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, 2005

                                       OR

(X)  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)

838 Market Street, 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: None

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

                          Common Stock, par value $.01
                                (Title of Class)

     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 an  accelerated  filer (as
defined in Exchange Act Rule 12b-2). YES (X) NO ( )

     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 the Nasdaq National Marketsm as of June 30, 2005 was $242,244,000. For
purposes  of this  calculation  only,  affiliates  are  deemed to be  directors,
executive  officers and beneficial  owners of greater than 5% of the outstanding
shares.

     As of March 10, 2006, there were issued and outstanding 6,595,411 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 27, 2006 are  incorporated by reference in Part
III hereof.  Portions of the 2005 Annual Report to Shareholders are incorporated
by reference in Part II.



<PAGE>

                           WSFS FINANCIAL CORPORATION
                                TABLE OF CONTENTS


                                     Part I

<TABLE>
<CAPTION>
                                                                                                                      Page
                                                                                                                      ----

<S>            <C>                                                                                                  <C>

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


Item 1A.          Risk Factors  ..........................................................................             19


Item 1B.          Unresolved Staff Comments  .............................................................             20


Item 2.           Properties  ............................................................................             21


Item 3.           Legal Proceedings.......................................................................             24


Item 4.           Submission of Matters to a Vote of Security Holders.....................................             24


                                     Part II


Item 5.           Market for Registrant's Common Equity and Related Stockholder  Matters..................             25


Item 6.           Selected Financial Data.................................................................             25


Item 7.           Management's Discussion and Analysis of Financial Condition and
                      Results of Operations...............................................................             26


Item 7A.          Quantitative and Qualitative Disclosures About Market Risk..............................             26


Item 8.           Financial Statements and Supplementary Data.............................................             26


Item 9.           Changes in and Disagreements with Accountants on Accounting and
                      Financial Disclosure................................................................             26


Item 9A.          Controls and Procedures.................................................................             26


Item 9B.          Other Information.......................................................................             26


                                    Part III


Item 10.          Directors and Executive Officers of the Registrant......................................             26


Item 11.          Executive Compensation..................................................................             26


Item 12.          Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
                    Matters...............................................................................             26


Item 13.          Certain Relationships and Related Transactions..........................................             27


Item 14.          Principal Accountant Fees and Services..................................................             27


Item 15.          Exhibits and Financial Statement Schedules..............................................             27

                  Signatures..............................................................................             29

</TABLE>

                                      -2-

<PAGE>


                                     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" or "Corporation").  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" contained in its
  financial  statements.  Management  has used  "forward-looking  statements" to
  describe  the  future  plans  and  strategies  including  expectations  of the
  Corporation's  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.  WSFS Financial  Corporation  does not undertake and
  specifically  disclaims 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

GENERAL

         WSFS Financial Corporation (the "Company" or "Corporation") is a thrift
holding company headquartered in Wilmington,  Delaware. Substantially all of the
Corporation's  assets  are  held  by its  subsidiary,  Wilmington  Savings  Fund
Society,  FSB  (Bank  or  WSFS).  Founded  in  1832,  WSFS is one of the  oldest
financial  institutions  in the country.  As a federal  savings bank,  which was
formerly  chartered  as  a  state  mutual  savings  bank,  WSFS  enjoys  broader
investment  powers than most other financial  institutions.  WSFS has served the
residents  of the  Delaware  Valley for 174 years.  WSFS is the  largest  thrift
institution   headquartered  in  Delaware  and  the  fourth  largest   financial
institution in the state on the basis of total deposits  traditionally  garnered
in-market.  The Corporation's  primary market area is the mid-Atlantic region of
the United  States which is  characterized  by a diversified  manufacturing  and
service economy.  The long-term business strategy of the Corporation is to serve
small and mid-size businesses through loans, deposits,  investments, and related
financial services,  and to gather retail core deposits.  The strategic focus is
to exceed  customer  expectations,  deliver  stellar  service and build customer
advocacy through highly trained, relationship oriented, friendly, knowledgeable,
and empowered Associates.

         WSFS provides  residential and commercial  real estate,  commercial and
consumer  lending  services,  as well as  retail  deposit  and  cash  management
services.  WSFS also  offers a variety  of wealth  management  services  and has
committed to expanding  its  operations  in this area.  Lending  activities  are
funded  primarily  with retail  deposits  and  borrowings.  The Federal  Deposit
Insurance  Corporation  (FDIC) insures  deposits to their legal  maximum.  As of
December 31, 2005, WSFS serves its customers  primarily from its main office, 24
retail banking offices,  loan production  offices and operations centers located
in  Delaware  and  southeastern  Pennsylvania.   The  Corporation's  website  is
www.wsfsbank.com.  The  Corporation  posts  its  Annual  Report  on  Form  10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those
reports  pursuant to Section  13(a) of the  Exchange  Act and other  information
relating to the Company on this website.

         The Corporation has two consolidated subsidiaries,  WSFS and Montchanin
Capital   Management,   Inc.   (Montchanin).   The  Corporation   also  has  one
unconsolidated  affiliate,  WSFS  Capital  Trust  III.  The  Corporation  has no
unconsolidated   subsidiaries  or  off-balance   sheet   entities.   Fully-owned
subsidiaries of WSFS include WSFS Investment 

                                      -3-


<PAGE>

Group, Inc., which markets various third-party insurance products and securities
through WSFS' retail banking system; and WSFS Reit, Inc., which holds qualifying
real estate assets and may be used in the future to raise capital.

         In  2000,  the  Board  of  Directors  approved  management's  plans  to
discontinue  the operations of WSFS Credit  Corporation  (WCC).  At December 31,
2000 WCC had 7,300 lease  contracts and 2,700 loan  contracts,  compared to zero
lease  contracts  and 31 loan  contracts  at December  31,  2005.  WCC no longer
accepts new applications but will continue to service existing loans until their
maturity.

         In the past, WSFS had two non-wholly  owned  subsidiaries,  CustomerOne
Financial Network,  Inc. (C1FN) and Wilmington  Finance,  Inc. (WF). C1FN, a 21%
owned  subsidiary  engaged  in  Internet  and  branchless  banking,  was sold in
November 2002. WF, a majority owned subsidiary engaged in sub-prime  residential
mortgage  banking was sold in January  2003.  Both  subsidiaries  are  therefore
classified  as  businesses  held-for-sale  in  the  Financial  Statements.  More
information is provided in the Business  Held-For-Sale  section of  Management's
Discussion and Analysis  (MD&A),  and Note 3 to the Financial  Statements of the
Corporation's  2005  Annual  Report  to  Shareholders  (Annual  Report).   These
divestitures  were  consistent with the Company's  strategic  direction to focus
resources  and  capital  on WSFS'  core  community  bank  network  in and around
Delaware.

         Montchanin has one consolidated  non-wholly owned  subsidiary,  Cypress
Capital Management,  LLC (Cypress). As of December 31, 2005 Montchanin owned 80%
of Cypress.  In January 2006,  Montchanin  increased its ownership in Cypress to
90%.  Cypress is a  Wilmington  based  investment  advisory  firm  serving  high
net-worth individuals and institutions.

COMPETITION

         WSFS is the second largest independent full-service banking institution
headquartered  and  operating in  Delaware.  It attracts  retail and  commercial
deposits  primarily  through its system of 24 banking  offices at  December  31,
2005.  Nineteen of these banking offices were located in northern Delaware's New
Castle County, WSFS' primary market. In addition to its business deposits, these
banking   offices   maintain   approximately   191,000  total  deposit   account
relationships with  approximately  80,000 total households in New Castle County.
Two  banking  offices  were in the state  capital,  Dover,  located  in  central
Delaware's  Kent County and one of these banking offices was located in southern
Delaware's Sussex County. Two other banking offices were located in southeastern
Pennsylvania.  In addition to its banking offices, WSFS also attracts commercial
loans  through its loan  production  offices.  WSFS also has 231 ATMs located in
Delaware.

         The  competition for deposit and loan products comes from other insured
financial  institutions such as commercial banks, thrift institutions and credit
unions in the  Registrant's  market area.  Deposit  competition  also includes a
number of insurance  products sold by local agents and investment  products such
as mutual funds and other securities sold by local and regional brokers.

SUBSIDIARIES

         The Corporation has two consolidated subsidiaries, WSFS and Montchanin.
The Corporation also has one unconsolidated  affiliate,  WSFS Capital Trust III.
The  Corporation  has  no  unconsolidated   subsidiaries  or  off-balance  sheet
entities.  WSFS Capital  Trust III was formed in 2005 to issue $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  London InterBank Offered
Rate (LIBOR).  The proceeds from this issue 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. In
1998, the Corporation purchased a $50.0 million,  ten-year interest cap in order
to  limit  its  exposure  on the  $51.5  million  of  variable  Trust  preferred
Securities  issued in 1998.  This  derivative  instrument  caps the  three-month
LIBOR, the base rate of the trust preferred borrowings at 6.00%.

         At  December  31,  2005,  WSFS  had  three   wholly-owned,   first-tier
subsidiaries WSFS Investment Group, WSFS Reit, Inc and WCC.

                                      -4-


<PAGE>
         WSFS Investment Group, Inc. was formed in 1989. This subsidiary markets
various third-party  investment and insurance  products,  such as single-premium
annuities,  whole life policies and  securities  primarily  through WSFS' retail
banking system. WSFS Reit, Inc. is a real estate investment trust formed in 2002
to hold  qualifying  real  estate  assets and may be used in the future to raise
capital.  WCC is engaged  primarily in indirect motor vehicle leasing.  In 2000,
the Corporation  approved plans to discontinue the operations of WCC. WCC, which
had zero lease  contracts and 31 loan  contracts at December 31, 2005, no longer
accepts new applications but will continue to service existing loans until their
maturity. More information is provided in the Discontinued Operations section of
the MD&A and Note 2 to the Financial Statements of the Corporation's 2005 Annual
Report.

         Montchanin was formed in late 2003 to provide asset management services
in the  Corporation's  primary  market area. As of December 31, 2005  Montchanin
owned 80% of Cypress.  In January  2006,  Montchanin  increased its ownership in
Cypress to 90%. Cypress is a Wilmington based investment advisory firm servicing
high net-worth individuals and institutions.

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 MD&A.

INVESTMENT ACTIVITIES

         The Corporation's  short-term  investment portfolio is intended to keep
its  funds fully employed at the maximum  after-tax  return,  while  maintaining
acceptable  credit, market  and  interest-rate   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:


<TABLE>
<CAPTION>
                                                                                 December 31,
                                                --------------------------------------------------------------------------
                                                          2005                      2004                     2003
                                                ---------------------      ----------------------     --------------------
                                                              Percent                    Percent                   Percent
                                                                of                         of                         of
                                                   Amount     Assets         Amount      Assets         Amount      Assets
                                                   ------     ------         ------      ------         ------      ------
                                                                           (Dollars In Thousands)
<S>                                              <C>           <C>       <C>              <C>        <C>             <C> 
Held-to-Maturity:
----------------

Corporate bonds.............................     $      -         -%        $   310          -%       $    310          -%
State and political subdivisions ...........        4,806       0.2           7,457        0.3          10,100        0.5
                                                  -------       ---       ---------        ---        --------        --- 
                                                    4,806       0.2           7,767        0.4          10,410        0.5
                                                  -------       ---       ---------        ---        --------        --- 
Available-for-Sale:
------------------

Reverse Mortgages...........................          785         -            (109)         -             193          -
State and political subdivisions............          975         -               -          -               -          -
U.S. Government and agencies................       51,702       1.8          89,718        3.6         105,885        4.8
                                                  -------       ---       ---------        ---        --------        --- 
                                                   53,462       1.8          89,609        3.6         106,078        4.8
                                                  -------       ---       ---------        ---        --------        --- 
Short-term investments:
----------------------

Interest-bearing deposits in other banks (1)          148         -             531          -           1,095          -  
                                                  -------       ---       ---------        ---        --------        --- 
                                                  $58,416       2.0%      $  97,907        4.0%       $117,583        5.3%
                                                  =======       ===       =========        ===        ========        === 
</TABLE>

(1)  Interest-bearing  deposits in other banks do not  include  deposits  with a
     maturity greater than one year.

         Proceeds  from  the  sale  of  investment   securities   classified  as
available-for-sale  during  2005 were  $61.1  million,  with a loss of  $609,000
realized on these sales.  Municipal bonds totaling  $180,000 and corporate bonds
totaling  $251,553 were called by the issuers with a gain of $4,000  realized on
these calls.  Proceeds  from the sale of  investments  during 2004 and 2003 were
$25.0  million and $21.2  million  respectively.  There was a net gain of $1,000
realized on sales in 2004 and 

                                      -5-

<PAGE>
$200,000  loss  realized  on sales in 2003.  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.

         The  following  table  sets  forth the terms to  maturity  and  related
weighted average yields of investment  securities and short-term  investments at
December  31, 2005.  Substantially  all of the related  interest  and  dividends
represent taxable income.


