株探米国株
英語
エドガーで原本を確認する
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number 001-35638
WSFS FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 22-2866913
(State or other jurisdiction of Incorporation or organization) (I.R.S. Employer Identification Number)
500 Delaware Ave,
Wilmington, Delaware, 19801
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (302) 792-6000
Not Applicable
(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.01 per share WSFS Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files).    Yes  x    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer   x    Accelerated filer
Non-accelerated filer      Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  x

Number of shares outstanding of the issuer's common stock, as of the latest practicable date: 60,731,884 shares as of October 31, 2023.



WSFS FINANCIAL CORPORATION
FORM 10-Q
TABLE OF CONTENTS
 
  PART I. Financial Information Page
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2023 and 2022
Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2023 and 2022
Consolidated Statements of Changes in Stockholders' Equity for the Three and Nine Months Ended September 30, 2023 and 2022
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022
Notes to the Consolidated Financial Statements for the Three and Nine Months Ended September 30, 2023
Item 2.
Item 3.
Item 4.
PART II. Other Information
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

2

FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, and exhibits hereto, contains estimates, predictions, opinions, projections and other “forward-looking statements” as that phrase is defined in the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, references to the Company’s predictions or expectations of future business or financial performance as well as its goals and objectives for future operations, financial and business trends, business prospects and management’s outlook or expectations for earnings, revenues, expenses, capital levels, liquidity levels, asset quality or other future financial or business performance, strategies or expectations. The words “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “project” and similar expressions, among others, generally identify forward-looking statements. Such forward-looking statements are based on various assumptions (some of which may be beyond the Company’s control) and are subject to risks and uncertainties (which change over time) and other factors which could cause actual results to differ materially from those currently anticipated. Such risks and uncertainties include, but are not limited to:
•difficult market conditions and unfavorable economic trends in the United States generally and in financial markets, particularly in the markets in which the Company operates and in which its loans are concentrated, including difficult and unfavorable conditions and trends related to housing markets, costs of living, unemployment levels, interest rates, supply chain issues, inflation, and economic growth;
•the impacts related to or resulting from recent bank failures and other economic and industry volatility, including potential increased regulatory requirements and costs and potential impacts to macroeconomic conditions;
•possible additional loan losses and impairment of the collectability of loans;
•the Company’s level of nonperforming assets and the costs associated with resolving problem loans including litigation and other costs and complying with government-imposed foreclosure moratoriums;
•changes in market interest rates, which may increase funding costs and reduce earning asset yields and thus reduce margin;
•the impact of changes in interest rates and the credit quality and strength of underlying collateral and the effect of such changes on the market value of the Company’s investment securities portfolio;
•the credit risk associated with the substantial amount of commercial real estate, construction and land development and commercial and industrial loans in the Company's loan portfolio;
•the extensive federal and state regulation, supervision and examination governing almost every aspect of the Company’s operations and potential expenses associated with complying with such regulations;
•the Company’s ability to comply with applicable capital and liquidity requirements, including its ability to generate liquidity internally or raise capital on favorable terms;
•possible changes in trade, monetary and fiscal policies and stimulus programs, laws and regulations and other activities of governments, agencies, and similar organizations, and the uncertainty of the short- and long-term impacts of such changes;
•any impairments of the Company's goodwill or other intangible assets;
•the discontinued publication of London Inter-Bank Offered Rate (LIBOR) and the transition to Secured Overnight Financing Rate (SOFR) as an alternative reference interest rate;
•the success of the Company's growth plans, including its plans to grow the commercial small business leasing, residential, small business and Small Business Administration (SBA) portfolios and wealth management business;
•the Company’s ability to successfully integrate and fully realize the cost savings and other benefits of its acquisitions, manage risks related to business disruption following those acquisitions, and post-acquisition Customer acceptance of the Company’s products and services and related Customer disintermediation;
•negative perceptions or publicity with respect to the Company generally and, in particular, the Company’s trust and wealth management business;
•failure of the financial and/or operational controls of the Company’s Cash Connect® and/or Wealth Management divisions;
•adverse judgments or other resolution of pending and future legal proceedings, and cost incurred in defending such proceedings;
•the Company's reliance on third parties for certain important functions, including the operation of its core systems, and any failures by such third parties;
•system failures or cybersecurity incidents or other breaches of the Company’s network security, particularly given widespread remote working arrangements;
•the Company’s ability to recruit and retain key Associates;
•the effects of problems encountered by other financial institutions that adversely affect the Company or the banking industry generally;
3

•the effects of weather, including climate change, and natural disasters such as floods, droughts, wind, tornadoes and hurricanes as well as effects from geopolitical instability, armed conflicts, public health crises and man-made disasters including terrorist attacks;
•the effects of regional or national civil unrest (including any resulting branch or ATM closures or damage);
•possible changes in the speed of loan prepayments by the Company’s Customers and loan origination or sales volumes;
•possible changes in the speed of prepayments of mortgage-backed securities (MBS) due to changes in the interest rate environment and the related acceleration of premium amortization on prepayments in the event that prepayments accelerate;
•regulatory limits on the Company’s ability to receive dividends from its subsidiaries and pay dividends to its stockholders;
•any reputation, credit, interest rate, market, operational, litigation, legal, liquidity, regulatory and compliance risk resulting from developments related to any of the risks discussed above;
•any compounding effects or unexpected interaction of the risks discussed above; and
•other risks and uncertainties, including those discussed herein under the heading “Risk Factors” and in other documents filed by the Company with the Securities and Exchange Commission (SEC) from time to time.
The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. The Company disclaims any duty to revise or update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company for any reason, except as specifically required by law.

As used in this Quarterly Report on Form 10-Q, the terms “WSFS”, “the Company”, “registrant”, “we”, “us”, and “our” mean WSFS Financial Corporation and its subsidiaries, on a consolidated basis, unless the context indicates otherwise.

The following are registered trademarks of the Company: Bryn Mawr Trust®, Cash Connect®, NewLane Finance®, Powdermill® Financial Solutions, WSFS Institutional Services®, WSFS Mortgage® and WSFS Wealth® Investments. Any other trademarks appearing in this Quarterly Report on Form 10-Q are the property of their respective holders.

4


WSFS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
  Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands, except per share and share data) 2023 2022 2023 2022
Interest income:
Interest and fees on loans and leases $ 218,903  $ 152,887  $ 620,511  $ 401,110 
Interest on mortgage-backed securities 26,654  28,338  81,310  78,828 
Interest and dividends on investment securities:
Taxable 699  703  2,103  2,107 
Tax-exempt 1,481  1,278  4,496  2,535 
Other interest income 3,402  3,359  10,871  6,142 
251,139  186,565  719,291  490,722 
Interest expense:
Interest on deposits 57,255  6,643  142,501  13,537 
Interest on Federal Home Loan Bank advances 167  42  5,135  42 
Interest on senior and subordinated debt 2,453  2,061  7,360  5,939 
Interest on federal funds purchased 185  28  1,324  28 
Interest on trust preferred borrowings 1,764  951  4,954  2,146 
Interest on other borrowings 6,713  11,041  26 
68,537  9,734  172,315  21,718 
Net interest income 182,602  176,831  546,976  469,004 
Provision for credit losses 18,414  7,454  63,255  34,693 
Net interest income after provision for credit losses 164,188  169,377  483,721  434,311 
Noninterest income:
Credit/debit card and ATM income 14,869  10,993  42,660  27,446 
Investment management and fiduciary income 32,720  29,504  95,575  90,877 
Deposit service charges 6,534  6,262  18,850  18,158 
Mortgage banking activities, net 1,254  1,420  3,680  6,529 
Loan and lease fee income 1,621  1,425  4,183  4,457 
Unrealized (loss) gain on equity investments, net (5) —  (9) 5,988 
Bank owned life insurance income 1,697  195  3,967  674 
Other income 13,978  12,852  33,760  41,125 
72,668  62,651  202,666  195,254 
Noninterest expense:
Salaries, benefits and other compensation 74,453  72,294  219,669  211,413 
Occupancy expense 9,529  9,699  30,069  30,393 
Equipment expense 10,563  9,913  31,165  30,674 
Data processing and operations expenses 4,867  5,362  14,362  16,009 
Professional fees 4,612  3,561  15,169  12,285 
Marketing expense 2,049  2,082  5,930  4,985 
FDIC expenses 2,534  1,540  7,979  4,399 
Loan workout and other credit costs (189) 1,001  292  1,103 
Corporate development expense 113  1,248  3,649  41,679 
Restructuring expense —  1,344  (787) 22,792 
Other operating expense 31,158  24,873  86,490  65,691 
139,689  132,917  413,987  441,423 
Income before taxes 97,167  99,111  272,400  188,142 
Income tax provision 22,904  25,767  66,880  49,929 
Net income $ 74,263  $ 73,344  $ 205,520  $ 138,213 
Less: Net income (loss) attributable to noncontrolling interest 97  (38) 272  287 
Net income attributable to WSFS $ 74,166  $ 73,382  $ 205,248  $ 137,926 
Earnings per share:
Basic $ 1.22  $ 1.16  $ 3.35  $ 2.15 
Diluted $ 1.22  $ 1.16  $ 3.34  $ 2.15 
Weighted average shares of common stock outstanding:
Basic 60,941,922  63,047,675  61,264,862  64,064,488 
Diluted 61,039,317  63,227,983  61,367,802  64,282,992 

The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.
5

WSFS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
 
Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands) 2023 2022 2023 2022
Net income $ 74,263  $ 73,344  $ 205,520  $ 138,213 
Less: Net income (loss) attributable to noncontrolling interest 97  (38) 272  287 
Net income attributable to WSFS 74,166  73,382  205,248  137,926 
Other comprehensive (loss) income:
Net change in unrealized losses on investment securities available-for-sale
Net unrealized losses arising during the period, net of tax benefit of $40,270, $63,954, $36,278, and $178,061, respectively
(127,523) (202,520) (114,880) (563,860)
Net change in securities held-to-maturity
Net change unrealized gains (losses) on available-for-sale securities reclassified to held-to-maturity, net of tax (benefit) expense of $(1,379), $(1,884), $(4,080), and $35,955, respectively(1)
4,366  5,966  12,924  (113,858)
Net change in unfunded pension liability
Change in unfunded pension liability related to unrealized gain and prior service cost, net of tax expense of $16, $10, $44, and $27, respectively
(51) (31) (140) (86)
Net change in cash flow hedge
Net unrealized loss arising during the period, net of tax benefit of $508, $—, $869, and $—, respectively
(1,608) —  (2,752) — 
Amortization of unrealized gain on terminated cash flow hedges, net of tax expense of $9, $13, $34, and $38, respectively
(28) (41) (107) (120)
(1,636) (41) (2,859) (120)
Net change in equity method investments
Net change in other comprehensive income of equity method investments, net of tax expense of $61, $8, $28, and $67, respectively
192  25  88  213 
Total other comprehensive loss (124,652) (196,601) (104,867) (677,711)
Total comprehensive (loss) income $ (50,486) $ (123,219) $ 100,381  $ (539,785)
(1)Includes $119.8 million, net of tax benefit, of unrealized losses on transferred investment securities with a book value of $1.1 billion from available-for-sale to held-to-maturity that were transferred in June 2022.
The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.
6

WSFS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
(Dollars in thousands, except per share and share data) September 30, 2023 December 31, 2022
Assets:
Cash and due from banks $ 260,200  $ 332,961 
Cash in non-owned ATMs 345,754  499,017 
Interest-bearing deposits in other banks including collateral (restricted cash) of $5,010 at September 30, 2023 and $4,650 at December 31, 2022
5,526  5,280 
Total cash, cash equivalents, and restricted cash 611,480  837,258 
Investment securities, available-for-sale (amortized cost of $4,584,190 at September 30, 2023 and $4,834,550 at December 31, 2022
3,691,541  4,093,060 
Investment securities, held-to-maturity, net of allowance for credit losses of $8 at September 30, 2023 and $10 at December 31, 2022 (fair value $927,680 at September 30, 2023 and $1,040,104 at December 31, 2022)
1,068,871  1,111,619 
Other investments 21,741  26,120 
Loans, held for sale at fair value 36,658  42,985 
Loans and leases, net of allowance for credit losses of $175,988 at September 30, 2023 and $151,861 at December 31, 2022
12,502,404  11,759,992 
Bank owned life insurance 101,424  101,935 
Stock in Federal Home Loan Bank (FHLB) of Pittsburgh at cost 12,199  24,116 
Other real estate owned 298  833 
Accrued interest receivable 81,909  74,448 
Premises and equipment 105,001  115,603 
Goodwill 885,898  883,637 
Intangible assets 122,574  128,595 
Other assets 798,994  714,554 
Total assets $ 20,040,992  $ 19,914,755 
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Noninterest-bearing $ 4,913,517  $ 5,739,647 
Interest-bearing 11,072,852  10,463,922 
Total deposits 15,986,369  16,203,569 
Federal funds purchased 25,000  — 
FHLB advances —  350,000 
Trust preferred borrowings 90,589  90,442 
Senior and subordinated debt 218,342  248,169 
Other borrowed funds 583,902  38,283 
Accrued interest payable 42,481  5,174 
Other liabilities 858,931  777,232 
Total liabilities 17,805,614  17,712,869 
Stockholders’ Equity:
Common stock $0.01 par value, 90,000,000 shares authorized; issued 76,043,902 at September 30, 2023 and 75,921,997 at December 31, 2022
761  759 
Capital in excess of par value 1,981,474  1,974,210 
Accumulated other comprehensive loss (780,711) (675,844)
Retained earnings 1,588,858  1,411,243 
Treasury stock at cost, 15,316,263 shares at September 30, 2023 and 14,310,085 shares at December 31, 2022
(547,587) (505,255)
Total stockholders’ equity of WSFS 2,242,795  2,205,113 
Noncontrolling interest (7,417) (3,227)
Total stockholders' equity 2,235,378  2,201,886 
Total liabilities and stockholders' equity $ 20,040,992  $ 19,914,755 

The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.
7

WSFS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
Three Months Ended September 30, 2023
(Dollars in thousands, except per share and share amounts) Shares Common Stock Capital in Excess of Par Value Accumulated Other Comprehensive Loss Retained Earnings Treasury Stock Total Stockholders' Equity of WSFS Non-controlling Interest Total Stockholders' Equity
Balance, June 30, 2023 76,021,963  $ 760  $ 1,977,945  $ (656,059) $ 1,523,849  $ (531,836) $ 2,314,659  $ (7,275) $ 2,307,384 
Net income —  —  —  —  74,166  —  74,166  97  74,263 
Other comprehensive loss —  —  —  (124,652) —  —  (124,652) —  (124,652)
Cash dividend, $0.15 per share
—  —  —  —  (9,157) —  (9,157) —  (9,157)
Distributions to noncontrolling shareholders —  —  —  —  —  —  —  (239) (239)
Issuance of common stock including proceeds from exercise of common stock options 21,939  2,057  —  —  —  2,058  —  2,058 
Stock-based compensation expense —  —  1,472  —  —  —  1,472  —  1,472 
Repurchases of common shares (1)
—  —  —  —  —  (15,751) (15,751) —  (15,751)
Balance, September 30, 2023 76,043,902  $ 761  $ 1,981,474  $ (780,711) $ 1,588,858  $ (547,587) $ 2,242,795  $ (7,417) $ 2,235,378 
Nine Months Ended September 30, 2023
(Dollars in thousands, except per share and share amounts) Shares Common Stock Capital in Excess of Par Value Accumulated Other Comprehensive Loss Retained Earnings Treasury Stock Total Stockholders' Equity of WSFS Non-controlling Interest Total Stockholders' Equity
Balance, December 31, 2022 75,921,997  $ 759  $ 1,974,210  $ (675,844) $ 1,411,243  $ (505,255) $ 2,205,113  $ (3,227) $ 2,201,886 
Net income —  —  —  —  205,248  —  205,248  272  205,520 
Other comprehensive loss —  —  —  (104,867) —  —  (104,867) —  (104,867)
Cash dividend, $0.45 per share
—  —  —  —  (27,633) —  (27,633) —  (27,633)
Distributions to noncontrolling shareholders —  —  —  —  —  —  —  (4,462) (4,462)
Issuance of common stock including proceeds from exercise of common stock options 121,905  2,418  —  —  —  2,420  —  2,420 
Stock-based compensation expense —  —  7,211  —  —  —  7,211  —  7,211 
Repurchases of common stock (2)
—  —  (2,365) —  —  (42,332) (44,697) —  (44,697)
Balance, September 30, 2023 76,043,902  $ 761  $ 1,981,474  $ (780,711) $ 1,588,858  $ (547,587) $ 2,242,795  $ (7,417) $ 2,235,378 
(1)Repurchase of common stock includes 386,900 shares repurchased in connection with the Company's share repurchase program approved by the Board of Directors.
(2)Repurchase of common stock includes 1,006,178 shares repurchased in connection with the Company's share repurchase program approved by the Board of Directors, and 45,489 shares withheld to cover tax liabilities.
8

Three Months Ended September 30, 2022
(Dollars in thousands, except per share and share amounts) Shares Common Stock Capital in Excess of Par Value Accumulated Other Comprehensive Loss Retained Earnings Treasury Stock Total Stockholders' Equity of WSFS Non-controlling Interest Total Stockholders' Equity
Balance, June 30, 2022 75,870,300  $ 759  $ 1,968,175  $ (518,878) $ 1,272,192  $ (406,888) $ 2,315,360  $ (2,484) $ 2,312,876 
Net income (loss) —  —  —  —  73,382  —  73,382  (38) 73,344 
Other comprehensive loss —  —  —  (196,601) —  —  (196,601) —  (196,601)
Cash dividend, $0.15 per share
—  —  —  —  (9,535) —  (9,535) —  (9,535)
Contributions from noncontrolling shareholders —  —  —  —  —  —  —  (240) (240)
Issuance of common stock including proceeds from exercise of common stock options 26,054  —  2,087  —  —  —  2,087  —  2,087 
Stock-based compensation expense —  —  1,366  —  —  —  1,366  —  1,366 
Repurchases of common shares (1)
—  —  —  —  —  (82,466) (82,466) —  (82,466)
Balance, September 30, 2022 75,896,354  $ 759  $ 1,971,628  $ (715,479) $ 1,336,039  $ (489,354) $ 2,103,593  $ (2,762) $ 2,100,831 
Nine Months Ended September 30, 2022
(Dollars in thousands, except per share and share amounts) Shares Common Stock Capital in Excess of Par Value Accumulated Other Comprehensive Loss Retained Earnings Treasury Stock Total Stockholders' Equity of WSFS Non-controlling Interest Total Stockholders' Equity
Balance, December 31, 2021 57,695,676  $ 577  $ 1,058,997  $ (37,768) $ 1,224,614  $ (307,321) $ 1,939,099  $ (2,083) $ 1,937,016 
Net income —  —  —  —  137,926  —  137,926  287  138,213 
Other comprehensive loss —  —  —  (677,711) —  —  (677,711) —  (677,711)
Cash dividend, $0.41 per share
—  —  —  —  (26,501) —  (26,501) —  (26,501)
Contributions from noncontrolling shareholders —  —  —  —  —  —  —  (53) (53)
Issuance of common stock including proceeds from exercise of common stock options 83,830  2,518  —  —  —  2,519  —  2,519 
Issuance of common stock in acquisition of BMT 18,116,848  181  907,835  —  —  —  908,016  —  908,016 
Noncontrolling interest assumed in acquisition —  —  —  —  —  —  —  (913) (913)
Stock-based compensation expense —  —  4,427  —  —  —  4,427  —  4,427 
Repurchases of common stock (2)
—  —  (2,149) —  —  (182,033) (184,182) —  (184,182)
Balance, September 30, 2022 75,896,354  $ 759  $ 1,971,628  $ (715,479) $ 1,336,039  $ (489,354) $ 2,103,593  $ (2,762) $ 2,100,831 
(1)Repurchase of common stock includes 1,664,550 shares repurchased in connection with the Company's share repurchase program approved by the Board of Directors, and 4,872 shares withheld to cover tax liabilities.
(2)Repurchase of common stock includes 3,789,137 shares repurchased in connection with the Company's share repurchase program approved by the Board of Directors and 104,965 shares withheld to cover tax liabilities.

