UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

FORM 10-K
                                   (Mark One)

(X)  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

                  For the fiscal year ended December 31, 2007

                                       OR

( )  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

            For the transition period from ___________ to __________

                         Commission file number 0-16668

                           WSFS FINANCIAL CORPORATION

     Delaware                                           22-2866913
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
incorporation or organization)

   500  Delaware Avenue, Wilmington, Delaware                   19899
     (Address of principal executive offices)                (Zip Code)

        Registrant's telephone number, including area code (302) 792-6000

           Securities registered pursuant to Section 12(b) of the Act:

     Title of each class               Name of each exchange on which registered
     -------------------               -----------------------------------------
Common Stock, $0.01 par value                   The NASDAQ Stock Market LLC

        Securities registered pursuant to Section 12(g) of the Act: None

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the  preceding  twelve  months (or for such shorter  period that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.  YES X    NO

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( )

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated  filer, a non-accelerated  filer or a smaller reporting  company.
See definitions of "large accelerated  filer,"  "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.



                                                                     
Large accelerated filer       Accelerated filer  X   Non-accelerated filer      Smaller reporting company
                        ---                     ---                        ---                            ---


     Indicate  by check mark  whether  the  registrant  is a shell  company  (as
defined in Exchange Act Rule 12b-2). Yes        No  X
                                         ---       ---

     The aggregate market value of the voting stock held by nonaffiliates of the
registrant,  based on the  closing  price of the  registrant's  common  stock as
quoted on NASDAQ as of June 29,  2007 was  $398,547,000.  For  purposes  of this
calculation only, affiliates are deemed to be directors,  executive officers and
beneficial owners of greater than 10% of the outstanding shares.

     As of March 5, 2008, there were issued and outstanding  6,173,236 shares of
the registrant's common stock.

                       DOCUMENTS INCORPORATED BY REFERENCE
     Portions of the  Registrant's  Proxy  Statement  for the Annual  Meeting of
Stockholders to be held on April 24, 2008 are  incorporated by reference in Part
III hereof.



                           WSFS FINANCIAL CORPORATION
                                TABLE OF CONTENTS

                                     Part I


                                                                                                                      Page
                                                                                                                      ----

                                                                                                              
Item 1.           Business  ..............................................................................              3

Item 1A.          Risk Factors  ..........................................................................             22

Item 1B.          Unresolved Staff Comments  .............................................................             24

Item 2.           Properties  ............................................................................             24

Item 3.           Legal Proceedings.......................................................................             28

Item 4.           Submission of Matters to a Vote of Security Holders.....................................             28

                                     Part II

Item 5.           Market for Registrant's Common Equity, Related Stockholder - Matters
                  and Issuer Purchases of Equity Securities...............................................             28

Item 6.           Selected Financial Data.................................................................             30

Item 7.           Management's Discussion and Analysis of Financial Condition and
                      Results of Operations...............................................................             30

Item 7A.          Quantitative and Qualitative Disclosures About Market Risk..............................             45

Item 8.           Financial Statements and Supplementary Data.............................................             46

Item 9.           Changes in and Disagreements with Accountants on Accounting and
                      Financial Disclosure................................................................             89

Item 9A.          Controls and Procedures.................................................................             89

Item 9B.          Other Information.......................................................................             91

                                    Part III

Item 10.          Directors, Executive Officers and Corporate Governance..................................             91

Item 11.          Executive Compensation..................................................................             91

Item 12.          Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
                    Matters...............................................................................             91

Item 13.          Certain Relationships and Related Transactions, and Director Independence...............             92

Item 14.          Principal Accountant Fees and Services..................................................             92

Item 15.          Exhibits and Financial Statement Schedules..............................................             92

                  Signatures..............................................................................             95


                                      -2-



                                     PART I

FORWARD-LOOKING STATEMENTS

         Within this Annual Report on Form 10-K and exhibits thereto, management
  has  included  certain  "forward-looking  statements"  concerning  the  future
  operations of WSFS Financial  Corporation ("the Company," "our Company," "we,"
  "our" or  "us").  It is  management's  desire to take  advantage  of the "safe
  harbor"  provisions of the Private  Securities  Litigation Reform Act of 1995.
  This  statement  is for the  express  purpose of  availing  the Company of the
  protections  of  such  safe  harbor  with  respect  to  all   "forward-looking
  statements"  contained  in  its  financial  statements.  Management  has  used
  "forward-looking  statements"  to  describe  the future  plans and  strategies
  including  expectations of our future financial results.  Management's ability
  to predict  results or the effect of future plans and  strategy is  inherently
  uncertain.  Factors that could affect  results  include  interest rate trends,
  competition, the general economic climate in Delaware, the mid-Atlantic region
  and the country as a whole,  asset  quality,  loan  growth,  loan  delinquency
  rates,  operating  risk,  uncertainty  of  estimates in general and changes in
  federal and state  regulations,  among other factors.  These factors should be
  considered in evaluating the "forward-looking  statements," and undue reliance
  should not be placed on such statements.  Actual results may differ materially
  from management  expectations.  We do not undertake and specifically  disclaim
  any  obligation to publicly  release the result of any  revisions  that may be
  made  to  any   forward-looking   statements  to  reflect  the  occurrence  of
  anticipated or unanticipated  events or  circumstances  after the date of such
  statements.

ITEM 1.  BUSINESS
- -----------------

OUR BUSINESS

         WSFS  Financial  Corporation  is  parent to WSFS  Bank,  one of the ten
oldest banks in the United States  continuously-operating under the same name. A
permanent  fixture in this  community,  WSFS has been in operation for more than
175 years. In addition to its focus on stellar  customer  service,  the Bank has
continued   to   fuel   growth   and   remain   relevant.    The   Bank   is   a
relationship-focused,  locally-managed,  community banking  institution that has
grown to become the largest thrift holding company among traditional  thrifts in
the State of Delaware, the second largest commercial lender in the state and the
fourth largest bank in terms of Delaware deposits.

         WSFS'  core  banking   business  is   commercial   lending   funded  by
customer-generated  deposits.  We have  built  a $1.5  billion  commercial  loan
portfolio by recruiting the best seasoned  commercial lenders in our markets and
offering a high level of service and  flexibility  typically  associated  with a
community bank. We fund this business  primarily with deposits generated through
commercial  relationships  and retail  deposits in our 29 branch retail  banking
franchise  located in Delaware and  southeastern  Pennsylvania.  We also offer a
broad  variety of  consumer  loan  products,  retail  securities  and  insurance
brokerage through our retail branches.

         In 2005, we established WSFS Wealth  Strategies,  our wealth management
services  division.  We built  this  division  in  response  to demand  from our
commercial  banking clients as their businesses and our relationships  with them
matured.  We also built this  business  as we learned  that  competitors  in our
market provide a poor service and product offering to non-ultra  wealthy clients
- - those with less than $5 million in investable  assets.  Our wealth  management
business is complemented by an asset management company,  Cypress Capital, which
we acquired in 2004.

         Our Cash Connect  division is a premier  provider of ATM Vault Cash and
related  services in the United  States.  Cash  Connect  manages  more than $265
million in vault cash in approximately  10,000 ATMs nationwide and also provides
online  reporting and ATM cash  management,  predictive  cash ordering,  armored
carrier  management,  ATM  processing  and  equipment  sales.  Cash Connect also
operates over 300 ATMs for WSFS Bank, which owns the largest branded ATM network
in Delaware.

                                      -3-



WSFS POINTS OF DIFFERENTIATION

         While all banks offer similar  products and  services,  we believe that
WSFS has set itself  apart from other  banks in our market and the  industry  in
general.  The following  factors  summarize  what we believe are those points of
differentiation.

Community Banking Model

         Our size and  community  banking  model play a key role in our success.
Our  approach to business  combines a  service-oriented  culture  (which we call
Stellar Service) with a strong compliment of products and services, all aimed at
meeting the needs of our retail and business  customers.  We believe the essence
of being a community bank means that we are:

o    Small enough to offer customers responsive, personalized service and direct
     access to decision makers,

o    Large enough to provide all the products and services  needed by our target
     market customers.

         As the financial  services industry has consolidated,  many independent
banks have been  acquired  by national  companies  that have  centralized  their
decision-making   authority   away  from  their   customers  and  focused  their
mass-marketing  to a regional or even  national  customer  base. We believe this
trend has  frustrated  smaller  business  owners who have become  accustomed  to
dealing  directly with their bank's senior  executives  and  discouraged  retail
customers who often experience  deteriorating levels of service in the branches.
Additionally,  it  frustrates  bank  Associates  who are no longer  empowered to
provide good and timely service to their customers.

WSFS Bank offers:

o    Rapid  response.  Our customers  tell us this is a critical  differentiator
     from larger, in-market competitors.

o    One  point of  contact.  Our  Relationship  Managers  are  responsible  for
     understanding  his or her customers' needs and bringing the right resources
     in the Bank together to meet those needs.

o    A customized approach to our clients. We believe this gives us an advantage
     over our competitors  who are too large or centralized to offer  customized
     products or services.

o    Products and services that our customers value. This includes a broad array
     of banking and cash management  products,  as well as a legal lending limit
     high enough to meet the credit needs of our  customers,  especially as they
     grow.

Building Associate Engagement and Customer Advocacy

         Our business model is built on a concept called Human Sigma.  The Human
Sigma model,  identified by Gallup,  Inc., begins with Associates who have taken
ownership of their jobs because their  strengths  have been  identified and they
have been matched with the right position and strong  management.  This strategy
motivates Associates, accelerates their development and unleashes innovation and
productivity to engage our most valuable asset, our customers.  As a result,  we
create Customer Advocates,  or customers who have built an emotional  attachment
to the Bank.  Research studies continue to show a direct link between  Associate
engagement, customer engagement and a company's financial performance.

                                      -4-



                                [GRAPHIC OMITTED]

[Engaged                       [Customer                 [Shareholder
Associates]                    Advocates]                Value]


Surveys conducted for us by a nationally recognized polling company indicate:

o    Our Associate  Engagement  scores  consistently rank in the top quartile of
     companies  polled.  In 2007,  there were 7.6 engaged  Associates  for every
     disengaged Associate. This compares to a 2.6:1 ratio in 2003 and a national
     average of 1.9:1.

o    Customer  surveys rank us in the top 10% of all companies,  a "world class"
     rating.  More than 38% of our  customers  ranked us a "five" out of "five,"
     strongly  agreeing  with the  statement  "I can't  imagine a world  without
     WSFS."

         We  believe  that by  fostering  the energy of  engaged  and  empowered
Associates,  we have become an  employer  of choice in our  market.  In 2006 and
2007, WSFS was ranked "Best Place to Work" by The News Journal.

Strong Market Demographics

         Delaware  is situated  in the middle of the  Washington,  DC - New York
corridor which  includes the urban markets of  Philadelphia  and Baltimore.  The
state benefits from this urban  concentration as well as from a unique political
environment   that  has   created   favorable   law  and  legal   structure,   a
business-friendly  environment and a fair tax system. In its 2007 overview,  the
Corporation for Enterprise Development ranked Delaware as one of only two states
to receive "Straight A's" in its assessment of economic  development  throughout
the U.S.  Additionally,  in a recent article, CFO Magazine ranked Delaware first
or second in each of the four measures it surveyed  regarding  impressions about
state  tax  environments.  Demographics  consistently  compare  favorably  to US
economic and demographic averages.

       -------------------------------------------- --------------- ------------
                                                                       National
       (Most recent available statistics)              Delaware        Average
       -------------------------------------------- --------------- ------------
       Average GDP Growth (Average 2003-2006)            4.2%            3.1%
       -------------------------------------------- --------------- ------------
       Unemployment (For December 2007)                  3.8%            5.0%
       -------------------------------------------- --------------- ------------
       Median Household Income (Average 2005-2006)     $52,676         $48,023
       -------------------------------------------- --------------- ------------
       Population Growth (2000-2006)                     8.9%            6.4%
       -------------------------------------------- --------------- ------------

Lending Discipline

         We put a great deal of discipline around our lending, including planned
portfolio  diversification and a willingness to accept a slightly higher risk of
default for  customers in favor of a lower  probability  of loss should  default
occur.  Additionally,  we take a proactive approach to identifying trends in our
business and lending  market and have  responded  proactively  to those areas of
concern.  For instance,  we have limited our exposure to  construction  and land
development  (CLD) loans as we  anticipated  an end to the  expansion in housing
prices.   We  have  also  increased  our  portfolio   monitoring  and  reporting
sophistication. We maintain diversification in our loan portfolio to limit our

                                      -5-



exposure  to any single  type of credit.  Such  discipline  supplements  careful
underwriting and the benefits of knowing our customers.

         We have been subject to many of the same  pressures  facing the banking
industry,  including  an increase in our  delinquent  loans,  problem  loans and
charge-offs from the  unsustainably  low levels in recent years. The measures we
have taken  strengthen  the Bank's  credit  position  by  diversifying  risk and
limiting exposure.

Disciplined and Aggressive Capital Management

         We understand  that the  Company's  capital (or  shareholders'  equity)
belongs to the Company's  shareholders.  They have  entrusted this capital to us
with the expectation  that it will be kept safe, but with the equal  expectation
that it will earn an adequate return. As a result, we prudently but aggressively
manage our shareholders'  capital. Since 1996, the year we first implemented our
capital  management  philosophy,  we have  returned  more than 70% of cumulative
earnings in the form of dividends  and share  repurchase.  In 2007, we increased
dividends by 25% and repurchased 564,100 shares or 8% of our common stock.

Strong Performance Expectations

         We are focused on aggressive long term financial goals. We define "high
performing"  as the top  quintile  in return on assets  (ROA),  return on equity
(ROE) and  earnings  per share  (EPS)  growth.  While  industry  headwinds  have
depressed these measures for the industry in recent years, we believe that, long
term, these targets should  translate to  approximately  1.5% ROA, 18% ROE and a
12% EPS growth rate.  Management  incentives  are paid, in large part,  based on
driving  performance in these areas.  "Target" payment level is only achieved by
reaching  performance  at the 60th  percentile  of a peer group of all  publicly
traded bank and thrifts in our size range.  More detail on this plan is included
in our proxy statement.

Growth

         Our successful  growth in lending,  deposit gathering and earnings have
been  the  result  of  our  focused  strategy  that  provides  the  service  and
responsiveness  of a  community  bank in a  consolidating  marketplace.  We will
continue to grow by:

o    Recruiting  and developing  talented,  service-minded  Associates.  We have
     successfully  recruited Associates with strong community ties to strengthen
     our existing markets and provide a strong start in new communities. We also
     focus efforts on developing  talent and leadership in our current Associate
     base to better equip those  Associates  for their jobs and prepare them for
     leadership roles at WSFS.

o    Embracing Human Sigma in all we do. We are committed to building  Associate
     engagement  and customer  advocacy as a way to develop our culture and grow
     our  franchise.  We firmly  believe  franchise  and  shareholder  value are
     directly linked to our Human Sigma model.

o    Continuing strong growth in commercial lending by:

     o    Selectively building a presence in contiguous markets.
     o    Providing  product solutions like Remote Deposit Capture to facilitate
          commercial  banking  outside of our  primary  market.
     o    Offering our community  banking model that  combines  Stellar  Service
          with the banking products and services our business customers demand.

o    Aggressively  growing  deposits.  In 2003,  we energized  our retail branch
     strategy by combining  Stellar  Service with an expanded and updated branch
     network.  We have also  implemented  a number  of  additional  measures  to
     accelerate  our deposit  growth.  We will  continue to grow  deposits by:

                                      -6-



     o    Expanding  and  renovating  our  retail  branch  network.
     o    Further expanding our commercial  customer  relationships with deposit
          products.
     o    Finding  creative  ways to build  deposit  market share such as hiring
          deposit-focused   relationship   managers,   and  targeted   marketing
          programs.

o    Growing our wealth  management  services  division by leveraging the strong
     relationships  we  have  with  our  current  customer  base  and  providing
     unparalleled service to non-ultra wealthy clients in our market.

Results

         Our focus on these points of differentiation has allowed us to grow our
core franchise and build value for our shareholders.  Since 2003, our commercial
loans have grown from $697 million to $1.5 billion, a strong 24% compound annual
growth rate (CAGR). Over the same period, customer deposits have grown from $922
million to $1.5 billion, a 15% CAGR. More importantly,  over the last generation
shareholder value has increased at a far greater rate than our banking peers and
the market in general, as is evident in the table below.

        Cumulative Total Shareholder Return Compared with Performance of
                                Selected Indexes
                  December 31, 1997 through December 31, 2007

                               [GRAPHIC OMITTED]


- -----------------------------------------------------------------------------------------------------------------
                                     1997   1998   1999   2000   2001   2002   2003   2004   2005   2006   2007
- -----------------------------------------------------------------------------------------------------------------
                                                                        
WSFS Financial Corporation            100    85      64     66     90    172    236    317    325    357    269
- -----------------------------------------------------------------------------------------------------------------
Dow Jones Total Market Index          100   123     149    134    117     89    115    127    132    150    156
- -----------------------------------------------------------------------------------------------------------------
Nasdaq Bank Index                     100    90      85     99    112    120    159    181    178    202    162
- -----------------------------------------------------------------------------------------------------------------


SUBSIDIARIES

         We have two consolidated subsidiaries, WSFS Bank and Montchanin Capital
Management, Inc.

         WSFS Bank has one subsidiary WSFS  Investment  Group,  Inc.,  which was
formed  in  1989  and  markets  various  third-party  investment  and  insurance
products, such as single-premium  annuities,  whole life policies and securities
primarily through the Bank's retail banking system and directly to the public.

         Montchanin Capital Management,  Inc.  ("Montchanin") was formed in late
2003 to provide  asset  management  services  in the our  primary  market  area.
Montchanin has one  consolidated  subsidiary,  Cypress Capital  management,  LLC
("Cypress").  As of December 31, 2007 Montchanin owned 100% of Cypress.  Cypress
is  a  Wilmington  based

                                      -7-



investment  advisory firm servicing high net-worth  individuals and institutions
and had  approximately  $515 million in assets under  management at December 31,
2007.

DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY

         Condensed  average  balance sheets for each of the last three years and
analyses  of net  interest  income  and  changes in net  interest  income due to
changes in volume and rate are presented in "Results of Operations"  included in
the section entitled "Management's Discussion and Analysis."


INVESTMENT ACTIVITIES

         Our  short-term  investment  portfolio  is  intended to keep the Bank's
funds  fully  employed  at  the  maximum  after-tax  return,  while  maintaining
acceptable  credit,  market and interest-rate  risk limits, and providing needed
liquidity under current circumstances.  Book values of investment securities and
short-term investments by category, stated in dollar amounts and as a percent of
total assets, follow:



                                                                     December 31,
                                       -----------------------------------------------------------------------------
                                                2007                     2006                         2005
                                       ---------------------    ----------------------     -------------------------
                                                    Percent                   Percent                      Percent
                                                      of                         of                          of
                                         Amount     Assets          Amount    Assets          Amount        Assets
                                         ------     ------          ------    ------          ------        ------
                                                                 (Dollars in Thousands)
                                                                                              
Held-to-Maturity:
- -----------------
State and political subdivisions....    $ 1,516        0.1 %       $ 4,219       0.1%        $ 4,806           0.2%
- --------------------------------        -------        ---         -------       ---        --------           ---

Available-for-Sale:
- ------------------

Reverse Mortgages...................      2,037        0.1             598         -             785             -
State and political subdivisions....      4,115        0.1           2,785       0.1             975             -
U.S. Government and agencies........     20,477        0.6          46,920       1.6          51,702           1.8
- ----------------------------            -------        ---         -------       ---        --------           ---
                                         26,629        0.8          50,303       1.7          53,462           1.8
                                        -------        ---         -------       ---        --------           ---

Short-term investments:
- ----------------------

Interest-bearing deposits in
- ----------------------------
other banks ........................      1,078          -             243         -             148             -
- -----------                             -------        ---         -------       ---         -------           ---
                                        $29,223        0.9%        $54,765       1.8%        $58,416           2.0%
                                        =======        ===         =======       ===         =======           ===



         During 2007, there were no sales of investment securities classified as
available-for-sale.  Municipal  bonds  totaling  $1.1 million were called by the
issuers.  Proceeds from the sale of investments  during 2006 and 2005 were $11.0
million and $60.7  million,  respectively.  There were net losses of $41,000 and
$609,000  realized on sales in 2006 and 2005,  respectively.  The cost basis for
all investment  security sales was based on the specific  identification  method
(actual  costs are  matched  to  specific  securities).  There  were no sales of
investment securities classified as held-to-maturity in 2007, 2006 and 2005.

                                      -8-



         The  following  table shows the terms to maturity and related  weighted
average yields of investment  securities and short-term  investments at December
31, 2007.  Substantially  all of the related  interest and  dividends  represent
taxable income.



                                                                At December 31, 2007
                                                              ------------------------
                                                                           Weighted
                                                                           Average
                                                                Amount     Yield (1)
                                                                ------    ---------
                                                              (Dollars In Thousands)
                                                                     

Held-to-Maturity:

State and political subdivisions (2):
      Within one year ...................................      $     -            - %
      After one but within five years ...................          875         7.53
      After ten years ...................................          641         5.27
                                                               -------

Total debt securities, held-to-maturity .................        1,516         6.57
                                                               -------

Available-for-Sale:

Reverse Mortgages (3):
      Within one year ...................................      $ 2,037            -
                                                               -------

                                                                 2,037            -
                                                               -------

State and political subdivisions (2):
      Within one year ...................................            -            -
      After one but within five years ...................        2,015         3.97
      After five but within ten years ...................        2,100         4.28
                                                               -------

                                                                 4,115         4.12
                                                               -------

U.S. Government and agencies:
      Within one year ...................................      $13,978         5.22
      After one but within five years ...................        6,499         3.94
                                                               -------

                                                                20,477         4.81
                                                               -------

Total debt securities, available-for-sale ...............       26,629         4.34
                                                               -------

Total debt securities ...................................       28,145         4.46
                                                               -------

Short-term investments:

      Interest-bearing deposits in other banks ..........        1,078         0.94
                                                               -------

Total short-term investments ............................        1,078         0.94
                                                               -------

                                                               $29,223         4.33
                                                               =======


(1)  Reverse   mortgages   have  been  excluded  from  weighted   average  yield
     calculations because income can vary significantly from reporting period to
     reporting  period  due to the  volatility  of  factors  used to  value  the
     portfolio.
(2)  Yields  on  state  and  political  subdivisions  are  not  calculated  on a
     tax-equivalent basis since the effect would be immaterial.
(3)  Reverse  mortgages do not have  contractual  maturities.  We have  included
     reverse mortgages in maturities within one year.

         In addition  to these  investment  securities,  we have  maintained  an
investment  portfolio of mortgage-backed  securities,  $12.4 million of which is
classified as "trading." At December 31, 2007 mortgage-backed  securities with a
par value of $464.9  million  were  pledged as  collateral  for retail  customer
repurchase  agreements and municipal  deposits.  Accrued interest receivable for
mortgage-backed  securities was $2.0 million at both December 31, 2007 and 2006.
Proceeds from the sale of mortgage-backed securities  available-for-sale in 2007
were $2.7 million,  resulting in a gain of $82,000.  In 2006,  proceeds from the
sale  of  mortgage-backed  securities  available-for-sale  were  $49.6  million,
resulting in a loss of $1.9 million.

         The following table shows the book value of mortgage-backed  securities
and their  related  weighted  average  contractual  rates at the end of the last
three fiscal years.




                                                                                 December 31,
                                                -------------------------------------------------------------------------------
                                                         2007                       2006                        2005
                                                -----------------------    ------------------------    ------------------------
                                                  Amount       Rate          Amount        Rate           Amount      Rate
                                                  ------       ----          ------        ----           ------      ----
                                                                            (Dollars in Thousands)
                                                                                                   
Available-for-Sale:
- -------------------

Collateralized mortgage obligations .......     $ 407,113      4.97%        $ 424,748       4.88%       $ 526,546      4.73%
FNMA ......................................        35,654      4.04            42,254       4.05           49,785     3.98
FHLMC .....................................        31,357      4.31            31,121       4.29           32,211     4.05
GNMA ......................................        15,923      4.73            19,115       4.72           14,643     4.37
                                                ---------      ----         ---------       ----        ---------     ----
                                                $ 490,047      4.85%        $ 517,238       4.77%       $ 623,185     4.63%
                                                =========      ====         =========       ====        =========     ====
Trading:
- --------

Collateralized mortgage obligations........      $ 12,364      7.79%        $  12,364       8.35%       $ 11,951      7.38%
                                                 ========      ----         =========       ----        ========      ====



CREDIT EXTENSION ACTIVITIES

         Over the past  several  years we have  focused on  increasing  the more
profitable  segments  of our loan  portfolio.  Our current  lending  activity is
concentrated  on lending to small to mid-sized  businesses  in the  mid-Atlantic
region of the United  States  primarily in Delaware and  contiguous  counties in
Pennsylvania, Maryland and New Jersey. In 2003, residential first mortgage loans
comprised 35.1% of the loan portfolio, while the combination of commercial loans
and commercial  real estate loans made up only 52.3%.  In contrast,  at December
31, 2007,  residential  loans  totaled only 20.1%,  while  commercial  loans and
commercial  real estate loans have increased to a combined total of 68.6% of the
loan portfolio. Traditionally, the majority of typical thrift institutions' loan
portfolios have consisted of first mortgage loans on residential properties.

                                      -10-





         The  following  table shows the  composition  of our loan  portfolio at
year-end for the last five years.



                                                                               December 31,
                              ------------------------------------------------------------------------------------------------------
                                        2007                   2006                2005                2004               2003
                              ----------------------  --------------------  ------------------  ------------------  ----------------
                                  Amount    Percent       Amount  Percent     Amount  Percent      Amount  Percent    Amount Percent
                                  ------    -------       ------  -------     ------  -------      ------  -------    ------ -------
                                                                          (Dollars in Thousands)
                                                                                                
Type of Loans
- -------------
Residential real estate (1).. $  449,853      20.1%    $ 474,871    23.5%  $ 457,651    25.8%   $ 443,023   28.9%   $ 458,408  35.1%
Commercial real estate:
  Commercial mortgage .......    465,928      20.9       422,089    20.9     410,552    23.1      416,287   27.1      335,050  25.7
  Construction ..............    276,939      12.4       241,931    12.0     178,418    10.0      120,604    7.9       54,742   4.2
                              ----------     -----    ----------   -----  ----------   -----   ----------  -----   ---------- -----
    Total commercial
      real estate............    742,867      33.3       664,020    32.9     588,970    33.1      536,891   35.0      389,792  29.9
Commercial ..................    787,539      35.3       643,918    31.9     508,930    28.7      368,752   24.0      292,516  22.4
Consumer ....................    278,272      12.4       263,478    13.0     244,820    13.8      210,959   13.7      186,133  14.3
                              ----------     -----    ----------   -----  ----------   -----   ----------  -----   ---------- -----

Gross loans ................. $2,258,531     101.1    $2,046,287   101.3  $1,800,371   101.4   $1,559,625  101.6   $1,326,849 101.7


Less:
(Deferred fees)
  unearned income ...........       (701)      0.0          (838)    0.0        (304)    0.0          (64)   0.0         (414)  0.0
Allowance for loan
  losses.....................     25,252       1.1        27,384     1.3      25,381     1.4       24,222    1.6       22,386   1.7
                              ----------     -----    ----------   -----  ----------   -----   ----------  -----   ---------- -----

Net loans ................... $2,233,980     100.0%   $2,019,741   100.0% $1,775,294   100.0%  $1,535,467  100.0%  $1,304,877 100.0%
                              ==========     =====    ==========   =====  ==========   =====   ==========  =====   ========== =====



(1)  Includes $2,418;  $925; $438;  $3,249;  and $1,465 of residential  mortgage
     loans held-for-sale at December 31, 2007; 2006; 2005; 2004; and 2003.

                                      -11-



         The following tables show how much time remains until our loans mature.
The first table  details the total loan  portfolio  by type of loan.  The second
table details the total loan  portfolio by loans with fixed  interest  rates and
loans with  adjustable  interest  rates.  The tables  show loans by  contractual
maturity.  Loans may be pre-paid so that the actual maturity is earlier than the
contractual maturity.  Prepayments tend to be highly dependent upon the interest
rate  environment.  Loans having no stated  maturity or  repayment  schedule are
reported in the Less than One Year category.



                                               Less than           One to             Over
                                               One Year          Five Years        Five Years           Total
                                               --------          ----------        ----------           -----
                                                                   (Dollars in Thousands)

                                                                                      
Real estate loans (1) ......................   $ 95,449          $273,682           $544,233        $  913,364
Construction loans .........................    158,044           111,508              7,387           276,939
Commercial loans ...........................    293,603           284,438            209,497           787,538
Consumer loans .............................    136,826            57,887             83,559           278,272
                                               $683,922          $727,515           $844,676        $2,256,113
Rate sensitivity:
  Fixed ....................................   $ 78,459          $325,242           $343,232        $  746,933
  Adjustable (2) ...........................    605,463           402,273            501,444         1,509,180
Gross loans                                    $683,922          $727,515           $844,676        $2,256,113


(1)  Includes commercial mortgage loans; does not include loans held-for-sale.
(2)  Includes hybrid adjustable rate mortgages


Residential Real Estate Lending.

          We originate  residential  mortgage loans with loan-to-value ratios up
to 100% and generally  require private  mortgage  insurance for up to 30% of the
mortgage amount for mortgage loans with  loan-to-value  ratios exceeding 80%. We
do not  have  any  significant  concentrations  of such  insurance  with any one
insurer.  On a limited basis, we originate or purchase loans with  loan-to-value
ratios  exceeding  80%  without a private  mortgage  insurance  requirement.  At
December 31, 2007, the balance of all such loans was approximately $4.4 million.

         Generally,   our  residential   mortgage  loans  are  underwritten  and
documented in accordance with standard  underwriting  criteria  published by the
Federal Home Loan Mortgage  Corporation  ("FHLMC") to assure maximum eligibility
for subsequent sale in the secondary  market.  We sell only those loans that are
originated specifically with the intention to sell.

         To protect the propriety of our liens,  we require that title insurance
be obtained.  We also require fire and extended coverage casualty  insurance for
properties securing residential loans. All properties securing residential loans
made by us are  appraised  by  independent,  licensed and  certified  appraisers
selected by us and are subject to review in accordance with our standards.

         The majority of our adjustable-rate  residential real estate loans have
interest rates that adjust yearly after an initial period. Typically, the change
in rate is limited to two percentage points at the adjustment date.  Adjustments
are  generally  based upon a margin  (currently  2.75%) over the weekly  average
yield on U.S. Treasury securities adjusted to a constant maturity,  as published
by the Federal Reserve Board.

         Generally,  the maximum rate on these loans is up to six percent  above
the initial interest rate. We underwrite  adjustable-rate  loans under standards
consistent with private mortgage insurance and secondary

                                      -12-



market  criteria.  We do not originate  adjustable-rate  mortgages  with payment
limitations that could produce negative  amortization.  Consistent with industry
practice in our market area,  we typically  originate  adjustable-rate  mortgage
loans with discounted initial interest rates.

         The retention of  adjustable-rate  mortgage loans in our loan portfolio
helps  mitigate  our risk to  changes  in  interest  rates.  However,  there are
unquantifiable  credit risks  resulting  from potential  increased  costs to the
borrower as a result of repricing adjustable-rate mortgage loans. It is possible
that  during  periods  of  rising  interest  rates,   the  risk  of  default  on
adjustable-rate  mortgage  loans may  increase due to the upward  adjustment  of
interest costs to the borrower. Further, although adjustable-rate mortgage loans
allow us to increase  the  sensitivity  of our asset base to changes in interest
rates,  the extent of this interest  sensitivity  is limited by the periodic and
lifetime  interest rate  adjustment  limitations.  Accordingly,  there can be no
assurance that yields on our adjustable-rate  mortgages will adjust sufficiently
to  compensate  for  increases  to our cost of funds  during  periods of extreme
interest rate increases.

         The original  contractual loan payment period for residential  loans is
normally 10 to 30 years.  Because  borrowers may refinance or prepay their loans
without  penalty,  these loans tend to remain  outstanding  for a  substantially
shorter period of time. First mortgage loans customarily  include  "due-on-sale"
clauses on adjustable- and fixed-rate  loans.  This provision gives us the right
to declare a loan immediately due and payable in the event the borrower sells or
otherwise  disposes of the real property  subject to the  mortgage.  Due-on-sale
clauses are an  important  means of  adjusting  the rate on existing  fixed-rate
mortgage loans to current market rates. We enforce  due-on-sale  clauses through
foreclosure and other legal proceedings to the extent available under applicable
laws.

         In general,  loans are sold without  recourse except for the repurchase
arising from standard contract  provisions covering violation of representations
and warranties or, under certain investor  contracts,  a default by the borrower
on the first  payment.  We also have limited  recourse  exposure  under  certain
investor  contracts  in the event a  borrower  prepays a loan in total  within a
specified  period after sale,  typically one year.  The recourse is limited to a
pro rata portion of the premium  paid by the  investor  for that loan,  less any
prepayment penalty collectible from the borrower.


Commercial Real Estate, Construction and Commercial Lending.

         Federal  savings banks are generally  permitted to invest up to 400% of
their total regulatory capital in nonresidential real estate loans and up to 20%
of its assets in commercial  loans.  As a federal savings bank that was formerly
chartered  as a  Delaware  savings  bank,  we have  certain  additional  lending
authority.

         We  offer   commercial  real  estate  mortgage  loans  on  multi-family
properties and other commercial real estate. Generally, loan-to-value ratios for
these loans do not exceed 80% of appraised value at origination.

         We offer  commercial  construction  loans to developers.  In some cases
these  loans are made as  "construction/permanent"  loans,  which  provides  for
disbursement  of loan funds during  construction  and  automatic  conversion  to
mini-permanent  loans  (1-5  years)  upon  completion  of  construction.   These
construction  loans are made on a short-term  basis,  usually not  exceeding two
years, with interest rates indexed to our prime rate or London InterBank Offered
Rate ("LIBOR"),  in most cases, and adjusted periodically as these rates change.
The loan appraisal process includes the same evaluation criteria as required for
permanent  mortgage loans, but also takes into  consideration:  completed plans,
specifications, comparables and cost estimates. Prior to approval of the credit,
these items are used as a basis to determine the appraised  value of the subject
property when  completed.  Our policy  requires that all  appraisals be reviewed
independently  from our commercial lending staff.  Generally,  the loan-to-value
ratios for  construction  loans do not exceed 75%. The initial  interest rate on
the permanent  portion of the financing is determined by the  prevailing  market
rate at the

                                      -13-



time of conversion to the permanent  loan. At December 31, 2007,  $431.8 million
was  committed  for  construction  loans,  of  which  $276.9  million  had  been
disbursed.