<TABLE>
<CAPTION>
                                                                                    At December 31, 2005
                                                                                    --------------------
                                                                                                 Weighted
                                                                                                 Average
                                                                                      Amount      Yield (1)
                                                                                      ------      ---------
                                                                                   (Dollars in Thousands)
<S>                                                                                 <C>           <C> 
Held-to-Maturity:
-----------------

State and political subdivisions (2):
  After one but within five years...............................................     $ 3,299       7.39
  After ten years ..............................................................       1,508       5.26
                                                                                     -------     

Total debt securities, held-to-maturity ........................................       4,807       6.72
                                                                                     -------     

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

Reverse Mortgages (3):
  Within one year...............................................................     $   785          -
                                                                                     -------     

                                                                                         785          -
                                                                                     -------     

State and political subdivisions (2):
  After one but within five years...............................................     $   635       3.83
  After five but within ten years ..............................................         340       4.20
                                                                                     -------     

                                                                                         975       3.96
                                                                                     -------     

U.S. Government and agencies:
  Within one year...............................................................     $12,929       3.33
  After one but within five years ..............................................      38,772       2.77
                                                                                     -------     

                                                                                      51,701       2.91
                                                                                     -------     

Total debt securities, available-for-sale ......................................      53,461       2.89
                                                                                     -------     

Total debt securities ..........................................................      58,268       3.20
                                                                                     -------     

Short-term investments:

  Interest-bearing deposits in other banks .....................................         148       4.84
                                                                                     -------     

Total short-term investments ...................................................         148       4.84
                                                                                     -------     

                                                                                     $58,416       3.21%
                                                                                     =======     
</TABLE>

(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.  The Corporation has
     included reverse mortgages in maturities within one year.

         In addition to the  foregoing  investment  securities,  the Company has
maintained an investment portfolio of mortgage-backed securities,  $11.9 million
of which is  classified  as  "trading."  At December  31,  2005  mortgage-backed
securities  with a par value of $369.0  million were pledged as  collateral  for
retail customer repurchase agreements,

                                      -6-

<PAGE>

municipal  deposits  and  Federal  Home Loan  Bank  advances.  Accrued  interest
receivable for  mortgage-backed  securities was $2.4 million and $1.9 million at
December 31, 2005 and 2004,  respectively.  No  mortgage-backed  securities were
sold during 2005.

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


<TABLE>
<CAPTION>
                                                                               December 31,
                                               --------------------------------------------------------------------------
                                                        2005                       2004                    2003
                                               ----------------------     --------------------       --------------------
                                                                         (Dollars in Thousands)
                                                 Amount        Rate         Amount      Rate         Amount        Rate
                                                 ------        ----         ------      ----         ------        ----
<S>                                            <C>          <C>          <C>          <C>         <C>             <C>  
Held-to-Maturity:
----------------
Collateralized mortgage obligations ........    $      -          -%       $      -         -%       $ 1,785       6.32%
FHLMC.......................................           -          -               4      6.06             29       8.13
                                                --------       ----        --------      ----       --------       ---- 
                                                $      -          -%       $      4      6.06%       $ 1,814       6.18%
                                                ========       ====        ========      ====        =======       ==== 

Available-for-Sale:
-------------------
Collateralized mortgage obligations.........     526,546       4.73%        401,231      4.38%      $390,467       4.29%
FNMA........................................      49,785       3.98          58,650      3.86         70,345       3.90
FHLMC.......................................      32,211       4.05          33,788      3.80         37,936       3.70
GNMA........................................      14,643       4.37          18,520      4.15         18,463       4.28
                                                --------       ----        --------      ----       --------       ---- 
                                                $623,185       4.63%       $512,189      4.27%      $517,211       4.19%
                                                ========       ====        ========      ====       ========       ==== 

Trading:
-------
Collateralized mortgage obligations.........    $ 11,951       7.37%      $  11,951      5.32%       $11,527       4.14%
                                                ========       ====       =========      ====        =======       ==== 
</TABLE>



CREDIT EXTENSION ACTIVITIES

         Over the past several years the Company has changed the  composition of
its loan portfolio. WSFS' current lending activity is concentrated on lending to
small  businesses  in the  mid-Atlantic  region of the United  States.  In 2001,
residential  loans comprised 43.7% of the loan portfolio,  while the combination
of  commercial  loans and  commercial  real estate loans made up only 40.7%.  In
contrast,  at December 31, 2005,  residential  loans  totaled only 25.8%,  while
commercial  loans and commercial  real estate loans have increased to a combined
total of 61.8% of the loan  portfolio.  Traditionally,  the  majority of typical
thrift  institutions'  loan portfolios have consisted of first mortgage loans on
residential properties.

                                      -7-


<PAGE>

         The following  table sets forth the  composition  of the  Corporation's
loan portfolio by type of loan at the dates  indicated.  Other than as disclosed
below,  the  Corporation had no  concentrations  of loans exceeding 10% of total
loans at December 31, 2005:


<TABLE>
<CAPTION>
                                                                              December 31,
                                 ---------------------------------------------------------------------------------------------------
                                       2005                 2004                  2003                 2002               2001
                                 -----------------      --------------       --------------       --------------      --------------
Types of Loans                   Amount    Percent      Amount Percent       Amount Percent       Amount Percent      Amount Percent
--------------                   ------    -------      ------ -------       ------ -------       ------ -------      ------ -------
                                                                          (Dollars in Thousands)
<S>                         <C>             <C>    <C>          <C>     <C>          <C>     <C>          <C>    <C>          <C>  
Residential real estate (1). $  457,651      25.8%  $  443,023   28.9%   $  458,408   35.1%   $  541,465   45.2%  $  487,845   43.7%
Commercial real estate:
Commercial mortgage.........    410,552      23.1      416,287   27.1       335,050   25.7       228,089   19.1      208,286   18.7
Construction................    178,418      10.1      120,604    7.9        54,742    4.2        59,555    5.0       48,002    4.3
                             ----------     -----   ----------  -----    ----------  -----    ----------  -----   ----------  ----- 
    Total commercial
      real estate...........    588,970      33.2      536,891   35.0       389,792   29.9       287,644   24.1      256,288   23.0
Commercial..................    508,930      28.6      368,752   24.0       292,516   22.4       209,567   17.5      197,790   17.7
Consumer....................    244,820      13.8      210,959   13.7       186,133   14.3       181,851   15.2      198,366   17.8
                             ----------     -----   ----------  -----    ----------  -----    ----------  -----   ----------  ----- 

Gross loans.................  1,800,371     101.4    1,559,625  101.6     1,326,849  101.7     1,220,527  102.0    1,140,289  102.2

Less:
(Deferred fees)
   unearned income..........       (304)      0.0          (64)   0.0          (414)   0.0         2,043    0.2        3,320    0.3
Allowance for loan losses...     25,381       1.4       24,222    1.6        22,386    1.7        21,452    1.8       21,597    1.9
                             ----------     -----   ----------  -----    ----------  -----    ----------  -----   ----------  ----- 

Net loans................... $1,775,294     100.0%  $1,535,467  100.0%   $1,304,877  100.0%   $1,197,032  100.0%  $1,115,372  100.0%
                             ==========     =====   ==========  =====    ==========  =====    ==========  =====   ==========  ===== 
</TABLE>


(1)  Includes $438, $3,249, $1,465, $121,349 and $84,691 of residential mortgage
     loans  held-for-sale  at December 31, 2005,  2004,  2003,  2002,  and 2001,
     respectively.

                                      -8-


<PAGE>

         The  following  table sets forth  information  as of December  31, 2005
regarding  the  amount  of  loans  maturing  in  the  Corporation's  portfolios,
including  scheduled  repayments  of  principal  based on  contractual  terms to
maturity. In addition,  the table sets forth the amount of loans maturing during
the indicated  periods based on whether the loan has a fixed or adjustable rate.
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 Year      Five Years       Total
                           --------      ---------      ----------       -----
                                             (In Thousands)

Real estate loans (1)     $   75,597     $  270,658     $  521,510    $  867,765
Construction loans ..        101,936         69,500          6,982       178,418
Commercial loans ....        199,302        187,874        121,754       508,930
Consumer loans ......        113,807         54,355         76,658       244,820
                          ----------     ----------     ----------    ----------
                          $  490,642     $  582,387     $  726,904    $1,799,933
                          ==========     ==========     ==========    ==========
Rate sensitivity:                                                    
  Fixed .............     $   56,542     $  220,547     $  285,700    $  562,789
  Adjustable (2) ....        434,100        361,840        441,204     1,237,144
                          ----------     ----------     ----------    ----------
Gross loans .........     $  490,642     $  582,387     $  726,904    $1,799,933
                          ==========     ==========     ==========    ==========
                                                                    
(1)  Includes commercial mortgage loans; does not include loans held-for-sale.
(2)  Includes hybrid adjustable rate mortgages


         The  above  schedule  does  not  include  any  prepayment  assumptions.
Prepayments  tend to be highly  dependent  upon the interest  rate  environment.
Management believes that the actual repricing and maturity of the loan portfolio
is  significantly  shorter  than is  reflected in the above table as a result of
prepayments.


Residential Real Estate Lending.

         WSFS originates residential mortgage loans with loan-to-value ratios up
to 100%. WSFS generally requires private mortgage insurance for up to 30% of the
mortgage amount for mortgage loans with loan-to-value ratios exceeding 80%. WSFS
does not have any  significant  concentrations  of such  insurance  with any one
insurer.  On  a  very  limited  basis,  WSFS  originates/purchases   loans  with
loan-to-value   ratios  exceeding  80%  without  a  private  mortgage  insurance
requirement.   At  December  31,  2005,  the  balance  of  all  such  loans  was
approximately   $9.2  million.   Generally,   residential   mortgage  loans  are
underwritten  and documented in accordance with standard  underwriting  criteria
published by Federal Home Loan Mortgage  Corporation  (FHLMC) to assure  maximum
eligibility for subsequent sale in the secondary market.  However,  unless loans
are  specifically  designated for sale, the Corporation  holds newly  originated
loans in its  portfolio  for long-term  investment.  Among other  things,  title
insurance is required to insure the priority of its lien,  and fire and extended
coverage  casualty  insurance  is  required  for  the  properties  securing  the
residential  loans. All properties  securing  residential loans made by WSFS are
appraised by  independent  appraisers  selected by WSFS and subject to review in
accordance with WSFS standards.

         The  majority of WSFS'  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.  WSFS  underwrites   adjustable-rate  loans  under
standards  consistent  with private  mortgage  insurance  and  secondary  market
criteria.  WSFS  does  not  originate  adjustable-rate  mortgages  with  payment
limitations that could produce negative  amortization.  Consistent with industry
practice  in its market  area,  WSFS has  typically  originated  adjustable-rate
mortgage loans with discounted initial interest rates.

                                      -9-


<PAGE>

         The retention of adjustable-rate mortgage loans in WSFS' loan portfolio
helps  mitigate  WSFS' 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 WSFS to increase the  sensitivity of its 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  WSFS'   adjustable-rate   mortgages   will  adjust
sufficiently  to compensate  for increases in WSFS' 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,  such 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  the
institution 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.  WSFS  enforces
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.  The Corporation also has 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 which was formerly
chartered  as a Delaware  savings  bank,  WSFS has  certain  additional  lending
authority.

         WSFS offers  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.

         WSFS offers 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 the WSFS prime rate or 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.  Policy requires that all appraisals be reviewed independently of the
commercial lending area.  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  time of
conversion  to the  permanent  loan.  At December 31, 2005,  $282.4  million was
committed for construction loans, of which $178.4 million had been disbursed.

                                      -10-


<PAGE>

         WSFS' commercial lending,  excluding real estate loans,  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 WSFS' prime rate,
or LIBOR, at the time of closing.  No one industry has a  concentration  greater
then  12.0% of these  types of  loans.  WSFS  intends  to  continue  originating
commercial loans in its market area.

         Commercial,  commercial mortgage and construction lending have a higher
level of risk as compared to residential mortgage lending. These loans typically
involve  larger loan  balances  concentrated  in 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 WSFS'  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.  WSFS attempts to mitigate  these risks and
plans for these contingencies  through additional analysis and monitoring of its
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, 2005, no
borrower had collective outstandings exceeding the above limits.


Consumer Lending.

         The  primary   consumer   credit   products  of  the   Corporation  are
equity-secured  installment  loans and home equity lines of credit.  At December
31, 2005,  WSFS had  equity-secured  installment  loans totaling $136.7 million,
which  represented  56% 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, 2005,  WSFS had extended $176.3 million in
home equity lines of credit, of which $87.5 million had been drawn at that date.
Home equity lines of credit potentially offer Federal income tax advantages, the
convenience of checkbook access and revolving credit features. Home equity lines
of credit expose the Corporation to the risk that falling  collateral values may
leave it  inadequately  secured,  whereas the risk on products  like home equity
loans is mitigated as they amortize over time. The  Corporation  has not had any
significant adverse experience on home equity lines of credit to date.

                                      -11-


<PAGE>

The table below sets forth consumer loans by type, in amounts and percentages at
the dates indicated.


<TABLE>
<CAPTION>

                                                                             December 31,
                                     ----------------------------------------------------------------------------------------------
                                            2005                 2004               2003                2002              2001
                                     ------------------    ---------------     ---------------   -----------------  ---------------
                                     Amount     Percent    Amount  Percent     Amount  Percent      Amount Percent   Amount Percent
                                     ------     -------    ------  -------     ------  -------      ------ -------   ------ -------
                                                                          (Dollars in Thousands)
<S>                                <C>          <C>     <C>        <C>     <C>         <C>      <C>        <C>   <C>        <C>  
Equity secured installment loans..  $136,721     55.8%   $131,935   62.6%   $ 124,411   66.9%    $ 123,655  68.1%   $ 125,597  63.3%
Home equity lines of credit.......    87,503     35.7      56,755   26.9       39,858   21.4        31,512  17.3       24,161  12.2
Automobile........................     2,616      1.1       5,126    2.4        9,137    4.9        11,728   6.4       11,737   5.9
Unsecured lines of credit.........     8,780      3.6       9,338    4.4       10,506    5.6        12,402   6.8       20,156  10.2
Other.............................     9,200      3.8       7,805    3.7        2,221    1.2         2,554   1.4       16,715   8.4
                                    --------     -----   --------   -----   ---------   -----    ---------  -----   --------- ----- 
                                                                                                                    
Total consumer loans .............  $244,820     100.0%  $210,959   100.0%  $ 186,133   100.0%   $ 181,851  100.0%  $ 198,366 100.0%
                                    ========     =====   ========   =====   =========   =====    =========  =====   ========= ===== 
</TABLE>
                                                                   
                                                                       
                                      -12-


<PAGE>

Loan Originations, Purchase and Sales.