The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.
9

WSFS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Nine Months Ended September 30,
(Dollars in thousands) 2023 2022
Operating activities:
Net income $ 205,520  $ 138,213 
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses 63,255  34,693 
Depreciation of premises and equipment, net 13,552  20,009 
Accretion of fees and discounts, net (20,891) (16,965)
Amortization of intangible assets 11,596  14,505 
Amortization of right-of-use lease assets 11,559  14,715 
Decrease in operating lease liability (9,328) (12,856)
Income from mortgage banking activities, net (3,680) (6,529)
Loss (gain) on sale of other real estate owned and valuation adjustments, net 195  (235)
Stock-based compensation expense 7,211  4,427 
Unrealized loss (gain) on equity investments, net (5,988)
Deferred income tax benefit (1,681) (6,439)
Increase in accrued interest receivable (7,461) (11,096)
Decrease in other assets (42,228) (39,991)
Origination of loans held for sale (206,979) (453,952)
Proceeds from sales of loans held for sale 144,990  421,098 
Decrease (increase) in value of bank owned life insurance 511  (437)
Increase in capitalized interest, net (1,702) (1,650)
Increase in accrued interest payable 37,307  1,590 
Increase in other liabilities 86,052  313,791 
Net cash provided by operating activities $ 287,807  $ 406,903 
Investing activities:
Purchases of investment securities held to maturity $ —  $ (120,868)
Repayments, maturities and calls of investment securities held-to-maturity 57,826  49,768 
Purchases of investment securities available-for-sale (21,080) (1,218,022)
Repayments, maturities and calls of investment securities available-for-sale 269,156  911,125 
Proceeds from bank-owned life insurance death benefit —  1,437 
Net (increase) decrease in loans (486,508) 11,642 
Net cash (paid for) from business combinations (3,000) 573,745 
Purchase of loans held-for-investment (238,047) (252,185)
Purchases of stock of Federal Home Loan Bank of Pittsburgh (119,479) (15,318)
Redemptions of stock of Federal Home Loan Bank of Pittsburgh 131,396 
Sales of other real estate owned 833  1,844 
Investment in premises and equipment (2,953) (7,665)
Sales of premises and equipment 891 
Net cash used in investing activities $ (411,853) $ (63,600)
10

Nine Months Ended September 30,
(Dollars in thousands) 2023 2022
Financing activities:
Net decrease in demand and saving deposits $ (816,546) $ (466,105)
Increase (decrease) in time deposits 612,672  (132,825)
Decrease in brokered deposits (33,486) (37,704)
Receipts from FHLB advances 5,945,000  458,100 
Repayments of FHLB advances (6,295,000) (458,100)
Receipts from federal funds purchased 6,033,000  310,001 
Repayments of federal funds purchased (6,008,000) (310,001)
Receipts from Bank Term Funding Program 565,000  — 
Distributions to noncontrolling shareholders (4,462) (53)
Cash dividend (27,633) (26,501)
Issuance of common stock including proceeds from exercise of common stock options 2,420  2,519 
Redemption of senior and subordinated debt (30,000) — 
Repurchases of common shares (44,697) (184,182)
Net cash used in financing activities $ (101,732) $ (844,851)
Decrease in cash, cash equivalents, and restricted cash (225,778) (501,548)
Cash, cash equivalents, and restricted cash at beginning of period 837,258  1,532,939 
Cash, cash equivalents, and restricted cash at end of period $ 611,480  $ 1,031,391 
Supplemental disclosure of cash flow information:
Cash paid during the period for:
     Interest $ 135,008  $ 16,886 
     Income taxes 72,789  26,237 
Non-cash information:
Loans transferred to other real estate owned $ 298  $ 502 
Loans transferred to portfolio from held-for-sale at fair value 68,022  84,829 
Held-to-maturity securities purchased, not settled —  5,136 
Securities transferred to held-to-maturity from available-for-sale at fair value —  931,421 
Fair value of assets acquired, net of cash received 7,993  4,713,544 
Fair value of liabilities assumed 4,993  4,379,273 
The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.
11

WSFS FINANCIAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023
(UNAUDITED)
1. BASIS OF PRESENTATION
General
These unaudited Consolidated Financial Statements include the accounts of WSFS Financial Corporation (WSFS, and together with its subsidiaries, the Company), and its consolidated subsidiaries. WSFS’ primary subsidiary is Wilmington Savings Fund Society, FSB (WSFS Bank or the Bank). As of September 30, 2023, the other subsidiaries of WSFS include The Bryn Mawr Trust Company of Delaware (BMT-DE), Bryn Mawr Capital Management, LLC (BMCM), WSFS Wealth Management, LLC (Powdermill®), WSFS SPE Services, LLC, and 601 Perkasie, LLC. The Company also has three unconsolidated subsidiaries: WSFS Capital Trust III, Royal Bancshares Capital Trust I, and Royal Bancshares Capital Trust II. WSFS Bank has two wholly-owned subsidiaries: Beneficial Equipment Finance Corporation (BEFC) and 1832 Holdings, Inc., and one majority-owned subsidiary, NewLane Finance Company (NewLane Finance®).
On January 1, 2023, WSFS completed the merger and brand conversion of WSFS Capital Management, LLC (West Capital) and Cypress Capital Management, LLC and renamed the combined entity Bryn Mawr Capital Management, LLC. BMCM is registered as an investment advisor with the U.S. Securities and Exchange Commission and is a wholly-owned subsidiary of WSFS.
Overview
Founded in 1832, the Bank is one of the ten oldest bank and trust companies continuously operating under the same name in the United States (U.S.). The Company provides residential and commercial real estate, commercial and consumer lending services, as well as consumer deposit and treasury management services. The Company's core banking business is commercial lending funded primarily by customer-generated deposits. In addition, the Company offers a variety of wealth management and trust services to individuals, institutions and corporations. The Federal Deposit Insurance Corporation (FDIC) insures the customers’ deposits to their legal maximums. The Company serves its customers primarily from 116 offices located in Pennsylvania (59), Delaware (40), New Jersey (14), Florida (1),  Nevada (1) and Virginia (1), its ATM network, website at www.wsfsbank.com and mobile app. Information on the website is not incorporated by reference into this Quarterly Report on Form 10-Q.
Basis of Presentation
In preparing the unaudited Consolidated Financial Statements, the Company is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. Amounts subject to significant estimates include the allowance for credit losses (including loans and leases held for investment, investment securities available-for-sale and held-to-maturity), lending-related commitments, goodwill, intangible assets, post-retirement benefit obligations, the fair value of financial instruments, and income taxes. Among other effects, changes to these estimates could result in future impairments of investment securities, goodwill and intangible assets, the establishment of additional allowance and lending-related commitment reserves, changes in the fair value of financial instruments, as well as increased post-retirement benefits and income tax expense.
The Company's accounting and reporting policies conform to Generally Accepted Accounting Principles in the U.S. (GAAP), prevailing practices within the banking industry for interim financial information and Rule 10-01 of SEC Regulation S-X (Rule 10-01). Rule 10-01 does not require us to include all information and notes that would be required in audited financial statements. Certain prior period amounts have been reclassified to conform with current period presentation. Operating results for the periods presented are not necessarily indicative of the results that may be expected for any future quarters or for the year ending December 31, 2023. These unaudited, interim Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and related notes included in the Annual Report on Form 10-K for the year ended December 31, 2022 (the 2022 Annual Report on Form 10-K) that was filed with the SEC on February 28, 2023 and is available at www.sec.gov or on the website at www.wsfsbank.com. All significant intercompany accounts and transactions were eliminated in consolidation.

12

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES:
The significant accounting policies used in preparation of the Consolidated Financial Statements are disclosed in the Company's 2022 Annual Report on Form 10-K. Those significant accounting policies remain unchanged at September 30, 2023, except for the following:
Past Due and Nonaccrual Loans
Past due loans are defined as loans contractually past due 90 days or more as to principal or interest payments. Past due loans 90 days or more that remain in accrual status are considered well secured and in the process of collection.
Nonaccruing loans are those on which the accrual of interest has ceased. Loans are placed on nonaccrual status immediately if, in the opinion of the Company, collection is doubtful, or when principal or interest is past due 90 days or more and the loan is not well secured and in the process of collection. 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 the Company’s assessment of the ultimate collectability of principal and interest. Loans are returned to accrual status when the Company assesses that the borrower has the ability to make all principal and interest payments in accordance with the terms of the loan (i.e., a consistent repayment record, generally six consecutive payments, has been demonstrated).
For loans greater than 90 days past due, unless loans are well-secured and collection is imminent, their respective reserves are generally charged off once the loss has been confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off.
A loan, for which the terms have been modified in the current reporting period in the form of principal forgiveness, an interest rate reduction, an other than-insignificant payment delay, or a term extension to a borrower experiencing financial difficulty, is considered a troubled loan. The assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification.
Principal balances are generally not forgiven when a loan is modified as a troubled loan. Nonaccruing troubled loans remain in nonaccrual status until there has been a period of sustained repayment performance demonstrated and repayment is reasonably assured. Since the effect of most troubled loans are already included in the Company’s estimate of expected credit losses, a change to the allowance for credit losses is generally not recorded upon modification.
For additional detail regarding past due and nonaccrual loans, see Note 7.
Allowance for Credit Losses - Loans and Leases
The Company establishes its allowance in accordance with guidance provided in ASC 326, Financial Instruments - Credit Losses. The allowance for credit losses includes quantitative and qualitative factors that comprise the Company's current estimate of expected credit losses, including the Company's 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.
The Company's portfolio segments, established based on similar risk characteristics and loss behaviors, are:
•Commercial Loans and Leases: Commercial and industrial - real estate secured, commercial and industrial - non-real estate secured, owner-occupied commercial, commercial mortgages, construction and commercial small business leases, and
•Residential and Consumer Loans: Residential mortgage, equity secured lines and loans, installment loans, unsecured lines of credit, originated education loans and previously acquired education loans.
Expected credit losses are net of expected recoveries and estimated over the contractual term, adjusted for expected prepayments. The contractual term excludes any extensions, renewals and modifications unless they are not unconditionally cancellable. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. Expected prepayments are based on historical experience and considers adjustments for current and future economic conditions.
The allowance includes two primary components: (i) an allowance established on loans which share similar risk characteristics collectively evaluated for credit losses (collective basis) and (ii) an allowance established on loans which do not share similar risk characteristics with any loan segment and are individually evaluated for credit losses (individual basis).
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Loans that share similar risk characteristics are collectively reviewed for credit loss and are evaluated based on historical loss experience, adjusted for current economic conditions and future economic forecasts. Estimated losses are determined differently for commercial and residential and consumer loans, and each portfolio segment is further segmented by internally assessed risk ratings.
The Company uses 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 Company's economic forecast considers the general health of the economy, the interest rate environment, real estate pricing and market risk. The Company's forecast extends out 6 quarters (the forecast period) and reverts to the historical loss rates on a straight-line basis over 4 quarters (the reversion period) as it believes this to be reasonable and supportable in the current environment. The economic forecast and reversion periods will be evaluated periodically by the Company and updated as appropriate.
The historical loss rates for commercial loans are estimated by determining the probability of default (PD) and expected loss given default (LGD) and are applied to the loans' exposure at default. The probability of default is calculated based on the historical rate of migration to an event of credit loss during the look-back period. The historical loss rates for consumer loans is calculated based on average net loss rates over the same look-back period. The current look-back period is 51 quarters which ensures historical loss rates are adequately considering losses within a full credit cycle.
Loans that do not share similar risk characteristics with any loan segments are evaluated on an individual basis. These loans, which may include troubled loans, are not included in the collective basis evaluation. When it is probable the Company will not collect all principal and interest due according to their contractual terms, which is assessed based on the credit characteristics of the loan and/or payment status, these loans are individually reviewed and measured for potential credit loss.
The amount of the potential credit loss is measured using any of the following three methods: (i) the present value of expected future cash flows discounted at the loan’s effective interest rate; (ii) the fair value of collateral if the loan is collateral dependent; or (iii) the loan’s observable market price. If the measured fair value of the loan is less than the amortized cost basis of the loan, an allowance for credit loss is recorded.
For collateral dependent loans, the expected credit losses at the individual asset level are the difference between the collateral's fair value (less cost to sell) and the amortized cost.
Qualitative adjustment factors consider various internal and external conditions which are allocated among loan segments and take into consideration:
•Current underwriting policies, staff and portfolio concentrations,
•Risk rating accuracy, credit and administration,
•Internal risk emergence (including internal trends of delinquency, and criticized loans by segment),
•Economic forecasts and conditions - locally and nationally (including market trends impacting collateral values), which is separate from or in addition to the third-party economic forecast described above, and
•Competitive environment, as it could impact loan structure and underwriting.
These factors are based on their relative standing compared to the period in which historical losses are used in quantitative reserve estimates and current directional trends, and reasonable and supportable forecasts. Qualitative factors can add to or subtract from quantitative reserves.
The Company's loan officers and risk managers meet at least quarterly to discuss and review the conditions and risks associated with individual problem loans. In addition, various regulatory agencies periodically review the Company's loan ratings and allowance for credit losses and the Bank's internal loan review department performs recurring loan reviews.
Accrued interest receivable on loans is excluded from the estimate of credit losses and is included in Accrued interest receivable on the unaudited Consolidated Statements of Financial Condition.
For additional detail regarding the allowance for credit losses and the provision for credit losses, see Note 7.
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RECENT ACCOUNTING PRONOUNCEMENTS
Accounting Guidance Adopted in 2023
ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures: In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The guidance eliminates the accounting guidance for troubled debt restructurings by creditors (ASC 310-40) while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. The guidance also requires that an entity disclose current-period write-offs by year of origination for financing receivables and net investments in leases within the scope of Topic 326. The Company adopted this guidance prospectively on January 1, 2023. For further details on the impact of the adoption and accounting policies, see updated Significant Accounting Policies, as described above, and troubled loans disclosures in Note 7 - Allowance for Credit Losses and Credit Quality Information.
Accounting Guidance Pending Adoption as of September 30, 2023
ASU No. 2023-01, Leases (Topic 842) Common Control Agreements: In March 2023, the FASB issued ASU No. 2023-01, Leases (Topic 842) Common Control Agreements. The amendment clarifies the accounting for leasehold improvements associated with common control leases by allowing the lessee to amortize the leasehold improvements over the useful life of the common control group’s use of the underlying asset, regardless of the lease term. The guidance is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. Adoption is required on a modified retrospective basis, consistent with the Company's adoption of Topic 842. The Company does not expect this update to have a material impact on the Consolidated Financial Statements.
ASU No. 2023-02, Investments—Equity Method and Joint Ventures (Topic 323) Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method: In March 2023, The FASB issued ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323) Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. The amendments permit reporting entities to elect to account for any equity investments in a tax credit program using the proportional amortization method if certain conditions are met. The amendments are effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. Adoption is required on a prospective, modified retrospective, or retrospective basis depending on the amendment. The Company does not expect this update to have a material impact on the Consolidated Financial Statements.

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3. NONINTEREST INCOME
Credit/debit card and ATM income
The following table presents the components of credit/debit card and ATM income:
Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands) 2023 2022 2023 2022
Bailment fees $ 9,982  $ 6,306  $ 28,051  $ 13,105 
Interchange fees 3,885  3,870  11,764  11,859 
Other card and ATM fees 1,002  817  2,845  2,482 
Total credit/debit card and ATM income $ 14,869  $ 10,993  $ 42,660  $ 27,446 
Credit/debit card and ATM income is composed of bailment fees, interchange fees, and other card and ATM fees. Bailment fees are earned from bailment arrangements with customers. Bailment arrangements are legal relationships in which property is delivered to another party without a transfer of ownership. The party who transferred the property (the bailor) retains ownership interest of the property. In the event that the bailee files for bankruptcy protection, the property is not included in the bailee's assets. The bailee pays an agreed-upon fee for the use of the bailor's property in exchange for the bailor allowing use of the assets at the bailee's site. Bailment fees are earned from cash that is made available for customers' use at an offsite location, such as cash located in an ATM at a customer's place of business. These fees are typically indexed to a market interest rate. This revenue stream generates fee income through monthly billing for bailment services.
Credit/debit card and ATM income also includes interchange fees. Interchange fees are paid by a merchant's bank to a bank that issued a debit or credit card used in a transaction to compensate the issuing bank for the value and benefit the merchant receives from accepting electronic payments. These revenue streams generate fee income at the time a transaction occurs and are recorded as revenue at the time of the transaction.
Investment management and fiduciary income
The following table presents the components of investment management and fiduciary income:
Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands) 2023 2022 2023 2022
Trust fees $ 22,062  $ 19,170  $ 64,514  $ 58,658 
Wealth management and advisory fees 10,658  10,334  31,061  32,219 
Total investment management and fiduciary income $ 32,720  $ 29,504  $ 95,575  $ 90,877 
Investment management and fiduciary income is composed of trust fees and wealth management and advisory fees. Trust fees are based on revenue earned from custody, escrow, trustee and trustee related services on structured finance transactions; indenture trustee, administrative agent and collateral agent services to individuals, institutions and corporations; commercial domicile and independent director services; and investment and trustee services to families and individuals. Most fees are flat fees, except for a portion of personal and corporate trustee fees where the Company earns a percentage on the assets under management or assets held within a trust. This revenue stream primarily generates fee income through monthly, quarterly and annual billings for services provided.
Wealth management and advisory fees consists of fees from Bryn Mawr Trust (excluding BMT-DE), BMCM, Powdermill®, and WSFS Wealth® Investments. Wealth management and advisory fees are based on revenue earned from services including asset management, financial planning, family office, and brokerage. The fees are based on the market value of assets, are assessed as a flat fee, or are brokerage commissions. This revenue stream primarily generates fee income through monthly, quarterly and annual billings for the services.

