WSFS Wsfs Financial Corp - 10-K

ITEM 1A. RISK FACTORS

As a financial services organization, we are subject to a number of risks inherent in our transactions and present in the business decisions we make. Described below are the primary risks and uncertainties that if realized could have a material and adverse effect on our business, financial condition, results of operations, cash flows, and liquidity. The risks and uncertainties described below are not the only risks we face.

We have identified our major risk categories as: market risk, credit risk, capital and liquidity risk, compliance risk, operational risk, strategic risk, reputation risk and model risk. Market risk is the risk of loss due to changes in external market factors such as interest rates. Credit risk is the risk of loss that arises when an obligor fails to meet the terms of an obligation. We are exposed to both client credit risk, from our loans, and institutional credit risk, principally from our various business partners and counterparties. Capital and liquidity risk is the risk that financial condition or overall safety and soundness are adversely affected by an inability, or perceived inability, to meet obligations and support business growth. Compliance risk is the risk that we fail to adequately comply with applicable laws, rules and regulations. Operational risk is the risk of loss arising from inadequate or failed processes, people or systems, external events (such as natural disasters) or compliance, reputation or legal matters and includes those risks as they relate directly to the Company as well as to third parties with whom we contract or otherwise do business. Strategic risk is the risk from changes in the business environment, improper implementation of decisions or inadequate responsiveness to changes in the business environment. Reputation risk is the risk of loss that arises from negative publicity or perceptions regarding our business practices. Model risk refers to the possibility of unintended business outcomes arising from the design, implementation or use of models.

1. Market Risk

Difficult market conditions and unfavorable economic trends could adversely affect our industry and our business.

We are exposed to downturns in the Greater Philadelphia and Delaware region, Mid-Atlantic and overall U.S. economy and housing markets. Unfavorable economic trends, sustained high unemployment, high costs of living, and declines in real estate values can cause a reduction in the availability of commercial credit and can negatively impact the credit performance of commercial and consumer loans, resulting in increased losses. These negative trends can cause economic pressure on consumers and businesses and diminish confidence in the financial markets, which may adversely affect our business, financial condition, results of operations and ability to access capital. A worsening of these conditions, such as a recession or economic slowdown, would likely exacerbate the adverse effects of these difficult market conditions on us and others in the financial services industry. In particular, we may face the following risks in connection with these events:

• An increase in the number of Clients unable to repay their loans in accordance with the original terms, which could result in a higher level of loan and lease losses and provision for loan and lease losses;

• Decreases in Client deposits;

• Impaired ability to assess the creditworthiness of clients as the models and approaches we use to select, manage and underwrite our Clients become less predictive of future performance;

• Impaired ability to estimate the losses inherent in our credit exposure as the process we use to make such estimates requires difficult, subjective and complex judgments based on forecasts of economic or market conditions that might impair the ability of our Clients to repay their loans, and this estimating process becomes less accurate and thus less reliable as economic conditions worsen;

• Increases in foreclosures, delinquencies and client bankruptcies, as well as more restricted access to commercial credit;

• Decreases in our Wealth and Trust segment's AUM portfolios as a result of, among other things, decreases in market value from investment performance losses and Clients' increased financial needs;

• Downward pressure on our stock price or an impaired ability to access the capital markets or otherwise obtain needed funding on attractive terms or at all;

• Changes in the regulatory environment, including regulations promulgated or to be promulgated under federal banking legislation or other new regulations, and changes in accounting standards, which could influence recognition of loan and lease losses and our allowance for credit losses, and could result in earlier recognition of loan losses and decreases in capital; and

• Increased competition due to intensified consolidation of the financial services industry and competition from non-banks.

Changes in interest rates and other factors beyond our control could have an adverse impact on our earnings.

Over the past several years, our earnings have been, and continue to be, significantly impacted by substantial fluctuations in the interest rate environment. In response to the economic and financial effects of the COVID-19 pandemic, the Federal Reserve initially reduced interest rates through 2020 and 2021 and instituted quantitative easing measures as well as domestic and global capital market support programs. In 2022 and 2023, to curb rising inflation, the Federal Reserve increased the target Federal Funds rate−the interest rate that banks charge each other for overnight lending in order to help maintain the reserve requirements of the Federal Reserve−to a range between 5.25% and 5.50% and enacted policies to achieve that target range. During 2025, the Federal Reserve announced three decreases to the Federal Funds rate, ending the year with a range between 3.50% and 3.75%.

Our operating income and net income depend to a significant extent on our net interest margin, which is the difference between the interest yields we receive on loans, securities and other interest-earning assets and the interest rates we pay on interest-bearing deposits and other liabilities. Net interest margin is affected by changes in market interest rates, because different types of assets and liabilities may react differently, and at different times, to market interest rate changes. When interest-bearing liabilities mature or reprice more quickly than interest-earning assets in a period, an increase in market rates of interest could reduce net interest income. Similarly, when interest-earning assets mature or reprice more quickly than interest-bearing liabilities, falling interest rates could reduce net interest income. These rates are highly sensitive to many factors beyond our control, including competition, general economic conditions and monetary and fiscal policies of various governmental regulatory agencies, including the Federal Reserve and the target Federal Funds rate.

We seek to manage our risk from changes in market interest rates by adjusting the rates, maturity, repricing, and balances of our different types of interest-earning assets and interest-bearing liabilities, but these interest rate risk management techniques are not capable of eliminating such risks and they may not be as effective as we intend. In particular, rapid increases or decreases in interest rates could have unusually adverse effects on our net interest margin, including the impact of deposit betas, and results of operations to the extent our interest rate risk management techniques are insufficient to mitigate these risks in a timely manner. The results of our interest rate sensitivity simulation models depend upon a number of assumptions which may prove to be inaccurate. We may not be able to successfully manage our interest rate risk, which could have a material adverse impact on the fair market value of our assets and the results of our operations.

Interest rate increases often result in larger payment requirements for our borrowers, which increase the potential for default and could result in a decrease in the demand for loans. At the same time, the marketability of the property securing a loan may be adversely affected by any reduced demand resulting from higher interest rates. In a declining interest rate environment, there may be an increase in prepayments on loans as borrowers refinance their loans at lower rates. In addition, in a low interest rate environment, loan clients often pursue long-term fixed rate credits, which could adversely affect our earnings and net interest margin if rates increase. Changes in interest rates also can affect the value of loans, securities and other assets. An increase in interest rates that adversely affects the ability of borrowers to pay the principal or interest on loans may lead to an increase in nonperforming assets and a reduction of income recognized, which could have an adverse effect on our results of operations and cash flows. Further, when we place a loan on nonaccrual status, we reverse any accrued but unpaid interest receivable, which decreases interest income. At the same time, we continue to have a cost to fund the loan, which is reflected as interest expense, without any interest income to offset the associated funding expense. Thus, an increase in the amount of nonperforming assets would have an adverse impact on net interest income.

The market value of our investment securities portfolio may be impacted by the level of interest rates and the credit quality and strength of the underlying collateral.

Our net interest income varies as a result of changes in interest rates as well as changes in interest rates across the yield curve. When interest rates are low, borrowers have an incentive to refinance into mortgages with longer initial fixed rate periods and fixed rate mortgages, causing our securities to experience faster prepayments. Increases in prepayments on our portfolio will cause our premium amortization to accelerate, lowering the yield on such assets. If this happens, we could experience a decrease in interest income, which may negatively impact our results of operations and financial condition.

Future changes in interest rates may reduce the market value of our investment securities, which could impact market confidence in our operations. For example, a series of bank failures in the spring of 2023 was precipitated by losses in the value of securities portfolios due to rising interest rates and subsequent reduction in deposits. In addition, our securities portfolio is subject to risk as a result of our exposure to the credit quality and strength of the issuers of the securities or the collateral backing such securities. Any decrease in the value of the underlying collateral will likely decrease the overall value of our securities, affecting equity and possibly impacting earnings.

Changes in or questions about the soundness of other financial institutions could adversely affect us.

Our ability to engage in routine funding transactions could be adversely affected by the actions of and changes in the commercial soundness of other financial institutions. Defaults by, or even rumors or questions about, one or more financial services institutions, or the financial services industry generally, have led to market-wide liquidity problems and could lead to losses or defaults by us or by other institutions and damage to our reputation by association. Such events could adversely affect our business, results of operations, or financial condition.

The financial services industry and our market area are highly competitive.

We compete with regional and national financial institutions and other non-bank companies, some of which may have larger client bases, operate with greater resources, and offer lending terms and services that we do not or cannot offer. Some of these competitors may have other advantages, such as the favorable tax treatments available to credit unions. The financial services industry continues to consolidate due to the benefits of operating at a larger scale and is undergoing rapid technological development that may require us to further develop and invest in our digital capabilities. This competition can affect the pricing for our products and services and if the Company cannot compete effectively, we may lose market share and income resulting in an adverse effect on our business, results of operations and financial condition.

2. Credit Risk

Significant increases of nonperforming assets, or greater than anticipated costs to resolve these credits, can have an adverse effect on our earnings.

Our nonperforming assets, which consist of non-accrual loans and assets acquired through foreclosure, adversely affect our net income in various ways. We do not record interest income on nonaccrual loans and assets acquired through foreclosure. We must establish an allowance for credit losses which reserves for losses inherent in the loan and lease portfolio that are both probable and reasonably estimable. From time to time, we also write down the value of properties in our portfolio of assets acquired through foreclosure to reflect changing market values. Additionally, there are legal fees associated with the resolution of problem assets as well as carrying costs such as taxes, insurance and maintenance related to assets acquired through foreclosure. The resolution of nonperforming assets requires the active involvement of management, which can distract management from daily operations and other income producing activities. Finally, if our estimate of the allowance for credit losses is inadequate, we will have to increase the allowance for credit losses accordingly, which will have an adverse effect on our earnings. Significant increases in the level of our nonperforming assets from the current level, or greater than anticipated costs to resolve these credits, will have an adverse effect on our earnings.

Our loan portfolio includes a substantial amount of commercial mortgage, commercial and industrial, and construction and land development loans. The credit risk related to these types of loans is greater than the risk related to residential loans.

Our commercial loan portfolio includes commercial and industrial loans, commercial mortgage loans, and construction and land development loans. Commercial mortgage loans generally carry larger loan balances and involve a greater degree of risk of nonpayment or late payment than home equity loans or residential mortgage loans. Any significant failure to pay or late payments by our Clients would adversely affect our earnings. The increased credit risk associated with these types of loans is a result of several factors, including the concentration of principal in a limited number of loans and borrowers, the larger size of loan balances, and the potential that changes in general economic and working conditions can adversely affect income-producing properties, such as reduced office usage as a result of remote work policies. A portion of our commercial mortgage, construction and land development and commercial and industrial loan portfolios includes a balloon payment feature. A number of factors may affect a borrower’s ability to make or refinance a balloon payment, including the financial condition of the borrower, the prevailing local economic conditions and the prevailing interest rate environment.