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

         During 2005,  the  Corporation  originated  $499 million of residential
real estate loans.  This compares to  originations of $376 million in 2004. From
time to  time,  WSFS has  purchased  whole  loans  and  loan  participations  in
accordance with its ongoing asset and liability management objectives. Purchases
of residential real estate loans from  correspondents  and brokers  primarily in
the  mid-Atlantic  region  totaled $77.5 million for the year ended December 31,
2005 and $68.4 million for 2004.  Residential real estate loan sales totaled $39
million  in 2005,  $51.1  million in 2004 and $116  million in 2003.  While WSFS
generally intends to hold loans for the foreseeable  future,  WSFS sells certain
newly originated  fixed-rate mortgage loans in the secondary market primarily to
control the interest rate  sensitivity  of its balance  sheet.  The  Corporation
holds for investment  certain of its fixed-rate  mortgage loans  consistent with
current asset/liability management strategies.

         At December  31,  2005,  WSFS  serviced  approximately  $256 million of
residential  loans for others compared to $245 million at December 31, 2004. The
Corporation also services  residential loans for its own portfolio totaling $431
million and $412 million at December 31, 2005 and 2004, respectively.

         WSFS originates commercial real estate and commercial loans through its
commercial  lending  division.  Commercial  loans  are made for the  purpose  of
working capital, financing equipment acquisitions,  business expansion and other
business  purposes.  During 2005, WSFS originated $597 million of commercial and
commercial  real estate loans  compared with $547 million in 2004. To reduce its
exposure  on these  types of loans,  WSFS,  at times  will sell a portion of its
commercial real estate loan portfolio. Commercial real estate loan sales totaled
$36.6  million and $2.0 million in 2005 and 2004,  respectively.  These  amounts
represent gross contract amounts and do not reflect amounts  outstanding on such
loans.

         WSFS'  consumer  lending  is  conducted  primarily  through  its branch
offices.  WSFS originates 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  2005,  consumer  loan  originations  amounted  to $20.0  million
compared to $16.8 million in 2004.

         All loans to one  borrowing  relationship  exceeding $3 million must be
approved by the senior management loan committee (SLC). The Executive  Committee
(EC) of the Board of  Directors  approves  the  minutes of the  management  loan
committee  meetings and approves  individual  loans  exceeding $5 million to one
borrowing  relationship.  Individual  Officers  of WSFS  have the  authority  to
approve  smaller loan amounts,  depending  upon their  experience and management
position.  The Bank's  credit  policy  includes a "House Limit" to one borrowing
relationship  of 50% of its legal  lending limit or  approximately  $18 million.
WSFS has one borrowing  relationship of $34.8 million,  which the EC approved to
exceed the "House Limit". This borrowing is secured by U.S. Treasury securities,
which  have a value  at  maturity  equal  to or  exceeding  the  loan  payments.

Fee Income from Lending Activities.

         WSFS earns fee  income  from  lending  activities,  including  fees for
originating  loans,  for servicing loans and for loan  participations  sold. The
Bank also receives fee income for making commitments to originate  construction,

                                      -13-


<PAGE>

residential  and commercial real estate loans.  Additionally,  the Bank collects
fees related to existing loans which include  prepayment  charges,  late charges
and assumption fees.

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

         Most loan fees are considered  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, 2005. 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

         The Corporation's  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.

         The Corporation  endeavors to manage its portfolios to identify problem
loans as promptly as possible and take immediate  actions to minimize losses. To
accomplish this, WSFS' Risk Management  Department monitors the asset quality of
the Corporation's 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 Controller's Department.


SOURCES OF FUNDS

                  The Company  manages  its  liquidity  risk and  funding  needs
through its treasury function and its Asset/Liability  Committee.  Historically,
the Company has had success in growing its loan portfolio.  For example,  during
the year ended December 31, 2005, net loan growth  resulted in the use of $228.8
million in cash.  The loan  growth  was  primarily  the result of the  continued
success increasing corporate and small business lending. Management expects this
trend to continue. While the Company's 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, the Company has ready access to several sources
of funding. Among these are:

     o        Deposit growth
     o        The brokered CD market
     o        Borrowing from the FHLB
     o        Other borrowings such as repurchase agreements
     o        Cash flow from securities and loan repayments
     o        And net income of the Company

         The  Company's  current  branch  expansion  and  renovation  program is
focused on expanding the Company's  retail  footprint in Delaware and attracting
new customers to provide  additional  deposit growth.  Retail deposit growth was
strong,  equaling  $141.7 million or 13% between  December 31, 2004 and December
31, 2005.

                                      -14-


<PAGE>

         Deposits.  WSFS  offers  various  deposit  programs  to its  customers,
including savings accounts,  demand deposits,  interest-bearing demand deposits,
money market deposit  accounts and certificates of deposits.  In addition,  WSFS
accepts  negotiable  rate  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.  It primarily attracts deposits through
its system of 24 retail banking offices at December 31, 2005.  Nineteen  banking
offices were located in northern  Delaware's  New Castle  County,  WSFS' primary
market.  These  banking  offices  maintain  approximately  191,000 total account
relationships  with approximately  80,000 total households.  Two banking offices
were in the state capital, Dover, located in central Delaware's Kent County. One
banking office was in Rehoboth located in Delaware's Sussex County and two other
banking offices were located in southeastern Pennsylvania.

         The following table sets forth the amount of certificates of deposit of
$100,000 or more by remaining maturity at December 31, 2005:


                                                 December 31,
Maturity Period                                      2005
---------------                                      ----
                                                (In Thousands)

Less than 3 months......................            $43,016
Over 3 months to 6 months...............              3,305
Over 6 months to 12 months..............             60,330
Over 12 months..........................             21,128
                                                   --------
                                                   $127,779
                                                   ========


         Borrowings. The Corporation utilizes the following borrowing sources to
fund operations.

         Federal Home Loan Bank Advances

         Advances from the Federal Home Loan Bank (FHLB) of Pittsburgh had rates
ranging  from  2.00% to 5.45% at  December  31,  2005.  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,  WSFS is required to acquire and
hold  shares of capital  stock in the FHLB of  Pittsburgh  in an amount at least
equal to 4.55% of its advances  (borrowings)  from the FHLB of Pittsburgh,  plus
0.55% of the  unused  borrowing  capacity.  WSFS  was in  compliance  with  this
requirement  with a stock  investment  in FHLB of Pittsburgh of $46.3 million at
December 31, 2005.

         Four  advances are  outstanding  at December 31, 2005  totaling  $145.0
million, with a weighted average rate of 4.96% maturing in 2008 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.  WSFS has the option to prepay these four advances at  predetermined
times or rates.

          Trust Preferred Borrowings

         On April 6, 2005,  the  Corporation  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.

                                      -15-


<PAGE>

         Federal  Funds  Purchased  and  Securities  Sold  Under  Agreements  to
Repurchase

         During 2005,  WSFS  purchased  federal  funds as a  short-term  funding
source.  At December 31, 2005, WSFS had purchased $50.0 million in federal funds
at a rate of 4.19%.  At December 31, 2004,  WSFS had $50.0 million federal funds
purchased.

         During 2005, WSFS sold securities  under  agreements to repurchase as a
short-term  funding  source.  At  December  31,  2005,   securities  sold  under
agreements  to  repurchase  had fixed  rates  ranging  from 4.20% to 4.36%.  The
underlying securities are U.S. Government agency securities with a book value of
$34.8  million  at  December  31,  2005.  Securities  sold under  agreements  to
repurchase with the  corresponding  carrying and market values of the underlying
securities are due as follows:

PERSONNEL

         As of December  31, 2005 the  Registrant  had 515  fulltime  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

         Sarbanes-Oxley Act of 2002. On July 30, 2002, the President signed into
law the  Sarbanes-Oxley  Act of 2002 (the "Act").  The  Securities  and Exchange
Commission (the "SEC") has  promulgated new regulations  pursuant to the Act 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 the Corporation's expenses.

         General.  The  Corporation  is a  registered  savings and loan  holding
company  and is  subject  to  Office  of Thrift  Supervision  (OTS)  regulation,
examination,  supervision  and  reporting  requirements.  As a  subsidiary  of a
holding  company,  WSFS is subject to certain  restrictions in its dealings with
the Corporation and other affiliates.

         Transactions with Affiliates; Tying Arrangements.  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 the  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  services,  or fixing or varying the consideration for any extension of
credit or service on the  condition  that the

                                      -16-


<PAGE>

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.

         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.
Under certain circumstances,  a savings and loan holding company is permitted to
acquire,  with the  approval  of the  Director  of OTS,  up to 15% of the voting
shares of an  under-capitalized  savings  association  pursuant to a  "qualified
stock issuance" without that savings  association being deemed controlled by the
holding  company.  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% 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  Director of 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  WSFS 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

         General. As a federally chartered savings institution,  WSFS is subject
to extensive regulation by the OTS. The lending activities and other investments
of WSFS must  comply  with  various  federal  regulatory  requirements.  The OTS
periodically examines WSFS for compliance with regulatory requirements. The FDIC
also has the authority to conduct special examinations of WSFS as the insurer of
deposits.  WSFS  must  file  reports  with OTS  describing  its  activities  and
financial  condition.  WSFS is also  subject  to  certain  reserve  requirements
promulgated by the Federal  Reserve Board.  This  supervision  and regulation is
intended primarily for the protection of depositors. Certain of these regulatory
requirements are referred to below or appear elsewhere herein.

         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 

                                      -17-


<PAGE>

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,  2005,  WSFS 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,
2005, WSFS was in compliance with the OTS risk-based capital requirements.

         Dividend Restrictions.  As the subsidiary of a savings and loan holding
company,  WSFS  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.

         Deposit Insurance. The Federal Deposit Insurance Reform Act of 2005 was
enacted on February 8, 2006 as a part of the Deficit  Reduction Act of 2005. The
Federal Deposit  Insurance Reform Act will (i) merge the Bank Insurance Fund and
the Savings  Association  Insurance  Fund into a new combined fund, to be called
the Deposit  Insurance  Fund,  (ii)  increase  deposit  insurance  coverage  for
retirement  accounts to  $250,000,  (iii) index the current  $100,000  insurance
coverage  limit for standard  accounts and the new $250,000 limit for retirement
accounts to reflect  inflation (with adjustments for inflation every five years,
commencing  January  1,  2011),  (iv)  require  the  Federal  Deposit  Insurance
Corporation to assess annual deposit insurance premiums on all banks and savings
institutions,  (v) give a one-time  insurance  assessment  credit  totaling $4.7
billion to banks and savings institutions in existence on December 31, 1996 that
can be used to offset premiums  otherwise due, (vi) impose a cap on the level of
the Deposit  Insurance  Fund and provide for  dividends or rebates when the fund
grows beyond a specified  threshold,  (vii) adopt a historical basis concept for
distributing  the  aforementioned  one-time  credit  and  dividends  (with  each
institution's  historical basis to be determined by a formula that looks back to
the  institution's  assessment  base in 1996 and adds  premiums  paid since that
time) and  (viii)  authorize  revisions  to the  current  risk-based  system for
assessing  premiums,   

                                      -18-


<PAGE>

including  replacing the current fixed reserve ratio requirement of 1.25% with a
range of between 1.15% and 1.5% of insured deposits.

         The merger of the two deposit  insurance  funds required by the Federal
Deposit  Insurance  Reform Act is to be effective  by July 1, 2006.  The Federal
Deposit  Insurance  Corporation is required to adopt final rules for the rest of
the provisions no later than 270 days after  enactment.  Such  regulations  will
result in the imposition of deposit insurance  assessments on all members of the
Deposit  Insurance  Fund,  including  WSFS, and such  assessments  could have an
adverse  effect on the  operating  expenses and results of  operations  of WSFS.
WSFS's  management  cannot  predict,  however,  the rate of any  such  insurance
assessments or the effect of the assessments on its operations.

         Federal Reserve System.  Pursuant to regulations of the Federal Reserve
Board, a savings institution must maintain average daily reserves equal to 3% on
the first $42.1 million of transaction accounts, plus 10% on the remainder. 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  be  to  reduce  the  amount  of  the   institution's
interest-earning   assets.  As  of  December  31,  2005  WSFS  met  its  reserve
requirements.



I
TEM 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  deterioration  in  economic
conditions  could result in losses to the Bank. 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 the Company's net interest margin.

Liquidity risk

          Due to the  Company's  continued  success in our  lending  operations,
particularly in corporate and small business lending,  our loans exceed 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  the
Asset/Liability  Committee (ALCO). While the Company's 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 liquidity management.

                                      -19-


<PAGE>

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 income from deposits and loans,  which would negatively impact our net
interest margins. Profitability of other products may be reduced as well.

The Company may not be able to achieve its 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.

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.



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

      None.

                                      -20-


<PAGE>


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

     The  following  table  sets  forth  the  location  and  certain  additional
information regarding the Corporation's offices and other material properties at
December 31, 2005.