         The remainder of our commercial  lending includes loans for the purpose
of working capital,  financing  equipment  acquisitions,  business expansion and
other  business  purposes.  These  loans  generally  range in  amounts up to $10
million, and their terms range from less than one year to seven years. The loans
generally  carry variable  interest rates indexed to our prime rate or LIBOR, at
the time of closing.  We have no loans to any one industry with a  concentration
greater then 12.0%.

         Commercial,  commercial mortgage and construction lending have a higher
level of risk than residential  mortgage lending.  These loans typically involve
larger loan  balances  concentrated  with single  borrowers or groups of related
borrowers.   In  addition,   the  payment   experience   on  loans   secured  by
income-producing  properties is typically dependent on the successful  operation
of the related real estate project and may be more subject to adverse conditions
in the commercial real estate market or in the economy  generally.  The majority
of our commercial and commercial real estate loans are  concentrated in Delaware
and surrounding areas.

         Construction  loans  involve  additional  risk  because  loan funds are
advanced as  construction  projects  progress.  The valuation of the  underlying
collateral  can  be  difficult  to  quantify  prior  to  the  completion  of the
construction.  This is due to  uncertainties  inherent in  construction  such as
changing construction costs, delays arising from labor or material shortages and
other unpredictable  contingencies.  We attempt to mitigate these risks and plan
for these  contingencies  through  additional  analysis  and  monitoring  of our
construction projects.  Construction loans receive independent inspections prior
to disbursement of funds.

         Federal law limits the  extensions of credit to any one borrower to 15%
of unimpaired capital, or 25% if the difference is secured by readily marketable
collateral  having a  market  value  that  can be  determined  by  reliable  and
continually available pricing. Extensions of credit include outstanding loans as
well as contractual  commitments to advance  funds,  such as standby  letters of
credit,  but do not include unfunded loan commitments.  At December 31, 2007, no
borrower had collective outstandings exceeding these limits.


Consumer Lending.

         Our primary  consumer  credit products are  equity-secured  installment
loans  and  home  equity  lines  of  credit.   At  December  31,  2007,  we  had
equity-secured  installment  loans totaling $147.6 million which represented 53%
of total  consumer  loans. A home equity line of credit grants a borrower a line
of credit of up to 100% of the appraised value (net of any senior  mortgages) of
their residence.  This line of credit is secured by a mortgage on the borrower's
property  and can be drawn upon at any time during the period of  agreement.  At
December  31,  2007,  we had  extended  $205.7  million in home equity  lines of
credit,  of which $108.9 million had been drawn at that date.  Home equity lines
of credit offer  customers with potential  Federal  income tax  advantages,  the
convenience of checkbook access and revolving credit features. Home equity lines
of credit  expose us to the risk that  falling  collateral  values  may leave us
inadequately  secured,  while the risk on  products  like home  equity  loans is
mitigated as they amortize over time.  We have not had any  significant  adverse
experience on home equity lines of credit.

                                      -14-



The following shows our consumer loans at year-end, for the last five years.



                                                                                 December 31,
                                       ---------------------------------------------------------------------------------------------
                                             2007               2006                2005               2004               2003
                                       ----------------    ----------------    ---------------    ---------------    ---------------
                                        Amount  Percent    Amount   Percent    Amount  Percent    Amount  Percent    Amount  Percent
                                       -------  -------    ------   -------    ------  -------    ------  -------    ------  -------
                                                                           (Dollars in Thousands)
                                                                                               
Equity secured installment loans....  $147,551   53.0%   $141,708     53.8%  $136,721    55.8%  $131,935   62.6%   $124,411   66.9%
Home equity lines of credit.........   108,873   39.1     100,981     38.3     87,503    35.7     56,755   26.9      39,858   21.4
Automobile .........................     1,159    0.4       1,702      0.7      2,616     1.1      5,126    2.4       9,137    4.9
Unsecured lines of credit...........     5,011    1.8       8,947      3.4      8,780     3.6      9,338    4.4      10,506    5.6
Other ..............................    15,678    5.7      10,140      3.8      9,200     3.8      7,805    3.7       2,221    1.2
                                      --------  -----    --------      ---   --------   -----   --------  -----    --------  -----

Total consumer loans................  $278,272  100.0%   $263,478      100%  $244,820   100.0%  $210,959  100.0%   $186,133  100.0%
                                      ========  =====    ========      ===   ========   =====   ========  =====    ========  =====


                                      -15-



Loan Originations, Purchase and Sales.

         We have engaged in traditional lending activities primarily in Delaware
and contiguous areas of neighboring  states. As a federal savings bank, however,
we may originate,  purchase and sell loans throughout the United States. We have
purchased  limited  amounts of loans from  outside our normal  lending area when
such   purchases   are  deemed   appropriate.   We  originate   fixed-rate   and
adjustable-rate  residential real estate loans through our banking  offices.  In
addition,  we  have  established  relationships  with  correspondent  banks  and
mortgage brokers to originate loans.

         During 2007,  we  originated  $671 million of  residential  real estate
loans. This compares to originations of $459 million in 2006. From time to time,
we have purchased  whole loans and loan  participations  in accordance  with our
ongoing asset and liability management objectives. Purchases of residential real
estate  loans from  correspondents  and brokers  primarily  in the  mid-Atlantic
region  totaled  $53.0  million for the year ended  December  31, 2007 and $81.6
million for 2006.  Residential  real  estate  loan sales  totaled $26 million in
2007, $33.0 million in 2006 and $39.1 million in 2005. While we generally intend
to hold our loans for the foreseeable  future,  we sell certain newly originated
mortgage  loans in the secondary  market  primarily to control the interest rate
sensitivity  of our balance  sheet and to manage  overall  balance sheet mix. We
hold  certain  fixed-rate  mortgage  loans for  investment  consistent  with our
current asset/liability management strategies.

         Our  residential  real  estate  portfolio  includes  $17.4  million  of
sub-prime mortgage loans. Most of our subprime portfolio is well seasoned, as is
evidenced by our low charge-offs and delinquency ratios. Of these loans $546,000
were in  nonaccrual  status as of  December  31,  2007.  Net charge offs in this
portfolio for the year were minimal at $41,000 or 23 basis points.

         At  December  31,  2007,  we  serviced  approximately  $255  million of
residential  mortgage loans for others  compared to $266 million at December 31,
2006. We also service residential  mortgage loans for our own portfolio totaling
$447 million and $453 million at December 31, 2007 and 2006, respectively.

         We originate  commercial  real estate and commercial  loans through our
commercial  lending  division.  Commercial  loans  are made for the  purpose  of
working capital, financing equipment acquisitions,  business expansion and other
business  purposes.  During 2007, we originated  $908 million of commercial  and
commercial  real estate loans  compared with $711 million in 2006. To reduce our
exposure on certain types of these loans,  or to maintain  relationships  within
internal  lending limits at times we will sell a portion of our commercial  real
estate loan  portfolio.  Commercial real estate loan sales totaled $19.3 million
and $16.0 million in 2007 and 2006, respectively.  These amounts represent gross
contract amounts and do not reflect amounts outstanding on those loans.

         Our consumer lending  activity is conducted  through our branch offices
and through  correspondent banks and mortgage brokers. We originate a variety of
consumer credit products  including home improvement loans, home equity lines of
credit,  automobile  loans,  credit cards,  unsecured  lines of credit and other
secured and unsecured  personal  installment loans.  During 2007,  consumer loan
originations amounted to $19.0 million compared to $18.5 million in 2006.

         During 2006,  we formed a new reverse  mortgage  initiative.  While the
Bank's  activity  during the year has been limited to acting as a  correspondent
for these loans,  our intention is to originate and  underwrite  our own reverse
mortgages  in the future.  We expect to sell most of these loans and not to hold
them in our  portfolio.  These  reverse  mortgages are  government  approved and
insured.

         All loans to one  borrowing  relationship  exceeding $3 million must be
approved  by  the  Senior  Management  Loan  Committee  ("SLC").  The  Executive
Committee  of the Board of  Directors  ("EC")  approves  the  minutes of the SLC
meetings.  They also approve individual loans exceeding $5 million for customers
with less than one year of  significant  loan history with the Bank and loans in
excess of $7.5 million for customers with established  borrowing  relationships.
Depending upon their experience and management position,  individual officers of
the Bank have the

                                      -16-



authority to approve  smaller loan amounts.  Our credit policy includes a "House
Limit"  to  one  borrowing   relationship  of  $18  million.   In  extraordinary
circumstances, we will approve exceptions to the "House Limit". The largest is a
borrowing relationship of $34.5 million,  which the EC approved.  This borrowing
is secured by U.S.  Treasury  securities which have a value at maturity equal to
or exceeding the aggregate loan payments.


Fee Income from Lending Activities.

         We  earn  fee  income  from  lending  activities,  including  fees  for
originating  loans,  servicing  loans and selling loan  participations.  We also
receive fee income for making commitments to originate construction, residential
and  commercial  real estate  loans.  Additionally,  we collect  fees related to
existing  loans which include  prepayment  charges,  late charges and assumption
fees.

         We charge  fees for making loan  commitments.  Also as part of the loan
application  process,  the borrower may pay us for out-of-pocket costs to review
the application, whether or not the loan is closed.

         Most loan fees are not  recognized  in the  Consolidated  Statement  of
 Operations immediately,  but are deferred as adjustments of yield in accordance
 with  U.S.  generally  accepted  accounting  principles  and are  reflected  in
 interest income. Those fees represented an immaterial amount of interest income
 during the three  years ended  December  31,  2007.  Loan fees other than those
 considered adjustments of yield (such as late charges) are reported as loan fee
 income, a component of noninterest income.


LOAN LOSS EXPERIENCE, PROBLEM ASSETS AND DELINQUENCIES

         Our results of operations can be negatively  impacted by  nonperforming
assets,  which include nonaccruing loans,  nonperforming real estate investments
and assets acquired through  foreclosure.  Nonaccruing  loans are those on which
the  accrual of  interest  has  ceased.  Loans are placed on  nonaccrual  status
immediately  if, in the opinion of management,  collection is doubtful,  or when
principal or interest is past due 90 days or more and collateral is insufficient
to cover principal and interest. Interest accrued, but not collected at the date
a loan is placed on nonaccrual  status, is reversed and charged against interest
income.  In addition,  the  amortization  of net deferred loan fees is suspended
when a loan is placed on nonaccrual status. Subsequent cash receipts are applied
either to the  outstanding  principal  balance or recorded  as interest  income,
depending on management's assessment of the ultimate collectibility of principal
and interest.

         We  endeavor  to manage our  portfolio  to  identify  problem  loans as
promptly  as  possible  and  take  immediate  actions  to  minimize  losses.  To
accomplish  this, our Risk Management  Department  monitors the asset quality of
our loan and investment in real estate  portfolios and reports such  information
to the Credit Policy  Committee,  the Audit  Committee of the Board of Directors
and the Bank's Controller's Department.


SOURCES OF FUNDS

         We manage our  liquidity  risk and funding  needs  through our treasury
function and our Asset/Liability Committee. Historically, we have had success in
growing our loan  portfolio.  For  example,  during the year ended  December 31,
2007,  net loan growth  resulted in the net use of $221.2  million in cash.  The
loan growth was  primarily  the result of our  continued  success in  increasing
corporate and small business lending. Management expects this trend to continue.
While  our  loan-to-deposit  ratio  has been  well  above  100% for many  years,
management  has  significant  experience  managing  its  funding  needs  through
borrowings and deposit growth.

         As a financial institution,  we have ready access to several sources of
funding. Among these are:

          o    Deposit growth,


                                      -17-



          o    The brokered deposit market,
          o    Borrowing from the Federal Home Loan Bank,
          o    Other borrowings such as repurchase agreements,
          o    Cash flow from securities and loan sales and repayments,
          o    And our net income.

         Our  current  branch  expansion  and  renovation  program is focused on
expanding  our retail  footprint in Delaware  and  attracting  new  customers to
provide additional deposit growth.  Customer deposit growth was strong, equaling
$135.5 million, or 10%, between December 31, 2006 and December 31, 2007.

         Deposits. We offer various deposit programs to our customers, including
savings  accounts,  demand deposits,  interest-bearing  demand  deposits,  money
market deposit  accounts and  certificates of deposits.  In addition,  we accept
"jumbo"  certificates  of  deposit  with  balances  in excess of  $100,000  from
individuals, businesses and municipalities in Delaware.

         WSFS is the second largest independent full service banking institution
headquartered  and operating in Delaware.  The Bank primarily  attracts deposits
through  its system of 29 retail  banking  offices (as of  December  31,  2007).
Twenty  banking  offices were located in northern  Delaware's New Castle County,
WSFS' primary market. These banking offices maintain approximately 159,000 total
account  relationships with approximately 63,000 total households.  Four banking
offices are located in central  Delaware's Kent County,  two of which are in the
state capital,  Dover.  Three banking  offices are located in Delaware's  Sussex
County and two other banking offices are located in southeastern Pennsylvania.


         The following  table shows the maturity of  certificates  of deposit of
$100,000 or more as of December 31, 2007:


                                                 December 31,
Maturity Period                                       2007
- ---------------                                       ----
                                                (In Thousands)

Less than 3 months......................            $138,198
Over 3 months to 6 months...............              69,014
Over 6 months to 12 months..............              31,723
Over 12 months..........................              10,014
                                                    --------
                                                    $248,949
                                                    ========


         Borrowings.   We  utilize  the  following  borrowing  sources  to  fund
operations:

         Federal Home Loan Bank Advances

         As a member of the Federal Home Loan Bank of Pittsburgh, we are able to
obtain  Federal  Home Loan Bank  ("FHLB")  advances.  Advances  from the FHLB of
Pittsburgh had rates ranging from 3.48% to 5.45% at December 31, 2007.  Pursuant
to collateral  agreements  with the FHLB, the advances are secured by qualifying
first mortgage  loans,  qualifying  fixed-income  securities,  FHLB stock and an
interest-bearing  demand  deposit  account  with the FHLB.  We are  required  to
acquire and hold shares of capital  stock in the FHLB of Pittsburgh in an amount
at least equal to 4.65% of its  borrowings  from them,  plus 0.65% of our unused
borrowing  capacity.  As of December 31, 2007, our FHLB stock investment totaled
$45.5 million.

         Seven  advances are  outstanding  at December 31, 2007 totaling  $170.0
million,  with a weighted average rate of 4.47% maturing in 2009 and beyond.  At
the discretion of the FHLB,  they are  convertible  quarterly to a variable rate

                                      -18-



advance based upon a three-month LIBOR rate, after an initial fixed term. If any
of these  advances  convert,  we have the  option to prepay  these  advances  at
predetermined times or rates.

          Trust Preferred Borrowings

         On April 6,  2005,  we  completed  the  issuance  of $67.0  million  of
aggregate  principal  amount of Pooled  Floating  Rate  Securities at a variable
interest rate of 177 basis points over the three-month  LIBOR rate. The proceeds
from this issuance were used to fund the redemption of $51.5 million of Floating
Rate Capital Trust I Preferred  Securities which had a variable interest rate of
250 basis points over the three-month LIBOR rate.


         Federal  Funds  Purchased  and  Securities  Sold  Under  Agreements  to
Repurchase

         During 2007, we purchased federal funds as a short-term funding source.
At December 31, 2007, we had purchased  $50.0 million in federal funds at a rate
of 4.25%.  At  December  31,  2006,  we also had  $50.0  million  federal  funds
purchased.

         During 2007,  we sold  securities  under  agreements to repurchase as a
funding  source.  At December  31, 2007,  securities  sold under  agreements  to
repurchase  had  a  fixed  rate  of  4.87%.   The   underlying   securities  are
mortgage-backed  securities  with a book value of $29.1  million at December 31,
2007.


PERSONNEL

         As of December  31,  2007 we had 599  full-time  equivalent  Associates
(employees). The Associates are not represented by a collective bargaining unit.
Management believes its relationship with its Associates is very good.


REGULATION

Regulation of the Corporation

         General.  We are a registered  savings and loan holding company and are
subject to the regulation,  examination,  supervision and reporting requirements
of the Office of Thrift  Supervision  ("OTS").  It is also a  registered  public
company subject to the reporting  requirements  of the United States  Securities
and  Exchange  Commission.  The  filings we make with  Securities  and  Exchange
Commission,  including  Annual Reports on Form 10-K,  Quarterly  Reports on Form
10-Q,  Current  Reports on Form 8-K, and all  amendments to those  reports,  are
available on the investor relations page of our website at www.wsfsbank.com.

         Sarbanes-Oxley Act of 2002. Sarbanes-Oxley Act of 2002 (the "Act"). The
Securities and Exchange  Commission  (the "SEC") has promulgated new regulations
pursuant  to  the  Sarbanes-Oxley  Act of  2002  and  may  continue  to  propose
additional implementing or clarifying regulations as necessary in furtherance of
the Act.  The  passage  of the Act and the  regulations  implemented  by the SEC
subject  publicly-traded  companies to additional and more cumbersome  reporting
regulations   and  disclosure.   Compliance  with  the  Act  and   corresponding
regulations has increased our expenses.

         Restrictions on  Acquisitions.  A savings and loan holding company must
obtain the prior approval of the Director of OTS before  acquiring,  (i) control
of any  other  savings  association  or  savings  and loan  holding  company  or
substantially all the assets thereof,  or (ii) more than 5% of the voting shares
of a savings  association or holding  company thereof which is not a subsidiary.
Except with the prior approval of the Director of OTS, no director or officer of
a savings and loan holding  company or person owning or  controlling by proxy or
otherwise more than 25%

                                      -19-



of such company's  stock,  may also acquire control of any savings  association,
other than a subsidiary  savings  association,  or of any other savings and loan
holding company.

         The OTS may only approve  acquisitions  resulting in the formation of a
multiple savings and loan holding company which controls savings associations in
more than one state if: (i) the company involved controls a savings  institution
which  operated a home or branch  office in the state of the  association  to be
acquired as of March 5, 1987; (ii) the acquirer is authorized to acquire control
of the savings association pursuant to the emergency  acquisition  provisions of
the Federal  Deposit  Insurance Act; or (iii) the statutes of the state in which
the association to be acquired is located specifically permit institutions to be
acquired by  state-chartered  associations or savings and loan holding companies
located in the state  where the  acquiring  entity is  located  (or by a holding
company that controls such state-chartered  savings  institutions).  The laws of
Delaware do not  specifically  authorize  out-of-state  savings  associations or
their holding companies to acquire Delaware-chartered savings associations.

         The statutory  restrictions  on the  formation of  interstate  multiple
holding  companies  would not  prevent us from  entering  into  other  states by
mergers or branching.  OTS regulations permit federal  associations to branch in
any  state or  states  of the  United  States  and its  territories.  Except  in
supervisory cases or when interstate  branching is otherwise  permitted by state
law or other  statutory  provision,  a federal  association may not establish an
out-of-state  branch  unless the federal  association  qualifies  as a "domestic
building and loan association" under Section 7701(a)(19) of the Internal Revenue
Code or as a "qualified  thrift  lender" under the Home Owners' Loan Act and the
total assets  attributable to all branches of the association in the state would
qualify such branches taken as a whole for treatment as a domestic  building and
loan association or qualified thrift lender.  Federal associations generally may
not  establish  new branches  unless the  association  meets or exceeds  minimum
regulatory  capital  requirements.  The OTS will also consider the association's
record of compliance with the Community  Reinvestment  Act of 1977 in connection
with any branch application.

Regulation of WSFS Bank

         General.  As a federally  chartered  savings  institution,  the Bank is
subject to extensive regulation by the Office of Thrift Supervision. The lending
activities and other  investments  of the Bank must comply with various  federal
regulatory  requirements.  The OTS periodically examines the Bank for compliance
with regulatory requirements. The FDIC also has the authority to conduct special
examinations  of the  Bank.  The Bank must file  reports  with  Office of Thrift
Supervision describing its activities and financial condition.  The Bank is also
subject to certain  reserve  requirements  promulgated  by the  Federal  Reserve
Board.

         Transactions with Affiliates;  Tying Arrangements.  The Bank is subject
to certain restrictions in its dealings with us and our affiliates. Transactions
between savings  associations and any affiliate are governed by Sections 23A and
23B  of  the  Federal  Reserve  Act.  An  affiliate  of a  savings  association,
generally,  is any company or entity which  controls or is under common  control
with the savings  association or any subsidiary of the savings  association that
is a bank or  savings  association.  In a holding  company  context,  the parent
holding company of a savings association (such as "WSFS Financial  Corporation")
and any  companies  which are  controlled  by such  parent  holding  company are
affiliates of the savings association. Generally, Sections 23A and 23B (i) limit
the extent to which the savings  institution or its  subsidiaries  may engage in
"covered  transactions" with any one affiliate to an amount equal to 10% of such
institution's  capital  stock and surplus,  and limit the  aggregate of all such
transactions with all affiliates to an amount equal to 20% of such capital stock
and  surplus  and  (ii)  require  that  all  such   transactions   be  on  terms
substantially  the  same,  or at  least  as  favorable,  to the  institution  or
subsidiary as those provided to a non-affiliate.  The term "covered transaction"
includes the making of loans,  purchase of assets,  issuance of a guarantee  and
similar  types of  transactions.  In  addition  to the  restrictions  imposed by
Sections 23A and 23B, no savings  association  may (i) lend or otherwise  extend
credit to an  affiliate  that  engages in any  activity  impermissible  for bank
holding companies, or (ii) purchase or invest in any stocks, bonds,  debentures,
notes or similar  obligations of any affiliate,  except for affiliates which are
subsidiaries  of  the  savings   association.   Savings  associations  are  also
prohibited from extending credit,  offering

                                      -20-



services,  or fixing or varying the consideration for any extension of credit or
service on the condition that the customer obtain some  additional  service from
the  institution  or certain of its  affiliates  or that the customer not obtain
services  from a  competitor  of the  institution,  subject to  certain  limited
exceptions.

         Regulatory Capital Requirements. Under OTS capital regulations, savings
institutions  must maintain  "tangible"  capital equal to 1.5% of adjusted total
assets,  "Tier 1" or "core"  capital equal to 4% of adjusted total assets (or 3%
if the  institution is rated  composite 1 under the OTS examiner rating system),
and "total" capital (a combination of core and "supplementary" capital) equal to
8%  of  risk-weighted  assets.  In  addition,  OTS  regulations  impose  certain
restrictions on savings  associations that have a total risk-based capital ratio
that is less than  8.0%,  a ratio of Tier 1 capital to  risk-weighted  assets of
less than 4.0% or a ratio of Tier 1 capital  to  adjusted  total  assets of less
than  4.0%  (or  3.0% if the  institution  is rated  Composite  1 under  the OTS
examination rating system).  For purposes of these  regulations,  Tier 1 capital
has the same definition as core capital.

         The  OTS  capital  rule  defines  Tier  1 or  core  capital  as  common
stockholders'  equity (including  retained  earnings),  noncumulative  perpetual
preferred stock and related surplus,  minority  interests in the equity accounts
of fully consolidated subsidiaries, certain nonwithdrawable accounts and pledged
deposits of mutual  institutions  and  "qualifying  supervisory  goodwill," less
intangible  assets  other than  certain  supervisory  goodwill  and,  subject to
certain  limitations,  mortgage and  non-mortgage  servicing  rights,  purchased
credit card relationships and  credit-enhancing  interest only strips.  Tangible
capital  is given  the same  definition  as core  capital  but does not  include
qualifying  supervisory goodwill and is reduced by the amount of all the savings
institution's intangible assets except for limited amounts of mortgage servicing
assets.  The OTS capital rule requires that core and tangible capital be reduced
by an amount equal to a savings  institution's  debt and equity  investments  in
"non-includable"  subsidiaries engaged in activities not permissible to national
banks,  other than  subsidiaries  engaged in activities  undertaken as agent for
customers  or  in  mortgage   banking   activities  and  subsidiary   depository
institutions or their holding  companies.  At December 31, 2007, the Bank was in
compliance with both the core and tangible capital requirements.

         The risk  weights  assigned by the OTS  risk-based  capital  regulation
range from 0% for cash and U.S.  government  securities to 100% for consumer and
commercial  loans,  non-qualifying  mortgage loans,  property  acquired  through
foreclosure,  assets more than 90 days past due and other assets. In determining
compliance with the risk-based capital  requirement,  a savings  institution may
include  both core  capital  and  supplementary  capital  in its total  capital,
provided  the  amount of  supplementary  capital  included  does not  exceed the
savings institution's core capital.  Supplementary capital is defined to include
certain preferred stock issues,  non-withdrawable  accounts and pledged deposits
that do not qualify as core capital, certain approved subordinated debt, certain
other  capital  instruments,  general  loan  loss  allowances  up  to  1.25%  of
risk-weighted  assets and up to 45% of  unrealized  gains on  available-for-sale
equity  securities  with  readily  determinable  fair values.  Total  capital is
reduced by the amount of the  institution's  reciprocal  holdings of  depository
institution  capital  instruments  and all equity  investments.  At December 31,
2006, WSFS Bank was in compliance with the OTS risk-based capital requirements.

         Dividend Restrictions.  As the subsidiary of a savings and loan holding
company,  WSFS bank must  submit  notice to the OTS prior to making any  capital
distribution  (which  includes cash  dividends and payments to  shareholders  of
another institution in a cash merger).  In addition,  a savings association must
make application to the OTS to pay a capital distribution if (x) the association
would  not  be  adequately  capitalized  following  the  distribution,  (y)  the
association's   total   distributions   for  the   calendar   year  exceeds  the
association's net income for the calendar year to date plus its net income (less
distributions)  for the  preceding  two  years,  or (z) the  distribution  would
otherwise violate applicable law or regulation or an agreement with or condition
imposed by the OTS.

         Insurance  of Deposit  Accounts.  The Bank's  deposits  are  insured to
applicable  limits  by the  FDIC.  Although  the FDIC is  authorized  to  assess
premiums  under a  risk-based  system for such deposit  insurance,  most insured
depository  institutions have not been required to pay premiums for the last ten
years.  The Federal  Deposit  Insurance  Reform Act of 2005 (the "Reform  Act"),
which was signed into law on February 15, 2006,  resulted in significant changes
to the federal deposit insurance program: (i) effective March 31, 2006, the Bank
Insurance Fund and the

                                      -21-



Savings Association  Insurance Fund were merged into a new combined fund, called
the Deposit Insurance Fund; (ii) the current $100,000 deposit insurance coverage
will be indexed for inflation  (with  adjustments  every five years,  commencing
January 1, 2011); and (iii) deposit insurance  coverage for retirement  accounts
was increased to $250,000 per  participant  subject to adjustment for inflation.
In  addition,  the  Reform Act gave the FDIC  greater  latitude  in setting  the
assessment  rates for insured  depository  institutions,  which could be used to
impose minimum assessments.

         The  FDIC  is  authorized  to set the  reserve  ratio  for the  Deposit
Insurance Fund annually at between 1.15% and 1.5% of estimated insured deposits.
If the Deposit  Insurance  Fund's reserves exceed the designated  reserve ratio,
the FDIC is required to pay out all or, if the reserve  ratio is less than 1.5%,
a portion of the excess as a dividend to insured  depository  institutions based
on the  percentage  of insured  deposits  held on December 31, 1996 adjusted for
subsequently  paid  premiums.  Insured  depository  institutions  that  were  in
existence on December 31, 1996 and paid assessments prior to that date (or their
successors) are entitled to a one-time credit against future  assessments  based
on the amount of their  assessable  deposits  on that date.  During 2007 we were
able to offset our entire  deposit  insurance  premium.  For 2008, we still have
$300,000 available from the special assessment credit.

         Pursuant  to the Reform Act,  the FDIC has  maintained  the  designated
reserve  ratio at  1.25%.  The FDIC has also  adopted a new  risk-based  premium
system that provides for quarterly assessments based on an insured institution's
ranking in one of four risk categories  based on their  examination  ratings and
capital ratios. Beginning in 2007,  well-capitalized  institutions with a CAMELS
("Capital,  Assets,  Management,  Earnings,  Liquidity and Sensitivity to market
risk")  rating of 1 or 2 will be grouped in Risk Category I and will be assessed
for deposit  insurance at an annual rate of between five and seven basis points,
with  the  assessment  rate  for  an  individual  institution  to be  determined
according  to a  formula  based  on a  weighted  average  of  the  institution's
individual  CAMEL component  ratings,  plus either five financial  ratios or the
average ratings of its long-term  debt.  Institutions in Risk Categories II, III
and IV  will  be  assessed  at  annual  rates  of 10,  28 and 43  basis  points,
respectively.

         In  addition,  all  FDIC-insured   institutions  are  required  to  pay
assessments  to the  FDIC to fund  interest  payments  on  bonds  issued  by the
Financing Corporation ("FICO"), an agency of the Federal government  established
to recapitalize  the predecessor to the SAIF. The FICO assessment  rates,  which
are determined  quarterly,  averaged 0.012% of insured  deposits in fiscal 2007.
These assessments will continue until the FICO bonds mature in 2017.

         Federal Reserve System.  Pursuant to regulations of the Federal Reserve
Board, a savings  institution must maintain  reserves against their  transaction
accounts. As of December 31, 2007, no reserves were required to be maintained on
the first $8.5 million of transaction accounts,  reserves of 3% were required to
be  maintained  against the next $37.3  million of  transaction  accounts  and a
reserve of 10% against all remaining  transaction  accounts.  This percentage is
subject to adjustment by the Federal Reserve Board.  Because  required  reserves
must be  maintained  in the  form of  vault  cash or in a  non-interest  bearing
account at a Federal  Reserve Bank,  the effect of the reserve  requirement  may
reduce the amount of an institution's  interest-earning  assets.  As of December
31, 2007 we met our reserve requirements.

ITEM 1A.  RISK FACTORS
- ----------------------

         The following are certain risks that  management  believes are specific
to our  business.  This  should not be viewed as an all  inclusive  list and the
order is not intended as an indicator of the level of importance.


Future loan losses may negatively impact the Company

         We are subject to credit risk, which is the risk of losing principal or
interest  due to  borrowers'  failure to repay  loans in  accordance  with their
terms.  A downturn in the economy or the real estate  market in our market areas
or a rapid change in interest  rates could have a negative  effect on collateral
values  and  borrowers'   ability  to  repay.  This

                                      -22-



deterioration in economic conditions could result in losses to us. To the extent
loans are not paid  timely by  borrowers,  the loans are placed on  non-accrual,
thereby reducing interest income.

Rapidly changing interest rate environments could reduce our profitability

          Interest  and fees on loans and  securities,  net of interest  paid on
deposits and borrowings,  are a large part of our net income. Interest rates are
key drivers of our net interest  margin and subject to many  factors  beyond the
control  of  management.  As  interest  rates  change,  net  interest  income is
affected.  Rapid  increases or  decreases in interest  rates in the future could
negatively impact our net interest margin.

Liquidity risk

          Due to our continued success in our lending  operations,  particularly
in  corporate  and small  business  lending,  our loans have  exceeded  customer
deposit   funding.   Changes  in  interest  rates  or   alternative   investment
opportunities  and other  factors may make  deposit  gathering  more  difficult.
Additionally,  interest rate changes or  disruptions  in the capital  market may
make the terms of the  borrowings  and brokered  deposits less  favorable.  As a
result, there is a risk that we will not have funds to meet our obligations when
they  come  due.   Interest   rate  and   liquidity   risk  is  managed  by  our
Asset/Liability  Committee ("ALCO").  While our  loan-to-deposit  ratio has been
well above 100% for many years,  management has significant  experience managing
its funding needs through borrowings and deposit growth. A liquidity crisis plan
has been developed and is an important part of our liquidity management.
The financial services industry is very competitive

          We face  competition  in  attracting  and retaining  deposits,  making
loans,  and providing other financial  services  throughout our market area. Our
competitors  include other community banks, larger banking  institutions,  and a
wide   range  of  other   financial   institutions   such  as   credit   unions,
government-sponsored enterprises, mutual fund companies, insurance companies and
other non-bank businesses.  Many of these competitors have substantially greater
resources than us. If we are unable to compete effectively,  we will lose market
share and will have less income from deposits and loans,  which will  negatively
impact our net interest  margin.  Profitability of other products may be reduced
as well.

Adverse  changes in the economic  growth and vitality in our banking markets may
negatively impact us

       Our  business  is  closely  tied to the  economies  of  Delaware  and the
contiguous  counties outside of Delaware.  A sustained  economic  downturn could
adversely affect our net income.

We are subject to extensive regulation

       Our  operations  are subject to extensive  regulation by federal  banking
authorities  which impose  requirements and restrictions on our operations.  The
impact  of  changes  to laws and  regulations  or other  actions  by  regulatory
agencies could make regulatory compliance more difficult or expensive for us and
could adversely affect our net income.

We may not be able to achieve our growth plans or effectively manage its growth

          There can be no assurance that growth  opportunities will be available
or that growth will be successfully managed.  This includes,  but is not limited
to, growth in generating loans and gathering deposits.  Due to our investment in
future growth,  failure to obtain  sufficient growth would negatively effect our
net income.

                                      -23-



Inability  to hire or retain  certain key  professionals,  management  and staff
could adversely affect our revenues and net income

          We rely on key personnel to manage and operate our business, including
major revenue generating functions such as our loan and deposit portfolios.  The
loss of key staff may adversely  affect our ability to maintain and manage these
portfolios effectively, which could negatively effect our revenues. In addition,
loss of key personnel could result in increased  recruiting and hiring expenses,
which could cause a decrease in our net income.

We continually encounter technological change

          The  financial  services  industry  is  continually  undergoing  rapid
technological  change  with  frequent  introductions  of  new  technology-driven
products and services.  The effective use of technology increases efficiency and
enables  financial  institutions to better serve customers and reduce costs. Our
future success  depends,  in part,  upon our ability to address the needs of our
customers by using technology to provide products and services that will satisfy
customer  demands,  as  well  as  to  create  additional   efficiencies  in  our
operations.  Our largest  competitors have  substantially  greater  resources to
invest  in  technological  improvements.  We may  not  be  able  to  effectively
implement  new  technology-driven  products  and  services or be  successful  in
marketing these products and services to our customers.  Failure to successfully
keep pace with  technological  change affecting the financial  services industry
could have a material adverse impact on our business and, in turn, our financial
condition and our net income.

