencies declined by 34%. In each of these areas, we are now at or below the lowest level in the past year. During the third quarter, WSBIS returned $56.3 million of capital, including buybacks of $46.8 million, or 1.5% of our outstanding shares. Year to date, we have repurchased 5.8% of our outstanding shares. Despite these higher levels of repurchase, our capital position remains very strong, with a CET1 of 14.39%, well in excess of our medium-term operating target of 12%. We intend to maintain an elevated level of buybacks in line with our previously communicated glide path towards our capital target of 12%, while retaining discretion to adjust the pace of these buybacks based on the macro environment, our business performance, and potential investment opportunities. These results position us well to meet our previously announced four-year outlook even with an additional October rate cut, which was not previously included in our assumptions. While the path and timing of future rate cuts remains uncertain, it's important to note that the impact of additional rate cuts on our financial results will not be linear as we continue to manage our margins through deposit repricing, our hedge program, and securities portfolio strategy. As we have done in the past, we will provide a full year 26 outlook in January with the release of our fourth quarter 2025 financial results. We remain excited about the future and committed to continue to deliver high performance. Thank you, and we'll now open the line for questions.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, again, press star 1. Thank you. Your first question comes from the line of Russell Gunther from Stephensing. Your line's open.