<TABLE>
<CAPTION>
                                                                                 Net Book Value
                                                                                  Of Property
                                                      Owned/     Date Lease       or Leasehold
Location                                              Leased       Expires      Improvements (1)   Deposits
--------                                              ------     ----------     ----------------   ---------
                                                                                        (In Thousands)
                                                                               -----------------------------
WSFS:
-----
<S>                                                   <C>          <C>            <C>            <C>
Main Office (2)                                       Owned                        $1,006        $635,880
  9th & Market Streets
  Wilmington, DE  19899
Union Street Branch                                   Leased        2008               67          46,622
  3rd & Union Streets
  Wilmington, DE  19805
Trolley Square Branch                                 Leased        2006                9          27,361
  1711 Delaware Avenue
  Wilmington, DE  19806
Fairfax Shopping Center Branch                        Leased        2008               84          62,627
  2005 Concord Pike
  Wilmington, DE  19803
Branmar Plaza Shopping Center Branch                  Leased        2008               13          72,396
  1812 Marsh Road
  Wilmington, DE  19810
Prices Corner Shopping Center Branch                  Leased        2008               21          89,238
  3202 Kirkwood Highway
  Wilmington, DE  19808
Pike Creek Shopping Center Branch                     Leased        2006              144          67,635
  New Linden Hill & Limestone Roads
  Wilmington, DE  19808
University Plaza Shopping Center Branch               Leased        2008               68          43,259
  I-95 & Route 273
  Newark, DE  19712
College Square Shopping Center Branch (3)             Leased        2007              168          73,141
  Route 273 & Liberty Avenue
  Newark, DE  19711
Airport Plaza Shopping Center Branch                  Leased        2013              736          65,283
  144 N. DuPont Hwy.
  New Castle, DE  19720
Stanton Branch                                        Leased        2006               29          14,453
  Inside ShopRite at First State Plaza
  1600 W. Newport Pike
  Wilmington, DE  19804
Glasgow Branch                                        Leased        2008               70          19,970
  Inside Genuardi's at Peoples Plaza
  Routes 40 & 896
  Newark, DE  19804
Middletown Crossing Shopping Center                   Leased        2017            1,257          29,872
  Route 299 and Silver Lake Road
  Middletown, DE 19709
Dover Branch                                          Leased        2010                2          16,968
  Inside Metro Food Market
  Rt 134 & White Oak Road
  Dover, DE  19901
</TABLE>


                                      -21-

<PAGE>

<TABLE>
<CAPTION>
                                                                                 Net Book Value
                                                                                  Of Property
                                                      Owned/     Date Lease       or Leasehold
Location                                              Leased       Expires      Improvements (1)   Deposits
--------                                              ------     ----------     ----------------   ---------
                                                                                        (In Thousands)
                                                                               -----------------------------
<S>                                                   <C>          <C>            <C>              <C>
    WSFS (continued...):
    --------------------
    West Dover Loan Office                            Leased       2009              7               229
      Greentree Office Center
      160 Greentree Drive
      Suite 105
      Dover, DE  19904
    Blue Bell Loan Office                             Leased       2006              -               N/A
      550 Township Line Road
      Suite 400
      Blue Bell, PA  19422
    Glen Eagle Branch                                 Leased       2008            106             7,098
      Inside Genaurdi's Family Market
      475 Glen Eagle Square
      Glen Mills, PA  19342
    University of Delaware-Trabant 
     University Center                                Leased       2008            136             9,054
      17 West Main Street
      Newark, DE  19716
    Brandywine Branch                                 Leased       2009             96            18,882
      Inside Genaurdi's Family Market
      2522 Foulk Road
      Wilmington, DE  19810
    Wal-Mart Branch                                   Leased       2009            236             6,693
      Route 40 & Wilton Boulevard
      New Castle, DE  19720
    Operations Center                                 Owned                        829               N/A
      2400 Philadelphia Pike
      Wilmington, DE  19703
    Longwood Branch                                   Leased       2010            119             6,637
      830 E. Baltimore Pike
      E. Marlborough, PA 19348
    Holly Oak Branch                                  Leased       2010             93            17,612
      Inside Superfresh
      2105 Philadelphia Pike
      Claymont, DE  19703
    Hockessin Branch                                  Leased       2015            652            39,824
      7450 Lancaster Pike
      Wilmington, DE  19707
    Lewes Loan Center                                 Leased       2008            109               407
      Southpointe Professional Center
      1515 Savannah Road, Suite 103
      Lewes Beach, DE  19958
    Fox Run Shopping Center                           Leased       2006          1,113            19,159
      Bear, DE
    Camden Town Center                                Leased       2024          1,186            15,704
      4566 S. Dupont Highway
      Camden, DE  19934
    Rehoboth                                          Leased       2029          1,045            40,232
      Lighthouse Plaza
      Route #1
      Rehoboth, DE  19971
    Loan Operations                                   Leased       2007            107               N/A
     30 Blue Hen Drive, Suite 200
      Newark, DE 19713
    West Dover (4)                                    Owned                      1,321               N/A
    1486 Forest Avenue
    Dover, DE  19904
</TABLE>


                                      -22-

<PAGE>

<TABLE>
<CAPTION>
                                                                                 Net Book Value
                                                                                  Of Property
                                                      Owned/     Date Lease       or Leasehold
Location                                              Leased       Expires      Improvements (1)   Deposits
--------                                              ------     ----------     ----------------   ---------
                                                                                        (In Thousands)
                                                                               -----------------------------
<S>                                                   <C>          <C>            <C>              <C>
    WSFS (CONTINUED...):
    --------------------
    WSFS Bank Center (5)                              Leased       2019               -               N/A
    500 Delaware Avenue
    Wilmington, DE  19801
    MONTCHANIN CAPITAL MANAGEMENT, INC.               Leased       2010              22               N/A
    ----------------------------------
      1220 Market Street
      Suite 705
      Wilmington, DE  19801
    CYPRESS CAPITAL MANAGEMENT, LLC                   Leased       2010               5               N/A
    -------------------------------
      1220 Market Street
      Suite 704
      Wilmington, DE  19801
    WSFS REIT, INC.                                   Leased       2006               -               N/A
    --------------
      227 East Main Street
      Elkton, MD  21921
    Friess Building (6) (7)                           Owned                       1,872               N/A
      3908 Kennett Pike
      Greenville, DE Property
    Fairfax Building                                  Owned                       6,202               N/A
      2005 Concord Pike                                                                               
      Wilmington, DE  19801
                                                                                              -----------
                                                                                              $ 1,446,236
                                                                                              ===========
</TABLE>


(1)  The net book  value  investment  in premise  and  equipment  totaled  $22.9
     million at December 31, 2005.
(2)  Includes location of executive offices.
(3)  Includes the Company's education and development center.
(4)  As of December 31, 2005, this branch was under  construction.  Construction
     was completed in February 2006.
(5)  New  Headquarters  Building under  construction at December 31, 2005. Lease
     begins in  January  2007.  The  Company  has a minority  ownership  in this
     property.
(6)  Property transferred to WSFS Reit, Inc. in 2002.
(7)  Transferred to Real Estate Held for Investment in October 2005.

                                      -23-


<PAGE>


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

     There are no material legal proceedings to which the Corporation or WSFS is
a party or to which any of its property is subject.


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, 2005 through the  solicitation  of
proxies or otherwise.

                                      -24-


<PAGE>


                                     PART II


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

     The  information   contained  under  the  section   captioned  "Market  for
Registrant's Common Equity and Related  Stockholder  Matters" in the 2005 Annual
Report  to  Stockholders  (the  "Annual  Report")  is  incorporated   herein  by
reference.



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


<TABLE>
<CAPTION>
                                             2005          2004            2003           2002           2001
                                         -----------   ------------     -----------    ----------     -----------
                                                        (Dollars in Thousands, Except Per Share Data)
<S>                                      <C>            <C>             <C>            <C>            <C>        
At December 31,
---------------
  Total assets .......................   $ 2,846,752    $ 2,502,956     $ 2,207,077    $ 1,705,000    $ 1,913,920
  Net loans (1) ......................     1,775,294      1,535,467       1,304,877      1,197,032      1,115,372
  Investment securities (2) ..........        56,704         97,485         116,292         21,777         14,194
  Investment in reverse mortgages, net           785           (109)            193          1,131         33,939
  Other investments ..................        46,466         44,477          44,771         93,500        122,889
  Mortgage-backed securities (2) .....       620,323        524,144         530,552        148,238        361,724
  Deposits ...........................     1,446,236      1,234,962         923,333        898,396      1,146,117
  Borrowings (3) .....................     1,127,997      1,002,609       1,031,058        466,006        595,480
  Trust preferred borrowings .........        67,011         51,547          50,000         50,000         50,000
  Stockholders' equity ...............       181,975        196,303         187,992        182,672        100,003
  Number of full-service branches (4)             24             24              23             21             27

For the Year Ended December 31,
-------------------------------
  Interest income ....................   $   136,022    $   104,110     $    89,299    $    94,703    $   101,338
  Interest expense ...................        62,380         37,246          31,301         33,434         46,597
  Noninterest income .................        34,653         31,950          26,166        124,060         21,125
  Noninterest expenses ...............        62,877         55,699          49,417         51,617         47,689
  Income from continuing operations ..        27,856         25,757          21,233         88,018         17,762
  Net income .........................        27,856         25,900          63,022        101,141         17,083
  Earnings per share:
   Basic:
     Income from continuing operations   $      4.10    $      3.60     $      2.73    $      9.69    $      1.85
     Net income ......................          4.10           3.62            8.11          11.13           1.78
   Diluted:
     Income from continuing operations          3.89           3.39            2.58           9.34           1.84
     Net income ......................          3.89           3.41            7.65          10.73           1.77

  Interest rate spread ...............          2.91%          3.07%           3.02%          4.97%          4.64%
  Net interest margin ................          3.13           3.24            3.29           4.93           4.51
  Return on average equity (5) .......         14.78          13.54           10.60          70.69          17.69
  Return on average assets (5) .......          1.05           1.10            1.09           6.22           1.33
  Average equity to average assets (5)          7.10           8.13           10.28           8.79           7.50
</TABLE>


(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 one branch in 2004,  opened two  branches in 2003,  transferred
     six branches to other financial institutions in 2002, and closed one branch
     in 2001.
(5)  Based on continuing operations.

                                      -25-

<PAGE>


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

     The information contained in the section captioned "Management's Discussion
and Analysis of Financial  Condition  and Results of  Operations"  in the Annual
Report is incorporated herein by reference.



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

     The  information  contained in the section  captioned  "Market Risk" in the
Annual Report is incorporated herein by reference.



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

     The  Registrant's  financial  statements  listed  in  Item  15  herein  are
incorporated herein by reference.



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

     None


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

     Disclosure Controls and Procedures

     The  Corporation's  management  evaluated,  with the  participation  of the
Corporation's   Chief  Executive  Officer  and  Chief  Financial  Officer,   the
effectiveness of the Corporation's  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 the Corporation's
disclosure  controls and  procedures  are  effective to ensure that  information
required to be  disclosed  by the  Corporation  in the reports  that it files or
submits  under  the  Securities  Exchange  Act of 1934 is  recorded,  processed,
summarized and reported within the time periods  specified in the Securities and
Exchange Commission's rules and forms. 


INTERNAL CONTROL OVER FINANCIAL REPORTING

     Management's  report on the  Corporation's  internal control over financial
reporting appears in the Annual Report and is incorporated herein by reference.

     The  attestation  report  of KPMG  LLP on  management's  assessment  of the
Corporation's  internal control over financial  reporting  appears in the Annual
Report and is incorporated herein by reference.

     During the last  quarter of the year under  report,  there was no change in
the Corporation's  internal control over financial reporting that has materially
affected,  or is  reasonably  likely to  materially  affect,  the  Corporation's
internal control over financial reporting.


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

     None


                                    PART III



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
-----------------------------------------------------------

     The  Information  which appears under the heading  "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  27,  2006  (the  "Proxy   Statement")  is
incorporated herein by reference.

     The  Corporation has adopted a Code of Ethics that applies to its principal
executive officer,  principal financial officer, principal accounting officer or
controller or persons performing similar functions. A copy of the Code of Ethics
is posted on the Corporation's website at www.wsfsbank.com.



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

     The information  which appears under the heading  "Proposal I - Election of
Directors" in the Proxy Statement is incorporated herein 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)  Management of the Corporation knows of no arrangements,  including any
          pledge by any person of securities of the  Corporation,  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

                                      -26-

<PAGE>


Set  forth  below is  information  as of  December  31,  2005  with  respect  to
compensation   plans  under  which  equity  securities  of  the  Registrant  are
authorized for issuance.

<TABLE>
<CAPTION>
                      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)
                                       --------------------        --------------------        -----------------------
<S>                                       <C>                         <C>                            <C>    
Equity compensation plans
  approved by stockholders (1)               745,949                     $ 31.60                        268,193

Equity compensation plans
 not approved by stockholders                    n/a                         n/a                            n/a
                                             -------                     -------                        -------
    TOTAL                                    745,949                     $ 31.60                        268,193
                                             =======                     =======                        =======
</TABLE>

(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 which appears under the heading "Business Relationships and
Related   Transactions"  in  the  Proxy  Statement  is  incorporated  herein  by
reference.



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

     The information called for by this item is incorporated herein by reference
to the section entitled "Independent Public Accountants" in the Proxy Statement.



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,  2005 and 2004,  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, 2005, 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.

                                      -27-


<PAGE>

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

<TABLE>
<CAPTION>
Exhibit
Number                            Description of Document
------                            -----------------------
<S>             <C>
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.