Furthermore, commercial and industrial loans secured by owner-occupied properties are dependent upon the successful operation of the borrower’s business. If the operating company suffers difficulties, including reduction in sales volume and/or profitability, the borrower’s ability to repay the loan may be impaired. Loans secured by properties where repayment is dependent upon payment of rent by third party tenants or the sale of the property may be impacted by loss of tenants, lower lease rates needed to attract new tenants or the inability to sell a completed project in a timely fashion and at a profit.

We are exposed to increased credit losses and credit related expenses in the event of a major natural disaster, public health crisis, other catastrophic event or significant climate change effects.

The occurrence of a major natural or environmental disaster, public health crisis or similar catastrophic event, as well as significant climate change effects such as rising sea levels or wildfires, especially in densely populated geographic areas, could increase our credit losses and credit related expenses. A natural disaster, public health crisis or catastrophic event or other significant climate change effect that either damages or destroys residential or multifamily real estate underlying mortgage loans or real estate owned properties, or negatively affects the ability of borrowers to continue to make payments on loans, could increase our serious delinquency rates and average loan loss severity in the affected areas. Such events could also cause downturns in economic and market conditions generally, which could have an adverse effect on our business and financial results. We may not have adequate insurance coverage for some of these natural, catastrophic, public health or climate change-related events.

Concentration of loans in our primary markets may increase our risk.

Our success depends primarily on the general economic conditions and housing markets in the state of Delaware, southeastern Pennsylvania, southern New Jersey and northern Virginia, as a large portion of our loans are made to clients in these markets. This makes us vulnerable to a downturn in the local economy and real estate markets in these areas. Declines in real estate valuations in these markets would lower the value of the collateral securing those loans, which could cause us to realize losses in the event of increased foreclosures. Local economic conditions have a significant impact on the ability of borrowers to repay loans as well as our ability to originate new loans. In addition, weakening in general economic conditions such as inflation, stagflation, increased costs-of-living, recession, unemployment, natural disasters or other factors beyond our control could negatively affect demand for loans, the performance of our borrowers and our financial results.

If our allowance for credit losses is not sufficient to cover actual loan and lease losses, our earnings will decrease.

We make various assumptions and judgments about the collectability of the loans and leases in our portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans and leases. In determining the amount of the allowance for credit losses, we review our portfolio mix and segmentation, modeling methodology, historical loss experience, relevant available information from internal and external sources relating to qualitative adjustment factors, prepayment speeds and reasonable and supportable forecasts about future economic conditions. If our assumptions are incorrect or if there is a significant deterioration in economic conditions, our allowance for credit losses may not be sufficient to cover expected credit losses in our loan and lease portfolio, resulting in unanticipated losses and additions to our allowance for credit losses. Material additions to our allowance for credit losses could materially decrease our net income.

3. Capital and Liquidity Risk

Our inability to grow deposits in the future could adversely affect our liquidity and ability to grow our business.

A key part of our strategy is to grow deposits. The market for deposits is highly competitive, with intense competition in attracting and retaining deposits. We compete on the basis of the rates we pay on deposits, features and benefits of our products, the quality of our client service and the competitiveness of our digital banking capabilities. Our ability to originate and maintain deposits is also highly dependent on the strength of the Bank and the perceptions of clients and others of our business practices and our financial health. Adverse perceptions regarding our reputation could lead to difficulties in attracting and retaining deposits accounts. Negative public opinion could result from actual or alleged conduct in a number of areas, including lending practices, regulatory compliance, inadequate protection of client information or sales and marketing activities, and from actions taken by regulators or others in response to such conduct.

The demand for the deposit products we offer may also be reduced due to a variety of factors, such as demographic patterns, changes in client preferences, reductions in consumers’ disposable income, regulatory actions that decrease client access to particular products or the availability of competing products. Competition from other financial services firms and others that use deposit funding products may affect deposit renewal rates, costs or availability. Changes we make to the rates offered on our deposit products may affect our profitability and liquidity.

The FDIA prohibits an insured bank from accepting brokered deposits or offering interest rates on any deposits significantly higher than the prevailing rate in the bank’s normal market area or nationally (depending upon where the deposits are solicited), unless it is “well-capitalized,” or it is “adequately capitalized” and receives a waiver from the FDIC. A bank that is “adequately capitalized” and accepts brokered deposits under a waiver from the FDIC may not pay an interest rate on any deposit in excess of 75 basis points over certain prevailing market rates. There are no such restrictions under the FDIA on a bank that is “well-capitalized”, and at December 31, 2025, the Bank met or exceeded all applicable requirements to be deemed “well-capitalized” for purposes of the FDIA. However, the Bank may not continue to meet these requirements. Limitations on the Bank’s ability to accept brokered deposits (including regulatory limitations on the amount of brokered deposits in total or as a percentage of total assets) for any reason in the future could adversely impact our funding costs and liquidity. Any limitation on the interest rates the Bank can pay on deposits could competitively disadvantage us in attracting and retaining deposits and have an adverse effect on our business.

We could experience an unexpected inability to obtain needed liquidity.

Liquidity is essential to our business, as we use cash to fund loans and investments, other interest-earning assets and deposit withdrawals that occur in the ordinary course of our business. We also are required by federal and state regulatory authorities to maintain adequate levels of capital to support our operations. Additionally, the operations of our Cash Connect ® segment depends on us having access to large amounts of cash.

Our principal sources of liquidity include client deposits, FHLB borrowings, brokered certificates of deposit, sales of loans, repayments to the Bank from borrowers and paydowns and sales of investment securities. Our ability to obtain funds from these sources could become limited, or our costs to obtain such funds could increase, due to a variety of factors, including changes in our financial performance, the imposition of regulatory restrictions on us, or adverse developments in the capital markets, including weakening economic conditions or negative views and expectations about the prospects for the financial services industry as a whole. If our ability to obtain necessary funding is limited or the costs of such funding increase, our ability to meet our obligations or grow our banking business would be adversely affected and our financial condition and results of operations could be harmed.

Restrictions on our subsidiaries’ ability to pay dividends to us could negatively affect our liquidity and ability to pay dividends.

We are a separate and distinct legal entity from our subsidiaries, including the Bank. We receive substantially all of our revenue from dividends from our subsidiaries. These dividends are the principal source of funds to pay dividends on our common stock, and interest and principal on our debt. Various federal and/or state laws and regulations limit the amount of dividends that the Bank and certain of our nonbank subsidiaries may pay us, and the OCC may block dividend payments by the Bank. Also, our right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors. Limitations on our subsidiaries to pay dividends to us could have an adverse effect on our liquidity and on our ability to pay dividends on our common stock. Additionally, if our subsidiaries’ earnings are not sufficient to make dividend payments to us while maintaining adequate capital levels; we may not be able to make dividend payments to our common stockholders.

4. Compliance Risk

We are subject to extensive regulation which could have an adverse effect on our operations.

We are subject to extensive federal and state regulation, supervision and examination governing almost all aspects of our operations. The Federal Reserve is the primary federal regulator for the Company, the OCC is the Bank’s primary regulator and the CFPB regulates the Bank’s compliance with a defined category of Federal consumer financial laws . Other agencies, including the U.S Department of Justice, the U.S Department of Housing and Urban Development, and state attorney's in general also have enforcement or other authority. The banking laws, regulations and policies applicable to us govern a variety of matters, including certain debt obligations, changes in control, maintenance of adequate capital, and general business operations, including permissible types, amounts and terms of loans and investments, the amount of reserves held against deposits, restrictions on dividends, establishment of new offices, the maximum interest rate that may be charged by law and treatment of clients. In addition, banking regulators have broad authority to supervise our banking business, including the authority to prohibit activities that represent unsafe or unsound banking practices or constitute violations of statute, rule, regulation or administrative order. Failure to appropriately comply with any such laws, regulations or regulatory policies could result in sanctions by regulatory agencies, civil money penalties or damage to our reputation, all of which could adversely affect our business, results of operations, financial condition or prospects. A government shutdown or understaffing at the Federal Reserve, the OCC and/or the CFPB could result in unforeseen delays in our ability to receive approval for certain transactions or deal with other regulatory issues. Such a delay could adversely affect our business, results of operations, or financial condition.

We are subject to changes in federal and state banking statutes, regulations and governmental policies, and their interpretation or implementation. Certain of our subsidiaries are registered with the SEC as investment advisers and, as such, are subject to regulation, supervision and enforcement by the SEC under the Investment Advisers Act. Regulations affecting banks and other financial institutions in particular are undergoing continuous review and frequently change and the ultimate effect of such changes cannot be predicted. Regulations and laws may be modified at any time, and new legislation may be enacted that will affect us. As noted in “Business - Regulation of the Company,” recent executive orders from the current administration may result in uncertainty as to what the supervisory and enforcement priorities of the three prudential banking agencies will be and may result in significant changes in policies, rules and regulations. Any changes in any federal and state law, as well as regulations and governmental policies could subject us to additional compliance costs and otherwise affect us in substantial and unpredictable ways, including ways that may adversely affect our business, results of operations, financial condition or prospects.

We face a risk of noncompliance and enforcement action under the Bank Secrecy Act and other anti-money laundering statutes and regulations.

The Bank Secrecy Act, the USA PATRIOT Act of 2001, and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports when appropriate. These laws and regulations also provide that we are ultimately responsible to ensure our third party vendors adhere to the same laws and regulations. In addition to other bank regulatory agencies, FinCEN is authorized to impose significant civil money penalties for violations of those requirements and has engaged in coordinated enforcement efforts with state and federal banking regulators, as well as the U.S. Department of Justice, CFPB, Drug Enforcement Administration, and Internal Revenue Service.

We are also subject to increased scrutiny of compliance with the rules enforced by OFAC regarding, among other things, the prohibition on transacting business with, and the need to freeze assets of, certain persons and organizations identified as a threat to the national security, foreign policy or economy of the United States. If our policies, procedures and systems or those of our third party vendors are deemed deficient, we would be subject to liability, including fines and regulatory actions, which may include restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan, including any acquisition plans. Any of these results could have an adverse effect on our business, financial condition, results of operations and prospects.

We are subject to numerous laws designed to protect consumers and promote community investment, including fair lending laws and the Community Reinvestment Act. Failure to comply with these laws or perform satisfactorily could lead to a wide variety of sanctions.

The Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions. Adverse findings in an evaluation of our fair lending compliance could result in a wide variety of sanctions, including damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions activity, restrictions on expansion, and restrictions on entering new business lines. Private parties may also have the ability to challenge our performance under fair lending laws in private individual and class action litigation. Such actions could have an adverse effect on our business, financial condition, results of operations and prospects.