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Deposit service charges
The following table presents the components of deposit service charges:
Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands) 2023 2022 2023 2022
Service fees $ 4,382  $ 3,933  $ 12,833  $ 11,789 
Return and overdraft fees 1,851  2,164  5,218  5,835 
Other deposit service fees 301  165  799  534 
Total deposit service charges $ 6,534  $ 6,262  $ 18,850  $ 18,158 
Deposit service charges includes revenue earned from core deposit products, certificates of deposit, and brokered deposits. The Company generates fee revenues from deposit service charges primarily through service charges and overdraft fees. Service charges consist primarily of monthly account maintenance fees, treasury management fees, foreign ATM fees and other maintenance fees. All of these revenue streams generate fee income through service charges for monthly account maintenance and similar items, transfer fees, late fees, overlimit fees, and stop payment fees. Revenue is recorded at the time of the transaction.
Other income
The following table presents the components of other income:
Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands) 2023 2022 2023 2022
Managed service fees $ 5,301  $ 4,866  $ 15,316  $ 13,091 
Currency preparation 1,331  1,104  3,955  2,904 
ATM loss protection 643  681  1,938  1,963 
Capital markets revenue 3,581  793  8,170  5,738 
Miscellaneous products and services(1)
3,122  5,408  4,381  17,429 
Total other income $ 13,978  $ 12,852  $ 33,760  $ 41,125 
(1)Includes commissions income from BMT Insurance Advisors (BMTIA) in 2022. The BMTIA business was sold at the end of the second quarter of 2022.
Other income consists of managed service fees, which are primarily courier fees related to treasury management, currency preparation, ATM loss protection, capital markets revenue, and other miscellaneous products and services offered by the Bank. These fees are primarily generated through monthly billings or at the time of the transaction. Capital markets revenue consists of fees related to interest rate swaps, risk participation agreements, foreign exchange contracts, letters of credit, and trade finance products and services offered by the Bank. Through its subsidiary BMTIA, the Bank earned commissions from the sale of insurance policies, which are generally calculated as a percentage of the policy premium, and contingent income, which is calculated based on the volume and performance of the policies held by each carrier. Obligations for the sale of insurance policies are generally satisfied at the point in time which the policy is executed and are recognized at the point in time in which the amounts are known and collection is reasonably assured. Performance metrics for contingent income are generally satisfied over time, not exceeding one year, and are recognized at the point in time in which the amounts are known and collection is reasonably assured.
The Company's contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on the prices charged to customers.
Practical expedients and exemptions
The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed.
See Note 14 for further information about the disaggregation of noninterest income by segment.
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4. EARNINGS PER SHARE
The following table shows the computation of basic and diluted earnings per share:
Three Months Ended September 30, Nine Months Ended September 30,
(Dollars and shares in thousands, except per share data) 2023 2022 2023 2022
Numerator:
Net income attributable to WSFS $ 74,166  $ 73,382  $ 205,248  $ 137,926 
Denominator:
Weighted average basic shares 60,942  63,048  61,265  64,064 
Dilutive potential common shares 97  180  103  219 
Weighted average fully diluted shares 61,039  63,228  $ 61,368  $ 64,283 
Earnings per share:
Basic $ 1.22  $ 1.16  $ 3.35  $ 2.15 
Diluted $ 1.22  $ 1.16  $ 3.34  $ 2.15 
Outstanding common stock equivalents having no dilutive effect 18  18 
Basic earnings per share is calculated by dividing Net income attributable to WSFS by the weighted-average basic shares outstanding. Diluted earnings per share is calculated by dividing Net income attributable to WSFS by the weighted-average fully diluted shares outstanding, using the treasury stock method. Fully diluted shares include the adjustment for the dilutive effect of common stock awards, which include outstanding stock options and unvested restricted stock units under the 2013 Incentive Plan and the 2018 Incentive Plan.
5. INVESTMENT SECURITIES
Debt Securities
The following tables detail the amortized cost, allowance for credit losses and the estimated fair value of the Company's investments in available-for-sale and held-to-maturity debt securities. None of the Company's investments in debt securities are classified as trading.
September 30, 2023
(Dollars in thousands) Amortized Cost Gross
Unrealized
 Gain
Gross
Unrealized
 Loss
Allowance for Credit Losses Fair
Value
Available-for-Sale Debt Securities
Collateralized mortgage obligation (CMO) $ 573,393  $ —  $ 118,729  $ —  $ 454,664 
Fannie Mae (FNMA) mortgage-backed securities (MBS) 3,608,095  —  694,683  —  2,913,412 
Freddie Mac (FHLMC) MBS 128,999  —  18,280  —  110,719 
Ginnie Mae (GNMA) MBS 47,621  —  4,870  —  42,751 
Government-sponsored enterprises (GSE) agency notes 226,082  —  56,087  —  169,995 
$ 4,584,190  $ —  $ 892,649  $ —  $ 3,691,541 
Held-to-Maturity Debt Securities(1)
FNMA MBS $ 881,844  $ —  $ 129,388  $ —  $ 752,456 
State and political subdivisions 187,035  24  11,827  175,224 
$ 1,068,879  $ 24  $ 141,215  $ $ 927,680 
(1)Held-to-maturity securities transferred from available-for-sale are included in held-to-maturity at fair value basis at the time of transfer. The amortized cost of transferred held-to-maturity securities included net unrealized losses of $125.8 million at September 30, 2023, which are offset in Accumulated other comprehensive loss. At the time of transfer, there was no allowance for credit loss on the available-for-sale securities. Subsequent to transfer, the securities were evaluated for credit loss.
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December 31, 2022
(Dollars in thousands) Amortized Cost Gross
Unrealized
 Gain
Gross
Unrealized
 Loss
Allowance for Credit Losses Fair
Value
Available-for-Sale Debt Securities
CMO $ 608,834  $ —  $ 102,454  $ —  $ 506,380 
FNMA MBS 3,823,036  —  572,778  —  3,250,258 
FHLMC MBS 135,554  —  13,555  —  121,999 
GNMA MBS 39,116  —  2,978  —  36,138 
GSE agency notes 228,010  —  49,725  —  178,285 
$ 4,834,550  $ —  $ 741,490  $ —  $ 4,093,060 
Held-to-Maturity Debt Securities(1)
FNMA MBS $ 909,498  $ —  $ 68,677  $ —  $ 840,821 
State and political subdivisions 201,631  532  3,372  10  198,781 
Foreign bonds 500  —  —  502 
$ 1,111,629  $ 534  $ 72,049  $ 10  $ 1,040,104 
(1)Held-to-maturity securities transferred from available-for-sale are included in held-to-maturity at fair value at the time of transfer. The amortized cost of transferred held-to-maturity securities included net unrealized losses of $142.8 million at December 31, 2022, which are offset in Accumulated other comprehensive loss. At the time of transfer, there was no allowance for credit loss on the available-for-sale securities. Subsequent to transfer, the securities were evaluated for credit loss.
The scheduled maturities of available-for-sale debt securities at September 30, 2023 and December 31, 2022 are presented in the table below:
  Available-for-Sale
  Amortized Fair
(Dollars in thousands) Cost Value
September 30, 2023 (1)
Within one year $ —  $ — 
After one year but within five years 87,314  81,548 
After five years but within ten years 577,578  465,454 
After ten years 3,919,298  3,144,539 
$ 4,584,190  $ 3,691,541 
December 31, 2022 (1)
Within one year $ —  $ — 
After one year but within five years 83,014  77,499 
After five years but within ten years 465,777  398,607 
After ten years 4,285,759  3,616,954 
$ 4,834,550  $ 4,093,060 
(1)Actual maturities could differ from contractual maturities.
As of September 30, 2023, the Company’s available-for-sale investment securities consisted of 964 securities, 964 of which were in an unrealized loss position.
As of September 30, 2023, substantially all of the Corporation’s available-for-sale investment securities were mortgage-backed securities or collateral mortgage obligations which were issued or guaranteed by U.S. government-sponsored entities and agencies. As of September 30, 2023 and December 31, 2022, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of shareholders’ equity.
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The scheduled maturities of held-to-maturity debt securities at September 30, 2023 and December 31, 2022 are presented in the table below:
  Held-to-Maturity
  Amortized Fair
(Dollars in thousands) Cost Value
September 30, 2023 (1)
Within one year $ —  $ — 
After one year but within five years 9,793  9,373 
After five years but within ten years 45,306  42,615 
After ten years 1,013,780  875,692 
$ 1,068,879  $ 927,680 
December 31, 2022 (1)
Within one year $ 731  $ 732 
After one year but within five years 9,530  9,476 
After five years but within ten years 46,170  45,944 
After ten years 1,055,198  983,952 
$ 1,111,629  $ 1,040,104 
(1)Actual maturities could differ from contractual maturities.
MBS may have expected maturities that differ from their contractual maturities. These differences arise because issuers may have the right to call securities and borrowers may have the right to prepay obligations with or without prepayment penalty. The estimated weighted average duration of MBS was 6.0 years at September 30, 2023.
The held-to-maturity debt securities are not collateral-dependent securities as these are general obligation bonds issued by cities, states, counties, or other local and foreign governments.
Investment securities with fair market values aggregating $3.3 billion and $2.8 billion were pledged as collateral for investment sweep repurchase agreements, municipal deposits, and other obligations as of September 30, 2023 and December 31, 2022, respectively.
During the nine months ended September 30, 2023 and 2022, the Company had no sales of debt securities categorized as available-for-sale.
As of September 30, 2023 and December 31, 2022, the Company's debt securities portfolio had remaining unamortized premiums of $59.2 million and $66.6 million, respectively, and unaccreted discounts of $21.9 million and $25.2 million, respectively.
For debt securities in an unrealized loss position, the table below shows the gross unrealized losses and fair value by investment category and length of time that individual debt securities were in a continuous unrealized loss position at September 30, 2023.
  Duration of Unrealized Loss Position    
  Less than 12 months 12 months or longer Total
  Fair Unrealized Fair Unrealized Fair Unrealized
(Dollars in thousands) Value Loss Value Loss Value Loss
Available-for-sale debt securities:
CMO $ —  $ —  $ 454,664  $ 118,729  $ 454,664  $ 118,729 
FNMA MBS 8,792  467  2,904,620  694,216  2,913,412  694,683 
FHLMC MBS —  110,712  18,280  110,719  18,280 
GNMA MBS 11,421  654  31,330  4,216  42,751  4,870 
GSE agency notes —  —  169,995  56,087  169,995  56,087 
$ 20,220  $ 1,121  $ 3,671,321  $ 891,528  $ 3,691,541  $ 892,649 
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For debt securities in an unrealized loss position, the table below shows the gross unrealized losses and fair value by investment category and length of time that individual debt securities were in a continuous unrealized loss position at December 31, 2022.
  Duration of Unrealized Loss Position    
  Less than 12 months 12 months or longer Total
  Fair Unrealized Fair Unrealized Fair Unrealized
(Dollars in thousands) Value Loss Value Loss Value Loss
Available-for-sale debt securities:
CMO $ 158,449  $ 13,855  $ 347,931  $ 88,599  $ 506,380  $ 102,454 
FNMA MBS 1,237,560  145,752  2,012,698  427,026  3,250,258  572,778 
FHLMC MBS 102,321  9,268  19,671  4,287  121,992  13,555 
GNMA MBS 32,076  2,265  4,030  713  36,106  2,978 
GSE agency notes —  —  178,285  49,725  178,285  49,725 
$ 1,530,406  $ 171,140  $ 2,562,615  $ 570,350  $ 4,093,021  $ 741,490 
The Company does not have the intent to sell, nor is it more likely than not it will be required to sell these securities before it is able to recover the amortized cost basis. The unrealized losses are the result of changes in market interest rates subsequent to purchase, not credit loss, as these are highly rated agency securities with no expected credit loss, in the event of a default. As a result, there is no allowance for credit losses recorded for available-for-sale debt securities as of September 30, 2023.
At September 30, 2023 and December 31, 2022, held-to-maturity debt securities had an amortized cost basis of $1.1 billion. The held-to-maturity debt security portfolio primarily consists of mortgage-backed securities which were issued or guaranteed by U.S. government-sponsored entities and agencies and highly rated municipal bonds. The Company monitors credit quality of its debt securities through credit ratings. The following table summarizes the amortized cost of debt securities held-to-maturity as of September 30, 2023, aggregated by credit quality indicator:
(Dollars in thousands) FNMA MBS State and political subdivisions
A+ rated or higher $ —  $ 187,035 
Not rated 881,844  — 
Ending balance $ 881,844  $ 187,035 
The following table summarizes the amortized cost of debt securities held-to-maturity as of December 31, 2022, aggregated by credit quality indicator:
(Dollars in thousands) FNMA MBS State and political subdivisions Foreign bonds
A+ rated or higher $ —  $ 201,631  $ 500 
Not rated 909,498  —  — 
Ending balance $ 909,498  $ 201,631  $ 500 
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The Company reviewed its held-to-maturity debt securities by major security type for potential credit losses. There was no activity in the allowance for credit losses for FNMA MBS and foreign bond debt securities for the nine months ended September 30, 2023 and 2022. The following table presents the activity in the allowance for credit losses for state and political subdivisions debt securities for the three and nine months ended September 30, 2023 and 2022:
Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2023 2022 2023 2022
Allowance for credit losses:
Beginning balance $ $ $ 10  $
Provision for (recovery of) credit losses —  (2)
Ending balance $ $ 10  $ $ 10 
Accrued interest receivable of $1.7 million and $2.4 million as of September 30, 2023 and December 31, 2022, respectively, for held-to-maturity debt securities were excluded from the evaluation of allowance for credit losses. There were no nonaccrual or past due held-to-maturity debt securities as of September 30, 2023 and December 31, 2022.
Equity Investments
The Company had equity investments at fair value of $21.7 million and $26.1 million as of September 30, 2023 and December 31, 2022, respectively.
During the three and nine months ended September 30, 2023, the Company recognized $0.7 million of net gains and $1.0 million of net losses, respectively, related to our equity method investments within Other income on the unaudited Consolidated Statements of Income.
During the nine months ended September 30, 2022, total nets gains on equity investments of $6.0 million were recorded, driven by an unrealized gain on the Company's investment in CRED.ai presented within Unrealized gain on equity investment, net in the Consolidated Statements of Income. During the three and nine months ended September 30, 2022, the Company recognized $2.9 million and $4.5 million, respectively, of net gains related to our equity method investments within Other income on the unaudited Consolidated Statements of Income.
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6. LOANS AND LEASES
The following table shows the Company's loan and lease portfolio by category:  
(Dollars in thousands) September 30, 2023 December 31, 2022
Commercial and industrial $ 2,644,039  $ 2,575,345 
Owner-occupied commercial 1,924,171  1,809,582 
Commercial mortgages 3,645,723  3,351,084 
Construction 1,043,568  1,044,049 
Commercial small business leases 605,698  558,981 
Residential(1)
858,111  761,882 
Consumer(2)
1,957,082  1,810,930 
12,678,392  11,911,853 
Less:
Allowance for credit losses 175,988  151,861 
Net loans and leases $ 12,502,404  $ 11,759,992 
(1) Includes reverse mortgages at fair value of $2.8 million at September 30, 2023 and $2.4 million at December 31, 2022.
(2) Includes home equity lines of credit, installment loans, unsecured lines of credit and education loans.
Accrued interest receivable on loans and leases was $66.6 million and $59.3 million at September 30, 2023 and December 31, 2022, respectively. Accrued interest receivable on loans and leases was excluded from the evaluation of allowance for credit losses.

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7. ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY INFORMATION
The following tables provide the activity of allowance for credit losses and loan balances for the three and nine months ended September 30, 2023 and 2022. The increase was primarily due to the impacts of the economic uncertainty and forecast and net loan growth.
(Dollars in thousands)
Commercial and Industrial(1)
Owner-occupied
Commercial
Commercial
Mortgages
Construction
Residential(2)
Consumer(3)
Total
Three months ended September 30, 2023
Allowance for credit losses
Beginning balance $ 62,783  $ 6,335  $ 31,937  $ 9,228  $ 5,043  $ 56,543  $ 171,869 
Charge-offs (10,675) —  (300) —  —  (5,872) (16,847)
Recoveries 2,124  14  55  357  2,552 
Provision 7,438  1,501  1,549  2,088  253  5,585  18,414 
Ending balance $ 61,670  $ 7,850  $ 33,187  $ 11,317  $ 5,351  $ 56,613  $ 175,988 
Nine months ended September 30, 2023
Allowance for credit losses
Beginning balance $ 59,394  $ 6,019  $ 21,473  $ 6,987  $ 4,668  $ 53,320  $ 151,861 
Charge-offs (30,496) (184) (300) —  (33) (15,374) (46,387)
Recoveries 5,554  50  532  211  906  7,257 
Provision 27,218  1,965  12,010  3,798  505  17,761  63,257 
Ending balance $ 61,670  $ 7,850  $ 33,187  $ 11,317  $ 5,351  $ 56,613  $ 175,988 
Period-end allowance allocated to:
Loans evaluated on an individual basis $ 1,054  $ 161  $ —  $ 1,600  $ —  $ —  $ 2,815 
Loans evaluated on a collective basis 60,616  7,689  33,187  9,717  5,351  56,613  173,173 
Ending balance $ 61,670  $ 7,850  $ 33,187  $ 11,317  $ 5,351  $ 56,613  $ 175,988 
Period-end loan balances:
Loans evaluated on an individual basis
$ 26,355  $ 16,442  $ 7,918  $ 4,828  $ 5,838  $ 1,798  $ 63,179 
Loans evaluated on a collective basis 3,223,382  1,907,729  3,637,805  1,038,740  849,502  1,955,284  12,612,442 
Ending balance
$ 3,249,737  $ 1,924,171  $ 3,645,723  $ 1,043,568  $ 855,340  $ 1,957,082  $ 12,675,621 
(1)Includes commercial small business leases.
(2)Period-end loan balance excludes reverse mortgages at fair value of $2.8 million.
(3)Includes home equity lines of credit, installment loans, unsecured lines of credit and education loans.

24

(Dollars in thousands)
Commercial and Industrial(1)
Owner -
occupied
Commercial
Commercial
Mortgages
Construction
Residential(2)
Consumer(3)
Total
Three months ended September 30, 2022
Allowance for credit losses
Beginning balance $ 60,921  $ 5,510  $ 23,663  $ 5,058  $ 4,988  $ 41,830  $ 141,970 
Charge-offs (5,120) —  (544) —  —  (1,834) (7,498)
Recoveries 3,194  101  653  207  114  4,273 
Provision (credit) 889  489  (1,686) 788  (377) 7,347  7,450 
Ending balance $ 59,884  $ 6,003  $ 21,534  $ 6,499  $ 4,818  $ 47,457  $ 146,195 
Nine months ended September 30, 2022
Allowance for loan losses
Beginning balance $ 49,967  $ 4,574  $ 11,623  $ 1,903  $ 3,352  $ 23,088  $ 94,507 
Initial allowance on acquired PCD loans 22,614  595  2,684  71  61  78  26,103 
Charge-offs (11,308) (179) (581) —  (186) (4,062) (16,316)
Recoveries 4,667  271  223  653  737  663  7,214 
(Credit) provision(4)
(6,056) 742  7,585  3,872  854  27,690  34,687 
Ending balance $ 59,884  $ 6,003  $ 21,534  $ 6,499  $ 4,818  $ 47,457  $ 146,195 
Period-end allowance allocated to:
Loans evaluated on an individual basis $ 5,348  $ —  $ —  $ —  $ —  $ —  $ 5,348 
Loans evaluated on a collective basis 54,536  6,003  21,534  6,499  4,818  47,457  140,847 
Ending balance $ 59,884  $ 6,003  $ 21,534  $ 6,499  $ 4,818  $ 47,457  $ 146,195 
Period-end loan balances:
Loans evaluated on an individual basis $ 21,565  $ 1,713  $ 9,483  $ 5,360  $ 6,451  $ 1,884  $ 46,456 
Loans evaluated on a collective basis 3,147,913  1,786,878  3,270,896  1,022,843  752,142  1,675,244  11,655,916 
Ending balance
$ 3,169,478  $ 1,788,591  $ 3,280,379  $ 1,028,203  $ 758,593  $ 1,677,128  $ 11,702,372 
(1)Includes commercial small business leases.
(2)Period-end loan balance excludes reverse mortgages at fair value of $3.0 million.
(3)Includes home equity lines of credit, installment loans, unsecured lines of credit and education loans.
(4)Includes $23.5 million initial provision for credit losses on non-PCD loans.

25

The following tables show nonaccrual and past due loans presented at amortized cost at the date indicated:
September 30, 2023
(Dollars in thousands) 30–89 Days
Past Due and
Still 
Accruing
Greater 
Than
90 Days
Past Due and
Still Accruing
Total Past
Due
And Still
Accruing
Accruing
Current
Balances
Nonaccrual Loans With No Allowance Nonaccrual
Loans With An Allowance
Total
Loans
Commercial and industrial(1)
$ 10,183  $ 1,119  $ 11,302  $ 3,212,140  $ 21,138  $ 5,157  $ 3,249,737 
Owner-occupied commercial 1,669  —  1,669  1,907,355  14,085  1,062  1,924,171 
Commercial mortgages 16,691  —  16,691  3,622,326  6,706  —  3,645,723 
Construction 8,285  2,016  10,301  1,028,439  726  4,102  1,043,568 
Residential(2)
6,764  —  6,764  846,045  2,531  —  855,340 
Consumer(3)
15,580  11,222  26,802  1,928,327  1,953  —  1,957,082 
Total
$ 59,172  $ 14,357  $ 73,529  $ 12,544,632  $ 47,139  $ 10,321  $ 12,675,621 
% of Total Loans 0.47  % 0.11  % 0.58  % 98.97  % 0.37  % 0.08  % 100  %
(1)Includes commercial small business leases.
(2)Residential accruing current balances excludes reverse mortgages at fair value of $2.8 million.
(3)Includes $16.1 million of delinquent, but still accruing, U.S. government-guaranteed student loans that carry little risk of credit loss.
December 31, 2022
(Dollars in thousands) 30–89 Days
Past Due and
Still 
Accruing
Greater 
Than
90 Days
Past Due and
Still Accruing
Total Past
Due
And Still
Accruing
Accruing
Current
Balances
Nonaccrual Loans(1)
Total
Loans
Commercial and industrial(2)
$ 10,767  $ 311  $ 11,078  $ 3,116,478  $ 6,770  $ 3,134,326 
Owner-occupied commercial 3,500  474  3,974  1,805,222  386  1,809,582 
Commercial mortgages 2,137  237  2,374  3,343,551  5,159  3,351,084 
Construction —  —  —  1,038,906  5,143  1,044,049 
Residential(3)
2,563  —  2,563  753,703  3,199  759,465 
Consumer(4)
12,263  15,513  27,776  1,781,009  2,145  1,810,930 
Total(4)
$ 31,230  $ 16,535  $ 47,765  $ 11,838,869  $ 22,802  $ 11,909,436 
% of Total Loans 0.26  % 0.14  % 0.40  % 99.41  % 0.19  % 100  %
(1)There were no nonaccrual loans with an allowance as of December 31, 2022.
(2)Includes commercial small business leases.
(3)Residential accruing current balances excludes reverse mortgages, at fair value of $2.4 million.
(4)Includes $21.1 million of delinquent, but still accruing, U.S. government-guaranteed student loans that carry little risk of credit loss.
The following table presents the amortized cost basis of nonaccruing collateral-dependent loans by class at September 30, 2023 and December 31, 2022:
September 30, 2023 December 31, 2022
(Dollars in thousands) Property
Equipment and other
Property
Equipment and other
Commercial and industrial(1)
$ 21,650  $ 4,645  $ 3,848  $ 2,922 
Owner-occupied commercial 15,147  —  386  — 
Commercial mortgages 6,706  —  5,159  — 
Construction 4,828  —  5,143  — 
Residential(2)
2,531  —  3,199  — 
Consumer(3)
1,953  —  2,145  — 
Total $ 52,815  $ 4,645  $ 19,880  $ 2,922 
(1)Includes commercial small business leases.
(2)Excludes reverse mortgages at fair value.
(3)Includes home equity lines of credit, installment loans, unsecured lines of credit and education loans.

26

As of September 30, 2023, there were 33 residential loans and 14 commercial loans in the process of foreclosure. The total outstanding balance on these loans was $3.8 million and $3.6 million, respectively. As of December 31, 2022, there were 45 residential loans and 8 commercial loans in the process of foreclosure. The total outstanding balance on these loans was $6.7 million and $1.6 million, respectively. Loan workout and other real estate owned (OREO) (recoveries) expenses were $(0.3) million and less than $0.1 million during the three and nine months ended September 30, 2023, respectively, and $0.3 million and $0.5 million during three and nine months ended September 30, 2022, respectively. Loan workout and OREO expenses are included in Loan workout and other credit costs on the unaudited Consolidated Statements of Income.
Credit Quality Indicators
Below is a description of each of the risk ratings for all commercial loans:
 
•Pass. These borrowers currently show no indication of deterioration or potential problems and their loans are considered fully collectible.
•Special Mention. These borrowers have potential weaknesses that deserve management’s close attention. Borrowers in this category may be experiencing adverse operating trends, for example, declining revenues or margins, high leverage, tight liquidity, or increasing inventory without increasing sales. These adverse trends can have a potential negative effect on the borrower’s repayment capacity. These assets are not adversely classified and do not expose the Bank to significant risk that would warrant a more severe rating. Borrowers in this category may also be experiencing significant management problems, pending litigation, or other structural credit weaknesses.
•Substandard or Lower. These borrowers have well-defined weaknesses that require extensive oversight by management. Borrowers in this category may exhibit one or more of the following: inadequate debt service coverage, unprofitable operations, insufficient liquidity, high leverage, and weak or inadequate capitalization. Relationships in this category are not adequately protected by the sound financial worth and paying capacity of the obligor or the collateral pledged on the loan, if any. A distinct possibility exists that the Bank will sustain some loss if the deficiencies are not corrected. In addition, some borrowers in this category could have the added characteristic that the possibility of loss is extremely high. Current circumstances in the credit relationship make collection or liquidation in full highly questionable. Such impending events include: perfecting liens on additional collateral, obtaining collateral valuations, an acquisition or liquidation preceding, proposed merger, or refinancing plan.
Residential and Consumer Loans
The residential and consumer loan portfolios are monitored on an ongoing basis using delinquency information and loan type as credit quality indicators. These credit quality indicators are assessed in the aggregate in these relatively homogeneous portfolios. Loans that are greater than 90 days past due are generally considered nonperforming and placed on nonaccrual status.