ITEM 1B.  UNRESOLVED STAFF COMMENTS
- -----------------------------------

      None.

ITEM 2. PROPERTIES
- ------------------

         The following table shows  information  regarding  offices and material
properties held by us, and our subsidiaries, at December 31, 2007.



                                                                                 Net Book Value
                                                                                   Of Property
                                                     Owned/      Date Lease       or Leasehold
Location                                             Leased        Expires      Improvements (1)         Deposits
- --------                                             ------        -------      ----------------         --------
                                                                                            (In Thousands)
                                                                                           
WSFS :

WSFS Bank Center Branch
   Main Office
  500 Delaware Avenue
  Wilmington, De   19801                             Leased          2011               796               683,456

Union Street Branch
  3rd & Union Streets
  Wilmington, DE   19805                             Leased          2008               66                 44,822

Trolley Square Branch
  1711 Delaware Ave
  Wilmington, DE   19806                             Leased          2011               28                 30,568

Fairfax Shopping Center (3)
  2005 Concord Pike
  Wilmington, DE   19803                             Owned                             8,195               78,304

Branmar Plaza Shopping Center Branch
  1812 Marsh Road
  Wilmington, DE   19810                             Leased          2008               89                 89,306

Prices Corner Shopping Center Branch
  3202 Kirkwood Highway
  Wilmington, DE   19808                             Leased          2008               22                106,786

Pike Creek Shopping Center Branch
  New Linden Hill & Limestone Road
  Wilmington, DE   19808                             Leased          2015               772                79,777


                                      -24-




                                                                                 Net Book Value
                                                                                   Of Property
                                                     Owned/      Date Lease       or Leasehold
Location                                             Leased        Expires      Improvements (1)         Deposits
- --------                                             ------        -------      ----------------         --------
                                                                                            (In Thousands)
                                                                                           

University Plaza Shopping Center Branch
   100 University Plaza
  Newark, DE   19712                                 Leased          2026              1,412               46,938

College Square Shopping Center Branch(4)
  Route 273 & Liberty Avenue
  Newark, DE   19711                                 Leased          2012               142                78,551

Airport Plaza Shopping Center Branch
  144 N. DuPont Hwy.
  New Castle, DE   19720                             Leased          2013               715                74,354

Stanton Branch
  Inside ShopRite
  1600 W. Newport Pike
  Wilmington, DE   19804                             Leased          2011               20                 18,759

Glasgow Branch
  Inside Genaurdi's at People Plaza
  Routes 40 & 896
  Newark, DE   19702                                 Leased          2008               37                 21,727

Middletown Crossing Shopping Center
Route 299 and Silver Lake Road
Middletown, De   19709                               Leased          2017              1,046               38,625

Dover Branch
  Inside Metro Food Market
  Rt. 134 & White Oak Road
  Dover, DE   19901                                  Leased          2010               15                 14,985


West Dover Loan Office
Greentree Office Center
160 Greentree Drive
Suite 105
Dover, DE   19904                                    Leased          2009               12                   10

Blue Bell Loan Office
721 Skippack Pike
Suite 101
Blue Bell, PA   19422                                Leased          2012                9                 11,618

Glen Eagle Branch
  Inside Genaurdi's  Family Market
  475 Glen Eagle Square
  Glen Mills, PA   19342                             Leased          2008               117                8,589

University of Delaware-Trabant University Center
  17 West Main Street
  Newark, DE   19716                                 Leased          2008               74                 11,278

Brandywine Branch
  Inside Genaurdi's  Family Market
  2522 Foulk Road
  Wilmington, DE   19810                             Leased          2009               54                 22,889

Operations Center
  2400 Philadelphia Pike
  Wilmington, DE   19703                             Owned                              729                 N/A

Longwood Branch
  830 E. Baltimore Pike
  E. Marlboro, PA 19348                              Leased          2010               79                 9,091

Holly Oak Branch
  Inside Super Fresh
  2105 Philadelphia Pike
  Claymont, DE 19703                                 Leased          2010               67                 18,364

Hockessin Branch
  7450 Lancaster Pike
  Wilmington, DE 19707                               Leased          2015               622                59,253


                                      -25-




                                                                                 Net Book Value
                                                                                   Of Property
                                                     Owned/      Date Lease       or Leasehold
Location                                             Leased        Expires      Improvements (1)         Deposits
- --------                                             ------        -------      ----------------         --------
                                                                                            (In Thousands)

                                                                                           

Lewes Branch
  Southpointe Professional Center
  1515 Savannah Road, Suite 103
  Lewes, DE   19958                                  Leased          2008               117                30,673

Fox Run Shopping Center
  Bear, De                                           Leased          2015               961                32,589

Camden Town Center
  4566 S. Dupont Highway
  Camden, DE   19934                                 Leased          2024              1,032               24,240

Rehoboth Branch
  Lighthouse Plaza
  Route #1
  Rehoboth, DE   19771                               Leased          2028               914                45,313

Loan Operations
  30 Blue Hen Drive
  Suite 200
  Newark, DE   19713                                 Leased          2012                5                  N/A

West Dover Branch
  1486 Forest Avenue
  Dover, DE   19904                                  Owned                             2,232               17,780

Longneck Branch
24985 John J. Williams Highway
Millsboro, DE   19966                                Leased          2026              1,311               27,456

Smyrna(5)
231 N. DuPont Parkway
Smyrna, DE   19977                                   Leased          2008                -                 13,263

Smyrna(6)
  Simon's Corner Shopping Center
  1300 South DuPont Highway
  Smyrna, DE   19977                                 Leased          2026               177                 N/A

Oxford, LPO
  59 South Third Street
Oxford, PA                                           Leased          2011               30                 2,167

Greenville
3908 Kennett Pike
Greenville, DE                                       Owned                             2,183               22,265

WSFS Bank Center (2)
500 Delaware Avenue
Wilmington, De   19801                               Leased          2019              1,813                 -

Market Street Branch(7)
  833 Market Street
  Wilmington, De   19801                             Leased          2009               148                62,982

Annandale, VA
7010 Little River Tnpk.
Suite 330
Annandale, VA  22003                                 Leased          2011               20                  383

Oceanview(8)
69 Atlantic Avenue
Oceanview, DE   19970                                Leased          2022               29                  N/A


                                      -26-




                                                                                  Net Book Value
                                                                                   Of Property
                                                     Owned/       Date Lease       or Leasehold
Location                                             Leased        Expires       Improvements (1)        Deposits
- --------                                             ------        -------       ----------------        --------
                                                                                                (In Thousands)
                                                                            
Montchanin Capital Management, Inc.
- -----------------------------------
  1220 Market Street
  Suite 705
  Wilmington, DE   19801                             Leased          2010               14                 N/A
Cypress Capital Management, LLC
- -------------------------------
  1220 Market Street
  Suite 704
  Wilmington, DE   19801                             Leased          2010                5                 N/A

                                                                                                        $1,827,161
                                                                                                        ==========


(1)  The net book value of all the Company's investment in premise and equipment
     totaled $34.9 million at December 31, 2007.
(2)  Location of Corporate Headquarters
(3)  Includes Fairfax Branch office.
(4)  Includes the Company's education and development center.
(5)  Temporary  location  for  branch  until  permanent  branch is  complete  in
     February of 2008. The lease is month to month.
(6)  As of December 31, 2007, location was under  construction.  To be completed
     in February of 2008.
(7)  Temporary location for branch until permanent location is complete.
(8)  As of December 31, 2007, location was under  construction.  To be completed
     in September of 2008.

                                      -27-



ITEM 3. LEGAL PROCEEDINGS
- -------------------------

         There are no material  legal  proceedings  to be  disclosed  under this
item.

ITEM 4.  SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -------------------------------------------------------------

         No matter was submitted to a vote of the stockholders during the fourth
quarter of the fiscal year ended December 31, 2007 through the  solicitation  of
proxies or otherwise.


                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER - MATTERS AND
- --------------------------------------------------------------------------------
        ISSUER PURCHASES OF EQUITY SECURITIES
        -------------------------------------

Market for Registrant's Common Equity and Related Stockholder Matters

         Our Common  Stock is traded on The Nasdaq  Stock  Market(SM)  under the
symbol WSFS. At December 31, 2007, we had 1,252 registered  common  stockholders
of record. The following table sets forth the range of high and low sales prices
for the Common Stock for each full  quarterly  period within the two most recent
fiscal years as well as the quarterly dividends paid.

The closing market price of our common stock at December 31, 2007 was $50.20.



                                    Stock Price Range
                             -----------------------------
                                Low                High         Dividends
- --------------------------------------------------------------------------
       2007        4th       $ 48.45             $ 68.33           $ 0.10
                   3rd       $ 53.42             $ 68.81           $ 0.10
                   2nd       $ 62.78             $ 69.00           $ 0.10
                   1st       $ 60.91             $ 70.85           $ 0.08
                                                              ------------
                                                                   $ 0.38
                                                              ============

       2006        4th       $ 60.00             $ 68.27           $ 0.08
                   3rd       $ 57.22             $ 64.62           $ 0.08
                   2nd       $ 57.34             $ 64.65           $ 0.08
                   1st       $ 59.80             $ 64.75           $ 0.07
                                                              ------------
                                                                   $ 0.31
                                                              ============


                                      -28-



COMPARATIVE STOCK PERFORMANCE GRAPH

The graph and table which follow show the cumulative  total return on our Common
Stock over the last five years compared with the cumulative  total return of the
Dow Jones Total  Market  Index and the Nasdaq Bank Index over the same period as
obtained from Bloomberg L.P.  Cumulative total return on our Common Stock or the
index  equals the total  increase in value since  December  31,  2002,  assuming
reinvestment  of all  dividends  paid  into  the  Common  Stock  or  the  index,
respectively.  The graph and table were  prepared  assuming $100 was invested on
December 31, 2002 in our Common  Stock and in each of the indexes.  There can be
no assurance  that our future stock  performance  will be the same or similar to
the historical stock  performance  shown in the graph below. We neither make nor
endorse any predictions as to stock performance.


                       CUMULATIVE TOTAL SHAREHOLDER RETURN
                  COMPARED WITH PERFORMANCE OF SELECTED INDEXES
                   December 31, 2002 through December 31, 2007

                               [OBJECT OMITTED]]
                                              Cumulative Total Return
                              --------------------------------------------------
                                2002     2003     2004     2005     2006   2007
- --------------------------------------------------------------------------------

WSFS Financial Corporation      $100     $137     $184     $188     $207   $156
Dow Jones Total Market Index     100      128      142      148      168    175
Nasdaq Bank Index                100      133      150      147      168    135


                                      -29-




ITEM 6.  SELECTED FINANCIAL DATA
- --------------------------------


                                             2007               2006               2005               2004               2003
                                             ----               ----               ----               ----               ----
                                                              (Dollars in Thousands, Except Per Share Data)
                                                                                                    
At December 31,
- ---------------
  Total assets                            $3,200,188         $2,997,396         $2,846,752         $2,502,956         $2,207,077
  Net loans (1)                            2,233,980          2,019,741          1,775,294          1,535,467          1,304,877
  Investment securities (2)                   26,235             53,893             56,704             97,485            116,292
  Investment in reverse mortgages, net         2,037                598                785              (109)                193
  Other investments                           46,615             41,615             46,466             44,477             44,771
  Mortgage-backed securities (2)             496,792            516,711            620,323            524,144            530,552
  Deposits                                 1,827,161          1,756,348          1,446,236          1,234,962            923,333
  Borrowings (3)                           1,068,149            935,668          1,127,997          1,002,609          1,031,058
  Trust preferred borrowings                  67,011             67,011             67,011             51,547             50,000
  Stockholders' equity                       211,330            212,059            181,975            196,303            187,992
  Number of full-service branches (4)             29                 27                 24                 24                 23

For the Year Ended December 31,
- -------------------------------
  Interest income                           $189,477           $177,177           $136,022           $104,110           $ 89,299
  Interest expense                           107,468             99,278             62,380             37,246             31,301
  Noninterest income                          48,166             40,305             34,653             31,950             26,166
  Noninterest expenses                        82,031             69,314             62,877             55,699             49,417
  Income from continuing operations           29,649             30,441             27,856             25,757             21,233
  Net income                                  29,649             30,441             27,856             25,900             63,022
  Earnings per share:
    Basic:
      Income from continuing operations      $  4.69            $  4.59            $  4.10            $  3.60            $  2.73
      Net income                                4.69               4.59               4.10               3.62               8.11
    Diluted:
      Income from continuing operations         4.55               4.41               3.89               3.39               2.58
      Net income                                4.55               4.41               3.89               3.41               7.65

Interest rate spread                            2.80%              2.70%              2.91%              3.07%              3.02%
Net interest margin                             3.09               2.98               3.13               3.24               3.29
Return on average equity (5)                   14.34              15.42              14.78              13.54              10.60
Return on average assets (5)                    0.98               1.03               1.05               1.10               1.09
Average equity to average assets (5)            6.87               6.68               7.10               8.13              10.28


(1)  Includes loans held-for-sale.
(2)  Includes securities available-for-sale.
(3)  Borrowings  consist of FHLB advances,  securities  sold under agreement  to
     repurchase and other borrowed funds.
(4)  WSFS opened  three  branches  and closed one branch in 2007,  opened  three
     branches  in 2006,  opened one branch in 2004,  and opened two  branches in
     2003.
(5)  Based on continuing operations.



ITEM 7 MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND RESULTS
- --------------------------------------------------------------------------------
       OF OPERATIONS
       -------------

OVERVIEW

     WSFS Financial  Corporation  ("the  Company," "our Company," "we," "our" or
"us")  is a  thrift  holding  company  headquartered  in  Wilmington,  Delaware.
Substantially all of our assets are held by our subsidiary,  Wilmington  Savings
Fund  Society,  FSB ("WSFS Bank" or the "Bank").  Founded in 1832, we are one of
the ten oldest banks in the United States  continuously-operating under the same
name. As a federal savings bank, which was formerly  chartered as a state mutual
savings  bank,  we enjoy  broader  investment  powers than most other  financial
institutions. We have served the residents of the Delaware Valley for 176 years.
We are the largest thrift  institution  headquartered  in Delaware and the third
largest  financial  institution  in the  state on the  basis  of total  deposits
traditionally  garnered  in-market.  Our primary market area is the mid-Atlantic
region  of  the  United  States,   which  is   characterized  by  a  diversified
manufacturing and service economy.  Our long-term strategy is to serve small and
mid-size businesses through loans, deposits, investments,

                                      -30-



and  related  financial  services,  and to  gather  retail  core  deposits.  Our
strategic focus is to exceed customer expectations,  deliver stellar service and
build customer advocacy through highly trained, relationship oriented, friendly,
knowledgeable, and empowered Associates.

     We provide residential and commercial real estate,  commercial and consumer
lending  services,  as well as retail deposit and cash management  services.  In
addition,  we offer a variety of wealth  management  and personal trust services
through  Wilmington  Advisors,  which was formed during 2006. Lending activities
are funded  primarily with retail deposits and  borrowings.  The Federal Deposit
Insurance  Corporation  ("FDIC") insures our customers'  deposits to their legal
maximum.  We serve  our  customers  primarily  from our main  office,  29 retail
banking  offices,  loan  production  offices and operations  centers  located in
Delaware,  southeastern  Pennsylvania  and  Virginia  and through our website at
www.wsfsbank.com.

     We have two  consolidated  subsidiaries,  WSFS Bank and Montchanin  Capital
Management, Inc. ("Montchanin"). We also have one unconsolidated affiliate, WSFS
Capital Trust III ("the Trust").  WSFS Bank has a fully-owned  subsidiary,  WSFS
Investment Group, Inc., which markets various third-party insurance products and
securities through the Bank's retail banking system.

     Montchanin has one consolidated subsidiary, Cypress Capital Management, LLC
("Cypress"). Cypress is a Wilmington-based investment advisory firm serving high
net-worth  individuals and institutions.  Cypress had approximately $515 million
in assets under management at December 31, 2007.


FORWARD-LOOKING STATEMENTS

     Within this annual report and financial statements, management has included
certain   "forward-looking   statements"   concerning  our  future   operations.
Statements  contained in this annual report which are not historical  facts, are
forward-looking  statements  as that term is defined in the  Private  Securities
Litigation  Reform Act of 1995. It is  management's  desire to take advantage of
the "safe harbor" provisions of the Private Securities  Litigation Reform Act of
1995.  This statement is for the express  purpose of availing the Corporation of
the  protections  of such  safe  harbor  with  respect  to all  "forward-looking
statements." Management has used "forward-looking statements" to describe future
plans and strategies  including  expectations of our future  financial  results.
Management's  ability  to  predict  results  or the  effect of future  plans and
strategy is  inherently  uncertain.  Factors that could affect  results  include
interest rate trends, competition, the general economic climate in Delaware, the
mid-Atlantic region and the country as a whole, asset quality, loan growth, loan
delinquency  rates,  operating  risk,  uncertainty of estimates in general,  and
changes in federal and state  regulations,  among other  factors.  These factors
should be considered in evaluating the  "forward-looking  statements," and undue
reliance  should not be placed on such  statements.  Actual  results  may differ
materially from management  expectations.  We do not undertake, and specifically
disclaim any obligation to publicly release the result of any revisions that may
be  made  to  any  forward-looking  statements  to  reflect  the  occurrence  of
anticipated  or  unanticipated  events or  circumstances  after the date of such
statements.


RESULTS OF OPERATIONS

     WSFS  Financial  Corporation  recorded net income of $29.6 million or $4.55
per  diluted  share for the year ended  December  31,  2007,  compared  to $30.4
million  or $4.41 per share  and  $27.9  million  or $3.89 per share in 2006 and
2005, respectively.

     Net Interest Income. Net interest income increased $4.1 million,  or 5%, to
$82.0 million in 2007 compared to $77.9 million in 2006. The net interest margin
for 2007 was 3.09%,  up 0.11%  from 2006.  The  overall  improvement  in the net
interest margin over last year reflects loan growth and our continued efforts to
refocus the mix of our balance  sheet.  Loans,  with an average  yield of 7.55%,
increased $168.7 million on average while  mortgage-backed  securities,  with an
average  yield of  4.93%,  declined  $99.4  million  on  average  mostly  due to
scheduled repayments.  In addition,  interest-bearing  deposits, with an average
rate of 3.76%, increased $219.3 million on average while FHLB advances,  with an
average rate of 4.97%, decreased $210.1 million on average. The yield on earning
assets  increased  0.37% on  average  in  comparison  to 2006  while the rate on
interest-bearing liabilities increased by 0.27% on average. Additionally, income
from reverse mortgages increased $1.3 million in comparison to 2006.

                                      -31-



     Net interest income increased $4.3 million, or 6%, to $77.9 million in 2006
compared to $73.6  million in 2005.  The net  interest  margin of 2.98% for 2006
declined from 3.13% in 2005. This ratio was negatively  impacted by a flattening
yield curve as the rate on  interest-bearing  liabilities  increased 1.18% while
the rate on  interest-earning  assets only increased by 0.97%.  Loans  increased
$284.9 million on average while  interest-bearing  deposits  increased by $223.2
million on average.

     The following table sets forth certain information regarding changes in net
interest  income  attributable  to  changes in the  volumes of  interest-earning
assets  and  interest-bearing  liabilities  and  changes  in the  yields for the
periods   indicated.   For  each   category  of   interest-earning   assets  and
interest-bearing  liabilities,  information  is provided on the changes that are
attributable  to: (i) changes in volume  (change in volume  multiplied  by prior
year  rate);  (ii)  changes in rates  (change in rate  multiplied  by prior year
volume on each category);  and (iii) net change (the sum of the change in volume
and the  change in rate).  Changes  due to the  combination  of rate and  volume
changes  (changes  in  volume  multiplied  by  changes  in rate)  are  allocated
proportionately between changes in rate and changes in volume.




  Year Ended December 31,                                     2007 vs. 2006                    2006 vs. 2005
  ------------------------------------------------------------------------------------------------------------------------
                                                      Volume    Yield/Rate      Net       Volume    Yield/Rate       Net
  ------------------------------------------------------------------------------------------------------------------------
  (Dollars in Thousands)
                                                                                            
  Interest Income:
    Commercial real estate loans                    $  4,281    $   (320)   $  3,961    $  4,549    $  7,985    $ 12,534
    Residential real estate loans                     (1,244)      1,186         (58)      2,312       1,531       3,843
    Commercial loans (1)                              10,318         475      10,793      10,832       6,780      17,612
    Consumer loans                                       870         317       1,187       2,590       1,411       4,001
    Mortgage-backed securities                        (4,898)        691      (4,207)        703       2,054       2,757
    Investment securities                             (1,638)      2,430         792      (1,413)        723        (690)
    Other                                               (601)        433        (168)         97       1,001       1,098
  ------------------------------------------------------------------------------------------------------------------------
  Favorable (unfavorable)                              7,088       5,212      12,300      19,670      21,485      41,155
  ------------------------------------------------------------------------------------------------------------------------

  Interest expense:
    Deposits:
       Interest-bearing demand                           180         428         608          35         453         488
       Money market                                    2,981         799       3,780       1,420       2,833       4,253
       Savings                                          (248)       (310)       (558)       (224)        723         499
       Retail time deposits                            4,003       3,045       7,048       3,302       3,909       7,211
       Jumbo certificates of deposits - nonretail        927         149       1,076       1,586       1,140       2,726
       Brokered certificates of deposits               1,815         835       2,650       2,118       3,722       5,840
    FHLB of Pittsburgh advances                      (10,342)      3,025      (7,317)      3,286      11,919      15,205
    Trust Preferred                                        0        (300)       (300)        319        (558)       (239)
    Other borrowed funds                               1,090         113       1,203      (1,404)      2,305         901
    Cost of funding discontinued operations                0           0           0           7           7          14
  ------------------------------------------------------------------------------------------------------------------------
  Unfavorable (favorable)                                406       7,784       8,190      10,445      26,453      36,898
  ------------------------------------------------------------------------------------------------------------------------
  Net change, as reported                           $  6,682    $ (2,572)   $  4,110    $  9,225    $ (4,968)   $  4,257
  ------------------------------------------------------------------------------------------------------------------------


(1)  The tax-equivalent income adjustment is related to commercial loans.

                                      -32-



The following table provides information  regarding the average balances of, and
yields/rates on interest-earning assets and interest-bearing  liabilities during
the periods indicated:




Year Ended December 31,                                2007                        2006                        2005
- ---------------------------------------------------------------------- --------------------------- ---------------------------
                                             Average           Yield/    Average            Yield/   Average           Yield/
                                             Balance Interest  Rate(1)   Balance Interest   Rate(1)  Balance Interest  Rate(1)
- ------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
                                                                                             
Assets
Interest-earning assets:
   Loans (2) (3):
      Commercial real estate loans         $ 687,614  $56,056    8.15% $ 635,133 $52,095     8.20% $ 573,566  $39,561    6.90%
      Residential real estate loans          459,043   26,451    5.76    481,308  26,509     5.51    438,405   22,666    5.17
      Commercial loans                       709,507   56,766    8.05    582,546  45,973     7.97    439,375   28,361    6.62
      Consumer loans                         270,518   20,239    7.48    258,946  19,052     7.36    222,679   15,051    6.76
                                           ------------------          -----------------           ------------------
          Total loans                      2,126,682  159,512    7.55  1,957,933 143,629     7.39  1,674,025  105,639    6.38
   Mortgage-backed securities (4)            491,650   24,237    4.93    591,021  28,444     4.81    575,580   25,687    4.46
   Investment securities (4)                  29,130    3,360   11.53     55,004   2,568     4.67     88,094    3,258    3.70
   Other interest-earning assets              40,137    2,368    5.90     51,144   2,536     4.96     48,077    1,438    2.99
                                           ------------------          -----------------           ------------------
          Total interest-earning assets    2,687,599  189,477    7.09  2,655,102 177,177     6.72  2,385,776  136,022    5.75
                                                     --------                    -------                     --------
Allowance for loan losses                   (28,192)                    (26,491)                    (24,909)
Cash and due from banks                       70,387                      57,771                      53,434
Cash in non-owned ATMs                       158,091                     153,060                     133,235
Bank-owned life insurance                     56,307                      53,137                      53,137
Loans, operating leases and other
    assets of discontinued operations              -                           -                         531
Other noninterest-earning assets              67,711                      63,793                      55,000
                                           ----------                  ----------                  ----------
          Total assets                     $3,011,903                  $2,956,372                  $2,656,204
                                           ----------                  ----------                  ----------

Liabilities and Stockholders' Equity
Interest-bearing liabilities:
   Interest-bearing deposits:

      Interest-bearing demand              $ 148,039  $ 1,393    0.94% $ 123,599     785     0.64%  $111,585      297    0.27%
      Money market                           312,192   11,870    3.80    232,418   8,090     3.48    177,911    3,837    2.16
      Savings                                211,453    1,679    0.79    240,426   2,237     0.93    272,673    1,738    0.64
      Retail time deposits                   476,159   22,357    4.70    384,654  15,309     3.98    286,371    8,098    2.83
                                           ------------------          -----------------           ------------------
          Total interest-bearing retail    1,147,843   37,299    3.25    981,097  26,421     2.69    848,540   13,970    1.65
          deposits
      Jumbo certificates of
      deposit-nonretail                       98,452    5,176    5.26     80,691   4,100     5.08     43,554    1,374    3.15
      Brokered certificates of deposit       277,860   14,836    5.34    243,070  12,186     5.01    189,593    6,346    3.35
                                           ------------------          -----------------           ------------------
          Total interest-bearing deposits  1,524,155   57,311    3.76  1,304,858  42,707     3.27  1,081,687   21,690    2.01
   FHLB of Pittsburgh advances               765,974   38,561    4.97    976,101  45,878     4.64    887,822   30,673    3.41
   Trust preferred borrowings                 67,011    4,753    7.00     67,011   5,053     7.44     62,986    5,292    8.29
   Other borrowed funds                      147,251    6,843    4.65    123,800   5,640     4.56    165,406    4,739    2.87
   Cost of funding discontinued operations         -        -                  -       -                   -     (14)
                                           ------------------          -----------------           -----------------
          Total interest-bearing
          liabilities                      2,504,391  107,468    4.29  2,471,770  99,278     4.02  2,197,901   62,380    2.84
                                                     --------                    -------                     ---------
Noninterest-bearing demand deposits          272,964                     262,838                     250,321
Other noninterest-bearing liabilities         27,737                      24,330                      19,274
Minority interest                                 38                          84                         209
Stockholders' equity                         206,773                     197,350                     188,499
                                          ----------                  ----------                  ----------
          Total liabilities and
              stockholders' equity        $3,011,903                  $2,956,372                  $2,656,204
                                          ==========                  ==========                  ==========
Excess of interest-earning assets
    over interest-bearing liabilities      $ 183,208                  $  183,332                  $  187,875
                                           =========                  ==========                  ==========
Net interest and dividend income                    $ 82,009                     $77,899                      $73,642
                                                    ========                     =======                      =======
Interest rate spread                                             2.80%                       2.70%                       2.91%
                                                                 ====                        ====                        ====
Net interest margin                                              3.09%                       2.98%                       3.13%
                                                                 ====                        ====                        ====


(1)  Weighted average yields have been computed on a tax-equivalent  basis using
     a 35% effective tax rate.
(2)  Nonperforming loans are included in average balance computations.
(3)  Balances are reflected net of unearned income.
(4)  Includes  securities  available-for-sale,  trading  securities  and reverse
     mortgages.

                                      -33-



Provision  for Loan  Losses.  We  maintain  an  allowance  for loan losses at an
appropriate level based on management's assessment of the estimable and probable
losses  in the loan  portfolio,  pursuant  to  accounting  literature,  which is
discussed further in the Nonperforming Assets section of Management's Discussion
and  Analysis.  Management's  evaluation is based upon a review of the portfolio
and requires  significant  judgement.  For the year ended  December 31, 2007, we
recorded a provision for loan losses of $5.0 million compared to $2.7 million in
2006 and $2.6 million in 2005. In 2007, the provision was primarily affected by:
(1)  continued  significant  loan growth;  (2) migration of certain loans toward
lower credit grades as we continue to assess our exposure in the current lending
environment; partially offset by (3) a lower level of estimated losses resulting
from  an  improvement  in the  methodology  for  estimating  loan  losses  using
historical data adjusted for current  conditions and trends.  The improvement in
this methodology  resulted in a net reduction of approximately $6.8 million from
the estimate previously used.

Noninterest  Income.  Noninterest income increased $7.9 million to $48.2 million
in 2007,  or 16%,  from $40.3 million in 2006.  This is  attributable  to a $3.2
million  increase in deposit  service  charges as we  continue  to benefit  from
increased  deposit  accounts and offering  additional  fee-based  services.  The
increase also includes a $1.1 million  non-recurring gain related to the sale of
our  former  headquarters  building  and an  $882,000  gain from the sale of our
credit card portfolio.  Credit/debit card and ATM income also increased $915,000
as a result of increased  volumes of cash in non-owned ATMs and higher  bailment
fees earned on this cash. In 2007 we also recorded two  offsetting  $6.0 million
items.  Both  occurred  during the fourth  quarter and resulted in a gain and an
expense  recognized  from the donation of a N.C. Wyeth mural,  Apotheosis of the
Family, which was located in our former headquarters. During 2006, we recognized
a loss of $2.0 million on the sale of  below-market  yielding  securities.  This
sale was part of our  efforts to  improve  our  earning  asset mix and return on
assets.


         Noninterest  income increased $5.7 million to $40.3 million in 2006, or
16%, from $34.7 million in 2005. The largest  increase was  attributable to $3.8
million  in card and ATM  income as a result  of  increased  volumes  of cash in
non-owned ATMs and higher  bailment rates earned on this cash.  Deposit  service
charges also increased $2.2 million as a result of growth in deposit accounts as
well as  additional  fee-based  services we provided.  During 2006,  noninterest
income was impacted by unanticipated income of $1.8 million in our investment in
Bank-Owned  Life  Insurance  (BOLI)  resulting from a death benefit we received.
Also,  during  2006,  we  recognized  a loss  of  $2.0  million  on the  sale of
below-market  yielding securities.  This sale was part of our efforts to improve
our earning asset mix and return on assets.

Noninterest  Expenses.  Noninterest  expenses for the year ended 2007 were $82.0
million,  an increase of 18%, or $12.7 million over $69.3 million  recognized in
2006.  The increase  reflects our continued  growth efforts in 2007 and included
the opening of three branch offices,  one branch renovation,  and the relocation
of our  corporate  headquarters.  As a result  of this  growth,  the  number  of
full-time Associates grew to 599, resulting in increased salaries,  benefits and
other  compensation  of $4.3 million.  This growth also affected both  occupancy
expense,  which increased by $2.8 million,  and other operating expenses,  which
increased by $1.9 million.  During 2007 our marketing  expenses  increased  $1.2
million, as a multi-year brand campaign was launched with the intent to leverage
our Stellar  Service model with the message "We Stand For Service."  Also during
2007, we recorded a $1.2 million expense  related to the Visa antitrust  lawsuit
settlement with American Express and other Visa-related litigation. We are not a
party to any of these  lawsuits and our expense  solely results from our being a
member of Visa. WSFS expects the proceeds from the anticipated  share redemption
for its ownership  interest in Visa's planned  initial  public  offering will be
applied to this charge.

         Noninterest  expenses  increased $6.4 million to $69.3 million in 2006,
or 10%, from $62.9 million in 2005.  Salaries,  benefits and other  compensation
increased $4.2 million as a result of our continued growth including the opening
of three branch offices and two branch  renovations/relocations  in 2006 and the
formation of the Wealth Management Division.  The number of full-time Associates
increased  from 515 in 2005 to 573 in 2006.  The  growth was also  reflected  in
higher  equipment and other  operating  expenses with an increase of $514,000 in
equipment  expense and $1.7 million in other operating  expenses.  Additionally,
$1.5 million of the increase in salaries,  benefits and other  compensation  was
the result of the 2006  implementation of the Statement of Financial  Accounting
Standards (SFAS) No. 123 (revised 2004), Share-Based Payment.

Income  Taxes.  We  recorded a $13.5  million tax  provision  for the year ended
December  31,  2007  compared to $15.7  million and $14.8  million for the years
ended December 31, 2006 and 2005, respectively.  The effective tax rates for the
years  ended  December  31,  2007,  2006 and 2005 were  31.2%,  34.0% and 34.8%,
respectively.  The  reduction in the 2007  effective  tax rate

                                      -34-



is primarily the result of a $1.7 million tax benefit  related to the previously
discussed  donation of our N.C.  Wyeth  mural.  The  provision  for income taxes
includes  federal,  state and local income taxes that are  currently  payable or
deferred because of temporary  differences between the financial reporting bases
and the tax reporting bases of the assets and liabilities.

         We analyze our projection of taxable income and make adjustments to our
provision for income taxes accordingly. For additional information regarding our
tax  provision  and  net  operating  loss  carryforwards,  see  Note  12 to  the
Consolidated Financial Statements.


FINANCIAL CONDITION

         Total  assets  increased  $202.8  million,  or 7%,  during 2007 to $3.2
billion.  This increase was predominantly due to growth in net loans, which grew
$214.2 million,  or 11%,  during 2007.  This increase was partially  offset by a
decrease  of $26.2  million  in  investment  securities  and  $19.9  million  in
mortgage-backed  securities.  Total liabilities  increased $203.6 million during
the year to $3.0 billion at December 31, 2007.  This  increase was primarily the
result of an increase in customer  deposits of $135.5  million,  or 10%,  during
2007, and an increase in total borrowings of $132.5 million,  or 13%.  Partially
offsetting  these  increases was a $52.0 million,  or 17%,  decrease in brokered
deposits.

Cash  in  non-owned  ATMs.  During  2007,  cash in  non-owned  ATMs  managed  by
CashConnect,  our ATM unit,  increased $16.4 million,  or 10%. This increase was
the result of an increase in the number of ATMs  serviced  by  CashConnect  from
7,458 at December  31, 2006 to 9,976 at December 31,  2007.  Of these,  325 ATMs
were WSFS owned and operated during 2007.

Mortgage-backed Securities.  Investments in mortgage-backed securities decreased
$19.9 million during 2007 to $496.8  million.  During 2007, we sold $2.6 million
of  our  mortgage-backed  securities.  The  weighted  average  duration  of  the
mortgage-backed securities was 2.8 years at December 31, 2007.

