WSFS Financial (WSFS)

Regional banking company WSFS Financial (NASDAQ:WSFS) announced better-than-expected revenue in Q3 CY2025, with sales up 1.1% year on year to $270.5 million. Its GAAP profit of $1.37 per share was 9.4% above analysts’ consensus estimates.

Company Overview

Founded in 1832 as Wilmington Savings Fund Society and one of the oldest banks in America still operating under its original name, WSFS Financial (NASDAQ:WSFS) operates a community banking and wealth management franchise primarily serving customers in the Mid-Atlantic region through its main subsidiary, WSFS Bank.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

WSFS Financial competes with other regional banks in the Mid-Atlantic region including M&T Bank (NYSE:MTB), Citizens Financial Group (NYSE:CFG), and Fulton Financial (NASDAQ:FULT), as well as larger national banks like JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC) that operate in its markets.

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions. Luckily, WSFS Financial’s revenue grew at an impressive 10% compounded annual growth rate over the last five years. Its growth beat the average banking company and shows its offerings resonate with customers, a helpful starting point for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. WSFS Financial’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 2.3% over the last two years was well below its five-year trend. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, WSFS Financial reported modest year-on-year revenue growth of 1.1% but beat Wall Street’s estimates by 0.9%.

Since the company recorded losses on certain securities, it generated more net interest income than revenue (a 34.9x multiple of its revenue to be exact) during the last five years, meaning WSFS Financial lives and dies by its lending activities because non-interest income barely moves the needle.

Net interest income commands greater market attention due to its reliability and consistency, whereas non-interest income is often seen as lower-quality revenue that lacks the same dependable characteristics.

Topline growth alone doesn't tell the complete story - the profitability of that growth shapes actual earnings impact. Banks track this dynamic through efficiency ratios, which compare non-interest expenses such as personnel, rent, IT, and marketing costs to total revenue streams.

Investors focus on efficiency ratio changes rather than absolute levels, understanding that expense structures vary by revenue mix. Counterintuitively, lower efficiency ratios indicate better performance since they represent lower costs relative to revenue.

Over the last five years, WSFS Financial’s efficiency ratio has increased by 3.9 percentage points, going from 60.3% to 60.9%. Said differently, the company’s expenses have increased at a faster rate than revenue, which usually raises questions unless the company is in high-growth mode and reinvesting its profits into attractive ventures.

WSFS Financial’s efficiency ratio came in at 60.2% this quarter, close to analysts’ expectations. This result was in line with the same quarter last year.

For the next 12 months, Wall Street expects WSFS Financial to maintain its trailing one-year ratio with a projection of 61.8%.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

WSFS Financial’s EPS grew at an astounding 19.9% compounded annual growth rate over the last five years, higher than its 10% annualized revenue growth. However, we take this with a grain of salt because its efficiency ratio didn’t improve and it didn’t repurchase its shares, meaning the delta came from factors we consider non-core or less sustainable over the long term.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For WSFS Financial, its two-year annual EPS growth of 1.5% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q3, WSFS Financial reported EPS of $1.37, up from $1.08 in the same quarter last year. This print beat analysts’ estimates by 9.4%. Over the next 12 months, Wall Street expects WSFS Financial’s full-year EPS of $4.85 to grow 3.4%.

The balance sheet drives banking profitability since earnings flow from the spread between borrowing and lending rates. As such, valuations for these companies concentrate on capital strength and sustainable equity accumulation potential.

Because of this, tangible book value per share (TBVPS) emerges as the critical performance benchmark. By excluding intangible assets with uncertain liquidation values, this metric captures real, liquid net worth per share. EPS can become murky due to acquisition impacts or accounting flexibility around loan provisions, and TBVPS resists financial engineering manipulation.

WSFS Financial’s TBVPS grew at a mediocre 4.5% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 25.4% annually over the last two years from $20.42 to $32.11 per share.

Over the next 12 months, Consensus estimates call for WSFS Financial’s TBVPS to grow by 10.1% to $35.37, solid growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, WSFS Financial has averaged a Tier 1 capital ratio of 13.7%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.

Over the last five years, WSFS Financial has averaged an ROE of 11.6%, impressive for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This shows WSFS Financial has a strong competitive moat.

We enjoyed seeing WSFS Financial beat analysts’ tangible book value per share expectations this quarter. We were also happy its net interest income outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock remained flat at $52.80 immediately after reporting.

Updated: December 4, 2025 at 11:40 PM EST

Are you wondering whether to buy WSFS Financial or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

WSFS Financial’s business quality ultimately falls short of our standards. To kick things off, its revenue growth was mediocre over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its astounding EPS growth over the last five years shows its profits are trickling down to shareholders, the downside is its estimated net interest income for the next 12 months are weak. On top of that, its declining net interest margin shows its loan book is becoming less profitable.

WSFS Financial’s P/B ratio based on the next 12 months is 1.1x. This valuation multiple is fair, but we don’t have much faith in the company. We're fairly confident there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $63.50 on the company (compared to the current share price of $55.97).