13                 Portions of the Corporation's 2004 Annual Report to Shareholders

21                 Subsidiaries of Registrant.

23                 Consent of KPMG LLP

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

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



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

                                      -28-

<PAGE>



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 15, 2006                        BY:   /s/ Marvin N. Schoenhals
                                                   -----------------------------
                                                   Marvin N. Schoenhals
                                                   Chairman and President

 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 15, 2006                       BY:   /s/ Marvin N. Schoenhals
                                                   -----------------------------
                                                   Marvin N. Schoenhals
                                                   Chairman and President


Date:   March 15, 2006                       BY:   /s/ Charles G. Cheleden
                                                   -----------------------------
                                                   Charles G. Cheleden
                                                   Vice Chairman and Director


Date:   March 15, 2006                       BY:   /s/ John F. Downey
                                                   -----------------------------
                                                   John F. Downey
                                                   Director


Date:   March 15, 2006                       BY:   /s/ Linda C. Drake
                                                   -----------------------------
                                                   Linda C. Drake
                                                   Director


Date:   March 15, 2006                       BY:   /s/ David E. Hollowell
                                                   -----------------------------
                                                   David E. Hollowell
                                                   Director


Date:   March 15, 2006                       BY:   /s/ Joseph R. Julian
                                                   -----------------------------
                                                   Joseph R. Julian
                                                   Director

<PAGE>

Date:   March 15, 2006                       By:   /s/Dennis E. Klima
                                                   -----------------------------
                                                   Dennis E. Klima
                                                   Director


Date:   March 15, 2006                       BY:   /s/ Calvert A. Morgan, Jr.
                                                   -----------------------------
                                                   Calvert A. Morgan, Jr.
                                                   Director


Date:   March 15, 2006                       BY:   /s/ Thomas P. Preston
                                                   -----------------------------
                                                   Thomas P. Preston
                                                   Director


Date:   March 15, 2006                       BY:   /s/ Scott E. Reed
                                                   -----------------------------
                                                   Scott E. Reed
                                                   Director


Date:   March 15, 2006                       BY:   /s/ Claibourne D. Smith
                                                   -----------------------------
                                                   Claibourne D. Smith
                                                   Director


Date:   March 15, 2006                       BY:   /s/ Eugene W. Weaver
                                                   -----------------------------
                                                   Eugene W. Weaver
                                                   Director


Date:   March 15, 2006                       BY:   /s/ R. Ted Weschler
                                                   -----------------------------
                                                   R. Ted Weschler
                                                   Director

Date:   March 15, 2006                       BY:   /s/ Stephen A. Fowle
                                                   -----------------------------
                                                   Stephen A. Fowle
                                                   Executive Vice President and
                                                   Chief Financial Officer


Date:   March 15, 2006                      BY:    /s/ Robert F. Mack
                                                   -----------------------------
                                                   Robert F. Mack
                                                   Senior Vice President and
                                                   Controller





WSFS FINANCIAL CORPORATION

        Management's Discussion and Analysis of Financial Condition and
                              Results of Operations
OVERVIEW

WSFS Financial  Corporation (Company or Corporation) is a thrift holding company
headquartered in Wilmington,  Delaware.  Substantially  all of the Corporation's
assets are held by its subsidiary, Wilmington Savings Fund Society, FSB (Bank or
WSFS). Founded in 1832, WSFS is one of the oldest financial  institutions in the
country. As a federal savings bank that was formerly chartered as a state mutual
savings bank,  WSFS enjoys broader  investment  powers than most other financial
institutions.  WSFS has  served the  residents  of the  Delaware  Valley for 174
years. WSFS is the largest thrift institution  headquartered in Delaware and the
fourth largest financial institution in the state on the basis of total deposits
traditionally  garnered in-market.  The Corporation's primary market area is the
mid-Atlantic  region of the United States that is characterized by a diversified
manufacturing and service economy.  The long-term strategy of the Corporation is
to  improve  its  status as a  high-performing  financial  services  company  by
focusing on its core community banking business.

WSFS
 provides  residential and commercial  real estate,  commercial and consumer
lending  services,  as well as  retail  deposit  and cash  management  services.
Lending activities are funded primarily with retail deposits and borrowings. The
Federal Deposit  Insurance  Corporation  (FDIC) insures  deposits to their legal
maximum.  WSFS  serves  customers  primarily  from its main office and 24 retail
banking offices located in Delaware and southeastern Pennsylvania.

The Corporation has two consolidated  subsidiaries,  WSFS and Montchanin Capital
Management,  Inc.  (Montchanin).  The  Corporation  also has one  unconsolidated
affiliate,  WSFS Capital  Trust III.  Fully-owned  and  continuing  consolidated
subsidiaries of WSFS include WSFS Investment Group,  Inc., which markets various
third-party  insurance  products and  securities  through  WSFS' retail  banking
system,  and WSFS Reit,  Inc., which holds qualifying real estate assets and may
be used in the future to raise capital.

Montchanin has one  consolidated  non-wholly owned  subsidiary,  Cypress Capital
Management,   LLC   (Cypress).   Cypress,   an  80%  owned   subsidiary,   is  a
Wilmington-based investment advisory firm serving high net-worth individuals and
institutions.  Cypress had more than $473 million in assets under  management at
December 31, 2005.

WSFS Credit Corporation (WCC), a consolidated  subsidiary of the Bank, which was
engaged  primarily in indirect auto financing and vehicle leasing,  discontinued
operations  in 2000.  WCC no longer  accepts new  applications  but continues to
service existing loans until their  maturities.  More information is provided in
the Discontinued  Operations section of Management's Discussion and Analysis and
Note 2 to the Financial Statements.

Wilmington  Finance,  Inc. (WF), a majority owned  subsidiary of WSFS, which was
engaged in sub-prime  residential  mortgage  banking,  was sold in January 2003.
This  subsidiary  was therefore  classified as a business  held-for-sale  in the
Financial Statements. More information is provided in the Business Held-For-Sale
section  of  this  Management's  Discussion  and  Analysis,  and  Note  3 to the
Financial Statements.

During the third quarter of 2005, the Company  finalized  agreements  related to
the move of its  corporate  headquarters  to support  growth in its core banking
activities.  Related to this move,  the Company  sold the land on which the WSFS
Bank Center is to be built.  As part of this agreement,  the property  developer
has agreed to purchase the Company's current headquarters,  which is expected to
result in approximately a $3.0 million gain at the time of the move, expected to
be early 2007.

FORWARD-LOOKING STATEMENTS

Within this annual  report and  financial  statements,  management  has included
certain  "forward-looking  statements"  concerning the future  operations of the
Corporation. 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 and  expectations  of the  Corporation's
future financial results.  Management's ability to predict results or the effect
or success 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.  WSFS Financial  Corporation does not undertake,  and specifically
disclaims 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.
                                                                               7

<PAGE>
                                                      WSFS FINANCIAL CORPORATION

RESULTS OF OPERATIONS

WSFS  Financial  Corporation  recorded net income of $27.9  million for the year
ended December 31, 2005, compared to $25.9 million and $63.0 million in 2004 and
2003,  respectively.  Excluding  gains  recorded for businesses  sold,  reported
income was $27.9  million,  $25.8  million and $21.2 million for the years ended
December 31, 2005,  2004 and 2003,  respectively.  Net income for the year ended
December 31, 2003  included an after tax gain of $41.3  million from the sale of
WF.  The sale of this  business  is  discussed  in more  detail in the  Business
Held-For-Sale section of this Management's Discussion and Analysis and Note 3 to
the Financial Statements.

Net Interest Income Net interest income increased $6.8 million, or 10%, to $73.6
million in 2005 compared to $66.9 million in 2004.  Total interest income earned
on assets  increased $31.9 million,  due to the combination of higher amounts of
earning assets and higher rates.  During the year, the yield on loans  increased
85 basis points while the yield on mortgage-backed securities increased 48 basis
points.  Interest  expense  increased  $25.1  million  due to higher  amounts of
interest-bearing  deposits and borrowings to fund the increase in earning assets
as  well  as  higher  rates.  The  higher  rates  on  both  earning  assets  and
interest-bearing  liabilities were the result of higher  prevailing rates during
2005.

Net interest income was negatively  impacted in 2005 when the Company refinanced
$51.5  million of Floating  Rate  Capital  Trust I Preferred  Securities,  which
carried  an  interest  rate of 250  basis  points  over the  three-month  London
InterBank  Offered  Rate (LIBOR) and issued $67.0  million  aggregate  principal
amount of Pooled  Floating  Rate  Capital  Securities,  at LIBOR  plus 177 basis
points. In conjunction with the refinancing, the Company incurred a $1.1 million
(pretax) non-cash charge from the write down of unamortized debt issuance costs.

Net interest  income  increased  $8.9 million,  or 15%, to $66.9 million in 2004
compared to $58.0 million in 2003. Total interest income increased $14.8 million
between 2003 and 2004,  primarily due to growth in loans and the increased yield
on mortgage-backed securities.  Total interest expense, excluding the expense to
fund discontinued operations, increased $5.9 million from 2003 to 2004 primarily
due to an increase in deposits and borrowings used to fund the loan growth.  The
average  rate paid on Federal Home Loan Bank (FHLB)  advances  declined 34 basis
points,  as higher costing advances matured during the year and were replaced at
lower rates. This partially offset the increase in volumes of deposits and other
borrowings.

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 rates 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.


<TABLE>
<CAPTION>
Year Ended December 31,                                       2005 vs. 2004                        2004 vs. 2003 
-----------------------------------------------------------------------------------   ---------------------------------
                                                    Volume       Rate         Net       Volume        Rate      Net
-----------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S>                                              <C>          <C>        <C>         <C>         <C>         <C>     
Interest income:
    Commercial real estate loans                  $   8,307    $ 6,493    $ 14,800    $  6,170    $   (362)   $  5,808
    Residential real estate loans                     (564)       (454)     (1,018)       (209)     (2,886)     (3,095)
    Commercial loans (1)                             5,813       6,078      11,891       4,714        (745)      3,969
    Consumer loans                                   1,234         652       1,886       1,169      (1,510)       (341)
    Loans held-for-sale                                (10)        (11)        (21)       (232)         (9)       (241)
    Mortgage-backed securities                       2,744       2,617       5,361         999       4,453       5,452
    Investment securities                             (914)       (774)     (1,688)      2,953         514       3,467
    Other                                               17         684         701         (97)       (111)       (208)
-----------------------------------------------------------------------------------------------------------------------
Favorable (unfavorable)                             16,627      15,285      31,912      15,467        (656)     14,811
-----------------------------------------------------------------------------------------------------------------------

Interest expense:
    Deposits:
      Interest-bearing demand                           69          35         104          20         (23)         (3)
      Money market                                   2,117       1,055       3,172         157         389         546
      Savings                                         (180)        661         481        --          (370)       (370)
      Retail time deposits                           1,141       1,955       3,096        (341)       (442)       (783)
      Jumbo certificates of deposit - nonretail        (69)        675         606         281          25         306
      Brokered certificates of deposit               2,852       1,984       4,836         755         755       1,510
    FHLB of Pittsburgh advances                        782       6,300       7,082       5,145      (2,459)      2,686
    Trust preferred borrowings                         596       2,512       3,108        --           221         221
    Other borrowed funds                              (213)      2,715       2,502         693         313       1,006
    Cost of funding discontinued operations             74          73         147         435         391         826
-----------------------------------------------------------------------------------------------------------------------
Unfavorable (favorable)                              7,169      17,965      25,134       7,145      (1,200)      5,945
-----------------------------------------------------------------------------------------------------------------------
Net change as reported                            $  9,458    $ (2,680)   $  6,778    $  8,322    $    544     $ 8,866
=======================================================================================================================
</TABLE>


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

8


<PAGE>

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:


<TABLE>
<CAPTION>
Year Ended December 31,                                 2005                          2004                          2003
-------------------------------------------------------------------------   ------------------------------------------------------
                                             Average             Yield/     Average            Yield/     Average           Yield/
                                             Balance   Interest  Rate (1)   Balance  Interest  Rate(1)    Balance  Interest Rate(1)
-------------------------------------------------------------------------   ------------------------------------------------------
                                                                   (Dollars in Thousands)
<S>                                      <C>          <C>         <C>   <C>         <C>        <C>    <C>        <C>       <C>  
Assets                      
Interest-earning assets:
  Loans (2) (3):
    Commercial real estate loans .......  $  573,566   $ 39,561    6.90% $  438,395  $ 24,761   5.56%  $  329,923  $18,953  5.67%
    Residential real estate loans.......     436,373     22,545    5.17     446,910    23,563   5.27      450,483   26,658  5.92
    Commercial loans ...................     439,375     28,361    6.62     340,611    16,470   5.08      250,577   12,501  5.37
    Consumer loans......................     222,679     15,051    6.76     204,122    13,165   6.45      187,111   13,506  7.22
                                          ----------   --------          ----------  --------          ----------  -------
       Total loans......................   1,671,993    105,518    6.38   1,430,038    77,959   5.53    1,218,094   71,618  5.97
  Mortgage-backed securities (4)........     575,580     25,687    4.46     510,965    20,326   3.98      480,389   14,874  3.10
  Loans held-for-sale (3)...............       2,032        121    5.95       2,188       142   6.49        5,767      383  6.64
  Investment securities (4).............      88,094      3,258    3.70     110,567     4,946   4.47       42,325    1,479  3.49
  Other interest-earning assets.........      48,077      1,438    2.99      47,010       737   1.57       52,681      945  1.79
                                          ----------   --------          ----------  --------          ----------  -------
       Total interest-earning assets....   2,385,776    136,022    5.75   2,100,768   104,110   5.01    1,799,256   89,299  5.03
                                                       --------                      --------                      -------
Allowance for loan losses...............     (24,909)                       (23,357)                      (22,139)
Cash and due from banks.................      53,434                         52,332                        48,070
Cash in non-owned ATMs..................     133,235                        116,953                        89,169
Bank-owned life insurance...............      53,137                         48,400                             -
Loans, operating leases and other 
  assets of discontinued operations ....         531                          4,660                        25,375
Other noninterest-earning assets .......      55,000                         45,338                        34,703
                                          ----------                     ----------                    ----------
       Total assets.....................  $2,656,204                     $2,345,094                    $1,974,434
                                          ==========                     ==========                    ==========
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
  Interest-bearing deposits:
    Interest-bearing demand.............  $  111,585        297    0.27% $   83,566       193   0.23%  $   74,926      196   0.26%
    Money market........................     177,911      3,837    2.16      60,615       665   1.10       33,170      119   0.36
    Savings.............................     272,673      1,738    0.64     312,981     1,257   0.40      312,892    1,627   0.52
    Retail time deposits................     286,371      8,098    2.83     238,024     5,002   2.10      253,474    5,785   2.28
                                          ----------   --------          ----------  --------          ----------  -------
       Total interest-bearing 
         retail deposits................     848,540     13,970    1.65     695,186     7,117   1.02      674,462    7,727   1.15
    Jumbo certificates of 
      deposit - nonretail...............      43,554      1,374    3.15      47,555       768   1.61      30,105       462   1.53
    Brokered certificates of deposit....     189,593      6,346    3.35      84,194     1,510   1.79           -         -      -
                                          ----------   --------          ----------  --------          ----------  -------