27

The following tables provide an analysis of loans by portfolio segment based on the credit quality indicators used to determine the allowance for credit losses as of September 30, 2023.
Term Loans Amortized Cost Basis by Origination Year(1)
2023 2022 2021 2020 2019 Prior Revolving loans amortized cost basis Revolving loans converted to term Total
(Dollars in thousands)
Commercial and industrial(2):
Risk Rating
Pass $ 830,232  $ 854,412  $ 321,269  $ 264,724  $ 119,282  $ 396,845  $ 8,710  $ 243,969  $ 3,039,443 
Special mention 14,913  24,194  2,917  350  798  —  861  44,040 
Substandard or Lower 53,341  34,854  5,908  11,086  24,982  19,568  —  16,515  166,254 
$ 898,486  $ 913,460  $ 330,094  $ 276,160  $ 145,062  $ 416,420  $ 8,710  $ 261,345  $ 3,249,737 
Current-period gross writeoffs $ 399  $ 5,410  $ 8,437  $ 1,398  $ 6,435  $ 8,417  $ —  $ —  $ 30,496 
Owner-occupied commercial:
Risk Rating
Pass $ 289,740  $ 269,796  $ 268,593  $ 213,060  $ 206,999  $ 361,669  $ —  $ 171,762  $ 1,781,619 
Special mention 2,907  2,182  6,638  1,122  9,621  5,601  —  1,615  29,686 
Substandard or Lower 8,936  18,540  9,523  11,588  2,831  42,725  —  18,723  112,866 
$ 301,583  $ 290,518  $ 284,754  $ 225,770  $ 219,451  $ 409,995  $ —  $ 192,100  $ 1,924,171 
Current-period gross writeoffs $ —  $ —  $ —  $ —  $ 184  $ —  $ —  $ —  $ 184 
Commercial mortgages:
Risk Rating
Pass $ 682,033  $ 478,103  $ 521,669  $ 475,369  $ 494,904  $ 625,112  $ —  $ 263,124  $ 3,540,314 
Special mention 9,599  —  69  4,802  24,401  19,797  —  294  58,962 
Substandard or Lower 9,913  2,584  1,343  11,041  1,249  4,846  —  15,471  46,447 
$ 701,545  $ 480,687  $ 523,081  $ 491,212  $ 520,554  $ 649,755  $ —  $ 278,889  $ 3,645,723 
Current-period gross writeoffs $ —  $ 83  $ —  $ 217  $ —  $ —  $ —  $ —  $ 300 
Construction:
Risk Rating
Pass $ 361,914  $ 387,776  $ 158,656  $ 20,879  $ 2,405  $ 9,241  $ —  $ 41,362  $ 982,233 
Special mention 14,239  14,338  10,691  —  —  —  —  —  39,268 
Substandard or Lower 8,285  —  4,102  8,954  161  —  —  565  22,067 
$ 384,438  $ 402,114  $ 173,449  $ 29,833  $ 2,566  $ 9,241  $ —  $ 41,927  $ 1,043,568 
Current-period gross writeoffs $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ — 
Residential(3):
Risk Rating
Performing $ 152,336  $ 68,990  $ 104,664  $ 57,762  $ 34,205  $ 431,381  $ —  $ —  $ 849,338 
Nonperforming —  170  589  489  1,259  3,495  —  —  6,002 
$ 152,336  $ 69,160  $ 105,253  $ 58,251  $ 35,464  $ 434,876  $ —  $ —  $ 855,340 
Current-period gross writeoffs $ 33  $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ 33 
Consumer(4):
Risk Rating
Performing $ 251,967  $ 598,183  $ 164,642  $ 107,950  $ 47,046  $ 256,796  $ 523,391  $ 5,188  $ 1,955,163 
Nonperforming —  —  —  199  41  —  1,367  312  1,919 
$ 251,967  $ 598,183  $ 164,642  $ 108,149  $ 47,087  $ 256,796  $ 524,758  $ 5,500  $ 1,957,082 
Current-period gross writeoffs $ 787  $ 10,716  $ 3,174  $ 235  $ 142  $ 320  $ —  $ —  $ 15,374 
(1)Origination date represents the most recent underwriting of the loan which includes new relationships, renewals and extensions.
(2)Includes commercial small business leases.
(3)Excludes reverse mortgages at fair value.
(4)Includes home equity lines of credit, installment loans, unsecured lines of credit and education loans.

28

The following tables provide an analysis of loans by portfolio segment based on the credit quality indicators used to determine the allowance for credit losses, as of December 31, 2022.
Term Loans Amortized Cost Basis by Origination Year
2022 2021 2020 2019 2018
Prior
Revolving loans amortized cost basis Revolving loans converted to term Total
(Dollars in thousands)
Commercial and industrial(1):
Risk Rating
Pass $ 1,123,803  $ 501,761  $ 387,225  $ 211,310  $ 153,713  $ 276,588  $ 8,099  $ 250,486  $ 2,912,985 
Special mention 28,672  27,689  7,585  9,451  347  1,010  —  2,596  77,350 
Substandard or Lower 32,362  16,162  6,943  37,534  37,133  6,768  —  7,089  143,991 
$ 1,184,837  $ 545,612  $ 401,753  $ 258,295  $ 191,193  $ 284,366  $ 8,099  $ 260,171  $ 3,134,326 
Owner-occupied commercial:
Risk Rating
Pass $ 280,898  $ 325,388  $ 258,177  $ 226,717  $ 106,390  $ 363,420  $ —  $ 132,942  $ 1,693,932 
Special mention 17,376  —  —  —  —  2,166  —  3,351  22,893 
Substandard or Lower 2,981  1,500  23,284  4,401  11,864  35,311  —  13,416  92,757 
$ 301,255  $ 326,888  $ 281,461  $ 231,118  $ 118,254  $ 400,897  $ —  $ 149,709  $ 1,809,582 
Commercial mortgages:
Risk Rating
Pass $ 516,783  $ 600,226  $ 526,312  $ 549,788  $ 276,414  $ 594,024  $ —  $ 210,550  $ 3,274,097 
Special mention 1,450  75  3,848  6,121  9,596  32,014  —  —  53,104 
Substandard or Lower 1,861  1,210  12,552  2,909  3,573  1,209  —  569  23,883 
$ 520,094  $ 601,511  $ 542,712  $ 558,818  $ 289,583  $ 627,247  $ —  $ 211,119  $ 3,351,084 
Construction:
Risk Rating
Pass $ 448,581  $ 299,619  $ 115,667  $ 9,319  $ 26,553  $ 7,539  $ —  $ 122,116  $ 1,029,394 
Special mention —  —  —  —  —  —  —  581  581 
Substandard or Lower —  4,200  8,930  183  —  —  —  761  14,074 
$ 448,581  $ 303,819  $ 124,597  $ 9,502  $ 26,553  $ 7,539  $ —  $ 123,458  $ 1,044,049 
Residential(2):
Risk Rating
Performing $ 64,500  $ 110,508  $ 60,625  $ 36,118  $ 45,859  $ 434,175  $ —  $ —  $ 751,785 
Nonperforming —  729  502  999  1,218  4,232  —  —  7,680 
$ 64,500  $ 111,237  $ 61,127  $ 37,117  $ 47,077  $ 438,407  $ —  $ —  $ 759,465 
Consumer(3):
Risk Rating
Performing $ 595,158  $ 195,397  $ 126,456  $ 54,449  $ 220,039  $ 71,478  $ 540,308  $ 5,232  $ 1,808,517 
Nonperforming —  —  350  —  479  —  1,255  329  2,413 
$ 595,158  $ 195,397  $ 126,806  $ 54,449  $ 220,518  $ 71,478  $ 541,563  $ 5,561  $ 1,810,930 
(1)Includes commercial small business leases.
(2)Excludes reverse mortgages at fair value.
(3)Includes home equity lines of credit, installment loans, unsecured lines of credit and education loans.
29

Troubled Loans
The Company offers loan modifications to commercial and consumer borrowers that may result in a payment delay, interest rate reduction, term extension, principal forgiveness, or combination thereof. Loan modifications are offered on a case-by-case basis and are generally term extension, payment delay, and interest rate reduction modification types. Forbearance (due to hardship) programs result in modification types including payment delay and/or term extension. In addition, certain reorganization bankruptcy judgments may result in interest rate reduction, term extension, or principal forgiveness modification types.
The following table shows the amortized cost basis at the end of the reporting period of troubled loans, disaggregated by portfolio segment and type of modification granted.
September 30, 2023
(Dollars in thousands) Term Extension More-Than-Insignificant Payment Delay Combination- Term Extension and Payment Delay Combination- Term Extension and Interest Rate Reduction Combination - Payment Delay and Interest Rate Reduction Total % of Total Loan Category
Commercial and industrial(1)
$ 36,683  $ 1,193  $ 10,163  $ 31  $ —  $ 48,070  1.48  %
Owner-occupied commercial —  —  1,062  209  —  1,271  0.07  %
Commercial mortgages 9,427  —  —  —  —  9,427  0.26  %
Construction 9,194  —  —  —  —  9,194  0.88  %
Residential 563  50  —  —  —  613  0.07  %
Consumer(2)
1,102  2,704  5,154  157  494  9,611  0.49  %
Total $ 56,969  $ 3,947  $ 16,379  $ 397  $ 494  $ 78,186  0.62  %
(1)Includes commercial small business leases.
(2)Includes home equity lines of credit, installment loans, unsecured lines of credit and education loans.
The following table describes the financial effect of the modifications made to troubled loans as of September 30, 2023:
Term Extension(1)
Interest Rate Reduction(2)
More-Than-Insignificant Payment Delay(3)
Commercial and industrial 1.55 4.00% 0.09%
Owner-occupied commercial 1.27 2.58 0.01
Commercial mortgages 1.33
Construction 0.27
Residential 20.18
Consumer 3.07 3.27 0.07
(1)Represents the weighted-average increase in the life of modified loans measured in years, which reduces monthly payment amounts for borrowers.
(2)Represents the weighted-average decrease in the contractual interest rate on the modified loans.
(3)Represents the percentage of loans deferred over the total loan portfolio excluding reverse mortgages at fair value.
As of September 30, 2023, the Company had commitments to extend credit of $4.8 million to borrowers experiencing financial difficulty whose terms had been modified.
Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.
30

The following table shows the amortized cost of loans that received a term extension modification that had a payment default during the period and were modified in the 12 months before default to borrowers experiencing financial difficulty as of September 30, 2023.
Term Extension More-Than-Insignificant Payment Delay Combination Term Extension & Payment Delay Total
Commercial and industrial $ 707  $ —  $ 10,163  $ 10,870 
Owner-occupied commercial —  —  1,062  1,062 
Consumer —  101  —  101 
Total $ 707  $ 101  $ 11,225  $ 12,033 
The Company closely monitors the performance of troubled loans to understand the effectiveness of its modification efforts. The following table shows the performance of loans that have been modified in the last 12 months:
September 30, 2023
(Dollars in thousands) 30-89 Days Past Due and Still Accruing 90+ Days Past Due and Still Accruing Accruing Current Balances Nonaccrual Loans Total
Commercial and industrial(1)
$ 428  $ —  $ 36,299  $ 11,343  $ 48,070 
Owner-occupied commercial —  —  —  1,271  1,271 
Commercial mortgages —  —  9,427  —  9,427 
Construction 8,285  —  909  —  9,194 
Residential(2)
—  —  613  —  613 
Consumer(2)
727  207  8,277  400  9,611 
Total $ 9,440  $ 207  $ 55,525  $ 13,014  $ 78,186 
(1)Includes commercial small business leases.
(2)Includes home equity lines of credit, installment loans, unsecured lines of credit and education loans.
Troubled Debt Restructurings (TDRs) under ASC 326 for periods prior to adoption of ASU 2022-02
The following table presents the balance of TDRs as of the indicated date:
(Dollars in thousands) December 31, 2022
Performing TDRs $ 19,737 
Nonperforming TDRs 2,006 
Total TDRs $ 21,743 
Approximately $0.6 million in related reserves have been established for these loans at December 31, 2022.
The following table presents information regarding the types of loan modifications made for the three and nine months ended September 30, 2022:
Three months ended September 30, 2022 Nine months ended September 30, 2022
Contractual payment reduction and term extension Maturity Date Extension Discharged in bankruptcy
Other(1)
Total Contractual payment reduction and term extension Maturity Date Extension Discharged in bankruptcy
Other(1)
Total
Commercial and industrial —  —  —  —  — 
Commercial mortgages —  —  —  —  —  —  —  — 
Construction —  —  —  —  —  —  —  — 
Residential —  —  —  —  —  —  — 
Consumer 50  64  51  32  93 
Total 50  66  53  34  100 
(1)Other includes interest rate reduction, forbearance, and interest only payments.
31

Principal balances are generally not forgiven when a loan is modified as a TDR. Nonaccruing restructured loans remain in nonaccrual status until there has been a period of sustained repayment performance, which is typically six months, and repayment is reasonably assured. The following table presents loans modified as TDRs during the three and nine months ended September 30, 2022.
Three months ended September 30, 2022 Nine Months Ended September 30, 2022
(Dollars in thousands) Pre Modification Post Modification Pre Modification Post Modification
Commercial $ 157  $ 157  $ 185  $ 185 
Commercial mortgages 2,390  2,390  2,390  2,390 
Construction 2,000  2,000  2,000  2,000 
Residential —  —  138  138 
Consumer 948  948  1,409  1,409 
Total(1)(2)
$ 5,495  $ 5,495  $ 6,122  $ 6,122 
(1)During the three and nine months ended September 30, 2022 the TDRs set forth in the table above resulted in a less than $0.1 million increase and a $0.3 million increase in the allowance for credit losses, respectively, and no additional charge-offs in either period. During the three and nine months ended September 30, 2022, no TDRs defaulted that had received troubled debt modification during the past twelve months.
(2)The TDRs set forth in the table above did not occur as a result of the loan forbearance program under the CARES Act.
8. LEASES
As a lessee, the Company enters into leases for its bank branches, corporate offices, and certain equipment. As a lessor, the Company primarily provides financing through its equipment leasing business.
Lessee
The Company's ongoing leases have remaining lease terms of less than one year to 22 years, which includes renewal options that are exercised at its discretion. The Company's lease terms to calculate the lease liability and right-of-use asset include options to extend the lease when it is reasonably certain that the Company will exercise the option. The lease liability and right-of-use asset is included in Other liabilities and Other assets, respectively, in the unaudited Consolidated Statements of Financial Condition. Leases with an initial term of 12 months or less are not recorded on the unaudited Consolidated Statements of Financial Condition. Lease expense is recognized on a straight-line basis over the lease term. Operating lease expense is included in Occupancy expense in the unaudited Consolidated Statements of Income. The Company accounts for lease components separately from nonlease components. The Company subleases certain real estate to third parties.
The components of operating lease cost were as follows:
Three months ended Nine months ended
(Dollars in thousands) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022
Operating lease cost (1)
$ 3,077  $ 4,900  $ 12,593  $ 15,289 
Sublease income (37) (51) (118) (222)
Net lease cost $ 3,040  $ 4,849  $ 12,475  $ 15,067 
(1)Includes variable lease cost and short-term lease cost.
Supplemental information related to operating leases was as follows:
(Dollars in thousands) September 30, 2023 December 31, 2022
Right-of-use assets $ 127,020  $ 138,182 
Lease liabilities $ 147,102  $ 158,269 
Lease term and discount rate
Weighted average remaining lease term (in years) 12.82 17.91
Weighted average discount rate 5.18  % 4.25  %
32

Maturities of operating lease liabilities were as follows:
(Dollars in thousands) September 30, 2023
Remaining in 2023 $ 4,652 
2024 17,259 
2025 17,014 
2026 16,176 
2027 14,865 
After 2027 135,220 
Total lease payments 205,186 
Less: Interest (58,084)
Present value of lease liabilities $ 147,102 
Supplemental cash flow information related to operating leases was as follows:
Three months ended Nine months ended
(Dollars in thousands) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 4,041  $ 5,196  $ 14,235  $ 15,911 
Right of use assets obtained in exchange for new operating lease liabilities (non-cash) —  —  —  13,707 
As of September 30, 2023, the Corporation had not entered into any material leases that have not yet commenced.
Lessor Equipment Leasing
The Company provides equipment and small business lease financing through its leasing subsidiary, NewLane Finance®. Interest income from direct financing leases where the Company is a lessor is recognized in Interest and fees on loans and leases on the unaudited Consolidated Statements of Income. The allowance for credit losses on finance leases is included in Provision for credit losses on the unaudited Consolidated Statements of Income.
The components of direct finance lease income are summarized in the table below:
Three months ended Nine months ended
(Dollars in thousands) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022
Direct financing leases:
Interest income on lease receivable $ 13,682  $ 10,822  $ 39,200  $ 30,885 
Interest income on deferred fees and costs, net (1,643) (925) (4,479) (2,422)
Total direct financing lease net interest income $ 12,039  $ 9,897  $ 34,721  $ 28,463 
Equipment leasing receivables relate to direct financing leases. The composition of the net investment in direct financing leases was as follows:
(Dollars in thousands) September 30, 2023 December 31, 2022
Lease receivables $ 698,729  $ 642,369 
Unearned income (108,629) (95,683)
Deferred fees and costs 15,598  12,295 
Net investment in direct financing leases $ 605,698  $ 558,981 
33

9. GOODWILL AND INTANGIBLE ASSETS
In accordance with ASC 805, Business Combinations (ASC 805) and ASC 350, Intangibles - Goodwill and Other (ASC 350), all assets acquired and liabilities assumed in purchase acquisitions, including goodwill, indefinite-lived intangibles and other intangibles are recorded at fair value as of acquisition date.

WSFS performs its annual goodwill impairment test on October 1 or more frequently if events and circumstances indicate that the fair value of a reporting unit is less than its carrying value. In between annual tests, management performs a qualitative review of goodwill quarterly as part of the Company's review of the overall business to ensure no events or circumstances have occurred that would impact its goodwill evaluation. During the nine months ended September 30, 2023, management determined based on its qualitative assessment that the fair values of our reporting units exceeded their carrying values, and no goodwill impairment existed during the nine months ended September 30, 2023.

The following table shows the allocation of goodwill to the reportable operating segments for purposes of goodwill impairment testing:

(Dollars in thousands) WSFS
Bank
Cash
Connect®
Wealth
Management
Consolidated
Company
December 31, 2022 $ 753,586  $ —  $ 130,051  $ 883,637 
Goodwill from business combinations(1)
—  —  2,261  2,261 
September 30, 2023 $ 753,586  $ —  $ 132,312  $ 885,898 
(1)During the third quarter of 2023, BMCM acquired the business of a registered investment advisory firm.
ASC 350 requires that an acquired intangible asset be separately recognized if the benefit of the intangible asset is obtained through contractual or other legal rights, or if the asset can be sold, transferred, licensed, rented or exchanged, regardless of the acquirer’s intent to do so. The following table summarizes the Company's intangible assets:
(Dollars in thousands) Gross
Intangible
Assets
Accumulated
Amortization
Net
Intangible
Assets
Amortization Period
September 30, 2023
Core deposits $ 104,751  $ (48,180) $ 56,571  10 years
Customer relationships 73,880  (16,795) 57,085 
7-15 years
Loan servicing rights(1)
12,201  (6,183) 6,018 
10-25 years
Tradename 2,900  —  2,900  indefinite
Total intangible assets $ 193,732  $ (71,158) $ 122,574 
December 31, 2022
Core deposits $ 104,751  $ (40,443) $ 64,308  10 years
Customer relationships 68,281  (12,937) 55,344 
7-15 years
Loan servicing rights(2)
11,118  (5,075) 6,043 
10-25 years
Tradename 2,900  —  2,900  indefinite
Non-compete agreements 200  (200) —  1 year
Total intangible assets $ 187,250  $ (58,655) $ 128,595 
(1)Includes a reversal of impairment losses of $0.2 million and less than $0.1 million for the three and nine months ended September 30, 2023, respectively.
(2)Includes impairment losses of $0.3 million for the year ended December 31, 2022.
The Company recognized amortization expense on intangible assets of $3.9 million and $11.6 million for the three and nine months ended September 30, 2023, respectively, compared to $3.9 million and $11.8 million for the three and nine months ended September 30, 2022, respectively.

34

The following table presents the estimated future amortization expense on definite life intangible assets:
(Dollars in thousands) September 30, 2023
Remaining in 2023 $ 4,239 
2024 16,793 
2025 16,451 
2026 15,775 
2027 15,337 
Thereafter 51,079 
Total $ 119,674 
Servicing Assets
The Company records mortgage servicing rights on its mortgage loan servicing portfolio, which includes mortgages that it acquires or originates as well as mortgages that it services for others, and servicing rights on Small Business Administration (SBA) loans. Mortgage servicing rights and SBA loan servicing rights are included in Intangible assets in the accompanying unaudited Consolidated Statements of Financial Condition. Mortgage loans which the Company services for others are not included in Loans and leases, net of allowance in the accompanying unaudited Consolidated Statements of Financial Condition. Servicing rights represent the present value of the future net servicing fees from servicing mortgage loans the Company acquires or originates, or that it services for others.
The value of the Company's mortgage servicing rights was $1.8 million and $2.1 million at September 30, 2023 and December 31, 2022, respectively, and the value of its SBA loan servicing rights was $4.2 million and $4.0 million at September 30, 2023 and December 31, 2022, respectively. Changes in the value of the Company's servicing rights resulted in a reversal of impairment losses of $0.2 million and less than $0.1 million for the three and nine months ended September 30, 2023, respectively, and impairment losses of $0.1 million and $0.2 million for the three and nine months ended September 30, 2022, respectively. Revenues from originating, marketing and servicing mortgage loans as well as valuation adjustments related to capitalized mortgage servicing rights are included in Mortgage banking activities, net in the unaudited Consolidated Statements of Income and revenues from the Company's SBA loan servicing rights are included in Loan and lease fee income in the unaudited Consolidated Statements of Income.
Besides the impairment on loan servicing rights noted above, there was no impairment of other intangible assets as of September 30, 2023 or December 31, 2022. Changing economic conditions that may adversely affect the Company's performance and could result in impairment, which could adversely affect earnings in the future.
10. DEPOSITS

The following table shows deposits by category:
(Dollars in thousands) September 30, 2023 December 31, 2022
Noninterest-bearing:
Noninterest demand $ 4,913,517  $ 5,739,647 
Total noninterest-bearing $ 4,913,517  $ 5,739,647 
Interest-bearing:
Interest-bearing demand $ 3,027,780  $ 3,346,682 
Savings 1,680,864  2,161,858 
Money market 4,559,643  3,730,778 
Customer time deposits 1,715,460  1,102,013 
Brokered deposits 89,105  122,591 
Total interest-bearing 11,072,852  10,463,922 
Total deposits $ 15,986,369  $ 16,203,569 

35

11. INCOME TAXES
There were no unrecognized tax benefits as of September 30, 2023. The Company records interest and penalties on potential income tax deficiencies as income tax expense. The Company's federal and state tax returns for the 2019 through 2022 tax years are subject to examination as of September 30, 2023. The Company does not expect to record or realize any material unrecognized tax benefits during 2023.
The amortization of the low-income housing credit investments has been reflected as income tax expense of $1.4 million and $1.2 million for the three months ended September 30, 2023 and 2022, respectively, and $4.1 million and $3.6 million of such amortization has been reflected as income tax expense for the nine months ended September 30, 2023 and 2022, respectively.
The amount of affordable housing tax credits, amortization, and tax benefits recorded as income tax expense for the nine months ended September 30, 2023 were $3.5 million, $4.1 million and $1.4 million, respectively. The carrying value of the investment in affordable housing credits is $64.9 million at September 30, 2023, compared to $69.0 million at December 31, 2022.

