KBRA Affirms Ratings for WSFS Financial Corporation

KBRA affirms the senior unsecured debt rating of A-, the subordinated debt rating of BBB+, and the short-term debt rating of K2 for Wilmington, Delaware-based WSFS Financial Corporation (NASDAQ: WSFS) (“the company”). In addition, KBRA affirms the deposit and senior unsecured debt ratings of A, the subordinated debt rating of A-, and the short-term deposit and debt ratings of K1 for its subsidiary, Wilmington Savings Fund Society, FSB ("WSFS Bank"). The Outlook for all long-term ratings is Stable.

The primary driver of the ratings, and a key differentiating factor for WSFS, is its significant and stable fee revenue base, which has averaged ~30% of revenues in its recent operating history (32% in 2024 and 1Q25). This revenue is derived from a diverse set of noninterest income streams, most notably its premier wealth and trust divisions, which reflect meaningful scale, including nearly $90 billion of AUM/AUA as of 1Q25. Additionally, the company has achieved robust growth in its cash logistics and payments business, gaining market share as competitors have exited the space; this segment now represents an increasingly important contributor to noninterest income. The favorable fee income trends and maintenance of a healthy NIM, which, supported by a low-cost deposit base (average cost of 1.71% during 1Q25) and a well-balanced loan portfolio with regard to fixed and variable rate structures that helps facilitate attractive loan yields across various interest rate cycles, have led the company to deliver consistently strong profitability in recent years, as well as historically. WSFS' core ROA of ~1.3% during 1Q25 is expected to persist throughout the remainder of the year, which assumes a fairly stable NIM around the 3.8% level, and continued growth across its fee-income business lines.

Another consideration in the ratings is WSFS’ favorable core funding profile and strong market position within its footprint, including the largest deposit market share among locally headquartered banks. While its operations are more geographically concentrated than those of larger regional peers, this is partially mitigated by the national lending verticals. Additionally, the company operates in markets with strong demographics and economic diversity, which provides added resilience during periods of stress.

WSFS has demonstrated solid historical asset quality, supported by conservative underwriting, and a diversified loan portfolio, including a modest concentration in investor CRE (211% of total risk-based capital as of 1Q25), and a manageable exposure to office (5% of total loans excluding medical properties). While NCOs have been slightly elevated in recent periods, primarily due to its consumer and equipment finance portfolios and certain acquired loans, the remainder of the portfolio has performed well. Additionally, the company maintains strong loss-absorbing capacity, including strong earnings, robust reserves, and healthy capital. That said, the CET1 ratio (14.1% as of 1Q25) is expected to decline toward the ~12% level over the next 2-3 years, which will be due to an increase level of share buybacks and stronger loan growth. Despite the anticipated decline, we view the targeted CET1 level as adequate for the company’s risk profile and the rating category.

The company reflects a conservative liquidity position evidenced by a below average loan-to-deposit ratio (78% as of 1Q25) and ample on-balance sheet liquidity. In the near-term, loan growth is expected to be funded with cash flow from the securities portfolio, but there is no a desire to materially leverage the balance sheet prospectively. 

To access ratings and relevant documents, click here.

Click here to view the report.

Methodologies