Loans,  net. Net loans  increased  $214.2  million,  or 11%,  during 2007.  This
included  increases  of $143.6  million,  or 22%,  in  commercial  loans,  $78.8
million,  or 12%, in commercial real estate loans, and $14.8 million,  or 6%, in
consumer  loans.  This  increase was partially  offset by a planned  decrease of
$26.5 million, or 6%, in residential mortgage loans.

Customer Deposits.  Customer deposits  increased $135.5 million,  or 10%, during
2007 to $1.5 billion.  Customer time deposits (CDs) increased $69.8 million,  or
16%, in 2007. In addition,  core deposit relationships  (demand deposits,  money
market and savings  accounts)  increased $65.7 million,  or 7%, during the year.
The table below  depicts the  changes in customer  deposits  over the last three
years:

                                         Year Ended December 31,
                               ----------------------------------------
                                2007            2006           2005
                                -----           -----          ----
                                          (In Millions)
Beginning balance.........    $1,343.7        $1,193.9       $1,052.2
Interest credited.........        32.4            26.3           11.4
Deposit inflows, net......       103.1           123.5          130.3
                              --------        --------       --------
Ending balance............    $1,479.2        $1,343.7       $1,193.9
                              ========        ========       ========


Borrowings  and  Brokered  Certificates  of  Deposit.  Borrowings  and  brokered
certificates  of deposit  increased by $80.4 million,  or 6%, during 2007.  This
increase  was  primarily  the result of an increase  in FHLB  advances of $114.3
million,  or 15%. In addition,  other borrowed funds increased $16.6 million, or
21%,  and Federal  funds  purchased  and  securities  sold under  agreements  to
repurchase  increased $1.6 million, or 2%, in 2007.  Partially  offsetting these
increases was a $52.0 million, or 17%, decrease in brokered deposits.

Stockholders' Equity.  Stockholders' equity decreased $729,000 to $211.3 million
at December  31, 2007.  This  decrease was mainly due to our purchase of 564,100
shares of treasury  stock for $36.2  million.  At December 31, 2007, we held 9.5
million

                                      -35-



shares of our common stock as treasury stock. We intend to continue repurchasing
shares depending on stock price and alternative uses of capital. In addition, we
declared cash dividends  totaling $2.4 million during 2007. These decreases were
partially  offset by a $34.4  million  increase in total  comprehensive  income,
including $29.6 million in net income,  and a $2.0 million  increase  related to
the adoption of Financial Accounting Standards Board ("FASB") Interpretation No.
48,  Accounting  for  Uncertainty  in Income Taxes,  an  interpretation  of FASB
Statement 109 ("FIN 48").  Lastly, an increase of $1.3 million resulted from the
exercise of common stock options.


ASSET/LIABILITY MANAGEMENT

         Our primary asset/liability management goal is to maximize net interest
income  opportunities  within the  constraints  of managing  interest rate risk,
while ensuring  adequate  liquidity and funding and maintaining a strong capital
base.

         In general,  interest  rate risk is mitigated  by closely  matching the
maturities or repricing periods of interest-sensitive  assets and liabilities to
ensure a favorable  interest rate spread.  We regularly review our interest-rate
sensitivity,  and  use  a  variety  of  strategies  as  needed  to  adjust  that
sensitivity within acceptable tolerance ranges established by management and the
Board  of  Directors.  Changing  the  relative  proportions  of  fixed-rate  and
adjustable-rate  assets and  liabilities  is one of our  primary  strategies  to
accomplish this objective.

         The matching of assets and liabilities may be analyzed by examining the
extent to which such assets and liabilities are "interest-rate sensitive" and by
monitoring an institution's  interest-sensitivity  gap. An  interest-sensitivity
gap is considered  positive when the amount of  interest-rate  sensitive  assets
exceeds the amount of  interest-rate  sensitive  liabilities  repricing within a
defined  period,  and is considered  negative  when the amount of  interest-rate
sensitive  liabilities  exceeds  the amount of  interest-rate  sensitive  assets
repricing within a defined period.

                                      -36-



The  repricing  and  maturities  of  our  interest-rate   sensitive  assets  and
interest-rate  sensitive  liabilities  at December 31, 2007 are set forth in the
following table:




                                                              Less than One              One to              Over            Total
                                                                       Year          Five Years        Five Years
- -----------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands) Interest-rate sensitive assets:
                                                                                                          
Real estate loans (1) (2)                                        $  763,760            $300,366         $ 126,176       $1,190,302
Commercial loans (2)                                                609,190             120,704            57,644          787,538
Consumer loans (2)                                                  138,194              56,071            84,007          278,272
Mortgage-backed securities                                          153,652             322,951            20,189          496,792
Loans held-for-sale (2)                                               2,417                   -                 -            2,417
Investment securities                                                66,410               5,867             1,532           73,809
Interest-bearing deposits in other banks                              1,078                   -                 -            1,078
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                  1,734,701             805,959           289,548        2,830,208
- -----------------------------------------------------------------------------------------------------------------------------------
Interest-rate sensitive liabilities:
Money market and interest-bearing demand deposits                   166,353                   -           308,941          475,294
Savings deposits                                                     55,188                   -           141,383          196,571
Retail time deposits                                                460,944              54,652             1,312          516,908
Jumbo certificates of deposit                                        98,581                 177                 -           98,758
Brokered certificates of deposit                                    163,571                   -            85,635          249,206
FHLB advances                                                       747,901             141,579             8,800          898,280
Trust preferred borrowings                                           67,011                   -                 -           67,011
Other borrowed funds                                                 83,204              25,000            61,665          169,869
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                  1,842,753             221,408           607,736        2,671,897
- -----------------------------------------------------------------------------------------------------------------------------------
(Deficiency) excess of interest-rate sensitive                  $  (108,052)           $584,551         $(318,188)       $ 158,311
   assets over interest-rate liabilities
   ("interest-rate sensitive gap")
- -----------------------------------------------------------------------------------------------------------------------------------
One-year interest-rate sensitive assets/                              94.14%
   Interest-rate sensitive liabilities
One-year interest-rate sensitive gap as a
   Percent of total assets                                             (3.38)%


(1)  Includes commercial mortgage, construction, and residential mortgage loans.
(2)  Loan balances exclude deferred fees and costs.

         Generally,  during a period of rising  interest  rates,  a positive gap
would  result in an increase in net  interest  income while a negative gap would
adversely  affect net interest  income.  Conversely,  during a period of falling
rates, a positive gap would result in a decrease in net interest  income while a
negative   gap   would    augment   net   interest    income.    However,    the
interest-sensitivity  table does not provide a comprehensive  representation  of
the impact of interest  rate changes on net interest  income.  Each  category of
assets or liabilities will not be affected equally or  simultaneously by changes
in the  general  level of interest  rates.  Even  assets and  liabilities  which
contractually  reprice  within the rate period may not, in fact,  reprice at the
same price or the same time or with the same frequency.  It is also important to
consider  that the table  represents a specific  point in time.  Variations  can
occur as we adjust our interest-sensitivity position throughout the year.

         To  provide a more  accurate  position  of our  one-year  gap,  certain
deposit  classifications are based on the interest-rate sensitive attributes and
not on the contractual repricing  characteristics of these deposits.  Management
estimates, based on historical trends of our deposit accounts, that 35% of money
market and 13% of  interest-bearing  demand  deposits are  sensitive to interest
rate changes and that 22% to 36% of savings  deposits are  sensitive to interest
rate changes.  Accordingly,  these interest-sensitive portions are classified in
the less  than  one-year  category  with  the  remainder  in the over  five-year
category.

         Deposit rates other than time deposit  rates are variable,  and changes
in  deposit  rates  are  generally   subject  to  local  market  conditions  and
management's discretion and are not indexed to any particular rate.

                                      -37-



REVERSE MORTGAGES

         We hold an investment in reverse  mortgages of $2.0 million at December
31, 2007 representing a participation in reverse mortgages with a third party.

         Reverse  mortgage  loans are contracts  that require the lender to make
monthly advances throughout the borrower's life or until the borrower relocates,
prepays or the home is sold,  at which time the loan  becomes  due and  payable.
Reverse  mortgages  are  nonrecourse  obligations,  which  means  that  the loan
repayments  are  generally  limited to the net sale  proceeds of the  borrower's
residence.

         We account for our  investment in reverse  mortgages by estimating  the
value  of the  future  cash  flows on the  reverse  mortgages  at a rate  deemed
appropriate  for  these  mortgages,   based  on  the  market  rate  for  similar
collateral.  Actual  cash flows from the  maturity of these  mortgage  loans can
result in  significant  volatility  in the  recorded  value of reverse  mortgage
assets.  As a result,  income  varies  significantly  from  reporting  period to
reporting  period.  For the year ended December 31, 2007, we earned $2.0 million
in  interest  income on reverse  mortgages  as  compared to $684,000 in 2006 and
$678,000 in 2005.

         The projected cash flows depend on assumptions about life expectancy of
the  mortgagee  and the future  changes in  collateral  values.  Projecting  the
changes  in  collateral  values is the most  significant  factor  impacting  the
volatility  of  reverse  mortgage  values.  Our  current  assumptions  include a
short-term annual  appreciation rate of -8.0% in the first year, and a long-term
annual appreciation rate of 0.5% in future years. If the long-term  appreciation
rate was  increased  to 1.5%,  the  resulting  impact on income  would have been
$106,000. Conversely, if the long-term appreciation rate was decreased to -0.5%,
the resulting impact on income would have been $(89,000).

         We also hold $12.4  million in BBB+  rated  mortgage-backed  securities
classified  as  trading  and  options  to  acquire  up to  49.9%  of  Class  "O"
Certificates  issued in connection with securities  consisting of a portfolio of
reverse  mortgages we previously owned. At the time of the  securitization,  the
third-party  securitizer  retained 100% of the Class "O"  Certificates  from the
securitization. These Class "O" Certificates have no priority over other classes
of Certificates  under the Trust and no distributions  will be made on the Class
"O" Certificates  until,  among other  conditions,  the principal amount of each
other  class of notes has been  reduced  to zero.  The  underlying  assets,  the
reverse  mortgages,  are very long-term  assets.  Therefore,  any cash flow that
might inure to the holder of the Class "O" Certificates is not expected to occur
until many years in the  future.  Additionally,  we can  exercise  our option on
49.9% of the Class "O"  Certificates  in up to five separate  increments  for an
aggregate  purchase  price of $1.0 million any time between  January 1, 2004 and
the termination of the  Securitization  Trust.  The option to purchase the Class
"O"  Certificates  does not meet the  definition of a derivative  under SFAS No.
133,  Accounting  for  Derivative  and Hedging  Activities and is carried in our
financial statements at cost.

         During 2006,  we formed a new reverse  mortgage  initiative.  While our
activity during the past two years has been limited to acting as a correspondent
for these loans, it is our intention to originate and underwrite our own reverse
mortgages in the future. We expect to sell most of these loans and do not intend
to hold them in our portfolio.  These reverse mortgages are government  approved
and insured.


NONPERFORMING ASSETS

         Nonperforming  assets,  which include nonaccruing loans,  nonperforming
real estate investments and assets acquired through foreclosure,  can negatively
affect  our  results  of  operations.  Nonaccruing  loans are those on which the
accrual  of  interest  has  ceased.   Loans  are  placed  on  nonaccrual  status
immediately  if, in the opinion of management,  collection is doubtful,  or when
principal  or  interest  is  past  due 90 days or  more  and  the  value  of the
collateral is insufficient to cover principal and interest. Interest accrued but
not collected at the date a loan is placed on nonaccrual  status is reversed and
charged against interest income.  In addition,  the amortization of net deferred
loan fees is suspended  when a loan is placed on nonaccrual  status.  Subsequent
cash  receipts  are  applied  either to the  outstanding  principal  balance  or
recorded  as  interest  income,  depending  on  management's  assessment  of the
ultimate collectibility of principal and interest. Past due loans are defined as
loans  contractually  past  due 90  days or more  as to  principal  or  interest
payments but which remain in accrual  status  because they are  considered  well
secured and in the process of collection.

                                      -38-



         The following  table sets forth our  nonperforming  assets and past due
loans at the dates indicated:



December 31,                                              2007      2006      2005      2004      2003
- --------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
                                                                                
Nonaccruing loans:
  Commercial                                            $17,187   $ 1,282   $   925   $ 1,595   $ 1,549
  Consumer                                                  835       557       155       291       240
  Commercial mortgages                                    3,873       500       727       909       941
  Residential mortgages                                   2,417     1,493     1,567     1,601     2,513
  Construction                                            6,794         -        36         -         -

Total nonaccruing loans                                  31,106     3,832     3,410     4,396     5,243
Assets acquired through foreclosure                         703       388        59       217       301

Total nonperforming assets                              $31,809   $ 4,220   $ 3,469   $ 4,613   $ 5,544


Past due loans:
  Residential mortgages                                 $   388   $   219   $   327   $   703   $   915
  Commercial and commercial mortgages                        14         3      --        --         129
  Consumer                                                  173        29        59       104       148

Total past due loans                                    $   575   $   251   $   386   $   807   $ 1,192


Ratio of nonaccruing loans to total loans (1)              1.38%     0.19%     0.19%     0.28%     0.40%
Ratio of allowance for loan losses to gross loans (1)      1.12%     1.34%     1.41%     1.56%     1.69%
Ratio of nonperforming assets to total assets              0.99%     0.14%     0.12%     0.18%     0.25%
Ratio of loan loss allowance to nonaccruing loans (2)     78.80%   705.32%   709.47%   524.05%   421.91%


(1)  Total loans exclude loans held-for-sale.
(2)  The applicable allowance represents general valuation allowances only.

   Total nonperforming  assets increased $27.6 million during 2007. As a result,
nonperforming  assets as a percentage  of total assets  increased  from 0.14% at
December 31, 2006 to 0.99% at December 31, 2007. This increase results primarily
from two large lending relationships being placed on nonaccrual during 2007. The
first is a $10.3  million  lending  relationship  consisting  of $7.0 million in
construction loans and $3.3 million in commercial mortgages. We charged-off $1.4
million against this relationship  during the fourth quarter of 2007. The second
is an  asset-based  loan for $18.7 million that was  subsequently  sold in March
2008 at a loss. The amount of this loss has been charged against this loan as of
December  31,  2007.  Based on the sale,  we  charged-off  $3.7 million from our
allowance for loan losses at December 31, 2007. The  relationship  also included
unused  letters of credit  amounting to $475,000.  We increased our  contingency
reserve for losses on the letters of credit associated with this relationship by
$184,000 at December 31, 2007.

         The following  table  provides an analysis of the change in the balance
of nonperforming assets during the last three years:

Year Ended December 31,              2007             2006             2005
- --------------------------------------------------------------------------------
(In Thousands)
Beginning balance                $  4,220         $  3,469         $  4,613
  Additions                        37,017            5,697            5,062
  Collections                      (3,029)          (3,916)          (4,467)
  Transfers to accrual               (295)            (453)            (398)
  Charge-offs/write-downs          (6,104)            (577)          (1,341)
- --------------------------------------------------------------------------------
Ending balance                   $ 31,809         $  4,220         $  3,469
- --------------------------------------------------------------------------------


Allowance for Loan Losses.  We maintain  allowances for credit losses and charge
losses to these allowances when such losses are realized.  The  determination of
the  allowance  for  loan  losses  requires  significant   judgement  reflecting

                                      -39-



management's  best  estimate of probable  loan  losses  related to  specifically
identified  loans  as  well  as  probable  loan  losses  in the  remaining  loan
portfolio. Our evaluation is based upon a continuing review of these portfolios.

          We  established  our loan loss  allowance in accordance  with guidance
provided in the Securities and Exchange  Commission's Staff Accounting  Bulletin
102  (SAB  102).  Its  methodology  for  assessing  the  appropriateness  of the
allowance  consists of several key elements which include:  specific  allowances
for identified  problem loans;  formula allowances for commercial and commercial
real estate loans; and allowances for pooled homogenous loans.

          Specific  reserves are  established  for certain  loans in cases where
management has identified  significant  conditions or circumstances related to a
specific credit that management  believes  indicate the probability  that a loss
has been incurred.

          The formula allowances for commercial and commercial real estate loans
are calculated by applying  estimated loss factors to outstanding loans based on
the internal risk grade of loans.  For low risk  commercial and commercial  real
estate  loans the  portfolio  is  pooled,  based on  internal  risk  grade,  and
estimates  are based on a  ten-year  net  charge-off  history.  Higher  risk and
criticized loans have loss factors that are derived from an analysis of both the
probability of default and the  probability  of loss should default occur.  Loss
adjustment  factors are applied based on criteria  discussed below. As a result,
changes in risk grades of both  performing  and  nonperforming  loans affect the
amount of the formula allowance.

         Pooled     loans    are    loans    that    are    usually     smaller,
not-individually-graded  and homogenous in nature, such as consumer  installment
loans and residential mortgages. Loan loss allowances for pooled loans are based
on a ten-year net charge-off history.  The average loss allowance per homogenous
pool is based on the  product of  average  annual  historical  loss rate and the
estimated  duration of the pool multiplied by the pool balances.  These separate
risk pools are  assigned a reserve for losses  based upon this  historical  loss
information and loss adjustment factors.

         Historical  loss  adjustment  factors are based upon our  evaluation of
various current conditions including those listed below:

o    General economic and business conditions affecting our key lending areas,
o    Credit quality trends,
o    Recent loss experience in particular segments of the portfolio,
o    Collateral values and loan-to-value ratios,
o    Loan volumes and concentrations, including changes in mix,
o    Seasoning of the loan portfolio,
o    Specific industry conditions within portfolio segments,
o    Bank regulatory examination results, and
o    Other  factors,  including  changes  in  quality  of the loan  origination,
     servicing and risk management processes.

Our loan  officers  and risk  managers  meet at least  quarterly  to discuss and
review these conditions and risks  associated with individual  problem loans. In
addition,  various regulatory agencies, as an integral part of their examination
process,  periodically  review  our  allowance  for such  losses.  We also  give
consideration to the results of these regulatory agency examinations.

         During 2007,  the  provision  for loan losses were affected by: (1) our
continued  significant loan growth;  (2) migration of certain loans toward lower
credit  grades as we  continue to assess our  exposure  in the  current  lending
environment; partially offset by (3) a lower level of estimated losses resulting
from  an  improvement  in the  methodology  for  estimating  loan  losses  using
historical data adjusted for current  conditions and trends.  The improvement in
this  methodology  resulted in a reduction of approximately  $6.8 million,  net,
from the estimate previously used.

                                      -40-



         The table below  represents a summary of changes in the  allowance  for
loan losses during the periods indicated:



                                      Year Ended December 31,                    2007         2006     2005        2004     2003
 -----------------------------------------------------------------------------------------------------------------------------------
 (Dollars in Thousands)
                                                                                                         
 Beginning balance                                                            $27,384      $25,381  $24,222     $22,386   $21,452
 Provision for loan losses                                                      5,021        2,738    2,582       3,217     2,550

 Charge-offs:
 Residential real estate                                                           41          75        90         222      329
 Commercial real estate (1)                                                     1,398           -       104         148        -
 Commercial                                                                     4,379         470     1,048         656      827
 Overdrafts (2)                                                                 1,441         607         -           -        -
 Consumer                                                                         790         483       631         817      860
 ----------------------------------------------------------------------------------------------------------------------------------
 Total charge-offs                                                              8,049       1,635     1,873       1,843    2,016
 ----------------------------------------------------------------------------------------------------------------------------------


 Recoveries:
 Residential real estate                                                           11          14        59          32        -
 Commercial real estate (1)                                                       127         170        42           -      202
 Commercial                                                                       173         343       209         335       79
 Overdrafts (2)                                                                   446         217         -           -        -
 Consumer                                                                         139         156       140          95      119
 ----------------------------------------------------------------------------------------------------------------------------------
 Total recoveries                                                                 896         900       450         462      400
 ----------------------------------------------------------------------------------------------------------------------------------

 Net charge-offs                                                                7,153         735     1,423       1,381    1,616
 ----------------------------------------------------------------------------------------------------------------------------------
 Ending balance                                                               $25,252     $27,384   $25,381     $24,222  $22,386
 ----------------------------------------------------------------------------------------------------------------------------------

 Net charge-offs to average gross loans
 outstanding, net of unearned income                                             0.34%       0.04%     0.09%       0.10%     0.13%
 ----------------------------------------------------------------------------------------------------------------------------------


(1)  Includes commercial mortgage and construction loans.
(2)  Prior to April 2006,  overdraft  charge-offs/recoveries  were recognized in
     other operating expense.

         The allowance for loan losses is allocated by major  portfolio type. As
these portfolios have developed, they have become a source of historical data in
projecting delinquencies and loss exposure;  however, such allocations are not a
guarantee  of  where  future  losses  may  occur.  While we have  allocated  the
allowance for loan losses by portfolio type in the following  table,  the entire
reserve is available for any loan  portfolio to utilize.  The  allocation of the
allowance for loan losses by portfolio  type at the end of each of the last five
fiscal years, and the percentage of outstanding  loans in each category to total
gross outstanding, at such dates follow:



  December 31,                              2007               2006                2005                2004              2003
  ----------------------------------------------------------------------------------------------------------------------------------
                                       Amount  Percent    Amount  Percent     Amount  Percent     Amount  Percent    Amount Percent
  ----------------------------------------------------------------------------------------------------------------------------------
  (Dollars in Thousands)
                                                                                                
  Residential real estate             $ 1,304   19.8%    $ 1,645   23.1%     $ 1,632   25.4%     $ 1,468   28.1%    $ 2,736   34.6%
  Commercial real estate               12,151   32.9%     11,343   32.5%      10,978   32.7%       9,211   34.6%      8,338   29.3%
  Commercial                            8,088   35.0%     11,019   31.5%       9,471   28.3%      10,456   23.7%      8,368   22.0%
  Consumer                              3,709   12.3%      3,377   12.9%       3,300   13.6%       3,087   13.6%      2,944   14.1%
  ----------------------------------------------------------------------------------------------------------------------------------
  Total                               $25,252  100.0%     $27,384 100.0%     $25,381  100.0%     $24,222  100.0%    $22,386   100.0%
  ----------------------------------------------------------------------------------------------------------------------------------



LIQUIDITY

         We manage our  liquidity  risk and funding  needs  through our treasury
function and our Asset/Liability Committee. Historically, we have had success in
growing our loan  portfolio.  For  example,  during the year ended  December 31,
2007,  net loan growth  resulted in the use of $221.2  million in cash. The loan
growth was primarily the result of our continued  success  increasing  corporate
and  small  business  lending.  We  expect  this  trend to  continue.  While our
loan-to-deposit  ratio has been well above 100% for many years,  management  has
significant experience managing its funding needs through borrowings and deposit
growth.

                                      -41-



         As a financial institution,  we have ready access to several sources of
funding. Among these are:

     o    Deposit growth,
     o    Borrowing from the FHLB,
     o    The brokered deposit market,
     o    Other borrowings such as repurchase agreements,
     o    Cash flow from securities, loan sales and repayments, and
     o    Our ability to generate positive cash flows from our operations.

         Our  current  branch  expansion  and  renovation  program is focused on
expanding  our retail  footprint in Delaware  and  attracting  new  customers to
provide additional deposit growth.  Customer deposit growth was strong, equaling
$135.5 million, or 10%, during 2007.

         Our   portfolio  of   high-quality,   liquid   investments,   primarily
short-duration  AAA-rated,  mortgage-backed  securities  and  Agency  notes also
provide a source of cash flow to meet current cash needs. If needed, portions of
this  portfolio,  as well as  portions of the loan  portfolio,  could be sold to
provide cash to fund new loans.  During the year ended December 31, 2007,  $32.7
million in cash was provided by operating activities.

         We have a policy that separately  addresses  liquidity,  and management
monitors our adherence to policy  limits.  As part of the  liquidity  management
process, we also monitor our available  wholesale funding capacity.  At December
31,  2007,  we had $294.6  million in funding  capacity at the Federal Home Loan
Bank of Pittsburgh and $551.2 million in estimated  funding capacity in brokered
deposits.  Liquidity  risk  management  is a primary area of focus for us and is
subject to examination by the OTS.

         We have not used and have no  intention  of using any  significant  off
balance sheet  financing  arrangement  for liquidity  management  purposes.  Our
financial  instruments with off balance sheet risk are limited to obligations to
fund loans to customers pursuant to existing commitments, obligations of letters
of credit and an interest  rate cap which limits the interest  rate  exposure on
$50.0 million of trust  preferred  floating rate debt. In addition,  we have not
had and have no intention to have any significant transactions,  arrangements or
other relationships with any unconsolidated, limited purpose entities that could
materially affect our liquidity or capital resources.


CAPITAL RESOURCES

         Federal laws, among other things,  require the OTS to mandate uniformly
applicable  capital  standards  for all savings  institutions.  These  standards
currently require institutions such as us to maintain a "tangible" capital ratio
equal to 1.5% of adjusted total assets,  "core" (or "leverage") capital equal to
4.0% of adjusted total assets, "Tier 1" capital equal to 4.0% of "risk-weighted"
assets and total "risk-based" capital (a combination of core and "supplementary"
capital) equal to 8.0% of "risk-weighted" assets.

         The Federal Deposit Insurance Corporation  Improvement Act (FDICIA), as
well as other  requirements,  established five capital tiers:  well-capitalized,
adequately-capitalized,  under-capitalized,  significantly under-capitalized and
critically under- capitalized.  A depository  institution's capital tier depends
upon its capital levels in relation to various relevant capital measures,  which
include  leverage and  risk-based  capital  measures and certain other  factors.
Depository  institutions that are not classified as well-capitalized are subject
to various restrictions regarding capital  distributions,  payment of management
fees, acceptance of brokered deposits and other operating activities.

         At December  31,  2007,  we are  classified  as  well-capitalized,  the
highest  regulatory defined level, and in compliance with all regulatory capital
requirements.   Additional   information   concerning  our  regulatory   capital
compliance is included in Note 10 to the Consolidated Financial Statements.

         Since  1996,  the  Board  of  Directors  has  approved   several  stock
repurchase  programs  to  acquire  common  stock  outstanding.  As part of these
programs, we acquired approximately 564,100 shares in 2007 and 103,400 shares in
2006.  At December 31, 2007,  we held 9.5 million  shares of our common stock as
treasury shares.  We intend to continue  repurchasing

                                      -42-



shares depending on stock price and alternative uses of capital. At December 31,
2007,  we had  579,500  shares  remaining  under our  current  share  repurchase
authorization.


OFF BALANCE SHEET ARRANGEMENTS

         We have no off balance sheet  arrangements  that currently have, or are
reasonably likely to have, a material future effect on our financial  condition,
changes in financial  condition,  revenues or expenses,  results of  operations,
liquidity,  capital  expenditures or capital resources.  Additional  information
concerning  our off  balance  sheet  arrangements  is included in Note 14 to the
Consolidated Financial Statements.


CONTRACTUAL OBLIGATIONS

                  At December 31, 2007, we had contractual  obligations relating
to operating  leases,  long-term debt,  data processing and credit  obligations.
These  obligations  are  summarized  below.  See  Notes  7,  9  and  14  to  the
Consolidated Financial Statements for further discussion.



                                                                        Less than                                         More than
                                                             Total         1 Year        1-3 Years       3-5 Years          5 Years
- ------------------------------------------------------------------------------------------------------------------------------------
(In Thousands)
                                                                                                            
Operating lease obligations                             $   44,137     $    4,562         $  8,427         $ 7,417          $23,731
Long-term debt obligations                                 965,291        577,900          278,079          42,301           67,011
Data processing contracts                                    8,352          3,848            4,493              11                -
Credit obligations                                         586,252        586,252                -               -                -
- ------------------------------------------------------------------------------------------------------------------------------------
Total                                                   $1,604,032     $1,172,562         $290,999         $49,729          $90,742
- ------------------------------------------------------------------------------------------------------------------------------------



IMPACT OF INFLATION AND CHANGING PRICES

         Our Consolidated  Financial Statements have been prepared in accordance
with  U.S.  generally  accepted   accounting   principles,   which  require  the
measurement of financial  position and operating  results in terms of historical
dollars without consideration of the changes in the relative purchasing power of
money over time due to  inflation.  The impact of  inflation is reflected in the
increased costs of our operations.  Unlike most industrial companies, nearly all
of our assets and liabilities are monetary.  As a result,  interest rates have a
greater  impact on our  performance  than do the  effects of  general  levels of
inflation.  Interest rates do not necessarily  move in the same direction or the
same extent as the price of goods and services.


RECENT LEGISLATION

         In February 2006,  Congress passed the Federal Deposit Insurance Reform
Act of 2005 (FDIRA).  This  legislation  merged the Bank  Insurance Fund and the
Savings Association  Insurance Fund into one fund,  increased insurance coverage
for retirement accounts to $250,000,  adjusted the maximum deposit insurance for
inflation after March 31, 2010 and gave the FDIC greater  flexibility in setting
insurance  assessments.  As part of the FDIRA-2005,  the Bank had been granted a
one-time  credit of $1.0 million for  utilization  against future FDIC insurance
premiums. During 2007, we used $709,000 of this credit to offset premiums.


CRITICAL ACCOUNTING POLICIES

         The discussion  and analysis of the financial  condition and results of
operations  are  based  on the  Consolidated  Financial  Statements,  which  are
prepared in conformity with U.S. generally accepted accounting  principles.  The
preparation of these Financial  Statements requires management to make estimates
and assumptions affecting the reported amounts of assets,  liabilities,  revenue
and expenses.  We regularly  evaluate these estimates and assumptions  including
those  related  to the

                                      -43-



allowance  for loan  losses,  contingencies  (including  indemnifications),  and
deferred taxes. We base our estimates on historical experience and various other
factors  and  assumptions   that  are  believed  to  be  reasonable   under  the
circumstances.  These form the basis for making judgements on the carrying value
of assets and  liabilities  that are not readily  apparent  from other  sources.
Actual results may differ from these estimates  under  different  assumptions or
conditions.

     The   following  are  critical   accounting   policies  that  involve  more
significant judgements and estimates:

Allowance for Loan Losses

We maintain  allowances for credit losses and charge losses to these  allowances
when  realized.  The  determination  of the allowance  for loan losses  requires
significant  judgement  reflecting  our best  estimate of  probable  loan losses
related to specifically  identified loans as well as those in the remaining loan
portfolio. Our evaluation is based upon a continuing review of these portfolios,
with consideration given to evaluations resulting from examinations performed by
regulatory authorities.

Contingencies (Including Indemnifications)

         In the ordinary  course of business,  we are subject to legal  actions,
which  involve  claims for monetary  relief.  Based upon  information  presently
available to us and our counsel,  it is our opinion that any legal and financial
responsibility  arising from such claims will not have a material adverse effect
on our results of operations.

         We maintain a loss contingency for standby letters of credit and charge
losses to this reserve when such losses are realized.  The  determination of the
loss  contingency for standby letters of credit requires  significant  judgement
reflecting management's best estimate of probable losses.

         The Bank,  as successor to  originators  of reverse  mortgages is, from
time to time,  involved  in  arbitration  or  litigation  with  various  parties
including  borrowers or the heirs of borrowers.  Because reverse mortgages are a
relatively new and uncommon  product,  there can be no assurances  about how the
courts or arbitrators may apply existing legal principles to the  interpretation
and  enforcement  of the terms and  conditions  of the Bank's  reverse  mortgage
obligations.

Deferred Taxes

         We account for income taxes in accordance with SFAS No. 109, Accounting
for Income Taxes (SFAS 109),  which  requires the  recording of deferred  income
taxes that  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.  We have  assessed  our  valuation
allowances  on  deferred  income  taxes  resulting  from,  among  other  things,
limitations  imposed by Internal Revenue Code and  uncertainties,  including the
timing of settlement and realization of these differences.


RECENT ACCOUNTING PRONOUNCEMENTS

         In  September   2006,   the  FASB  issued  SFAS  No.  157,  Fair  Value
Measurements  (SFAS 157).  This  Statement  defines  fair value,  establishes  a
framework for measuring fair value in generally accepted  accounting  principles
and  expands  disclosures  about  fair  value  measurements.   Additionally,  it
establishes a fair value  hierarchy that  prioritizes  the  information  used to
develop those assumptions. SFAS 157 is effective for financial statements issued
for fiscal years  beginning  after November 15, 2007 and interim  periods within
those  fiscal  years.  We do not  believe  the  adoption of SFAS 157 will have a
material impact on our Consolidated Financial Statements in 2008.

         In February  2007,  the FASB issued SFAS No. 159, The Fair Value Option
for Financial Assets and Financial  Liabilities--Including  an amendment of FASB
Statement  No. 115 (SFAS 159).  SFAS 159  permits  entities to choose to measure
many  financial  instruments  and certain other items at fair value.  Unrealized
gains and losses on items for which the fair value  option has been elected will
be recognized in earnings at each  subsequent  reporting  date. This will become
effective  for us on January 1, 2008. We do not believe the adoption of SFAS 159
will have a material impact on our Consolidated Financial Statements in 2008.

                                      -44-



         In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business
Combinations  (SFAS 141(R)).  This  Statement  changes the  requirements  for an
acquirer's   recognition   and  measurement  of  the  assets  acquired  and  the
liabilities  assumed in a business  combination.  SFAS 141(R) is  effective  for
annual  periods  beginning  after  December  15,  2008  and  should  be  applied
prospectively  for all  business  combinations  entered  into  after the date of
adoption.  We have not yet determined whether there will be a material impact on
our Consolidated Financial Statements upon adoption.