The Community Reinvestment Act requires federal banking regulators to use their supervisory authority to assess depository institutions' record of community investment. If the Bank does not perform satisfactorily under the Community Reinvestment Act, as determined by the OCC, the Company and the Bank could be restricted in their ability to expand through mergers, acquisitions, and/or the establishment of branches.

The fiscal, monetary and regulatory policies of the federal government and its agencies could have an adverse effect on our results of operations.

The Federal Reserve regulates the supply of money and credit in the U.S. Its policies determine in large part the cost of funds for lending and investing and the return earned on those loans and investments, both of which affect our net interest margin. Its policies can also adversely affect borrowers, potentially increasing the risk that they may fail to repay their loans. Congress controls fiscal policy through decisions on taxation and expenditures. Depending on industries and markets involved, changes to tax law and increased or reduced public expenditures could affect us directly or the business operations of our Clients. Changes in Federal Reserve policies, fiscal policy, and our regulatory environment generally are beyond our control, and we are unable to predict what changes may occur or the manner in which any future changes may affect our business, financial condition and results of operations.

If we fail to comply with legal standards, we could incur liability to our Clients or lose clients, which could negatively affect our earnings.

Managing or servicing assets with reasonable prudence in accordance with the terms of governing documents and applicable laws is important to client satisfaction, which in turn is important to the earnings and growth of our investment businesses. Failure to comply with these standards, adequately manage these risks or manage the differing interests often involved in the exercise of fiduciary responsibilities could also result in liability.

The CFPB has reshaped consumer financial regulations through rulemaking and enforcement of prohibitions against unfair, deceptive or abusive business acts or practices. Compliance with any such change may impact the manner in which WSFS and WSFS Bank offer consumer financial products or services, and our results of operations.

As an insured depository institution with $10 billion or more in total assets, WSFS Bank is subject to supervision, examination, and enforcement with respect to defined Federal consumer financial laws by the CFPB. The CFPB has broad authority to administer and carry out provisions of the Dodd-Frank Act with respect to the Company's consumer financial products and services and may impose requirements more onerous than those of other bank regulatory agencies. For example, the Dodd-Frank Act authorizes the CFPB to write rules or bring enforcement actions to prohibit acts or practices that are unfair, deceptive or abusive in connection with consumer financial products or services, and the concept of an "abusive" act or practice did not previously exist in federal banking law.

The CFPB has initiated enforcement actions against a variety of bank and non-bank market participants with respect to a number of consumer financial products and services, which has resulted in those participants expending significant time and money, including the costs of penalties and consumer redress, to respond to the actions pursued by the CFPB. As part of its rulemaking and enforcement activities, the CFPB has adopted interpretations of consumer protection laws that have required many market participants to change their practices and expend substantial resources to do so. The CFPB has used its authorities to penalize market participants and/or change market practices in several areas of the financial services industry, including automobile loan servicing, credit card account management, debt collection, small business lending, the operation of ATMs, mortgage origination and servicing, depository account management, the charging of late fees or other credit card fees, the charging of overdraft fees and insufficient funds fees on deposit accounts, and consumer reporting, among others.

There continues to be uncertainty as to how CFPB's strategies and priorities will impact the Company's business and operations. As noted in “Business - Regulation of the Company,” the Acting Director of the CFPB instructed agency staff to pause most activity, including supervision and enforcement. There also has been a reduction in staffing and funding at the CFPB in 2025, which has been challenged in ongoing litigation. While it is presently unclear what the level and nature of activity by the CFPB will be going forward, other governmental authorities, including state attorneys general or banking regulators, may seek to increase their regulation and supervision of, and enforcement against providers of consumer financial products and services in response to changes at the CFPB and other federal agencies, which could increase our regulatory risk.

5. Operational Risk

Our technology-related operational processes and procedures may not be effective in accomplishing their intended purposes.

Our operations depend upon the use of computer programs, algorithms, and other analytical tools. If such technology is ineffective at its intended purposes or includes errors in computer code, bias, bad data, misuse of data, or fraud, it may adversely affect our operations. Additionally, as societal norms, legal requirements, businesses and markets evolve, our technology may not accurately reflect this evolution. There may also be technology-related issues that exist, or that develop in the future, that we have not anticipated, identified or mitigated, including when processes are changed or new products and services are introduced. In particular, the implementations of new technologies and digital solutions may cause business disruptions that affect our ability to maintain relationships with clients, depositors and employees. If our risk management framework does not effectively identify and control such risks, we could suffer unexpected losses or be adversely affected, and that could have an adverse effect on our business, results of operations and financial condition.

Our results of operations and financial condition could be adversely affected if our Cash Connect ® segment’s policies, procedures and controls are inadequate to prevent a misappropriation of funds, or if a misappropriation of funds is not insured or not fully covered through insurance.

The profitability of our Cash Connect ® segment depends to a large degree on its ability to accurately and efficiently distribute, track, and settle large amounts of cash to its Clients’ ATMs which, in turn, depends on the successful implementation and monitoring of a comprehensive system of financial and operational controls that are designed to help prevent, detect, and recover any potential loss of funds. These controls require the implementation and maintenance of complex proprietary software, the ability to track and monitor an extensive network of armored car companies, and the ability to settle large amounts of electronic funds transfers (EFT) from various ATM networks. There is a risk that those associated with armored car companies, ATM networks and processors, ATM operators, or other parties may misappropriate funds belonging to Cash Connect ® . Cash Connect ® has experienced such occurrences in the past. If our Cash Connect ® division’s established policies, procedures and controls are inadequate, or not properly executed to prevent or detect a misappropriation of funds, or if a misappropriation of funds is not insured or not fully covered through any insurance maintained by us, our business, results of operations or financial condition could be adversely affected.

System failure or cybersecurity breaches of our network security could subject us to increased operating costs as well as litigation and other potential losses.

Our operations are dependent upon our ability to protect our computer equipment against damage from fire, power loss, telecommunications failure or a similar catastrophic event. Any damage or failure that causes an interruption in our operations could have an adverse effect on our business, financial condition and results of operations. In addition, our operations are dependent upon our ability to protect the computer systems, software and networks utilized by us, including our Internet banking activities, against damage from physical break-ins, cyber-attacks, cybersecurity breaches and other disruptive problems. Failures in, or breaches of, our computer systems, software and networks, or those of our third-party vendors or other service providers, including as a result of cyber-attacks, cybersecurity breaches and other disruptions, could disrupt our business or operations or those of our Clients and counterparties, result in the disclosure or misuse of confidential or proprietary information, result in supervisory liability or regulatory enforcement action, damage our reputation, result in a loss of Clients and business, result in a loss of confidence in the security of our systems, products and services, increase our costs and cause losses to us. Our security measures, including firewalls and penetration testing, as well as Board oversight and management's assessment, identification and management of cybersecurity risks, may not prevent or detect future potential losses or liabilities from system failures or breaches or cyber-attacks, cybersecurity breaches, or other disruptions. We seek to continuously monitor for and nimbly react to any and all such malicious cyber activity, and we develop our systems to protect our technology infrastructure and data from misuse, misappropriation or corruption. Senior management gives a quarterly update on cybersecurity to the Risk Committee of our Board (Risk Committee) and an annual update to our full Board.

Although we devote significant resources and Board oversight and management focus to ensuring the integrity of our systems through information security and business continuity programs, our computer systems, software and networks, and those of our third-party service providers, are vulnerable to external or internal security breaches, acts of vandalism, computer viruses or malware, misplaced or lost data, denial-of-service attacks, programming or human errors, or other similar events. We also experience large volumes of phishing and other forms of social engineering attempts for the purpose of perpetrating fraud against us, our Associates, or our Clients. In addition to cyber-attacks or other security breaches involving the theft of sensitive and confidential information, hackers recently have engaged in attacks against large financial institutions that are designed to disrupt key business services, such as consumer-facing web sites. We and our third-party vendors or other service providers have experienced all of these events and expect to continue to experience them in the future. Any of these occurrences could have an adverse effect on our business, financial condition and results of operations. Although the impact to date from these events has not had an adverse effect on us, we cannot be sure this will be the case in the future. We are not able to anticipate or implement effective preventive measures against all security breaches of these types, especially because attacks are increasingly sophisticated, change frequently, often not recognized until launched, and can originate from a wide variety of sources. Our early detection and response mechanisms could fail to detect, mitigate or remediate these risks in a timely manner. Despite our implementation of protective measures and endeavoring to modify them as circumstances warrant, our computer systems, software and networks may be vulnerable to human error, equipment failure, natural disasters, power loss, unauthorized access, supply chain attacks, distributed denial of service attacks, computer viruses and other malicious code, and other events that could result in significant liability and damage to our reputation, and have an ongoing impact on the security and stability of our operations. In addition, although we maintain insurance coverage that may, subject to terms and conditions, cover certain aspects of cyber and information security risks, such insurance coverage may be insufficient to cover all losses, such as litigation costs or financial losses that exceed our policy limits or are not covered under any of our current insurance policies.

Information security risks for financial institutions like us have increased recently in part because of new technologies, the use of the internet, cloud, and telecommunications technologies (including mobile devices) to conduct financial and other business transactions and the increased sophistication and activities of organized crime, perpetrators of fraud, hackers, terrorists and others. Additionally, like many large enterprises, we have introduced more remote work arrangements for our Associates. The increase in remote work arrangements over the past few years has introduced potential new vulnerabilities to cyber threats. We also face increased cybersecurity risk as we deploy additional technologies and digital solutions, including our website and mobile banking app. We may also face increased cybersecurity risk for a period of time after acquisitions as we transition the acquired entity’s historical systems and networks to our standards. Moreover, any cyber-attack or other security breach may persist for an extended period of time without detection. We endeavor to design and implement policies and procedures to identify such cyber-attacks or breaches as quickly as possible; however, we expect that any investigation of a cyber-attack or breach would take substantial amounts of time, and that there may be extensive delays before we obtain full and reliable information. During such time we would not necessarily know the extent of the harm or how best to remediate it, and certain errors or actions could be repeated or compounded before they are discovered and remediated, all of which would further increase the costs and consequences of such an attack or breach.

We may also be subject to liability under various data protection laws. In the normal course of business, we collect, process, and retain sensitive and confidential information regarding our Clients and Associates, including personal data. As a result, we are subject to numerous laws and regulations designed to protect this information, such as U.S. federal, state and international laws governing the protection of personally identifiable information. These laws and regulations are increasing in complexity and number. If any person, including any of our Associates, negligently disregards or intentionally breaches our established controls with respect to client or employee data, or otherwise mismanages or misappropriates such data, we could be subject to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution. In addition, unauthorized disclosure of sensitive or confidential client or employee data, whether through system failure, employee negligence, fraud or misappropriation, could damage our reputation and cause us to lose clients and related revenue. Potential liability in the event of a security breach of client data could be significant. Depending on the circumstances giving rise to the breach, this liability may not be subject to a contractual limit or an exclusion of consequential or indirect damages.

