Equibles

10-Q

WSFS FINANCIAL CORP (WSFS)

10-Q 2024-08-02 For: 2024-06-30
View Original
Added on April 10, 2026

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 June 30, 2024

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: 59,269,460 shares as of July 31, 2024.

WSFS FINANCIAL CORPORATION

FORM 10-Q

TABLE OF CONTENTS

PART I. Financial Information Page
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Income for theThree and Six Months EndedJune 30, 2024and2023 5
Consolidated Statements of Comprehensive Income (Loss) for theThree and Six Months EndedJune 30, 2024and2023 6
Consolidated Statements of Financial Condition as ofJune 30, 2024andDecember 31, 2023 7
Consolidated Statements of Changes in Stockholders' Equity for theThree and Six Months EndedJune 30, 2024and2023 8
Consolidated Statements of Cash Flows for theSix Months EndedJune 30, 2024and2023 10
Notes to the Consolidated Financial Statements for theThree and Six Months EndedJune 30, 2024 12
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 51
Item 3. Quantitative and Qualitative Disclosures About Market Risk 65
Item 4. Controls and Procedures 65
PART II. Other Information
Item 1. Legal Proceedings 66
Item 1A. Risk Factors 66
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 66
Item 3. Defaults upon Senior Securities 66
Item 4. Mine Safety Disclosures 66
Item 5. Other Information 66
Item 6. Exhibits 67

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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 bank failures and other economic and industry volatility, including potential increased regulatory requirements and costs and potential impacts to macroeconomic conditions;

•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, which could impact market confidence in our operations;

•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;

•the credit risk associated with the substantial amount of commercial real estate, commercial and industrial, and construction and land development 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 success of the Company's growth plans;

•failure of the financial and/or operational controls of the Company’s Cash Connect® and/or Wealth Management segments;

•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;

•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 remote working arrangements;

•the Company’s ability to recruit and retain key Associates;

•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);

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•possible changes in the speed of loan prepayments by the Company’s Customers and loan origination or sales volumes;

•possible changes in market valuations and/or 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 interactions 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.

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WSFS FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months Ended June 30, Six Months Ended June 30,
(Dollars in thousands, except per share and share data) 2024 2023 2024 2023
Interest income:
Interest and fees on loans and leases $ 230,815 $ 207,884 $ 455,518 $ 401,608
Interest on mortgage-backed securities 25,784 27,130 51,681 54,656
Interest and dividends on investment securities:
Taxable 699 700 1,399 1,404
Tax-exempt 1,484 1,482 2,968 3,015
Other interest income 6,455 4,573 15,293 7,469
265,237 241,769 526,859 468,152
Interest expense:
Interest on deposits 76,693 50,054 149,488 85,246
Interest on Federal Home Loan Bank advances 359 1,597 667 4,968
Interest on senior and subordinated debt 2,441 2,334 4,890 4,907
Interest on federal funds purchased 41 — 41 1,139
Interest on trust preferred borrowings 1,750 1,635 3,506 3,190
Interest on other borrowings 9,504 4,307 18,540 4,328
90,788 59,927 177,132 103,778
Net interest income 174,449 181,842 349,727 364,374
Provision for credit losses 19,814 15,830 34,952 44,841
Net interest income after provision for credit losses 154,635 166,012 314,775 319,533
Noninterest income:
Credit/debit card and ATM income 23,875 14,430 43,544 27,791
Investment management and fiduciary income 37,606 32,379 70,534 62,855
Deposit service charges 6,496 6,277 12,983 12,316
Mortgage banking activities, net 2,217 1,304 3,864 2,426
Loan and lease fee income 1,706 1,190 3,229 2,562
Unrealized loss on equity investments, net — — — (4)
Realized gain on sale of equity investments, net 2,130 — 2,130 —
Bank owned life insurance income 793 760 1,993 2,270
Other income 16,775 10,531 29,178 19,782
91,598 66,871 167,455 129,998
Noninterest expense:
Salaries, benefits and other compensation 83,249 72,367 159,055 145,216
Occupancy expense 9,387 10,132 18,866 20,540
Equipment expense 12,054 10,810 22,746 20,602
Data processing and operations expenses 4,807 4,771 8,467 9,495
Professional fees 4,781 6,118 9,262 10,557
Marketing expense 2,020 2,165 3,802 3,881
FDIC expenses 2,390 2,863 6,372 5,445
Loan workout and other credit costs (1,278) 536 (207) 481
Corporate development expense 158 2,796 366 3,536
Restructuring expense — (26) — (787)
Other operating expense 38,200 28,721 76,111 55,332
155,768 141,253 304,840 274,298
Income before taxes 90,465 91,630 177,390 175,233
Income tax provision 21,257 23,035 42,459 43,976
Net income $ 69,208 $ 68,595 $ 134,931 $ 131,257
Less: Net (loss) income attributable to noncontrolling interest (65) (83) (103) 175
Net income attributable to WSFS $ 69,273 $ 68,678 $ 135,034 $ 131,082
Earnings per share:
Basic $ 1.16 $ 1.12 $ 2.25 $ 2.13
Diluted $ 1.16 $ 1.12 $ 2.24 $ 2.13
Weighted average shares of common stock outstanding:
Basic 59,833,207 61,348,200 60,092,704 61,429,008
Diluted 59,958,628 61,414,273 60,237,232 61,526,331

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

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WSFS FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

Three Months Ended June 30, Six Months Ended June 30,
(Dollars in thousands) 2024 2023 2024 2023
Net income $ 69,208 $ 68,595 $ 134,931 $ 131,257
Less: Net (loss) income attributable to noncontrolling interest (65) (83) (103) 175
Net income attributable to WSFS 69,273 68,678 135,034 131,082
Other comprehensive (loss) income:
Net change in unrealized (losses) gains on investment securities available-for-sale
Net unrealized (losses) gains arising during the period, net of tax (benefit) expense of $(2,874), $(12,747), $(15,507), and $3,993, respectively (9,100) (40,367) (49,107) 12,643
Net change in securities held-to-maturity
Net change in unrealized gains on available-for-sale securities reclassified to held-to-maturity, net of tax benefit of $1,203, $1,386, $2,361, and $2,702, respectively 3,808 4,393 7,477 8,558
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, $17, $56, and $28, respectively (52) (54) (176) (89)
Net change in cash flow hedge
Net unrealized loss arising during the period, net of tax benefit of $185, $466, $2,217, and $361, respectively (587) (1,475) (7,020) (1,143)
Amortization of unrealized gain on terminated cash flow hedges, net of tax benefit of $—, $13, $—, and $25, respectively — (40) — (80)
(587) (1,515) (7,020) (1,223)
Net change in equity method investments
Net change in other comprehensive income of equity method investments, net of tax benefit of $13, $32, $19, and $33, respectively (40) (101) (61) (104)
Total other comprehensive (loss) income (5,971) (37,644) (48,887) 19,785
Total comprehensive income $ 63,302 $ 31,034 $ 86,147 $ 150,867

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

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WSFS FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

(Dollars in thousands, except per share and share data) June 30, 2024 December 31, 2023
Assets:
Cash and due from banks $ 618,446 $ 629,310
Cash in non-owned ATMs 400,482 458,889
Interest-bearing deposits in other banks including collateral (restricted cash) of $2,330 at June 30, 2024 and $4,270 at December 31, 2023 2,788 4,701
Total cash, cash equivalents, and restricted cash 1,021,716 1,092,900
Investment securities, available-for-sale (amortized cost of $4,374,333 at June 30, 2024 and $4,504,342 at December 31, 2023 3,651,913 3,846,537
Investment securities, held-to-maturity, net of allowance for credit losses of $7 at June 30, 2024 and $8 at December 31, 2023 (fair value $929,668 at June 30, 2024 and $985,931 at December 31, 2023) 1,038,854 1,058,557
Other investments 16,778 17,434
Loans, held for sale at fair value 54,608 29,268
Loans and leases, net of allowance for credit losses of $198,253 at June 30, 2024 and $186,126 at December 31, 2023 12,945,948 12,583,202
Bank owned life insurance 36,090 42,762
Stock in Federal Home Loan Bank (FHLB) of Pittsburgh at cost 16,638 15,398
Other real estate owned 1,342 1,569
Accrued interest receivable 88,878 85,979
Premises and equipment 104,020 104,484
Goodwill and intangible assets 996,181 1,004,560
Other assets 771,564 712,022
Total assets $ 20,744,530 $ 20,594,672
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Noninterest-bearing $ 4,782,920 $ 4,917,297
Interest-bearing 11,508,161 11,556,789
Total deposits 16,291,081 16,474,086
FHLB advances 22,306 —
Trust preferred borrowings 90,736 90,638
Senior and subordinated debt 218,515 218,400
Other borrowed funds 810,698 586,038
Accrued interest payable 56,684 46,684
Other liabilities 776,153 709,011
Total liabilities 18,266,173 18,124,857
Stockholders’ Equity:
Common stock $0.01 par value, 90,000,000 shares authorized; issued 76,208,354 at June 30, 2024 and 76,095,094 at December 31, 2023 762 761
Capital in excess of par value 1,989,289 1,984,746
Accumulated other comprehensive loss (642,878) (593,991)
Retained earnings 1,760,598 1,643,657
Treasury stock at cost, 16,947,092 shares at June 30, 2024 and 15,557,263 shares at December 31, 2023 (618,191) (557,537)
Total stockholders’ equity of WSFS 2,489,580 2,477,636
Noncontrolling interest (11,223) (7,821)
Total stockholders' equity 2,478,357 2,469,815
Total liabilities and stockholders' equity $ 20,744,530 $ 20,594,672

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

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WSFS FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)

Three Months Ended June 30, 2024
(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, March 31, 2024 76,133,596 $ 761 $ 1,987,800 $ (636,907) $ 1,700,349 $ (578,522) $ 2,473,481 $ (7,859) $ 2,465,622
Net income (loss) — — — — 69,273 — 69,273 (65) 69,208
Other comprehensive loss — — — (5,971) — — (5,971) — (5,971)
Cash dividend, $0.15 per share — — — — (9,024) — (9,024) — (9,024)
Distributions to noncontrolling shareholders — — — — — — — (3,299) (3,299)
Issuance of common stock including proceeds from exercise of common stock options (1) 74,758 1 (1,698) — — — (1,697) — (1,697)
Stock-based compensation expense — — 3,721 — — — 3,721 — 3,721
Repurchases of common shares (2) — — (534) — — (39,669) (40,203) — (40,203)
Balance, June 30, 2024 76,208,354 $ 762 $ 1,989,289 $ (642,878) $ 1,760,598 $ (618,191) $ 2,489,580 $ (11,223) $ 2,478,357
Six Months Ended June 30, 2024
(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, 2023 76,095,094 $ 761 $ 1,984,746 $ (593,991) $ 1,643,657 $ (557,537) $ 2,477,636 $ (7,821) $ 2,469,815
Net income (loss) — — — — 135,034 — 135,034 (103) 134,931
Other comprehensive loss — — — (48,887) — — (48,887) — (48,887)
Cash dividend, $0.30 per share — — — — (18,093) — (18,093) — (18,093)
Distributions to noncontrolling shareholders — — — — — — — (3,299) (3,299)
Issuance of common stock including proceeds from exercise of common stock options (3) 113,260 1 (1,100) — — — (1,099) — (1,099)
Stock-based compensation expense — — 6,177 — — — 6,177 — 6,177
Repurchases of common stock (4) — — (534) — — (60,654) (61,188) — (61,188)
Balance, June 30, 2024 76,208,354 $ 762 $ 1,989,289 $ (642,878) $ 1,760,598 $ (618,191) $ 2,489,580 $ (11,223) $ 2,478,357

(1)Issuance of common stock includes 40,417 shares withheld to cover tax liabilities.

(2)Repurchase of common stock includes 897,461 shares repurchased in connection with the Company's share repurchase program approved by the Board of Directors.

(3)Issuance of common stock includes 50,104 shares withheld to cover tax liabilities.

(4)Repurchase of common stock includes 1,389,829 shares repurchased in connection with the Company's share repurchase program approved by the Board of Directors.

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Three Months Ended June 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, March 31, 2023 75,958,600 $ 759 $ 1,977,757 $ (618,415) $ 1,464,392 $ (518,131) $ 2,306,362 $ (3,018) $ 2,303,344
Net income (loss) — — — — 68,678 — 68,678 (83) 68,595
Other comprehensive loss — — — (37,644) — — (37,644) — (37,644)
Cash dividend, $0.15 per share — — — — (9,221) — (9,221) — (9,221)
Distributions to noncontrolling shareholders — — — — — — — (4,174) (4,174)
Issuance of common stock including proceeds from exercise of common stock options 63,363 1 — — — — 1 — 1
Stock-based compensation expense — — 2,553 — — — 2,553 — 2,553
Repurchases of common shares (1) — — (2,365) — — (13,705) (16,070) — (16,070)
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
Six Months Ended June 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 — — — — 131,082 — 131,082 175 131,257
Other comprehensive income — — — 19,785 — — 19,785 — 19,785
Cash dividend, $0.30 per share — — — — (18,476) — (18,476) — (18,476)
Distributions to noncontrolling shareholders — — — — — — — (4,223) (4,223)
Issuance of common stock including proceeds from exercise of common stock options 99,966 1 362 — — — 363 — 363
Stock-based compensation expense — — 5,738 — — — 5,738 — 5,738
Repurchases of common stock (2) — — (2,365) — — (26,581) (28,946) — (28,946)
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

(1)Repurchase of common stock includes 357,278 shares repurchased in connection with the Company's share repurchase program approved by the Board of Directors, and 37,231 shares withheld to cover tax liabilities.

(2)Repurchase of common stock includes 619,278 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.

