WSFS outlines elevated buybacks and pipeline growth targets amid robust Q3 asset quality improvements

Earnings Call Insights: WSFS Financial Corporation (WSFS) Q3 2025

MANAGEMENT VIEW

* David Burg, Executive VP & CFO, opened by stating WSFS "delivered a core EPS of $1.40, core return on assets of 1.48% and core return on tangible common equity of 18.7%, which are all up versus the second quarter." Burg highlighted that "core net income increased 21%, core PPNR grew 6% and core earnings per share increased 30%" year-over-year, and tangible book value per share increased by 12%.
* Burg noted the net interest margin expanded to 3.91% and client deposits increased 1% linked quarter, with noninterest deposits growing 12% year-over-year. He reported, "Loans were down 1% linked quarter, driven by the previously announced sale of the Upstart loan portfolio and continued runoff in our Spring EQ portfolio. Excluding these items, loans were generally flat this quarter, but we saw solid momentum in several areas."
* Burg stated, "We saw a meaningful improvement across our asset quality metrics during the quarter. Total net credit costs were $8.4 million this quarter, down $5.9 million compared to the prior quarter."
* The company returned $56.3 million of capital in Q3 including $46.8 million in share buybacks, and year-to-date repurchased 5.8% of shares. Burg emphasized, "We intend to maintain an elevated level of buybacks in line with our previously communicated glide path towards our capital target of 12%."
* Burg confirmed, "These results position us well to meet our previously announced full year outlook, even with an additional October rate cut, which was not previously included in our assumptions."

OUTLOOK

* WSFS plans to maintain its prior full-year outlook, with Burg stating, "We remain excited about the future and committed to continue to deliver high performance."
* Burg said, "We will provide a full year '26 outlook in January with the release of our fourth quarter 2025 financial results."
* Guidance on loan growth remains focused on balancing runoff from the Spring EQ portfolio with growth in home lending and consumer portfolios. Burg explained, "We think positively about that growth continuing."

FINANCIAL RESULTS

* Core fee revenue was flat quarter-over-quarter, reflecting exits in Wealth and Trust and the Spring EQ earn-out, but excluding these, core fee revenue grew 5% quarter-over-quarter, driven by Capital Markets and Cash Connect.
* Wealth and Trust business grew 13% year-over-year.
* Commercial pipeline increased to approximately $300 million.
* Asset quality improvements were highlighted by net charge-offs of 30 basis points and NPAs declining over 30% to 35 basis points, with delinquencies down 34%.
* CET1 ratio stands at 14.39%.

Q&A

* Russell Elliott Gunther, Stephens Inc., asked about the CET1 capital target and pace of buybacks. Burg responded, "We're buying back approximately 100% of our net income...we still have a lot of dry powder to execute the buybacks at or above the level of 100% of our net income for a couple of years."
* Gunther also inquired about reserve levels amid macro volatility. Burg said, "When you look at the pure macro data...it would suggest that we have the capacity to release some reserves. But we have conservatively made some qualitative offsets...to keep that reserve where it is."
* Christopher Marinac, Janney Montgomery Scott LLC, asked about Wealth and Trust growth. Burg explained, "We've seen the places where we've seen a lot of new activity growth, new clients, new accounts have been both on the institutional services side and the BMT of Delaware side."
* Marinac also asked about operating leverage in Wealth. Burg stated, "We do have a lot of operating leverage and a lot of opportunity for scale there for sure."
* Sun Young Lee, TD Cowen, focused on Cash Connect and loan portfolio runoff. Burg detailed the interest rate sensitivity and said, "We expect that to continue," referring to Spring EQ runoff at $15–$17 million per month.
* Kelly Motta, KBW, asked about talent recruitment and margin management. Burg confirmed ongoing hiring in commercial and wealth, and described margin sensitivity as "about 3 basis points per 25 basis point rate cut" with various tools to mitigate margin pressure, including deposit repricing and hedging.

SENTIMENT ANALYSIS

* Analysts maintained a constructive but probing tone, focusing on capital deployment, asset quality, and growth levers, with repeated questions on buybacks, reserves, and loan growth. The Q&A reflected interest in strategic capital management and profitability drivers.
* Management's sentiment was confident and proactive, emphasizing strong capital, buyback flexibility, and positive business momentum. Burg's comments, such as "we feel good about our portfolio, and we feel good about continuing to make progress," conveyed steady confidence. Compared to the previous quarter, management's tone remained assertive but more focused on capital return and asset quality improvement.

QUARTER-OVER-QUARTER COMPARISON

* Core EPS increased from $1.27 in Q2 to $1.40 in Q3, with higher core ROA and return on tangible common equity.
* Net interest margin expanded from 3.89% to 3.91%, while funding cost reductions were less pronounced this quarter.
* Asset quality improved significantly, with net credit costs dropping and NPAs declining.
* Share buybacks slowed from $77.7 million in Q2 to $46.8 million in Q3, but year-to-date repurchases rose to 5.8% of shares.
* The commercial pipeline strengthened, and management continued to highlight buybacks as a strategic use of excess capital.
* Analysts' focus shifted more towards capital returns and risk management, compared to more balanced growth and expense discussions in Q2.

RISKS AND CONCERNS

* Burg cited macroeconomic volatility, further rate cuts, and loan runoff as ongoing challenges.
* Management continues to monitor asset quality closely, employing conservative reserve strategies to address labor and inflation risks.
* Burg emphasized "erring more on the conservative side" in reserve management due to "potential volatility in the macro economy."

FINAL TAKEAWAY

WSFS Financial Corporation highlighted robust Q3 performance, with improved asset quality, expanded margins, and ongoing capital returns. Management reiterated its focus on maintaining an elevated pace of share buybacks given strong capital generation, while actively managing loan portfolio transitions and deploying tools to offset interest rate pressures. The company remains on track to meet its full-year outlook and is poised to provide expanded guidance for 2026, underscoring confidence in its diversified business model and strategic execution.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/wsfs/earnings/transcripts]

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* WSFS Financial Corporation (WSFS) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4833260-wsfs-financial-corporation-wsfs-q3-2025-earnings-call-transcript]
* WSFS Financial Corporation 2025 Q3 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4833244-wsfs-financial-corporation-2025-q3-results-earnings-call-presentation]
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