         In  December  2007,  the  FASB  issued  SFAS  No.  160,  Noncontrolling
Interests in  Consolidated  Financial  Statements  -- an amendment of ARB No. 51
(SFAS 160). This Statement requires (i) that noncontrolling (minority) interests
be  reported  as a  component  of  shareholders'  equity,  (ii) that net  income
attributable  to the parent and to the  noncontrolling  interest  be  separately
identified in the consolidated statement of operations,  (iii) that changes in a
parent's ownership interest while the parent retains its controlling interest be
accounted  for as equity  transactions,  (iv) that any  retained  noncontrolling
equity investment upon the deconsolidation of a subsidiary be initially measured
at fair value,  and (v) that  sufficient  disclosures  are provided that clearly
identify and  distinguish  between the interests of the parent and the interests
of the noncontrolling owners. SFAS 160 is effective for annual periods beginning
after  December  15,  2008 and should be  applied  prospectively.  However,  the
presentation  and  disclosure  requirements  of the  statement  shall be applied
retrospectively  for all periods  presented.  We do not believe the  adoption of
SFAS 160 will have a material impact on our Consolidated Financial Statements.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- -------------------------------------------------------------------

      Market risk is the risk of loss from adverse  changes in market prices and
rates.  Our market risk arises primarily from interest rate risk inherent in our
lending,  investing and funding activities. To that end, we actively monitor and
manage our interest rate risk exposure.  One measure required to be performed by
the  Office  of  Thrift  Supervision  (OTS)-regulated  institutions  is the test
specified by OTS Thrift  Bulletin  No. 13A,  Management  of Interest  Rate Risk,
Investment Securities and Derivatives Activities.  This test measures the impact
on the net portfolio value of an immediate change in interest rates in 100 basis
point increments. Net portfolio value is defined as the net present value of the
estimated  cash flows from assets and  liabilities  as a  percentage  of the net
present  value of  assets.  The  following  table  is the  estimated  impact  of
immediate changes in interest rates on our net interest margin and net portfolio
value at the  specified  levels at  December  31, 2007 and 2006,  calculated  in
compliance with Thrift Bulletin No. 13A:



     December 31,                         2007                                 2006
     -------------------------------------------------------   -----------------------------------
       Change in           % Change in                            % Change in
     Interest Rate        Net Interest         Net Portfolio     Net Interest      Net Portfolio
     (Basis                 Margin (1)            Value (2)        Margin (1)          Value (2)
     Points)
     ---------------------------------------------------------------------------------------------
                                                                   
         +300                  +2%                9.70%              -1%              7.89%
         +200                  +2%               10.27%              -1%              8.46%
         +100                  +1%               10.72%               0%              8.99%
            0                   0%               11.01%               0%              9.66%
         -100                  -1%               11.04%              +2%              9.03%
         -200                  -2%               11.10%              +1%              9.04%
           (3)
         -300                  -4%               11.25%              -1%              8.91%
           (3)


(1)  The percentage  difference between net interest margin in a stable interest
     rate  environment  and net interest  margin as projected  under the various
     rate environment changes.

(2)  Our net portfolio value in a stable  interest rate  environment and the net
     portfolio value as projected under the various rate environment changes.

(3)  Sensitivity  indicated by a decrease of 200 and 300 basis points may not be
     particularly   meaningful   at  December   31,  2007  and  2006  given  the
     historically low absolute level of interest rates at these dates.

         Our primary objective in managing interest rate risk is to minimize the
adverse impact of changes in interest rates on net interest  income and capital,
while maximizing the yield/cost spread on our asset/liability structure. We rely
primarily on our asset/liability structure to control interest rate risk.

         We also  engage in other  business  activities  that are  sensitive  to
changes in interest rates.  For example,  mortgage banking revenues and expenses
can fluctuate with changing interest rates.  These fluctuations are difficult to
model and estimate.

                                      -45-



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DISCLOSURES
- -----------------------------------------------------------

             Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
WSFS Financial Corporation:

We have  audited the  accompanying  consolidated  statement of condition of WSFS
Financial Corporation and subsidiaries (the Company) as of December 31, 2007 and
2006,  and  the  related  consolidated  statements  of  operations,  changes  in
stockholders'  equity,  and cash  flows for each of the years in the  three-year
period ended December 31, 2007. These consolidated  financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the  financial  position of WSFS  Financial
Corporation  and  subsidiaries as of December 31, 2007 and 2006, and the results
of their operations and their cash flows for each of the years in the three-year
period ended  December 31, 2007,  in  conformity  with U.S.  generally  accepted
accounting principles.

We also have  audited,  in accordance  with the standards of the Public  Company
Accounting  Oversight Board (United States), the Company's internal control over
financial  reporting as of December 31, 2007,  based on criteria  established in
Internal  Control-Integrated  Framework  issued by the  Committee of  Sponsoring
Organizations of the Treadway  Commission (COSO), and our report dated March 17,
2008  expressed an  unqualified  opinion on the  effectiveness  of the Company's
internal control over financial reporting.

As discussed in Note 1 to the  consolidated  financial  statements,  the Company
adopted FASB Statement No. 123(revised), Share-Based Payment, a revision of FASB
Statement No. 123, Accounting for Stock-Based Compensation, effective January 1,
2006,  and FASB  Interpretation  No. 48,  Accounting  for  Uncertainty in Income
Taxes, an interpretation of FASB Statement 109, effective January 1, 2007.




/s/ KPMG LLP
- --------------------------
Philadelphia, Pennsylvania
March 17, 2008

                                      -46-



CONSOLIDATED STATEMENT OF OPERATIONS



Year Ended December 31,                                                                2007               2006                2005
- -----------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands, Except Per Share Data)
                                                                                                               
Interest income:
Interest and fees on loans                                                         $159,512           $143,629            $105,639
Interest on mortgage-backed securities                                               24,237             28,444              25,687
Interest and dividends on investment securities                                       1,353              1,884               2,580
Interest on investments in reverse mortgages                                          2,007                684                 678
Other interest income                                                                 2,368              2,536               1,438
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                                    189,477            177,177             136,022
- -----------------------------------------------------------------------------------------------------------------------------------

Interest expense:
Interest on deposits                                                                 57,311             42,707              21,690
Interest on Federal Home Loan Bank advances                                          38,561             45,878              30,659
Interest on federal funds purchased and securities
     sold under agreements to repurchase                                              3,153              3,790               4,089
Interest on trust preferred borrowings                                                4,753              5,053               5,292
Interest on other borrowings                                                          3,690              1,850                 650
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                                    107,468             99,278              62,380
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income                                                                  82,009             77,899              73,642
Provision for loan losses                                                             5,021              2,738               2,582
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses                                  76,988             75,161              71,060
- -----------------------------------------------------------------------------------------------------------------------------------

Noninterest income:
Credit/debit card and ATM income                                                     19,750             18,835              15,049
Deposit service charges                                                              15,419             12,250              10,091
Investment advisory income                                                            2,465              2,399               2,519
Loan fee income                                                                       2,384              1,824               1,999
Bank-owned life insurance income                                                      2,269              3,976               2,003
Mortgage banking activities, net                                                        217                225                 391
Securities gains (losses)                                                                82            (1,981)               (605)
Non-recurring gains, net                                                              1,979                  -                   -
Other income                                                                          3,601              2,777               3,206
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                                     48,166             40,305              34,653
- -----------------------------------------------------------------------------------------------------------------------------------

Noninterest expenses:
Salaries, benefits and other compensation                                            43,662             39,369              35,172
Occupancy expense                                                                     8,280              5,508               5,168
Equipment expense                                                                     5,616              4,393               3,879
Data processing and operations expense                                                4,062              3,511               3,465
Marketing expense                                                                     3,911              2,713               2,745
Professional fees                                                                     2,662              2,070               2,416
Other operating expenses                                                             13,838             11,750              10,032
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                                     82,031             69,314              62,877
- -----------------------------------------------------------------------------------------------------------------------------------
Income before minority interest and taxes                                            43,123             46,152              42,836
Less minority interest                                                                    -                 51                 133
- -----------------------------------------------------------------------------------------------------------------------------------
Income before taxes                                                                  43,123             46,101              42,703
Income tax provision                                                                 13,474             15,660              14,847
- -----------------------------------------------------------------------------------------------------------------------------------
Net income                                                                          $29,649            $30,441             $27,856
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings per share:
Basic                                                                                $4.69               $4.59              $4.10
Diluted                                                                              $4.55               $4.41              $3.89


  The accompanying notes are an integral part of these Financial Statements.

                                      -47-



CONSOLIDATED STATEMENT OF CONDITION


Year Ended December 31,                                                                2007            2006
- --------------------------------------------------------------------------------------------------------------
(Dollars in Thousands, Except Per Share Data)
                                                                                          
Assets
Cash and due from banks                                                          $     83,936    $     73,989
Cash in non-owned ATMs                                                                182,523         166,092
Federal funds sold                                                                          -           1,500
Interest-bearing deposits in other banks                                                1,078             243
- --------------------------------------------------------------------------------------------------------------
    Total cash and cash equivalents                                                   267,537         241,824
Investment securities held-to-maturity  (fair value: 2007-$1,498; 2006-$4,252)          1,516           4,219
Investment securities available-for-sale including reverse mortgages                   26,756          50,272
Mortgage-backed securities-available-for-sale                                         484,428         504,347
Mortgage-backed securities-trading                                                     12,364          12,364
Loans held-for-sale                                                                     2,404             919
Loans, net of allowance for loan losses of $25,252 at December 31, 2007
     and $27,384 at December 31, 2006                                               2,231,576       2,018,822
Bank-owned life insurance                                                              57,551          55,282
Stock in Federal Home Loan Bank of Pittsburgh, at cost                                 45,537          39,872
Assets acquired through foreclosure                                                       703             388
Premises and equipment                                                                 34,851          30,218
Accrued interest receivable and other assets                                           34,965          38,869
- --------------------------------------------------------------------------------------------------------------
Total assets                                                                     $  3,200,188    $  2,997,396
- --------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity

Liabilities:
Deposits:
    Noninterest-bearing demand                                                   $    290,424    $    276,338
    Interest-bearing demand                                                           171,363         146,719
    Money market                                                                      303,931         246,645
    Savings                                                                           196,571         226,853
    Time                                                                              366,717         326,009
    Jumbo certificates of deposit - customer                                          150,191         121,142
- --------------------------------------------------------------------------------------------------------------
          Total customer deposits                                                   1,479,197       1,343,706
    Other jumbo certificates of deposit                                                98,758         111,388
    Brokered deposits                                                                 249,206         301,254
- --------------------------------------------------------------------------------------------------------------
           Total deposits                                                           1,827,161       1,756,348

Federal funds purchased and securities sold under agreements to repurchase             75,000          73,400
Federal Home Loan Bank advances                                                       898,280         784,028
Trust preferred borrowings                                                             67,011          67,011
Other borrowed funds                                                                   94,869          78,240
Accrued interest payable and other liabilities                                         26,537          26,256
- --------------------------------------------------------------------------------------------------------------
Total liabilities                                                                   2,988,858       2,785,283
- --------------------------------------------------------------------------------------------------------------

Minority Interest                                                                           -              54

Stockholders' Equity:
Serial preferred stock $.01 par value, 7,500,000 shares authorized;
     none issued and outstanding                                                            -               -
Common stock $.01 par value, 20,000,000 shares authorized; issued 15,673,865
     at December 31, 2007 and 15,584,580 at December 31, 2006                             157             156
Capital in excess of par value                                                         83,077          81,580
Accumulated other comprehensive loss                                                   (3,861)         (8,573)
Retained earnings                                                                     376,682         347,448
Treasury stock at cost, 9,507,069 shares at December 31, 2007 and 8,942,969
     shares at December 31, 2006                                                     (244,725)       (208,552)
- --------------------------------------------------------------------------------------------------------------
Total stockholders' equity                                                            211,330         212,059
- --------------------------------------------------------------------------------------------------------------
Total liabilities, minority interest and stockholders' equity                    $  3,200,188    $  2,997,396
- --------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these Financial Statements.

                                      -48-



  CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY



                                                                              Accumulated
                                                               Capital in           Other                                    Total
                                                     Common     Excess of   Comprehensive    Retained      Treasury  Stockholders'
                                                      Stock     Par Value            Loss    Earnings         Stock         Equity
(In Thousands)
                                                                                                      
Balance, December 31, 2004                            $ 152       $68,327         $(3,385)   $293,054     $(161,845)      $196,303
Comprehensive income:
    Net income                                            -             -               -      27,856             -         27,856
    Other comprehensive loss (1)                          -             -          (6,583)          -             -         (6,583)
                                                                                                                   ----------------
Total comprehensive income                                                                                                  21,273
                                                                                                                   ----------------
Cash dividend, $0.27 per share                            -             -               -      (1,845)            -         (1,845)
Issuance of common stock,
    including proceeds from exercise
    of common stock options                               2         3,120               -           -             -          3,122
Treasury stock at cost, 712,300 shares (2)                -           276               -           -       (40,104)       (39,828)
Tax benefit from exercises of
    common stock options                                  -         2,950                           -             -          2,950
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2005                            $ 154       $74,673         $(9,968)   $319,065     $(201,949)      $181,975
- -----------------------------------------------------------------------------------------------------------------------------------

Comprehensive income:
    Net income                                            -             -               -      30,441             -         30,441
    Other comprehensive income (1)                        -             -           1,956           -             -          1,956
                                                                                                                   ----------------
Total comprehensive income                                                                                                  32,397
                                                                                                                   ----------------
Adjustment to initially apply FASB                        -             -            (561)          -             -           (561)
    Statement No. 158, net of tax  $(344)
Cash dividend, $0.31 per share                            -             -               -      (2,058)            -         (2,058)
Issuance of common stock,
    including proceeds from exercise of
    common stock options                                  2         4,610               -           -             -          4,612
Treasury stock at cost, 103,400 shares                    -             -               -           -        (6,603)        (6,603)
Issuance of restricted stock                              -           286               -           -             -            286
Tax benefit from exercises of
    common stock options                                  -         2,011               -           -             -          2,011
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2006                            $ 156       $81,580         $(8,573)   $347,448     $(208,552)      $212,059
- -----------------------------------------------------------------------------------------------------------------------------------

Comprehensive income:
    Net income                                            -             -               -      29,649             -         29,649
    Other comprehensive income (1)                        -             -           4,712           -             -          4,712
                                                                                                                   ----------------
Total comprehensive income                                                                                                  34,361
                                                                                                                   ----------------
Cumulative effect of change in accounting                 -             -               -       1,988             -          1,988
    principle related to the adoption of
FIN 48
Cash dividend, $0.38 per share                            -             -               -     (2,403)             -        (2,403)
Issuance of common stock,
    including proceeds from exercise of
    common stock options                                  1         3,704               -           -             -          3,705
Treasury stock at cost, 564,100 shares                    -             -               -           -       (36,173)       (36,173)
Issuance of restricted stock                              -           230               -           -             -            230
Tax liability from exercises of
    common stock options                                  -        (2,437)              -           -             -         (2,437)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2007                             $157       $83,077         $(3,861)   $376,682     $(244,725)      $211,330
- -----------------------------------------------------------------------------------------------------------------------------------


                                      -49-






     (1)  Other Comprehensive Income:                                                              2007          2006          2005
     -------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 
        Net unrealized holding gains (losses) on securities available-for-sale arising           $4,657       $   426       $(7,407)
        during the
            period,  net of taxes  (2007-$2,855;  2006 - $261;  2005 - $(4,540))
        Actuarial gain reclassified to periodic cost,
            net of income taxes of  $42                                                              68             -             -
        Transition obligation reclassified to periodic cost,
            net of income taxes of  $23                                                              38             -             -
        Net unrealized holding gains arising during the period on derivatives
            net of taxes (2007 - $0;  2006 - $163;  2005 - $241)                                      -           302           449
        Reclassification for losses (gains) included in income,  net of taxes (2007-$(31);
            2006 - $753; 2005 - $230)                                                              (51)         1,228           375
     -------------------------------------------------------------------------------------------------------------------------------
     Total other comprehensive income (loss)                                                     $4,712        $1,956       $(6,583)
     -------------------------------------------------------------------------------------------------------------------------------


     (2) Net of reissuance of 7,200 shares.

     The accompanying notes are an integral part of these Financial Statements.

                                      -50-



CONSOLIDATED STATEMENT OF CASH FLOWS


 Year Ended December 31,                                                                2007         2006         2005
- -----------------------------------------------------------------------------------------------------------------------
 (In Thousands)
                                                                                                  
 Operating activities:
 Net income                                                                        $  29,649    $  30,441    $  27,856
 Adjustments to reconcile net income to net cash provided by
      (used for) operating activities:
       Provision for loan losses                                                       5,021        2,738        2,582
       Depreciation, accretion and amortization                                        4,930        4,507        5,440
       Decrease (increase) in accrued interest receivable and other assets             1,142       (3,066)      (1,952)
       Origination of loans held-for-sale                                            (27,160)     (23,914)     (37,222)
       Proceeds from sales of loans held-for-sale                                     25,362       21,406       38,722
       Gain on mortgage banking activity                                                (217)        (224)         (84)
       Gain on sale of credit card portfolio                                            (882)           -            -
       Gain on sale of former headquarters building                                   (1,093)           -            -
       (Gain) loss on sale of investments                                                (82)       1,981          605
       Stock-based compensation expense, net of tax benefit recognized                 1,222        1,153            -
       Excess tax liability (benefit) from share-based payment arrangements            2,437       (2,011)           -
       Minority interest in net income                                                     -           51          133
       (Decrease) increase in accrued interest payable and other liabilities          (3,328)       4,380        6,031
       (Gain) loss on sale of assets acquired through foreclosure                        (20)          41         (137)
       Increase in value of bank-owned life insurance                                 (2,269)      (3,976)      (2,003)
       Increase in capitalized interest, net                                          (2,007)      (1,097)        (678)
- -----------------------------------------------------------------------------------------------------------------------
 Net cash provided by operating activities                                            32,705       32,410       39,293
- -----------------------------------------------------------------------------------------------------------------------

 Investing activities:
       Maturities of investment securities                                            41,893       13,569        6,990
       Sales of investment securities available-for-sale                                   -       10,991       60,454
       Purchases of investment securities available-for-sale                         (13,986)     (20,718)     (26,744)
       Sales of mortgage-backed securities available-for-sale                          2,690       49,412            -
       Repayments of mortgage-backed securities held-to-maturity                           -            -            4
       Repayments of mortgage-backed securities available-for-sale                    77,328      102,255      112,395
       Purchases of mortgage-backed securities available-for-sale                    (52,507)     (47,721)    (220,816)
       Repayments on reverse mortgages                                                 3,532        1,347          177
       Disbursements for reverse mortgages                                            (2,964)        (476)        (393)
       Purchase of Cypress Capital Management, LLC                                      (240)        (466)        (452)
       Purchase of ATM vault cash business                                              (440)           -            -
       Sales of loans                                                                    909       11,379          688
       Purchases of loans                                                             (2,656)      (9,600)     (15,831)
       Payment of bank-owned life insurance                                                -        2,887            -
       Net increase in loans                                                        (221,179)    (246,432)    (228,758)
       Net (increase) decrease  in stock of Federal Home Loan Bank of Pittsburgh      (5,665)       6,421       (2,347)
       Sales of assets acquired through foreclosure, net                                 120           80          683
       Purchase of land                                                                    -            -         (925)
       Sale of real estate held-for-investment                                             -            -        5,296
       Sale of credit card portfolio                                                   6,295            -            -
       Sale of former headquarters building                                            2,436            -            -
       Deferred gain on sale of partnership interest                                   1,335            -            -
       Investment in real estate partnership                                           1,172           24       (1,196)
       Premises and equipment, net                                                    (9,181)     (10,750)      (4,202)
- -----------------------------------------------------------------------------------------------------------------------
 Net cash used for investing activities                                             (171,108)    (137,798)    (314,977)
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------

                                                        (Continued on next page)

                                      -51-



CONSOLIDATED STATEMENT OF CASH FLOWS (continued)


Year Ended December 31,                                                          2007           2006           2005
- ---------------------------------------------------------------------------------------------------------------------
(In Thousands)
                                                                                              
Financing activities:
   Net increase in demand and saving deposits                            $     82,363    $    56,803    $   125,297
   Net increase in time deposits                                                4,256        294,365         87,875
   Net increase (decrease) in securities sold
        under agreement to repurchase                                           1,600         (9,750)       (48,955)
   Receipts of FHLB advances                                               31,427,417      8,796,661      7,789,201
   Repayments of FHLB advances                                            (31,313,165)    (9,021,354)    (7,617,543)
   Redemption of Trust  Preferred Securities                                        -              -        (51,547)
   Issuance of Pooled Floating Rate Capital Securities                              -              -         67,011
   Dividends paid on common stock                                              (2,404)        (2,058)        (1,845)
   Issuance of common stock and exercise of common stock options                2,713          3,355          6,348
   Excess tax (liability) benefit from share-based payment arrangements        (2,437)         2,011              -
   Purchase of treasury stock, net of re-issuance                             (36,173)        (6,603)       (40,104)
   Decrease in minority interest                                                  (54)          (203)          (166)
                                                                         ------------    -----------    -----------
   Net cash provided by financing activities                                  164,116        113,227        315,572
                                                                         ------------    -----------    -----------
   Increase in cash and cash equivalents from continuing operations            25,713          7,839         39,888
   Net cash provided by operating activities of discontinued operations             -             14          1,141
   Net cash provided by (used for) investing activities of
        discontinued operations                                                     -             20            (87)
   Cash and cash equivalents at beginning of period                           241,824        233,951        193,009
                                                                         ------------    -----------    -----------
   Cash and cash equivalents at end of period                            $    267,537    $   241,824        233,951
                                                                         ------------    -----------    -----------

Supplemental Disclosure of Cash Flow Information:

   Cash paid in interest during the year                                 $    105,969    $    98,142    $    58,080
   Cash paid for income taxes, net                                             18,056         13,597         10,151
   Cash refunded for taxes of discontinued operations, net                          -              -            (45)
   Loans transferred to assets acquired through foreclosure                       415            450            388
   Net change in other comprehensive income                                     4,712          1,395         (6,583)
   Transfer of loans held for sale to loans                                       333          2,129          1,378
   Transfer of building to real estate held-for-investment                          -              -          1,878


  The accompanying notes are an integral part of these Financial Statements.

                                      -52-



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         WSFS Financial  Corporation  ("the Company," "our Company," "we," "our"
or "us") is a thrift holding  company  organized  under the laws of the State of
Delaware.  Our  principal  wholly-owned  subsidiary,   Wilmington  Savings  Fund
Society,  FSB ("WSFS Bank" or the "Bank"),  is a federal  savings bank organized
under  the laws of the  United  States  which,  at  December  31,  2007,  serves
customers  from its main office,  29 retail  banking  offices,  loan  production
offices and operations  centers located in Delaware,  southeastern  Pennsylvania
and Virginia.

         In preparing the Financial  Statements,  management is required to make
estimates  and  assumptions   that  affect  the  reported   amounts  of  assets,
liabilities, revenues and expenses. The material estimates that are particularly
susceptible to significant  changes in the near term relate to the allowance for
loan  losses  for  impaired  loans  and the  remainder  of the loan  portfolios,
investment in reverse mortgages,  contingencies (including indemnifications) and
income taxes.

         Basis of Presentation

           The  Consolidated  Financial  Statements  include the accounts of the
parent  company,  Montchanin  Capital  Management,  Inc.  (Montchanin)  and  its
wholly-owned subsidiary,  Cypress Capital Management,  LLC (Cypress),  WSFS Bank
and its wholly-owned  subsidiary,  WSFS Investment  Group,  Inc. WSFS Investment
Group,  Inc. markets various  third-party  insurance and securities  products to
Bank  customers  through WSFS' retail banking  system.  Montchanin was formed to
provide asset management products and services.  In January 2005, 2006 and 2007,
Montchanin  increased its ownership in Cypress,  a  Wilmington-based  investment
advisory firm servicing high net-worth individuals and institutions, to 80%, 90%
and 100%, respectively.

         WSFS Capital Trust III ("the Trust") is an unconsolidated  affiliate of
ours, and was formed in 2005 to issue $67.0 million  aggregate  principle amount
of Pooled  Floating Rate Capital  Securities.  The proceeds from this issue were
used to fund the redemption of $51.5 million of Floating Rate WSFS Capital Trust
I Preferred  Securities  (formerly WSFS Capital Trust I). The Trust invested all
of the proceeds from the sale of the Pooled Floating Rate Capital  Securities in
Junior Subordinated Debentures of the Corporation.


         Certain  reclassifications have been made to the prior years' Financial
Statements to conform them to the current year's  presentation.  All significant
intercompany transactions are eliminated in consolidation.

         Cash and Cash Equivalents

         For purposes of reporting cash flows, cash and cash equivalents include
cash,  cash in  non-owned  ATMs,  cash due from  banks,  federal  funds sold and
securities  purchased under agreements to resell.  Generally,  federal funds are
purchased and sold for periods ranging up to 90 days.

         Debt and Equity Securities

         Investments in equity securities that have a readily  determinable fair
value and investments in debt  securities are classified  into three  categories
and accounted for as follows:

                                      -53-



    o    Debt  securities  with the  positive  intention to hold to maturity are
         classified as "held-to-maturity" and reported at amortized cost.
    o    Debt and equity securities purchased with the intention of selling them
         in the near  future are  classified  as  "trading  securities"  and are
         reported at fair value,  with  unrealized  gains and losses included in
         earnings.
    o    Debt and equity  securities  not  classified in either of the above are
         classified  as  "available-for-sale  securities"  and  reported at fair
         value,  with  unrealized  gains and losses  excluded  from earnings and
         reported, net of tax, as a separate component of stockholders' equity.

         Debt  and  equity  securities   include   mortgage-backed   securities,
municipal  bonds,  U.S.  Government  and agency  securities  and certain  equity
securities.   Premiums   and   discounts   on   debt   and   equity   securities
held-to-maturity and  available-for-sale are recognized in interest income using
a level yield  method over the period to  expected  maturity.  The fair value of
debt and equity  securities  is  primarily  obtained  from  third-party  pricing
services.   Implicit  in  the  valuation  are  estimated  prepayments  based  on
historical and current market conditions.

         Declines  in  the  fair  value  of  individual   held-to-maturity   and
available-for-sale  securities  below their cost that are other than  temporary,
result in  write-downs  of the  individual  securities to their fair value.  The
related  write-downs are included in earnings as realized losses.  Management is
required to use its judgement to determine impairment in certain  circumstances.
The  specific  identification  method is used to  determine  realized  gains and
losses on sales of investment and mortgage-backed securities. All sales are made
without recourse.

         Investment in Reverse Mortgages

         We account for our investment in reverse  mortgages in accordance  with
the instructions provided by the staff of the Securities and Exchange Commission
(SEC) entitled  "Accounting for Pools of Uninsured  Residential Reverse Mortgage
Contracts,"  which  requires  grouping the  individual  reverse  mortgages  into
"pools" and  recognizing  income based on the estimated  effective  yield of the
pool.  In computing the  effective  yield,  we must project the cash inflows and
outflows of the pool including  actuarial  projections of the life expectancy of
the  individual  contract  holder  and  changes in the  collateral  value of the
residence.  At each reporting date, a new economic  forecast is made of the cash
inflows and outflows of each pool of reverse  mortgages;  the effective yield of
each pool is recomputed,  and income is adjusted retroactively and prospectively
to reflect the revised rate of return. Because of this quasi-market-value  based
accounting,  the  recorded  value of  reverse  mortgage  assets  can  result  in
significant  volatility  associated  with  estimations.   As  a  result,  income
recognition can vary significantly from reporting period to reporting period.

         Loans

         Loans are stated net of deferred fees and costs and unearned discounts.
Loan  interest  income is accrued  using  various  methods  that  approximate  a
constant yield. Loan origination and commitment fees and direct loan origination
costs are deferred  and  recognized  over the life of the related  loans using a
level yield method over the period to maturity.

         A loan is impaired when, based on current information and events, it is
probable  that a creditor will be unable to collect all amounts due according to
the contractual  terms of the loan agreement.  Impaired loans are measured based
on the present value of expected future  discounted cash flows, the market price
of the  loan or the  fair  value  of the  underlying  collateral  if the loan is
collateral  dependent.  Impaired  loans  include  loans  within our  commercial,
commercial mortgage, commercial construction, residential mortgages and consumer
portfolios.  Our policy for  recognition of interest income on impaired loans is
the same as for nonaccrual loans discussed below.

                                      -54-



         Nonaccrual Loans

         Nonaccrual loans are those on which the accrual of interest has ceased.
Loans  are  placed on  nonaccrual  status  immediately  if,  in the  opinion  of
management,   collection  is  doubtful,   or  when   principal  or  interest  is
contractually  past due 90 days or more and collateral is  insufficient to cover
principal and interest. Interest accrued but not collected at the date a loan is
placed on nonaccrual  status is reversed and charged against interest income. In
addition, the amortization of net deferred loan fees is suspended when a loan is
placed on nonaccrual status.  Subsequent cash receipts are applied either to the
outstanding principal or recorded as interest income,  depending on management's
assessment  of ultimate  collectibility  of principal  and  interest.  Loans are
returned  to an accrual  status  when the  borrower's  ability to make  periodic
principal and interest  payments has returned to normal (i.e. - brought  current
with respect to principal or interest or  restructured)  and the paying capacity
of the  borrower or the  underlying  collateral  is deemed  sufficient  to cover
principal  and  interest  in   accordance   with  our   previously   established
loan-to-value policies.

         Allowances for Loan Losses

         We maintain  allowances  for credit  losses and charge  losses to these
allowances when such losses are realized. The determination of the allowance for
loan losses requires significant judgement reflecting management's best estimate
of probable losses related to specifically  identified loans as well as probable
losses in the remaining loan portfolio.  Management's evaluation is based upon a
review of these portfolios.

         Management  establishes  the loan loss  allowance  in  accordance  with
guidance provided by the Securities and Exchange  Commission's  Staff Accounting
Bulletin 102 (SAB 102). Its methodology for assessing the appropriateness of the
allowance  consists of several key elements which include:  specific  allowances
for identified  problem loans,  formula allowances for commercial and commercial
real estate loans, and allowances for pooled homogenous loans.

         Specific  reserves  are  established  for certain  loans in cases where
management has identified  significant  conditions or circumstances related to a
specific credit that management  believes  indicate the probability  that a loss
has been incurred.

         The formula  allowances for commercial and commercial real estate loans
are calculated by applying  estimated loss factors to outstanding loans based on
the internal risk grade of loans.  For low risk  commercial and commercial  real
estate  loans the  portfolio  is  pooled,  based on  internal  risk  grade,  and
estimates  are based on a  ten-year  net  charge-off  history.  Higher  risk and
criticized loans have loss factors that are derived from an analysis of both the
probability of default and the  probability  of loss should default occur.  Loss
adjustment  factors are applied based on criteria  discussed below. As a result,
changes in risk grades of both  performing  and  nonperforming  loans affect the
amount of the formula allowance.

         Pooled     loans    are    loans    that    are    usually     smaller,
not-individually-graded  and homogeneous in nature, such as consumer installment
loans and residential mortgages. Loan loss allowances for pooled loans are based
on a ten-year net charge-off history. The average loss allowance per homogeneous
pool is based on the  product's  average  annual  historical  loss  rate and the
average  estimated  duration of the pool multiplied by the pool balances.  These
separate  risk pools are assigned a reserve for loss based upon this  historical
loss information and loss adjustment factors.

         Historical  loss  adjustment   factors  are  based  upon   management's
evaluation of various current conditions, including those listed below:

     o    General economic and business  conditions  affecting WSFS' key lending
          areas,
     o    Credit quality trends,
     o    Recent loss experience in particular segments of the portfolio,
     o    Collateral values and loan-to-value ratios,

                                      -55-



     o    Loan volumes and concentrations, including changes in mix,
     o    Seasoning of the loan portfolio,
     o    Specific industry conditions within portfolio segments,
     o    Bank regulatory examination results, and
     o    Other factors,  including  changes in quality of the loan origination,
          servicing and risk management processes.

         Our loan officers and risk managers meet at least  quarterly to discuss
and review these conditions,  and also risks associated with individual  problem
loans. In addition,  various regulatory  agencies,  as an integral part of their
examination process,  periodically review our allowance for such losses. We also
give consideration to the results of these regulatory agency examinations.

         During 2007,  the  provision for loan losses was affected by changes in
estimates used in the  calculation.  These changes  resulted in a lower level of
estimated losses resulting from an improvement in the methodology for estimating
loan losses using  historical  data adjusted for current  conditions and trends.
Management  believes this analysis better estimates losses currently in our loan
portfolio.  These  changes  resulted in a reduction  to the  provision  for loan
losses of $6.8 million or $0.68 per share.

         Allowances  for  estimated  losses on  investments  in real  estate and
assets acquired  through  foreclosure are provided if the carrying value exceeds
the fair value less estimated disposal costs.

         Assets Held-for-Sale

         Assets held-for-sale include loans held-for-sale and are carried at the
lower of cost or market of the aggregate or, in some cases, individual assets.

         Assets Acquired Through Foreclosure

         Assets  acquired  through  foreclosure are recorded at the lower of the
recorded  investment in the loans or fair value less estimated  disposal  costs.
Costs  subsequently  incurred to improve the assets are included in the carrying
value provided that the resultant carrying value does not exceed fair value less
estimated  disposal  costs.  Costs relating to holding the assets are charged to
expense in the current  period.  An allowance for  estimated  losses is provided
when declines in fair value below the carrying value are  identified.  Net costs
of assets acquired  through  foreclosure  include costs of holding and operating
the assets, net gains or losses on sales of the assets and provisions for losses
to reduce such assets to fair value less estimated disposal costs.

         Premises and Equipment

         Premises and equipment are stated at cost less accumulated depreciation
and amortization.  Costs of major  replacements,  improvements and additions are
capitalized.  Depreciation expense is computed on a straight-line basis over the
estimated  useful lives of the assets or, for leasehold  improvements,  over the
effective  life of the related lease if less than the estimated  useful life. In
general,  computer equipment,  furniture and equipment and building  renovations
are depreciated over three, five and ten years, respectively.

         Federal  Funds  Purchased  and  Securities  Sold  Under  Agreements  to
Repurchase

         We enter into  sales of  securities  under  agreements  to  repurchase.
Reverse repurchase agreements are treated as financings,  with the obligation to
repurchase  securities  sold  reflected  as  a  liability  in  the  Consolidated
Statement of Condition. The securities underlying the agreements are assets.

                                      -56-



         Loss Contingency for Standby Letters of Credit

         We maintain a loss contingency for standby letters of credit and charge
losses to this reserve when such losses are realized.  The  determination of the
loss  contingency for standby letters of credit requires  significant  judgement
reflecting  management's  best  estimate of probable  losses  related to standby
letters of credit.

         Income Taxes

         The provision for income taxes includes federal, state and local income
taxes  currently  payable and those  deferred  because of temporary  differences
between the financial statement basis and tax basis of assets and liabilities.