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

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WSFS FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six Months Ended June 30,
(Dollars in thousands) 2024 2023
Operating activities:
Net income $ 134,931 $ 131,257
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses 34,952 44,841
Depreciation of premises and equipment, net 7,421 9,023
Accretion of fees and discounts, net (11,750) (14,346)
Amortization of intangible assets 7,863 7,689
Amortization of right-of-use lease assets 5,300 8,813
Decrease in operating lease liability (5,310) (6,450)
Income from mortgage banking activities, net (3,864) (2,426)
Loss on sale of other real estate owned and valuation adjustments, net 296 195
Stock-based compensation expense 6,177 5,738
Unrealized loss on equity investments, net — 4
Realized gain on sale of equity investments, net (2,130) —
Deferred income tax benefit 1,617 1,919
Increase in accrued interest receivable (2,899) (3,382)
(Increase) decrease in other assets (46,599) 11,184
Origination of loans held for sale (183,742) (131,703)
Proceeds from sales of loans held for sale 133,724 85,096
(Increase) decrease in value of bank owned life insurance (56) 827
Increase in capitalized interest, net (661) (649)
Increase in accrued interest payable 10,000 20,544
Increase (decrease) in other liabilities 72,440 (45,616)
Net cash provided by operating activities $ 157,710 $ 122,558
Investing activities:
Repayments, maturities and calls of investment securities held-to-maturity 28,561 41,961
Purchases of investment securities available-for-sale (41,096) (20,030)
Repayments, maturities and calls of investment securities available-for-sale 169,544 173,145
Proceeds from bank-owned life insurance death benefit 112 —
Proceeds from bank-owned life insurance surrender 6,616 —
Net increase in loans (188,531) (238,112)
Purchase of loans held-for-investment (176,597) (159,669)
Purchases of stock of Federal Home Loan Bank of Pittsburgh (84,226) (103,879)
Redemptions of stock of Federal Home Loan Bank of Pittsburgh 82,986 118,596
Sales of other real estate owned 509 604
Investment in premises and equipment (6,957) (1,812)
Sales of premises and equipment — 3
Net cash used in investing activities $ (209,079) $ (189,193)

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Six Months Ended June 30,
(Dollars in thousands) 2024 2023
Financing activities:
Net decrease in demand and saving deposits $ (341,207) $ (370,288)
Increase in time deposits 199,441 536,663
(Decrease) increase in brokered deposits (51,676) 44,844
Receipts from FHLB advances 3,922,306 5,265,000
Repayments of FHLB advances (3,900,000) (5,615,000)
Receipts from federal funds purchased 175,000 5,150,000
Repayments of federal funds purchased (175,000) (5,150,000)
Receipts from Bank Term Funding Program 235,000 565,000
Distributions to noncontrolling shareholders (3,299) (4,223)
Cash dividend (18,093) (18,476)
Issuance of common stock including proceeds from exercise of common stock options (1,099) 363
Redemption of senior and subordinated debt — (30,000)
Repurchases of common shares (61,188) (28,946)
Net cash (used in) provided by financing activities $ (19,815) $ 344,937
(Decrease) increase in cash, cash equivalents, and restricted cash (71,184) 278,302
Cash, cash equivalents, and restricted cash at beginning of period 1,092,900 837,258
Cash, cash equivalents, and restricted cash at end of period $ 1,021,716 $ 1,115,560
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 167,133 $ 83,234
Income taxes 36,619 48,698
Non-cash information:
Loans transferred to other real estate owned $ 282 $ 298
Loans transferred to portfolio from held-for-sale at fair value 26,354 46,103
Available-for-sale securities purchased, not settled — 2,667

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

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WSFS FINANCIAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

(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 June 30, 2024, 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®).

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 mortgage, 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 Company's customers’ deposits to their legal maximums. The Company serves its customers primarily from 114 offices located in Pennsylvania (57), Delaware (39), New Jersey (14), Florida (2),  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.

The Company's leasing business is conducted by NewLane Finance®. 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.

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), loans held for sale, 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. 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, 2024. 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, 2023 (the 2023 Annual Report on Form 10-K) that was filed with the SEC on February 29, 2024 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.

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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 2023 Annual Report on Form 10-K. Those significant accounting policies remain unchanged at June 30, 2024.

RECENT ACCOUNTING PRONOUNCEMENTS

The following accounting pronouncements were adopted by the Company during the six months ended June 30, 2024, but did not have a material impact on the unaudited Consolidated Financial Statements.

•ASU No. 2023-01, Leases (Topic 842) — Common Control Agreements

•ASU No. 2023-02, Investments — Equity Method and Joint Ventures (Topic 323) Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method

There were no other applicable material accounting pronouncements adopted by the Company since December 31, 2023.

Accounting Guidance Pending Adoption as of June 30, 2024

ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07): In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07 to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. Adoption is required retrospectively for all prior periods presented in the financial statements. The Company is currently evaluating this update to determine the impact on the Company’s disclosures.

ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09): In December 2023, the FASB issued ASU 2023-09 to enhance the transparency and decision usefulness of income tax disclosures primarily related to the effective tax rate reconciliation and income taxes paid. The amendments are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating this update to determine the impact on the Company’s disclosures.

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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 June 30, Six Months Ended June 30,
(Dollars in thousands) 2024 2023 2024 2023
Bailment fees $ 18,819 $ 9,385 $ 33,783 $ 18,069
Interchange fees 3,971 3,993 7,724 7,879
Other card and ATM fees 1,085 1,052 2,037 1,843
Total credit/debit card and ATM income $ 23,875 $ 14,430 $ 43,544 $ 27,791

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 June 30, Six Months Ended June 30,
(Dollars in thousands) 2024 2023 2024 2023
Trust fees $ 26,143 $ 21,936 $ 48,004 $ 42,452
Wealth management and advisory fees 11,463 10,443 22,530 20,403
Total investment management and fiduciary income $ 37,606 $ 32,379 $ 70,534 $ 62,855

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 June 30, Six Months Ended June 30,
(Dollars in thousands) 2024 2023 2024 2023
Service fees $ 4,522 $ 4,315 $ 8,884 $ 8,451
Return and overdraft fees 1,648 1,720 3,448 3,367
Other deposit service fees 326 242 651 498
Total deposit service charges $ 6,496 $ 6,277 $ 12,983 $ 12,316

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 June 30, Six Months Ended June 30,
(Dollars in thousands) 2024 2023 2024 2023
Managed service fees $ 5,861 $ 5,216 $ 11,447 $ 10,015
Currency preparation 1,924 1,342 3,599 2,624
ATM loss protection 884 647 1,743 1,295
Capital markets revenue 3,378 1,710 6,379 4,589
Miscellaneous products and services 4,728 1,616 6,010 1,259
Total other income $ 16,775 $ 10,531 $ 29,178 $ 19,782

Other income consists of managed service fees, which are primarily courier fees related to treasury management and are partially offset in noninterest expense, 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.

Arrangements with multiple performance obligations

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 June 30, Six Months Ended June 30,
(Dollars and shares in thousands, except per share data) 2024 2023 2024 2023
Numerator:
Net income attributable to WSFS $ 69,273 $ 68,678 $ 135,034 $ 131,082
Denominator:
Weighted average basic shares 59,833 61,348 60,093 61,429
Dilutive potential common shares 126 66 144 97
Weighted average fully diluted shares 59,959 61,414 $ 60,237 $ 61,526
Earnings per share:
Basic $ 1.16 $ 1.12 $ 2.25 $ 2.13
Diluted $ 1.16 $ 1.12 $ 2.24 $ 2.13
Outstanding common stock equivalents having no dilutive effect 3 98 2 22

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 and performance stock units under 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.

June 30, 2024
(Dollars in thousands) Amortized Cost Gross<br>Unrealized<br> Gain Gross<br>Unrealized<br> Loss Allowance for Credit Losses Fair<br>Value
Available-for-Sale Debt Securities
Collateralized mortgage obligation (CMO) $ 550,076 $ 193 $ 100,871 $ — $ 449,398
Fannie Mae (FNMA) mortgage-backed securities (MBS) 3,430,171 136 558,186 — 2,872,121
Freddie Mac (FHLMC) MBS 122,622 — 13,410 — 109,212
Ginnie Mae (GNMA) MBS 47,310 1 4,062 — 43,249
Government-sponsored enterprises (GSE) agency notes 224,154 — 46,221 — 177,933
$ 4,374,333 $ 330 $ 722,750 $ — $ 3,651,913
Held-to-Maturity Debt Securities(1)
FNMA MBS $ 853,910 $ — $ 106,377 $ — $ 747,533
State and political subdivisions 184,951 527 3,336 7 182,135
$ 1,038,861 $ 527 $ 109,713 $ 7 $ 929,668

(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 $110.6 million at June 30, 2024, 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, 2023
(Dollars in thousands) Amortized Cost Gross<br>Unrealized<br> Gain Gross<br>Unrealized<br> Loss Allowance for Credit Losses Fair<br>Value
Available-for-Sale Debt Securities
CMO $ 560,952 $ — $ 96,333 $ — $ 464,619
FNMA MBS 3,544,762 162 502,574 — 3,042,350
FHLMC MBS 126,856 — 11,324 — 115,532
GNMA MBS 46,333 6 2,999 — 43,340
GSE agency notes 225,439 — 44,743 — 180,696
$ 4,504,342 $ 168 $ 657,973 $ — $ 3,846,537
Held-to-Maturity Debt Securities(1)
FNMA MBS $ 872,653 $ — $ 74,332 $ — $ 798,321
State and political subdivisions 185,912 2,665 959 8 187,610
$ 1,058,565 $ 2,665 $ 75,291 $ 8 $ 985,931

(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 $120.4 million at December 31, 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.

The scheduled maturities of available-for-sale debt securities at June 30, 2024 and December 31, 2023 are presented in the table below:

Available-for-Sale
Amortized Fair
(Dollars in thousands) Cost Value
June 30, 2024 (1)
Within one year $ 17,032 $ 16,616
After one year but within five years 118,845 111,923
After five years but within ten years 520,143 435,930
After ten years 3,718,313 3,087,444
$ 4,374,333 $ 3,651,913
December 31, 2023 (1)
Within one year $ — $ —
After one year but within five years 86,224 82,387
After five years but within ten years 569,956 485,593
After ten years 3,848,162 3,278,557
$ 4,504,342 $ 3,846,537

(1)Actual maturities could differ from contractual maturities.

As of June 30, 2024, the Company’s available-for-sale investment securities consisted of 982 securities, 973 of which were in an unrealized loss position.

As of June 30, 2024, 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 June 30, 2024 and December 31, 2023, 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 June 30, 2024 and December 31, 2023 are presented in the table below:

Held-to-Maturity
Amortized Fair
(Dollars in thousands) Cost Value
June 30, 2024 (1)
Within one year $ — $ —
After one year but within five years 13,255 12,876
After five years but within ten years 47,748 46,336
After ten years 977,858 870,456
$ 1,038,861 $ 929,668
December 31, 2023 (1)
Within one year $ — $ —
After one year but within five years 10,932 10,856
After five years but within ten years 46,489 46,246
After ten years 1,001,144 928,829
$ 1,058,565 $ 985,931

(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 5.7 years at June 30, 2024.

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 $2.9 billion and $3.3 billion were pledged as collateral for investment sweep repurchase agreements, municipal deposits, and other obligations as of June 30, 2024 and December 31, 2023, respectively.

During the six months ended June 30, 2024 and 2023, the Company had no sales of debt securities categorized as available-for-sale.

As of June 30, 2024 and December 31, 2023, the Company's debt securities portfolio had remaining unamortized premiums of $52.4 million and $56.9 million, respectively, and unaccreted discounts of $19.4 million and $20.9 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 June 30, 2024.

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 $ — $ — $ 439,041 $ 100,871 $ 439,041 $ 100,871
FNMA MBS 23,249 237 2,836,351 557,949 2,859,600 558,186
FHLMC MBS 6 — 109,206 13,410 109,212 13,410
GNMA MBS 2,938 96 39,086 3,966 42,024 4,062
GSE agency notes — — 177,933 46,221 177,933 46,221
$ 26,193 $ 333 $ 3,601,617 $ 722,417 $ 3,627,810 $ 722,750

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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, 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 $ — $ — $ 464,619 $ 96,333 $ 464,619 $ 96,333
FNMA MBS 9,068 125 3,026,520 502,449 3,035,588 502,574
FHLMC MBS — — 115,525 11,324 115,525 11,324
GNMA MBS 10,543 217 31,681 2,782 42,224 2,999
GSE agency notes — — 180,696 44,743 180,696 44,743
$ 19,611 $ 342 $ 3,819,041 $ 657,631 $ 3,838,652 $ 657,973

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 June 30, 2024.

At June 30, 2024 and December 31, 2023, held-to-maturity debt securities had an amortized cost basis of $1.0 billion and $1.1 billion, respectively. 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 non-government and non-agency securities through credit ratings. The following table summarizes the amortized cost of debt securities held-to-maturity as of June 30, 2024, aggregated by credit quality indicator:

(Dollars in thousands) FNMA MBS State and political subdivisions
A+ rated or higher $ — $ 184,951
Not rated 853,910 —
Ending balance $ 853,910 $ 184,951

The following table summarizes the amortized cost of debt securities held-to-maturity as of December 31, 2023, aggregated by credit quality indicator:

(Dollars in thousands) FNMA MBS State and political subdivisions
A+ rated or higher $ — $ 185,912
Not rated 872,653 —
Ending balance $ 872,653 $ 185,912

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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 debt securities for the six months ended June 30, 2024 and 2023. The following table presents the activity in the allowance for credit losses for state and political subdivisions debt securities for the three and six months ended June 30, 2024 and 2023:

Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2024 2023 2024 2023
Allowance for credit losses:
Beginning balance $ 8 $ 9 $ 8 $ 10
Recovery of credit losses (1) (1) (1) (2)
Ending balance $ 7 $ 8 $ 7 $ 8

Accrued interest receivable of $3.6 million and $3.7 million as of June 30, 2024 and December 31, 2023, 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 June 30, 2024 and December 31, 2023.

Equity Investments

The Company had equity investments of $16.8 million and $17.4 million as of June 30, 2024 and December 31, 2023, respectively.

During the three and six months ended June 30, 2024, the Company recognized realized gains of $2.1 million related to our equity investments.

