In the first quarter of 2025, WSFS Financial Corp (NASDAQ:WSFS) showcased robust financial performance metrics. Notably, core earnings per share increased to $1.13, reflecting an improvement over the previous quarter. Additionally, the company reported a core return on assets (ROA) of 1.29% and a core return on tangible common equity of 16.97%. The net interest margin expanded by 8 basis points to 3.88%, bolstered by reduced funding costs. Fee-based revenue grew by 6% year-over-year, largely driven by wealth and trust services. Furthermore, the corporation returned $62.6 million in capital through buybacks and dividends, demonstrating strong capital management.
Despite these achievements, WSFS Financial Corp faced some challenges. Gross loans decreased slightly during the quarter due to macroeconomic uncertainties that led clients to delay investments. Client deposits also fell by 1%, influenced by seasonal factors and expected outflows in trust. Credit costs rose significantly, primarily because of a one-time charge-off of a non-performing loan. However, the company maintained solid capital ratios with CET1 at 14.1% and TCE at 8.63%, underscoring its financial stability.
Financial Strengths and Revenue Growth
WSFS Financial Corp demonstrated significant improvements in several key financial indicators during the first quarter of 2025. Core earnings per share reached $1.13, marking a notable increase from the prior period. This growth was complemented by a core ROA of 1.29% and a core return on tangible common equity of 16.97%. The expansion of the core net interest margin by 8 basis points to 3.88% played a crucial role in enhancing profitability. This success was partly attributed to the reduction in total funding costs and strategic deposit repricing actions.
The company also experienced a 6% year-over-year increase in core fee revenue, fueled by a 19% rise in wealth and trust services. WSFS Financial Corp effectively managed its capital, returning $62.6 million to shareholders via buybacks and dividends. A quarterly dividend hike of 13% to $0.17 per share further underscored the firm's commitment to shareholder value. These accomplishments highlight the company's ability to navigate challenging economic conditions while maintaining strong financial health.
Operational Challenges and Strategic Responses
While WSFS Financial Corp achieved impressive financial milestones, it encountered operational hurdles during the quarter. Gross loans declined by less than 1%, as commercial loan activity remained stagnant due to client hesitation amid macroeconomic uncertainty. Similarly, client deposits dropped by 1% within the quarter, primarily attributable to seasonal patterns and anticipated trust outflows. Total net credit costs surged to $17.6 million, largely due to a substantial charge-off of a non-performing office-related C&I loan acquired from Bryn Mawr Trust.
To address these challenges, WSFS Financial Corp implemented various strategies. CFO David Burg clarified that the absence of updated guidance was intentional, given the early stage of the year and volatile market conditions. Regarding credit issues, the recent charge-off was identified as a one-time event, with other portfolios performing as expected. Expense management expectations were outlined, with a projected run rate around $160 million after adjusting for one-time items. CEO Rodger Levenson expressed optimism about future commercial growth, contingent upon market stabilization. Additionally, potential interest rate cuts could enhance Cash Connect’s profitability, with an estimated annualized improvement of $400,000 per rate cut. Efforts to optimize pricing and control expenses continue to focus on improving margins.