         In July 2006, the Financial  Accounting Standards Board ("FASB") issued
Interpretation   No.  48,   Accounting  for  Uncertainty  in  Income  Taxes,  an
interpretation of FASB Statement 109 ("FIN 48"). FIN 48 prescribes a recognition
threshold and a measurement  attribute for the financial  statement  recognition
and  measurement of tax positions taken or expected to be taken in a tax return.
Benefits from tax positions are recognized in the financial statements only when
it is  more-likely-than-not  that  the  tax  position  will  be  sustained  upon
examination by the appropriate  taxing  authority that would have full knowledge
of all relevant information.  A tax position that meets the more-likely-than-not
recognition  threshold  is  measured at the  largest  amount of benefit  that is
greater  than 50%  likely  of  being  realized  upon  ultimate  settlement.  Tax
positions that previously  failed to meet the  more-likely-than-not  recognition
threshold are recognized in the first subsequent  financial  reporting period in
which that threshold is met. Previously  recognized tax positions that no longer
meet the  more-likely-than-not  recognition  threshold are  derecognized  in the
first subsequent financial reporting period in which that threshold is no longer
met. FIN 48 also  provides  guidance on the  accounting  for and  disclosure  of
unrecognized tax benefits,  interest and penalties.  FIN 48 became effective for
us on January 1, 2007,  and resulted in a $2.0 million  increase to our retained
earnings on that date.

         Earnings Per Share

         The  following  table sets forth the  computation  of basic and diluted
earnings per share:



                                                                                         2007       2006        2005
                                                                                         ----       ----        ----
                                                                                  (In Thousands, Except Per Share Data)
                                                                                                  
  Numerator:
     Net income................................................................      $  29,649   $  30,441  $  27,856
                                                                                     =========   =========  =========

  Denominator:
    Denominator for basic earnings per share - weighted average shares ........           6,316       6,634       6,795
    Effect of dilutive employee stock options..................................             194         270         373
                                                                                     ----------------------------------
    Denominator for diluted earnings per share -.adjusted weighted average
      shares and assumed exercise..............................................           6,510       6,904       7,168
                                                                                     ========== =========== ===========

Earnings per share:
    Basic:
     Net income................................................................      $     4.69  $     4.59 $      4.10
                                                                                     ==========  ========== ===========
    Diluted:
     Net income................................................................      $     4.55  $     4.41 $     3.89
                                                                                     ==========  ========== ===========

     Outstanding common stock equivalents having no dilutive effect............             194         197         173


                                      -57-



Stock-Based Compensation

         Stock-based  compensation is accounted for in accordance with Statement
of Financial  Accounting  Standards  (SFAS) No. 123 (revised 2004),  Share-Based
Payment (SFAS 123R).  We adopted SFAS 123R  beginning  January 1, 2006 using the
Modified Prospective Application Method. The impact of stock-based  compensation
for 2007 was $1.2 million,  or $0.16 per share, to salaries,  benefits and other
compensation, compared to $1.5 million, or $0.19 per share in 2006.

         For comparative purposes, the following table illustrates the effect on
net  income  and  earnings  per share had the  Company  applied  the fair  value
recognition provision of SFAS No. 123, Accounting for Stock-Based  Compensation,
to stock-based employee compensation.



                                                                                                  2005
                                                                                                  ----
                                                                                               (In Thousands, Except Per Share Data)
                                                                                              
Income from continuing operations, as reported.........................................          $27,856
Less:  Total stock-based employee compensation expense determined
           under fair value based methods for all awards, net of related tax effects....            (972)
                                                                                                 -------
Pro forma income from continuing operations.............................................         $26,884
                                                                                                 =======

      Earnings per share:
              Basic:
          Income from continuing operations............................................          $  4.10
          Less: Total stock-based employee compensation expense determined
             under fair value based methods for all awards, net of related tax effects..           (0.14)
                                                                                                 -------
          Pro forma income from continuing operations...................................         $  3.96
                                                                                                 =======

            Diluted:
          Income from continuing operations............................................          $  3.89
          Less: Total stock-based employee compensation expense determined
             under fair value based methods for all awards, net of related tax effects..           (0.14)
                                                                                                 -------
          Pro forma income from continuing operations...................................         $  3.75
                                                                                                 =======



2.  INVESTMENT SECURITIES

         The following  tables detail the amortized  cost and the estimated fair
value of the Company's investment securities:



                                                                Gross          Gross
                                             Amortized       Unrealized       Unrealized       Fair
                                               Cost            Gains           Losses          Value
                                              -------         -------         -------         -------
                                                                   (In Thousands)
                                                                               
Available-for-sale securities:

    December 31, 2007:
       Reverse mortgages (1)..............    $ 2,037         $     -         $     -         $ 2,037
       U.S. Government and agencies.......     20,477              99               -          20,576
       State and political subdivisions...      4,115              28               -           4,143
                                              -------         -------         -------         -------

                                              $26,629         $   127         $     -         $26,756
                                              =======         =======         =======         =======


                                      -58-





                                                                               
     December 31, 2006:
       Reverse mortgages (1)..............    $   598         $     -         $     -         $   598
       U.S. Government and agencies.......     46,920              21              74          46,867
       State and political subdivisions...      2,785              23               1           2,807
                                              -------         -------         -------         -------
                                              $50,303         $    44         $    75         $50,272
                                              =======         =======         =======         =======

Held-to-maturity:

    December 31, 2007:
       State and political subdivisions...    $ 1,516         $    24         $    42         $ 1,498
                                              -------         -------         -------         -------
                                              $ 1,516         $    24         $    42         $ 1,498
                                              =======         =======         =======         =======

     December 31, 2006:
       State and political subdivisions...    $ 4,219         $    75         $    42         $ 4,252
                                              -------         -------         -------         -------
                                              $ 4,219         $    75         $    42         $ 4,252
                                              =======         =======         =======         =======


(1)  See  Note  4  of  the  Consolidated  Financial  Statements  for  a  further
     discussion of Reverse Mortgages.


         Securities with book values  aggregating  $21.0 million at December 31,
2007 were  specifically  pledged as collateral  for WSFS'  Treasury Tax and Loan
account  with the Federal  Reserve  Bank,  securities  sold under  agreement  to
repurchase  and certain  letters of credit and municipal  deposits which require
collateral.  Accrued interest receivable  relating to investment  securities was
$341,000 and $560,000 at December 31, 2007 and 2006, respectively.

         The scheduled maturities of investment securities  held-to-maturity and
securities available-for-sale at December 31, 2007 were as follows:



                                                  Held-to-Maturity               Available-for-Sale
                                                  ----------------               ------------------
                                              Amortized         Fair           Amortized           Fair
                                                Cost            Value            Cost              Value
                                              -------          -------          -------          -------
                                                                  (In Thousands)
                                                                                    
Within one year (1).....................      $     -          $     -          $16,015          $16,073
After one year but within five years....          875              899            8,514            8,569
After five years but within ten years...            -                -            2,100            2,114
After ten years.........................          641              599                -                -
                                              -------          -------          -------          -------
                                              $ 1,516          $ 1,498          $26,629          $26,756
                                              =======          =======          =======          =======


(1)  Reverse  mortgages do not have  contractual  maturities.  We have  included
     reverse mortgages in maturities within one year.


         During 2007, there were no sales of investment securities classified as
available-for-sale.  Municipal  bonds  totaling  $1.1 million were called by the
issuers.  Proceeds from the sale of investments classified as available-for-sale
during 2006 and 2005 were $11.0 million and $60.7 million,  respectively.  There
was a net loss of  $41,000  and  $609,000  realized  on sales in 2006 and  2005,
respectively.  The cost basis for all investment security sales was based on the
specific  identification  method.  There were no sales of investment  securities
classified as held-to-maturity in 2007, 2006 and 2005.

                                      -59-



         At December 31, 2007, we owned investment  securities totaling $683,000
where the amortized cost basis exceeded fair value.  Total unrealized  losses on
those securities were $42,000 at December 31, 2007. This temporary impairment is
the  result of  changes  in market  interest  rates  since the  purchase  of the
securities. Securities amounting to $433,000 have been impaired for 12 months or
longer.  We have determined that these securities are not other than temporarily
impaired. The following table includes unrealized losses aggregated by category:



                                                   Less than 12 months         12 months or longer         Total
                                                  ----------------------      ---------------------   ----------------------

                                                   Fair       Unrealized       Fair     Unrealized     Fair      Unrealized
                                                   Value         Loss          Value       Loss        Value        Loss
                                                   -----         ----          -----       ----        -----        ----
                                                                               (In Thousands)
                                                                                                
Held-to-maturity
  State and political subdivisions ............    $  -        $    -          $433        $ 42        $433        $ 42

Available-for-sale
  State and political subdivisions ............     250             -             -           -         250           -
                                                   ----        -----           ----        ----        ----        ----
     Total temporarily impaired investments....    $250        $    -          $433        $ 42        $683        $ 42
                                                   ====        =====           ====        ====        ====        ====



3.  MORTGAGE-BACKED SECURITIES

         The following  tables detail the amortized  cost and the estimated fair
value of the Company's mortgage-backed securities:



                                                            Gross          Gross
                                         Amortized       Unrealized       Unrealized       Fair
                                           Cost            Gains           Losses          Value
                                          -------         -------         -------         -------
                                                               (In Thousands)
                                                                            
Available-for-sale securities:

December 31, 2007:
Collateralized mortgage obligations ...    $407,113       $    856        $  4,440        $403,529
 FNMA .................................      35,654              -           1,009          34,645
 FHLMC ................................      31,357             34             937          30,454
 GNMA .................................      15,923              -             123          15,800
                                           --------       --------        --------        --------
                                           $490,047       $    890        $  6,509        $484,428
                                           ========       ========        ========        ========

      Weighted average yield ..........       4.85%

December 31, 2006:
Collateralized mortgage obligations....    $424,748       $    119        $  9,023        $415,844
 FNMA .................................      42,254              -           2,036          40,218
 FHLMC ................................      31,121             97           1,632          29,586
 GNMA .................................      19,115              -             416          18,699
                                           --------       --------        --------        --------
                                           $517,238       $    216        $ 13,107        $504,347
                                           ========       ========        ========        ========

      Weighted average yield...........       4.77%


                                      -60-





                                                                                   
Trading securities:

December 31, 2007:
      Collateralized mortgage obligations....  $  12,364     $         -         $        -     $  12,364
                                               ---------     -----------         ----------     ---------
                                               $  12,364     $         -         $        -     $  12,364
                                               =========     ===========         ==========     =========

      Weighted average yield.................       7.79%

December 31, 2006:
      Collateralized mortgage obligations....  $  12,364     $         -         $        -     $  12,364
                                               ---------     -----------         ----------     ---------
                                               $  12,364     $         -         $        -     $  12,364
                                               =========     ===========         ==========     =========

      Weighted average yield.................       8.35%


         The portfolio of available-for-sale mortgage-backed securities consists
entirely of AAA-rated, currently cash flowing securities, backed by conventional
10 to 30-year  mortgages.  The weighted average duration of the  mortgage-backed
securities was 2.8 years at December 31, 2007.

         At  December  31,  2007,  mortgage-backed  securities  with par  values
 aggregating  $464.9  million were  pledged as  collateral  for retail  customer
 repurchase  agreements  and municipal  deposits.  Accrued  interest  receivable
 relating to  mortgage-backed  securities  was $2.0 million at both December 31,
 2007 and 2006.  From time to time,  mortgage-backed  securities  are pledged as
 collateral  for  Federal  Home Loan Bank (FHLB)  borrowings.  The fair value of
 these  pledged  mortgage-backed  securities  at December  31, 2007 and 2006 was
 $218.8 million and $0, respectively.  Proceeds from the sale of mortgage-backed
 securities available-for-sale were $2.7 million in 2007, resulting in a gain of
 $82,000.  In  2006,  proceeds  from  the  sale  of  mortgage-backed  securities
 available-for-sale were $49.6 million, resulting in a loss of $1.9 million. The
 cost basis of all mortgage-backed sales is based on the specific identification
 method.

         We own $12.4 million of SASCO RM-1 2002 securities,  including  accrued
 interest,  which  was paid in kind,  which are  classified  as  trading.  $10.0
 million was  received  as partial  consideration  for the sale of a  previously
 owned  reverse  mortgage  portfolio,  while  an  additional  $1.0  million  was
 purchased at par at the time of the  securitization  of these assets by a third
 party and $1.4 million from accrued  interest paid in kind. These floating rate
 notes  represent  the  BBB+  traunche  of  a  reverse  mortgage  securitization
 underwritten  by Lehman  Brothers and carry a coupon rate of  one-month  London
 InterBank Offered Rate (LIBOR) plus 300 basis points.  For a further discussion
 of reverse  mortgages,  see the Reverse  Mortgages  discussion in  Management's
 Discussion and Analysis and Note 4 to the Consolidated Financial Statements.

         Based on SFAS No. 115,  Accounting for Certain  Investments in Debt and
 Equity  Securities  (SFAS 115),  when these  securities were acquired they were
 classified  as trading.  It was our intention to sell them in the near term. An
 active market for these securities has not developed since the issuance, but it
 continues  to be our  intent  to sell  these  securities  if and when an active
 market develops. Since there is no active market for these securities,  we have
 used the  guidance  under SFAS 115 to  provide a  reasonable  estimate  of fair
 value. We estimated the value of these securities as of December 31, 2007 based
 on the  pricing  of BBB+  securities  that have an  active  market as well as a
 fundamental analysis of the actual cash flows of the underlying securities.  We
 also obtained an estimate,  from an independent securities dealer, of the value
 of these securities.

         At December  31, 2007,  we owned  mortgage-backed  securities  totaling
$374.5  million  where the  amortized  cost basis  exceeded  fair  value.  Total
unrealized  losses on those  securities  were $6.5 million at December 31, 2007.
This  temporary  impairment  is the result of changes in market  interest  rates
since  the  purchase  of the  securities.  Most of these  securities  have  been
impaired for twelve months or longer.  We have determined that these  securities
are not  "other  than  temporarily"  impaired.  The  following  table  lists the
unrealized losses aggregated by category:

                                      -61-





                                                   Less than 12 months       12 months or longer         Total
                                                   -------------------       -------------------    ---------------------
                                                   Fair       Unrealized     Fair     Unrealized     Fair      Unrealized
                                                   Value         Loss        Value       Loss        Value        Loss
                                                   -----         ----        -----       ----        -----        ----
                                                                               (In Thousands)
                                                                                            
 Available-for-sale
    CMO...................................        $46,322      $   479     $254,213     $3,962      $300,535    $4,441
    FNMA..................................              -            -       34,645      1,009        34,645     1,009
    FHLMC.................................              -            -       23,522        937        23,522       937
    GNMA..................................             -             -       15,800        123        15,800       123
                                                  -------      -------     --------     ------     --------     ------

      Total temporarily impaired MBS......        $46,322      $   479     $328,180     $6,031     $374,502     $6,510
                                                  =======      =======     ========     ======     ========     ======



4.  REVERSE MORTGAGES AND RELATED ASSETS

         We hold an investment in reverse  mortgages of $2.0 million at December
31, 2007 representing a participation in reverse mortgages with a third party.

         Reverse  mortgage  loans are contracts  that require the lender to make
monthly advances throughout the borrower's life or until the borrower relocates,
prepays or the home is sold,  at which time the loan  becomes  due and  payable.
Reverse  mortgages  are  nonrecourse  obligations,  which  means  that  the loan
repayments  are  generally  limited to the net sale  proceeds of the  borrower's
residence.

         We account for our  investment in reverse  mortgages by estimating  the
value  of the  future  cash  flows on the  reverse  mortgages  at a rate  deemed
appropriate  for  these  mortgages,   based  on  the  market  rate  for  similar
collateral.   Actual  cash  flows  from  these  mortgage  loans  can  result  in
significant  volatility in the recorded value of reverse mortgage  assets.  As a
result,  income varies  significantly from reporting period to reporting period.
For the year ended  December  31,  2007,  the  Company  earned  $2.0  million in
interest  income on  reverse  mortgages  as  compared  to  $684,000  in 2006 and
$678,000 in 2005.

         The projected cash flows depend on assumptions about life expectancy of
the  mortgagee  and the future  changes in  collateral  values.  Projecting  the
changes  in  collateral  values is the most  significant  factor  impacting  the
volatility  of  reverse  mortgage  values.  The  current  assumptions  include a
short-term annual  depreciation rate of -8.0% in the first year, and a long-term
annual appreciation rate of 0.5% in future years. If the long-term  appreciation
rate was  increased  to 1.5%,  the  resulting  impact on income  would have been
$106,000. Conversely, if the long-term appreciation rate was decreased to -0.5%,
the resulting impact on income would have been $(89,000).

         We also hold $12.4  million in BBB+  rated  mortgage-backed  securities
classified  as  trading  and  options  to  acquire  up to  49.9%  of  Class  "O"
Certificates  issued in connection with securities  consisting of a portfolio of
reverse  mortgages we previously  held. At the time of the  securitization,  the
securitizer retained 100% of the Class "O" Certificates from the securitization.
These Class "O" Certificates have no priority over other classes of Certificates
under the Trust and no distributions  will be made on the Class "O" Certificates
until, among other conditions, the principal amount of each other class of notes
has been reduced to zero.  The underlying  assets,  the reverse  mortgages,  are
long-term  assets.  Hence,  any cash flow that might  inure to the holder of the
Class "O"  Certificates is not expected to occur until 2014.  Additionally,  the
Company can exercise its option on 49.9% of the Class "O"  Certificates in up to
five separate  increments  for an aggregate  purchase  price of $1.0 million any
time between  January 1, 2004 and the termination of the  Securitization  Trust.
The option to purchase the Class "O"  Certificates  does not meet the definition
of a  derivative  under SFAS No.  133,  Accounting  for  Derivative  and Hedging
Activities.  This certificate is an equity security with no readily determinable
fair value,  as such, it is

                                      -62-



excluded from the accounting treatment  promulgated under SFAS 115. As a result,
the option is carried at cost (which is zero). The amount by which the option is
considered in the money,  is included in Note 15 to the  Consolidated  Financial
Statements,  as required by SFAS 107,  Disclosures about Fair Value of Financial
Instruments.


5.  LOANS

The following table details our loan portfolio:

 December 31,                                                  2007        2006
 -------------------------------------------------------------------------------
 (In Thousands) Real estate mortgage loans:
   Residential (1-4 family)                               $ 447,435     473,946
   Other                                                    489,658     446,810
 Real estate construction loans                             300,130     260,733
 Commercial loans                                           791,473     649,832
 Consumer loans                                             278,272     263,478
 -------------------------------------------------------------------------------
                                                          2,306,968   2,094,799
 -------------------------------------------------------------------------------

 Less:
   Loans in process                                          50,855      49,437
   Deferred costs, net                                         (715)       (844)
   Allowance for loan losses                                 25,252      27,384
 -------------------------------------------------------------------------------
       Net loans                                         $2,231,576  $2,018,822
 -------------------------------------------------------------------------------

         We had impaired  loans of  approximately  $31.8 million at December 31,
2007  compared to $3.8  million and $3.4  million at December 31, 2006 and 2005,
respectively.  A loan is impaired when, based on current information and events,
it is  probable  that a  creditor  will be unable to  collect  all  amounts  due
according to the contractual  terms of the loan agreement.  The average recorded
balance of impaired  loans was $10.0  million,  $3.6  million  and $3.9  million
during 2007, 2006 and 2005,  respectively.  The allowance for losses on impaired
loans was $738,000,  $369,000 and $480,000 at December 31, 2007,  2006 and 2005,
respectively. There was no interest income recognized on impaired loans.

         The total  amount of loans  serviced  for others were  $255.0  million,
$265.5  million  and  $255.8  million  at  December  31,  2007,  2006 and  2005,
respectively. We received fees from the servicing of loans of $718,000, $724,000
and $769,000 during 2007, 2006 and 2005, respectively.

         We  record  mortgage-servicing  rights on our  mortgage  loan-servicing
portfolio.  Mortgage  servicing rights represent the present value of the future
net servicing fees from  servicing  mortgage loans acquired or originated by us.
The total of this portfolio was $81.9 million and $64.9 million for December 31,
2007 and 2006, respectively. Mortgage loans serviced for others are not included
in loans on the accompanying  Consolidated Statement of Condition. The valuation
of these  servicing  rights  resulted in $144,000  and  $135,000 of  noninterest
income during 2007 and 2006, respectively.  Revenues from originating, marketing
and  servicing  mortgage  loans  as well as  valuation  adjustments  related  to
capitalized   mortgage   servicing  rights  are  included  in  mortgage  banking
activities, net on the Consolidated Statement of Operations.

         Accrued interest  receivable on loans outstanding was $10.4 million and
$10.3 million at December 31, 2007 and 2006, respectively.

                                      -63-



         Nonaccruing  loans  aggregated  $31.8  million,  $3.8  million and $3.4
million at December 31, 2007,  2006 and 2005,  respectively.  If interest on all
such loans had been recorded in accordance with contractual  terms, net interest
income would have  increased by $790,000 in 2007,  $159,000 in 2006 and $133,000
in 2005.

         A summary of changes in the allowance for loan losses follows:

 Year Ended December 31,                 2007           2006             2005
 -------------------------------------------------------------------------------
 (In Thousands)
 Beginning balance                      $27,384        $25,381          $24,222
   Provision for loan losses              5,021          2,738            2,582
   Loans charged-off (1)                 (8,049)        (1,418)          (1,873)
   Recoveries (2)                           896            683              450
 -------------------------------------------------------------------------------
 Ending balance                         $25,252        $27,384          $25,381
 -------------------------------------------------------------------------------

(1)  2007 and 2006 include  $1.4 million and $607,000 of overdraft  charge-offs,
     respectively.  Prior  to  2006,  these  amounts  were  recognized  in other
     operating expenses.
(2)  2007 and 2006  include  $446,000  and  $217,000  of  overdraft  recoveries,
     respectively.  Prior  to  2006,  these  amounts  were  recognized  in other
     operating expenses.


6.   ASSETS ACQUIRED THROUGH FORECLOSURE

     Assets acquired through foreclosure are summarized as follows:

December 31, 2007 2006

- -------------------------------------------------------------------------------
(In Thousands)
Real estate                                                    $ 703      $388
Less allowance for losses                                          -         -
- -------------------------------------------------------------------------------
                                                               $ 703      $388
- -------------------------------------------------------------------------------


7.  PREMISES AND EQUIPMENT

     Land, office buildings, leasehold improvements and furniture and equipment,
at cost, are summarized by major classifications:

 December 31,                                                 2007        2006
 -------------------------------------------------------------------------------
 (In Thousands)
 Land                                                       $4,415     $ 4,440
 Buildings                                                  10,713      12,125
 Leasehold improvements                                     20,967      18,746
 Furniture and equipment                                    27,817      25,349
 -------------------------------------------------------------------------------
                                                            63,912      60,660

 Less:
       Accumulated depreciation                             29,061      30,442
 -------------------------------------------------------------------------------
                                                           $34,851     $30,218
 -------------------------------------------------------------------------------

                                      -64-



     We  occupy   certain   premises  and  operate   certain   equipment   under
noncancelable  leases with terms  ranging  from 1 to 25 years.  These leases are
accounted  for as  operating  leases.  Accordingly,  lease costs are expensed as
incurred.  Rent expense was $4.5 million in 2007,  $2.4 million in 2006 and $2.2
million in 2005. Future minimum payments under these leases at December 31, 2007
are as follows:


(In Thousands)
2008                                                                     $ 4,562
2009                                                                       4,371
2010                                                                       4,056
2011                                                                       3,947
2012                                                                       3,470
Thereafter                                                                23,731
- --------------------------------------------------------------------------------
    Total future minimum lease payments                                  $44,137
- --------------------------------------------------------------------------------



8.  DEPOSITS
The  following is a summary of deposits by category,  including a summary of the
remaining time to maturity for time deposits:




December 31,                                                             2007             2006
- -----------------------------------------------------------------------------------------------
                                                                              
(In Thousands) Money market and demand:
     Noninterest-bearing demand                                     $ 290,424        $ 276,338
     Interest-bearing demand                                          171,363          146,719
     Money market                                                     303,931          246,645
- -----------------------------------------------------------------------------------------------
          Total money market and demand                               765,718          669,702

Savings                                                               196,571          226,853
- -----------------------------------------------------------------------------------------------

Customer certificates of deposit by maturity:
     Less than one year                                               320,474          251,214
     One year to two years                                             40,191           54,080
     Two years to three years                                           3,234           17,217
     Three years to four years                                          1,022            1,567
     Over four years                                                    1,796            1,931
- -----------------------------------------------------------------------------------------------
          Total customer time certificates                            366,717          326,009

Jumbo certificates of deposit--customer, by maturity:
     Less than one year                                               140,353           98,636
     One year to two years                                              9,569           16,087
     Two years to three years                                             102            6,103
     Three years to four years                                              -                -
     Over four years                                                      167              316
- -----------------------------------------------------------------------------------------------
          Total jumbo certificates of deposit--customer               150,191          121,142
- -----------------------------------------------------------------------------------------------
Subtotal retail deposits                                            1,479,197        1,343,706
- -----------------------------------------------------------------------------------------------


                                      -65-





                                                                              
Other jumbo certificates of deposit--by maturity:
     Less than one year                                                98,582          110,964
     One year to two years                                                176              152
     Two years to three years                                               -              272
     Three years to four years                                              -                -
     Over four years                                                        -                -
- -----------------------------------------------------------------------------------------------
          Total other jumbo time certificates                          98,758          111,388
- -----------------------------------------------------------------------------------------------

Brokered deposits less than one year                                  249,206          301,254
- -----------------------------------------------------------------------------------------------

Total deposits                                                     $1,827,161       $1,756,348
- -----------------------------------------------------------------------------------------------


Interest expense by category follows:


Year Ended December 31,                                    2007          2006             2005
- -----------------------------------------------------------------------------------------------
(In Thousands)
                                                                                
Interest-bearing demand                                 $ 1,393         $ 785            $ 297
Money market                                             11,870         8,090            3,837
Savings                                                   1,679         2,237            1,738
Customer time deposits                                   22,357        15,309            8,098
- -----------------------------------------------------------------------------------------------
     Total customer interest expense                     37,299        26,421           13,970
- -----------------------------------------------------------------------------------------------

Other jumbo certificates of deposit                       5,176         4,100            1,374
Brokered deposits                                        14,836        12,186            6,346
- -----------------------------------------------------------------------------------------------
     Total interest expense on deposits                 $57,311       $42,707          $21,690
- -----------------------------------------------------------------------------------------------


9.  BORROWED FUNDS

The following is a summary of borrowed funds by type:



                                                                             Maximum        Amount      Weighted
                                                                           Outstanding      Average     Average
                                                              Weighted       at Month       Amount      Interest
                                                   Balance at  Average         End         Outstanding    Rate
                                                     End of    Interest     During the     During the  During the
                                                     Period     Rate          Period         Period       Period
                                                   ---------- ---------      ----------   ------------- -------------
                                                                           (Dollars in Thousands)
          2007
          ----
                                                                                         
FHLB advances..................................    $898,280      4.23%     $  936,302      $765,974       4.97%
Trust preferred borrowings.....................      67,011      6.89          67,011        67,011       7.00
Federal funds purchased and securities
  sold under agreements to repurchase .........      75,000      4.46          75,000        60,649       5.13
Other borrowed funds ..........................      94,869      3.84          95,087        86,602       4.26


                                      -66-





                                                                                         
          2006
          ----

FHLB advances..................................    $784,028      4.93%     $1,051,458      $976,101       4.64%
Trust preferred borrowings.....................      67,011      7.14          67,011        67,011       7.44
Federal funds purchased and securities
  sold under agreements to repurchase .........      73,400      5.36          83,150        74,412       5.02
Other borrowed funds ..........................      78,240      4.30          78,240        49,388       3.74



Federal Home Loan Bank Advances

         Advances from the FHLB of  Pittsburgh  with rates ranging from 3.48% to
5.45% at December 31, 2007 are due as follows:

                                                                        Weighted
                                                                         Average
                                                         Amount           Rate
                                                         ------           ----
                                                         (Dollars in Thousands)

       2008......................................      $577,900           4.03%
       2009......................................       162,562           4.67
       2010......................................       115,517           4.63
       2012 - 2013...............................        42,301           4.27
                                                       --------
                                                       $898,280
                                                       ========

     Pursuant to collateral  agreements  with the FHLB,  advances are secured by
qualifying first mortgage loans, qualifying fixed-income securities,  FHLB stock
and an interest-bearing demand deposit account with the FHLB.

     As a member of the FHLB of Pittsburgh,  we are required to acquire and hold
shares of capital stock in the FHLB of Pittsburgh in an amount at least equal to
4.65% of its advances  (borrowings)  from the FHLB of Pittsburgh,  plus 0.65% of
the unused borrowing capacity.  We were in compliance with this requirement with
a stock  investment in FHLB of Pittsburgh of $45.5 million at December 31, 2007.
This stock is carried on the accompanying consolidated statement of condition at
cost, which approximates liquidation value.

     Seven  advances  are  outstanding  at  December  31, 2007  totaling  $170.0
million, with a weighted average rate of 4.47% maturing in 2009 and beyond. They
are  convertible  on a  quarterly  basis  (at the  discretion  of the FHLB) to a
variable rate advance based upon the  three-month  LIBOR rate,  after an initial
fixed  term.  If any of these  advances  convert,  WSFS has the option to prepay
these advances at predetermined times or rates.


      Trust Preferred Borrowings

     On April 6, 2005,  we completed  the issuance of $67.0 million of aggregate
principal amount of Pooled Floating Rate Securities at a variable  interest rate
of 177 basis points over the  three-month  LIBOR rate.  The  proceeds  from this
issuance  were used to fund the  redemption  of $51.5  million of Floating  Rate
Capital Trust I Preferred Securities.


      Federal Funds Purchased and Securities Sold Under Agreements to Repurchase

     During 2007, we purchased federal funds as a short-term  funding source. At
December 31, 2007, we had purchased  $50.0 million in federal funds at a rate of
4.25%. At December 31, 2006, we also had $50.0 million federal funds purchased.

                                      -67-



     During 2007, we sold securities under agreements to repurchase as a funding
source. At December 31, 2007, securities sold under agreements to repurchase had
a fixed rate of 4.87%. The underlying securities are mortgage-backed  securities
with a book value of $29.1 million at December 31, 2007.  Securities  sold under
agreements to repurchase  with the  corresponding  carrying and market values of
the underlying securities are due as follows:



                                                              Collateral
                                                       -----------------------------------
                               Borrowing                Carrying     Market     Accrued
                               Amount         Rate       Value        Value    Interest
                             ----------    ----------  ----------   ----------------------
(Dollars in Thousands)
                                                               
2007
- ----

Over 90 days................. $  25,000       4.87%     $  29,086    $  28,155 $       99
                              =========                 =========    ========= ==========

2006

Up to 30 days................ $  23,400       5.32%     $  24,993    $  24,969  $      215
                              =========                 =========    =========  ==========


         Other Borrowed Funds

     Included in other  borrowed  funds are  collateralized  borrowings of $94.9
 million  and  $78.2  million  at  December  31,  2007 and  2006,  respectively,
 consisting   of   outstanding   retail   repurchase   agreements,   contractual
 arrangements  under which portions of certain  securities are sold overnight to
 retail  customers  under   agreements  to  repurchase.   Such  borrowings  were
 collateralized  by  mortgage-backed  securities.  The  average  rates  on these
 borrowings were 3.84% and 4.30% at December 31, 2007 and 2006, respectively.


 10.  STOCKHOLDERS' EQUITY

     Under  Office of Thrift  Supervision  (OTS)  capital  regulations,  savings
 institutions  such as WSFS, must maintain  "tangible"  capital equal to 1.5% of
 adjusted  total assets,  "core" capital equal to 4.0% of adjusted total assets,
 "Tier  1"  capital  equal  to 4.0%  of  risk-weighted  assets  and  "total"  or
 "risk-based" capital (a combination of core and "supplementary"  capital) equal
 to 8.0% of risk-weighted  assets.  Failure to meet minimum capital requirements
 can  initiate  certain  mandatory - and  possibly  additional  discretionary  -
 actions by regulators that, if undertaken,  could have a direct material effect
 on WSFS'  Financial  Statements.  At December  31,  2007 and 2006,  WSFS was in
 compliance   with   regulatory   capital   requirements   and  was   deemed   a
 "well-capitalized" institution.

 The following table presents WSFS' consolidated capital position as of December
31, 2007 and 2006:



                                                                                                                  To Be
                                                                                                             Well-Capitalized
                                                                                                               Under Prompt
                                                             Consolidated              For Capital               Corrective
                                                             Bank Capital           Adequacy Purposes        Action Provisions
- -----------------------------------------------------------------------------   ----------------------   ----------------------
                                                            Amount   Percent         Amount   Percent          Amount  Percent
- ----------------------------------------------------------------------------------------------------------------------------------
(In Thousands)
                                                                                                      
 As of December 31, 2007:
  Total Capital (to risk-weighted assets)                 $304,992     12.31%      $198,156      8.00%       $247,696    10.00%
  Core Capital (to adjusted tangible assets)               276,327      8.63        128,033      4.00         160,041     5.00
  Tangible Capital (to tangible assets)                    276,327      8.63         48,012      1.50             N/A      N/A
  Tier 1 Capital (to risk-weighted assets)                 276,327     11.16         99,078      4.00         148,617     6.00


                                      -68-





                                                                                                      
As of December 31, 2006:
  Total Capital (to risk-weighted assets)                $ 302,805     13.54%     $ 178,857      8.00%      $ 223,571    10.00%
  Core Capital (to adjusted tangible assets)               277,593      9.25        120,084      4.00         150,105     5.00
  Tangible Capital (to tangible assets)                    277,593      9.25         45,032      1.50             N/A      N/A
  Tier 1 Capital (to risk-weighted assets)                 277,593     12.42         89,429      4.00         134,143     6.00


         We have a simple  capital  structure with one class of $0.01 par common
stock outstanding,  each share having equal voting rights. In addition,  we have
authorized 7,500,000 shares of $0.01 par preferred stock. No preferred stock was
outstanding at December 31, 2007 and 2006. When infused into the Bank, the Trust
Preferred Securities issued in 2005 qualify as Tier 1 capital. We are prohibited
from paying any  dividend or making any other  capital  distribution  if,  after
making the distribution,  we would be undercapitalized within the meaning of the
OTS Prompt Corrective Action regulations. Since 1996, the Board of Directors has
approved several stock repurchase  programs to reacquire common shares.  As part
of these programs,  we acquired  approximately  564,100 shares in 2007 for $36.2
million and 103,400 shares in 2006 for $6.6 million.