During the three and six months ended June 30, 2023, the Company recognized $0.4 million and $1.7 million, respectively, of net losses 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) June 30, 2024 December 31, 2023
Commercial and industrial $ 2,639,152 $ 2,540,070
Owner-occupied commercial 1,940,677 1,886,087
Commercial mortgages 4,034,818 3,801,180
Construction 879,217 1,035,530
Commercial small business leases 643,520 623,622
Residential(1) 900,384 870,705
Consumer(2) 2,106,433 2,012,134
13,144,201 12,769,328
Less:
Allowance for credit losses 198,253 186,126
Net loans and leases $ 12,945,948 $ 12,583,202

(1) Includes reverse mortgages at fair value of $2.8 million at June 30, 2024 and December 31, 2023.

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

Accrued interest receivable on loans and leases was $72.7 million and $69.8 million at June 30, 2024 and December 31, 2023, 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 six months ended June 30, 2024 and 2023. The increase was primarily due to the impacts of the economic uncertainty and forecast and net loan growth.

(Dollars in thousands) Commercial and Industrial Owner-occupied<br>Commercial Commercial<br>Mortgages Construction Commercial Small Business Leases Residential(1) Consumer(2) Total
Three months ended June 30, 2024
Allowance for credit losses
Beginning balance $ 55,902 $ 10,569 $ 36,797 $ 10,959 $ 15,459 $ 5,407 $ 57,536 $ 192,629
Charge-offs (1,906) — (4,907) — (4,888) (51) (5,820) (17,572)
Recoveries 1,736 4 102 — 831 43 665 3,381
Provision 784 (905) 14,839 (1,761) 4,816 (342) 2,384 19,815
Ending balance $ 56,516 $ 9,668 $ 46,831 $ 9,198 $ 16,218 $ 5,057 $ 54,765 $ 198,253
Six months ended June 30, 2024
Allowance for credit losses
Beginning balance $ 49,394 $ 10,719 $ 36,055 $ 10,762 $ 15,170 $ 5,483 $ 58,543 $ 186,126
Charge-offs (2,382) — (4,932) — (9,740) (101) (12,276) (29,431)
Recoveries 3,502 205 104 — 1,422 132 1,240 6,605
Provision 6,002 (1,256) 15,604 (1,564) 9,366 (457) 7,258 34,953
Ending balance $ 56,516 $ 9,668 $ 46,831 $ 9,198 $ 16,218 $ 5,057 $ 54,765 $ 198,253
Period-end allowance allocated to:
Loans evaluated on an individual basis $ 8,055 $ — $ — $ — $ — $ — $ — $ 8,055
Loans evaluated on a collective basis 48,461 9,668 46,831 9,198 16,218 5,057 54,765 190,198
Ending balance $ 56,516 $ 9,668 $ 46,831 $ 9,198 $ 16,218 $ 5,057 $ 54,765 $ 198,253
Period-end loan balances:
Loans evaluated on an individual basis $ 39,217 $ 4,260 $ 8,991 $ 3,887 $ — $ 8,300 $ 2,838 $ 67,493
Loans evaluated on a collective basis 2,599,935 1,936,417 4,025,827 875,330 643,520 889,273 2,103,595 13,073,897
Ending balance $ 2,639,152 $ 1,940,677 $ 4,034,818 $ 879,217 $ 643,520 $ 897,573 $ 2,106,433 $ 13,141,390

(1)Period-end loan balance excludes reverse mortgages at fair value of $2.8 million.

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

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(Dollars in thousands) Commercial and Industrial Owner -<br>occupied<br>Commercial Commercial<br>Mortgages Construction Commercial Small Business Leases Residential(1) Consumer(2) Total
Three months ended June 30, 2023
Allowance for credit losses
Beginning balance $ 53,473 $ 6,056 $ 30,114 $ 9,672 $ 9,236 $ 5,327 $ 55,284 $ 169,162
Charge-offs (6,453) (184) — — (3,906) (33) (5,298) (15,874)
Recoveries 1,814 31 1 1 400 113 390 2,750
Provision 3,566 432 1,822 (445) 4,653 (364) 6,167 15,831
Ending balance $ 52,400 $ 6,335 $ 31,937 $ 9,228 $ 10,383 $ 5,043 $ 56,543 $ 171,869
Six months ended June 30, 2023
Allowance for loan losses
Beginning balance $ 49,526 $ 6,019 $ 21,473 $ 6,987 $ 9,868 $ 4,668 $ 53,320 $ 151,861
Charge-offs (13,016) (184) — — (6,805) (33) (9,502) (29,540)
Recoveries 2,515 36 3 531 915 156 549 4,705
Provision 13,375 464 10,461 1,710 6,405 252 12,176 44,843
Ending balance $ 52,400 $ 6,335 $ 31,937 $ 9,228 $ 10,383 $ 5,043 $ 56,543 $ 171,869
Period-end allowance allocated to:
Loans evaluated on an individual basis $ 1,953 $ — $ — $ — $ — $ — $ — $ 1,953
Loans evaluated on a collective basis 50,447 6,335 31,937 9,228 10,383 5,043 56,543 169,916
Ending balance $ 52,400 $ 6,335 $ 31,937 $ 9,228 $ 10,383 $ 5,043 $ 56,543 $ 171,869
Period-end loan balances:
Loans evaluated on an individual basis $ 18,367 $ 3,979 $ 7,515 $ 741 $ — $ 6,491 $ 2,175 $ 39,268
Loans evaluated on a collective basis 2,605,356 1,879,076 3,545,285 954,483 590,063 820,259 1,903,044 12,297,566
Ending balance $ 2,623,723 $ 1,883,055 $ 3,552,800 $ 955,224 $ 590,063 $ 826,750 $ 1,905,219 $ 12,336,834

(1)Period-end loan balance excludes reverse mortgages at fair value of $3.1 million.

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

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The following tables show nonaccrual and past due loans presented at amortized cost at the date indicated:

June 30, 2024
(Dollars in thousands) 30–89 Days<br>Past Due and<br>Still <br>Accruing Greater <br>Than<br>90 Days<br>Past Due and<br>Still Accruing Total Past<br>Due<br>And Still<br>Accruing Accruing<br>Current<br>Balances Nonaccrual Loans With No Allowance Nonaccrual<br>Loans With An Allowance Total<br>Loans
Commercial and industrial $ 4,456 $ 759 $ 5,215 $ 2,594,707 $ 13,411 $ 25,819 $ 2,639,152
Owner-occupied commercial 5,196 — 5,196 1,931,542 3,939 — 1,940,677
Commercial mortgages 1,674 46 1,720 4,024,109 8,989 — 4,034,818
Construction — — — 875,330 3,887 — 879,217
Commercial small business leases 10,206 50 10,256 633,264 — — 643,520
Residential(1) 4,587 8 4,595 887,892 5,086 — 897,573
Consumer(2) 14,040 8,935 22,975 2,080,555 2,903 — 2,106,433
Total $ 40,159 $ 9,798 $ 49,957 $ 13,027,399 $ 38,215 $ 25,819 $ 13,141,390
% of Total Loans 0.31 % 0.07 % 0.38 % 99.13 % 0.29 % 0.20 % 100 %

(1)Residential accruing current balances excludes reverse mortgages at fair value of $2.8 million.

(2)Includes $11.9 million of delinquent, but still accruing, U.S. government-guaranteed student loans that carry little risk of credit loss.

December 31, 2023
(Dollars in thousands) 30–89 Days<br>Past Due and<br>Still <br>Accruing Greater <br>Than<br>90 Days<br>Past Due and<br>Still Accruing Total Past<br>Due<br>And Still<br>Accruing Accruing<br>Current<br>Balances Nonaccrual Loans With No Allowance(1) Nonaccrual<br>Loans With An Allowance Total<br>Loans
Commercial and industrial $ 1,630 $ 293 $ 1,923 $ 2,518,934 $ 13,645 $ 5,568 $ 2,540,070
Owner-occupied commercial 1,786 487 2,273 1,878,952 4,862 — 1,886,087
Commercial mortgages 1,190 — 1,190 3,777,698 22,292 — 3,801,180
Construction — — — 1,022,913 12,617 — 1,035,530
Commercial small business leases 6,697 772 7,469 616,153 — — 623,622
Residential(2) 9,261 — 9,261 856,055 2,579 — 867,895
Consumer(3) 15,249 10,032 25,281 1,984,407 2,446 — 2,012,134
Total $ 35,813 $ 11,584 $ 47,397 $ 12,655,112 $ 58,441 $ 5,568 $ 12,766,518
% of Total Loans 0.28 % 0.09 % 0.37 % 99.13 % 0.46 % 0.04 % 100 %

(1)Excludes nonaccruing loans held-for-sale.

(2)Residential accruing current balances excludes reverse mortgages, at fair value of $2.8 million.

(3)Includes $14.5 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 June 30, 2024 and December 31, 2023:

June 30, 2024 December 31, 2023
(Dollars in thousands) Property Equipment and other Property Equipment and other
Commercial and industrial(1) $ 30,421 $ 8,809 $ 17,230 $ 1,983
Owner-occupied commercial 3,939 — 4,862 —
Commercial mortgages 8,989 — 22,292 —
Construction 3,887 — 12,617 —
Residential(2) 5,086 — 2,579 —
Consumer(3) 2,903 — 2,446 —
Total $ 55,225 $ 8,809 $ 62,026 $ 1,983

(1)Excludes nonaccruing loans held-for-sale in 2023.

(2)Excludes reverse mortgages at fair value.

(3)Includes home equity lines of credit.

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As of June 30, 2024, there were 34 residential loans and 14 commercial loans in the process of foreclosure. The total outstanding balance on these loans was $5.4 million and $3.5 million, respectively. As of December 31, 2023, there were 31 residential loans and 9 commercial loans in the process of foreclosure. The total outstanding balance on these loans was $3.2 million and $1.1 million, respectively. Loan workout and other real estate owned (OREO) expenses (recoveries) were $0.3 million and $(0.1) million during the three and six months ended June 30, 2024, respectively, and $0.2 million and $0.3 million during three and six months ended June 30, 2023, 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.

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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 June 30, 2024.

Term Loans Amortized Cost Basis by Origination Year(1)
(Dollars in thousands) 2024 2023 2022 2021 2020 Prior Revolving loans amortized cost basis Revolving loans converted to term Total
Commercial and industrial:
Risk Rating
Pass $ 342,046 $ 716,383 $ 411,996 $ 153,043 $ 178,489 $ 334,222 $ 9,499 $ 247,094 $ 2,392,772
Special mention 3,088 1,519 2,857 — — 1,524 — 14,892 23,880
Substandard or Lower 52,436 47,126 54,201 6,844 5,333 42,762 29 13,769 222,500
$ 397,570 $ 765,028 $ 469,054 $ 159,887 $ 183,822 $ 378,508 $ 9,528 $ 275,755 $ 2,639,152
Current-period gross writeoffs $ — $ 74 $ 134 $ 151 $ 206 $ 1,817 $ — $ — $ 2,382
Owner-occupied commercial:
Risk Rating
Pass $ 148,343 $ 327,387 $ 217,530 $ 238,638 $ 177,313 $ 454,474 $ — $ 210,962 $ 1,774,647
Special mention — 248 20,831 1,379 25,932 21,554 — 1,554 71,498
Substandard or Lower 493 693 20,516 10,811 5,382 44,714 — 11,923 94,532
$ 148,836 $ 328,328 $ 258,877 $ 250,828 $ 208,627 $ 520,742 $ — $ 224,439 $ 1,940,677
Current-period gross writeoffs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Commercial mortgages:
Risk Rating
Pass $ 276,251 $ 779,662 $ 568,431 $ 446,777 $ 415,596 $ 969,561 $ — $ 434,855 $ 3,891,133
Special mention — 33,637 571 4,886 1,797 2,159 — 14,515 57,565
Substandard or Lower 18,306 7,249 999 956 25,456 32,416 — 738 86,120
$ 294,557 $ 820,548 $ 570,001 $ 452,619 $ 442,849 $ 1,004,136 $ — $ 450,108 $ 4,034,818
Current-period gross writeoffs $ — $ 25 $ — $ — $ — $ 4,907 $ — $ — $ 4,932
Construction:
Risk Rating
Pass $ 191,277 $ 322,283 $ 193,905 $ 25,024 $ 89 $ 4,438 $ — $ 93,264 $ 830,280
Special mention 8,057 — 3,313 — — — — — 11,370
Substandard or Lower 9,128 23,706 — 4,042 — 145 — 546 37,567
$ 208,462 $ 345,989 $ 197,218 $ 29,066 $ 89 $ 4,583 $ — $ 93,810 $ 879,217
Current-period gross writeoffs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Commercial small business leases:
Risk Rating
Performing $ 137,975 $ 225,819 $ 156,005 $ 78,843 $ 26,664 $ 18,214 $ — $ — $ 643,520
Nonperforming — — — — — — — — —
$ 137,975 $ 225,819 $ 156,005 $ 78,843 $ 26,664 $ 18,214 $ — $ — $ 643,520
Current-period gross writeoffs $ 11 $ 2,548 $ 3,955 $ 2,042 $ 846 $ 338 $ — $ — $ 9,740
Residential(2):
Risk Rating
Performing $ 67,721 $ 185,317 $ 65,007 $ 95,534 $ 56,120 $ 419,412 $ — $ — $ 889,111
Nonperforming — — 365 3,477 690 3,930 — — 8,462
$ 67,721 $ 185,317 $ 65,372 $ 99,011 $ 56,810 $ 423,342 $ — $ — $ 897,573
Current-period gross writeoffs $ — $ — $ — $ — $ — $ 101 $ — $ — $ 101
Consumer(3):
Risk Rating
Performing $ 149,512 $ 402,536 $ 507,860 $ 134,878 $ 94,424 $ 292,334 $ 515,249 $ 6,802 $ 2,103,595
Nonperforming — 249 — 270 352 227 1,576 164 2,838
$ 149,512 $ 402,785 $ 507,860 $ 135,148 $ 94,776 $ 292,561 $ 516,825 $ 6,966 $ 2,106,433
Current-period gross writeoffs $ 521 $ 1,662 $ 7,697 $ 1,573 $ 477 $ 346 $ — $ — $ 12,276

(1)Origination date represents the most recent underwriting of the loan which includes new relationships, renewals and extensions.