We rely on third parties for certain important functions. Any failures by those vendors and service providers could disrupt our business operations or expose us to loss of confidential information or intellectual property.

Our use of third-party service providers exposes us to the risk of failures in their operations and their risk and control environments. We outsource certain key functions to external parties, including some that are critical to financial reporting (including our use of hedge accounting), valuations, our mortgage-related investment activity, loan underwriting, and loan servicing. We may enter into other key outsourcing relationships in the future and continue to expand our existing reliance on third-party service providers. If one or more of these key external parties were not able to perform their functions, perform them at an acceptable service level or handle increased volumes, or if one of them experiences a disruption in its own business or technology from any cause, our business operations could be constrained, disrupted, or otherwise negatively affected. Our use of third-party service providers also exposes us to the risk of losing intellectual property or confidential information and to other harm, including to our reputation. Our ability to monitor the activities or performance of third-party service providers may be constrained, which may make it difficult for us to assess and manage the risks associated with these relationships.

Use of artificial intelligence by us and our third-party vendors or service providers could result in reputational or competitive harm, legal or regulatory liability and adverse impacts on our results of operations.

We have incorporated, and expect to continue to incorporate in the future, artificial intelligence (“AI”) solutions into our operations, and the use of AI involves various risks and challenges that could adversely affect our business, financial condition or results of operations. In addition, we expect our third-party vendors and service providers to increasingly develop and incorporate AI into their product offerings. The use, development and deployment of AI systems or the AI systems of third-party AI vendors involve inherent technical complexities and uncertainties, and these AI systems may encounter unexpected technical difficulties, limitations or errors, including inaccuracies in data processing or flawed algorithms, which could compromise the reliability and effectiveness of our products and services based on AI. In addition, our competitors or other third parties may incorporate AI into their products more quickly or more successfully than us, which could impair our ability to compete effectively.

The use of AI applications, including large language models, has resulted in, and may in the future result in, cybersecurity vulnerabilities or incidents that implicate the personal information, intellectual property, proprietary data or other sensitive information of end users of such applications. Any such cybersecurity incidents related to our use of AI applications could adversely affect our reputation and results of operations. AI also presents emerging ethical issues, and if our use of AI becomes controversial, we may experience brand or reputational harm, competitive harm, regulatory scrutiny or legal liability.

The increased adoption of AI technologies in our products and services may result in new or enhanced governmental or regulatory scrutiny, litigation, confidentiality or security risks or other complications that could adversely affect our business, reputation or financial results. The regulatory landscape governing AI technologies is evolving rapidly, and various jurisdictions, including Europe and certain U.S. states, have proposed or already adopted laws governing the use, development and deployment of AI technologies. Changes in laws, regulations or enforcement practices may impose new compliance requirements, restrict certain AI applications or increase our regulatory obligations, which could negatively impact our business and results of operations.

Our business may be adversely impacted by litigation and regulatory enforcement, which could expose us to significant liabilities and/or damage our reputation.

From time to time, we have and may become party to various litigation claims and legal proceedings. Our businesses involve the risk that clients or others may sue us, claiming that we have failed to perform under a contract or otherwise failed to carry out a duty perceived to be owed to them. Our trust, custody and investment management businesses are particularly subject to this risk. This risk may be heightened during periods when credit, equity or other financial markets are deteriorating in value or are particularly volatile, or when clients or investors are experiencing losses. In addition, as a publicly-traded company, we are subject to the risk of claims under the federal securities laws, and volatility in our stock price and those of other financial institutions increases this risk. Actions brought against us may result in injunctions, settlements, damages, fines or penalties, which could have an adverse effect on our business, financial condition or results of operations or require changes to our business. Even if we defend ourselves successfully, the cost of litigation may be substantial, and public reports regarding claims made against us may cause damage to our reputation among existing and prospective clients or negatively impact the confidence of counterparties, rating agencies and stockholders, consequently negatively affecting our earnings.

In the ordinary course of our business, we also are subject to various regulatory, governmental and enforcement inquiries, investigations and subpoenas. These may be directed generally to participants in the businesses in which we are involved or may be specifically directed at us. In enforcement matters, claims for disgorgement, the imposition of civil and criminal penalties and the imposition of other remedial sanctions are possible.

WSFS Bank provides indenture trustee and loan agency services, including administrative and collateral agent fee-based services for first lien, second lien, debtor-in-possession and exit facilities, and WSFS Bank professionals work with ad hoc committees, unsecured creditors’ committees, borrowers and other professionals involved in restructuring and bankruptcy. In this capacity, in the normal course of business, WSFS Bank may be named as a party in litigation. Although WSFS Bank has no credit or direct exposure in conjunction with this administrative role, the fact that the Bank’s name appears in the case caption may create the erroneous impression that WSFS Bank may have financial exposure in such a lawsuit.

Actual outcomes, losses and related expenses of pending legal proceedings may differ materially from assessments and estimates, and may exceed the amount of any reserves we have established, which could adversely affect our reputation, business, financial condition and results of operations.

Errors, breakdowns in controls or other mistakes in the provision of services to clients or in carrying out transactions for our own account can subject us to liability, result in losses or negatively affect our earnings in other ways.

In our asset servicing, investment management, fiduciary administration and other business activities, we effect or process transactions for clients and for us that involves very large amounts of money. Failure to properly manage or mitigate operational risks can have adverse consequences, and increased volatility in the financial markets may increase the magnitude of resulting losses. Given the high volume of transactions we process, errors that affect earnings may be repeated or compounded before they are discovered and corrected.

6. Strategic Risk

Our business strategy includes significant investment in growth plans, and our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth and investment in infrastructure effectively.

We are pursuing a significant growth strategy for our business. Our growth initiatives have required us to recruit experienced personnel to assist in such initiatives. The failure to retain such personnel would place significant limitations on our ability to successfully execute our growth strategy. In addition, as we expand our lending beyond our current market areas, we could incur additional risk related to those new market areas. We may not be able to expand our market presence in our existing market areas or successfully enter new markets.

A weak economy, low demand and competition for credit may impact our ability to successfully execute our growth plan and adversely affect our business, financial condition, results of operations, reputation and growth prospects. While we believe we have the executive management resources and internal systems in place to successfully manage our future growth, there can be no assurance growth opportunities will be available or that we will successfully manage our growth.

We regularly evaluate potential acquisitions and expansion opportunities. If appropriate opportunities present themselves, we expect to engage in selected acquisitions or other business growth initiatives or undertakings. We may not successfully identify appropriate opportunities, may not be able to negotiate or finance such activities and such activities, if undertaken, may not be successful.

We have in the past and may in the future pursue acquisitions, which may disrupt our business and adversely affect our results of operations, and we may fail to realize all of the anticipated benefits of any such acquisition.

We have historically pursued acquisitions, and may seek acquisitions in the future. We may not be able to successfully identify suitable candidates, negotiate appropriate acquisition terms, complete proposed acquisitions, successfully integrate acquired businesses into the existing operations, or expand into new markets. Once integrated, acquired operations may not achieve levels of revenues, profitability, or productivity comparable with those achieved by our existing operations, or otherwise perform as expected.

Acquisitions, such as our acquisition of Bryn Mawr Trust in January 2022, involve numerous risks, including difficulties in the integration of the operations, technologies, services and products of the acquired companies, and the diversion of management’s attention from other business concerns. We may not properly ascertain all such risks prior to an acquisition or prior to such a risk impacting us while integrating an acquired company. As a result, difficulties encountered with acquisitions could have an adverse effect on our business, financial condition and results of operations.

Furthermore, we must generally receive federal regulatory approval before we can acquire another insured depository institution or its holding company. In determining whether to approve a proposed acquisition, federal regulators will consider, among other factors, the effect of the acquisition on competition, the financial condition of the acquiring institution and the target, the future prospects of the acquiring institution, including current and projected capital levels, the competence, experience, and integrity of management, compliance with laws and regulations, the convenience and needs of the communities to be served, including the acquiring institution’s record of compliance under the Community Reinvestment Act, and the effectiveness of the acquiring institution in combating money laundering. In addition, we cannot be certain when or if, or on what terms and conditions, any required regulatory approvals will be granted. Consequently, we may not obtain regulatory approval for a proposed acquisition on acceptable terms or at all, in which case we would not be able to complete the acquisition despite the time and expenses invested in pursuing it.

Key Associates may be difficult to attract and retain.

Our Associates are our most important resource and, in many areas of the financial services industry, competition for qualified personnel is intense. We invest significantly in recruitment, training, development and talent management as our Associates are the cornerstone of our model. If we were unable to continue to attract and retain qualified key Associates to support the various functions of our businesses, our performance, including our competitive position, could be adversely affected. As economic conditions improve, we may face increased difficulty in retaining top performers and critical skilled Associates. If key personnel were to leave us and equally knowledgeable or skilled personnel are unavailable within WSFS or could not be sourced in the market, our ability to manage our business may be hindered or impaired.

7. Reputation Risk

Damage to our reputation could significantly harm our businesses.

Our ability to attract and retain clients, investors, and highly-skilled management and Associates is affected by our reputation and the reputation of the financial services industry as a whole. Adverse developments may result in additional scrutiny or new litigation against us and potential sources of reputational damage are discussed throughout these risk factors. Although we monitor developments for areas of potential risk to our reputation and brand, negative perceptions or publicity could adversely impact our business, financial condition and results of operations.

Significant harm to our reputation can arise from sources, including economic changes, regulatory scrutiny, employee misconduct, actual or perceived unethical behavior, litigation or regulatory outcomes, failing to deliver minimum or required standards of service and quality, compliance failures, disclosure of confidential information, significant or numerous failures, interruptions or breaches of our information systems, and the activities of our Clients and counterparties, including vendors.

In particular, the success of our Wealth and Trust segment is highly dependent on reputation. Our Wealth and Trust segment derives the majority of its revenue from noninterest income which consists of trust, investment and other servicing fees, and our ability to attract trust and wealth management clients is highly dependent upon external perceptions of this segment’s level of service, trustworthiness, business practices and financial condition. Negative perceptions or publicity regarding these matters could damage the division’s and our reputation among existing clients and corporate clients, which could make it difficult for the Wealth and Trust segment to attract new clients and maintain existing ones.

