WSFS Financial (NASDAQ:WSFS) reported second-quarter 2026 core earnings per share of $1.66, core return on assets of 1.55% and core return on tangible common equity of 20.2%, with management citing growth in fee businesses, deposits and selected lending categories.
Chief Financial Officer David Burg said core net income rose 19% from a year earlier, while core pre-provision net revenue increased 10%. Core EPS grew 31% year over year, and tangible book value per share increased 13%.
Margin Expands as Deposit Costs Decline
Net interest margin expanded 4 basis points from the first quarter to 3.87%. Burg attributed the increase to a 4-basis-point decline in client deposit costs and higher investment-security yields. The company’s interest-bearing deposit beta remained at 46%.
Management updated its full-year 2026 outlook based on an assumption that the federal funds rate will not change during the remainder of the year. WSFS now expects net interest margin of approximately 3.85% for the year.
During the question-and-answer session, Burg said the company expects to manage its margin despite a more competitive deposit environment. WSFS has allowed some higher-cost deposits to run off during the first half because of its liquidity position, he said, but may need to raise rates in certain areas to remain competitive and support client growth.
“We want to make sure that we remain competitive,” Burg said, noting that deposit competition had increased during the prior six months. “There could be some upward pressure on deposit costs.”
Fee Revenue and Institutional Services Growth
Core fee revenue, which represented nearly one-third of total revenue, increased 2% from the first quarter and 5% from a year earlier. Wealth and trust revenue grew 17% year over year.
Within Institutional Services, corporate trust revenue rose 28% year over year and global capital markets revenue increased 58%, according to Burg. The company said it continued to win mandates and gain market share in those businesses.
For the first half of 2026, WSFS ranked as the third-most-active asset-backed securities and mortgage-backed securities trustee by deal count, increasing its market share to 14% from 11.7% in 2025, Burg said. Bryn Mawr Trust Company of Delaware, the company’s personal trust operation, grew 20% year over year as new accounts increased.
Cash Connect fees declined from a year earlier because of interest-rate cuts and lower volumes. However, the business delivered a 15% profit margin for the second consecutive quarter.
Burg told analysts that the ABS and MBS market has continued to expand, with industry growth of roughly 20% to 30%, while WSFS has also increased its share. He said the company’s ability to move quickly and provide service has helped it compete with larger players, though he cautioned against extrapolating the current pace of market growth.
Deposits, Loans and Asset Quality
Client deposits increased 3% sequentially and 11% year over year, led by Institutional Services and commercial banking. Non-interest-bearing deposits climbed 10% from the first quarter and accounted for 37% of total client deposits, compared with 31% a year earlier. Average deposits rose 3% sequentially and 8% year over year.
Burg said approximately 80% of the quarter’s non-interest-bearing deposit growth came from Institutional Services, split between corporate trust and global capital markets, with the remaining 20% coming from commercial banking. He said the company historically has operated with non-interest-bearing deposits in the low 30% range and would view a low-to-mid-30% level as a favorable sustainable range.
Gross loans increased 1% from the prior quarter, equivalent to a 5% annualized pace. Commercial and industrial loans rose 2% sequentially, or 8% annualized. Residential mortgages and WSFS home-equity loans increased 10% sequentially and 23% year over year.
Chairman, President and CEO Rodger Levenson said client sentiment appeared constructive despite cost pressures and uncertainty tied to geopolitical developments and energy volatility. He said businesses were continuing to invest in a relatively stable economic environment, supporting the company’s commercial loan pipeline.
Management said home-lending growth may moderate after a strong spring selling season. Burg said the residential pipeline had declined somewhat as the seasonal market slowed and rates rose.
Asset-quality measures improved during the quarter. Problem assets fell 6% sequentially and 31% year over year, aided by commercial payoffs. Delinquencies declined 5% from the first quarter and nearly 40% from a year earlier, while nonperforming assets fell 8% sequentially and nearly 25% year over year.
Net charge-offs were $7.1 million, or 21 basis points of average loans. Excluding the prior quarter’s loan recovery, net charge-offs declined $5.1 million sequentially because of lower commercial charge-offs. Management said office properties remain a challenging area, but it did not identify a broader portfolio trend or asset-class concern.
Capital Returns and Updated Outlook
WSFS returned $77 million of capital during the second quarter, including $66 million of share repurchases. Year to date, the company repurchased more than 4% of its outstanding shares and returned approximately 100% of net income to shareholders.
Burg said the company’s first priority remains investing in the business at attractive returns. Management said it would consider acquisitions that are additive to its strategy, including potential opportunities in fee businesses and wealth management, but Levenson said the bar for bank acquisitions would be high given the company’s organic opportunities in its existing markets.
- Full-year return on assets outlook was raised to 1.50%, with potential for modest upside.
- Deposit growth outlook was raised to the high-single-digit range.
- Fee revenue growth, excluding Cash Connect, is expected in the mid-to-high-single-digit range.
- Expected net charge-offs were lowered to 15 to 25 basis points of average loans for the year.
- The company maintained its efficiency outlook in the high-50% range.
Burg said expenses could remain around current levels or be somewhat lower, though variable compensation, transaction-related costs, health-care expenses and fraud-related costs could create quarterly variability. He said the company is pursuing cost initiatives involving vendor spending, real estate optimization and exits from businesses that are not central to its strategy.
About WSFS Financial (NASDAQ:WSFS)
WSFS Financial Corporation is the bank holding company for WSFS Bank, a regional financial institution headquartered in Wilmington, Delaware. The company traces its roots to the Safe Deposit & Trust Company, founded in 1832, and formally organized as WSFS Financial in the mid-1980s. Over its long history, WSFS has grown through a combination of organic expansion and selective acquisitions to serve a broad base of individual, commercial and institutional clients.
WSFS Bank offers a full suite of banking and financial services, including retail and commercial deposit accounts, commercial and industrial lending, real estate financing, and treasury management solutions.