36

12. FAIR VALUE DISCLOSURES OF FINANCIAL ASSETS AND LIABILITIES
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
ASC 820-10, Fair Value Measurement (ASC 820-10) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820-10 establishes a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels:
•Level 1: Inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available.
•Level 2: Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets; inputs to the valuation methodology include quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs to the valuation methodology that are derived principally from or can be corroborated by observable market data by correlation or other means.
•Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Level 3 assets and liabilities include financial instruments whose value is determined using discounted cash flow methodologies, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
The following tables present financial instruments carried at fair value as of September 30, 2023 and December 31, 2022 by level in the valuation hierarchy (as described above):
September 30, 2023
(Dollars in thousands) Quoted
Prices in
Active
Markets for
Identical
Asset
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total Fair
Value
Assets measured at fair value on a recurring basis:
Available-for-sale securities:
CMO $ —  $ 454,664  $ —  $ 454,664 
FNMA MBS —  2,913,412  —  2,913,412 
FHLMC MBS —  110,719  —  110,719 
GNMA MBS —  42,751  —  42,751 
GSE agency notes —  169,995  —  169,995 
Other assets —  203,083  23  203,106 
Total assets measured at fair value on a recurring basis $ —  $ 3,894,624  $ 23  $ 3,894,647 
Liabilities measured at fair value on a recurring basis:
Other liabilities $ —  $ 196,821  $ 14,482  $ 211,303 
Assets measured at fair value on a nonrecurring basis:
Other investments $ —  $ —  $ 21,741  $ 21,741 
Other real estate owned —  —  298  298 
Loans held for sale —  36,658  —  36,658 
Total assets measured at fair value on a nonrecurring basis $ —  $ 36,658  $ 22,039  $ 58,697 
37

December 31, 2022
(Dollars in thousands) Quoted
Prices in
Active
Markets for
Identical
Asset
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total Fair
Value
Assets measured at fair value on a recurring basis:
Available-for-sale securities:
CMO $ —  $ 506,380  $ —  $ 506,380 
FNMA MBS —  3,250,258  —  3,250,258 
FHLMC MBS —  121,999  —  121,999 
GNMA MBS —  36,138  —  36,138 
GSE agency notes —  178,285  —  178,285 
Other assets —  156,912  81  156,993 
Total assets measured at fair value on a recurring basis $ —  $ 4,249,972  $ 81  $ 4,250,053 
Liabilities measured at fair value on a recurring basis:
Other liabilities $ —  $ 156,520  $ 17,102  $ 173,622 
Assets measured at fair value on a nonrecurring basis
Other investments $ —  $ —  $ 26,120  $ 26,120 
Other real estate owned —  —  833  833 
Loans held for sale —  42,985  —  42,985 
Total assets measured at fair value on a nonrecurring basis $ —  $ 42,985  $ 26,953  $ 69,938 
Fair value is based on quoted market prices, where available. If such quoted market prices are not available, fair value is based on internally developed models or obtained from third parties that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include unobservable parameters. The Company's valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While the Company believes its valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.
Available-for-sale securities
Securities classified as available-for-sale are reported at fair value using Level 2 inputs. The Company believes that this Level 2 designation is appropriate under ASC 820-10, as these securities are GSEs and GNMA securities with almost all fixed income securities, none are exchange traded, and all are priced by correlation to observed market data. For these securities the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, U.S. government and agency yield curves, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the security’s terms and conditions, among other factors.
Other investments
Other investments includes equity investments without readily determinable fair values and equity method investments, which are categorized as Level 3. The Company’s equity investments without readily determinable fair values are held at cost, and are adjusted for any observable transactions during the reporting period and its equity method investments are initially recorded at cost based on the Company’s percentage ownership in the investee, and are adjusted to reflect the recognition of the Company’s proportionate share of income or loss of the investee based on the investee’s earnings.
Other real estate owned
Other real estate owned consists of loan collateral which has been repossessed through foreclosure or other measures. Initially, foreclosed assets are recorded at the fair value of the collateral less estimated selling costs. Subsequent to foreclosure, valuations are updated periodically and the assets may be marked down further, reflecting a new cost basis. The fair value of other real estate owned was estimated using Level 3 inputs based on appraisals obtained from third parties.
38

Loans held for sale
The fair value of loans held for sale is based on estimates using Level 2 inputs. These inputs are based on pricing information obtained from wholesale mortgage banks and brokers and applied to loans with similar interest rates and maturities.
Other assets
Other assets include the fair value of interest rate products, derivatives on the residential mortgage held for sale loan pipeline, and risk participation agreements. Valuation of interest rate products is obtained from an independent pricing service and also from the derivative counterparty. Valuation of the derivative related to the residential mortgage held for sale loan pipeline is based on valuation of the loans held for sale portfolio as described above in Loans held for sale. Valuation of risk participation agreements are obtained from an independent pricing service.
Other liabilities
Other liabilities include the fair value of interest rate products, derivatives on the residential mortgage held for sale loan pipeline, foreign exchange forward contracts, risk participation agreements, and derivative related to the sale of certain Visa Class B common shares. Valuation of interest rate products is obtained from an independent pricing service and also from the derivative counterparty. Valuation of the derivative related to the residential mortgage held for sale loan pipeline is based on valuation of the loans held for sale portfolio as described above in Loans held for sale. Valuation of foreign exchange forward contracts and risk participation agreements are obtained from an independent pricing service. Valuation of the derivative related to the sale of certain Visa Class B common shares is based on: (i) the agreed upon graduated fee structure; (ii) the length of time until the resolution of the Visa covered litigation; and (iii) the estimated impact of dilution in the conversion ratio of Class B shares resulting from changes in the Visa covered litigation.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The reported fair values of financial instruments are based on a variety of factors. In certain cases, fair values represent quoted market prices for identical or comparable instruments. In other cases, fair values have been estimated based on assumptions regarding the amount and timing of estimated future cash flows that are discounted to reflect current market rates and varying degrees of risk. Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of period-end or that will be realized in the future.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:
Cash, cash equivalents, and restricted cash
For cash and short-term investment securities, including due from banks, federal funds sold or purchased under agreements to resell and interest-bearing deposits with other banks, the carrying amount is a reasonable estimate of fair value.
Investment securities
Investment securities include debt securities classified as held-to-maturity or available-for-sale. Fair value is estimated using quoted prices for similar securities, which the Company obtains from a third party vendor. The Company uses one of the largest providers of securities pricing to the industry and management periodically assesses the inputs used by this vendor to price the various types of securities owned by the Company to validate the vendor’s methodology as described above in available-for-sale securities.
Other investments
Other investments includes equity investments without readily determinable fair values (see discussion in “Fair Value of Financial Assets and Liabilities” section above).
Loans held for sale
Loans held for sale are carried at their fair value (see discussion in “Fair Value of Financial Assets and Liabilities” section above).
39

Loans and leases
Loans and leases are segregated by portfolio segments with similar financial characteristics. The fair values of loans and leases, with the exception of reverse mortgages, are estimated by discounting expected cash flows using the current rates at which similar loans would be made to borrowers with comparable credit ratings and for similar remaining maturities. The fair values of reverse mortgages are based on the net present value of the expected cash flows using a discount rate specific to the reverse mortgages portfolio. The fair value of nonperforming loans is based on recent external appraisals of the underlying collateral, if the loan is collateral dependent. Estimated cash flows, discounted using a rate commensurate with current rates and the risk associated with the estimated cash flows, are used if appraisals are not available. This technique does contemplate an exit price.
Stock in the Federal Home Loan Bank (FHLB) of Pittsburgh
The fair value of FHLB stock is assumed to be equal to its cost basis, since the stock is non-marketable but redeemable at its par value.
Accrued interest receivable
The carrying amounts of interest receivable approximate fair value.
Other assets
Other assets include the fair value of interest rate products, derivatives on the residential mortgage held for sale loan pipeline, and risk participation agreements (see discussion in “Fair Value of Financial Assets and Liabilities” section above).
Deposits
The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, money market and interest-bearing demand deposits, is assumed to be equal to the amount payable on demand. The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using rates currently offered for deposits with comparable remaining maturities.
Borrowed funds
Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt.
Off-balance sheet instruments
The fair value of off-balance sheet instruments, including swap guarantees of $7.7 million at September 30, 2023 and $10.4 million at December 31, 2022, respectively, and standby letters of credit, approximates the recorded net deferred fee amounts. Because letters of credit are generally not assignable by either the Company or the borrower, they only have value to the Company and the borrower. In determining the fair value of the swap guarantees, the Company assesses the underlying credit risk exposure for each borrower in a paying position to the third-party financial institution.
Accrued interest payable
The carrying amounts of interest payable approximate fair value.
Other liabilities
Other liabilities include the fair value of interest rate products, derivatives on the residential mortgage held for sale loan pipeline, foreign exchange forward contracts, risk participation agreements, and derivative related to the sale of certain Visa Class B common shares (see discussion in “Fair Value of Financial Assets and Liabilities” section above).
40

Financial instruments measured at fair value using significant unobservable inputs (Level 3)
The following tables provide a description of the valuation techniques and significant unobservable inputs for the Company's financial instruments classified as Level 3 as of September 30, 2023 and December 31, 2022:
(Dollars in thousands) September 30, 2023
Financial Instrument Fair Value Valuation Technique(s) Unobservable Input Range
(Weighted Average)
Other investments $ 21,741  Observed market comparable transactions Period of observed transactions
May 2022
Other real estate owned 298  Fair market value of collateral Costs to sell
10.0%
Other assets (Risk participation agreements purchased) 23
Credit Value Adjustment
CDS Spread and Loss Given Default (LGD)
CDS spread: 110 - 360 bps (196 bps)
LGD: –% - 30% (30%)
Other liabilities (Risk participation agreements sold)
Credit Value Adjustment
CDS Spread and Loss Given Default (LGD)
CDS spread: 1 - 250 bps (78 bps)
LGD: 30%
Other liabilities (Financial derivative related to
sales of certain Visa Class B shares)
14,481  Discounted cash flow Timing of Visa litigation resolution
1.00 - 5.00 years (3.20 years or 4Q 2025)
(Dollars in thousands) December 31, 2022
Financial Instrument Fair Value Valuation Technique(s) Unobservable Input Range
(Weighted Average)
Other investments $ 26,120  Observed market comparable transactions Period of observed transactions May 2022
Other real estate owned 833  Fair market value of collateral Costs to sell
10.0%
Other assets (Risk participation agreements purchased) 81
Credit Value Adjustment
CDS Spread and Loss Given Default (LGD)
CDS spread: 110 - 250 bps (205 bps)
LGD: –% - 30% (30%)
Other liabilities (Risk participation agreements sold)
Credit Value Adjustment
CDS Spread and Loss Given Default (LGD)
CDS spread: 1 - 250 bps (158 bps)
LGD: 30%
Other liabilities (Financial derivative related to
sales of certain Visa Class B shares)
17,100  Discounted cash flow Timing of Visa litigation resolution
1.00 - 5.75 years (3.61 years or 4Q 2025)
41

The book value and estimated fair value of the Company's financial instruments are as follows:
 
September 30, 2023 December 31, 2022
(Dollars in thousands) Fair Value
Measurement
Book Value Fair Value Book Value Fair Value
Financial assets:
Cash, cash equivalents, and restricted cash Level 1 $ 611,480  $ 611,480  $ 837,258  $ 837,258 
Investment securities available-for-sale Level 2 3,691,541  3,691,541  4,093,060  4,093,060 
Investment securities held-to-maturity, net Level 2 1,068,871  927,680  1,111,619  1,040,104 
Other investments Level 3 21,741  21,741  26,120  26,120 
Loans, held for sale Level 2 36,658  36,658  42,985  42,985 
Loans and leases, net(1)
Level 3 12,502,404  12,454,772  11,759,992  11,567,888 
Stock in FHLB of Pittsburgh Level 2 12,199  12,199  24,116  24,116 
Accrued interest receivable Level 2 81,909  81,909  74,448  74,448 
Other assets Levels 2, 3 203,106  203,106  156,993  156,993 
Financial liabilities:
Deposits Level 2 $ 15,986,369  $ 15,951,775  $ 16,203,569  $ 16,156,124 
Borrowed funds Level 2 917,833  917,053  726,894  709,014 
Standby letters of credit
Level 3 663  663  739  739 
Accrued interest payable Level 2 42,481  42,481  5,174  5,174 
Other liabilities Levels 2, 3 211,303  211,303  173,622  173,622 
 (1) Includes reverse mortgage loans.
At September 30, 2023 and December 31, 2022 the Company had no commitments to extend credit measured at fair value.
42

13. DERIVATIVE FINANCIAL INSTRUMENTS
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both economic conditions and its business operations. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities. The Company manages a matched book with respect to its derivative instruments in order to minimize its net risk exposure resulting from such transactions. The Company does not use derivative financial instruments for trading purposes.
Fair Values of Derivative Instruments
The table below presents the fair value of derivative financial instruments as well as their location on the unaudited Consolidated Statements of Financial Condition as of September 30, 2023.
Fair Values of Derivative Instruments
(Dollars in thousands) Count Notional Balance Sheet Location Derivatives
(Fair Value)
Derivatives designated as hedging instruments:
Interest rate products 6 $ 500,000  Other assets $ 5,508 
Total $ 500,000  $ 5,508 
Derivatives not designated as hedging instruments:
Interest rate products $ 2,226,251  Other assets $ 196,508 
Interest rate products 2,226,251  Other liabilities (196,508)
Interest rate lock commitments with customers 32,747  Other assets 498 
Interest rate lock commitments with customers 3,886  Other liabilities (20)
Forward sale commitments 21,500  Other assets 203 
Forward sale commitments 13,907  Other liabilities (32)
FX forwards 16,687  Other assets 366 
FX forwards 14,793   Other liabilities (261)
Risk participation agreements sold 97,049   Other liabilities (1)
Risk participation agreements purchased 115,520   Other assets 23 
Financial derivatives related to
sales of certain Visa Class B shares
113,177  Other liabilities (14,481)
Total derivatives $ 5,381,768  $ (8,197)
43

The table below presents the fair value of derivative financial instruments as well as their location on the unaudited Consolidated Statements of Financial Condition as of December 31, 2022.
Fair Values of Derivative Instruments
(Dollars in thousands) Notional Balance Sheet Location Derivatives
(Fair Value)
Derivatives not designated as hedging instruments:
Interest rate products $ 1,794,678  Other assets $ 156,414 
Interest rate products 1,794,678  Other liabilities (156,414)
Interest rate lock commitments with customers 24,673  Other assets 385 
Interest rate lock commitments with customers 1,179  Other liabilities (7)
Forward sale commitments 9,072  Other assets 75 
Forward sale commitments 20,719  Other liabilities (54)
FX forwards 4,177  Other assets 38 
FX forwards 3,052  Other liabilities (45)
Risk participation agreements sold 68,459  Other liabilities (2)
Risk participation agreements purchased 87,168  Other assets 81 
Financial derivatives related to
sales of certain Visa Class B shares
113,177  Other liabilities (17,100)
Total derivatives $ 3,921,032  $ (16,629)
Effect of Derivative Instruments on the Income Statement
The table below presents the effect of the derivative financial instruments on the unaudited Consolidated Statements of Income for the three and nine months ended September 30, 2023 and September 30, 2022.
Amount of (Loss) Gain Recognized in OCI on Derivative (Effective Portion) Amount of (Loss) Gain Recognized in OCI on Derivative (Effective Portion) Location of Gain Reclassified from Accumulated OCI into Income (Effective Portion)
(Dollars in thousands) Three Months Ended September 30, Nine Months Ended September 30,
Derivatives in Cash Flow Hedging Relationships 2023 2022 2023 2022
Interest rate products $ (1,608) $ —  $ (2,752) $ —  Interest income
Total $ (1,608) $ —  $ (2,752) $ — 
Amount of Gain (Loss) Recognized in Income Amount of Gain (Loss) Recognized in Income Location of Gain (Loss) Recognized in Income
(Dollars in thousands) Three Months Ended September 30, Nine Months Ended September 30,
Derivatives not designated as hedging instruments 2023 2022 2023 2022
Interest rate products $ 3,427  $ 674  $ 7,397  $ 5,599  Other income
Interest rate lock commitments with customers (171) (1,032) 116  (1,856) Mortgage banking activities, net
Forward sale commitments 595  1,097  660  $ 5,120  Mortgage banking activities, net
FX forwards 97  54  126  95  Other income
Risk participation agreements (317) (1) (330) (191) Other income
Total $ 3,631  $ 792  $ 7,969  $ 8,767 
44

Derivatives Designated as Hedging Instruments:
Cash Flow Hedges of Interest Rate Risk
The Company's objectives in using interest rate derivatives are to add stability to interest income and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate options, including floors, caps, collars, or swaps as part of its interest rate risk management strategy. Interest rate options designated as cash flow hedges involve the receipt of fixed amounts from a counterparty in exchange for the Company making variable-rate payments over the life of the agreements without exchange of the underlying notional amount.
The Company has agreements with certain derivative counterparties that contain a provision under which, if it defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. The Company also has agreements with certain derivative counterparties that contain a provision where if it fails to maintain its status as a well-capitalized or adequately capitalized institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements.
During 2023, the Company purchased six interest rate floors at a premium of $9.7 million with an aggregate notional amount of $500.0 million to hedge variable cash flows associated with a variable rate loan pool through the third quarter of 2026. Changes to the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecast transaction affects earnings. If the Company determines that a cash flow hedge is no longer highly effective, future changes in the fair value of the hedging instrument would be reported in earnings. As of September 30, 2023, the Company determined the cash flow hedges remain highly effective. During the three and nine months ended September 30, 2023, $0.4 million and $0.6 million, respectively, of amortization expense on the premium was reclassified into interest income. The Company does not expect any unrealized gains or losses related to cash flow hedges to be reclassified into earnings in the next twelve months.
In 2020, the Company terminated its three interest rate swaps that were designated as cash flow hedges for a net gain of $1.3 million, recognized in accumulated other comprehensive income. The derivatives were used to hedge the variable cash flows associated with a variable rate loan pool. Hedge accounting was discontinued, and the net gain in accumulated comprehensive income is reclassified into earnings when the transaction affects earnings. As the underlying hedged transaction continued to be probable, the remaining net gain for the three and nine months ended September 30, 2023, of less than $0.1 million and $0.1 million was reclassified into interest income, respectively. As of September 30, 2023, this gain has been fully recognized and reclassified to interest income.
Derivatives Not Designated as Hedging Instruments:
Customer Derivatives – Interest Rate Swaps
The Company enters into interest rate swaps with commercial loan customers wishing to manage interest rate risk. The Company then enters into corresponding swap agreements with swap dealer counterparties to economically hedge the exposure arising from these contracts. The interest rate swaps with both the customers and third parties are not designated as hedges under ASC 815, Derivatives and Hedging (ASC 815) and are marked to market through earnings. As the interest rate swaps are structured to offset each other, changes to the underlying benchmark interest rates considered in the valuation of these instruments do not result in an impact to earnings; however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings as required by ASC 820. As of September 30, 2023, there were no fair value adjustments related to credit quality.
Derivative Financial Instruments from Mortgage Banking Activities
Derivative financial instruments related to mortgage banking activities are recorded at fair value and are not designated as accounting hedges. This includes commitments to originate certain fixed-rate residential mortgage loans to customers, also referred to as interest rate lock commitments. The Company may also enter into forward sale commitments to sell loans to investors at a fixed price at a future date and trade asset-backed securities to mitigate interest rate risk.
45

Foreign Exchange Forward Contracts
The Company enters into foreign exchange forward contracts (FX forwards) with customers to exchange one currency for another on an agreed date in the future at an agreed exchange rate. The Corporation then enters into corresponding FX forwards with swap dealer counterparties to economically hedge its exposure on the exchange rate component of the customer agreements. The FX forwards with both the customers and third parties are not designated as hedges under ASC 815 and are marked to market through earnings. Exposure to gains and losses on these contracts increase or decrease over their respective lives as currency exchange and interest rates fluctuate. As the FX forwards are structured to offset each other, changes to the underlying term structure of currency exchange rates considered in the valuation of these instruments do not result in an impact to earnings; however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings as required by ASC 820. As of September 30, 2023, there were no fair value adjustments related to credit quality.
Risk Participation Agreements
The Company may enter into a risk participation agreement (RPA) with another institution as a means to assume a portion of the credit risk associated with a loan structure which includes a derivative instrument, in exchange for fee income commensurate with the risk assumed. This type of derivative is referred to as an “RPA sold.” In addition, in an effort to reduce the credit risk associated with an interest rate swap agreement with a borrower for whom the Corporation has provided a loan structured with a derivative, the Corporation may purchase an RPA from an institution participating in the facility in exchange for a fee commensurate with the risk shared. This type of derivative is referred to as an “RPA purchased.”
Swap Guarantees
The Company entered into agreements with one unrelated financial institution whereby that financial institution entered into interest rate derivative contracts (interest rate swap transactions) directly with customers referred to them by the Company. Under the terms of the agreements, the financial institution has recourse to us for any exposure created under each swap transaction, only in the event that the customer defaults on the swap agreement and the agreement is in a paying position to the third-party financial institution. This is a customary arrangement that allows us to provide access to interest rate swap transactions for our customers without creating the swap ourselves. These swap guarantees are accounted for as credit derivatives.
At September 30, 2023 and December 31, 2022, there were 193 and 209 variable-rate to fixed-rate swap transactions between the third-party financial institutions and the Company's customers, respectively. The initial notional aggregate amount was approximately $0.8 billion at September 30, 2023 and December 31, 2022. At September 30, 2023, the swap transactions remaining maturities ranged from under 1 year to 12 years. At September 30, 2023, none of these customer swaps were in a paying position to third parties, with our swap guarantees having a fair value of $7.7 million. At December 31, 2022, none of these customer swaps were in a paying position to third parties, with the Company's swap guarantees having a fair value of $10.4 million. However, for both periods, none of the Company's customers were in default of the swap agreements.
Credit-risk-related Contingent Features
The Company has agreements with certain derivative counterparties that contain a provision under which, if it defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.
The Company has minimum collateral posting thresholds with certain of its derivative counterparties, and has posted collateral of $5.0 million in cash against its obligations under these agreements which meets or exceeds the minimum collateral posting requirements. If the Company had breached any of these provisions at September 30, 2023, it could have been required to settle its obligations under the agreements at the termination value.