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We could also suffer significant harm to our reputation if we fail to properly identify and manage potential conflicts of interest. Management of potential conflicts of interests has become increasingly complex as we expand our business activities through more numerous transactions, obligations and interests with and among our Clients. The actual or perceived failure to adequately address conflicts of interest could affect the willingness of clients to deal with us, which could adversely affect our businesses, financial condition and results of operations

8. Model Risk

The quantitative models we use to manage certain accounting and risk management functions may not be effective, which may cause adverse effects on our results of operations and financial condition.

We use quantitative models to help manage certain aspects of our business and to assist with certain business decisions, including estimating probable loan losses, measuring the fair value of financial instruments when reliable market prices are unavailable and estimating the effects of changing interest rates and other market measures on our financial condition and results of operations. Our modeling methodologies rely on many assumptions, historical analyses and correlations. These assumptions may be incorrect, particularly in times of market distress, and the historical correlations on which we rely may no longer be relevant. Additionally, as businesses and markets evolve, our measurements may not accurately reflect this evolution. Even if the underlying assumptions and historical correlations used in our models are adequate, our models may be deficient due to errors in computer code, bad data, misuse of data, fraud or the use of a model for a purpose outside the scope of the model’s design.

As a result, our models may not capture or fully express the risks we face, may suggest that we have sufficient capitalization when we do not, or may lead us to misjudge the business and economic environment in which we will operate. If our models fail to produce reliable results on an ongoing basis, we may not make appropriate risk management or other business or financial decisions. Furthermore, strategies that we employ to manage and govern the risks associated with our use of models may not be effective or fully reliable, and as a result, we may realize losses or other lapses.

Banking regulators continue to focus on the models used by banks and bank holding companies in their businesses. The failure or inadequacy of a model may result in increased regulatory scrutiny on us or may result in an enforcement action or proceeding against us by one of our regulators.

9. General Risk

Impairment of goodwill and/or intangible assets could require charges to earnings, which could negatively impact our results of operations.

Goodwill and other intangible assets arise when a business is purchased for an amount greater than the net fair value of its identifiable net assets. We have recognized goodwill as an asset on the balance sheet in connection with several recent acquisitions. We evaluate goodwill and intangibles for impairment at least annually. Although we have determined that goodwill and other intangible assets were not impaired during 2025, a significant and sustained decline in our stock price and market capitalization, a significant decline in our expected future cash flows, a significant adverse change in the business climate, slower growth rates or other factors could result in impairment of goodwill or other intangible assets. Any future write-down of the goodwill or other intangible assets could result in a material charge to earnings.

Changes in accounting standards or changes in how the accounting standards are interpreted or applied could adversely impact the Company’s financial statements.

From time to time, the Financial Accounting Standards Board (FASB) or the SEC may change the financial accounting and reporting standards that govern the preparation of the Company’s financial statements. In addition, the FASB, SEC, banking regulators and the Company’s independent registered public accounting firm may also amend or even reverse their previous interpretations or positions on how various standards should be applied. These changes may be difficult to predict and could impact how we prepare and report the Company’s financial statements. In some cases, the Company could be required to apply a new or revised standard retroactively, potentially resulting in the Company restating prior period’s financial statements.

Changes in the value of our deferred tax assets could adversely affect our results of operations and regulatory capital ratios.

Our deferred tax assets are subject to an evaluation of whether it is more likely than not that they will be realized for financial statement purposes. In making this determination, we consider all positive and negative evidence available, including the impact of recent operating results, as well as potential carryback of tax to prior years’ taxable income, changes in statutory tax rates, reversals of existing taxable temporary differences, tax planning strategies and projected earnings within the statutory tax loss carryover period. If we conclude in the future that a significant portion of our deferred tax assets are not more likely than not to be realized, we will record a valuation allowance, which could adversely affect our financial position, results of operations and regulatory capital ratios.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

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 $21.3 billion in assets and $97.4 billion in assets under management (AUM) and assets under administration (AUA) at December 31, 2025, 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 193 years. In addition to our focus on stellar client 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 ® .”

As of December 31, 2025, the Company's consolidated operating subsidiaries included WSFS Bank, The Bryn Mawr Trust Company of Delaware (BMT-DE), Bryn Mawr Trust Advisors (BMTA), and WSFS SPE Services, LLC. The Company also has three unconsolidated subsidiaries: WSFS Capital Trust III, Royal Bancshares Capital Trust I, and Royal Bancshares Capital Trust II. Subsidiaries of WSFS Bank included 1832 Holdings, Inc. and one majority-owned subsidiary, NewLane Finance Company (NewLane Finance ® ).

Our banking segment had a net loan and lease portfolio of $12.6 billion as of December 31, 2025. We have built a $10.0 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. The Home Lending division offers mortgage banking and title services through our branches and WSFS Mortgage ® , our mortgage banking division specializing in a variety of residential mortgage and refinancing solutions. We fund our lending businesses primarily with deposits generated through commercial relationships and consumer, wealth and trust client deposits, as well as through our digital banking platforms.

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.

Our Cash Connect ® segment 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 $1.3 billion in total cash and services approximately 24,000 non-bank ATMs and 11,900 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 488 owned or branded ATMs for WSFS Bank Clients, which is one of the largest branded ATM networks in our market.

Our Wealth and Trust segment 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 $97.4 billion of AUM and AUA at December 31, 2025.

Bryn Mawr Trust ® is our predominant Private Wealth Management brand, providing advisory, investment management and trustee services to institutions, affluent and high-net-worth individuals. Private Wealth Management serves high-net-worth clients and institutions by providing trustee and advisory services, financial planning, customized investment strategies, brokerage products such as annuities and traditional banking services such as credit and deposit products tailored to its clientele. Private Wealth Management includes businesses that operate under the Bank’s charter and as a registered investment advisor (RIA). It generates revenue through a percentage fee based on account assets, fee-only arrangements, net interest income and other fee-only services such as estate administration, trust tax planning and custody.

BMT-DE provides personal trust and fiduciary services to families and individuals across the U.S. and internationally. WSFS Institutional Services ® provides trustee, agency, bankruptcy administration, custodial and commercial domicile services to institutional, corporate clients and special purpose vehicles.

As of December 31, 2025, we service our Clients primarily from 113 offices located in Pennsylvania (58), Delaware (37), New Jersey (14), Florida (2), Nevada (1) and Virginia (1), our ATM network, our website at www.wsfsbank.com , and our mobile app.

Notable Items Impacting Results of Operations, Financial Condition and Business Outlook

Notable items in 2025 include the following:

• EPS was $5.09 and ROA was 1.36%, compared to $4.41 and 1.27%, respectively, for the year ended December 31, 2024.

• Net interest margin of 3.87%, compared to 3.82% for the year ended December 31, 2024, driven by deposit repricing actions continued wholesale funding optimization, and higher cash balances, partially offset by lower loan yields due to rate cuts.

• Client deposits increased $612.7 million, or 4% , primarily due to growth in Trust deposits, reflecting continued strong performance in this business.

• Net loans and leases grew $85.8 million , or 1%, compared to December 31, 2024. Increases in construction loans, commercial & industrial, and residential mortgage were partially offset by decreases in consumer loans and commercial mortgages.

• Noninterest income in our Wealth and Trust segment increased 16% compared to December 31, 2024 , driven by growth in WSFS Institutional Services ® .

◦ WSFS Institutional Services ® ended 2025 as the securitization industry's fourth most active trustee for U.S. ABS and MBS according to Asset-Backed Alert's ABS Database.

• During the year, WSFS recognized $3.2 million of nonrecurring income from our partnership with Spring EQ, comprised of the $2.3 million annual earnout and $0.9 million of post-close distributions related to the sale of our equity investment that occurred in the fourth quarter of 2023.

• Throughout the year, WSFS exited certain non-strategic businesses and product offerings which included the sales of the Upstart loan portfolio and Powdermill business (which provided tax and other administrative services to family offices), as well as the unwind of a wealth advisory partnership with Commonwealth Financial. These actions helped to streamline our product offering and organizational focus on our core strategic priorities.

◦ The Upstart portfolio was an unsecured consumer lending portfolio generated through our partnership with Upstart. The impacts from the sale included a net charge-off of $5.2 million against previous reserves of $9.9 million, resulting in a provision release of $4.7 million.

• Returned $324.7 million of capital to shareholders through $287.5 million of share repurchases and $37.2 million of quarterly dividends. Under the Company's share repurchase program, 5,439,981 shares of common stock were repurchased at an average price of $52.86 per share .

• The Board approved a 13% increase in the quarterly cash dividend to $0.17 per share of common stock as well as an incremental share repurchase authorization of 10% of outstanding shares as of March 31, 2025.

• The Company and the Bank continue to be well-capitalized across all measures of regulatory capital, with total common equity tier 1 capital of 13.92% and 14.06%, respectively, and total risk-based capital of 15.67% and 15.25%, respectively.

• In December, the Company issued $200.0 million of senior notes due 2035 (the 2035 Notes). The 2035 Notes mature on December 15, 2035 and have a fixed coupon rate of 5.375% from issuance until December 15, 2030 and a variable coupon rate equal to the benchmark rate (which is expected to be three-month term SOFR), reset quarterly, plus 1.89% from December 15, 2030 until maturity. The proceeds from this issuance were concurrently used to redeem $150.0 million of Fixed-to-Floating Senior Notes due 2030 (the 2030 Notes).

• WSFS completed the redemption of $70.0 million fixed-to-floating rate subordinated notes due 2027 (the 2027 Notes) acquired from Bryn Mawr Trust using our other operating cash flows.

Subsequent Events

In February 2026, the Company received payment for loans that were previously charged off in the first quarter of 2025 to a fund invested in office properties. In the first quarter of 2026, the Company will recognize a recovery of $15.7 million (against the first quarter 2025 charge-off of $15.9 million) as well as the payoff of a $2.5 million nonperforming loan, specific to this transaction. Management will update its previously announced 2026 net charge-off outlook as part of its first quarter 2026 Earnings Release.

FINANCIAL CONDITION

Total assets increased $499.8 million, or 2%, to $21.3 billion as of December 31, 2025, compared to $20.8 billion as of December 31, 2024. The increase is primarily comprised of the following (in descending order of magnitude):

• Total cash and cash equivalents increased $544.3 million, primarily due to higher deposits.

• Net loans and leases held for investment increased $85.8 million due to increases in construction loans of $191.8 million primarily from draws on existing commitments, $140.5 million in commercial and industrial loans, and $124.8 million in residential mortgage loans. These increases were partially offset by decreases in consumer loans of $191.9 million primarily driven by the Upstart portfolio sale and runoff of the Spring EQ portfolio, $114.5 million in commercial mortgages primarily due to the payoff of several large loans, and $36.3 million in owner-occupied commercial loans

• Other assets decreased $87.3 million, primarily driven by a $55.0 million decrease in low-income housing tax credit investments and a $34.9 million decrease in derivatives from our Capital Markets business due to changes in fair value, partially offset by a $15.2 million increase in receivables due to the settlement timing of ACH payments.