         The Holding Company

         In April 2005, WSFS Capital Trust III, an  unconsolidated  affiliate of
WSFS  Financial  Corporation,  issued $67.0  million of  aggregate  principle of
Pooled Floating Rate Securities at a variable  interest rate of 177 basis points
over the  three-month  LIBOR rate.  The proceeds were used to refinance the WSFS
Capital  Trust I November  1998  issuance  of $51.5  million of Trust  Preferred
Securities  which had a variable  rate of 250 basis points over the  three-month
LIBOR  rate.  At December  31,  2007,  the coupon rate of the Capital  Trust III
securities  was 6.89% with a  scheduled  maturity  of June 1, 2035.  The Company
purchased an interest rate cap that economically limits the three-month LIBOR to
6.00% on $50.0 million of the $67.0 million of securities  until  December 2008.
The effective rate of these securities,  including the cost of the cap was 7.00%
at December 31, 2007. The effective rate will vary, however, due to fluctuations
in interest  rates and changes in the fair value of the cap. The  proceeds  from
the  issue  were  invested  in  Junior  Subordinated  Debentures  issued by WSFS
Financial  Corporation.  These  securities  are treated as  borrowings  with the
interest  included  in  interest  expense  on  the  Consolidated   Statement  of
Operations. Additional information concerning the Trust Preferred Securities and
the  interest  rate  cap is  included  in  Notes  9 and  18 to the  Consolidated
Financial Statements. The proceeds were used primarily to extinguish higher rate
debt and for general corporate purposes.

         Pursuant to federal laws and  regulations,  WSFS'  ability to engage in
transactions with affiliated corporations is limited, and WSFS generally may not
lend funds to nor guarantee indebtedness of the Company.


 11. ASSOCIATE (EMPLOYEE) BENEFIT PLANS

Associate 401(k) Savings Plan

         Certain  subsidiaries  of ours  maintain  a  qualified  plan  in  which
Associates  may  participate.  Participants  in the plan may  elect to  direct a
portion of their wages into  investment  accounts  that  include  professionally
managed  mutual and money  market  funds and our common  stock.  Generally,  the
principal  and earnings  thereon are tax deferred  until  withdrawn.  We match a
portion of the Associates'  contributions  and periodically  make  discretionary
contributions  based  on our  performance  into  the  plan  for the  benefit  of
Associates. Our total cash contributions to the plan on behalf of our Associates
resulted in a cash  expenditure  of $1.7 million,  $1.6 million and $1.4 million
for 2007, 2006 and 2005, respectively.

         Effective  November 2007, all of our  discretionary  contributions  are
invested  in  accordance  with the  Associates'  selection  of  investments.  If
Associates do not designate how discretionary  contributions are to be invested,
80% will be invested  in a balanced  fund and 20% will be invested in our common
stock. Associates may make transfers to various other

                                      -69-



investment  vehicles within the plan without any significant  restrictions.  The
plan purchased 25,000, 13,000 and 36,000 shares of our common stock during 2007,
2006 and 2005, respectively.

         Postretirement Benefits

         We share certain costs of providing health and life insurance  benefits
to  retired  Associates  (and  their  eligible  dependents).  Substantially  all
Associates  may  become  eligible  for  these  benefits  if  they  reach  normal
retirement age while working for us.

         We account for our  obligations  under the  provisions of SFAS No. 106,
Employers'  Accounting  for  Postretirement  Benefits  Other Than Pensions (SFAS
106).  SFAS 106 requires that the costs of these benefits be recognized  over an
Associate's  active working career.  Amortization  of unrecognized  net gains or
losses resulting from experience different from that assumed and from changes in
assumptions  is included as a component  of net  periodic  benefit cost over the
remaining  service period of active  employees to the extent that such gains and
losses exceed 10% of the accumulated  postretirement  benefit obligation,  as of
the beginning of the year.  Disclosures for 2007 and 2006 are in accordance with
SFAS No.  158,  Employers'  Accounting  for  Defined  Benefit  Pension and Other
Postretirement  Plans (SFAS 158),  while  disclosures for 2005 are in accordance
with SFAS No. 132  (Revised),  Employers'  Disclosure  About  Pensions and Other
Postretirement Benefits.


         On  December  31,  2006,  we adopted  the  recognition  and  disclosure
provisions of SFAS 158. SFAS 158 requires that we recognize the funded status of
our defined benefit  postretirement plan in our statement of financial position,
with a corresponding  adjustment to accumulated other comprehensive  income, net
of tax. The adjustment to  accumulated  other  comprehensive  income at adoption
represented the net unrecognized  actuarial  losses and unrecognized  transition
obligation  remaining  from the  initial  adoption  of SFAS No.  87,  Employers'
Accounting for Pensions (SFAS 87), all of which were  previously  netted against
the plan's funded status in our statement of financial  position pursuant to the
provisions  of SFAS 87. These  amounts will be  subsequently  recognized  as net
periodic  pension  costs  pursuant  to  our  historical  accounting  policy  for
amortizing  such  amounts.  Further,  actuarial  gains and losses  that arise in
subsequent  periods and are not  recognized as net periodic  pension cost in the
same periods will be  recognized as a component of other  comprehensive  income.
Those  amounts will be  subsequently  recognized  as a component of net periodic
pension cost on the same basis as the amounts  recognized in  accumulated  other
comprehensive income at adoption of SFAS 158.


         The  incremental  effect of adopting  the  recognition  and  disclosure
provisions  of SFAS 158 on our  Consolidated  Statement of Condition at December
31, 2006 was a $905,000 (pretax) decrease in other  comprehensive  income.  This
included a net  actuarial  loss of $537,000 and a net  transition  obligation of
$368,000.  Also  related to the  adoption of SFAS 158,  the  Company  recorded a
deferred tax asset of $344,000 and a corresponding liability of $905,000. During
2008,  the  Company  expects to  recognize  $16,000 in expense  relating  to the
amortization  of the net actuarial  loss and $61,000 in expense  relating to the
amortization of the net transition obligation.

                                      -70-



The following  disclosures relating to postretirement  benefits were measured at
December 31, 2007:



                                                                                    2007        2006        2005
- -----------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
                                                                                                
Change in benefit obligation:
Benefit obligation at beginning of year                                          $ 2,233     $ 2,287     $ 2,086
Service cost                                                                         137         108         106
Interest cost                                                                        125          93         122
Actuarial (gain)/loss                                                                (29)       (110)        200
Benefits paid                                                                       (127)       (145)       (227)
- -----------------------------------------------------------------------------------------------------------------
   Benefit obligation at end of year                                             $ 2,339     $ 2,233     $ 2,287
- -----------------------------------------------------------------------------------------------------------------

Change in plan assets:
Fair value of plan assets at beginning of year                                   $     -     $     -     $     -
Employer contributions                                                               127         145         227
Benefits paid                                                                       (127)       (145)       (227)
- -----------------------------------------------------------------------------------------------------------------
   Fair value of plan assets at end of year                                      $     -     $     -     $     -
- -----------------------------------------------------------------------------------------------------------------

Funded status:
Funded status                                                                    $(2,339)    $(2,233)    $(2,287)
Unrecognized transition obligation                                                     -           -         429
Unrecognized net loss                                                                  -           -         647
Recognized net loss                                                                  795         905           -
- -----------------------------------------------------------------------------------------------------------------
   Net amount recognized                                                         $(1,544)    $(1,328)    $(1,211)
- -----------------------------------------------------------------------------------------------------------------

Components of net periodic benefit cost:
Service cost                                                                         137     $   108     $   106
Interest cost                                                                        125          93         122
Amortization of transition obligation                                                 61          61          61
Net loss recognition                                                                  19           -          15
- -----------------------------------------------------------------------------------------------------------------
   Net periodic benefit cost                                                     $   342     $   262     $   304
- -----------------------------------------------------------------------------------------------------------------

Assumptions used to determine net periodic benefit cost:
   Discount rate                                                                    5.75%       5.50%       6.00%
   Health care cost trend rate                                                      5.00%       5.00%       5.50%

Sensitivity analysis of health care cost trends:
Effect of +1% on service cost plus interest cost                                 $    (7)    $    (8)    $     3
Effect of -1% on service cost plus interest cost                                       7           7          (1)
Effect of +1% on APBO                                                                (74)        (76)         18
Effect of -1% on APBO                                                                 63          66          (9)

Assumptions used to value the Accumulated Postretirement Benefit
Obligation (APBO):
     Discount rate                                                                  6.00%       5.75%       5.50%
     Health care cost trend rate                                                    5.00%       5.00%       5.50%
     Ultimate trend rate                                                            5.00%       5.00%       5.00%
     Year of ultimate trend rate                                                    2005        2005        2005


                                      -71-



Estimated future benefit payments:
The following table shows the expected future payments for the next ten years:
During 2008                                                             $   109
During 2009                                                                 110
During 2010                                                                 111
During 2011                                                                 111
During 2012                                                                 118
During 2013 through 2017                                                    717
- -------------------------------------------------------------------------------
                                                                        $ 1,276
- -------------------------------------------------------------------------------


         We assume that the average annual rate of increase for medical benefits
will remain flat and stabilize at an average increase of 5% per annum. The costs
incurred for retirees'  health care are limited  since  certain  current and all
future  retirees are restricted to an annual medical  premium cap indexed (since
1995) by the lesser of 4% or the actual increase in medical premiums paid by the
Company.  For 2007,  this annual premium cap amounted to $2,308 per retiree.  We
estimate  that we will  contribute  approximately  $109,000  to the plan  during
fiscal 2008.

         We have three additional  plans.  They are a Supplemental  Pension Plan
with a corresponding liability of $700,000, an Early Retirement Window Plan with
a corresponding liability of $455,000 and a Director's Plan with a corresponding
liability of $146,000.


12.  TAXES ON INCOME

         The  Company and its  subsidiaries,  with the  exception  of WSFS Reit,
Inc.,  file a  consolidated  federal income tax return and separate state income
tax  returns.  WSFS Reit,  Inc.  files  separate  federal  and state  income tax
returns. Our income tax provision consists of the following:

Year Ended December 31,                 2007             2006             2005
- --------------------------------------------------------------------------------
(In Thousands)
Current income taxes:
       Federal taxes                 $ 10,389         $ 14,662          $ 11,118
       State and local taxes            2,274            2,278             2,197
Deferred income taxes:
       Federal taxes                      811           (1,336)            1,445
       State and local taxes                -               56                87
- --------------------------------------------------------------------------------
         Total                       $ 13,474         $ 15,660          $ 14,847
- --------------------------------------------------------------------------------

         Current  federal  income taxes  include  taxes on income that cannot be
offset by net operating loss carryforwards.

         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 our  deferred  tax  assets and
liabilities as of December 31, 2007 and 2006:

                                      -72-





                                                                       2007       2006
- ---------------------------------------------------------------------------------------
(In Thousands)
                                                                        
Deferred tax liabilities:
        Accelerated depreciation                                   $   (618)   $   (488)
        Other                                                           (24)       (110)
        Prepaid expenses                                             (1,505)     (1,490)
        Deferred loan costs                                          (2,100)     (2,005)
- ---------------------------------------------------------------------------------------
Total deferred tax liabilities                                       (4,247)     (4,093)
- ---------------------------------------------------------------------------------------

Deferred tax assets:
        Bad debt deductions                                           8,838       9,585
        Tax credit carryforwards                                        150         150
        Net operating loss carryforwards                              2,482       3,406
        Capital loss carryforwards                                       93         679
        Loan fees                                                         3          14
        Reserves and other                                            2,732       2,033
        Deferred gains                                                  439           -
        Unrealized losses on available-for-sale securities            2,366       5,255
- ---------------------------------------------------------------------------------------
Total deferred tax assets                                            17,103      21,122
- ---------------------------------------------------------------------------------------

Valuation allowance                                                  (2,178)     (2,651)
- ---------------------------------------------------------------------------------------
Net deferred tax asset                                             $ 10,678    $ 14,378
- ---------------------------------------------------------------------------------------


         Included  in  the  table  above  is the  effect  of  certain  temporary
differences  for which no deferred tax expense or benefit was  recognized.  Such
items consisted  primarily of unrealized gains and losses on certain investments
in debt and equity securities accounted for under SFAS 115.

         Based on our  history of prior  earnings  and our  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 $10.7  million  at  December  31,  2007.  Adjustments  to
decrease  gross deferred tax assets and the related  valuation  allowance in the
amount of  $473,000,  $51,000  and  $110,000  were made in 2007,  2006 and 2005,
respectively, to reflect state tax net operating losses that have expired.


         Approximately $221,000 in our gross deferred tax assets at December 31,
2007 was  related to state tax net  operating  losses.  We  assessed a valuation
allowance of $221,000 on this entire deferred tax asset due to an expectation of
such net operating losses expiring before being utilized.

         We have  $267,000  of capital  loss  carryforwards  that will expire on
December 31, 2011.  Net  operating  loss  carryforwards  (NOLs) of $10.2 million
remain at  December  31,  2007.  The  expiration  dates and  amounts of such NOL
carryforwards are listed below:

                                                        Federal            State
                                                        -------            -----
                                                            (In Thousands)
2008..............................................      $ 1,294         $     -
2009..............................................        5,165               -
2018..............................................            -           3,732
                                                        -------         -------
                                                        $ 6,459         $ 3,732
                                                        =======         =======

                                      -73-



         Our ability to use our federal NOLs to offset  future income is subject
to  restrictions  enacted in Section 382 of the  Internal  Revenue  Code.  These
restrictions  limit a  company's  future  use of NOLs if there is a  significant
ownership change in a company's stock (an "Ownership  Change").  The utilization
of  approximately  $6.5 million of federal net operating loss  carryforwards  is
limited to  approximately  $1.3 million each year as a result of such  Ownership
Change in a former subsidiary's stock. At December 31, 2007,  approximately $2.4
million in our gross deferred tax assets was related to net operating losses and
tax credits  attributable to a former  subsidiary.  We have assessed a valuation
allowance  of $2.0  million  on a portion  of these  deferred  tax assets due to
limitations imposed by the Internal Revenue Code.

         A  reconciliation  setting forth the differences  between our effective
tax rate and the U.S. Federal statutory tax rate is as follows:



Year Ended December 31,                                        2007       2006       2005
- -----------------------------------------------------------------------------------------
                                                                           
Statutory federal income tax rate                              35.0%      35.0%      35.0%
State tax net of federal tax benefit                            3.4        3.2        3.2
Interest income 50% excludable                                 (1.7)      (1.6)      (1.7)
Bank-owned life insurance income                               (1.8)      (3.0)      (1.6)
Charitable donation                                            (5.0)         -          -
Incentive stock option compensation                             0.5        0.6          -
Other                                                           0.8       (0.2)      (0.1)
- -----------------------------------------------------------------------------------------
Effective tax rate                                             31.2%      34.0%      34.8%
- -----------------------------------------------------------------------------------------


      During 2007, we donated a N.C. Wyeth mural which was previously  displayed
in our  former  headquarters.  The  estimated  fair  value of the mural was $6.0
million, which was recorded as a charitable  contribution expense. We recognized
a related  offsetting gain on the transfer of the asset during 2007. The expense
and offsetting gain was shown net in our Consolidated  Financial Statements.  As
the gain on the transfer of the asset is permanently  excludible  from taxation,
the charitable  contribution  transaction  results in a permanent  deduction for
income  tax  purposes.  The  amount of the  deduction  represents  an income tax
uncertainty because it is subject to evaluation by the Internal Revenue Service.

         We record interest and penalties on potential  income tax  deficiencies
as income tax expense.  Federal tax years 2004  through  2007 remain  subject to
examination  as of December 31,  2007,  while tax years 2004 through 2007 remain
subject to examination by state taxing  jurisdictions.  Our 2004,  2005 and 2006
federal  income tax returns are currently  being  examined.  No state income tax
return  examinations  are  currently  in  process.  We believe it is  reasonably
possible  that  between  $500,000  and $1.2  million of  unrecognized  state tax
benefits,  net of federal tax,  will be realized  during 2008 as a result of the
expiration  of statutes of  limitations.  It is also  reasonably  possible  that
between $100,000 and $300,000 of additional  reserves will be established during
2008 related to interest on existing unrecognized state tax benefits.

         During 2007,  an  additional  $3.6 million tax reserve was  established
related  primarily to the Internal  Revenue Service ("IRS")  disallowance of the
deduction for certain  compensation  in prior periods.  This  adjustment was the
result of a routine IRS audit of our 2004  through  2006 tax years.  Because the
original tax benefit for this item was  recorded as an increase to equity,  $3.4
million of the tax liability was recorded as a reduction to equity in 2007. Even
though  this  matter is not yet  settled,  standards  under FIN 48 require  this
reserve to be  established  during 2007. In order to stop interest from accruing
on this tax liability  until the matter can be resolved  through the IRS appeals
process,  we deposited  the entire $3.4 million plus interest in 2007 so that no
reserve remains for this matter as of December 31, 2007.

         The total amount of  unrecognized  tax benefits as of December 31, 2007
was  $2.6  million,  all of  which  would  affect  our  effective  tax  rate  if
recognized.  The total amount of accrued interest and penalties included in such
unrecognized tax

                                      -74-



benefits were $660,000 and $0,  respectively,  which  approximates the amount of
related expense in 2007. A  reconciliation  of the total amounts of unrecognized
tax benefits during 2007 is as follows:

(In Thousands)
Unrecognized tax benefits at December 31, 2006                          $4,544
Reduction resulting from implementation of FIN 48 on January 1, 2007    (1,988)
Additions as a result of tax positions taken during prior years          3,416
Additions as a result of tax positions taken during current year           416
Reductions relating to settlements with taxing authorities              (3,671)
Reductions as a result of a lapse of statues of limitations                (85)
- -------------------------------------------------------------------------------
Unrecognized tax benefits at December 31, 2007                          $2,632
- -------------------------------------------------------------------------------


13.  STOCK-BASED COMPENSATION

         Stock-based  compensation  is accounted for in accordance with SFAS No.
123  (revised  2004),  Share-Based  Payment  (SFAS  123R).  We adopted SFAS 123R
beginning January 1, 2006 using the Modified Prospective Application Method.

         We have stock options outstanding under two plans (collectively, "Stock
Incentive Plans") for officers,  directors and Associates of the Company and its
subsidiaries.  After  shareholder  approval in 2005,  the 1997 Stock Option Plan
("1997 Plan") was replaced by the 2005 Incentive  Plan ("2005 Plan").  No future
awards may be granted under the 1997 Plan.  The 2005 Plan will  terminate on the
tenth  anniversary of its effective date,  after which no awards may be granted.
The number of shares  reserved for issuance  under the 2005 Plan is 862,000.  At
December 31, 2007,  there were 380,121 shares  available for future grants under
the 2005 Plan.

         The Stock  Incentive  Plans provide for the granting of incentive stock
options  as  defined  in Section  422 of the  Internal  Revenue  Code as well as
nonincentive stock options (collectively,  "Stock Options").  Additionally,  the
2005 Plan provides for the granting of stock  appreciation  rights,  performance
awards, restricted stock and restricted stock unit awards, deferred stock units,
dividend  equivalents,  other  stock-based  awards  and cash  awards.  All Stock
Options are to be granted at not less than the market  price of our common stock
on the date of the grant.  All Stock Options  granted during 2007 vest in 20% or
25% per annum  increments,  start to become  exercisable one year from the grant
date and expire between five and ten years from the grant date.  Generally,  all
awards become  immediately  exercisable in the event of a change in control,  as
defined within the Stock Incentive Plans.

         A summary of the status of our Option  Plans as of December  31,  2007,
2006 and 2005, and changes during the years then ended is presented below:

                                      -75-





                                            2007                          2006                        2005
                                      -----------------------       ----------------------     ------------------------
                                                  Weighted-                   Weighted-                    Weighted-
                                                  Average                     Average                      Average
                                      Shares   Exercise Price       Shares  Exercise Price     Shares    Exercise Price
                                      ------   --------------       ------  --------------     ------    --------------
                                                                                       
Exercise Price
Stock Options:
Outstanding at beginning of year     703,427     $  39.52           742,404    $ 31.92         869,845    $ 23.73
Granted                              121,375        54.25           106,905      64.93         109,817      62.71
Exercised                            (80,836)       23.85          (143,346)     19.01        (226,963)     15.05
Forfeited                            (21,384)       60.08            (2,536)     46.19         (10,295)     38.98
                                    --------                       --------                   --------

Outstanding at end of year           722,582        43.14           703,427      39.52         742,404      31.92

Exercisable at end of year           438,458        33.40           416,773      26.91         435,344      20.57

Weighted-average fair value
 of awards granted                 $   11.36                       $  13.52                    $ 13.67



         Beginning January 1, 2007,  416,773 stock options were exercisable with
an intrinsic value of $10.0 million. In addition,  at January 1, 2007 there were
286,654  nonvested  options  with a grant date fair value of $12.76.  During the
year ended December 31, 2007,  103,286 options vested with an intrinsic value of
$550,000,  and a grant date fair value of $11.86 per option.  Also during  2007,
80,836  options were  exercised  with an  intrinsic  value of $3.3  million.  In
addition,  765 vested options were  forfeited with an intrinsic  value of $6,000
and a grant date fair value of $13.32,  while 21,384  options were  forfeited in
total with a grant date fair value of  $13.34.  There were  438,458  exercisable
options  remaining at December 31, 2007, with an intrinsic value of $8.4 million
and a remaining  contractual  term of 4.2 years. At December 31, 2007 there were
722,582 stock options  outstanding with an intrinsic value of $8.5 million and a
remaining  contractual  term of 4.4 years and 284,124  nonvested  options with a
grant date fair value of $12.45.  During 2006,  143,346  options were  exercised
with an intrinsic  value of $6.2 million and 125,235 options vested with a grant
date fair value of $9.91 per option.

         The total  amount of  compensation  cost  related  to  nonvested  stock
options as of December 31, 2007 was $2.1 million.  The  weighted-average  period
over which it is expected  to be  recognized  is 2.9 years.  We issue new shares
upon the exercise of options.

         During 2007,  we granted  121,320  options with a five-year  life and a
four-year  vesting period.  The Black-Scholes  option-pricing  model was used to
determine the grant date fair value of these  options.  Significant  assumptions
used in the  model  included  a  weighted-average  risk-free  rate of  return of
between  3.3%  and  4.7%  in  2007;  an  expected   option  life  of  three  and
three-quarter years; and an expected stock price volatility of between 18.7% and
21.8% in 2007. For the purposes of this  option-pricing  model, a dividend yield
of between 0.5% and 0.7% was used as the expected  dividend yield.  The expected
option life was determined  based on the mid-point  between the vesting date and
the end of the contractual term.

      Also  during  2007,  we  granted 55  options  with a  ten-year  life and a
five-year  vesting period.  The Black-Scholes  option-pricing  model was used to
determine the grant date fair value of these  options.  Significant  assumptions
used in the model included a  weighted-average  risk-free rate of return of 4.7%
in 2007;  an expected  option life of six and  one-half  years;  and an expected
stock price  volatility of 21.1% in 2007 based on our  historical  volatility of
our own common stock over a period that  approximates  the expected  term of the
award. For the purposes of this  option-pricing  model, a dividend yield of 0.5%
was used as the expected  dividend yield.  The expected option life was based on
the mid-point between the vesting date and the end of the contractual term.

                                      -76-



      Prior to  adoption  of SFAS 123R,  we used a  graded-vesting  schedule  to
calculate the expense related to stock options. Since the adoption of SFAS 123R,
we  recognize  compensation  expense  related to new stock  options  issued on a
straight-line basis over the applicable service period.

      The Black-Scholes and other option-pricing  models assume that options are
freely tradable and immediately vested. Since options are not transferable, have
vesting  provisions,  and are subject to trading blackout periods imposed by us,
the value calculated by the Black-Scholes model may significantly  overstate the
true economic value of the options.

      The impact of  stock-based  compensation  for the year ended  December 31,
2007 was $1.2 million  pretax ($1.0 million  after tax), or $0.16 per share,  to
salaries, benefits and other compensation, compared to $1.5 million pretax ($1.3
million  after tax),  or $0.19 per share in 2006.  Prior to the adoption of SFAS
123R, we applied  Accounting  Principles Board (APB) Opinion 25,  Accounting for
Stock Issued to Employees,  and related  interpretations  in accounting  for the
Stock Incentive Plans and to provide the required pro forma  disclosures of SFAS
No.123  Accounting for Stock-Based  Compensation  (SFAS 123). Had the grant date
fair  value  provisions  of SFAS  123  been  adopted,  the  Company  would  have
recognized  pretax  compensation  expense of $1.2 million in 2005 related to its
Stock Incentive Plans.

      The  following  table   summarizes  all  stock  options   outstanding  and
exercisable  for Option  Plans as of December  31,  2007,  segmented by range of
exercise prices:



                                         Outstanding                     Exercisable
                     --------------------------------------------    ---------------------
                                 Weighted-          Weighted-                   Weighted-
                                 Average             Average                     Average
                                 Exercise           Remaining                   Exercise
                     Number      Price          Contractual Life     Number        Price
                     ------   -------------     ----------------     ------   ------------
                                                               
  Stock Options:

$ 6.90-$13.80         59,357     $ 10.96               2.7 years       59,357   $ 10.96
$13.81-$20.70        142,503       16.67               3.4 years      142,503     16.67
$20.71-$27.60              -           -                 - years            -         -
$27.61-$34.50         71,765       33.36               4.8 years       70,965     33.38
$34.51-$41.40              -           -                 - years            -         -
$41.41-$48.30         70,695       43.78               5.8 years       55,178     43.76
$48.31-$55.20        119,065       53.31               5.0 years        2,416     51.10
$55.21-$62.10         73,192       58.91               6.8 years       41,631     58.83
$62.11-$69.00        186,005       64.50               3.5 years       66,408     64.18
                     -------                                          -------

Total                722,582      $43.14               4.4 years      438,458    $33.40
                     =======                                          =======


      During  2007,  2006  and  2005,  we  issued  129,  15,269  and 30  shares,
respectively,  of restricted stock. These awards vest over five years: 0% in the
first two years,  25% in each of the third and fourth years and 50% in the fifth
year.

                                      -77-



14.  COMMITMENTS AND CONTINGENCIES

         Lending Operations

         At December 31, 2007,  we had  commitments  to extend  credit of $586.3
million.  Consumer  lines of credit totaled $48.7 million of which $31.5 million
was secured by real estate. Outstanding letters of credit were $46.0 million and
outstanding  commitments  to make or  acquire  mortgage  loans  aggregated  $8.4
million. Approximately $565,000 of these mortgage loan commitments were at fixed
rates  ranging  from 5.13% to 8.25%,  and  approximately  $7.9  million  were at
variable rates ranging from 5.13% to 7.50%.  Mortgage commitments generally have
closing dates within a six-month period.

         Data Processing Operations

         We have entered into contracts to manage our network  operations,  data
processing and other related  services.  The projected amounts of future minimum
payments contractually due (in thousands) are as follows:

                  2008................................            $3,848
                  2009................................             3,635
                  2010................................               858
                  2011................................                11

         Legal Proceedings

         In the  ordinary  course of business,  we are subject to legal  actions
that  involve  claims for  monetary  relief.  Based upon  information  presently
available to us and our counsel,  it is our opinion that any legal and financial
responsibility  arising from such claims will not have a material adverse effect
on our results of operations.

         We, as  successor  to  originators,  are from time to time  involved in
arbitration or litigation with reverse mortgage loan borrowers or with the heirs
of  borrowers.  Because  reverse  mortgages  are a  relatively  new and uncommon
product,  there can be no assurances regarding how the courts or arbitrators may
apply existing legal  principles to the  interpretation  and  enforcement of the
terms and conditions of our reverse mortgage rights and obligations.

         Financial Instruments With Off-Balance Sheet Risk

         We are a party to financial  instruments with off-balance sheet risk in
the normal  course of  business  primarily  to meet the  financing  needs of our
customers.  To varying degrees,  these financial instruments involve elements of
credit risk that are not recognized in the Consolidated Statement of Condition.

         Exposure to loss for  commitments to extend credit and standby  letters
of credit written is represented by the contractual amount of those instruments.
We generally require collateral to support such financial  instruments in excess
of the  contractual  amount of those  instruments  and  essentially use the same
credit policies in making commitments as we do for on-balance sheet instruments.

                                      -78-



         The  following  represents  a summary of  off-balance  sheet  financial
instruments at year-end:

December 31,                                                   2007        2006
- --------------------------------------------------------------------------------
(In Thousands)
Financial instruments with contract amounts which
  represent potential credit risk:
    Construction loan commitments                          $154,875    $127,858
    Commercial mortgage loan commitments                    105,094      96,618
    Commercial loan commitments                             223,181     209,125
    Commercial standby letters of credit                     45,977      40,594
    Residential mortgage loan commitments                     8,435      12,320
    Consumer loan commitments                                48,690      46,315

         Commitments  to extend  credit are  agreements to lend to a customer as
long as there is no  violation of any  condition  established  in the  contract.
Commitments  generally have fixed expiration dates or other termination  clauses
and may require  payment of a fee. Since many of the commitments are expected to
expire without being completely drawn upon, the total commitment  amounts do not
necessarily  represent future cash  requirements.  Standby letters of credit are
conditional  commitments  issued to guarantee the performance of a customer to a
third party. We evaluate each customer's  creditworthiness and obtain collateral
based on management's credit evaluation of the counterparty.

         Indemnifications

         Secondary  Market  Loan  Sales.  We  generally  do not sell  loans with
recourse  except  to  the  extent  arising  from  standard  loan  sale  contract
provisions  covering  violations of  representations  and warranties  and, under
certain circumstances first payment default by the borrower. These are customary
repurchase  provisions  in the  secondary  market for  conforming  mortgage loan
sales.  We typically  sell  fixed-rate,  conforming  first mortgage loans in the
secondary  market as part of our  ongoing  asset/liability  management  program.
Loans  held-for-sale are carried at the lower of cost or market of the aggregate
or in some  cases  individual  loans.  Gains  and  losses  on sales of loans are
recognized at the time of the sale.

          As is  customary  in such sales,  we provide  indemnifications  to the
 buyers under  certain  circumstances.  These  indemnifications  may include the
 repurchase of loans by us. Repurchases and losses are rare, and no provision is
 made for losses at the time of sale. During 2007, we had no repurchases.

          Swap  Guarantees.  We entered into  agreements  with two  unaffiliated
 financial  institutions  whereby  those  financial  institutions  entered  into
 interest rate  derivative  contracts  (interest  rate swap  transactions)  with
 customers  referred  to them  by us.  By the  terms  of the  agreements,  those
 financial  institutions have recourse to us for any exposure created under each
 swap  transaction in the event the customer  defaults on the swap agreement and
 the agreement is in a paying position to the third-party financial institution.
 This is a customary arrangement that allows smaller financial institutions like
 us to provide  access to  interest  rate swap  transactions  for our  customers
 without creating the swap ourselves.

          At  December  31,  2007,   there  were  twenty-six   variable-rate  to
 fixed-rate swap transactions between the third-party  financial institution and
 our customers with an initial notional amount aggregating  approximately $108.3
 million,  and with  maturities  ranging from four months to fifteen years.  The
 aggregate  market value of these swaps to the customers was a liability of $4.7
 million as of December 31, 2007, and essentially  all of the swap  transactions
 were in a paying position to third-party financial institutions.

         ATM Cash  Management.  We entered  into an  agreement  with a financial
institution,  whereby  they  provide cash for  distribution/cash  management  by
CashConnect,  our ATM division.  Under this agreement we accept the  operational
risk

                                      -79-



associated  with this cash and are  legally  bound to  reimburse  the  financial
institution for any related  operational losses. We have taken steps to mitigate
the  risk  of  loss to us by  purchasing  a  multi-layer  insurance  policy  and
instituting  strong  operational  controls.  Additionally,  CashConnect  has the
ability to recover losses from its vault cash customers based on the strength of
our ATM cash  bailment  agreements,  which  hold the ATM  vault  cash  customers
responsible for any loss of cash, which is not a result of our gross negligence.


15.  FAIR VALUE OF FINANCIAL INSTRUMENTS

         The  reported  fair  values  of  financial  instruments  are based on a
variety of factors. In certain cases, fair values represent quoted market prices
for identical or comparable  instruments.  In other cases, fair values have been
estimated  based on  assumptions  regarding  the amount and timing of  estimated
future  cash  flows that are  discounted  to reflect  current  market  rates and
varying degrees of risk.  Accordingly,  the fair values may not represent actual
values of the financial instruments that could have been realized as of year-end
or that will be realized in the future.

         The following  methods and  assumptions  were used to estimate the fair
value of each class of  financial  instruments  for which it is  practicable  to
estimate that value:

         Cash and Short-Term  Investments:  For cash and short-term investments,
including  due from  banks,  federal  funds  sold,  securities  purchased  under
agreements  to resell  and  interest-bearing  deposits  with  other  banks,  the
carrying amount is a reasonable estimate of fair value.

         Investments and Mortgage-Backed  Securities:  Fair value for investment
and  mortgage-backed   securities  is  based  on  quoted  market  prices,  where
available.  If a quoted market price is not  available,  fair value is estimated
using quoted prices for similar securities.  The fair value of our investment in
reverse  mortgages is based on the net present  value of  estimated  cash flows,
which have been updated to reflect recent external  appraisals of the underlying
collateral.

         Loans:  Fair values are estimated for  portfolios of loans with similar
financial characteristics.  Loans are segregated by type: commercial, commercial
mortgages,  construction,  residential  mortgages and  consumer.  For loans that
reprice  frequently,  the book value approximates fair value. The fair values of
other types of loans are estimated by discounting  expected cash flows using the
current rates at which similar loans would be made to borrowers with  comparable
credit  ratings  and  for  similar  remaining  maturities.  The  fair  value  of
nonperforming  loans is based on recent  external  appraisals of the  underlying
collateral.  Estimated cash flows,  discounted  using a rate  commensurate  with
current  rates  and the risk  associated  with the  estimated  cash  flows,  are
utilized if appraisals are not available.

         Interest  Rate  Cap:  The fair  value  is  estimated  using a  standard
sophisticated option model.