       Total interest-bearing deposits..   1,081,687     21,690    2.01      826,935    9,395   1.14     704,567     8,189   1.16
  FHLB of Pittsburgh advances...........     887,822     30,673    3.41      859,742   23,591   2.70     678,680    20,905   3.04
  Trust preferred borrowings............      62,986      5,292    8.29       51,162    2,184   4.20      50,000     1,963   3.87
  Other borrowed funds..................     165,406      4,739    2.87      181,334    2,237   1.23     122,459     1,231   1.01
  Cost of funding discontinued
    operations..........................           -        (14)                   -     (161)                 -      (987)
                                          ----------   --------          ----------  --------          ----------  -------
       Total interest-bearing 
         liabilities....................   2,197,901     62,380    2.84    1,919,173   37,246   1.94    1,555,706   31,301   2.01
                                                       --------                      --------                      -------
Noninterest-bearing demand deposits.....     250,321                         220,446                      187,190
Other noninterest-bearing liabilities...      19,274                          15,040                       31,233
Minority interest.......................         209                             200                            -
Stockholders' equity....................     188,499                         190,235                      200,305
                                          ----------                      ----------                   ----------
       Total liabilities and 
         stockholders' equity...........  $2,656,204                      $2,345,094                   $1,974,434
                                          ==========                      ==========                   ==========
Excess (deficit) of interest-
  earning assets over 
  interest-bearing liabilities..........  $  187,875                      $  181,595                   $  243,550
                                          ==========                      ==========                   ==========
Net interest and dividend income........               $ 73,642                       $66,864                      $57,998
                                                       ========                       =======                      =======
Interest rate spread....................                           2.91%                        3.07%                        3.02%
                                                                   ====                         ====                         ==== 
Interest rate margin....................                           3.13%                        3.24%                        3.29%
                                                                   ====                         ====                         ==== 
</TABLE>

(1)  Weighted average yields have been computed on a tax-equivalent basis.
(2)  Nonperforming loans are included in average balance computations.
(3)  Balances are reflected net of unearned income.
(4)  Includes securities available-for-sale. .
                                                                               9

<PAGE>
WSFS FINANCIAL CORPORATION

Provision  for Loan Losses.  The  Corporation  maintains  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, 2005,  the  Corporation  recorded a provision  for loan losses from
continuing  operations of $2.6 million compared to $3.2 million in 2004 and $2.6
million in 2003. In 2005,  the decrease  reflects an  improvement  in the credit
quality of the loan portfolio.

Noninterest  Income.  Noninterest income increased $2.7 million to $34.7 million
in 2005, or 8%, from $32.0  million in 2004.  The increase was mainly the result
of an increase of $2.9 million in card and ATM income as a result of  underlying
growth in volumes  combined  with  increased  prime-based  bailment  fees. As of
December 31, 2005, the CashConnect  segment,  WSFS' ATM unit,  recognized income
from servicing 7,425 ATMs compared to 5,584 at December 31, 2004. Of these, WSFS
owned and  operated  271 ATMs in 2005.  Additionally,  deposit  service  charges
increased  $702,000 due primarily to an increase in total retail deposits driven
by the  promotion  of a new free  checking  product  line.  The  increases  were
partially offset by $605,000 of losses  recognized on the sale of lower yielding
agency investments.

Noninterest  income increased $5.8 million to $32.0 million in 2004, or 22% from
2003. This increase was primarily due to card and ATM fee income which grew $2.4
million during 2004 as a result of continued  expansion of WSFS' ATM network and
customer card usage. At December 31, 2004, WSFS' CashConnect segment, WSFS's ATM
unit,  recognized income from servicing 5,584 ATMs compared to 4,716 at December
31, 2003. Of these,  WSFS owned and operated 246 ATMs in 2004 compared to 222 in
2003.  The increase was also due to fee income of $2.3 million from  Montchanin.
Additionally,  WSFS  received  fee income of $2.2  million from the January 2004
investment in  Bank-Owned  Life  Insurance  (BOLI).  Income from this  long-term
illiquid  investment  is shown as  noninterest  income in  accordance  with U.S.
generally accepted accounting principles.  These increases were partially offset
by lower loan fee income of  $668,000  and lower gains on the sales of loans and
securities of $1.3 million.  These decreases  resulted  primarily from generally
higher interest rates and reduced  refinancing  activity during 2004 as compared
to 2003.

Noninterest  Expenses.  Noninterest  expenses for the year ended 2005 were $62.9
million for an increase of $7.2  million  over the $55.7  million in 2004.  This
increase is primarily a result of the  Company's  growth in the  commercial  and
retail banking areas and is mainly in salaries, benefits and other compensation,
occupancy expense, marketing expenses and other operating expenses. The increase
in marketing  expenses also stem from expenses related to the promotion of a new
free  checking  product  line,  and a  campaign  to  increase  market  share for
commercial  banking.   Consistent  with  accounting  rules  under  Statement  of
Financial  Accounting  Standards (SFAS) No. 5, Accounting for  Contingencies,  a
$397,000 loss contingency for standby letters of credit was recorded during 2005
and is included in other operating  expenses.  The Corporation  established this
reserve based on  management's  assessment  of the  "estimable"  and  "probable"
losses in the standby letters of credit portfolio.  More information is provided
on the  Corporation's  standby  letters of credit is  provided in Note 16 to the
Financial Statements.  As a result of the continued growth, and the formation of
the Wealth Management  Services division,  the Company anticipates that expenses
will continue to grow.

Noninterest  expenses of $55.7 million in 2004  increased  $6.3 million,  or 13%
from 2003.  Included in the 2004 results were $2.0 million in operating expenses
related  to  Montchanin.  Included  in the 2003  results  were $1.3  million  of
expenses  recorded in  connection  with the sale of WF and  $303,000 of expenses
related   to  the   Corporation's   Technology,   Organizational   and   Process
Simplification  Plan (TOPS).  During the first quarter of 2003, the  Corporation
completed  the  previously  announced  TOPS program;  an initiative  designed to
simplify the organization,  better integrate technology solutions and reengineer
certain back office processes.  Excluding the above-mentioned  items,  operating
expenses  increased  $5.9 million,  or 12% from 2003.  Included in this increase
were a $3.3 million increase in salaries,  benefits and other compensation and a
$541,000  increase in occupancy  expense.  These increases were primarily due to
normal salary increases and the Company's  continued  branch  expansion  efforts
during 2004.  Marketing expenses increased $700,000 from 2003, mainly due to the
promotion  of a new free  checking  product  line  designed to attract a greater
share of market  deposits  over time.  Also during  2004,  the Company  incurred
$469,000 of expenses  associated with the initial compliance with Section 404 of
the  Sarbanes-Oxley  Act of 2002 (SOX 404).  Finally,  during 2004 and 2003, the
CashConnect  segment performed an extensive analysis of its reserve for business
losses.  Based on its  evaluation  of  probable  losses  using  historical  loss
experience,  the Company  recorded a reduction to this reserve of $4,000 in 2004
and $261,000 in 2003.

Income  Taxes.  The  Corporation  recorded a $14.8 million tax provision for the
year ended December 31, 2005 compared to $14.1 million and $34.9 million for the
years ended  December 31, 2004 and 2003,  respectively.  The effective tax rates
for continuing  operations for the years ended December 31, 2005,  2004 and 2003
were  34.8%,  35.1% and 34.1%,  respectively.  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.  The increase in the
effective  tax rate from 2003 to 2004 is  principally  the result of a change in
New  Jersey  tax law that was  enacted  in June  2004.  This law  change,  which
eliminated the utilization of a portion of the Company's net operating losses in
2004, resulted in additional New Jersey state taxes payable.

10

<PAGE>
                                                      WSFS FINANCIAL CORPORATION

At December 31, 2005, approximately $3.3 million in gross deferred tax assets of
the Corporation are related to net operating losses and tax credits attributable
to a former subsidiary.  Management has assessed a valuation  allowance of $1.96
million on these deferred tax assets due to limitations  imposed by the Internal
Revenue  Code.  Approximately  $744,000  in gross  deferred  tax  assets  of the
Corporation at December 31, 2005 are related to state tax net operating  losses.
Management  has  established a valuation  allowance on all of these deferred tax
assets due to such net operating losses expiring before being utilized.


The  Corporation  has an ongoing program that analyzes its projection of taxable
income and makes adjustments to its provision for income taxes accordingly.  For
additional  information  regarding  the  Corporation's  tax  provision  and  net
operating  loss  carryforwards,  see  Note  14  to  the  Consolidated  Financial
Statements.

FINANCIAL CONDITION

Total assets increased $343.8 million, or 14%, during 2005 to $2.8 billion. This
increase  was  predominantly  due to  growth in net  loans,  which  grew  $239.8
million,  or 16% during 2005. Total liabilities  increased $358.2 million during
the year to $2.7 billion at December 31, 2005.  This  increase was primarily the
result of an  increase in deposits of $211.3  million,  or 17% during  2005.  In
addition,  the increase was due to  increased  advances  from the FHLB of $171.7
million.

Cash in non-owned  ATMs.  Between  December 31, 2004 and December 31, 2005,  the
CashConnect  segments',  WSFS' ATM unit,  cash in non-owned ATMs increased $43.4
million,  or 33%.  This  increase was the result of an increase in the number of
ATMs  serviced  by  CashConnect  from  5,584 at  December  31,  2004 to 7,425 at
December 31, 2005. Of these, 271 ATMs were WSFS owned and operated during 2005.

Mortgage-backed Securities.  Investments in mortgage-backed securities increased
$96.2  million  during 2005 to $620.3  million.  During  2005,  the  Corporation
purchased $220.8 million in mortgage-backed securities. This increase was offset
by principal  repayments of $112.4 million. The weighted average duration of the
mortgage-backed securities was 3.1 years at December 31, 2005.

Loans, net. Net loans, including loans held-for-sale,  increased $239.8 million,
or 16%  during  2005.  This  included  increases  of $140.2  million,  or 38% in
commercial loans,  $51.9 million,  or 10% in commercial real estate loans, $33.9
million,  or 16% in  consumer  loans and  $17.8  million,  or 4% in  residential
mortgage loans.

Retail Deposits. Retail deposits increased $141.7 million, or 13% during 2005 to
$1.2 billion.  Core deposit  relationships  (demand  deposits,  money market and
savings accounts) increased $122.6 million, or 16% during the year. In addition,
retail time deposits (CDs)  increased  $19.1  million,  or 7% in 2005. The table
below depicts the changes in retail deposits over the last three years:

Year Ended December 31,              2005             2004             2003     
--------------------------------------------------------------------------------
(In Millions)
Beginning balance                  $1,052.2         $  883.1         $872.1
Interest credited                      11.4              6.6            6.4
Deposit inflows, net                  130.3            162.5            4.6 
--------------------------------------------------------------------------------
Ending balance                     $1,193.9         $1,052.2         $883.1
================================================================================

Borrowings and Brokered  Certificates of Deposit.  Total borrowings increased by
$140.9 million, or 13% between December 31, 2004 and December 31, 2005. Advances
from the FHLB increased  $171.7 million,  or 21% and Trust Preferred  borrowings
increased $15.5 million, or 30%. Brokered deposits also increased $73.9 million,
or 54% during the year.  These  increases  were  primarily  used to fund the 16%
growth in loans during 2005.

Stockholders'  Equity.  Stockholders'  equity  decreased $14.3 million to $182.0
million at December 31, 2005. This decrease was mainly due to the acquisition of
719,500 shares of the  Corporation's  common stock for $40.2 million ($55.94 per
share average). At December 31, 2005, the Corporation held 8.8 million shares of
its common  stock as  treasury  shares.  The  Corporation  intends  to  continue
repurchasing  shares in 2006 in amounts depending on stock price and alternative
uses of capital.  In addition,  other  comprehensive loss increased $6.6 million
due to a decline in the fair value of  securities  available-for-sale.  Finally,
the Corporation  declared cash dividends totaling $1.8 million.  These decreases
were  partially  offset by net income of $27.9  million  and in increase of $6.1
million in proceeds from the exercise of stock options.

ASSET/LIABILITY MANAGEMENT

The primary asset/liability management goal of the Corporation is maximizing its
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.  Management  regularly reviews the Corporation's
interest-rate sensitivity,  and uses 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 the primary strategies utilized
by the Corporation to accomplish this objective.

                                                                              11

<PAGE>
WSFS FINANCIAL CORPORATION

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.