• Goodwill and intangible assets decreased $18.3 million due to scheduled amortization and impacts from the sale of the WSFS Wealth Management, LLC (dba Powdermill Financial Solutions) business.

• Total investment securities decreased $15.2 million:

◦ Investment securities, held to maturity decreased $46.8 million primarily due to repayments, maturities and calls of $62.2 million, partially offset by $12.4 million of amortization of net unrealized losses on securities transferred from available-for-sale.

◦ Investment securities, available-for-sale increased $31.6 million, primarily due to a net $212.2 million increase in market value on available-for-sale securities and $203.0 million in purchases, partially offset by repayments of $380.6 million .

Total liabilities increased $351.1 million, or 2%, to $18.6 billion at December 31, 2025 compared to the prior year, primarily comprised of the following (in descending order of magnitude):

• Total deposits increased $612.7 million, primarily driven by the Wealth and Trust segment, with growth in noninterest demand and money market deposits.

• Other liabilities decreased $162.2 million primarily due to a decrease of $162.4 million in collateral held on derivatives and derivative liabilities.

• FHLB advances decreased $51.0 million due to wholesale funding optimization.

• Senior and subordinated debt decreased $21.7 million due to the redemption of the 2030 Notes and 2027 Notes, partially offset by the issuance of the 2035 Notes.

Stockholders’ equity increased $148.8 million to $2.7 billion at December 31, 2025 compared to the prior year. The increase was primarily due to earnings of $287.3 million during the year and a decrease of $179.3 million in accumulated other comprehensive loss due to market value increases on investment securities, partially offset by significant capital returns to shareholders ($287.5 million from the repurchase of shares of common stock under our stock repurchase plan as well as payment of dividends on our common stock of $37.2 million).

We repurchased 5,439,981 and 2,049,739 shares of our common stock in 2025 and 2024, respectively. We held 23,046,983 shares and 17,607,002 shares of our common stock as treasury shares at December 31, 2025 and 2024, respectively.

For further information on our regulatory capital requirements, refer to our Capital Resources discussion below.

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LIQUIDITY AND CAPITAL RESOURCES

Capital Resources

Regulatory capital requirements for the Bank and the Company include a minimum common equity Tier 1 capital ratio of 4.50% of risk-weighted assets, a Tier 1 capital ratio of 6.00% of risk-weighted assets, a minimum Total capital ratio of 8.00% of risk-weighted assets and a minimum Tier 1 leverage capital ratio of 4.00% of average assets. In order to avoid limits on capital distributions and discretionary bonus payments, the Bank and the Company must maintain a capital conservation buffer of 2.5% of common equity Tier 1 capital over each of the risk-based capital requirements. Failure to meet minimum capital requirements can initiate certain mandatory actions and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our financial statements.

Regulators have established five capital tiers: well-capitalized, adequately-capitalized, under-capitalized, significantly under-capitalized, and critically under-capitalized. A depository institution’s capital tier depends upon its capital levels in relation to various relevant capital measures, which include leveraged and risk-based capital measures and certain other factors. Under the Prompt Corrective Action framework of the Federal Deposit Insurance Corporation Act, depository institutions that are not classified as well-capitalized are subject to various restrictions regarding capital distributions, payment of management fees, acceptance of brokered deposits and other operating activities. At December 31, 2025, the Bank and the Company were in compliance with regulatory capital requirements and all of their regulatory ratios exceeded “well-capitalized” regulatory benchmarks. For the capital position of the Bank and the Company, refer to Note 13 of the Consolidated Financial Statements.

In addition, and not included in the Bank's capital, the Company separately held $254.5 million in cash to support share repurchases, potential dividends, acquisitions, strategic growth plans and other general corporate purposes.

Liquidity

We manage our liquidity and funding needs through our Treasury function and our Asset/Liability Committee. We have a policy that separately addresses liquidity, and management monitors our adherence to policy limits. Also, liquidity risk management is a primary area of examination by the banking regulators.

Funding sources to support growth and meet our liquidity needs include cash from operations, commercial, consumer, wealth and trust deposit programs, loan repayments, FHLB borrowings, repurchase agreements, access to the Federal Reserve Discount Window, and access to the brokered deposit market as well as other wholesale funding avenues. In addition, we have a large portfolio of high-quality, liquid investments, primarily short-duration mortgage-backed securities, that provide a near-continuous source of cash flow to meet current cash needs, or can be sold to meet larger discrete needs for cash. We believe these sources are sufficient to meet our funding needs as well as maintain required and prudent levels of liquidity over the next twelve months and beyond.

As of December 31, 2025, the Company has $1.7 billion in cash, cash equivalents, and restricted cash. Our estimated uninsured deposits were $7.1 billion, or 40% of total client deposits, and our estimated unprotected deposits (uninsured and uncollateralized) were $5.3 billion, or 30% of total Client deposits.

As of December 31, 2025, the Company had a readily available, secured borrowing capacity of $5.9 billion from the FHLB and $2.3 billion through the Federal Reserve Discount Window. In addition, the Company had $0.3 billion in unpledged securities that could be used to support additional borrowings and $1.2 billion of cash deposited with the Federal Reserve Bank.

During the year ended December 31, 2025, cash, cash equivalents and restricted cash increased $544.3 million to $1.7 billion from $1.2 billion as of December 31, 2024. Cash provided by operating activities was $220.0 million, primarily reflecting the cash impact of earnings. Cash provided by investing activities was $124.9 million primarily due to repayments of AFS and HTM securities of $380.6 million and $62.2 million, respectively, partially offset by $203.0 million of purchases of AFS securities and a $117.7 million net increase in loans and leases. Cash provided by financing activities was $199.5 million, primarily due to a $604.3 million net increase in deposits and $200.0 million from the issuance of the 2035 Notes, offset by $290.3 million for repurchases of common stock under the previously announced stock repurchase plan, $220.0 million for the redemption of senior and subordinated debt, $51.0 million for the redemption of fixed rate FHLB term advances, and $37.2 million for the payment of quarterly dividends.

Our primary cash contractual obligations relate to operating leases, long-term debt, credit obligations, and data processing. At December 31, 2025, we had $167.9 million in total contractual payments for ongoing leases that have remaining lease terms of less than one year to 19 years, which includes renewal options that are exercised at our discretion. For additional information on our operating leases see Note 9 to the Consolidated Financial Statements. At December 31, 2025, we had obligations for principal payments on long-term debt including $200.0 million for our senior debt due December 15, 2035, $67.0 million for our trust preferred borrowings due June 1, 2035, and $24.0 million for our trust preferred borrowings due December 15, 2034. We are also contractually obligated to make interest payments on our long-term debt through their respective maturities.

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For additional information regarding long-term debt, see Note 12 to the Consolidated Financial Statements. At December 31, 2025, the Company had total commitments to extend credit of $4.5 billion, which are generally one year commitments. For additional information regarding commitments to extend credit, see Note 17 to the Consolidated Financial Statements.

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NONPERFORMING ASSETS

Nonperforming assets include nonaccruing loans and OREO. Nonaccruing loans are those on which we no longer accrue interest. Loans are placed on nonaccrual status immediately if, in the opinion of management, collection is doubtful, or when principal or interest is past due 90 days or more and the value of the collateral is insufficient to cover principal and interest. Interest accrued but not collected at the date a loan is placed on nonaccrual status is reversed and charged against interest income. In addition, the amortization of net deferred loan fees is suspended when a loan is placed on nonaccrual status. Subsequent cash receipts are applied either to the outstanding principal balance or recorded as interest income, depending on management’s assessment of the ultimate collectability of principal and interest. Past due loans are defined as loans contractually past due 90 days or more as to principal or interest payments but which remain in accrual status because they are considered well secured and in the process of collection. Troubled loans are loans modified in the form of principal forgiveness, interest rate reduction, an other-than-insignificant payment delay, or a term extension to borrowers experiencing financial difficulty.

The following table shows our nonperforming assets, past due loans, and troubled loans at the dates indicated:

At December 31,

(Dollars in thousands)

Nonaccruing loans (1) :

Commercial and industrial

Owner-occupied commercial

Commercial mortgages

Construction

Residential

Consumer

Total nonaccruing loans

Other real estate owned

Total nonperforming assets

Past due loans:

Commercial

Residential

Consumer (2)

Total past due loans

Troubled loans (3) :

Commercial

Residential

Consumer

Total troubled loans

Ratio of allowance for credit losses to total gross loans and leases (4)

Ratio of nonaccruing loans to total gross loans and leases (5)

Ratio of nonperforming assets to total assets

Ratio of allowance for credit losses to nonaccruing loans

Ratio of allowance for credit losses to total nonperforming assets (6)

(1) Includes nonaccruing troubled loans.

(2) Includes U.S. government guaranteed student loans with little risk of credit loss.

(3) Represents loans with certain modifications (as prescribed in ASU 2022-02) to borrowers experiencing financial difficulty.

(4) Represents amortized cost basis for loans and leases.

(5) Total loans exclude loans held for sale and reverse mortgages.

(6) Excludes acquired purchase credit deteriorated loans.

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Nonperforming assets decreased $55.3 million between December 31, 2024 and December 31, 2025. This decrease was primarily due to the payoff of three existing nonperforming commercial loans and the charge-off of an existing nonperforming C&I loan to a fund that is invested in office properties, partially offset by the migration of a land development loan. The ratio of nonperforming assets to total assets decreased from 0.61% at December 31, 2024 to 0.34% at December 31, 2025.

The following table summarizes the changes in nonperforming assets during the periods indicated:

Year Ended December 31,

(Dollars in thousands)

Beginning balance

Additions

Collections

Transfers to accrual

Charge-offs

Ending balance

The timely identification of problem loans is a key element in our strategy to manage our loan portfolio. Problem loans are all criticized, classified and nonperforming loans and other real estate owned. Timely identification enables us to take appropriate action and accordingly, minimize losses. An asset review system established to monitor the asset quality of our loans and investments in real estate portfolios facilitates the identification of problem assets. In general, this system uses guidelines established by federal regulation.

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RESULTS OF OPERATIONS

2024 compared with 2023

For a discussion of our results for the year ended December 31, 2024 compared to the year ended December 31, 2023, please see "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 28, 2025.

2025 compared with 2024

We recorded net income attributable to WSFS of $287.3 million, or $5.09 per diluted common share, for the year ended December 31, 2025, an increase of $23.7 million compared to $263.7 million, or $4.41 per diluted common share, for the year ended December 31, 2024.