(2)Excludes reverse mortgages at fair value.

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

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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, 2023.

Term Loans Amortized Cost Basis by Origination Year(1)
(Dollars in thousands) 2023 2022 2021 2020 2019 Prior Revolving loans amortized cost basis Revolving loans converted to term Total
Commercial and industrial:
Risk Rating
Pass $ 716,848 $ 490,934 $ 180,343 $ 211,151 $ 90,522 $ 383,609 $ 8,785 $ 237,786 $ 2,319,978
Special mention 7,209 11,860 2,804 463 735 743 — 1,649 25,463
Substandard or Lower 72,993 54,024 5,951 10,224 22,046 17,906 — 11,485 194,629
$ 797,050 $ 556,818 $ 189,098 $ 221,838 $ 113,303 $ 402,258 $ 8,785 $ 250,920 $ 2,540,070
Current-period gross writeoffs $ — $ 568 $ 5,214 $ 1,747 $ 7,567 $ 11,557 $ — $ — $ 26,653
Owner-occupied commercial:
Risk Rating
Pass $ 346,908 $ 264,895 $ 251,262 $ 212,365 $ 194,153 $ 313,801 $ — $ 178,150 $ 1,761,534
Special mention 2,885 3,115 5,419 1,105 11,002 5,559 — 1,393 30,478
Substandard or Lower 996 18,865 11,109 6,787 8,019 35,330 — 12,969 94,075
$ 350,789 $ 286,875 $ 267,790 $ 220,257 $ 213,174 $ 354,690 $ — $ 192,512 $ 1,886,087
Current-period gross writeoffs $ — $ — $ — $ — $ 184 $ — $ — $ — $ 184
Commercial mortgages:
Risk Rating
Pass $ 847,137 $ 464,895 $ 526,280 $ 465,354 $ 486,855 $ 619,448 $ — $ 290,083 $ 3,700,052
Special mention 20,632 — 67 1,837 10,666 — — — 33,202
Substandard or Lower 9,862 1,153 1,047 13,837 14,352 12,212 — 15,463 67,926
$ 877,631 $ 466,048 $ 527,394 $ 481,028 $ 511,873 $ 631,660 $ — $ 305,546 $ 3,801,180
Current-period gross writeoffs $ — $ 83 $ — $ 217 $ — $ — $ — $ — $ 300
Construction:
Risk Rating
Pass $ 429,055 $ 319,958 $ 111,333 $ 3,030 $ 388 $ 7,016 $ — $ 87,741 $ 958,521
Special mention 28,718 19,769 8,227 — — — — — 56,714
Substandard or Lower 5,698 — 3,308 8,598 2,134 — — 557 20,295
$ 463,471 $ 339,727 $ 122,868 $ 11,628 $ 2,522 $ 7,016 $ — $ 88,298 $ 1,035,530
Current-period gross writeoffs $ — $ — $ 794 $ — $ — $ — $ — $ — $ 794
Commercial small business leases:
Risk Rating
Performing $ 260,348 $ 191,746 $ 103,428 $ 40,697 $ 15,411 $ 11,992 $ — $ — $ 623,622
Nonperforming — — — — — — — — —
$ 260,348 $ 191,746 $ 103,428 $ 40,697 $ 15,411 $ 11,992 $ — $ — $ 623,622
Current-period gross writeoffs $ 1,528 $ 7,250 $ 4,447 $ 1,454 $ 735 $ 227 $ — $ — $ 15,641
Residential(2):
Risk Rating
Performing $ 188,644 $ 67,358 $ 102,982 $ 57,273 $ 33,499 $ 412,099 $ — $ — $ 861,855
Nonperforming — 170 713 486 1,251 3,420 — — 6,040
$ 188,644 $ 67,528 $ 103,695 $ 57,759 $ 34,750 $ 415,519 $ — $ — $ 867,895
Current-period gross writeoffs $ 33 $ — $ — $ — $ — $ 8 $ — $ — $ 41
Consumer(3):
Risk Rating
Performing $ 391,580 $ 568,919 $ 153,930 $ 104,248 $ 44,996 $ 245,849 $ 494,663 $ 5,662 $ 2,009,847
Nonperforming — — 135 352 176 30 1,362 232 2,287
$ 391,580 $ 568,919 $ 154,065 $ 104,600 $ 45,172 $ 245,879 $ 496,025 $ 5,894 $ 2,012,134
Current-period gross writeoffs $ 1,790 $ 15,227 $ 4,411 $ 313 $ 198 $ 455 $ — $ — $ 22,394

(1)Origination date represents the most recent underwriting of the loan which includes new relationships, renewals and extensions.

(2)Excludes reverse mortgages at fair value.

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

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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 tables show the period-end amortized cost basis of troubled loans modified during the three and six months ended June 30, 2024 and 2023, disaggregated by portfolio segment and type of modification granted:

Three Months Ended June 30, 2024
(Dollars in thousands) Term Extension More-Than-Insignificant Payment Delay Combination- Term Extension and Payment Delay Total % of Total Loan Category
Commercial and industrial $ 30,075 $ 606 $ 92 $ 30,773 1.17 %
Owner-occupied commercial 493 — — 493 0.03 %
Commercial mortgages 83 — — 83 — %
Construction 10,620 — — 10,620 1.21 %
Consumer(1) 256 784 1,270 2,310 0.11 %
Total $ 41,527 $ 1,390 $ 1,362 $ 44,279 0.34 %
Six Months Ended June 30, 2024
(Dollars in thousands) Term Extension More-Than-Insignificant Payment Delay Combination- Term Extension and Payment Delay Total % of Total Loan Category
Commercial and industrial $ 61,803 $ 955 $ 805 $ 63,563 2.41 %
Owner-occupied commercial 493 — — 493 0.03 %
Commercial mortgages 83 — — 83 — %
Construction 10,620 — — 10,620 1.21 %
Consumer(1) 502 1,389 2,886 4,777 0.23 %
Total $ 73,501 $ 2,344 $ 3,691 $ 79,536 0.61 %

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

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Three months ended June 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 $ 8,819 $ — $ 10,164 $ — $ — $ 18,983 0.72 %
Owner-occupied commercial — — 1,062 — — 1,062 0.06 %
Commercial mortgages 9,468 — — — — 9,468 0.27 %
Construction 3,305 — — — — 3,305 0.35 %
Consumer(1) 172 720 1,967 — 75 2,934 0.15 %
Total $ 21,764 $ 720 $ 13,193 $ — $ 75 $ 35,752 0.29 %
Six Months Ended June 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) $ 21,530 $ — $ 10,164 $ — $ — $ 31,694 1.21 %
Owner-occupied commercial — — 1,062 144 — 1,206 0.06 %
Commercial mortgages 9,468 — — — — 9,468 0.27 %
Construction 3,305 — — — — 3,305 0.35 %
Consumer(2) 888 871 3,344 158 195 5,456 0.29 %
Total $ 35,191 $ 871 $ 14,570 $ 302 $ 195 $ 51,129 0.41 %

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

The following table describes the financial effect of the modifications made to troubled loans during the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30, 2024 Six Months Ended June 30, 2024
Term Extension(1) More-Than-Insignificant Payment Delay(2) Term Extension(1) More-Than-Insignificant Payment Delay(2)
Commercial and industrial 0.86 0.01% 1.01 0.01%
Owner-occupied commercial 0.54 — 0.54 —
Commercial mortgages 0.59 — 0.59 —
Construction 0.60 — 0.60 —
Consumer 0.48 0.02 0.47 0.03
Three Months Ended June 30, 2023 Six Months Ended June 30, 2023
--- --- --- --- ---
Term Extension(1) More-Than-Insignificant Payment Delay(2) Term Extension(1) Interest Rate Reduction(3) More-Than-Insignificant Payment Delay(2)
Commercial and industrial 1.11 0.08% 1.08 —% 0.08%
Owner-occupied commercial 1.34 0.01 1.29 2.57 0.01
Commercial mortgages 1.33 — 1.33 — —
Construction 0.25 — 0.25 — —
Consumer 0.44 0.02 4.35 2.65 0.04

(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 percentage of loans deferred over the total loan portfolio excluding reverse mortgages at fair value.

(3)Represents the weighted-average decrease in the contractual interest rate on the modified loans.

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As of June 30, 2024 and December 31, 2023, the Company had commitments to extend credit of $31.8 million and $18.4 million, respectively, 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.

The following table shows the amortized cost of loans that received a modification that had a payment default during the six months ended June 30, 2024 and were modified in the 12 months before default to borrowers experiencing financial difficulty. There were no loans that received a modification that had a payment default during the three months ended June 30, 2024 and were modified in the 12 months before default to borrowers experiencing financial difficulty. There were $0.9 million of C&I loans that received a term extension modification that had a payment default during the three and six months ended June 30, 2023 and were modified in the 12 months before default to borrowers experiencing financial difficulty.

Six Months Ended June 30, 2024
Term Extension More-Than-Insignificant Payment Delay Total
Commercial and industrial $ 3,870 $ 61 $ 3,931
Total $ 3,870 $ 61 $ 3,931

The Company closely monitors the performance of troubled loans to understand the effectiveness of its modification efforts. The following tables show the performance of loans that have been modified in the last 12 months as of June 30, 2024 and 2023:

June 30, 2024
(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 $ — $ — $ 83,960 $ 13,765 $ 97,725
Owner-occupied commercial — — 493 — 493
Commercial mortgages — — 15,432 83 15,515
Construction — — 10,620 — 10,620
Residential — — 40 165 205
Consumer(1) 1,034 339 7,054 95 8,522
Total $ 1,034 $ 339 $ 117,599 $ 14,108 $ 133,080

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

June 30, 2023
30-89 Days Past Due and Still Accruing 90+ Days Past Due and Still Accruing Accruing Current Balances Nonaccrual Loans Total
Commercial and industrial $ — $ — $ 30,301 $ 1,393 $ 31,694
Owner-occupied commercial — — 1,062 144 1,206
Commercial mortgages — — 9,468 — 9,468
Construction — — 3,305 — 3,305
Consumer(1) 358 101 4,997 — 5,456
Total $ 358 $ 101 $ 49,133 $ 1,537 $ 51,129

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

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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 21 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 Six months ended
(Dollars in thousands) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
Operating lease cost (1) $ 4,452 $ 4,723 $ 8,424 $ 9,516
Sublease income (29) (32) (61) (81)
Net lease cost $ 4,423 $ 4,691 $ 8,363 $ 9,435

(1)Includes variable lease cost and short-term lease cost.

Supplemental information related to operating leases was as follows:

(Dollars in thousands) June 30, 2024 December 31, 2023
Right-of-use assets $ 136,669 $ 130,601
Lease liabilities $ 160,068 $ 151,596
Lease term and discount rate
Weighted average remaining lease term (in years) 12.91 13.01
Weighted average discount rate 5.25 % 5.20 %

Maturities of operating lease liabilities were as follows:

(Dollars in thousands) June 30, 2024
Remaining in 2024 $ 9,423
2025 18,690
2026 17,945
2027 16,584
2028 16,601
After 2028 145,418
Total lease payments 224,661
Less: Interest (64,593)
Present value of lease liabilities $ 160,068

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Supplemental cash flow information related to operating leases was as follows:

Three months ended Six months ended
(Dollars in thousands) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 4,762 $ 5,134 $ 9,483 $ 10,194

As of June 30, 2024, 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 Six months ended
(Dollars in thousands) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
Direct financing leases:
Interest income on lease receivable $ 15,815 $ 13,136 $ 30,615 $ 25,518
Interest income on deferred fees and costs, net (1,890) (1,450) (3,682) (2,836)
Total direct financing lease net interest income $ 13,925 $ 11,686 $ 26,933 $ 22,682

Equipment leasing receivables relate to direct financing leases. The composition of the net investment in direct financing leases was as follows:

(Dollars in thousands) June 30, 2024 December 31, 2023
Lease receivables $ 745,572 $ 721,338
Unearned income (121,401) (114,341)
Deferred fees and costs 19,349 16,625
Net investment in direct financing leases $ 643,520 $ 623,622

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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 six months ended June 30, 2024, 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 six months ended June 30, 2024.

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

(Dollars in thousands) WSFS<br>Bank Wealth<br>Management Consolidated<br>Company
December 31, 2023 $ 753,586 $ 132,312 $ 885,898
Goodwill adjustments — — —
June 30, 2024 $ 753,586 $ 132,312 $ 885,898

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<br>Intangible<br>Assets Accumulated<br>Amortization Net<br>Intangible<br>Assets Amortization Period
June 30, 2024
Core deposits $ 104,751 $ (55,899) $ 48,852 10 years
Customer relationships 73,880 (20,871) 53,009 7-15 years
Loan servicing rights(1) 12,905 (7,383) 5,522 10-25 years
Tradename 2,900 — 2,900 indefinite
Total intangible assets $ 194,436 $ (84,153) $ 110,283
December 31, 2023
Core deposits $ 104,751 $ (50,754) $ 53,997 10 years
Customer relationships 73,880 (18,153) 55,727 7-15 years
Loan servicing rights(2) 12,613 (6,575) 6,038 10-25 years
Tradename 2,900 — 2,900 indefinite
Total intangible assets $ 194,144 $ (75,482) $ 118,662

(1)Includes impairment losses of $0.1 million and $0.2 million for the three and six months ended June 30, 2024, respectively.

(2)Includes impairment losses of less than $0.1 million for the year ended December 31, 2023.

The Company recognized amortization expense on intangible assets of $3.9 million and $7.9 million for the three and six months ended June 30, 2024, respectively, compared to $3.8 million and $7.7 million for the three and six months ended June 30, 2023, respectively.

