WSFS Q2 2025 slides reveal strong fee revenue growth, company raises full-year guidance

Introduction & Market Context

WSFS Financial Corporation (NASDAQ:WSFS) released its second quarter 2025 earnings presentation on July 25, 2025, revealing solid financial performance across key metrics. The company reported core earnings per share of $1.27, up from $1.13 in the previous quarter and $1.08 in the same period last year, representing a 12% year-over-year increase.

Despite the positive results, WSFS stock closed at $56.25, down 0.63% on the day of the announcement. The company’s shares have traded between $42.44 and $62.75 over the past 52 weeks, suggesting investors may be taking a measured approach despite the strong quarterly performance.

Quarterly Performance Highlights

WSFS delivered robust financial results in the second quarter, with core return on assets (ROA) reaching 1.38%, an improvement of 9 basis points quarter-over-quarter and 13 basis points year-over-year. The company’s pre-provision net revenue (PPNR) grew to $107.8 million, representing increases of 3% both sequentially and compared to the same period last year.

As shown in the following comprehensive overview of the company’s financial metrics:

Net interest margin (NIM) edged up to 3.89%, a slight improvement from 3.88% in the first quarter and 3.85% in the second quarter of 2024. This stability in NIM reflects the company’s effective deposit repricing actions, which helped offset pressure from lower loan yields in the current interest rate environment.

The following chart illustrates these NIM trends and deposit cost dynamics:

Detailed Financial Analysis

WSFS reported particularly strong performance in its fee revenue segments, with core fee revenue reaching $88.0 million, up 9% quarter-over-quarter and 2% year-over-year. The fee revenue ratio stood at 32.8% of total revenue, demonstrating the company’s successful diversification beyond traditional banking income.

The Wealth and Trust segment was a standout performer, with revenue increasing 17% year-over-year. Institutional Services grew an impressive 39% compared to the same period last year as Corporate Trust expanded its client base and market share. The following chart breaks down the core fee revenue by business segment:

On the lending side, commercial and industrial (C&I) loans showed strong momentum, growing at a 7% annualized rate quarter-over-quarter. The company also saw robust growth in residential mortgage and WSFS consumer loans, while maintaining a disciplined approach to commercial real estate exposure.

The loan portfolio composition and growth trends are illustrated in this detailed breakdown:

Deposit growth remained solid, with total client deposits increasing by $242 million (6% annualized) quarter-over-quarter and $830 million (5%) year-over-year. Notably, noninterest demand deposits grew by $359 million (29% annualized) in the quarter, helping to reduce overall funding costs.

The following chart provides a comprehensive view of deposit trends and composition:

Strategic Initiatives

WSFS maintained its strong capital position with a Common Equity Tier 1 (CET1) ratio of 14.07%, well above regulatory requirements. This robust capital base enabled the company to continue its aggressive share repurchase program, buying back 1.6 million shares or approximately 2.7% of outstanding shares during the second quarter.

The company’s capital return strategy is illustrated in the following chart:

Asset quality metrics showed improvement, with nonperforming assets decreasing by 6 basis points quarter-over-quarter, primarily driven by the payoff of a C&I loan with no additional losses. The allowance for credit losses (ACL) ratio remained stable at 1.43%, as the runoff and sale of the Upstart (NASDAQ:UPST) portfolio was offset by additional reserves for two previously identified nonperforming loans.

The following chart details the company’s asset quality trends:

Forward-Looking Statements

In a positive development for investors, WSFS raised its full-year 2025 outlook despite lowering its GDP growth expectations from 2.6% to 1.5%. The company now projects a core ROA of approximately 1.30%, up from the previous estimate of 1.25%, and a net interest margin of around 3.85%, improved from the earlier projection of 3.80%.

The updated guidance also reflects the company’s expectation of two 25-basis-point interest rate cuts in September and December, compared to the previous assumption of one cut in June. This suggests management’s confidence in navigating the changing interest rate environment effectively.

The complete updated outlook is presented in this comprehensive table:

WSFS continues to target a CET1 ratio of approximately 12% over the medium term, suggesting ongoing opportunities for capital deployment through share repurchases and potential strategic initiatives. The company’s investment portfolio remains high-quality, providing consistent cash flows and borrowing capacity, with anticipated cash flows that could fund approximately 3.5% annualized loan growth.

These results build upon the momentum seen in the first quarter, when WSFS reported an EPS of $1.13 that exceeded analyst forecasts by 8.65%. The continued improvement in key metrics, particularly in fee revenue growth and margin stability, demonstrates the company’s resilience and effective execution in a challenging economic environment.

Full presentation:

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