         Class "O" Certificates:  The fair value of the option to purchase 49.9%
of the  Class "O"  Certificates  of SASCO  2002 RM1 is based on the net  present
value of the  forecasted  cash  flows.  The  forecasted  cash flows are based on
assumptions  about the life  expectancy  of the  mortgagee,  current  collateral
values,  the future change in collateral  values, and future interest rates. The
current  assumptions  include a short-term annual  appreciation rate of -8.0% in
the first year and a long-term annual appreciation rate of 0.5% in future years.
These  projected cash flows are discounted at an appropriate  discount rate. The
discount  rate is derived  using the  "Build-up  Model" taking into account as a
base the risk free rate of return  and  adding  individual  factors  unique  and
applicable  to the cash flows of the Class "O"  Certificates.  The discount rate
currently used is approximately  21%. Finally,  since the Class "O" Certificates
represent the equity  tranche of SASCO 2002 RM1, a 15%  illiquidity  discount is
applied to the resulting net present value.

                                      -80-



         Deposit  Liabilities:  The  fair  value  of  deposits  with  no  stated
maturity,  such  as  noninterest-bearing   demand  deposits,  money  market  and
interest-bearing demand deposits and savings deposits, is assumed to be equal to
the amount payable on demand.  The carrying value of variable rate time deposits
and time deposits that reprice frequently also approximates fair value. The fair
value  of the  remaining  time  deposits  is based  on the  discounted  value of
contractual cash flows. The discount rate is estimated using the rates currently
offered for deposits with comparable remaining maturities.

         Borrowed Funds:  Rates currently  available to us for debt with similar
terms and remaining maturities are used to estimate fair value of existing debt.

         Off-Balance  Sheet  Instruments:  The fair value of  off-balance  sheet
instruments,  including  commitments  to extend  credit and  standby  letters of
credit,  is  estimated  using the fees  currently  charged to enter into similar
agreements   with   comparable   remaining   terms  and   reflects  the  present
creditworthiness of the counterparties.


         The book value and estimated  fair value of our  financial  instruments
are as follows:



  December 31,                                                           2007                                  2006
  -----------------------------------------------------------------------------------------       --------------------------------
                                                                 Book Value     Fair Value              Book Value     Fair Value
  --------------------------------------------------------------------------------------------------------------------------------
  (In Thousands)
                                                                                                          
  Financial assets:
    Cash and cash equivalents                                    $  267,537     $  267,537              $  241,824     $  241,824
    Investment securities                                            28,272         28,254                  54,491         54,524
    Mortgage-backed securities                                      496,792        496,284                 516,711        516,434
    Loans, net                                                    2,233,980      2,240,847               2,019,741      2,012,530
    Bank-owned life insurance                                        57,551         57,551                  55,282         55,282
    Stock in Federal Home Loan Bank of Pittsburgh                    45,537         45,455                  39,872         39,720
    Accrued interest receivable                                      12,905         12,905                  13,037         13,037
    Interest rate cap                                                     -              -                      30             30
    Option to purchase Class "O" Certificates                             -            147                       -          3,503

  Financial liabilities:
    Deposits                                                      1,827,161      1,811,947               1,756,348      1,757,259
    Borrowed funds                                                1,135,160      1,136,020               1,002,679        997,476
    Accrued interest payable                                         10,189         10,189                   8,690          8,690


         The estimated fair value of our off-balance sheet financial instruments
is as follows:



  December 31,                                                                                                2007           2006
  --------------------------------------------------------------------------------------------------------------------------------
  (In Thousands)
                                                                                                                    
  Off-balance sheet instruments:
    Commitments to extend credit                                                                            $4,942         $4,454
    Standby letters of credit                                                                                  460            406



                                      -81-



16.  RELATED PARTY TRANSACTIONS


         We routinely enter into  transactions  with our directors and officers.
Such  transactions  are made in the ordinary  course of business.  The aggregate
amount of loans to such  related  parties was $5.4  million and $5.1  million at
December 31, 2007 and 2006, respectively. During 2007, new loans and credit line
advances  to such  related  parties  amounted  to $7.0  million  and  repayments
amounted to $6.8 million.

         We engage a law firm that is  affiliated  with one of our directors for
general legal services.  Total fees for such services amounted to $56,000 during
2007.

         Our Chairman was also the  Chairman of the FHLB of  Pittsburgh  through
December 31, 2007. At December 31, 2007, we had borrowed funds  outstanding from
the FHLB of  Pittsburgh  of $898.3  million and owned  $45.5  million of FHLB of
Pittsburgh stock.


17.  PARENT COMPANY FINANCIAL INFORMATION

Condensed Statement of Financial Condition

December 31,                                           2007              2006
- -----------------------------------------------------------------------------
(In Thousands)
Assets:
   Cash                                           $     682         $   4,984
   Investment in subsidiaries                       275,258           270,994
   Investment in interest rate cap                        -                30
   Investment in Capital Trust III                    2,011             2,011
   Other assets                                         800             1,499
- -----------------------------------------------------------------------------
Total assets                                      $ 278,751         $ 279,518
- -----------------------------------------------------------------------------

Liabilities:
   Borrowings                                     $  67,011         $  67,011
   Interest payable                                     372               412
   Other liabilities                                     38                36
- -----------------------------------------------------------------------------
   Total liabilities                                 67,421            67,459
- -----------------------------------------------------------------------------

Stockholders' equity:
   Common stock                                         157               156
   Capital in excess of par value                    83,077            81,580
   Comprehensive loss                                (3,861)           (8,573)
   Retained earnings                                376,682           347,448
   Treasury stock                                  (244,725)         (208,552)
- -----------------------------------------------------------------------------
   Total stockholders' equity                       211,330           212,059
- -----------------------------------------------------------------------------
Total liabilities and stockholders' equity        $ 278,751         $ 279,518
- -----------------------------------------------------------------------------

                                      -82-



Condensed Statement of Operations



Year Ended December 31,                                          2007        2006        2005
(In Thousands)
                                                                           
Income:
   Interest income                                           $    337    $    594    $    533
   Noninterest income                                             166         354         139
- ---------------------------------------------------------------------------------------------
                                                                  503         948         672
- ---------------------------------------------------------------------------------------------
Expenses:
   Interest expense                                             4,752       5,053       5,292
   Other operating expenses                                    (1,437)     (1,386)     (1,567)
- ---------------------------------------------------------------------------------------------
                                                                3,315       3,667       3,725
- ---------------------------------------------------------------------------------------------

Loss before equity in undistributed income of subsidiaries     (2,812)     (2,719)     (3,053)
Equity in undistributed income of subsidiaries                 32,461      33,160      30,909
- ---------------------------------------------------------------------------------------------
Net income                                                   $ 29,649    $ 30,441    $ 27,856
- ---------------------------------------------------------------------------------------------



Condensed Statement of Cash Flows



Year Ended December 31,                                          2007        2006        2005
- ---------------------------------------------------------------------------------------------
(In Thousands)
                                                                           
Operating activities:
Net income                                                   $ 29,649    $ 30,441    $ 27,856
Adjustments to reconcile net income to net cash
    used for operating activities:
      Equity in undistributed income of subsidiaries          (32,461)    (33,160)    (30,909)
      Amortization                                                  -         560       1,398
      Decrease (increase) in other assets                         443        (606)        432
      (Decrease) increase in other liabilities                    (38)         51         126
- ---------------------------------------------------------------------------------------------
Net cash used for operating activities                         (2,407)     (2,714)     (1,097)
- ---------------------------------------------------------------------------------------------

Investing activities:
   Decrease (increase) in investment in subsidiaries           34,898        (646)     28,210
   Net issuance of Pooled Floating Rate Capital Securities          -                  17,011
- ---------------------------------------------------------------------------------------------
Net cash provided by (used for) investing activities           34,898        (646)     45,221
- ---------------------------------------------------------------------------------------------

Financing activities:
   Issuance of common stock                                     1,784       6,907       6,348
   Dividends paid on common stock                              (2,403)     (2,057)     (1,845)
   Treasury stock, net of reissuance                          (36,174)     (6,603)    (40,104)
- ---------------------------------------------------------------------------------------------
Net cash used for financing activities                        (36,793)     (1,753)    (35,601)
- ---------------------------------------------------------------------------------------------

(Decrease) increase in cash                                    (4,302)     (5,113)      8,523
Cash at beginning of period                                     4,984      10,097       1,574
- ---------------------------------------------------------------------------------------------
Cash at end of period                                        $    682    $  4,984    $ 10,097
- ---------------------------------------------------------------------------------------------


                                      -83-




18.  ACCOUNTING FOR INTEREST RATE CAP


           We have an interest-rate cap with a notional amount of $50.0 million,
which limits  three-month  LIBOR to 6.00% for the ten years  ending  December 1,
2008. The fair value of the cap is estimated using a standard option model.  The
fair value of the interest rate cap at December 31, 2007 was  essentially  zero.
The cap is  considered a free  standing  derivative  and all changes in the fair
value of the cap are  recorded  in the  Consolidated  Statement  of  Operations.
During 2007, we recognized $30,000 of related interest expense.


19. SEGMENT INFORMATION

         Under the definition of SFAS No. 131,  Disclosures About Segments of an
Enterprise and Related  Information (SFAS 131), we discuss our business in three
segments.  There is one segment for WSFS Bank and one for  CashConnect,  the ATM
division of WSFS.  The third  segment,  "All  Others,"  represents  the combined
contributions  of  Montchanin,  WSFS  Investment  Group,  Inc.,  and our  Wealth
Management Services Division.  Montchanin,  WSFS Investment Group, Inc., and the
Wealth Management Services Division each offer different products, to a separate
customer  base,  through  distinct  distribution  methods.  Therefore,  we  have
combined  Montchanin,  WSFS Investment  Group,  Inc., and the Wealth  Management
Services  Division to form the operating  segment "All Others." All prior years'
information  has been  updated to reflect  this  presentation.  The WSFS segment
provides  financial products to commercial and retail customers through its main
office,  29 retail  banking  offices,  loan  production  offices and  operations
centers. Retail and Commercial Banking,  Commercial Real Estate Lending, Private
Banking and other  banking  business  units are operating  departments  of WSFS.
These departments share the same regulator,  market, many of the same customers,
share common  resources  (corporate and  department-level)  and provide  similar
products and services through the general infrastructure of the Company. Because
of these  and other  reasons,  these  departments  are not  considered  discrete
segments and are appropriately aggregated within the WSFS segment of the Company
in accordance with SFAS 131.  CashConnect  provides turnkey ATM services through
strategic  partnerships with several of the largest networks,  manufacturers and
service  providers in the ATM industry.  Montchanin  provides  asset  management
products  and  services to  customers  in the  Company's  primary  market  area.
Montchanin  has  one  consolidated  wholly-owned  subsidiary,   Cypress  Capital
Management,  LLC (Cypress).  Cypress is a Wilmington-based  investment  advisory
firm serving high net-worth individuals and institutions. WSFS Investment Group,
Inc. markets various  third-party  insurance products and securities directly to
the public and  through  WSFS'  retail  banking  system.  The Wealth  Management
Services  Division  provides  wealth  management  and personal trust services to
customers in the Company's primary market area.

                                      -84-



         An operating  segment is a component of an  enterprise  that engages in
business  activities from which it may earn revenues and incur  expenses,  whose
operating  results are regularly  reviewed by the  enterprise's  chief operating
decision makers to make decisions about resources to be allocated to the segment
and assess its  performance,  and for which  discrete  financial  information is
available.  We evaluate  performance based on pretax ordinary income relative to
resources used, and allocate  resources  based on these results.  The accounting
policies  applicable to our segments are those that apply to our  preparation of
the accompanying Consolidated Financial Statements.  Segment information for the
years ended December 31, 2007, 2006 and 2005 is shown below.




For the Year Ended December 31, 2007:          WSFS             CashConnect      All Others (1)           Total
- ------------------------------------------------------------------------------------------------------------------
(In Thousands)
                                                                                          
External customer revenues:
   Interest income                        $  189,477          $        -          $        -           $  189,477
   Noninterest income                         27,991              16,584               3,591               48,166
- ------------------------------------------------------------------------------------------------------------------
Total external customer revenues             217,468              16,584               3,591              237,643
- ------------------------------------------------------------------------------------------------------------------

Intersegment revenues:
   Interest income                             8,684                   -                   -                8,684
   Noninterest income                          2,544                 675                   -                3,219
- ------------------------------------------------------------------------------------------------------------------
Total intersegment revenues                   11,228                 675                   -               11,903
- ------------------------------------------------------------------------------------------------------------------

Total revenue                                228,696              17,259               3,591              249,546
- ------------------------------------------------------------------------------------------------------------------

External customer expenses:
   Interest expense                          107,468                   -                   -              107,468
   Noninterest expenses                       72,657               4,683               4,691               82,031
   Provision for loan loss                     5,021                   -                   -                5,021
- ------------------------------------------------------------------------------------------------------------------
Total external customer expenses             185,146               4,683               4,691              194,520

Intersegment expenses:
   Interest expense                                -               8,684                   -                8,684
   Noninterest expenses                          675               1,076               1,468                3,219
- ------------------------------------------------------------------------------------------------------------------
Total intersegment expenses                      675               9,760               1,468               11,903
- ------------------------------------------------------------------------------------------------------------------

Total expenses                               185,821              14,443               6,159              206,423
- ------------------------------------------------------------------------------------------------------------------

Income (loss) before taxes                $   42,875          $    2,816          $   (2,568)              43,123

Provision for income taxes                                                                                 13,474
- ------------------------------------------------------------------------------------------------------------------

Consolidated net income                                                                                $   29,649
- ------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents                 $   83,650          $  182,523          $    1,364           $  267,537
Other segment assets                       2,913,328              17,314               2,009            2,932,651
- ------------------------------------------------------------------------------------------------------------------
Total segment assets                      $2,996,978          $  199,837          $    3,373           $3,200,188
- ------------------------------------------------------------------------------------------------------------------

Capital expenditures                      $   8,134           $      194          $        5           $   8,333


(1)  Includes  Montchanin Capital  Management,  Inc., WSFS Investment Group Inc.
     and the Wealth Management Services Division.

                                      -85-






For the Year Ended December 31, 2006:                          WSFS           CashConnect        All Others (1)           Total
- ---------------------------------------------------------------------------------------------------------------------------------
(In Thousands)
                                                                                                          
External customer revenues:
   Interest income                                        $  177,177          $        -          $        -           $  177,177
   Noninterest income                                         21,472              15,644               3,189               40,305
- ---------------------------------------------------------------------------------------------------------------------------------
Total external customer revenues                             198,649              15,644               3,189              217,482
- ---------------------------------------------------------------------------------------------------------------------------------

Intersegment revenues:
   Interest income                                             8,071                   -                   -                8,071
   Noninterest income                                          1,704                 685                   -                2,389
- ---------------------------------------------------------------------------------------------------------------------------------
Total intersegment revenues                                    9,775                 685                   -               10,460
- ---------------------------------------------------------------------------------------------------------------------------------

Total revenue                                                208,424              16,329               3,189              227,942
- ---------------------------------------------------------------------------------------------------------------------------------

External customer expenses:
   Interest expense                                           99,278                   -                   -               99,278
   Noninterest expenses                                       61,521               4,222               3,571               69,314
   Provision for loan loss                                     2,738                   -                   -                2,738
- ---------------------------------------------------------------------------------------------------------------------------------
Total external customer expenses                             163,537               4,222               3,571              171,330
- ---------------------------------------------------------------------------------------------------------------------------------

Intersegment expenses:
   Interest expense                                                -               8,071                   -                8,071
   Noninterest expenses                                          685                 688               1,016                2,389
- ---------------------------------------------------------------------------------------------------------------------------------
Total intersegment expenses                                      685               8,759               1,016               10,460
- ---------------------------------------------------------------------------------------------------------------------------------

Total expenses                                               164,222              12,981               4,587              181,790
- ---------------------------------------------------------------------------------------------------------------------------------

Income (loss) before taxes and minority interest          $   44,202          $    3,348          $   (1,398)              46,152

Provision for income taxes                                                                                                 15,660
Minority interest                                                                                                              51
- ---------------------------------------------------------------------------------------------------------------------------------
Consolidated net income                                                                                                $   30,441
- ---------------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents                                 $   74,905          $  166,092          $      827           $  241,824
Other segment assets                                       2,738,531              15,228               1,813            2,755,572
- ---------------------------------------------------------------------------------------------------------------------------------
Total segment assets                                      $2,813,436          $  181,320          $    2,640           $2,997,396
- ---------------------------------------------------------------------------------------------------------------------------------

Capital expenditures                                      $    9,790          $      382          $       20           $   10,192


(1)  Includes  Montchanin Capital  Management,  Inc., WSFS Investment Group Inc.
     and the Wealth Management Services Division.

                                      -86-





For the Year Ended December 31, 2005:                   WSFS            CashConnect       All Others (1)             Total
- ----------------------------------------------------------------------------------------------------------------------------
(In Thousands)
                                                                                                   
External customer revenues:
   Interest income                                 $   136,022         $         -         $         -          $   136,022
   Noninterest income                                   18,544              12,539               3,570               34,653
- ----------------------------------------------------------------------------------------------------------------------------
Total external customer revenues                       154,566              12,539               3,570              170,675
- ----------------------------------------------------------------------------------------------------------------------------

Intersegment revenues:
   Interest income                                       4,729                   -                   -                4,729
   Noninterest income                                    1,671                 682                   -                2,353
- ----------------------------------------------------------------------------------------------------------------------------
Total intersegment revenues                              6,400                 682                   -                7,082
- ----------------------------------------------------------------------------------------------------------------------------

Total revenue                                          160,966              13,221               3,570              177,757
- ----------------------------------------------------------------------------------------------------------------------------

External customer expenses:
   Interest expense                                     62,380                   -                   -               62,380
   Noninterest expenses                                 55,351               3,956               3,570               62,877
   Provision for loan loss                               2,582                   -                   -                2,582
- ----------------------------------------------------------------------------------------------------------------------------
Total external customer expenses                       120,313               3,956               3,570              127,839
- ----------------------------------------------------------------------------------------------------------------------------

Intersegment expenses:
   Interest expense                                          -               4,729                   -                4,729
   Noninterest expenses                                    682                 778                 893                2,353
- ----------------------------------------------------------------------------------------------------------------------------
Total intersegment expenses                                682               5,507                 893                7,082
- ----------------------------------------------------------------------------------------------------------------------------

Total expenses                                         120,995               9,463               4,463              134,921
- ----------------------------------------------------------------------------------------------------------------------------

Income (loss) before taxes and minority interest   $    39,971         $     3,758         $      (893)              42,836

Provision for income taxes                                                                                           14,847
Minority interest                                                                                                       133
- ----------------------------------------------------------------------------------------------------------------------------
Consolidated net income                                                                                         $    27,856
- ----------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents                          $    59,109         $   174,527         $       315          $   233,951
Other segment assets                                 2,604,001               7,153               1,647            2,612,801
- ----------------------------------------------------------------------------------------------------------------------------
Total segment assets                               $ 2,663,110         $   181,680         $     1,962          $ 2,846,752
- ----------------------------------------------------------------------------------------------------------------------------

Capital expenditures                               $    15,656         $       811         $        59          $    16,526


(1)  Includes  Montchanin Capital  Management,  Inc., WSFS Investment Group Inc.
     and the Wealth Management Services Division.

                                      -87-






QUARTERLY FINANCIAL SUMMARY  (Unaudited)

Three months ended                         12/31/07      09/30/07    06/30/07  03/31/07   12/31/06   09/30/06  06/30/06   03/31/06
- --------------------------------------- -------------- ------------ --------- ---------- ---------- --------- ---------- ---------
(In Thousands, Except Per Share Data)
                                                                                                
Interest income                               $48,143      $47,579   $46,667    $47,088    $46,701   $46,131    $43,868   $40,477
Interest expense                               27,433       27,480    26,527     26,028     26,611    27,011     24,482    21,174
- --------------------------------------- -------------- ------------ --------- ---------- ---------- --------- ---------- ---------
Net interest income                            20,710       20,099    20,140     21,060     20,090    19,120     19,386    19,303
Provision for loan losses                       2,376        1,001     1,273        371      1,036       319        695       688
- --------------------------------------- -------------- ------------ --------- ---------- ---------- --------- ---------- ---------
Net interest income after
    provision for loan losses                  18,334       19,098    18,867     20,689     19,054    18,801     18,691    18,615
Noninterest income                             13,008       12,809    11,616     10,733     11,078    10,309      9,880     9,038
Noninterest expenses                           22,313       21,333    19,027     19,358     18,553    17,587     16,932    16,242
- --------------------------------------- -------------- ------------ --------- ---------- ---------- --------- ---------- ---------
Income before minority interest
    and taxes                                   9,029       10,574    11,456     12,064     11,579    11,523     11,639    11,411
Less minority interest                              -            -         -          -         11         9         15        16
- --------------------------------------- -------------- ------------ --------- ---------- ---------- --------- ---------- ---------
Income before taxes                             9,029       10,574    11,456     12,064     11,568    11,514     11,624    11,395
Income tax provision                            1,533        3,431     4,227      4,283      3,969     3,511      4,126     4,054
- --------------------------------------- -------------- ------------ --------- ---------- ---------- --------- ---------- ---------
Net Income                                    $ 7,496      $ 7,143   $ 7,229    $ 7,781    $ 7,599   $ 8,003    $ 7,498   $ 7,341
- --------------------------------------- -------------- ------------ --------- ---------- ---------- --------- ---------- ---------

Earnings per share:
Basic                                            1.21         1.14      1.15       1.19       1.14      1.20       1.13      1.11
Diluted                                          1.18         1.11      1.11       1.15       1.10      1.16       1.09      1.06



                                      -88-


ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
- --------------------------------------------------------------------------------
          FINANCIAL DISCLOSURE
          --------------------

           There are no matters required to be disclosed under this item.

ITEM 9A. CONTROLS AND PROCEDURES
- --------------------------------

         Disclosure Controls and Procedures

         Our management evaluated, with the participation of our Chief Executive
Officer  and  Chief  Financial  Officer,  the  effectiveness  of our  disclosure
controls  and  procedures  as of the end of the period  covered by this  report.
Based on that  evaluation,  the Chief  Executive  Officer  and  Chief  Financial
Officer concluded that our disclosure controls and procedures are effective.

Internal Control Over Financial Reporting

Management's Report on Internal Control Over Financial Reporting

To Our Stockholders:

         Management of the  Corporation  is  responsible  for  establishing  and
maintaining  adequate  internal  control over financial  reporting as defined in
Rules  13a-15(f)  under the Securities  Exchange Act of 1934. The  Corporation's
internal  control over  financial  reporting  is designed to provide  reasonable
assurance to the Corporation's  management and board of directors  regarding the
preparation and fair presentation of published financial statements.

         Management  assessed the  effectiveness of the  Corporation's  internal
control  over  financial  reporting  as of  December  31,  2007.  In making this
assessment,  management  used  the  criteria  set  forth  by  the  Committee  of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control -
Integrated Framework.  Based on this assessment,  management has concluded that,
as of December 31,  2007,  the  Corporation's  internal  control over  financial
reporting is effective based on those criteria.

         KPMG LLP, an independent registered public accounting firm, has audited
the  Company's  consolidated  financial  statements as of and for the year ended
December 31, 2007 and the  effectiveness of the Company's  internal control over
financial  reporting as of December 31, 2007, as stated in their reports,  which
are included herein.





/s/ Mark A. Turner                              /s/ Stephen A. Fowle
- -------------------------------------           --------------------------------
Mark A. Turner                                  Stephen A. Fowle
President and Chief Executive Officer           Executive Vice President and
                                                Chief Financial Officer

                                      -89-



Report of Independent Registered Public
Accounting Firm

The Board of Directors and Stockholders
WSFS Financial Corporation:

We have audited the internal control over financial  reporting of WSFS Financial
Corporation  and  subsidiaries  (the Company) as of December 31, 2007,  based on
criteria  established in Internal  Control--Integrated  Framework  issued by the
Committee of Sponsoring  Organizations of the Treadway  Commission  (COSO).  The
Company's  management is responsible for maintaining  effective internal control
over financial reporting and for its assessment of the effectiveness of internal
control over  financial  reporting,  included in the  accompanying  Management's
Report on Internal Control Over Financial  Reporting.  Our  responsibility is to
express an opinion on the Company's  internal  control over financial  reporting
based on our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain  reasonable  assurance  about whether  effective
internal  control  over  financial  reporting  was  maintained  in all  material
respects. Our audit included obtaining an understanding of internal control over
financial  reporting,  assessing the risk that a material  weakness exists,  and
testing  and  evaluating  the design and  operating  effectiveness  of  internal
control  based on the assessed  risk.  Our audit also included  performing  such
other  procedures as we considered  necessary in the  circumstances.  We believe
that our audit provides a reasonable basis for our opinion.

A company's  internal control over financial  reporting is a process designed to
provide reasonable  assurance  regarding the reliability of financial  reporting
and the preparation of financial  statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial  reporting  includes those policies and procedures that (1) pertain to
the  maintenance  of records that, in reasonable  detail,  accurately and fairly
reflect the  transactions  and  dispositions  of the assets of the company;  (2)
provide  reasonable  assurance  that  transactions  are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting  principles,  and that receipts and  expenditures  of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of  unauthorized  acquisition,  use, or  disposition  of the company's
assets that could have a material effect on the financial statements.

Because of its inherent  limitations,  internal control over financial reporting
may not prevent or detect misstatements.  Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate  because of changes in  conditions,  or that the degree of compliance
with the policies or procedures may deteriorate.

In our opinion, WSFS Financial Corporation and subsidiaries  maintained,  in all
material  respects,  effective  internal control over financial  reporting as of
December  31,  2007,  based  on  criteria  established  in  Internal  Control  -
Integrated Framework issued by the Committee of Sponsoring  Organizations of the
Treadway Commission (COSO).

We also have  audited,  in accordance  with the standards of the Public  Company
Accounting  Oversight  Board  (United  States),  the  consolidated  statement of
condition  of the  Company as of  December  31,  2007 and 2006,  and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for each of the years in the  three-year  period ended  December 31, 2007,
and our report dated March 17, 2008  expressed an  unqualified  opinion on those
consolidated financial statements.

/s/ KPMG LLP
- --------------------------
Philadelphia, Pennsylvania
March 17, 2008

                                      -90-



         During the quarter  ended  December  31,  2007,  there was no change in
internal control over financial  reporting that has materially  affected,  or is
reasonably  likely to materially  affect,  our internal  control over  financial
reporting.


ITEM 9B. OTHER INFORMATION
- --------------------------

         There are no matters required to be disclosed under this item.




                                    PART III


ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
- ---------------------------------------------------------------

     The  Information   under  "Section  16a  Beneficial   Ownership   Reporting
Compliance"  and  "Proposal  1 -  Election  of  Directors"  in the  Registrant's
definitive proxy statement for the  registrant's  Annual Meeting of Stockholders
to be held on April 24, 2008 (the "Proxy  Statement") is incorporated  into this
item by reference.

     We have  adopted a Code of Ethics that applies to our  principal  executive
officer, principal financial officer,  principal accounting officer,  controller
or persons performing similar functions.  A copy of the Code of Ethics is posted
on our website at www.wsfsbank.com.


ITEM 11.  EXECUTIVE COMPENSATION
- --------------------------------

     The  information  under  "Proposal I - Election of  Directors" in the Proxy
Statement is incorporated into this item by reference.


ITEM 12.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
- --------------------------------------------------------------------------------
          RELATED SHAREHOLDER MATTERS
          ---------------------------

     (a)  Security Ownership of Certain Beneficial Owners

          Information  required by this item is incorporated herein by reference
          to the section  captioned  "Voting  Securities  and Principal  Holders
          Thereof" of the Proxy Statement

     (b)  Security Ownership of Management

          Information  required by this item is incorporated herein by reference
          to the section  captioned  "Proposal  1 Election of  Directors - Stock
          Ownership of Management" of the Proxy Statement

     (c)  We know of no arrangements,  including any pledge by any person of our
          securities,  the operation of which may at a subsequent date result in
          a change in control of the registrant.

     (d)  Securities Authorized for Issuance Under Equity Compensation Plans

                                      -91-



Shown below is information as of December 31, 2007 with respect to  compensation
plans under  which  equity  securities  of the  Registrant  are  authorized  for
issuance.

                      Equity Compensation Plan Information



                                         (a)                      (b)            (c) Number of securities
                                  Number of Securities      Weighted-Average         remaining available for
                                   to be issued upon        exercise price of        future issuance under
                                exercise of outstanding       outstanding           equity compensation plans
                                   Options and                Options and             (excluding securities
                                 Phantom Stock Awards     Phantom Stock Awards       reflected in column (a)
                                 --------------------     --------------------       -----------------------
                                                                                     
Equity compensation plans
  approved by stockholders (1)         722,582                  $ 43.14                       380,121

Equity compensation plans
 not approved by stockholders              n/a                      n/a                           n/a
                                      --------                  -------                      --------

    TOTAL                              722,582                 $ 43.143                        80,121
                                       =======                 ========                        ======


(1)  Plans  approved by  stockholders  include the 1997 Stock  Option  Plan,  as
     amended and the 2005 Incentive Plan.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------------------------------------------------------

     The information under "Business  Relationships and Related Transactions" in
the Proxy Statement is incorporated into this item by reference.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
- -----------------------------------------------

         The information  under  "Independent  Public  Accountants" in the Proxy
Statement is incorporated into this item by reference.


ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
- ---------------------------------------------------

    (a) Listed below are all financial  statements and exhibits filed as part of
    this report, and are incorporated by reference.

         1.  The   consolidated   statements  of  Condition  of  WSFS  Financial
             Corporation  and  subsidiary as of December 31, 2007 and 2006,  and
             the  related   consolidated   statements  of  income,   changes  in
             stockholders'  equity  and cash  flows for each of the years in the
             three year  period  ended  December  31,  2007,  together  with the
             related  notes and the  independent  auditors'  report of KPMG LLP,
             independent registered public accounting firm.

         2. Schedules omitted as they are not applicable.

                                      -92-



The following  exhibits are  incorporated by reference herein or annexed to this
Annual Report:




Exhibit
Number                            Description of Document
- ------                            -----------------------

3.1       Registrant's Certificate of Incorporation,  as amended is incorporated
          herein by reference to Exhibit 3.1 of the  Registrant's  Annual Report
          on Form 10-K for the year ended December 31, 1994.

3.2       Amended   and   Restated   Bylaws  of  WSFS   Financial   Corporation,
          incorporated  herein by reference  to Exhibit 3.2 of the  Registrant's
          Annual Report on Form 10-K for the year ended December 31, 2003.

10.1      WSFS Financial Corporation,  1994 Short Term Management Incentive Plan
          Summary  Plan  Description  is  incorporated  herein by  reference  to
          Exhibit 10.7 of the  Registrant's  Annual  Report on Form 10-K for the
          year ended December 31, 1994.

10.2      Amended and Restated Wilmington Savings Fund Society,  Federal Savings
          Bank 1997 Stock Option Plan is incorporated herein by reference to the
          Registrant's  Registration  Statement on Form S-8 (File No. 333-26099)
          filed with the Commission on April 29, 1997.

10.3      2000 Stock Option and Temporary  Severance  Agreement among Wilmington
          Savings Fund Society, Federal Savings Bank, WSFS Financial Corporation
          and Marvin N. Schoenhals on February 24, 2000 is  incorporated  herein
          by reference to Exhibit 10.4 of the Registrant's Annual Report on Form
          10-K for the year ended December 31, 2000.

10.4      Severance  Policy  among  Wilmington  Savings  Fund  Society,  Federal
          Savings Bank and certain  Executives  dated March 13, 2001, as amended
          is   incorporated   herein  by   reference  to  Exhibit  10.5  of  the
          Registrant's  Annual  Report on Form 10-K for the year ended  December
          31, 2000.

10.5      WSFS  Financial  Corporation's  2005  Incentive  Plan is  incorporated
          herein by reference to appendix A of the Registrant's Definitive Proxy
          Statement   on  Schedule   14-A  for  the  2005   Annual   Meeting  of
          Stockholders.

21        Subsidiaries of Registrant.

23        Consent of KPMG LLP

31        Certification  pursuant to Rule 13a-14 of the Exchange Act

                                      -93-



32        Certification  pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002

Exhibits 10.1 through 10.4.1 represent management contracts or compensatory plan
arrangements.

                                      -94-



SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                        WSFS FINANCIAL CORPORATION


Date:  March 17, 2008            BY:   /s/ Mark A. Turner
                                       -----------------------------------------
                                       Mark A. Turner
                                      President and Chief Executive Officer

 Pursuant to the  requirements  of the  Securities  Exchange  Act of 1934,  this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.


Date:   March 17, 2008           BY:   /s/ Marvin N. Schoenhals
                                       -----------------------------------------
                                       Marvin N. Schoenhals
                                       Chairman


Date:   March 17, 2008           BY:   /s/ Mark A. Turner
                                       -----------------------------------------
                                      Mark A. Turner
                                      President and Chief Executive Officer


Date:   March 17, 2008           BY:    /s/ Charles G. Cheleden
                                       -----------------------------------------
                                      Charles G. Cheleden
                                      Vice Chairman and Lead Director


Date:   March __, 2008           BY:
                                       -----------------------------------------
                                       John F. Downey
                                       Director


Date:   March 17, 2008           BY:   /s/ Linda C. Drake
                                       -----------------------------------------
                                       Linda C. Drake
                                       Director

                                      -95-





Date:   March 17, 2008           BY:   /s/ David E. Hollowell
                                       -----------------------------------------
                                       David E. Hollowell
                                       Director


Date:   March 17, 2008          BY:    /s/ Joseph R. Julian
                                       -----------------------------------------
                                       Joseph R. Julian
                                       Director


Date:   March 17, 2008          BY:    /s/Dennis E. Klima
                                       -----------------------------------------
                                       Dennis E. Klima
                                       Director


Date:   March 17, 2008          BY:    /s/ Calvert A. Morgan, Jr.
                                       -----------------------------------------
                                       Calvert A. Morgan, Jr.
                                       Director


Date:   March 17, 2008          BY:    /s/ Thomas P. Preston
                                       -----------------------------------------
                                       Thomas P. Preston
                                       Director


Date:   March 17, 2008          BY:    /s/ Scott E. Reed
                                       -----------------------------------------
                                       Scott E. Reed
                                       Director


Date:   March 17, 2008          BY:    /s/ Claibourne D. Smith
                                       -----------------------------------------
                                       Claibourne D. Smith
                                       Director


Date:   March 17, 2008         BY:     /s/ Stephen A. Fowle
                                       -----------------------------------------
                                       Stephen A. Fowle
                                       Executive Vice President and
                                       Chief Financial Officer


Date:   March 17, 2008         BY:     /s/ Robert F. Mack
                                       -----------------------------------------
                                       Robert F. Mack
                                       Senior Vice President and Controller

                                      -96-