The following table presents the estimated future amortization expense on definite life intangible assets:

(Dollars in thousands) June 30, 2024
Remaining in 2024 $ 8,426
2025 16,583
2026 15,877
2027 15,409
2028 14,582
Thereafter 36,506
Total $ 107,383

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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 Goodwill and 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 $1.6 million and $1.7 million at June 30, 2024 and December 31, 2023, respectively, and the value of its SBA loan servicing rights was $3.9 million and $4.3 million at June 30, 2024 and December 31, 2023, respectively. Changes in the value of the Company's servicing rights resulted in impairment losses of $0.1 million and $0.2 million for the three and six months ended June 30, 2024, respectively, and impairment losses of $0.2 million for the three and six months ended June 30, 2023. 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 June 30, 2024 or December 31, 2023. 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) June 30, 2024 December 31, 2023
Noninterest-bearing:
Noninterest demand $ 4,782,920 $ 4,917,297
Total noninterest-bearing $ 4,782,920 $ 4,917,297
Interest-bearing:
Interest-bearing demand $ 2,811,933 $ 2,935,530
Savings 1,537,516 1,610,143
Money market 5,174,905 5,175,123
Customer time deposits 1,983,807 1,784,317
Brokered deposits — 51,676
Total interest-bearing 11,508,161 11,556,789
Total deposits $ 16,291,081 $ 16,474,086

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11. INCOME TAXES

There were no unrecognized tax benefits as of June 30, 2024. 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 2020 through 2023 tax years are subject to examination as of June 30, 2024. The Company does not expect to record or realize any material unrecognized tax benefits during 2024.

The amortization of the low-income housing credit investments has been reflected as income tax expense of $1.9 million and $1.4 million for the three months ended June 30, 2024 and 2023, respectively, and $3.8 million and $2.7 million for the six months ended June 30, 2024 and 2023, respectively.

The amount of affordable housing tax credits, amortization, and tax benefits recorded as income tax expense for the three months ended were $1.7 million, $1.9 million, and $0.5 million, respectively. The amount of affordable housing tax credits, amortization, and tax benefits recorded as income tax expense for the six months ended June 30, 2024 were $3.4 million, $3.8 million and $1.1 million, respectively. The carrying value of the investment in affordable housing credits is $83.3 million at June 30, 2024, compared to $87.1 million at December 31, 2023 and is included in the Other assets line item on the unaudited Consolidated Statements of Financial Condition.

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.

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The following tables present financial instruments carried at fair value as of June 30, 2024 and December 31, 2023 by level in the valuation hierarchy (as described above):

June 30, 2024
(Dollars in thousands) Quoted<br>Prices in<br>Active<br>Markets for<br>Identical<br>Asset<br>(Level 1) Significant<br>Other<br>Observable<br>Inputs<br>(Level 2) Significant<br>Unobservable<br>Inputs<br>(Level 3) Total Fair<br>Value
Assets measured at fair value on a recurring basis:
Available-for-sale securities:
CMO $ — $ 449,398 $ — $ 449,398
FNMA MBS — 2,872,121 — 2,872,121
FHLMC MBS — 109,212 — 109,212
GNMA MBS — 43,249 — 43,249
GSE agency notes — 177,933 — 177,933
Other assets — 175,035 43 175,078
Total assets measured at fair value on a recurring basis $ — $ 3,826,948 $ 43 $ 3,826,991
Liabilities measured at fair value on a recurring basis:
Other liabilities $ — $ 160,873 $ 8,902 $ 169,775
Assets measured at fair value on a nonrecurring basis:
Other investments $ — $ — $ 14,320 $ 14,320
Other real estate owned — — 1,342 1,342
Loans held for sale — 54,608 — 54,608
Total assets measured at fair value on a nonrecurring basis $ — $ 54,608 $ 15,662 $ 70,270 December 31, 2023
--- --- --- --- --- --- --- --- ---
(Dollars in thousands) Quoted<br>Prices in<br>Active<br>Markets for<br>Identical<br>Asset<br>(Level 1) Significant<br>Other<br>Observable<br>Inputs<br>(Level 2) Significant<br>Unobservable<br>Inputs<br>(Level 3) Total Fair<br>Value
Assets measured at fair value on a recurring basis:
Available-for-sale securities:
CMO $ — $ 464,619 $ — $ 464,619
FNMA MBS — 3,042,350 — 3,042,350
FHLMC MBS — 115,532 — 115,532
GNMA MBS — 43,340 — 43,340
GSE agency notes — 180,696 — 180,696
Other assets — 153,569 78 153,647
Total assets measured at fair value on a recurring basis $ — $ 4,000,106 $ 78 $ 4,000,184
Liabilities measured at fair value on a recurring basis:
Other liabilities $ — $ 137,616 $ 14,026 $ 151,642
Assets measured at fair value on a nonrecurring basis
Other investments $ — $ — $ 15,206 $ 15,206
Other real estate owned — — 1,569 1,569
Loans held for sale — 29,268 — 29,268
Total assets measured at fair value on a nonrecurring basis $ — $ 29,268 $ 16,775 $ 46,043

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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, 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 price changes in orderly transactions for the identical or a similar investment of the same issuer during the reporting period.

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.

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, foreign exchange forward contracts, 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 foreign exchange forward contracts and 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.

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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) as well as equity method investments.

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).

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, foreign exchange forward contracts, 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.

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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 $6.5 million at June 30, 2024 and $7.3 million at December 31, 2023, 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).

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 June 30, 2024 and December 31, 2023:

(Dollars in thousands) June 30, 2024
Financial Instrument Fair Value Valuation Technique(s) Unobservable Input Range<br>(Weighted Average)
Other investments $ 14,320 Observed market comparable transactions Period of observed transactions December 2023
Other real estate owned 1,342 Fair market value of collateral Costs to sell 10.0%-20.0% (19.3%)
Other assets (Risk participation agreements purchased) 43 Credit Valuation Adjustment CDS Spread and Loss Given Default (LGD) CDS spread: 110 - 360 bps (191 bps)<br><br>LGD: –% - 30% (30%)
Other liabilities (Risk participation agreements sold) 2 Credit Valuation Adjustment CDS Spread and Loss Given Default (LGD) CDS spread: 1 - 250 bps (82 bps)<br><br>LGD: –% - 30% (30%)
Other liabilities (Financial derivative related to sales of certain Visa Class B shares) 8,900 Discounted cash flow Timing of Visa litigation resolution 3.00 years or 2Q 2027 (Dollars in thousands) December 31, 2023
--- --- --- --- --- ---
Financial Instrument Fair Value Valuation Technique(s) Unobservable Input Range<br>(Weighted Average)
Other investments $ 15,206 Observed market comparable transactions Period of observed transactions December 2023
Other real estate owned 1,569 Fair market value of collateral Costs to sell 10.0% - 20.0% (18.1%)
Other assets (Risk participation agreements purchased) 78 Credit Valuation Adjustment CDS Spread and Loss Given Default (LGD) CDS spread: 110 - 360 bps (195 bps)<br><br>LGD: –% - 30% (30%)
Other liabilities (Risk participation agreements sold) 3 Credit Valuation Adjustment CDS Spread and Loss Given Default (LGD) CDS spread: 1 - 250 bps (95 bps)<br><br>LGD: 30%
Other liabilities (Financial derivative related to sales of certain Visa Class B shares) 14,023 Discounted cash flow Timing of Visa litigation resolution 1.00 - 4.75 years (3.06 years or 4Q 2025)

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The book value and estimated fair value of the Company's financial instruments are as follows:

June 30, 2024 December 31, 2023
(Dollars in thousands) Fair Value<br>Measurement Book Value Fair Value Book Value Fair Value
Financial assets:
Cash, cash equivalents, and restricted cash Level 1 $ 1,021,716 $ 1,021,716 $ 1,092,900 $ 1,092,900
Investment securities available-for-sale Level 2 3,651,913 3,651,913 3,846,537 3,846,537
Investment securities held-to-maturity, net Level 2 1,038,854 929,668 1,058,557 985,931
Other investments Level 3 16,778 16,778 17,434 17,434
Loans, held for sale Level 2 54,608 54,608 29,268 29,268
Loans and leases, net(1) Level 3 12,945,948 12,887,446 12,583,202 12,514,431
Stock in FHLB of Pittsburgh Level 2 16,638 16,638 15,398 15,398
Accrued interest receivable Level 2 88,878 88,878 85,979 85,979
Other assets Levels 2, 3 175,078 175,078 153,647 153,647
Financial liabilities:
Deposits Level 2 $ 16,291,081 $ 16,175,575 $ 16,474,086 $ 16,449,198
Borrowed funds Level 2 1,142,255 1,134,269 895,076 912,760
Standby letters of credit Level 3 754 754 814 814
Accrued interest payable Level 2 56,684 56,684 46,684 46,684
Other liabilities Levels 2, 3 169,775 169,775 151,642 151,642

(1) Includes reverse mortgage loans.

At June 30, 2024 and December 31, 2023 the Company had no commitments to extend credit measured at fair value.

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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 June 30, 2024.

Fair Values of Derivative Instruments
(Dollars in thousands) Count Notional Balance Sheet Location Derivatives<br>(Fair Value)
Derivatives designated as hedging instruments:
Interest rate swaps 15 $ 1,200,000 Other assets $ 13,141
Total $ 1,200,000 $ 13,141
Derivatives not designated as hedging instruments:
Interest rate swaps $ 2,710,817 Other assets $ 159,901
Interest rate swaps 2,701,548 Other liabilities (159,901)
Interest rate lock commitments with customers 55,558 Other assets 906
Interest rate lock commitments with customers 145 Other liabilities (2)
Forward sale commitments 23,750 Other assets 80
Forward sale commitments 39,898 Other liabilities (97)
FX forwards 30,543 Other assets 1,007
FX forwards 20,470 Other liabilities (873)
Risk participation agreements sold 102,374 Other liabilities (2)
Risk participation agreements purchased 86,730 Other assets 43
Financial derivatives related to<br>sales of certain Visa Class B shares 73,811 Other liabilities (8,900)
Total derivatives $ 7,045,644 $ 5,303

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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, 2023.

Fair Values of Derivative Instruments
(Dollars in thousands) Count Notional Balance Sheet Location Derivatives<br>(Fair Value)
Derivatives designated as hedging instruments:
Interest rate swaps 9 $ 750,000 Other assets $ 15,578
Total $ 750,000 $ 15,578
Derivatives not designated as hedging instruments:
Interest rate swaps $ 2,428,306 Other assets $ 136,924
Interest rate swaps 2,383,443 Other liabilities (136,924)
Interest rate lock commitments with customers 34,651 Other assets 637
Forward sale commitments 1,000 Other assets 1
Forward sale commitments 37,348 Other liabilities (283)
FX forwards 15,812 Other assets 429
FX forwards 13,064 Other liabilities (409)
Risk participation agreements sold 103,648 Other liabilities (3)
Risk participation agreements purchased 116,804 Other assets 78
Financial derivatives related to<br>sales of certain Visa Class B shares 113,177 Other liabilities (14,023)
Total derivatives $ 5,997,253 $ 2,005

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 six months ended June 30, 2024 and June 30, 2023.

Amount of Loss Recognized in OCI on Derivative (Effective Portion) Amount of Loss Recognized in OCI on Derivative (Effective Portion) Location of Loss Reclassified from Accumulated OCI into Income (Effective Portion)
(Dollars in thousands) Three Months Ended June 30, Six Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships 2024 2023 2024 2023
Interest rate options $ (587) $ (1,475) $ (7,020) $ (1,143) Interest income
Total $ (587) $ (1,475) $ (7,020) $ (1,143)
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 June 30, Six Months Ended June 30,
Derivatives not designated as hedging instruments 2024 2023 2024 2023
Interest rate swaps and options $ 2,719 $ 1,531 $ 5,154 $ 3,971 Other income
Interest rate lock commitments with customers 4 (134) 256 287 Mortgage banking activities, net
Forward sale commitments 130 213 244 $ 66 Mortgage banking activities, net
FX forwards 121 13 280 28 Other income
Risk participation agreements (1) (17) (35) (14) Other income
Total $ 2,973 $ 1,606 $ 5,899 $ 4,338

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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.

As of June 30, 2024, the Company had 15 interest rate floors purchased at an aggregate premium of $23.4 million with an aggregate notional amount of $1.2 billion to hedge variable cash flows associated with a variable rate loan pool through the second quarter of 2027. 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 June 30, 2024, the Company determined the cash flow hedges remain highly effective. During the three and six months ended June 30, 2024, $1.0 million and $1.9 million, respectively, of amortization expense on the premium was reclassified into interest income compared to $0.1 million and $0.2 million during the three and six months ended June 30, 2023, respectively. 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.

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 June 30, 2024, 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.

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 June 30, 2024, there were no fair value adjustments related to credit quality.

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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 June 30, 2024 and December 31, 2023, there were 175 and 188 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 $0.7 billion at June 30, 2024 and December 31, 2023. At June 30, 2024, the swap transactions remaining maturities ranged from under 1 year to 11 years. At June 30, 2024, none of these customer swaps were in a paying position to third parties, with our swap guarantees having a fair value of $6.5 million. At December 31, 2023, none of these customer swaps were in a paying position to third parties, with the Company's swap guarantees having a fair value of $7.3 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 $2.3 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 June 30, 2024, it could have been required to settle its obligations under the agreements at the termination value.

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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. Bryn Mawr Trust® is our predominant Private Wealth Management brand, providing advisory, investment management and trustee services to institutions, affluent and high-net-worth individuals. Private Wealth Management, which includes Private Banking, serves high-net-worth clients and institutions by providing trustee and advisory services, financial planning, customized investment strategies, brokerage products such as annuities and customized banking services including 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 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.

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.