The repricing and maturities of the Corporation's interest-rate sensitive assets
and  interest-rate  sensitive  liabilities at December 31, 2005 are set forth in
the following table:


<TABLE>
<CAPTION>
                                                                 Less than          One to                Over
                                                                 One Year       Five Years          Five Years           Total   
------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S>                                                            <C>            <C>                    <C>           <C>       
Interest-rate sensitive assets :
   Real estate loans (1)..............................          $  638,064     $   328,379            $ 79,740      $1,046,183
   Commercial loans...................................             426,238          58,842              23,850         508,930
   Consumer loans.....................................             113,998          55,067              75,755         244,820
   Mortgage-backed securities.........................             215,334         154,368             250,621         620,323
   Loans held-for-sale................................                 438               -                   -             438
   Investment securities..............................              48,718          38,194              16,870         103,782
   Other investments..................................                 173               -                    -            173
------------------------------------------------------------------------------------------------------------------------------
                                                                 1,442,963         634,850             446,836       2,524,649
------------------------------------------------------------------------------------------------------------------------------
Interest-rate sensitive liabilities:             
   Money market and interest-bearing demand deposits..              91,032               -             259,744         350,776
   Savings deposits...................................              70,621               -             181,054         251,675
   Retail time deposits...............................             224,950          85,814               1,301         312,065
   Jumbo certificates of deposit......................              36,935           3,632                   -          40,567
   Brokered certificates of deposit...................             211,738               -                   -         211,738
   FHLB advances .....................................             661,000         274,900              72,821       1,008,721
   Trust preferred borrowings.........................              67,011               -                   -          67,011
   Other borrowed funds...............................              95,794               1              23,481         119,276
------------------------------------------------------------------------------------------------------------------------------
                                                                 1,459,081         364,347             538,401       2,361,829
------------------------------------------------------------------------------------------------------------------------------
   (Deficiency) excess  of interest-rate sensitive....
   assets over interest-rate sensitive liabilities....
   ("interest-rate sensitive gap")....................          $  (16,118)    $   270,503            $(91,565)     $  162,820
==============================================================================================================================
</TABLE>


One-year interest-rate sensitive 
  assets/interest-rate sensitive liabilities                         98.90% 
One-year interest-rate sensitive gap as a 
  percent of total assets                                            (0.57)%


(1)  Includes commercial mortgage, construction, and residential mortgage loans.

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 the Company adjusts
its interest-sensitivity position throughout the year.

To provide a more  accurate  one-year gap position of the  Corporation,  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 the Bank's 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.

12

<PAGE>
                                                      WSFS FINANCIAL CORPORATION

In 1998,  the  Corporation  purchased a ten-year  interest  rate cap in order to
limit its  exposure on $51.5  million of  variable  Trust  Preferred  Securities
issued in 1998.  On April 6, 2005,  the  Corporation  completed  the issuance of
$67.0 million of aggregate  principal amount of Pooled Floating Rate Securities.
The  proceeds  from  this  issuance  were used to fund the  redemption  of $51.5
million of Floating Rate Capital Trust I Preferred  Securities.  This derivative
instrument  caps the  three-month  LIBOR,  the base rate of the trust  preferred
borrowings,  at 6.00%. The Trust Preferred borrowings are classified in the less
than one-year  category  reflecting the ability to adjust upward for the balance
of the term of the interest  rate cap. If the  three-month  LIBOR rate equals or
exceeds 6.00%, the Trust Preferred borrowing takes on a fixed characteristic and
therefore would be classified in the period corresponding to the cap's maturity.

REVERSE MORTGAGES

The Corporation holds an investment in reverse mortgages of $785,000 at December
31, 2005 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.

The Corporation  accounts for its 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, 2005, the Corporation  earned
$678,000 in interest income on reverse  mortgages as compared to $1.8 million in
2004 and $(24,000) in 2003.

The projected  cash flows depend on  assumptions  about life  expectancy and the
changes in future collateral values. Projecting the changes in future collateral
values is the most  significant  factor  impacting the volatility of future cash
flows. The Corporation is currently  estimating 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  $150,000.  Conversely,  if the
long-term  appreciation  rate was decreased to -0.5%,  the  resulting  impact on
income would have been $(130,000).

The Corporation also holds $12.0 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  previously  held  by the  Corporation.  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 very long-term assets.  Hence, 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,  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 133,
Accounting for Derivative and Hedging Activities.

DISCONTINUED OPERATIONS

In December 2000, the  Corporation  approved plans to discontinue the operations
of WCC. At December  31,  2000,  WCC had 7,300  lease  contracts  and 2,700 loan
contracts,  compared to zero lease  contracts and 31 loan  contracts at December
31, 2005. WCC no longer accepts new  applications,  but will continue to service
existing loans until their maturity.

An  extensive  analysis as of December  31, 2005  indicated  that no  additional
reserves  were  needed  for the  expected  losses  in the  business  during  the
remaining wind-down period.

At December 31, 2005,  there were $74,000 in indirect loans and zero in indirect
leases,  net,  still  outstanding.  At December 31,  2005,  WSFS had exposure to
$19,000  in  remaining  used car  residuals,  for which it  estimates  a loss of
$8,000.  Management has provided for this loss in the Financial Statements.  Due
to the provision for this estimated  exposure in the financial  statements,  the
loss on the wind-down of discontinued operations, net of tax, was zero in 2005.

                                                                              13

<PAGE>
WSFS FINANCIAL CORPORATION

BUSINESS HELD-FOR-SALE

In November  2002,  WSFS  signed a  definitive  agreement  for the sale of WSFS'
majority-owned subsidiary, WF. This sale was completed in January 2003. In 2003,
WSFS  recognized  an after  tax gain on the sale of $41.3  million  or $5.01 per
diluted  share.  The sale  included  $148.2  million in assets,  of which $117.6
million were residential mortgage loans  held-for-sale.  The gain on the sale of
WF is presented separately on the statement of operations, net of tax.

The completion of this divestiture transaction was consistent with the Company's
strategic  direction to focus resources and capital on WSFS' core community bank
network in and around Delaware.

MARKET RISK

Market risk is the risk of loss from adverse changes in market prices and rates.
The Company's  market risk arises  primarily from interest rate risk inherent in
its lending,  investing and funding activities. To that end, management actively
monitors and manages its 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 the Company's net interest margin and net
portfolio  value  at the  specified  levels  at  December  31,  2005  and  2004,
calculated in compliance with Thrift Bulletin No. 13A:

December 31,            2005                                  2004       
------------------------------------------------    ----------------------------
Change in Interest  % Change in                     % Change in
       Rate         Net Interest   Net Portfolio    Net Interest   Net Portfolio
  (Basis Points)     Margin (1)      Value (2)      Margin (1)       Value (2)
--------------------------------------------------------------------------------
       +300              0%             7.33%            3%             9.26%
       +200              0%             7.86%            2%             9.35%
       +100              0%             8.31%            1%             9.42%
          0              0%             8.72%            0%             9.47%
       -100             -2%             8.83%           -3%             9.30%
       -200 (3)         -7%             8.62%           -9%             9.10%
       -300 (3)        -11%             8.32%          -17%             9.07%


(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)  The  net  portfolio  value  of  the  Company  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,  2005  and  2004  given  the
     historically low absolute level of interest rates at these dates.

The Company's  primary  objective in managing  interest rate risk is to minimize
the adverse  impact of changes in interest  rates on the  Company's net interest
income and capital,  while  maximizing  the  yield/cost  spread on the Company's
asset/liability  structure.  The Company relies primarily on its asset/liability
structure to control interest rate risk.

The Company  also engages 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.

NONPERFORMING ASSETS

Nonperforming assets, which include nonaccruing loans, nonperforming real estate
investments and assets acquired through  foreclosure,  can negatively affect the
Corporation's  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.

14

<PAGE>
                                                      WSFS FINANCIAL CORPORATION

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


<TABLE>
<CAPTION>

December 31,                                      2005      2004      2003      2002      2001
----------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S>                                            <C>       <C>       <C>       <C>       <C>   
Nonaccruing loans:
     Commercial                                 $  925    $1,595    $1,549    $2,242    $1,330
     Consumer                                      155       291       240       516       306
     Commercial mortgages                          727       909       941       326     1,928
     Residential mortgages                       1,567     1,601     2,513     3,246     3,618
     Construction                                   36         -         -       199       351
----------------------------------------------------------------------------------------------
Total nonaccruing loans                          3,410     4,396     5,243     6,529     7,533
Assets acquired through foreclosure                 59       217       301       904       432
----------------------------------------------------------------------------------------------
Total nonperforming assets                      $3,469    $4,613    $5,544    $7,433    $7,965
==============================================================================================

Past due loans:
     Residential mortgages                      $  327    $  703    $  915    $  346    $   88
     Commercial and commercial mortgages             -         -       129        95       767
     Consumer                                       59       104       148        88       244
----------------------------------------------------------------------------------------------
Total past due loans                            $  386    $  807    $1,192    $  529    $1,099
==============================================================================================

Ratio of nonaccruing loans to total
     loans (1)                                    0.19%     0.28%     0.40%     0.60%     0.72%
Ratio of allowance for loan losses to gross
     loans (1)                                    1.41%     1.56%     1.69%     1.95%     2.05%
Ratio of nonperforming assets to total assets     0.12%     0.18%     0.25%     0.44%     0.42%
Ratio of loan loss allowance to nonaccruing
  loans (2)                                     709.47%   524.05%   421.91%   324.49%   277.77%

</TABLE>


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

The ratio of  nonaccruing  loans to total loans  improved  from 0.28% in 2004 to
0.19% in 2005. In addition,  the ratio of  nonperforming  assets to total assets
improved from 0.18% in 2004 to 0.12% in 2005. These improvements were the result
of continued strong levels of asset quality.

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




Year Ended December 31,                    2005            2004           2003 
--------------------------------------------------------------------------------
(In Thousands)                                                       
Beginning balance                       $ 4,613         $ 5,544        $ 7,433
      Additions                           5,062           6,554          7,299
      Collections                        (4,467)         (4,668)        (6,992)
      Transfers to accrual                 (398)         (1,717)          (945)
      Charge-offs/write-downs            (1,341)         (1,100)        (1,251)
--------------------------------------------------------------------------------
 Ending balance                         $ 3,469         $ 4,613        $ 5,544
================================================================================
                                                            
Allowance  for Loan Losses.  The  Corporation  maintains  allowances  for credit
losses and charges 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  loan  losses  related to
specifically  identified  loans as well as probable loan 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 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.

                                                                              15

<PAGE>
WSFS FINANCIAL CORPORATION

The formula  allowances  for  commercial  and  commercial  real estate loans are
calculated by applying loss factors to  outstanding  loans in each case based on
the  internal  risk grade of each loan.  As a result,  changes in risk grades of
both  performing  and  nonperforming  loans  affect  the  amount of the  formula
allowance.  Loss  factors by risk grade  have a basis in WSFS'  historical  loss
experience for such loans and may be adjusted for  significant  factors that, in
management's  judgement,  affect the  collectability  of the portfolio as of the
evaluation date. See the discussion of historical loss adjustment factors below.

Pooled  loans are loans that are usually  smaller,  not-individually-graded  and
homogenous  in  nature,  such as  consumer  installment  loans  and  residential
mortgages.  Pooled loan loss  allowances are based on historical net charge-offs
for ten years.  The average loss allowance per  homogenous  pool is based on the
product  of  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 losses based upon this  historical  loss  information
and historical 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 (including trends in nonperforming  loans expected to
     result from existing conditions),
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.

WSFS' 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 the Corporation's  allowance for such losses. The
Company  also gives  consideration  to the  results of these  regulatory  agency
examinations.

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


<TABLE>
<CAPTION>
Year Ended December 31,                                     2005        2004        2003        2002         2001
-----------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S>                                                    <C>         <C>         <C>         <C>          <C>     
Beginning balance                                       $ 24,222    $ 22,386    $ 21,452    $ 21,597     $ 21,423
Provision for loan losses - continuing operations          2,582       3,217       2,550       2,243        1,865
Provision for loan losses - businesses held-for-sale           -           -           -         211          347
Sale of businesses held-for-sale                               -           -           -        (269)           -

Charge-offs:
    Residential real estate                                   90         222         329         725          106
    Commercial real estate (1)                               104         148           -         333          195
    Commercial                                             1,048         656         827         895        1,000
    Consumer (2)                                             631         817         860       1,551        1,031
-----------------------------------------------------------------------------------------------------------------
Total charge-offs                                          1,873       1,843       2,016       3,504        2,332
-----------------------------------------------------------------------------------------------------------------

Recoveries:
    Residential real estate                                   59          32           -          76            1
    Commercial real estate (1)                                42           -         202         181           61
    Commercial                                               209         335          79         483          100
    Consumer (2)                                             140          95         119         434          132
-----------------------------------------------------------------------------------------------------------------
Total recoveries                                             450         462         400       1,174          294
-----------------------------------------------------------------------------------------------------------------

Net charge-offs                                            1,423       1,381       1,616       2,330        2,038
-----------------------------------------------------------------------------------------------------------------
Ending balance                                          $ 25,381    $ 24,222    $ 22,386    $ 21,452     $ 21,597
=================================================================================================================

Net charge-offs to average gross loans outstanding,
    net of unearned income                                  0.09%       0.10%       0.13%       0.22%        0.20%
=================================================================================================================
</TABLE>


(1)  Includes  commercial  mortgage and  construction  loans. 
(2)  2002 and prior years include amounts for businesses held-for-sale.

16

<PAGE>
                                                      WSFS FINANCIAL CORPORATION

For the year ended December 31, 2005, the Corporation  provided $2.6 million for
loan  losses.  The  decrease in 2005  reflects  improved  credit  quality of the
Corporation's loan portfolio despite strong loan growth.