46

14. SEGMENT INFORMATION
As defined in ASC 280, Segment Reporting (ASC 280), an operating segment is a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the enterprise’s chief operating decision makers to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The Company evaluates performance based on pretax net income relative to resources used, and allocate resources based on these results. The accounting policies applicable to the Company's segments are those that apply to its preparation of the accompanying unaudited Consolidated Financial Statements. Based on these criteria, the Company has identified three segments: WSFS Bank, Cash Connect®, and Wealth Management.
The WSFS Bank segment provides financial products to commercial and consumer customers. Commercial and Consumer Banking, Commercial Real Estate Lending and other banking business units are operating departments of WSFS Bank. These departments share the same regulators, the same market, many of the same customers and provide similar products and services through the general infrastructure of the Bank. Accordingly, these departments are not considered discrete segments and are appropriately aggregated in the WSFS Bank segment.
The Company's Cash Connect® segment provides ATM vault cash, smart safe 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. The balance sheet category Cash in non-owned ATMs includes cash from which fee income is earned through bailment arrangements with customers of Cash Connect®.
The Wealth Management 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 through multiple integrated businesses. 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. The Bryn Mawr Trust Company of Delaware 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. 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, through a broker/dealer 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. Powdermill® is a multi-family office specializing in providing independent solutions to high-net-worth individuals, families and corporate executives through a coordinated, centralized approach.





47

The following tables show segment results for the three and nine months ended September 30, 2023 and 2022:
  Three Months Ended September 30, 2023 Three Months Ended September 30, 2022
(Dollars in thousands) WSFS Bank
Cash
Connect®
Wealth
Management
Total WSFS Bank
Cash
Connect®
Wealth
Management
Total
Statements of Income
External customer revenues:
Interest income $ 245,520  $ —  $ 5,619  $ 251,139  $ 183,107  $ —  $ 3,458  $ 186,565 
Noninterest income 18,371  21,231  33,066  72,668  17,585  15,416  29,650  62,651 
Total external customer revenues 263,891  21,231  38,685  323,807  200,692  15,416  33,108  249,216 
Inter-segment revenues:
Interest income 7,213  340  27,011  34,564  4,570  416  13,658  18,644 
Noninterest income 7,384  499  190  8,073  6,906  431  222  7,559 
Total inter-segment revenues 14,597  839  27,201  42,637  11,476  847  13,880  26,203 
Total revenue 278,488  22,070  65,886  366,444  212,168  16,263  46,988  275,419 
External customer expenses:
Interest expense 60,133  —  8,404  68,537  8,923  —  811  9,734 
Noninterest expenses 105,655  15,524  18,510  139,689  104,817  9,646  18,454  132,917 
Provision for (recovery of) credit losses 18,544  —  (130) 18,414  7,463  —  (9) 7,454 
Total external customer expenses 184,332  15,524  26,784  226,640  121,203  9,646  19,256  150,105 
Inter-segment expenses:
Interest expense 27,351  4,068  3,145  34,564  14,074  3,414  1,156  18,644 
Noninterest expenses 689  1,391  5,993  8,073  653  1,185  5,721  7,559 
Total inter-segment expenses 28,040  5,459  9,138  42,637  14,727  4,599  6,877  26,203 
Total expenses 212,372  20,983  35,922  269,277  135,930  14,245  26,133  176,308 
Income before taxes $ 66,116  $ 1,087  $ 29,964  $ 97,167  $ 76,238  $ 2,018  $ 20,855  $ 99,111 
Income tax provision 22,904  25,767 
Consolidated net income 74,263  73,344 
Net income (loss) attributable to noncontrolling interest 97  (38)
Net income attributable to WSFS $ 74,166  $ 73,382 
Supplemental Information
Capital expenditures for the period ended $ 1,131  $ —  $ 10  $ 1,141  $ 3,213  $ 16  $ —  $ 3,229 

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Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022
(Dollars in thousands) WSFS Bank
Cash
Connect®
Wealth
Management
Total WSFS Bank
Cash
Connect®
Wealth
Management
Total
Statements of Income
External customer revenues:
Interest income $ 703,210  $ —  $ 16,081  $ 719,291  $ 481,683  $ —  $ 9,039  $ 490,722 
Noninterest income 46,610  59,402  96,654  202,666  63,833  37,500  93,921  195,254 
Total external customer revenues 749,820  59,402  112,735  921,957  545,516  37,500  102,960  685,976 
Inter-segment revenues:
Interest income 20,037  1,058  72,686  93,781  7,720  1,148  27,865  36,733 
Noninterest income 21,545  1,455  389  23,389  20,103  1,220  569  21,892 
Total inter-segment revenues 41,582  2,513  73,075  117,170  27,823  2,368  28,434  58,625 
Total revenue 791,402  61,915  185,810  1,039,127  573,339  39,868  131,394  744,601 
External customer expenses:
Interest expense 152,582  —  19,733  172,315  20,475  —  1,243  21,718 
Noninterest expenses 314,751  43,562  55,674  413,987  361,949  25,383  54,091  441,423 
Provision for credit losses 62,589  —  666  63,255  34,647  —  46  34,693 
Total external customer expenses 529,922  43,562  76,073  649,557  417,071  25,383  55,380  497,834 
Inter-segment expenses:
Interest expense 73,744  11,478  8,559  93,781  29,013  4,896  2,824  36,733 
Noninterest expenses 1,844  4,221  17,324  23,389  1,789  3,436  16,667  21,892 
Total inter-segment expenses 75,588  15,699  25,883  117,170  30,802  8,332  19,491  58,625 
Total expenses 605,510  59,261  101,956  766,727  447,873  33,715  74,871  556,459 
Income before taxes $ 185,892  $ 2,654  $ 83,854  $ 272,400  $ 125,466  $ 6,153  $ 56,523  $ 188,142 
Income tax provision 66,880  49,929 
Consolidated net income 205,520  138,213 
Net income attributable to noncontrolling interest 272  287 
Net income attributable to WSFS $ 205,248  $ 137,926 
Supplemental Information
Capital expenditures for the period ended $ 2,943  $ —  $ 10  $ 2,953  $ 7,649  $ 16  $ —  $ 7,665 

The following table shows significant components of segment net assets as of September 30, 2023 and December 31, 2022:
  September 30, 2023 December 31, 2022
(Dollars in thousands) WSFS Bank
Cash
Connect®
Wealth
Management
Total WSFS Bank
Cash
Connect®
Wealth
Management
Total
Statements of Financial Condition
Cash and cash equivalents $ 241,531  $ 327,417  $ 42,532  $ 611,480  $ 317,022  $ 476,850  $ 43,386  $ 837,258 
Goodwill 753,586  —  132,312  885,898  753,586  —  130,051  883,637 
Other segment assets 18,132,659  11,662  399,293  18,543,614  17,824,946  10,429  358,485  18,193,860 
Total segment assets $ 19,127,776  $ 339,079  $ 574,137  $ 20,040,992  $ 18,895,554  $ 487,279  $ 531,922  $ 19,914,755 

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15. COMMITMENTS AND CONTINGENCIES
Secondary Market Loan Sales
The Company typically sells newly originated residential mortgage loans in the secondary market to mortgage loan aggregators and to GSEs such as FHLMC, FNMA, and on a more limited basis, the FHLB. Loans held for sale are reflected on the unaudited Consolidated Statements of Financial Condition at fair value with changes in the value reflected in the unaudited Consolidated Statements of Income. Gains and losses are recognized at the time of sale. The Company periodically retains the servicing rights on residential mortgage loans sold which results in monthly service fee income. The mortgage servicing rights are included in Intangible assets on the unaudited Consolidated Statements of Financial Condition. Otherwise, the Company sells loans with servicing released on a nonrecourse basis. Rate-locked loan commitments that the Company intends to sell in the secondary market are accounted for as derivatives under ASC 815.
The Company does not sell loans with recourse, except for standard loan sale contract provisions covering violations of representations and warranties and, under certain circumstances, early payment default by the borrower. These are customary repurchase provisions in the secondary market for residential mortgage loan sales. These provisions may include either an indemnification from loss or the repurchase of the loans. Repurchases and losses have been rare and no provision is made for losses at the time of sale. There was one repurchase during the nine months ended September 30, 2023 for $0.8 million and two repurchases for $0.8 million during the same period in 2022.
Unfunded Lending Commitments
At September 30, 2023 and December 31, 2022, the allowance for credit losses of unfunded lending commitments was $12.1 million and $11.9 million, respectively. A provision expense of $0.1 million and $0.2 million was recognized during the three and nine months ended September 30, 2023, respectively, compared to a provision expense of $0.7 million and $0.6 million during the three and nine months ended September 30, 2022, respectively.
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16. CHANGE IN ACCUMULATED OTHER COMPREHENSIVE LOSS
Accumulated other comprehensive loss includes unrealized gains and losses on available-for-sale investments, unrealized gains and losses on cash flow hedges, as well as unrecognized prior service costs and actuarial gains and losses on defined benefit pension plans. Changes to accumulated other comprehensive loss are presented, net of tax, as a component of stockholders’ equity. Amounts that are reclassified out of accumulated other comprehensive loss are recorded on the unaudited Consolidated Statements of Income either as a gain or loss. Changes to accumulated other comprehensive loss by component are shown, net of taxes, in the following tables for the period indicated:
(Dollars in thousands) Net change in
investment
securities
available-for-sale
Net change
in investment securities
held-to-maturity
Net
change in
defined
benefit
plan
Net change in
fair value of
derivatives
used for cash
flow hedges(1)
Net change in equity method investments Total
Balance, June 30, 2023 $ (550,890) $ (99,945) $ (4,571) $ (1,115) $ 462  $ (656,059)
Other comprehensive (loss) income (127,523) —  (3) (1,608) 192  (128,942)
Less: Amounts reclassified from accumulated other comprehensive loss —  4,366  (48) (28) —  4,290 
Net current-period other comprehensive (loss) income (127,523) 4,366  (51) (1,636) 192  (124,652)
Balance, September 30, 2023 $ (678,413) $ (95,579) $ (4,622) $ (2,751) $ 654  $ (780,711)
Balance, June 30, 2022 $ (395,213) $ (119,649) $ (4,746) $ 189  $ 541  $ (518,878)
Other comprehensive (loss) income (202,520) (1) (4) —  25  (202,500)
Less: Amounts reclassified from accumulated other comprehensive loss —  5,967  (27) (41) —  5,899 
Net current-period other comprehensive (loss) income (202,520) 5,966  (31) (41) 25  (196,601)
Balance, September 30, 2022 $ (597,733) $ (113,683) $ (4,777) $ 148  $ 566  $ (715,479)
(1)Includes amortization of net gain for cash flow hedges terminated as of April 1, 2020.
(Dollars in thousands) Net change in
investment
securities
available-for-sale
Net change
in investment securities
held-to-maturity
Net
change in
defined
benefit
plan
Net change in
fair value of
derivatives
used for cash
flow hedges(1)
Net change in equity method investments Total
Balance, December 31, 2022 $ (563,533) $ (108,503) $ (4,482) $ 108  $ 566  $ (675,844)
Other comprehensive (loss) income (114,880) —  (2,752) 88  (117,542)
Less: Amounts reclassified from accumulated other comprehensive loss —  12,924  (142) (107) —  12,675 
Net current-period other comprehensive (loss) income (114,880) 12,924  (140) (2,859) 88  (104,867)
Balance, September 30, 2023 $ (678,413) $ (95,579) $ (4,622) $ (2,751) $ 654  $ (780,711)
Balance, December 31, 2021 $ (33,873) $ 175  $ (4,691) $ 268  $ 353  $ (37,768)
Other comprehensive (loss) income(2)
(563,860) (119,769) (4) —  213  (683,420)
Less: Amounts reclassified from accumulated other comprehensive loss —  5,911  (82) (120) —  5,709 
Net current-period other comprehensive (loss) income (563,860) (113,858) (86) (120) 213  (677,711)
Balance, September 30, 2022 $ (597,733) $ (113,683) $ (4,777) $ 148  $ 566  $ (715,479)
(1)Includes amortization of net gain for cash flow hedges terminated as of April 1, 2020.
(2)Includes $119.8 million, net of tax, of unrealized losses on transferred investment securities from available-for-sale to held-to-maturity.
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The unaudited Consolidated Statements of Income were impacted by components of other comprehensive loss as shown in the tables below:
Three Months Ended September 30, Affected line item in unaudited Consolidated Statements of Income
(Dollars in thousands) 2023 2022
Net unrealized holding losses on securities transferred between available-for-sale and held-to-maturity:
Amortization of net unrealized losses to income during the period 5,745  7,851  Net interest income
Income taxes (1,379) (1,884) Income tax provision
Net of tax 4,366  5,967 
Amortization of defined benefit pension plan-related items:
Prior service credits
(19) (19)
Actuarial gains (44) (17)
Total before tax (63) (36) Salaries, benefits and other compensation
Income taxes 15  Income tax provision
Net of tax (48) (27)
Net unrealized gains on terminated cash flow hedges:
Amortization of net unrealized gains to income during the period (37) (54) Interest and fees on loans and leases
Income taxes 13  Income tax provision
Net of tax (28) (41)
Total reclassifications $ 4,290  $ 5,899 
  Nine Months Ended September 30, Affected line item in unaudited Consolidated Statements of Operations
  2023 2022  
Net unrealized holding losses on securities transferred between available-for-sale and held-to-maturity:
Amortization of net unrealized losses to income during the period 17,005  7,777  Net interest income
Income taxes (4,081) (1,866) Income tax provision
Net of tax 12,924  5,911 
Amortization of defined benefit pension plan-related items:
Prior service credits
(57) (57)
Actuarial gains (130) (51)
Total before tax (187) (108) Salaries, benefits and other compensation
Income taxes 45  26  Income tax provision
Net of tax (142) (82)
Net unrealized gains on terminated cash flow hedges:
Amortization of net unrealized gains to income during the period (141) (158) Interest and fees on loans and leases
Income taxes 34  38  Income tax provision
Net of tax (107) (120)
Total reclassifications $ 12,675  $ 5,709 

17. LEGAL AND OTHER PROCEEDINGS
In accordance with the current accounting standards for loss contingencies, the Company establishes reserves for litigation-related matters that arise in the ordinary course of its business activities when it is probable that a loss associated with a claim or proceeding has been incurred and the amount of the loss can be reasonably estimated. Litigation claims and proceedings of all types are subject to many uncertain factors that generally cannot be predicted with assurance. In addition, the Company's defense of litigation claims may result in legal fees, which it expenses as incurred.
There were no material changes or additions to other significant pending legal or other proceedings involving the Company other than those arising out of routine operations.
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ITEM 2. 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 $20.0 billion in assets and $77.6 billion in assets under management (AUM) and assets under administration (AUA) at September 30, 2023, 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 191 years. In addition to our focus on stellar customer 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.” Our strategy of “Engaged Associates, living our culture, enriching the communities we serve” focuses on exceeding customer expectations, delivering stellar experiences and building customer advocacy through highly-trained, relationship-oriented, friendly, knowledgeable and empowered Associates.
As of September 30, 2023, we had six consolidated subsidiaries: WSFS Bank, The Bryn Mawr Trust Company of Delaware (BMT-DE), Bryn Mawr Capital Management, LLC (BMCM), WSFS Wealth Management, LLC (Powdermill®), WSFS SPE Services, LLC, and 601 Perkasie, LLC. The Company also has three unconsolidated subsidiaries: WSFS Capital Trust III, Royal Bancshares Capital Trust I, and Royal Bancshares Capital Trust II. WSFS Bank has two wholly-owned subsidiaries: Beneficial Equipment Finance Corporation (BEFC) and 1832 Holdings, Inc., and one majority-owned subsidiary, NewLane Finance Company (NewLane Finance®).
On January 1, 2023, WSFS completed the merger and brand conversion of WSFS Capital Management, LLC (West Capital) and Cypress Capital Management, LLC and renamed the combined entity Bryn Mawr Capital Management, LLC. BMCM is registered as an investment advisor with the U.S. Securities and Exchange Commission and is a wholly-owned subsidiary of WSFS.
Our banking business had a total loan and lease portfolio of $12.7 billion as of September 30, 2023, which was funded primarily through commercial relationships and consumer and customer generated deposits. We have built a $9.9 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, in addition to mortgage and title services through our branches and WSFS Mortgage®, our mortgage banking company specializing in a variety of residential mortgage and refinancing solutions. 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® business 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 $1.5 billion in total cash and services approximately 25,200 non-bank ATMs and 8,600 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, ATM processing equipment sales and deposit safe cash logistics. Cash Connect® also supports 592 branded ATMs for WSFS Bank Customers, which is one of the largest branded ATM networks in our market. On September 29, 2023, Cash Connect entered into an agreement to add approximately 8,000 units to its bailment ATM count, which is expected to close in 4Q 2023.
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Our Wealth Management business provides a broad array of planning and advisory services, investment management, trust services, and credit and deposit products to individual, corporate and institutional clients through multiple integrated businesses. Combined, these businesses had $77.6 billion of AUM and AUA at September 30, 2023. 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. 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. 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, through a broker/dealer 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. Powdermill® is a multi-family office specializing in providing independent solutions to high-net-worth individuals, families and corporate executives through a coordinated, centralized approach.
As of September 30, 2023, we service our customers primarily from 116 offices located in Pennsylvania (59), Delaware (40), New Jersey (14), Florida (1) and Nevada (1) and Virginia (1), our ATM network, our website at www.wsfsbank.com and our mobile app.
Highlights and Other Notables Items for Three and Nine Months Ended September 30, 2023
•Three Months Ended September 30, 2023
◦BMCM expanded into southern Delaware and established a new presence in Boca Raton, Florida, after an acquisition of a woman-founded, owned and managed registered investment advisory firm based in Rehoboth Beach, Delaware.
◦In August 2023, Kroll Bond Rating Agency (KBRA) reaffirmed the senior unsecured debt rating of A-, subordinated debt rating of BBB+, and a short term debt rating of K2 for the Company. The Bank received A ratings for both senior unsecured debt and deposit, a subordinated debt rating of A-, and the short-term debt and deposit ratings of K1.
◦WSFS repurchased 386,900 shares of common stock under the Company's share repurchase programs at an average price of $40.67 per share, for an aggregate purchase price of approximately $15.7 million.
◦The Board of Directors approved a $0.15 per share quarterly cash dividend.
◦The Bank and the Company continue to be well above well-capitalized across all measures of regulatory capital, with total common equity tier 1 capital of 13.26% and 12.75%, respectively, and total risk-based capital of 14.43% and 14.82%, respectively.
•Nine Months Ended September 30, 2023
◦Net loans and leases grew $742.4 million, or 8% annualized, compared to December 31, 2022.
◦The allowance for credit losses (ACL) on loans and leases increased $24.1 million when compared to December 31, 2022, primarily due to impact from the economic forecast and net loan originations.
◦During the nine months ended September 30, 2023, WSFS had capital returns of $69.9 million to stockholders, comprised of $42.3 million from share repurchases and $27.6 million from quarterly dividends.
◦WSFS completed the redemption of the $30.0 million of fixed-to-floating rate subordinated notes due 2025 (the 2025 Notes) acquired from Bryn Mawr Trust. The 2025 Notes were redeemed at a price of 100%, plus accrued and unpaid interest through the date of redemption.
◦In April 2023, Moody's Investors Service (Moody’s) lowered the macro profile for the U.S. banking system to ‘Strong +’ from ‘Very Strong.’ Lowering the macro profile resulted in updates to 22 bank ratings. As part of this update, Moody’s reaffirmed both the Company and Bank ratings with a stable outlook from positive.
◦During the year, we held our first-ever "We Stand for Service Day", during which approximately 1,200 of our Associates provided nearly 5,000 hours of service to more than 80 nonprofit and community organizations across the Greater Philadelphia, Southern New Jersey and Delaware region.