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The following tables show segment results for the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30, 2024 Three Months Ended June 30, 2023
(Dollars in thousands) WSFS Bank Cash<br><br>Connect® Wealth<br>Management Total WSFS Bank Cash<br><br>Connect® Wealth<br>Management Total
Statements of Income
External customer revenues:
Interest income $ 259,387 $ — $ 5,850 $ 265,237 $ 236,405 $ — $ 5,364 $ 241,769
Noninterest income 22,640 31,000 37,958 91,598 14,089 19,992 32,790 66,871
Total external customer revenues 282,027 31,000 43,808 356,835 250,494 19,992 38,154 308,640
Inter-segment revenues:
Interest income 7,979 386 27,321 35,686 6,725 323 24,948 31,996
Noninterest income 8,488 478 264 9,230 7,261 495 94 7,850
Total inter-segment revenues 16,467 864 27,585 44,916 13,986 818 25,042 39,846
Total revenue 298,494 31,864 71,393 401,751 264,480 20,810 63,196 348,486
External customer expenses:
Interest expense 79,681 — 11,107 90,788 53,962 — 5,965 59,927
Noninterest expenses 110,637 23,942 21,189 155,768 108,147 14,538 18,568 141,253
Provision for credit losses 19,800 — 14 19,814 16,328 — (498) 15,830
Total external customer expenses 210,118 23,942 32,310 266,370 178,437 14,538 24,035 217,010
Inter-segment expenses:
Interest expense 27,707 4,294 3,685 35,686 25,271 3,851 2,874 31,996
Noninterest expenses 742 1,650 6,838 9,230 589 1,484 5,777 7,850
Total inter-segment expenses 28,449 5,944 10,523 44,916 25,860 5,335 8,651 39,846
Total expenses 238,567 29,886 42,833 311,286 204,297 19,873 32,686 256,856
Income before taxes $ 59,927 $ 1,978 $ 28,560 $ 90,465 $ 60,183 $ 937 $ 30,510 $ 91,630
Income tax provision 21,257 23,035
Consolidated net income 69,208 68,595
Net (loss) income attributable to noncontrolling interest (65) (83)
Net income attributable to WSFS $ 69,273 $ 68,678
Supplemental Information
Capital expenditures for the period ended $ 2,173 $ 123 $ 428 $ 2,724 $ 956 $ — $ — $ 956

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Six Months Ended June 30, 2024 Six Months Ended June 30, 2023
(Dollars in thousands) WSFS Bank Cash<br><br>Connect® Wealth<br>Management Total WSFS Bank Cash<br><br>Connect® Wealth<br>Management Total
Statements of Income
External customer revenues:
Interest income $ 515,520 $ — $ 11,339 $ 526,859 $ 457,690 $ — $ 10,462 $ 468,152
Noninterest income 38,860 57,350 71,245 167,455 28,239 38,171 63,588 129,998
Total external customer revenues 554,380 57,350 82,584 694,314 485,929 38,171 74,050 598,150
Inter-segment revenues:
Interest income 14,545 826 56,192 71,563 12,824 718 45,675 59,217
Noninterest income 15,761 913 471 17,145 14,161 956 199 15,316
Total inter-segment revenues 30,306 1,739 56,663 88,708 26,985 1,674 45,874 74,533
Total revenue 584,686 59,089 139,247 783,022 512,914 39,845 119,924 672,683
External customer expenses:
Interest expense 154,760 — 22,372 177,132 92,449 — 11,329 103,778
Noninterest expenses 217,269 45,877 41,694 304,840 209,096 28,038 37,164 274,298
Provision for credit losses 34,620 — 332 34,952 44,045 — 796 44,841
Total external customer expenses 406,649 45,877 64,398 516,924 345,590 28,038 49,289 422,917
Inter-segment expenses:
Interest expense 57,018 7,423 7,122 71,563 46,393 7,410 5,414 59,217
Noninterest expenses 1,384 3,059 12,702 17,145 1,155 2,830 11,331 15,316
Total inter-segment expenses 58,402 10,482 19,824 88,708 47,548 10,240 16,745 74,533
Total expenses 465,051 56,359 84,222 605,632 393,138 38,278 66,034 497,450
Income before taxes $ 119,635 $ 2,730 $ 55,025 $ 177,390 $ 119,776 $ 1,567 $ 53,890 $ 175,233
Income tax provision 42,459 43,976
Consolidated net income 134,931 131,257
Net income attributable to noncontrolling interest (103) 175
Net income attributable to WSFS $ 135,034 $ 131,082
Supplemental Information
Capital expenditures for the period ended $ 6,393 $ 123 $ 441 $ 6,957 $ 1,812 $ — $ — $ 1,812

The following table shows significant components of segment net assets as of June 30, 2024 and December 31, 2023:

June 30, 2024 December 31, 2023
(Dollars in thousands) WSFS Bank Cash<br><br>Connect® Wealth<br>Management Total WSFS Bank Cash<br><br>Connect® Wealth<br>Management Total
Statements of Financial Condition
Cash and cash equivalents $ 609,850 $ 371,122 $ 40,744 $ 1,021,716 $ 600,483 $ 443,431 $ 48,986 $ 1,092,900
Goodwill 753,586 — 132,312 885,898 753,586 — 132,312 885,898
Other segment assets 18,393,939 20,302 422,675 18,836,916 18,191,585 15,654 408,635 18,615,874
Total segment assets $ 19,757,375 $ 391,424 $ 595,731 $ 20,744,530 $ 19,545,654 $ 459,085 $ 589,933 $ 20,594,672

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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 Goodwill and 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 were two repurchases during the six months ended June 30, 2024 for an aggregate of $0.5 million and one repurchase for $0.8 million during the same period in 2023.

Unfunded Lending Commitments

At June 30, 2024 and December 31, 2023, the allowance for credit losses of unfunded lending commitments was $11.5 million and $12.1 million, respectively. A provision release of $0.3 million and $0.6 million was recognized during the three and six months ended June 30, 2024, respectively, compared to a provision expense of $0.4 million and $0.2 million during the three and six months ended June 30, 2023, 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<br>investment<br>securities<br>available-for-sale Net change<br>in investment securities<br>held-to-maturity Net<br>change in<br>defined<br>benefit<br>plan Net change in<br>fair value of<br>derivatives<br>used for cash<br>flow hedges Net change in equity method investments Total
Balance, March 31, 2024 $ (539,939) $ (87,854) $ (4,738) $ (4,836) $ 460 $ (636,907)
Other comprehensive (loss) income (9,100) — (2) (587) (40) (9,729)
Less: Amounts reclassified from accumulated other comprehensive loss — 3,808 (50) — — 3,758
Net current-period other comprehensive (loss) income (9,100) 3,808 (52) (587) (40) (5,971)
Balance, June 30, 2024 $ (549,039) $ (84,046) $ (4,790) $ (5,423) $ 420 $ (642,878)
Balance, March 31, 2023 $ (510,523) $ (104,338) $ (4,517) $ 400 $ 563 $ (618,415)
Other comprehensive (loss) income (40,367) — (7) (1,475) (101) (41,950)
Less: Amounts reclassified from accumulated other comprehensive loss — 4,393 (47) (40) — 4,306
Net current-period other comprehensive (loss) income (40,367) 4,393 (54) (1,515) (101) (37,644)
Balance, June 30, 2023 $ (550,890) $ (99,945) $ (4,571) $ (1,115) $ 462 $ (656,059)
(Dollars in thousands) Net change in<br>investment<br>securities<br>available-for-sale Net change<br>in investment securities<br>held-to-maturity Net<br>change in<br>defined<br>benefit<br>plan Net change in<br><br>fair value of<br><br>derivatives<br><br>used for cash<br><br>flow hedges(1) Net change in equity method investments Total
Balance, December 31, 2023 $ (499,932) $ (91,523) $ (4,614) $ 1,597 $ 481 $ (593,991)
Other comprehensive (loss) income (49,107) — (77) (7,020) (61) (56,265)
Less: Amounts reclassified from accumulated other comprehensive loss — 7,477 (99) — — 7,378
Net current-period other comprehensive (loss) income (49,107) 7,477 (176) (7,020) (61) (48,887)
Balance, June 30, 2024 $ (549,039) $ (84,046) $ (4,790) $ (5,423) $ 420 $ (642,878)
Balance, December 31, 2022 $ (563,533) $ (108,503) $ (4,482) $ 108 $ 566 $ (675,844)
Other comprehensive income (loss) 12,643 — 5 (1,143) (104) 11,401
Less: Amounts reclassified from accumulated other comprehensive loss — 8,558 (94) (80) — 8,384
Net current-period other comprehensive income (loss) 12,643 8,558 (89) (1,223) (104) 19,785
Balance, June 30, 2023 $ (550,890) $ (99,945) $ (4,571) $ (1,115) $ 462 $ (656,059)
(1)Includes amortization of net gain for cash flow hedges terminated as of April 1, 2020.

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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 June 30, Affected line item in unaudited Consolidated Statements of Income
(Dollars in thousands) 2024 2023
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 5,011 5,779 Net interest income
Income taxes (1,203) (1,386) Income tax provision
Net of tax 3,808 4,393
Amortization of defined benefit pension plan-related items:
Prior service credits (19) (19)
Actuarial gains (47) (43)
Total before tax (66) (62) Salaries, benefits and other compensation
Income taxes 16 15 Income tax provision
Net of tax (50) (47)
Net unrealized gains on terminated cash flow hedges:
Amortization of net unrealized gains to income during the period — (53) Interest and fees on loans and leases
Income taxes — 13 Income tax provision
Net of tax — (40)
Total reclassifications $ 3,758 $ 4,306
Six Months Ended June 30, Affected line item in unaudited Consolidated Statements of Operations
2024 2023
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 9,838 11,260 Net interest income
Income taxes (2,361) (2,702) Income tax provision
Net of tax 7,477 8,558
Amortization of defined benefit pension plan-related items:
Prior service credits (38) (38)
Actuarial gains (92) (86)
Total before tax (130) (124) Salaries, benefits and other compensation
Income taxes 31 30 Income tax provision
Net of tax (99) (94)
Net unrealized gains on terminated cash flow hedges:
Amortization of net unrealized gains to income during the period — (105) Interest and fees on loans and leases
Income taxes — 25 Income tax provision
Net of tax — (80)
Total reclassifications $ 7,378 $ 8,384

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 $20.7 billion in assets and $84.9 billion in assets under management (AUM) and assets under administration (AUA) at June 30, 2024, 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 192 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 June 30, 2024, 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®).

Our banking business had a total loan and lease portfolio of $13.1 billion as of June 30, 2024, which was funded primarily through commercial relationships and consumer and customer generated deposits. We have built a $10.1 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 $1.7 billion in total cash and services approximately 33,100 non-bank ATMs and 9,400 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 579 owned or branded ATMs for WSFS Bank Customers, which is one of the largest branded ATM networks in our market.

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. Combined, these businesses had $84.9 billion of AUM and AUA at June 30, 2024.

Bryn Mawr Trust® is our predominant Private Wealth Management brand, providing advisory, investment management and trustee services to institutions, affluent and high-net-worth individuals. Private Wealth Management serves high-net-worth clients and institutions by providing trustee and advisory services, financial planning, customized investment strategies, brokerage products such as annuities and traditional banking services such as credit and deposit products tailored to its clientele. Private Wealth Management includes businesses that operate under the bank’s charter, 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.

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

As of June 30, 2024, we service our customers primarily from 114 offices located in Pennsylvania (57), Delaware (39), New Jersey (14), Florida (2) 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 Six Months Ended June 30, 2024

•Three Months Ended June 30, 2024

◦Noninterest income was $91.6 million, or 34.38% of total net revenue, and included:

▪As a result of the Visa Class B exchange program, (i) a $3.4 million gain resulting from the reduction of our Visa B derivative liability established from our previous sale of 360,000 shares in 2Q 2020 and (ii) a $0.1 million gain on the liquidation of a portion of our remaining equity investment.

▪Post-close distributions of $2.0 million related to the sale of our equity interests in Spring EQ that occurred in the fourth quarter of 2023.

◦WSFS repurchased 897,461 shares of common stock under the Company's share repurchase programs at an average price of $44.20 per share, for an aggregate purchase price of approximately $39.7 million.

◦The Board of Directors approved a $0.15 per share quarterly cash dividend.

◦During the quarter, we held our second annual "We Stand for Service Day", during which nearly 1,500 of our Associates volunteered at more than 130 community organizations across the Greater Philadelphia, Southern New Jersey and Delaware region.

◦In July 2024, Moody's Investor Services reaffirmed the Company's investment-grade issuer rating of Baa2 with a stable outlook. The ratings reaffirmation reflects the benefits of our diversified business model, our strong capital levels, earnings, liquidity, and asset quality.

◦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 13.07% and 13.29%, respectively, and total risk-based capital of 14.32% and 15.34%, respectively.

•Six Months Ended June 30, 2024

◦Net loans and leases grew $362.7 million, or 6% annualized, compared to December 31, 2023.

◦The allowance for credit losses (ACL) on loans and leases increased $12.1 million when compared to December 31, 2023, primarily due to higher provision on our commercial mortgages portfolio.

◦During the six months ended June 30, 2024, WSFS had capital returns of $78.7 million to stockholders, comprised of $60.7 million from share repurchases and $18.1 million from quarterly dividends.

◦WSFS recorded a $0.9 million expense for the final FDIC Special Assessment received during the year.

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FINANCIAL CONDITION

Total assets increased $149.9 million to $20.7 billion at June 30, 2024 compared to December 31, 2023. This increase is primarily comprised of the following:

•Net loans and leases held for investment increased $362.7 million, primarily due to increases of $99.1 million in commercial and industrial and $94.3 million in consumer loans primarily from Spring EQ home equity loans. Commercial mortgages increased $233.6 million with a corresponding decrease of $156.3 million in construction due to the migration of construction loans to permanent commercial mortgages. Additionally, owner-occupied commercial loans increased $54.6 million and residential mortgage loans increased $29.7 million.

•Other assets increased $59.5 million, primarily due to increases of $23.7 million in derivatives from our capital markets business due to changes in fair value, $13.1 million in our deferred tax asset primarily related to unrealized losses on available-for-sale securities, and $8.4 million in lease right of use asset due to additional leases entered into in 2024.

•Total investment securities decreased $214.3 million:

◦Investment securities, available-for-sale decreased $194.6 million, primarily due to repayments, maturities and calls of $169.5 million and decreased market values of $64.6 million, partially offset by purchases of $41.1 million.

◦Investment securities, held-to-maturity decreased $19.7 million, primarily due to repayments, maturities and calls of $28.6 million, partially offset by $7.3 million of amortization of net unrealized losses on available-for-sale securities transferred to held-to-maturity.