• Net interest income for the year ended December 31, 2025 was $726.1 million, an increase of $20.6 million compared to 2024, primarily due to lower deposit and wholesale funding costs as well as higher cash balances from growth in average deposits. The increase was partially offset by lower loan yields due to rate cuts. See “Net Interest Income” for further information.

• Our provision for credit losses decreased $12.2 million in 2025. The current year provision was impacted by charge-offs and new originations, partially offset by the reduction in the allowance due to the Upstart loan sale. See “Provision/Allowance for Credit Losses” for further information.

• Noninterest income decreased $1.0 million in 2025, primarily due to a decrease in Cash Connect ® driven by rates and lower ATM bailment income, the impact of valuation adjustments to our Visa B derivative liability, and an impairment loss related to one of our equity investments, partially offset by an increase from Wealth and Trust driven by WSFS Institutional Services ® and BMT-DE and returns on derivative collateral. See “Noninterest Income” for further information.

• Noninterest expense decreased $1.5 million in 2025, primarily due to a decrease in other operating expense driven by lower Cash Connect ® funding costs and other productivity measures, partially offset by increases in salaries and benefits from performance-based increases and equipment expense. See “Noninterest Expense” for further information.

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Net Interest Income

The following table provides information regarding the average balances of, and yields/rates on, interest-earning assets and interest-bearing liabilities during the periods indicated:

Year Ended December 31,

(Dollars in thousands)

Average

Balance

Interest &

Dividends

Yield/

Rate (1)

Average

Balance

Interest &

Dividends

Yield/

Rate  (1)

Assets:

Interest-earning assets:

Loans: (2)

Commercial loans

Commercial mortgage loans

Commercial leases

Residential

Consumer

Loans held for sale

Total loans and leases

Mortgage-backed securities (3)

Investment securities (3)

Other interest-earning assets

Total interest-earning assets

Allowance for credit losses

Cash and due from banks

Cash in non-owned ATMs

Bank owned life insurance

Other noninterest-earning assets

Total assets

Liabilities and stockholders’ equity:

Interest-bearing liabilities:

Interest-bearing deposits:

Interest-bearing demand

Money market

Savings

Client time deposits

Total interest-bearing client deposits

Brokered deposits

Total interest-bearing deposits

Federal Home Loan Bank (FHLB) advances

Trust preferred borrowings

Senior and subordinated debt

Other borrowed funds (4)

Total interest-bearing liabilities

Noninterest-bearing demand deposits

Other noninterest-bearing liabilities

Stockholders’ equity of WSFS

Noncontrolling interest

Total liabilities and stockholders’ equity

Excess of interest-earning assets over interest-bearing liabilities

Net interest and dividend income

Interest rate spread

Net interest margin

(1) Weighted average yields for tax-exempt securities and loans have been computed on a tax-equivalent basis.

(2) Average balances are net of unearned income and include nonperforming loans.

(3) Includes securities held-to-maturity (at amortized cost) and securities available-for-sale (at fair value).

(4) Includes federal funds purchased.

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Net interest income increased $20.6 million, or 3%, to $726.1 million in 2025, compared to 2024 driven by lower deposit and wholesale funding costs as well as higher cash balances from growth in average deposits . The increase was partially offset by lower loan yields due to rate cuts . Net interest margin increased 5 bps to 3.87% in 2025 from 3.82% in 2024. The increase was primarily due to deposit repricing actions, continued wholesale funding optimization, and higher cash balances, partially offset by lower loan yields.

The following table provides certain information regarding changes in net interest income attributable to changes in the volumes of interest-earning assets and interest-bearing liabilities and changes in the rates for the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided on the changes that are attributable to: (i) changes in volume (change in volume multiplied by prior year rate); (ii) changes in rates (change in rate multiplied by prior year volume on each category); and (iii) net change (the sum of the change in volume and the change in rate). Changes due to the combination of rate and volume changes (changes in volume multiplied by changes in rate) are allocated proportionately between changes in rate and changes in volume.

Year Ended December 31,

(Dollars in thousands)

Volume

Yield/Rate

Net

Interest Income:

Loans:

Commercial loans (1)

Commercial mortgage loans

Commercial leases

Residential

Consumer

Loans held for sale

Mortgage-backed securities

Investment securities (2)

Other interest-earning assets

Favorable (unfavorable)

Interest expense:

Deposits:

Interest-bearing demand

Money market

Savings

Client time deposits

Brokered deposits

FHLB advances

Trust preferred borrowings

Senior and subordinated debt

Other borrowed funds

Favorable

Net change, as reported

(1) Includes a tax-equivalent income adjustment related to commercial loans.

(2) Includes a tax-equivalent income adjustment related to municipal bonds.

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Investment Securities

The following table details the maturity and weighted average yield of the available-for-sale investment portfolio as of December 31, 2025:

(Dollars in thousands)

Maturing During 2026

Maturing From 2027 Through 2030

Maturing From 2031 Through 2035

Maturing After 2035

Total

Collateralized mortgage obligations (CMO)

Amortized cost

Weighted average yield

Fannie Mae (FNMA) mortgage-backed securities (MBS)

Amortized cost

Weighted average yield

Freddie Mac (FHLMC) MBS

Amortized cost

Weighted average yield

Ginnie Mae (GNMA) MBS

Amortized cost

Weighted average yield

Government-sponsored enterprises (GSE) agency notes

Amortized cost

Weighted average yield

Total amortized cost

Weighted average yield

As of December 31, 2025, WSFS does not have any tax-exempt securities within the available-for-sale investment portfolio. Yields are calculated on a weighted average basis using the investments amortized cost and respective average yields for each investment category. Expected maturities of mortgage-backed securities may differ from contractual maturities due to calls or prepay obligations.

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Provision/Allowance for Credit Losses (ACL)

We maintain an ACL at an appropriate level based on our assessment of current expected credit losses in the loan portfolio, which we evaluate in accordance with applicable accounting principles, as discussed further in “Nonperforming Assets.” Our evaluation is based on a review of the portfolio and requires significant, complex and difficult judgments.

For the year ended December 31, 2025, we recorded a provision for credit losses of $49.2 million, a net change of $12.2 million, compared to a provision for credit losses of $61.4 million in 2024. The current year provision was primarily driven by charge-offs and new originations in our C&I, Construction, and Residential Mortgage, partially offset by the reduction in the allowance due to the sale of the Upstart loans. The decrease was due to favorable migration when compared to the prior period and payoffs of several large nonperforming assets, as well a provision release associated with the Upstart loans sale.

The ACL was $182.5 million at December 31, 2025 compared to $195.3 million at December 31, 2024. The decrease of the ACL was primarily due to the resolution of several problem loans as well as the Upstart loan sale, partially offset by additional reserve on accounts receivable for certain fee-based businesses. The ratio of allowance for credit losses to total loans and leases decreased to 1.36% at December 31, 2025 from 1.48% at December 31, 2024 due to a decrease of eleven basis points driven by the sale of the Upstart loans and resolution of several large nonperforming assets, which was offset by growth in C&I and residential mortgages.

The following tables detail the allocation of the ACL on loans and leases and show our net charge-offs (recoveries) by portfolio category:

(Dollars in thousands)

Commercial and Industrial

Owner-

occupied

Commercial

Commercial

Mortgages

Construction

Commercial Small Business Leases

Residential (1)

Consumer (2)

Total

As of December 31, 2025

Allowance for credit losses

% of ACL to total ACL

Loan portfolio balance

% to total loans and leases

Year ended December 31, 2025

Charge-offs

Recoveries

Net (charge-offs) recoveries

Average loan balance

Ratio of net charge-offs (recoveries) to average gross loans

(Dollars in thousands)

Commercial and Industrial

Owner-

occupied

Commercial

Commercial

Mortgages

Construction

Commercial Small Business Leases

Residential (1)

Consumer (2)

Total

As of December 31, 2024

Allowance for credit losses

% of ACL to total ACL

Loan portfolio balance

% to total loans and leases

Year ended December 31, 2024

Charge-offs

Recoveries

Net (charge-offs) recoveries

Average loan balance

Ratio of net charge-offs (recoveries) to average gross loans

NMF

(1) Excludes reverse mortgages.

(2) Includes home equity lines of credit, installment loans unsecured lines of credit and education loans.

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Noninterest Income

Noninterest income decreased $1.0 million to $339.9 million in 2025 from $340.9 million in 2024. This decrease reflects a $17.2 million decrease from Cash Connect ® driven by lower interest rates and ATM bailment income, a $6.8 million impact from valuation adjustments to our Visa B derivative liability that was established from our previous sale of 360,000 shares in 2Q 2020, and a $4.1 million impairment loss related to one of our equity investments. These decreases were partially offset by a $23.3 million increase in Wealth and Trust revenue, primarily driven by WSFS Institutional Services ® and BMT-DE, as well as $5.0 million from returns on derivative collateral.

Noninterest Expenses

Noninterest expense decreased $1.5 million to $636.2 million in 2025 from $637.7 million in 2024. The decrease was primarily due to a $30.5 million decrease in other operating expense driven by lower funding costs from Cash Connect ® as well as other productivity measures, partially offset by increases of $24.1 million in salaries and benefits costs due to performance-based increases and talent additions in key business areas and $5.2 million in equipment expense.

Income Taxes

We recorded $93.4 million of income tax expense for the year ended December 31, 2025 compared to $83.8 million for the year ended December 31, 2024. The increase in income tax expense was primarily driven by an increase in income before taxes of $33.4 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. The effective tax rates for the years ended December 31, 2025 and 2024 were 24.5% and 24.1%, respectively. The effective tax rate for year ended December 31, 2025 increased primarily due to certain tax credits recognized in 2024.

The effective tax rate reflects the recognition of certain tax benefits in the financial statements including those benefits from tax-exempt interest income, income from bank-owned life insurance policies, various federal income tax credits, and excess tax benefits from recognized stock compensation. These tax benefits are offset by the tax effect of stock-based compensation expense related to incentive stock options, and a provision for state income tax expense.

We frequently analyze our projections of taxable income and make adjustments to our provision for income taxes accordingly.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law by President Trump in the United States. The legislation introduces several changes to the U.S. corporate income tax system, including the immediate expensing of qualifying research and development expenditures and the permanent extension of select provisions originally enacted under the Tax Cuts and Jobs Act. The legislation has multiple effective dates and is not expected to have a material impact on the Company.

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SEGMENT INFORMATION

For financial reporting purposes, our business has three reporting segments: WSFS Bank, Cash Connect ® , and Wealth and Trust. The WSFS Bank segment provides loans and leases and other financial products to Commercial and Consumer Clients. Cash Connect ® provides ATM vault cash, smart safe and other cash logistics services in the U.S 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. The Wealth and Trust segment provides a broad array of planning and advisory services, investment management, trust services, and credit and deposit products to individual, corporate and institutional clients.

