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.

Key Credit Considerations

The ratings are supported by WSFS' differentiated business model, which includes meaningful and stable fee-generating businesses, most notably its sizable wealth and trust franchises (~$100 billion of AUM/AUA as of 1Q26). These businesses contribute peer-leading levels of noninterest income (32% of total revenue during 1Q26 and 2025) that have proven both durable and scalable over time. Combined with a relatively efficient operating model, a NIM reinforced by enviable deposit costs stemming from its leading market share and diversified funding base, and disciplined interest rate risk management that has facilitated attractive loan yields, WSFS has consistently generated strong profitability.

Another important consideration is WSFS' robust loss-absorbing capacity. In addition to strong earnings as the first line of defense against credit losses, the company maintains above-average reserve coverage and capital levels (13.9% CET1 ratio as of 1Q26). That said, management is targeting a CET1 ratio of ~12% over the medium term, primarily through stronger loan growth and continued pace of share repurchases. Although achieving this target is likely to take approximately 3 years, we believe the resulting capital position will remain appropriate for the risk profile and rating category.

WSFS maintains a favorable core deposit franchise and a sound liquidity profile, reflected in its below-average loan-to-deposit ratio (72% as of 1Q26) and ample on-balance-sheet liquidity. While unrealized losses within the securities portfolio somewhat reduce immediately available liquidity, we view this as manageable, especially given the demonstrated ability to consistently grow core deposits through diversified funding channels, meaningful cash flows from the securities portfolio, the durability of its customer relationships. Moreover, the disciplined approach to loan growth should continue to underpin a sound liquidity profile.

Historical asset quality metrics have been solid, though WSFS has reported modestly higher NPAs and NCOs in recent years, primarily from purchased consumer loans (largely runoff), equipment finance (strong risk-adjusted yields), and acquired loans. That said, following the recently announced sales of the credit card and Upstart portfolios, combined with the company's position in one of the largest and most diversified regional economies in the U.S., a manageable investor CRE concentration (227% of Tier 1 capital and LLR at the bank as of 1Q26), and conservative underwriting, we expect asset quality to remain sound throughout the credit cycle.

Rating Sensitivities

Given that the ratings are at the higher end of our rating scale, an upgrade is unlikely over the medium term. However, greater scale and geographic diversification while maintaining a strong financial profile could result in positive momentum over the longer term. Conversely, a downgrade is not anticipated, though negative rating pressure could result from deterioration in the core funding base, fee-generating businesses, credit quality, or capital profile, notably if these trends materially weaken its peer-leading key financial metrics.

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