•Total cash and cash equivalents decreased $71.2 million, primarily due to a shift to external funding sources in our Cash Connect® business.

•Goodwill and intangible assets decreased $8.4 million due to scheduled amortization of intangible assets.

Total liabilities increased $141.3 million to $18.3 billion at June 30, 2024 compared to December 31, 2023. This increase is primarily comprised of the following:

•Other borrowed funds increased $224.7 million, primarily due to $235.0 million borrowed from the Bank Term Funding Program (BTFP) as a result of favorable terms and pricing.

•Other liabilities increased $67.1 million, primarily due to increases of $70.2 million in collateral held on derivatives and derivative liabilities, partially offset by a decrease of $5.1 million due to the reduction of our Visa B derivative liability.

•Customer deposits decreased $131.3 million primarily due to transactional accounts, which drive notable inflows and outflows of deposits in our Trust and Commercial businesses, offset by growth in our Private Wealth Management and Consumer businesses.

For further information, see "Notes to the Consolidated Financial Statements (Unaudited).

LIQUIDITY AND CAPITAL RESOURCES

Capital Resources

Stockholders’ equity of WSFS increased $11.9 million between December 31, 2023 and June 30, 2024. This increase was primarily due to $135.0 million of earnings, partially offset by $60.7 million from the repurchase of shares of common stock under our stock repurchase plan, an increase of $48.9 million in accumulated other comprehensive loss driven by market value decreases on available-for-sale mortgage-backed securities, and the payment of dividends on our common stock of $18.1 million.

During the three months ended June 30, 2024, our Board of Directors approved a quarterly cash dividend of $0.15 per share of common stock. This dividend will be paid on August 23, 2024 to stockholders of record as of August 9, 2024.

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Book value per share of common stock was $42.01 at June 30, 2024, an increase of $1.08 from $40.93 at December 31, 2023. Tangible book value per share of common stock (a non-GAAP financial measure) was $25.20 at June 30, 2024, an increase of $0.87 from $24.33 at December 31, 2023.  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 June 30, 2024:

Consolidated<br>Capital Minimum For Capital<br>Adequacy Purposes To be Well-Capitalized<br>Under Prompt Corrective<br>Action Provisions
(Dollars in thousands) Amount Percent Amount Percent Amount Percent
Total Capital (to Risk-Weighted Assets)
Wilmington Savings Fund Society, FSB $ 2,333,593 14.32 % $ 1,303,890 8.00 % $ 1,629,863 10.00 %
WSFS Financial Corporation 2,500,508 15.34 1,304,346 8.00 1,630,433 10.00
Tier 1 Capital (to Risk-Weighted Assets)
Wilmington Savings Fund Society, FSB 2,129,779 13.07 977,918 6.00 1,303,890 8.00
WSFS Financial Corporation 2,166,672 13.29 978,260 6.00 1,304,346 8.00
Common Equity Tier 1 Capital (to Risk-Weighted Assets)
Wilmington Savings Fund Society, FSB 2,129,779 13.07 733,438 4.50 1,059,411 6.50
WSFS Financial Corporation 2,166,672 13.29 733,695 4.50 1,059,781 6.50
Tier 1 Leverage Capital
Wilmington Savings Fund Society, FSB 2,129,779 10.44 815,873 4.00 1,019,841 5.00
WSFS Financial Corporation 2,166,672 10.61 816,469 4.00 1,020,587 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 June 30, 2024, 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 $330.5 million in cash to support share repurchases, potential dividends, acquisitions, strategic growth plans and other general corporate purposes.

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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 June 30, 2024, the Company had $1.0 billion in cash, cash equivalents, and restricted cash. As of June 30, 2024, our estimated uninsured deposits were $6.0 billion, or 37% of total customer deposits, and our estimated unprotected deposits (uninsured and uncollateralized) were $5.2 billion, or 32% of total customer deposits.

As of June 30, 2024, the Company had a readily available, secured borrowing capacity of $5.3 billion from the FHLB and $1.8 billion through the Federal Reserve Discount Window. In addition, the Company had $1.7 billion in unpledged securities that could be used to support additional borrowings and $0.4 billion of cash deposited with the Federal Reserve Bank.

Our primary cash contractual obligations relate to operating leases, long-term debt, credit obligations, and data processing. At June 30, 2024, we had $224.7 million in total contractual payments for ongoing leases that have remaining lease terms of less than one year to 21 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 June 30, 2024, 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. At June 30, 2024, we had advances of $800 million under the BTFP, due January 2025. Royal Bancshares Capital Trust I (Trust I) and Royal Bancshares Capital Trust II (Trust II) (collectively, the RBC 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 RBC 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 RBC Trusts with a current carrying value of $11.9 million each, totaling $23.7 million. The Company records its investments in the RBC 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 RBC 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 June 30, 2024, the Company had total commitments to extend credit of $4.0 billion, which are generally one year commitments.

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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) June 30, 2024 December 31, 2023
Nonaccruing loans(1):
Commercial and industrial $ 39,230 $ 29,389
Owner-occupied commercial 3,939 4,862
Commercial mortgages 8,989 22,292
Construction 3,887 12,617
Residential 5,086 2,579
Consumer 2,903 2,446
Total nonaccruing loans(2) 64,034 74,185
Other real estate owned 1,342 1,569
Total nonperforming assets $ 65,376 $ 75,754
Past due loans:
Commercial $ 855 $ 1,552
Residential 8 —
Consumer(3) 8,935 10,032
Total past due loans $ 9,798 $ 11,584
Troubled loans:
Commercial $ 124,353 $ 85,330
Residential 205 777
Consumer 8,522 9,161
Total troubled loans $ 133,080 $ 95,268
Ratio of allowance for credit losses to total loans and leases(4) 1.51 % 1.46 %
Ratio of nonaccruing loans to total gross loans and leases(5) 0.49 0.58
Ratio of nonperforming assets to total assets 0.32 0.37
Ratio of allowance for credit losses to nonaccruing loans 310 251
Ratio of allowance for credit losses to total nonperforming assets(6) 303 246

(1)Includes nonaccruing troubled loans.

(2)Includes nonaccrual loans held-for-sale as of December 31, 2023

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

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

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

(6)Excludes acquired PCD loans.

Nonperforming assets decreased $10.4 million between December 31, 2023 and June 30, 2024. This decrease was primarily driven by favorable resolutions and paydowns of multiple loans during the year and a charge-off on a commercial mortgage relationship. The ratio of nonperforming assets to total assets decreased from 0.37% at December 31, 2023 to 0.32% at June 30, 2024.

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

Six Months Ended June 30,
(Dollars in thousands) 2024 2023
Beginning balance $ 75,754 $ 43,372
Additions 64,648 37,483
Collections (55,521) (10,983)
Transfers to accrual(1) (216) (19,903)
Charge-offs (19,289) (16,439)
Ending balance $ 65,376 $ 33,530

(1)Includes impact of ASU No. 2022-02 adoption in 2023.

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

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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. The FOMC raised the federal funds target rate four times in 2023 for a total of 100 basis points and has suggested it may lower interest rates in 2024. 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 June 30, 2024, interest-bearing liabilities exceeded interest-earning assets that mature or reprice within one year (interest-sensitive gap) by $62.0 million. Our interest-sensitive assets as a percentage of interest-sensitive liabilities within the one-year window was 99.32% at June 30, 2024 compared with 99.67% at December 31, 2023. Likewise, the one-year interest-sensitive gap as a percentage of total assets was (0.30)% at June 30, 2024 compared with (0.14)% at December 31, 2023.

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 June 30, 2024 and December 31, 2023:

June 30, 2024 December 31, 2023
% Change in Interest Rate (Basis Points) % Change in Net<br><br>Interest Margin(1) Economic Value of Equity(2) % Change in Net<br><br>Interest Margin(1) Economic Value of Equity(2)
+300 16.3% 22.39% 15.7% 22.44%
+200 10.8% 21.54% 10.4% 21.46%
+100 5.4% 20.62% 5.2% 20.41%
+50 2.7% 20.13% 2.6% 19.85%
+25 1.3% 19.88% 1.3% 19.56%
— —% 19.63% —% 19.26%
-25 (1.3)% 19.37% (1.3)% 18.96%
-50 (2.6)% 19.10% (2.6)% 18.64%
-100 (4.6)% 18.60% (4.9)% 18.00%
'-200 (8.3)% 17.30% (9.6)% 16.50%
'-300 (11.9)% 15.90% (14.2)% 14.80%

(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.

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RESULTS OF OPERATIONS

Three months ended June 30, 2024: Net income for the three months ended June 30, 2024 was $69.3 million, compared to $68.7 million for the three months ended June 30, 2023.

•Net interest income decreased $7.4 million, primarily due to lagging increases in deposit pricing following rate hikes in 2023 and a continued shift to customer time deposits. See “Net Interest Income” for further information.

•Our provision for credit losses increased $4.0 million, primarily due to a higher provision on our commercial mortgages portfolio. See “Allowance for Credit Losses” for further information.

•Noninterest income increased $24.7 million, primarily due to increases in income from Cash Connect® due to additional customers added during the fourth quarter of 2023 and first half of 2024 and the higher rate environment, Wealth Management fee income, a gain on our Visa B derivative liability, post-close distributions from our investment in Spring EQ, and capital markets income. See “Noninterest Income” for further information.

•Noninterest expense increased $14.5 million, primarily due to higher salaries and benefits and Cash Connect® funding costs associated with a shift towards external funding, partially offset by decreases in net corporate development and restructuring costs, loan workout and OREO expenses, and professional fees.

•Income tax provision decreased $1.8 million, primarily due to the $1.2 million decrease in pre-tax income, the benefit from solar and other tax credit investments, and lower state income taxes.

Six months ended June 30, 2024: Net income for the six months ended June 30, 2024 was $135.0 million, compared to $131.1 million for the six months ended June 30, 2023.

•Net interest income decreased $14.6 million during the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to the reasons described above. See “Net Interest Income” for further information.

•Our provision for credit losses for the six months ended June 30, 2024 decreased $9.9 million compared to the six months ended June 30, 2023, due to lower losses across most of our commercial loan portfolios and our consumer portfolio, partially offset by higher losses on our commercial mortgages portfolio. See “Allowance for Credit Losses” for further information.

•Noninterest income for the six months ended June 30, 2024 increased $37.5 million compared to the six months ended June 30, 2023, primarily due to increases from Cash Connect®, Wealth Management fee income, a gain on our Visa B derivative liability, capital markets income, post-close distributions from our investment in Spring EQ, and mortgage banking activities. See “Noninterest Income” for further information.

•Noninterest expense increased $30.5 million during the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to an increase in Cash Connect® funding costs associated with a shift towards external funding and salaries and benefits, partially offset by decreases in net corporate development and restructuring costs, occupancy expense, and professional fees.

•Income tax provision for the six months ended June 30, 2024 decreased $1.5 million compared to the six months ended June 30, 2023, primarily due to the benefit from solar and other tax credit investments and lower state income taxes.

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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 June 30,
2024 2023
(Dollars in thousands) Average<br>Balance Interest Yield/<br><br>Rate(1) Average<br>Balance Interest Yield/<br><br>Rate(1)
Assets:
Interest-earning assets:
Loans:(2)
Commercial loans and leases $ 5,115,017 $ 91,001 7.17 % $ 5,051,292 $ 86,073 6.85 %
Commercial real estate loans 4,968,847 88,852 7.19 4,484,162 78,018 6.98
Residential loans 892,139 10,995 4.93 804,390 9,384 4.67
Consumer loans 2,088,180 39,019 7.52 1,907,294 33,508 7.05
Loans held for sale 42,010 948 9.08 45,766 901 7.90
Total loans and leases 13,106,193 230,815 7.09 12,292,904 207,884 6.79
Mortgage-backed securities(3) 4,335,831 25,784 2.38 4,766,207 27,130 2.28
Investment securities(3) 361,093 2,183 2.70 370,530 2,182 2.62
Other interest-earning assets 469,120 6,455 5.53 345,791 4,573 5.30
Total interest-earning assets $ 18,272,237 $ 265,237 5.85 % $ 17,775,432 $ 241,769 5.46 %
Allowance for credit losses (195,557) (170,968)
Cash and due from banks 308,226 255,590
Cash in non-owned ATMs 339,430 387,889
Bank-owned life insurance 41,067 101,031
Other noninterest-earning assets 2,020,925 1,872,610
Total assets $ 20,786,328 $ 20,221,584
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Interest-bearing demand $ 2,807,761 $ 8,107 1.16 % $ 3,039,257 $ 6,525 0.86 %
Savings 1,553,044 1,774 0.46 1,873,572 1,342 0.29
Money market 5,172,682 46,390 3.61 4,137,867 27,898 2.70
Customer time deposits 1,937,265 20,422 4.24 1,578,615 10,597 2.69
Total interest-bearing customer deposits 11,470,752 76,693 2.69 10,629,311 46,362 1.75
Brokered deposits — — — 307,515 3,692 4.82
Total interest-bearing deposits 11,470,752 76,693 2.69 10,936,826 50,054 1.84
Federal Home Loan Bank advances 25,742 359 5.61 123,297 1,597 5.20
Trust preferred borrowings 90,704 1,750 7.76 90,511 1,635 7.25
Senior and subordinated debt 218,478 2,441 4.47 218,247 2,334 4.28
Other borrowed funds(4) 816,919 9,545 4.70 390,576 4,307 4.42
Total interest-bearing liabilities $ 12,622,595 $ 90,788 2.89 % $ 11,759,457 $ 59,927 2.04 %
Noninterest-bearing demand deposits 4,835,912 5,458,676
Other noninterest-bearing liabilities 891,273 674,300
Stockholders’ equity 2,446,371 2,332,147
Noncontrolling interest (9,823) (2,996)
Total liabilities and stockholders’ equity $ 20,786,328 $ 20,221,584
Excess of interest-earning assets over interest-bearing liabilities $ 5,649,642 $ 6,015,975
Net interest income $ 174,449 $ 181,842
Interest rate spread 2.96 % 3.42 %
Net interest margin 3.85 % 4.11 %

(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.

