WSFS FINANCIAL CORPWSFS
WSFS FINANCIAL CORP Income Taxes Disclosure
15. INCOME TAXES
The Company and its subsidiaries file a consolidated federal income tax return and separate state income tax returns. The Company's income tax provision consists of the following:
| Year ended December 31, | |||||||||||||||||
| (Dollars in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current income taxes: | |||||||||||||||||
| Federal taxes | $ | 65,927 | $ | 69,589 | $ | 81,674 | |||||||||||
| State and local taxes | 21,736 | 22,337 | 19,968 | ||||||||||||||
| Total current taxes | $ | 87,663 | $ | 91,926 | $ | 101,642 | |||||||||||
| Deferred income taxes: | |||||||||||||||||
| Federal taxes | 5,889 | (6,817) | (5,331) | ||||||||||||||
| State and local taxes | (189) | (1,345) | (66) | ||||||||||||||
| Total deferred taxes | $ | 5,700 | $ | (8,162) | $ | (5,397) | |||||||||||
| Total | $ | 93,363 | $ | 83,764 | $ | 96,245 | |||||||||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following is a summary of the significant components of the Company's deferred tax assets and liabilities as of December 31, 2025 and 2024:
| (Dollars in thousands) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Allowance for credit losses | $ | 39,755 | $ | 42,441 | |||||||
| Purchase accounting adjustments—loans | 6,244 | 8,094 | |||||||||
| Reserves and other accruals | 28,741 | 33,250 | |||||||||
| Net operating losses | 1,538 | 2,131 | |||||||||
| Derivatives | 1,862 | 3,258 | |||||||||
| Lease liabilities | 26,311 | 31,996 | |||||||||
| Unrealized losses on available-for-sale securities | 138,933 | 193,956 | |||||||||
Other(1) | 1,577 | 1,379 | |||||||||
| Total deferred tax assets | $ | 244,961 | $ | 316,505 | |||||||
| Deferred tax liabilities: | |||||||||||
| Accelerated depreciation | (4,709) | (5,735) | |||||||||
| Right of use assets | (21,607) | (27,536) | |||||||||
| Intangibles | (28,714) | (31,278) | |||||||||
Other(2) | (4,103) | (3,795) | |||||||||
| Total deferred tax liabilities | (59,133) | (68,344) | |||||||||
| Net deferred tax asset | $ | 185,828 | $ | 248,161 | |||||||
(1)Other deferred tax assets includes investments, deferred gains, and tax credits.
(2)Other deferred tax liabilities includes partnership investments, employee benefit plans, and reverse mortgages.
Based on the Company's history of prior earnings and its expectations of the future, it is anticipated that operating income and the reversal pattern of its temporary differences will, more likely than not, be sufficient to realize a net deferred tax asset of $185.8 million at December 31, 2025. The Company reduces the carrying amounts of deferred tax assets by a valuation allowance if, based on the available evidence, it is more likely than not that such assets will not be realized. The need to establish valuation allowances for deferred tax assets is assessed quarterly. In assessing the requirement for, and amount of, a valuation allowance in accordance with the more likely than not standard for all periods, the Company considers all positive and negative evidence related to the realization of the deferred tax assets. This assessment considers, among other matters, the generation of future profitability, the reversal of deferred tax liabilities, and tax planning strategies.
The Company has $7.3 million of remaining Federal net operating losses (NOLs). Due to Internal Revenue Service (IRS) limitations, $2.7 million are being utilized each year. Accordingly, the Company fully expects to utilize all of these NOLs. The Company has no state NOLs. Finally, the Company has $0.5 million of alternative minimum tax credits that have no expiration date and are fully expected to be utilized.
A reconciliation showing the differences between the Company's effective tax rate and the U.S. Federal statutory tax rate is as follows:
| Year ended December 31, | |||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||
| Statutory federal income tax rate | $ | 79,929 | 21.0 | % | $ | 72,924 | 21.0 | % | $ | 76,707 | 21.0 | % | |||||||||||||||||||||||
State tax, net of federal tax benefit(1) | 17,812 | 4.7 | 16,448 | 4.7 | 16,195 | 4.4 | |||||||||||||||||||||||||||||
| Federal tax credits, net of amortization | (3,084) | (0.8) | (4,592) | (1.3) | (1,729) | (0.5) | |||||||||||||||||||||||||||||
| Nontaxable or nondeductible items (federal) | |||||||||||||||||||||||||||||||||||
| Surrender of bank-owned life insurance policies | — | — | — | — | 4,742 | 1.3 | |||||||||||||||||||||||||||||
| Other | (1,563) | (0.4) | (2,518) | (0.7) | (204) | — | |||||||||||||||||||||||||||||
| Other | 269 | — | 1,502 | 0.4 | 534 | 0.1 | |||||||||||||||||||||||||||||
| Effective tax rate | $ | 93,363 | 24.5 | % | $ | 83,764 | 24.1 | % | $ | 96,245 | 26.3 | % | |||||||||||||||||||||||
(1)State taxes in Pennsylvania and Delaware made up the majority (greater than 50 percent) of the tax effect in this category.
The amount of income taxes paid (net of refunds received) disaggregated by federal (national) and state taxes is shown below:
| Year ended December 31, | |||||||||||||||||
| (Dollars in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Federal tax, net of refunds | $ | 59,427 | $ | 60,504 | $ | 78,624 | |||||||||||
| State and local tax, net of refunds | |||||||||||||||||
| Delaware state tax | 6,063 | 6,113 | 4,217 | ||||||||||||||
| Pennsylvania state tax | 2,996 | 8,297 | 10,335 | ||||||||||||||
| New Jersey state tax | 3,100 | 4,000 | 2,766 | ||||||||||||||
| Other state tax | 3,576 | 3,208 | 3,194 | ||||||||||||||
| Total state and local tax, net of refunds | $ | 15,735 | $ | 21,618 | $ | 20,512 | |||||||||||
| Total income tax paid | $ | 75,162 | $ | 82,122 | $ | 99,136 | |||||||||||
Based on recent changes in the interest rate environment lowering our yields on our Bank Owned Life Insurance (BOLI) policies and the termination of a stable value protection wrap policy, during 2023, we surrendered $65.5 million of previously acquired BOLI policies. This resulted in a taxable gain of $22.6 million and corresponding income tax charge of $7.1 million.
There were no unrecognized tax benefits as of December 31, 2025. The Company records interest and penalties on potential income tax deficiencies as income tax expense. The Company's federal and state tax returns for the 2022 through 2025 tax years are subject to examination as of December 31, 2025. No federal or state income tax return examinations are currently in process. The Company does not expect to record or realize any material unrecognized tax benefits during 2026.
The amortization of the low-income housing credit investments has been reflected as in the amount of $6.7 million for the year ended December 31, 2025, compared to $5.3 million and $3.9 million for the years ended December 31, 2024 and December 31, 2023, respectively.
The amount of affordable housing tax credits, amortization and tax benefits recorded as for the year ended December 31, 2025 were $6.9 million, $6.7 million and $1.6 million respectively. The carrying value of the investment in affordable housing credits is $115.8 million at December 31, 2025, compared to $94.3 million at December 31, 2024.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Feb 28, 2019 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.