54

FINANCIAL CONDITION
Total assets increased $126.2 million to $20.0 billion at September 30, 2023 compared to December 31, 2022. This increase is primarily comprised of the following:
•Net loans and leases held for investment increased $742.4 million primarily due to increases of $294.6 million in commercial mortgages, $146.2 million in consumer loans primarily from our consumer partnerships, $114.6 million in owner-occupied commercial loans, and $96.2 million in residential loans.
•Other assets increased $84.4 million, primarily due to a $40.4 million increase due to fair value changes of derivatives from our capital markets business and a $32.2 million increase on our deferred tax asset related to unrealized losses on available-for-sale securities.
•Total investment securities decreased $444.3 million:
◦Investment securities, available-for-sale decreased $401.5 million primarily due to repayments, maturities and calls of $269.2 million and decreased market values of $151.2 million, partially offset by purchases of $21.1 million.
◦Investment securities, held-to-maturity decreased $42.7 million, primarily due to repayments, maturities and calls of $57.8 million, partially offset by $17.0 million of amortization of net unrealized losses on available-for-sale securities transferred to held-to-maturity.
•Total cash and cash equivalents decreased $225.8 million, primarily due to decreases in customer deposits, increased lending activity, and the redemption of the 2025 Notes, partially offset by an increase in other borrowed funds.
•Stock in FHLB decreased $11.9 million due to a decrease in the borrowing activity.
Total liabilities increased $92.7 million to $17.8 billion at September 30, 2023 compared to December 31, 2022. This increase is primarily comprised of the following:
•Other borrowed funds increased $545.6 million primarily due to $565.0 million borrowed from the Bank Term Funding Program (BTFP) as a result of favorable terms and pricing.
•Other liabilities increased $81.7 million, primarily due to a $72.9 million increase in capital markets derivative collateral, and a $40.3 million increase in the fair value of derivatives from our capital markets business, partially offset by a $12.4 million reduction in accrued expenses primarily due to compensation activity, an $11.2 million reduction in lease liabilities due to scheduled and accelerated amortization related to branch closures during the year, and a $7.9 million decrease in accrued taxes.
•FHLB advances decreased $350.0 million due to the repayment of fixed rate FHLB term advances as part of our routine balance sheet management.
•Customer deposits decreased $183.7 million primarily due to decreases in our small business and commercial lines of business, partially offset by wealth and consumer deposits.
For further information, see "Notes to the Consolidated Financial Statements (Unaudited)."
LIQUIDITY AND CAPITAL RESOURCES
Capital Resources
Stockholders’ equity of WSFS increased $37.7 million between December 31, 2022 and September 30, 2023. This increase was primarily due to $205.2 million of earnings, partially offset by an increase of $104.9 million in accumulated other comprehensive loss driven by market value decreases on available-for-sale mortgage-backed securities, $42.3 million from the repurchase of shares of common stock under our stock repurchase plan, and the payment of dividends on our common stock of $27.6 million.
During the three months ended September 30, 2023, our Board of Directors approved a quarterly cash dividend of $0.15 per share of common stock. This dividend will be paid on November 17, 2023 to stockholders of record as of November 3, 2023.
55

Book value per share of common stock was $36.93 at September 30, 2023, an increase of $1.14 from $35.79 at December 31, 2022. Tangible book value per share of common stock (a non-GAAP financial measure) was $20.33 at September 30, 2023, an increase of $0.97 from $19.36 at December 31, 2022.  We believe tangible book value per common share helps management and investors better understand and assess changes from period to period in stockholders’ equity exclusive of changes in intangible assets. This non-GAAP measure should be considered in addition to results prepared in accordance with Generally Accepted Accounting Principles in the U.S. (GAAP), and is not a substitute for, or superior to, GAAP results. For a reconciliation of tangible book value per common share to book value per share in accordance with GAAP, see "Reconciliation of Non-GAAP Measure to GAAP Measure."
The table below compares the Bank's and the Company’s consolidated capital position to the minimum regulatory requirements as of September 30, 2023:
  Consolidated
Capital
Minimum For Capital
Adequacy Purposes
To be Well-Capitalized
Under Prompt Corrective
Action Provisions
(Dollars in thousands) Amount Percent Amount Percent Amount Percent
Total Capital (to Risk-Weighted Assets)
Wilmington Savings Fund Society, FSB $ 2,314,101  14.43  % $ 1,282,652  8.00  % $ 1,603,315  10.00  %
WSFS Financial Corporation 2,379,208  14.82  1,284,609  8.00  1,605,762  10.00 
Tier 1 Capital (to Risk-Weighted Assets)
Wilmington Savings Fund Society, FSB 2,125,926  13.26  961,989  6.00  1,282,652  8.00 
WSFS Financial Corporation 2,047,229  12.75  963,457  6.00  1,284,609  8.00 
Common Equity Tier 1 Capital (to Risk-Weighted Assets)
Wilmington Savings Fund Society, FSB 2,125,926  13.26  721,492  4.50  1,042,155  6.50 
WSFS Financial Corporation 2,047,229  12.75  722,593  4.50  1,043,745  6.50 
Tier 1 Leverage Capital
Wilmington Savings Fund Society, FSB 2,125,926  10.72  793,596  4.00  991,995  5.00 
WSFS Financial Corporation 2,047,229  10.31  794,475  4.00  993,094  5.00 
Under the prompt corrective action regime, 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 on its capital levels in relation to various relevant capital measures, which include leverage and risk-based capital measures and certain other factors. Depository institutions that are not classified as well-capitalized are subject to various restrictions, which may include restrictions on capital distributions, payment of management fees, acceptance of brokered deposits and other operating activities.
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. As of September 30, 2023, the Bank and the Company were in compliance with the regulatory capital requirements and met or exceeded the amounts required to be considered “well-capitalized” as defined in the regulations.
Not included in the Bank’s capital, WSFS separately held $201.3 million in cash to support share repurchases, potential dividends, acquisitions, strategic growth plans and other general corporate purposes.

56

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 deposits, 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 September 30, 2023, the Company had $0.6 billion in cash, cash equivalents, and restricted cash. As of September 30, 2023, our estimated uninsured deposits were $5.8 billion, or 37% of total customer deposits, and our estimated unprotected deposits (uninsured and uncollateralized) were $4.4 billion, or 28% of total customer deposits.
As of September 30, 2023, the Company had a readily available, secured borrowing capacity of $5.3 billion from the FHLB, $0.7 billion through the Federal Reserve Discount Window, and $1.0 billion through the BTFP. In addition, the Company had $1.3 billion in unpledged securities that could be used to support additional borrowings and $0.1 billion of cash deposited with the Federal Reserve Bank. The Company’s readily available, secured borrowing capacity to estimated unprotected deposits ratio is 188%.
Our primary cash contractual obligations relate to operating leases, long-term debt, credit obligations, and data processing. At September 30, 2023, we had $205.2 million in total contractual payments for ongoing leases that have remaining lease terms of less than one year to 22 years, which includes renewal options that are exercised at our discretion. For additional information on our operating leases see Note 8 to the unaudited Consolidated Financial Statements. At September 30, 2023, we had obligations for principal payments on long-term debt including $67.0 million for our trust preferred borrowings, due June 1, 2035, $70.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes due 2027, and $150.0 million for our senior debt, due December 15, 2030. Royal Bancshares Capital Trust I (Trust I) and Royal Bancshares Capital Trust II (Trust II) (collectively, the Trusts), which were acquired from Bryn Mawr Bank Corporation, were utilized for the sole purpose of issuing and selling capital securities representing preferred beneficial interests. Although WSFS owns an aggregate of $0.8 million of the common securities of Trust I and Trust II, the Trusts are not consolidated into the Company’s Consolidated Financial Statements. Inclusive of the fair value marks, WSFS assumed junior subordinated debentures owed to the Trusts with a carrying value of $11.8 million each, totaling $23.6 million. The Company records its investments in the Trusts’ common securities of $0.4 million each as investments in unconsolidated entities and records dividend income upon declaration by Trust I and Trust II. The Company has fully and unconditionally guaranteed all of the obligations of the Trusts, including any distributions and payments on liquidation or redemption of the capital securities. We are also contractually obligated to make interest payments on our long-term debt through their respective maturities.
Commitments to extend credit provide for financing on predetermined terms as long as the customer continues to meet specific criteria. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being completely drawn upon, the total commitment amounts do not necessarily represent future cash requirements. At September 30, 2023, the Company had total commitments to extend credit of $4.0 billion, which are generally one year commitments.

57

NONPERFORMING ASSETS
Nonperforming assets include nonaccruing loans, OREO and restructured loans. 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.
The following table shows our nonperforming assets and past due loans at the dates indicated:
(Dollars in thousands) September 30, 2023 December 31, 2022
Nonaccruing loans(1):
Commercial and industrial $ 26,295  $ 6,770 
Owner-occupied commercial 15,147  386 
Commercial mortgages 6,706  5,159 
Construction 4,828  5,143 
Residential 2,531  3,199 
Consumer 1,953  2,145 
Total nonaccruing loans 57,460  22,802 
Other real estate owned 298  833 
Troubled debt restructurings (accruing)(2)
—  19,737 
Total nonperforming assets $ 57,758  $ 43,372 
Past due loans:
Commercial $ 3,135  $ 1,022 
Consumer(3)
11,222  15,513 
Total past due loans $ 14,357  $ 16,535 
Troubled loans:
Commercial $ 67,962  $ — 
Residential 613  — 
Consumer 9,611  — 
Total troubled loans $ 78,186  $ — 
Ratio of allowance for credit losses to total loans and leases(4)
1.28  % 1.17  %
Ratio of nonaccruing loans to total gross loans and leases(5)
0.45  0.19 
Ratio of nonperforming assets to total assets 0.29  0.22 
Ratio of allowance for credit losses to nonaccruing loans 306  666 
Ratio of allowance for credit losses to total nonperforming assets(6)
305  350 
(1)Includes nonaccruing troubled loans beginning in 2023 and nonaccruing troubled debt restructurings (TDRs) prior to 2023.
(2)Balance excludes COVID-19 modifications.
(3)Includes U.S. government guaranteed student loans with little risk of credit loss.
(4)Represents amortized cost basis for loans, leases and held-to-maturity securities.
(5)Total loans exclude loans held for sale and reverse mortgages.
(6)Excludes acquired PCD loans.
Nonperforming assets increased $14.4 million between December 31, 2022 and September 30, 2023. This increase was primarily due to the addition of six commercial relationships, partially offset by the adoption of ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The ratio of nonperforming assets to total assets decreased from 0.22% at December 31, 2022 to 0.29% at September 30, 2023.
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The following table summarizes the changes in nonperforming assets during the periods indicated:
Nine Months Ended September 30,
(Dollars in thousands) 2023 2022
Beginning balance $ 43,372  $ 33,133 
Additions 75,216  24,513 
Collections (16,487) (15,909)
Transfers to accrual(1)
(20,263) (922)
Charge-offs (24,080) (3,498)
Ending balance $ 57,758  $ 37,317 
(1)Includes impact of ASU No. 2022-02 adoption.
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.

59

INTEREST RATE SENSITIVITY
Our primary objective in managing interest rate risk is to minimize the adverse impact of changes in interest rates on net interest income and capital, while maximizing the yield/cost spread on our asset/liability structure. Interest rates are partly a function of decisions by the Federal Open Market Committee (FOMC) on the target range for the federal funds rate, and these decisions are sometimes difficult to anticipate. In response to the economic and financial effects of COVID-19, the FOMC reduced interest rates through 2020 and 2021 and instituted quantitative easing measures as well as domestic and global capital market support programs. The FOMC raised the federal funds target rate seven times in 2022 for a total of 425 basis points and four times in 2023 for a total of 100 basis points, and has suggested it may continue raising interest rates further in 2023. In order to manage the risks associated with changes or possible changes in interest rates, we rely primarily on our asset/liability structure.
Our primary tool for achieving our asset/liability management strategies is to match maturities or repricing periods of interest rate-sensitive assets and liabilities to promote a favorable interest rate spread and mitigate exposure to fluctuations in interest rates. We regularly review our interest rate sensitivity and adjust the sensitivity within acceptable tolerance ranges. At September 30, 2023, interest-earning assets exceeded interest-bearing liabilities that mature or reprice within one year (interest-sensitive gap) by $81.2 million. Our interest-sensitive assets as a percentage of interest-sensitive liabilities within the one-year window was 100.96% at September 30, 2023 compared with 116.93% at December 31, 2022. Likewise, the one-year interest-sensitive gap as a percentage of total assets was 0.41% at September 30, 2023 compared with 6.29% at December 31, 2022.
Market risk is the risk of loss from adverse changes in market prices and rates. Our market risk arises primarily from interest rate risk inherent in our lending, investing, and funding activities. To that end, we actively monitor and manage our interest rate risk exposure. One measure evaluates the impact of an immediate change in interest rates in 100 basis point increments on the economic value of equity ratio. The economic value of the equity ratio is defined as the economic value of the estimated cash flows from assets and liabilities as a percentage of economic value of cash flows from total assets.
The following table shows the estimated impact of immediate changes in interest rates on our net interest margin and economic value of equity ratio at the specified levels at September 30, 2023 and December 31, 2022:
 
September 30, 2023 December 31, 2022
% Change in Interest Rate (Basis Points)
% Change in Net
Interest Margin(1)
Economic Value of Equity(2)
% Change in Net
Interest Margin(1)
Economic Value of Equity(2)
+300 15.1% 24.23% 18.5% 27.54%
+200 10.0% 23.33% 12.3% 26.44%
+100 5.0% 22.36% 6.1% 25.22%
+50 2.5% 21.83% 3.1% 24.56%
+25 1.2% 21.56% 1.5% 24.22%
—% 21.29% —% 23.87%
-25 (1.2)% 20.99% (1.6)% 23.50%
-50 (2.5)% 20.70% (3.3)% 23.10%
-100 (5.0)% 20.10% (6.8)% 22.20%
'-200
(10.1)% 18.60% (14.0)% 20.20%
'-300
(15.2)% 17.00% (21.2)% 17.90%
(1)The percentage difference between net interest margin in a stable interest rate environment and net interest margin as projected under the various rate change environments.
(2)The economic value of equity ratio in a stable interest rate environment and the economic value of equity ratio as projected under the various rate change environments.
We also engage in other business activities that are sensitive to changes in interest rates. For example, mortgage banking revenues and expenses can fluctuate with changing interest rates. These fluctuations are difficult to model and estimate.

60

RESULTS OF OPERATIONS
Three months ended September 30, 2023: Net income for the three months ended September 30, 2023 was $74.2 million, compared to $73.4 million for the three months ended September 30, 2022.
•Net interest income increased $5.8 million primarily due to the rising interest rate environment and balance sheet size and mix. See “Net Interest Income” for further information.
•Our provision for credit losses increased $11.0 million primarily due to net loan growth and downgrades, partially offset by the impact of the economic forecast. See “Allowance for Credit Losses” for further information.
•Noninterest income increased $10.0 million primarily due to increases in income from Cash Connect®, Wealth Management fee income, and capital markets income. These increases were partially offset by decreases in other banking fees. See “Noninterest Income” for further information.
•Noninterest expense increased $6.8 million primarily due to higher variable operating costs from Cash Connect®, salaries and benefits costs, and professional fees, partially offset by a decrease in net corporate development and restructuring costs.
•Income tax provision decreased $2.9 million primarily due to the $1.9 million decrease in pre-tax income and higher projected tax benefits from our lower income housing tax credit investments, partially offset by the impacts of non-deductible goodwill written off during the sale of the BMTIA business.
Nine months ended September 30, 2023: Net income for the nine months ended September 30, 2023 was $205.2 million, compared to $137.9 million for the nine months ended September 30, 2022.
•Net interest income increased $78.0 million during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily due to the reasons described above. See “Net Interest Income” for further information.
•Our provision for credit losses for the nine months ended September 30, 2023 increased $28.6 million compared to the nine months ended September 30, 2022, due to the impacts of the economic uncertainty and forecast. See “Allowance for Credit Losses” for further information.
•Noninterest income for the nine months ended September 30, 2023 increased $7.4 million compared to the nine months ended September 30, 2022, primarily due to increases in income from Cash Connect®, Wealth Management fee income, and capital markets income. These increases were partially offset by decreases in other banking fees and mortgage banking activities, and unrealized gains on equity investments and income from BMTIA (business sold in 2022). See “Noninterest Income” for further information.
•Noninterest expense decreased $27.4 million during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily due to a decrease in net corporate development and restructuring costs, partially offset by increases in other operating expense driven by Cash Connect®, salaries and benefits costs, and professional fees. See “Noninterest Expense” for further information.
•Income tax provision for the nine months ended September 30, 2023 increased $17.0 million compared to the nine months ended September 30, 2022, primarily due to the $84.3 million increase in pre-tax income.

61

Net Interest Income
The following tables provide information concerning the balances, yields and rates on interest-earning assets and interest-bearing liabilities during the periods indicated:
  Three months ended September 30,
  2023 2022
(Dollars in thousands) Average
Balance
Interest
Yield/
Rate(1)
Average
Balance
Interest
Yield/
Rate(1)
Assets:
Interest-earning assets:
Loans:(2)
Commercial loans and leases $ 5,107,501  $ 90,098  7.01  % $ 4,895,972  $ 67,060  5.45  %
Commercial real estate loans 4,611,968  82,040  7.06  4,262,599  53,096  4.94 
Residential loans 841,510  10,698  5.09  769,151  8,379  4.36 
Consumer loans 1,940,418  34,972  7.15  1,594,673  23,384  5.82 
Loans held for sale
54,072  1,095  8.03  66,103  968  5.81 
Total loans and leases 12,555,469  218,903  6.92  11,588,498  152,887  5.24 
Mortgage-backed securities(3)
4,602,107  26,654  2.32  5,243,169  28,338  2.16 
Investment securities(3)
364,565  2,180  2.64  361,113  1,981  2.57 
Other interest-earning assets 251,273  3,402  5.37  460,124  3,359  2.90 
Total interest-earning assets $ 17,773,414  $ 251,139  5.61  % $ 17,652,904  $ 186,565  4.21  %
Allowance for credit losses (173,052) (143,943)
Cash and due from banks 277,780  242,734 
Cash in non-owned ATMs 363,131  603,780 
Bank-owned life insurance 101,411  100,863 
Other noninterest-earning assets 1,922,080  1,779,411 
Total assets $ 20,264,764  $ 20,235,749 
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Interest-bearing demand $ 2,955,613  $ 7,156  0.96  % $ 3,370,158  $ 2,179  0.26  %
Savings 1,750,809  1,521  0.34  2,287,227  185  0.03 
Money market 4,499,909  34,639  3.05  3,833,113  2,907  0.30 
Customer time deposits 1,661,885  12,828  3.06  1,083,290  1,230  0.45 
Total interest-bearing customer deposits 10,868,216  56,144  2.05  10,573,788  6,501  0.24 
Brokered deposits 88,594  1,111  4.98  24,184  142  2.33 
Total interest-bearing deposits 10,956,810  57,255  2.07  10,597,972  6,643  0.25 
Federal Home Loan Bank advances 11,576  167  5.72  4,979  42  3.35 
Trust preferred borrowings 90,557  1,764  7.73  90,361  951  4.18 
Senior and subordinated debt 218,304  2,453  4.49  248,332  2,061  3.32 
Other borrowed funds(4)
604,156  6,898  4.53  39,745  37  0.37 
Total interest-bearing liabilities $ 11,881,403  $ 68,537  2.29  % $ 10,981,389  $ 9,734  0.35  %
Noninterest-bearing demand deposits 5,248,931  6,319,755 
Other noninterest-bearing liabilities 813,858  589,817 
Stockholders’ equity 2,327,853  2,347,178 
Noncontrolling interest (7,281) (2,390)
Total liabilities and stockholders’ equity $ 20,264,764  $ 20,235,749 
Excess of interest-earning assets over interest-bearing liabilities $ 5,892,011  $ 6,671,515 
Net interest income $ 182,602  $ 176,831 
Interest rate spread 3.32  % 3.86  %
Net interest margin 4.08  % 3.99  %
(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 available-for-sale at fair value.
(4)Includes federal funds purchased.
62

