WSFS Financial Corporation

I'd now like to turn the call over to your host for today, Mr. David Burg, Chief Financial Officer. Sir, please go ahead.

Thank you very much. Good afternoon and thank you for joining our third quarter 2026 earnings call. Our earnings release and earnings release supplement, which we will refer to on today's call, can be found in the investor relations section of our company website. With me on this call is Rodger Levenson, Chairman, President and CEO. 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 in our annual report on Form 10-K and our most recent quarterly report on Form 10-Q, as well as other documents were periodically filed 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. During the third quarter, WSFIS's performance continued to demonstrate the strength of our franchise and diverse business model. Results included a core EPS of $1.75, and many more. In addition to this, there is a significant increase in net interest margin. Net interest margin increased by one basis point link quarter, the 3.88%, reflecting the benefit of loan growth and higher investment securities yields, partially offset by four basis point increase in client deposit costs. We exited the rate cycle with a cumulative interest bearing deposit beta of 41% and experienced an 18% deposit beta in the September rate hike. We continue to see deposit pricing pressure in the market and expect our beta to drift up over time. We expect to exit 2026 with an upcycled beta of 35% across the September rate increase and another rate increase in December. Core fee revenue, which represents nearly a third of total revenue, declined 1% link quarter and increased 3% year-over-year. The growth in our fee revenue was led by wealth and trust, which increased 30% year-over-year and now represents approximately 60% of our total fee revenue. Our wealth and trust business has delivered double-digit year-over-year growth for eight consecutive quarters, demonstrating our ability to generate growth through various interest rate and market environments. Wealth and Trust's growth was broad-based, with Corporate Trust, Global Capital Markets, the Bryn Mawr Trust Company of Delaware, and Private Wealth all delivering double-digit growth year-over-year. Within WSFIS Institutional Services, Corporate Trust and Global Capital Markets increased 45% and 48% year-over-year respectively, reflecting continued success in winning new mandates and Capturing Market Share. Our personal trust business, the Bryn Mawr Trust Company of Delaware, grew 22% year-over-year, driven by continued new account growth, while private wealth increased 14% year-over-year, driven by higher AUM. CashConnect fees declined year-over-year due to the impact of the 2025 interest rate cuts and lower volumes, but the business delivered another quarter with a profit margin of 15%, which is up meaningfully from the prior year. Gross loans grew 1% link quarter or 5% annualized. Excluding the continued runoff of the spring EQ portfolio, loans grew 2% link quarter and 7% year over year. In commercial, we continue to see momentum in CNI, which grew 1% link quarter and is up 9% year over year. While CNI funding is moderated from the elevated levels in recent quarters, client activity remains healthy and is supported by a solid pipeline. In consumer, home lending delivered another strong origination quarter despite the interest rate environment. Residential mortgage and home equity loans were up 6% in the quarter and 24% year over year. Client deposits declined 3% in the quarter, primarily reflecting the expected outflow of elevated transactional deposits at the end of the prior quarter within institutional services and commercial. Average deposits, which are a better measure of client activity, were up slightly in quarters. on a year-over-year basis, average core deposits were up 10% with average non-interest deposits growing 20%. Non-interest deposits now represent 35% of our total average deposits. Core non-interest expenses decreased 3% in quarter and were generally flat year-over-year as our efficiency ratio declined to 56.1%. While our expenses benefited from several non-recurring items this quarter, We continue to focus on expense discipline while investing in the franchise. Turning to asset quality. Most credit metrics remain stable, and we had a net recovery this quarter for the second time this year. Year to date, net charge-offs totaled three basis points of average gross loans. Delinquencies decreased 3% link quarter and 11% year-over-year, reaching their lowest level in two years. Problem assets increased by $57.5 million, or 12% link quarter, primarily driven by several downgrades across multifamily, construction, and CNI. Despite the link quarter increase, problem assets are down 16% compared to a year ago. Non-performing assets were generally flat link quarter as an increase from a student housing related loan was offset by other payoffs. Our credit costs for the quarter included an $8 million specific reserve related to this loan. During the quarter, we continue to execute on our capital return framework, returning 70 million of capital to shareholders, including 60 million through share repurchases. Year to date, we have repurchased 5.6% of our outstanding shares and returned over 90% of that income to shareholders. We're pleased with these results and remain committed to delivering high performance. We will now open the line for questions.

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Russell Gunther with Stevens. Russell, please go ahead.