WSFS Bank Segment

The WSFS Bank segment income before taxes increased $8.4 million, or 4%, in 2025 compared to 2024. The increase was driven by a $17.9 million, or 29%, decrease in provision for credit losses and a $10.2 million increase in net external Client interest income. The decrease in provision for credit losses was primarily due to favorable migration when compared to the prior period, payoffs of several large nonperforming assets, and a provision release associated with the Upstart loan sale. The increase in net interest income was driven by lower deposit and wholesale funding costs. The increase in income before taxes was partially offset by an increase in salaries, benefits, and other compensation expense of $15.9 million, or 6%, largely due to performance-based increases and talent additions in key businesses.

WSFS Bank segment net loans and leases held for investment was essentially flat at $12.6 billion, with growth in construction, residential mortgage, and commercial and industrial, offset by a decrease in consumer loans driven by the runoff of our Spring EQ portfolio and the sale of the Upstart loans, as well as a decrease in commercial mortgages. Client deposits decreased by $0.1 billion to $14.5 billion, primarily driven by decreases in time deposits and interest-bearing demand deposits, partially offset by growth in money market and noninterest-bearing demand deposits.

Cash Connect ® Segment

The Cash Connect ® segment income before taxes increased to $9.8 million in 2025 from $1.0 million in 2024. The increase was primarily due to a decrease in other operating expense driven by lower funding costs and one-time charges during 2024 associated with the termination of a longstanding Client relationship totaling $4.7 million. The full-year 2025 profit margin for the Cash Connect ® segment increased to 11.51% from 0.99% for the full-year 2024 due to the reasons described above. Cash Connect ® had $1.3 billion in total cash managed at December 31, 2025 and $1.6 billion at December 31, 2024. At year-end 2025, Cash Connect ® serviced approximately 24,000 non-bank ATMs compared to approximately 28,600 at year-end 2024 and approximately 11,900 smart safes nationwide compared to approximately 10,000 smart safes at year-end 2024.

Wealth and Trust Segment

The Wealth and Trust segment income before taxes increased $16.1 million in 2025 compared to 2024, primarily driven by fee revenue growth from WSFS Institutional Services ® and BMT-DE, partially offset by increases in salaries and benefits as a result of performance-based incentive increases and talent additions to support future growth. At December 31, 2025, Wealth and Trust had AUA/AUM of $97.4 billion, a 9% increase from 2024 balances. WSFS Institutional Services ® ended 2025 as the securitization industry's fourth most active trustee for U.S. ABS and MBS according to Asset-Backed Alert’s ABS Database.

The Wealth and Trust segment net loans held for investment increased $53.9 million to $445.7 million, primarily driven by growth in consumer and commercial loans. Client deposits increased $0.7 billion to $3.1 billion, primarily driven by Institutional Services.

Segment financial information for the years ended December 31, 2025, 2024 and 2023 is provided in Note 21 to the Consolidated Financial Statements.

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ASSET/LIABILITY MANAGEMENT

Our primary asset/liability management goal is to optimize long term net interest income opportunities within the constraints of managing interest rate risk, ensuring adequate liquidity and funding and maintaining a strong capital base.

In general, interest rate risk is mitigated by closely matching the maturities or repricing periods of interest-sensitive assets and liabilities to ensure a favorable interest rate spread. We regularly review our interest-rate sensitivity, and use a variety of strategies as needed to adjust that sensitivity within acceptable tolerance ranges established by management and our Board of Directors. Changing the relative proportions of fixed-rate and adjustable-rate assets and liabilities is one of our primary strategies to accomplish this objective.

The matching of assets and liabilities may be analyzed using a number of methods including by examining the extent to which such assets and liabilities are “interest-rate sensitive” and by monitoring our interest-sensitivity gap. An interest-sensitivity gap is considered positive when the amount of interest-rate sensitive assets exceeds the amount of interest-rate sensitive liabilities repricing within a defined period, and is considered negative when the amount of interest-rate sensitive liabilities exceeds the amount of interest-rate sensitive assets repricing within a defined period. For additional information related to interest rate sensitivity, see "Quantitative and Qualitative Disclosures About Market Risk."

The repricing and maturities of our interest-rate sensitive assets and interest-rate sensitive liabilities at December 31, 2025 are shown in the following table:

(Dollars in thousands)

Less than

One Year

One to Five

Years

Five to Fifteen Years

Over Fifteen Years

Total

Interest-rate sensitive assets:

Loans (1) :

Commercial loans and leases

Commercial mortgage loans

Residential (2)

Consumer

Loans held for sale

Investment securities, available-for-sale

Investment securities, held-to-maturity

Other interest-earning assets

Total interest-rate sensitive assets:

Interest-rate sensitive liabilities:

Interest-bearing deposits:

Interest-bearing demand

Savings

Money market

Client time deposits

Trust preferred borrowings

Senior and subordinated debt

Other borrowed funds

Total interest-rate sensitive liabilities:

Excess of interest-rate sensitive assets over interest-rate liabilities (interest-rate sensitive gap) (3)

One-year interest-rate sensitive assets/interest-rate sensitive liabilities

One-year interest-rate sensitive gap as a percent of total assets

(1) Loan balances exclude nonaccruing loans, deferred fees and costs

(2) Includes reverse mortgage loans

(3) Excludes the impact of floor options purchased for balance sheet hedging purposes. Inclusive of the floor options, the one-year interest-rate sensitive assets/interest-rate sensitive liabilities is 103.26% and the one-year interest-rate sensitive gap as a percent of total assets is 1.33%.

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Generally, during a period of rising interest rates, a positive gap would result in an increase in net interest income while a negative gap would adversely affect net interest income. Conversely, during a period of falling rates, a positive gap would result in a decrease in net interest income while a negative gap would augment net interest income. However, the interest-sensitivity table does not provide a comprehensive representation of the impact of interest rate changes on net interest income. Each category of assets or liabilities will not be affected equally or simultaneously by changes in the general level of interest rates. Even assets and liabilities which contractually reprice within the rate period may not reprice at the same price, at the same time or with the same frequency. It is also important to consider that the table represents a specific point in time. Variations can occur as we adjust our interest sensitivity position throughout the year.

To provide a more accurate position of our one-year gap, certain deposit classifications are based on the interest-rate sensitive attributes and not on the contractual repricing characteristics of these deposits. For the purpose of this analysis, we estimate, based on historical trends of our deposit accounts, with the exception of certain deposits estimated at 100%, that the majority of our money market deposits are 75%, and the majority of our savings and interest-bearing demand deposits are 50% sensitive to interest rate changes. Accordingly, these interest-sensitive portions are classified in the “Less than One Year” category with the remainder in the “Over Five Years” category. Deposit rates other than time deposit rates are variable. Changes in deposit rates are generally subject to local market conditions and our discretion and are not indexed to any particular rate.

Impact of Inflation

Our Consolidated Financial Statements have been prepared in accordance with GAAP, which require the measurement of financial position and operating results in terms of historical dollars without consideration of the changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased costs of our operations. Unlike most industrial companies, nearly all of our assets and liabilities are monetary. As a result, interest rates have a greater impact on our performance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or the same extent as the price of goods and services.

OFF BALANCE SHEET ARRANGEMENTS

We have no off balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. For a description of certain financial instruments to which we are party and which expose us to certain credit risk not recognized in our financial statements, see Note 17 to the Consolidated Financial Statements.

CRITICAL ACCOUNTING ESTIMATES

The discussion and analyses of the financial condition and results of operations are based on the Consolidated Financial Statements, which are prepared in conformity with U.S. GAAP and general practices within the banking industry. The significant accounting policies of the Company are described in Note 2 to the Consolidated Financial Statements. The preparation of these Consolidated Financial Statements requires us to make estimates and assumptions that may materially affect the reported amounts of assets, liabilities, revenues and expenses. We regularly evaluate these estimates and assumptions including those related to the allowance for credit losses, business combinations, deferred taxes, fair value measurements and goodwill and other intangible assets. We base our estimates on historical experience and various other factors and assumptions that are believed to be reasonable under the circumstances. These form the basis for making judgments on the carrying value of certain assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The following critical accounting policy involves more significant judgments and estimates. We have reviewed this critical accounting policy and estimates with the Audit Committee.

Allowance for Credit Losses

We maintain an allowance for credit losses (ACL) which represents our best estimate of expected losses in our financial assets, which include loans, leases, held-to-maturity debt securities, and accounts receivable. We establish our allowance in accordance with guidance provided in ASC 326, Financial Instruments – Credit Losses. The ACL includes two primary components: (i) an allowance established on financial assets which share similar risk characteristics collectively evaluated for credit losses (collective basis), and (ii) an allowance established on financial assets which do not share similar risk characteristics with any loan segment and is individually evaluated for credit losses (individual basis). We consider the determination of the ACL to be critical because it requires significant judgment reflecting our best estimate of expected credit losses based on our historical loss experience, current conditions and economic forecasts. Our evaluation is based upon a continuous review of our financial assets, with consideration given to evaluations resulting from examinations performed by regulatory authorities. See Note 7 to the Consolidated Financial Statements, for further discussion of the ACL.

The calculation of expected credit losses is determined using a single scenario third-party economic forecast to adjust the calculated historical loss rates of the portfolio segments to incorporate the effects of current and future economic conditions. The determination of the appropriate level of the ACL inherently involves a high degree of subjectivity and requires us to make significant estimates, including modeling methodology, historical loss experience, relevant available information from internal and external sources relating to qualitative adjustment factors, prepayment speeds and reasonable and supportable forecasts about future economic conditions. The Company's economic forecast considers the general health of the economy, the interest rate environment, real estate pricing and market risk.

The ACL may increase or decrease due to changes in economic conditions affecting borrowers and macroeconomic variables that our financial assets are more susceptible to, including unforeseen events such as natural disasters and pandemics, new information regarding existing financial assets, identification of additional problems assets, the fair value of underlying collateral, and other factors. These changes, both within and outside the Company’s control, may frequently update and have a material impact to our financial results.

Because current economic conditions and forecasts can change and future events are inherently difficult to predict, the anticipated amount of estimated credit losses on our financial assets, and therefore the appropriateness of the ACL, could change significantly. It is difficult to estimate how potential changes in any one economic factor or input might affect the overall ACL because a wide variety of factors and inputs are considered in these estimates and changes in those factors and inputs considered may not occur at the same rate and may not be consistent across the Company’s portfolio mix and segmentation. Additionally, changes in factors and inputs may be directionally inconsistent, such that improvement in one factor may offset deterioration in others. As of December 31, 2025, the Company believes that its ACL was adequate.