  Nine months ended September 30,
  2023 2022
(Dollars in thousands) Average
Balance
Interest
Yield/
Rate(1)
Average
Balance
Interest
Yield/
Rate(1)
Assets:
Interest-earning assets:
Loans:(2)
Commercial loans and leases $ 5,038,365  $ 256,915  6.83  % $ 4,860,079  $ 176,476  4.87  %
Commercial real estate loans 4,507,845  231,886  6.88  4,263,906  137,183  4.30 
Residential loans 805,424  28,710  4.75  799,980  26,810  4.47 
Consumer loans 1,899,370  100,015  7.04  1,472,878  57,900  5.26 
Loans held for sale
47,827  2,985  8.34  69,068  2,741  5.31 
Total loans and leases 12,298,831  620,511  6.75  11,465,911  401,110  4.68 
Mortgage-backed securities(3)
4,729,796  81,310  2.29  5,253,248  78,828  2.00 
Investment securities
370,573  6,599  2.71  325,960  4,642  2.21 
Other interest-earning assets 279,373  10,871  5.20  1,124,922  6,142  0.73 
Total interest-earning assets $ 17,678,573  $ 719,291  5.45  % $ 18,170,041  $ 490,722  3.62  %
Allowance for credit losses (165,807) (138,532)
Cash and due from banks 254,702  240,421 
Cash in non-owned ATMs 390,474  560,202 
Bank-owned life insurance 101,350  100,659 
Other noninterest-earning assets 1,904,597  1,728,847 
Total assets $ 20,163,889  $ 20,661,638 
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Interest-bearing demand $ 3,045,247  $ 18,705  0.82  % $ 3,384,443  $ 3,701  0.15  %
Savings 1,895,379  4,119  0.29  2,276,861  506  0.03 
Money market 4,168,793  81,795  2.62  3,969,219  5,063  0.17 
Customer time deposits 1,506,980  29,418  2.61  1,132,489  3,826  0.45 
Total interest-bearing customer deposits 10,616,399  134,037  1.69  10,763,012  13,096  0.16 
Brokered deposits 246,544  8,464  4.59  40,866  441  1.44 
Total interest-bearing deposits 10,862,943  142,501  1.75  10,803,878  13,537  0.17 
Federal Home Loan Bank advances 133,143  5,135  5.16  1,678  42  3.35 
Trust preferred borrowings 90,510  4,954  7.32  90,313  2,146  3.18 
Senior debt 223,192  7,360  4.40  248,448  5,939  3.19 
Other borrowed funds(4)
377,050  12,365  4.38  36,401  54  0.20 
Total interest-bearing liabilities $ 11,686,838  $ 172,315  1.97  % $ 11,180,718  $ 21,718  0.26  %
Noninterest-bearing demand deposits 5,421,479  6,466,720 
Other noninterest-bearing liabilities 753,067  526,945 
Stockholders’ equity 2,307,002  2,489,860 
Noncontrolling interest (4,497) (2,605)
Total liabilities and stockholders’ equity $ 20,163,889  $ 20,661,638 
Excess of interest-earning assets over interest-bearing liabilities $ 5,991,735  $ 6,989,323 
Net interest and dividend income $ 546,976  $ 469,004 
Interest rate spread 3.48  % 3.36  %
Net interest margin 4.15  % 3.46  %
(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 available-for-sale at fair value.
(4)Includes federal funds purchased.
63

Three months ended September 30, 2023: During the three months ended September 30, 2023, net interest income increased $5.8 million from the three months ended September 30, 2022 primarily due to the rising interest rate environment and balance sheet size and mix. Net interest margin was 4.08% for the third quarter of 2023, a 9 basis point increase compared to 3.99% for the third quarter of 2022 due to a favorable increase of 14 basis points from loan growth and mix, partially offset by a decrease of 4 basis points due to increasing deposit betas and 1 basis point from purchase accounting accretion.
Nine months ended September 30, 2023: During the nine months ended September 30, 2023, net interest income increased $78.0 million from the nine months ended September 30, 2022. This increase included $79.9 million from balance sheet size and mix and the benefits of our asset sensitive balance sheet, partially offset by a $1.9 million decrease in purchase accounting accretion. Net interest margin was 4.15% for the nine months ended September 30, 2023, a 69 basis point increase compared to 3.46% for the nine months ended September 30, 2022 reflecting a 40 basis point increase due to our asset-sensitive balance sheet and a 30 basis point increase due to loan growth and mix, partially offset by 1 basis point from purchase accounting accretion.
Allowance for Credit Losses
We maintain the allowance for credit losses at an appropriate level based on our assessment of estimable and expected losses in the loan portfolio. Our allowance for credit losses is based on our historical loss experience that includes the inherent risk of our loans and various other factors including but not limited to, collateral values, trends in asset quality, level of delinquent loans and concentrations. Further, regional and national economic forecasts are considered in our expected credit losses. Our evaluation is based on a review of the portfolio and requires significant, complex and difficult judgments.
During the three months ended September 30, 2023, we recorded a provision for credit losses of $18.4 million, a net change of $11.0 million, as compared with the provision for credit losses of $7.5 million for the three months ended September 30, 2022. This increase was primarily due to net loan growth and downgrades, partially offset by the impact of the economic forecast.
During the nine months ended September 30, 2023, we recorded a provision for credit losses of $63.3 million, a net change of $28.6 million, as compared with the provision for credit losses of $34.7 million for the nine months ended September 30, 2022. This increase was primarily due to the impact of the economic uncertainty and forecast.
The allowance for credit losses increased to $176.0 million at September 30, 2023 from $151.9 million at December 31, 2022. The ratio of allowance for credit losses to total loans and leases was 1.28% at September 30, 2023 and 1.17% at December 31, 2022.
64

The following tables detail the allocation of the ACL and show our net charge-offs (recoveries) by portfolio category:
(Dollars in thousands)
Commercial and Industrial(1)
Owner-
occupied
Commercial
Commercial
Mortgages
Construction
Residential(2)
Consumer(3)
Total
As of September 30, 2023
Allowance for credit losses $ 61,670  $ 7,850  $ 33,187  $ 11,317  $ 5,351  $ 56,613  $ 175,988 
% of ACL to total ACL 35  % % 19  % % % 32  % 100  %
Loan portfolio balance $ 3,249,737  $ 1,924,171  $ 3,645,723  $ 1,043,568  $ 855,340  $ 1,957,082  $ 12,675,621 
% to total loans and leases 26  % 15  % 29  % % % 15  % 100  %
Three months ended September 30, 2023
Charge-offs $ 10,675  $ —  $ 300  $ —  $ —  $ 5,872  $ 16,847 
Recoveries 2,124  14  55  357  2,552 
Net charge-offs (recoveries) $ 8,551  $ (14) $ 299  $ (1) $ (55) $ 5,515  $ 14,295 
Average loan balance $ 3,217,096  $ 1,890,404  $ 3,612,027  $ 999,941  $ 838,556  $ 1,940,418  $ 12,498,442 
Ratio of net charge-offs (recoveries) to average gross loans 1.05  % NMF 0.03  % NMF (0.03) % 1.13  % 0.45  %
Nine months ended September 30, 2023
Charge-offs $ 30,496  $ 184  $ 300  $ —  $ 33  $ 15,374  $ 46,387 
Recoveries 5,554  50  532  211  906  7,257 
Net charge-offs (recoveries) $ 24,942  $ 134  $ 296  $ (532) $ (178) $ 14,468  $ 39,130 
Average loan balance $ 3,180,688  $ 1,857,677  $ 3,509,036  $ 998,809  $ 802,584  $ 1,899,370  $ 12,248,164 
Ratio 1.05  % 0.01  % 0.01  % (0.07) % (0.03) % 1.02  % 0.43  %
(1)Includes commercial small business leases.
(2)Excludes reverse mortgages.
(3)Includes home equity lines of credit, installment loans unsecured lines of credit and education loans.
(Dollars in thousands)
Commercial and Industrial(1)
Owner-
occupied
Commercial
Commercial
Mortgages
Construction
Residential(2)
Consumer(3)
Total
As of December 31, 2022
Allowance for credit losses $ 59,394  $ 6,019  $ 21,473  $ 6,987  $ 4,668  $ 53,320  $ 151,861 
% of ACL to total ACL 39  % % 14  % % % 35  % 100  %
Loan portfolio balance $ 3,134,326  $ 1,809,582  $ 3,351,084  $ 1,044,049  $ 759,465  $ 1,810,930  $ 11,909,436 
% to total loans and leases 26  % 15  % 28  % % % 15  % 100  %
Year ended December 31, 2022
Charge-offs $ 19,004  $ 179  $ 581  $ —  $ 186  $ 7,520  $ 27,470 
Recoveries 6,112  278  223  2,567  665  793  10,638 
Net charge-offs (recoveries) $ 12,892  $ (99) $ 358  $ (2,567) $ (479) $ 6,727  $ 16,832 
Average loan balance $ 3,043,836  $ 1,831,428  $ 3,319,687  $ 962,082  $ 787,273  $ 1,543,704  $ 11,488,010 
Ratio of net charge-offs (recoveries) to average gross loans 0.42  % (0.01) % 0.01  % (0.27) % (0.06) % 0.44  % 0.15  %
(1)Includes commercial small business leases.
(2)Excludes reverse mortgages.
(3)Includes home equity lines of credit, installment loans unsecured lines of credit and education loans.
See Note 7 to the unaudited Consolidated Financial Statements and "Nonperforming Assets" above for further information.
Noninterest Income
Three months ended September 30, 2023: During the three months ended September 30, 2023, noninterest income was $72.7 million, an increase of $10.0 million from $62.7 million during the three months ended September 30, 2022. The increase was primarily driven by $5.8 million from Cash Connect®, $3.8 million in Wealth Management fees, and $2.8 million in capital markets income. Partially offsetting these increases was a $3.7 million decrease in other banking fees from lower returns on derivative collateral as a result of funding optimization and lower income from our consumer lending partnerships.
65

Nine months ended September 30, 2023: During the nine months ended September 30, 2023, noninterest income was $202.7 million, an increase of $7.4 million from $195.3 million during the nine months ended September 30, 2022. This increase was primarily driven by $21.9 million from Cash Connect®, $2.6 million in Wealth Management fees, and $2.4 million in capital markets income. These increases were partially offset by an $11.1 million decrease in other banking fees and a $2.8 million decrease in mortgage banking activities. In addition to these decreases, we recognized $6.0 million of unrealized gains on equity investments and $2.6 million from BMTIA in 2022.
For further information, see Note 3 to the unaudited Consolidated Financial Statements.
Noninterest Expense
Three months ended September 30, 2023: During the three months ended September 30, 2023, noninterest expense was $139.7 million, an increase of $6.8 million from $132.9 million for the three months ended September 30, 2022. The increase was primarily due to $6.3 million in other operating expense driven by higher variable operating costs from Cash Connect®, $2.2 million from salaries and benefits costs, and $1.1 million from professional fees. These increases were partially offset by a $2.5 million decrease in net corporate development and restructuring costs.
Nine months ended September 30, 2023: During the nine months ended September 30, 2023, noninterest expense was $414.0 million, a decrease of $27.4 million from $441.4 million for the nine months ended September 30, 2022. The decrease was primarily due to a $61.6 million decrease in net corporate development and restructuring costs, partially offset by increases of $20.8 million in other operating expense driven by higher variable operating costs from Cash Connect®, $8.3 million in salaries and benefits costs, and $2.9 million in professional fees.
Income Taxes
We and our subsidiaries file a consolidated federal income tax return and separate state income tax returns. Income taxes are accounted for in accordance with ASC 740, Income Taxes, which requires the recording of deferred income taxes for tax consequences of temporary differences. We recorded income tax expense of $22.9 million and $66.9 million during the three and nine months ended September 30, 2023, respectively, compared to income tax expense of $25.8 million and $49.9 million for the same periods in 2022, respectively.
Our effective tax rate was 23.6% and 24.6% for the three and nine months ended September 30, 2023, respectively, compared to 26.0% and 26.5% for the same periods in 2022, respectively. The effective tax rate for the three and nine months ended September 30, 2023 decreased primarily due to an increase in projected tax benefits from our low-income housing tax credit investments as well as a reduction in state income taxes. In addition, we incurred $0.4 million of tax expense related to nondeductible merger costs incurred in the nine months ended September 30, 2022 combined with $1.9 million of tax expense related to nondeductible goodwill written off during the sale of the BMTIA business that occurred in that same period.
The effective tax rate reflects the recognition of certain tax benefits in the financial statements including those benefits from tax-exempt interest income, federal low-income housing tax credits, research and development 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, nondeductible acquisition costs (incurred in 2022) 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.

66

RECONCILIATION OF NON-GAAP MEASURE TO GAAP MEASURE
The following table provides a reconciliation of tangible book value per share of common stock to book value per share of common stock, the most directly comparable GAAP financial measure. We believe this measure helps management and investors better understand and assess changes from period to period in stockholders’ equity exclusive of changes in intangible assets. This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP, and is not a substitute for, or superior to, GAAP results.
(Dollars and share amounts in thousands, except per share amounts) September 30, 2023 December 31, 2022
Stockholders’ equity of WSFS $ 2,242,795  $ 2,205,113 
Less: Goodwill and other intangible assets 1,008,472  1,012,232 
Tangible common equity (numerator) $ 1,234,323  $ 1,192,881 
Shares of common stock outstanding (denominator) 60,728  61,612 
Book value per share of common stock $ 36.93  $ 35.79 
Goodwill and other intangible assets 16.60  16.43 
Tangible book value per share of common stock $ 20.33  $ 19.36 
CRITICAL ACCOUNTING ESTIMATES
The preparation of the unaudited Consolidated Financial Statements in accordance with U.S. GAAP requires us to make estimates and assumptions affecting the reported amounts of assets, liabilities, revenue 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. Although our current estimates contemplate current economic conditions and how we expect them to change in the future, for the remainder of 2023, it is possible that actual conditions may be worse than anticipated in those estimates, which could materially affect our results of operations and financial condition. Actual results may differ from these estimates under different assumptions or conditions.
Critical accounting estimates at September 30, 2023 did not significantly change from our critical accounting estimates at December 31, 2022, which are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.
RECENT REGULATORY DEVELOPMENTS
Recent regulatory developments at September 30, 2023 did not significantly change from our recent regulatory developments at December 31, 2022, which are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, except as noted below.
Potential Regulatory Reforms in Response to Recent Bank Failures
The recent failures of Silicon Valley Bank, Santa Clara, California, Signature Bank, New York, New York, and First Republic Bank, San Francisco, California, in March and April of this year, have led, and may continue to lead, to regulatory changes and initiatives that could impact the Company. For example, the FDIC has stated that it plans to impose a special deposit insurance assessment on banks in order to recover losses that the FDIC's Deposit Insurance Fund (DIF) incurred in the receiverships of these institutions. In addition, President Biden has encouraged the federal banking agencies to adopt various reforms, including the completion of an incentive compensation rule for bank executives pursuant to Section 956 of the Dodd-Frank Act, in response to these bank failures. Further, on April 28, 2023, the Federal Reserve and the FDIC issued reports on the potential causes of failures of Silicon Valley Bank and Signature Bank, respectively. Among the changes discussed, the Federal Reserve and the FDIC highlighted the need to change their approach to supervising banks of all sizes as well as to their capital and other regulatory requirements. Despite these initiatives, it remains unclear what actions federal regulatory agencies will ultimately take as a result of these failures.
67

FDIC Special Assessment
On May 11, 2023, the FDIC published a proposed rule that would impose a special deposit insurance assessment on insured depository institutions in order to recover losses that the FDIC's Deposit Insurance Fund (DIF) has incurred in the receiverships of Silicon Valley Bank and Signature Bank. The proposed rule would require the payment of the special assessment over eight quarterly assessment periods beginning the first quarter of 2024, subject to adjustments if the total amount collected is insufficient to cover the DIF’s costs. Each quarterly special assessment would be equal to 3.13 basis points (0.0313%) of the amount of an institution’s estimated uninsured deposits that exceeded $5 billion as of December 31, 2022. As of December 31, 2022, WSFS Bank’s estimated amount of uninsured deposits was $6.9 billion.
Small Business Lending Data Collection Rule
On March 30, 2023, the CFPB finalized a rule under section 1071 of the Dodd-Frank Act requiring lenders to collect and report data regarding small business lending activity. The rule was scheduled to take effect on August 29, 2023, and requires compliance by October 1, 2024, April 1, 2025, or January 1, 2026, depending on the number of covered small business loans that a covered lender originates. On July 31, 2023, the U.S. District Court for the Southern District of Texas ordered the CFPB not to implement or enforce the rule against the plaintiff trade associations in Texas Bankers Ass'n, et al, v. CFPB, et al, No. 7:23-cv-00144, and their members, which include WSFS Bank. The Company is evaluating the impact of the new rule and related court rulings.
Transition from London Inter-Bank Offered Rate (LIBOR)
LIBOR, a benchmark interest rate that was widely referenced in the past, is no longer published as of June 30, 2023. Financial market regulators had taken steps in previous years to prepare for the transition away from LIBOR and to encourage banks and other market participants to do the same. The United Kingdom Financial Conduct Authority (FCA) caused several LIBOR settings to cease publication after December 31, 2021 and the remaining settings to cease publication after June 30, 2023.
The Adjustable Interest Rate (LIBOR) Act and implementing regulations of the Federal Reserve created a set of default rules for preexisting contracts that reference LIBOR, and created a safe harbor from liability for persons who elected to use the Secured Overnight Financing Rate (SOFR) as the replacement rate in a contract that references LIBOR.
The Company’s commercial and consumer businesses used various products that were indexed to LIBOR. Most of these instruments gave the Company discretion to determine a replacement benchmark rate when LIBOR became unavailable.
This discretion combined with the LIBOR Act's safe harbor allowed the Company to select and migrate to SOFR as a replacement to LIBOR in the first quarter of 2022. Currently, the Company's new variable rate loan products are primarily originated in SOFR.
Third-Party Risk Management Guidance
On June 6, 2023, the FDIC, the Federal Reserve and the OCC issued final guidance providing sound principles that support a risk-based approach to third-party risk management. The Company is evaluating the impact of this guidance on its practices.
Item 3.     Quantitative and Qualitative Disclosures About Market Risk
The information required by this Item is incorporated herein by reference to the information provided in Part I Item 2 (Interest Rate Sensitivity) of this Quarterly Report on Form-10-Q.
Item 4.     Controls and Procedures
 
(a)Evaluation of disclosure controls and procedures. Based on their evaluation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934), our principal executive officer and principal financial officer have concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q such disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

(b)Changes in internal control over financial reporting. There was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting during the three months ended September 30, 2023.
68

Part II. OTHER INFORMATION
Item 1.    Legal Proceedings
The information required by this Item is incorporated herein by reference to the information provided in Note 17 – Legal and Other Proceedings to the unaudited Consolidated Financial Statements.
Item 1A. Risk Factors
There have not been any material changes to the risk factors previously disclosed under Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
During the first quarter of 2020, the Board of Directors of the Company approved a share repurchase program authorizing the repurchase of 7,594,977 shares of common stock, or 15% of its outstanding shares as of March 31, 2020. This repurchase program was completed during the first quarter of 2023. During the second quarter of 2022, the Board of Directors of the Company approved an additional share repurchase authorization under the program of 6,358,727 shares of common stock, or 10% of its outstanding shares as of June 30, 2022. Under the program, repurchases may be made from time to time in the open market or through negotiated transactions, subject to market conditions and other factors, and in accordance with applicable securities laws. The program is consistent with our intent to return a minimum of 35% of annual net income to stockholders through dividends and share repurchases while maintaining capital ratios in excess of “well-capitalized” regulatory benchmarks.
The following table represents information with respect to repurchases of common stock made by the Company during the three months ended September 30, 2023.
Month
Total Number
of Shares Purchased
Average Price
Paid Per Share
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1, 2023 - July 31, 2023 36,000  $ 43.82  36,000  5,933,493 
August 1, 2023 - August 28, 2023 209,000  41.45  209,000  5,724,493 
September 1, 2023 - September 31, 2023 141,900  38.72  141,900  5,582,593 
Total 386,900  $ 40.67  386,900 
Item 3.    Defaults upon Senior Securities
None.
Item 4.    Mine Safety Disclosures
Not applicable.
Item 5.    Other Information
During the period covered by this Quarterly Report on Form 10-Q, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.
69

Item 6.     Exhibits
 
Exhibit
Number
   Description of Document
10.1
31.1   
31.2   
32   
101.INS    XBRL Instance Document *
101.SCH    XBRL Schema Document *
101.CAL    XBRL Calculation Linkbase Document *
101.LAB    XBRL Labels Linkbase Document *
101.PRE    XBRL Presentation Linkbase Document *
101.DEF    XBRL Definition Linkbase Document *
104
The cover page of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed with the SEC on November 3, 2023, is formatted in Inline XBRL.
* Submitted as Exhibits 101 to this Quarterly Report on Form 10-Q are documents formatted in XBRL (Extensible Business Reporting Language). Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability.
70

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
  WSFS FINANCIAL CORPORATION
Date: November 3, 2023   /s/ Rodger Levenson
  Rodger Levenson
  Chairman, President and Chief Executive Officer
  (Principal Executive Officer)
Date: November 3, 2023   /s/ Arthur J. Bacci
  Arthur J. Bacci
  Executive Vice President, Chief Wealth Officer and
  Interim Chief Financial Officer
  (Principal Financial and Accounting Officer)

71
EX-31.1 2 a302certification-ceo3q23.htm EX-31.1 Document



Exhibit 31.1

I, Rodger Levenson, certify that:
1.I have reviewed this quarterly report on Form 10-Q of WSFS Financial Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15-(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 3, 2023 /s/ Rodger Levenson
Rodger Levenson
Chairman, President and Chief Executive Officer
(Principal Executive Officer)




EX-31.2 3 a302certification-cfo3q23.htm EX-31.2 Document


Exhibit 31.2


I, Arthur J. Bacci, certify that:
1.I have reviewed this quarterly report on Form 10-Q of WSFS Financial Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15-(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 3, 2023 /s/ Arthur J. Bacci
Arthur J. Bacci
Executive Vice President, Chief Wealth Officer and Interim Chief Financial Officer
(Principal Financial and Accounting Officer)


EX-32 4 a906certification3q23.htm EX-32 Document

Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of WSFS Financial Corporation (the Company) for the quarter ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the Report), we, Rodger Levenson, Chairman, President and Chief Executive Officer, and Arthur J. Bacci, Executive Vice President, Chief Wealth Officer and Interim Chief Financial Officer (Principal Accounting Officer), hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:

1.The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Rodger Levenson /s/ Arthur J. Bacci
Rodger Levenson Arthur J. Bacci
Chairman, President and Chief Executive Officer Executive Vice President, Chief Wealth Officer and
(Principal Executive Officer) Interim Chief Financial Officer
(Principal Financial and Accounting Officer)

Date: November 3, 2023