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Six months ended June 30,
2024 2023
(Dollars in thousands) Average<br>Balance Interest Yield/<br><br>Rate(1) Average<br>Balance Interest Yield/<br><br>Rate(1)
Assets:
Interest-earning assets:
Loans:(2)
Commercial loans and leases $ 5,081,250 $ 179,531 7.12 % $ 5,003,224 $ 166,817 6.74 %
Commercial real estate loans 4,928,165 175,576 7.16 4,454,920 149,846 6.78
Residential loans 883,421 21,574 4.88 787,082 18,012 4.58
Consumer loans 2,064,785 77,247 7.52 1,878,506 65,043 6.98
Loans held for sale 38,458 1,590 8.31 44,653 1,890 8.54
Total loans and leases 12,996,079 455,518 7.05 12,168,385 401,608 6.66
Mortgage-backed securities(3) 4,405,932 51,681 2.35 4,794,699 54,656 2.28
Investment securities 363,234 4,367 2.68 373,628 4,419 2.74
Other interest-earning assets 556,434 15,293 5.53 293,656 7,469 5.13
Total interest-earning assets $ 18,321,679 $ 526,859 5.79 % $ 17,630,368 $ 468,152 5.37 %
Allowance for credit losses (192,159) (162,124)
Cash and due from banks 290,752 242,962
Cash in non-owned ATMs 291,690 404,381
Bank-owned life insurance 41,929 101,320
Other noninterest-earning assets 1,986,980 1,895,709
Total assets $ 20,740,871 $ 20,112,616
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Interest-bearing demand $ 2,821,017 $ 15,473 1.10 % $ 3,090,807 $ 11,549 0.75 %
Savings 1,570,634 3,354 0.43 1,968,863 2,598 0.27
Money market 5,179,542 91,823 3.57 4,000,491 47,156 2.38
Customer time deposits 1,886,344 38,660 4.12 1,428,245 16,590 2.34
Total interest-bearing customer deposits 11,457,537 149,310 2.62 10,488,406 77,893 1.50
Brokered deposits 9,205 178 3.89 326,828 7,353 4.54
Total interest-bearing deposits 11,466,742 149,488 2.62 10,815,234 85,246 1.59
Federal Home Loan Bank advances 23,585 667 5.69 194,934 4,968 5.14
Trust preferred borrowings 90,680 3,506 7.78 90,485 3,190 7.11
Senior debt 218,449 4,890 4.48 225,677 4,907 4.35
Other borrowed funds(4) 799,387 18,581 4.67 261,615 5,467 4.21
Total interest-bearing liabilities $ 12,598,843 $ 177,132 2.83 % $ 11,587,945 $ 103,778 1.81 %
Noninterest-bearing demand deposits 4,832,389 5,509,184
Other noninterest-bearing liabilities 857,053 722,166
Stockholders’ equity 2,461,412 2,296,403
Noncontrolling interest (8,826) (3,082)
Total liabilities and stockholders’ equity $ 20,740,871 $ 20,112,616
Excess of interest-earning assets over interest-bearing liabilities $ 5,722,836 $ 6,042,423
Net interest and dividend income $ 349,727 $ 364,374
Interest rate spread 2.96 % 3.56 %
Net interest margin 3.85 % 4.18 %

(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.

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Three months ended June 30, 2024: During the three months ended June 30, 2024, net interest income decreased $7.4 million from the three months ended June 30, 2023 primarily due to lagging deposit pricing increases following rate hikes in 2023 and a continued shift to customer time deposits. Net interest margin was 3.85% for the second quarter of 2024, a 26 basis point decrease compared to 4.11% for the second quarter of 2023. The decrease was due to an unfavorable decrease of 40 basis points from the lagging deposit pricing increases mentioned above and 4 basis points from purchase accounting accretion, partially offset by an increase of 18 basis points from our balance sheet size and mix.

Six months ended June 30, 2024: During the six months ended June 30, 2024, net interest income decreased $14.6 million from the six months ended June 30, 2023 due to the reasons noted above. Net interest margin was 3.85% for the six months ended June 30, 2024, a 33 basis point decrease compared to 4.18% for the six months ended June 30, 2023. The decrease was due to a 44 basis point decrease from the lagging deposit increases noted above and a 4 basis point decrease from purchase accounting accretion, partially offset by a 15 basis point increase from our balance sheet size and mix.

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 June 30, 2024, we recorded a provision for credit losses of $19.8 million, an increase of $4.0 million, as compared with the provision for credit losses of $15.8 million for the three months ended June 30, 2023. This increase was primarily due to a higher provision on our commercial mortgages portfolio.

During the six months ended June 30, 2024, we recorded a provision for credit losses of $35.0 million, a decrease of $9.9 million, as compared with the provision for credit losses of $44.8 million for the six months ended June 30, 2023. This decrease was primarily due to lower losses across most of our commercial loan portfolios and our consumer portfolio, partially offset by higher losses on our commercial mortgages portfolio.

The allowance for credit losses increased to $198.3 million at June 30, 2024 from $186.1 million at December 31, 2023. The ratio of allowance for credit losses to total loans and leases was 1.51% at June 30, 2024 and 1.46% at December 31, 2023.

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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 Owner-<br>occupied<br>Commercial Commercial<br>Mortgages Construction Commercial Small Business Leases Residential(1) Consumer(2) Total
As of June 30, 2024
Allowance for credit losses $ 56,516 $ 9,668 $ 46,831 $ 9,198 $ 16,218 $ 5,057 $ 54,765 $ 198,253
% of ACL to total ACL 28 % 4 % 24 % 5 % 8 % 3 % 28 % 100 %
Loan portfolio balance $ 2,639,152 $ 1,940,677 $ 4,034,818 $ 879,217 $ 643,520 $ 897,573 $ 2,106,433 $ 13,141,390
% to total loans and leases 19 % 15 % 31 % 7 % 5 % 7 % 16 % 100 %
Three months ended June 30, 2024
Charge-offs $ 1,906 $ — $ 4,907 $ — $ 4,888 $ 51 $ 5,820 $ 17,572
Recoveries (1,736) (4) (102) — (831) (43) (665) (3,381)
Net charge-offs (recoveries) $ 170 $ (4) $ 4,805 $ — $ 4,057 $ 8 $ 5,155 $ 14,191
Average loan balance $ 2,583,882 $ 1,892,519 $ 3,931,305 $ 1,037,542 $ 638,616 $ 889,502 $ 2,088,180 $ 13,061,546
Ratio of net charge-offs (recoveries) to average gross loans 0.03 % NMF 0.49 % — % 2.56 % NMF 0.99 % 0.44 %
Six months ended June 30, 2024
Charge-offs $ 2,382 $ — $ 4,932 $ — $ 9,740 $ 101 $ 12,276 $ 29,431
Recoveries (3,502) (205) (104) — (1,422) (132) (1,240) (6,605)
Net (recoveries) charge-offs $ (1,120) $ (205) $ 4,828 $ — $ 8,318 $ (31) $ 11,036 $ 22,826
Average loan balance $ 2,556,878 $ 1,892,340 $ 3,873,510 $ 1,054,655 $ 632,032 $ 880,661 $ 2,064,785 $ 12,954,861
Ratio of net (recoveries) charge-offs to average gross loans (0.09) % (0.02) % 0.25 % — % 2.65 % (0.01) % 1.07 % 0.35 %

(1)Excludes reverse mortgages.

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

(Dollars in thousands) Commercial and Industrial Owner-<br>occupied<br>Commercial Commercial<br>Mortgages Construction Commercial Small Business Leases Residential(1) Consumer(2) Total
As of December 31, 2023
Allowance for credit losses $ 49,394 $ 10,719 $ 36,055 $ 10,762 $ 15,170 $ 5,483 $ 58,543 $ 186,126
% of ACL to total ACL 27 % 6 % 19 % 6 % 8 % 3 % 31 % 100 %
Loan portfolio balance $ 2,540,070 $ 1,886,087 $ 3,801,180 $ 1,035,530 $ 623,622 $ 867,895 $ 2,012,134 $ 12,766,518
% to total loans and leases 19 % 15 % 30 % 8 % 5 % 7 % 16 % 100 %
Year ended December 31, 2023
Charge-offs $ 26,653 $ 184 $ 300 $ 794 $ 15,641 $ 41 $ 22,394 $ 66,007
Recoveries (7,735) (54) (7) (532) (1,986) (260) (1,625) (12,199)
Net charge-offs (recoveries) $ 18,918 $ 130 $ 293 $ 262 $ 13,655 $ (219) $ 20,769 $ 53,808
Average loan balance $ 2,589,147 $ 1,863,542 $ 3,562,070 $ 1,008,768 $ 588,592 $ 817,758 $ 1,922,828 $ 12,352,704
Ratio of net charge-offs (recoveries) to average gross loans 0.73 % 0.01 % 0.01 % 0.03 % 2.32 % (0.03) % 1.08 % 0.44 %

(1)Excludes reverse mortgages.

(2)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.

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Noninterest Income

Three months ended June 30, 2024: During the three months ended June 30, 2024, noninterest income was $91.6 million, an increase of $24.7 million from $66.9 million during the three months ended June 30, 2023. The increase was primarily driven by $11.0 million from Cash Connect® due to the addition of customers during the fourth quarter of 2023 and first half of 2024 and the higher rate environment, $5.3 million in Wealth Management fees, a $3.4 million gain due to the reduction of our Visa B derivative liability established from our previous sale of 360,000 shares in 2Q 2020, a $2.0 million gain from post-close distributions from our investment in Spring EQ, and $1.8 million in capital markets income.

Six months ended June 30, 2024: During the six months ended June 30, 2024, noninterest income was $167.5 million, an increase of $37.5 million from $130.0 million during the six months ended June 30, 2023. This increase was primarily driven by $19.2 million from Cash Connect® due to the reason mentioned above, $7.7 million in Wealth Management fees, the $3.4 million gain on our Visa B derivative liability mentioned above, $2.0 million in capital markets income, the $2.0 million gain related to Spring EQ mentioned above, and $1.4 million from mortgage banking activities.

For further information, see Note 3 to the unaudited Consolidated Financial Statements.

Noninterest Expense

Three months ended June 30, 2024: During the three months ended June 30, 2024, noninterest expense was $155.8 million, an increase of $14.5 million from $141.3 million for the three months ended June 30, 2023. The increase was primarily due to $10.9 million from salaries and benefits costs and $9.5 million from other operating expense driven by higher funding costs from Cash Connect® due to a shift towards external funding, partially offset by decreases of $2.6 million in net corporate development and restructuring costs, $1.8 million in loan workout and OREO expenses, and $1.3 million in professional fees.

Six months ended June 30, 2024: During the six months ended June 30, 2024, noninterest expense was $304.8 million, an increase of $30.5 million from $274.3 million for the six months ended June 30, 2023. The increase was primarily due to $20.8 million in other operating expense driven by higher funding costs from Cash Connect® due to a shift towards external funding and $13.8 million in salaries and benefits, partially offset by a $2.4 million decrease in net corporate development and restructuring costs, $1.7 million in occupancy expense, and $1.3 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 $21.3 million and $42.5 million during the three and six months ended June 30, 2024, respectively, compared to income tax expense of $23.0 million and $44.0 million for the same periods in 2023, respectively.

Our effective tax rate was 23.5% and 23.9% for the three and six months ended June 30, 2024, respectively, compared to 25.1% for both the three and six months ended June 30, 2023. The effective tax rate for the three and six months ended June 30, 2024 decreased primarily due to an increase in projected tax benefits from our low-income housing tax credit investments, solar tax credit investments made during the current quarter, as well as a reduction in state income taxes.

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, solar 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, tax deficiencies from recognized stock compensation, 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.

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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) June 30, 2024 December 31, 2023
Stockholders’ equity of WSFS $ 2,489,580 $ 2,477,636
Less: Goodwill and other intangible assets 996,181 1,004,560
Tangible common equity (numerator) $ 1,493,399 $ 1,473,076
Shares of common stock outstanding (denominator) 59,261 60,538
Book value per share of common stock $ 42.01 $ 40.93
Goodwill and other intangible assets 16.81 16.58
Tangible book value per share of common stock $ 25.20 $ 24.33

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 2024, 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 June 30, 2024 did not significantly change from our critical accounting estimates at December 31, 2023, which are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

RECENT REGULATORY DEVELOPMENTS

Recent regulatory developments at June 30, 2024 did not significantly change from our recent regulatory developments at December 31, 2023, which are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

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 June 30, 2024.

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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, 2023.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

During the second quarter of 2022, the Board of Directors of the Company approved a share repurchase program authorizing the repurchase 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 June 30, 2024.

Month Total Number<br><br>of Shares Purchased Average Price<br>Paid Per Share Total Number of<br>Shares Purchased as<br>Part of Publicly<br>Announced Plans or<br>Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
April 1, 2024 - April 30, 2024 25,000 $ 43.05 25,000 4,824,225
May 1, 2024 - May 31, 2024 418,000 44.71 418,000 4,406,225
June 1, 2024 - June 30, 2024 454,461 43.80 454,461 3,951,764
Total 897,461 $ 44.20 897,461

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.

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Item 6.     Exhibits

Exhibit<br>Number Description of Document
31.1 Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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 June 30, 2024, filed with the SEC on August 2, 2024, 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.

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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: August 2, 2024 /s/ Rodger Levenson
Rodger Levenson
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
Date: August 2, 2024 /s/ Arthur J. Bacci
Arthur J. Bacci
Executive Vice President, Chief Wealth Officer and
Interim Chief Financial Officer
(Principal Financial and Accounting Officer)

68

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: August 2, 2024 /s/ Rodger Levenson
Rodger Levenson
Chairman, President and Chief Executive Officer
(Principal Executive Officer)

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: August 2, 2024 /s/ Arthur J. Bacci
Arthur J. Bacci
Executive Vice President, Chief Wealth Officer and Interim Chief Financial Officer
(Principal Financial and Accounting Officer)

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 June 30, 2024 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: August 2, 2024

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