WSFS Financial in Wilmington, Delaware, reported a fourth-quarter profit totaling $64.2 million Tuesday, buoyed by solid deposit growth, a resilient net interest margin and record revenue from its flagship wealth management business.
“Our businesses continued to perform very well, providing us with strong momentum moving into 2025,” Chief Financial Officer David Burg said on a conference call with analysts.
The $20.8 billion-asset WSFS’ bottom line was impacted by an “adverse event” that led to the termination of a longstanding Cash Connect client relationship. The situation, which Burg characterized as an “isolated incident,” resulted in a $2.8 million writeoff of uncollected fees as well as $1.9 million in noninterest expenses.
Overall, WSFS’ net income was up 0.5% from the final three months of 2023. On a per-share basis, the $1.17 quarterly profit beat analysts’ expectations of $1.09, according to Jake Civiello, who covers the company for Janney Montgomery Scott.
Despite losses stemming from the client termination, the 26-year-old Cash Connect business generated $101 million of revenue during 2024, up 46% from 2023. Chairman and CEO Roger Levinson said he expects the unit’s prospects to brighten in 2025, as lower costs more than offset reduced revenue. “We still expect our profit margin to increase from the mid-single-digits to the high-single-digits next year,” Levinson said.
The Cash Connect team identified the issue early, minimizing damage to the company, Levinson added. “There’s obviously a lot of systems that have built up over the 25 years or so we’ve been in the business,” Levinson said. “I would say as a general statement, all of those controls worked in this particular situation to our satisfaction.”
Cash Connect services nonbank ATMs and smart safes around the country.
WSFS’s wealth management business generated revenue totaling $40 million during the three months ending Dec. 31, up 12% from the same period in 2023. Wealth management revenues were $146.9 million for all of 2024, up 12% from the prior year, as assets under management or administration rose 15% to $89.4 billion. The wealth business line’s strength helped drive an 18% gain in full-year noninterest income, which amounted to $340.9 million.
WSFS added two adviser teams in the second half of 2024, according to Burg. The company plans to continue investing in the business in 2025 and is projecting another year of double-digit revenue growth, Burg said.
WSFS reported deposits totaling $17 billion at Dec. 31, up 4% from a year earlier. The growth helped the company maintain a 3.80% net interest margin, roughly in line with the result from year-end 2023 but up two basis points from Sept. 30, 2024. WSFS is projecting deposit growth in the low-single-digits in 2025, Burg said.
Loans increased 3% from the fourth quarter of 2023 to $13 billion.
Levinson said WSFS was pleased with its performance in 2024 and optimistic about 2025. Still, he did not rule out the possibility of a deal either for another bank or a fee-income-producing business.
“The focus is really continuing to optimize this very unique market position we have across all of our businesses,” Levinson said. “That being said … we would look to invest in both the fee businesses and the banking side if it was something that could be accretive to those activities.”
Investors appeared satisfied with WSFS’ results. Shares closed up more than 1% Tuesday at $55.52.