The  allowance  for  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
indicative of where future losses may occur. The allocation of the allowance for
loan and  lease  losses  by  portfolio  type at the end of each of the last five
fiscal years,  and the percentage of outstanding in each category to total gross
loans outstanding, at such dates follow:


<TABLE>
<CAPTION>
December 31,                               2005               2004              2003              2002              2001
------------------------------------------------------ ------------------ ----------------- ----------------- -----------------
                                       Amount  Percent   Amount   Percent   Amount  Percent   Amount  Percent    Amount Percent
------------------------------------------------------ ------------------ ----------------- ----------------- -----------------
(Dollars in Thousands)
<S>                                 <C>         <C>   <C>         <C>    <C>        <C>   <C>          <C>     <C>        <C>  
Residential real estate              $  1,632    25.4% $  1,468    28.1%  $  2,736   34.6% $   3,620    38.2%   $ 4,039    38.2%
Commercial real estate                 10,978    32.7     9,211    34.6      8,338   29.3      7,208    26.2      6,927    24.3
Commercial                              9,471    28.3    10,456    23.7      8,368   22.0      7,375    19.1      6,963    18.7
Consumer                                3,300    13.6     3,087    13.6      2,944   14.1      3,249    16.5      3,668    18.8
-------------------------------------------------------------------------------------------------------------------------------
Total                                 $25,381   100.0%  $24,222   100.0%   $22,386  100.0%   $21,452   100.0%   $21,597   100.0%
===============================================================================================================================
</TABLE>

                                                                          
LIQUIDITY

The Company  manages its  liquidity  risk and funding needs through its treasury
function and its Asset/Liability  Committee.  Historically,  the Company has had
success  in  growing  its loan  portfolio.  For  example,  during the year ended
December  31,  2005,  net loan growth  resulted in the use of $228.8  million in
cash.  The loan  growth  was  primarily  the  result  of the  continued  success
increasing  corporate and small business lending.  Management expects this trend
to continue. While the Company's  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,  the Company has ready access to several sources of
funding.  Among these are:  

o   Deposit growth 
o   The brokered CD market 
o   Borrowing from the FHLB 
o   Other borrowings such as repurchase  agreements 
o   Cashflow from securities and loan repayments 
o   And net income of the Company

The Company's  current  branch  expansion and  renovation  program is focused on
expanding  the  Company's  retail  footprint  in  Delaware  and  attracting  new
customers  to provide  additional  deposit  growth.  Retail  deposit  growth was
strong,  equaling  $141.7 million or 13% between  December 31, 2004 and December
31, 2005.

The  Corporation's  portfolio of  high-quality,  liquid  investments,  primarily
short-duration  AAA-rated,  mortgage-backed  securities  and  Agency  notes also
provide a  near-continuous  source of cash flow to meet current  cash needs.  If
needed,  portions of this  portfolio  could also be sold to provide cash to fund
loan growth.  During the year ended December 31 2005,  $39.3 million in cash was
also provided by operating activities.

The Company has a policy that  separately  addresses  liquidity,  and management
monitors the Company's  adherence to policy limits. One measure of the Company's
liquidity is the ratio of cash and qualified assets to net withdrawable deposits
and  borrowings  due  within  one year,  which was 7.4% at  December  31,  2005,
compared  with 10.5% at December 31, 2004.  The ratio at both dates were well in
excess of the policy minimum.  Also, liquidity risk management is a primary area
of examination by the OTS.

The  Corporation  has not used and has no intention of using any significant off
balance sheet  financing  arrangement  for liquidity  management  purposes.  The
Corporation's  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,  WSFS has not had and has no  intention  to have  any  significant
transactions,  arrangements  or other  relationships  with  any  unconsolidated,
limited purpose entities that could  materially  affect its 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 WSFS 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.

                                                                              17

<PAGE>
WSFS FINANCIAL CORPORATION

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,  2005,  WSFS is  classified  as  well-capitalized,  the highest
regulatory  defined  level,  and is in compliance  with all  regulatory  capital
requirements.   Additional   information  concerning  WSFS'  regulatory  capital
compliance is included in Note 12 to the Financial Statements.

Since  1996,  the Board of  Directors  has  approved  several  stock  repurchase
programs to acquire common stock  outstanding.  As part of these  programs,  the
Corporation acquired  approximately 719,500 shares in 2005 and 373,900 shares in
2004.  At December  31, 2005,  the  Corporation  held 8.8 million  shares of its
common  stock  as  treasury   shares.   The  Corporation   intends  to  continue
repurchasing  shares in 2006 in amounts depending on stock price and alternative
uses of capital.  At December  31,  2005,  the  Corporation  had 650,000  shares
remaining under its current share repurchase authorization.

OFF BALANCE SHEET ARRANGEMENTS

The  Corporation has no off balance sheet  arrangements  that currently have, or
are  reasonably  likely to have a material  future  effect on the  Corporation's
financial  condition,  changes in  financial  condition,  revenues or  expenses,
results of operations,  liquidity,  capital  expenditures or capital  resources.
Additional   information   concerning  the   Corporation's   off  balance  sheet
arrangements is included in Note 16 to the Financial Statements.

CONTRACTUAL OBLIGATIONS

At December 31, 2005, the Corporation had  contractual  obligations  relating to
operating leases, long-term debt, data processing and credit obligations.  These
obligations  are  summarized  below.   Additional   information  concerning  the
Corporation's  contractual obligations is included in Notes 9, 11, and 16 to the
Financial Statements.


<TABLE>
<CAPTION>
                                                 Less than                                 More than
                                      Total         1 Year     1-3 Years     3-5 Years       5 Years
----------------------------------------------------------------------------------------------------
                                                         (Amount in Thousands)
<S>                             <C>            <C>             <C>            <C>           <C>    
Operating lease obligations      $   37,288     $    2,253      $  5,550       $ 5,524       $23,961
Long-term debt obligations        1,008,721        661,000       209,900        65,000        72,821
Data processing contracts            12,587          3,364         6,147         3,076             -
Credit obligations                  503,398        503,398                           -
----------------------------------------------------------------------------------------------------
Total                            $1,561,994     $1,170,015      $221,597       $73,600       $96,782
====================================================================================================
</TABLE>


IMPACT OF INFLATION AND CHANGING PRICES

The  Corporation's  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  the  Corporation's  operations.   Unlike  most  industrial
companies,  nearly  all  the  assets  and  liabilities  of the  Corporation  are
monetary. As a result, interest rates have a greater impact on the Corporation's
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

On July 30, 2002,  President Bush signed into law the Sarbanes-Oxley Act of 2002
(the "Act").  The SEC promulgated  certain  regulations  pursuant to the Act and
will 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  subjected
publicly-traded   companies  to  additional  and  more  comprehensive  reporting
regulations and disclosure. These new regulations, which are intended to curtail
corporate fraud, require the chief executive officer and chief financial officer
of the  Company  to  personally  certify  certain  SEC  filings  as  well as the
Company's  Financial  Statements  and to  certify  as to (i)  the  existence  of
disclosure  controls  and  procedures  within the Company are designed to ensure
that  information  required to be disclosed by the Company in its SEC filings is
processed,  summarized and reported accurately and (ii) the effectiveness of the
Company's internal control over financial reporting.

The Act and regulations promulgated thereunder by the SEC also impose additional
measures to be taken by the Company's  officers,  directors and outside auditors
and impose accelerated  reporting  requirements by officers and directors of the
Company in  connection  with  certain  changes in their  equity  holdings of the
Company.  Implementation  of and  compliance  with  the  Act  and  corresponding
regulations has and will likely increase the Company's operating expenses.

18

<PAGE>
                                                      WSFS FINANCIAL CORPORATION

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.  Management  evaluates  these  estimates and assumptions on an ongoing
basis,  including those related to the allowance for loan losses,  contingencies
(including indemnifications), and deferred taxes. Management bases its 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

The  Corporation  maintains  allowances  for credit losses and charges losses to
these  allowances  when realized.  The  determination  of the allowance for loan
losses requires significant  judgement reflecting  management's best estimate of
probable loan losses related to specifically  identified loans, as well as those
in the  remaining  loan  portfolio.  Management's  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,  the  Corporation,  the  Bank  and  its
subsidiaries  are subject to legal  actions  which  involve  claims for monetary
relief.  Based upon information  presently  available to the Corporation and its
counsel,  it  is  the  Corporation's   opinion  that  any  legal  and  financial
responsibility  arising from such claims will not have a material adverse effect
on the Corporation's results of operations.

The Bank,  as successor to  originators  of reverse  mortgages  is, from time to
time,  involved in disputes,  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  regarding 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

The  Corporation  accounts  for  income  taxes  in  accordance  with  SFAS  109,
Accounting  for Income Taxes,  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.  Management has assessed the Company's
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 December 2004, the Financial  Accounting  Standards  Board (FASB) issued SFAS
No. 123 (revised 2004), Share-Based Payment - An Amendment of Statements No. 123
and 95 that addresses the accounting for equity-based compensation arrangements,
including employee stock options. Upon implementation of the changes proposed in
this  statement,  entities  would no longer be able to account for  equity-based
compensation  using the intrinsic  value method under  Opinion No. 25.  Entities
would be required to measure the cost of employee  services received in exchange
for awards of equity  instruments  at the grant  date of the award  using a fair
value based method.  SFAS 123 (R) becomes  effective for public entities that do
not file as small  business  issuers  as of the  beginning  of the first  fiscal
reporting period that begins after June 15, 2005. For the  Corporation,  it will
become effective on January 1, 2006. See Note 1 to the Financial  Statements for
the Company's  disclosure of the prospective impact of fair value accounting for
stock options.

In May  2005,  the FASB  issued  SFAS No.  154,  Accounting  Changes  and  Error
Corrections - a replacement  of APB Opinion No. 20 and FASB Statement No. 3 that
requires  retrospective  application  to prior periods  financial  statements of
voluntary changes in accounting principle and changes required by new accounting
standards  when the standard  does not include  specific  transition  provisions
unless it is impracticable  to do so. SFAS 154 becomes  effective for accounting
changes and  corrections of errors in fiscal years  beginning after December 15,
2005. For the  Corporation,  this will become  effective on January 1, 2006. The
adoption of this Statement will not have a material impact on the  Corporation's
Consolidated Financial Statements.

In November  2005,  FASB Staff Position (FSP) SFAS Nos. 115-1 and SFAS 124-1 The
Meaning  of  Other-Than-Temporary  Impairment  and Its  Application  to  Certain
Investments,  was issued.  This FSP  addresses the  determination  as to when an
investment  is  considered  impaired,  whether  that  impairment  is other  than
temporary,  and the  measurement of an impairment  loss.  This FSP also includes
accounting  considerations subsequent to the recognition of other-than-temporary
impairment and requires certain  disclosures  about unrealized  losses that have
not been recognized as  other-than-temporary  impairments.  The guidance in this
FSP shall be applied to reporting periods beginning after December 15, 2005. For
the Corporation,  this will become effective on January 1, 2006. The adoption of
this Statement will not have a material impact on the Corporation's Consolidated
Financial Statements.

                                                                              19


<PAGE>
WSFS FINANCIAL CORPORATION


Market for Registrant's Common Equity and 
Related Stockholder Matters

WSFS Financial Corporation's Common Stock is traded on The Nasdaq Stock MarketSM
under  the  symbol  WSFS.  At  December  31,  2005,  the  Corporation  had 1,378
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 the common stock at December 31, 2005 was $61.25.


                                         Stock Price Range                
                                         -----------------                
                                         Low          High     Dividends
           -------------------------------------------------------------
           2005         4th            $57.12        $65.00     $ 0.07
                        3rd             54.00         59.26       0.07
                        2nd             49.50         56.70       0.07
                        1st             51.90         60.38       0.06
                                                                ------
                                                                $ 0.27
                                                                ======

           2004         4th            $49.90        $62.75     $ 0.06
                        3rd             47.80         53.75       0.06
                        2nd             45.03         51.12       0.06
                        1st             43.81         52.31       0.05
                                                                ------
                                                                $ 0.23
                                                                ======

20

<PAGE>
                                                      WSFS FINANCIAL CORPORATION


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,  2005.  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, 2005, the Corporation's  internal control over financial  reporting
is effective based on those criteria.

Management's  assessment of the effectiveness of internal control over financial
reporting as of December 31, 2005, has been audited by KPMG LLP, the independent
registered   public   accounting   firm  who  also  audited  the   Corporation's
consolidated  financial  statements.  KPMG's  attestation report on management's
assessment  of the  Corporation's  internal  control  over  financial  reporting
appears elsewhere in this annual report.


/s/Marvin N. Schoenhals                            /s/Stephen A. Fowle
------------------------------                     -----------------------------
Marvin N. Schoenhals                               Stephen A. Fowle
Chairman and President                             Executive Vice President and
and Chief Financial Officer                        Chief Financial Officer



                                                                              21


<PAGE>
WSFS FINANCIAL CORPORATION

Report of Independent Registered
Public Accounting Firm


The Board of Directors and Stockholders
WSFS Financial Corporation:

We  have  audited   management's   assessment,   included  in  the  accompanying
Management's  Report on Internal  Control Over  Financial  Reporting,  that WSFS
Financial  Corporation (the Corporation)  maintained  effective internal control
over financial reporting as of December 31, 2005, based on criteria  established
in Internal Control--Integrated  Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). The Corporation'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.   Our  responsibility  is  to  express  an  opinion  on  management's
assessment and an opinion on the  effectiveness  of the  Corporation'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,  evaluating management's assessment, testing and evaluating
the design and operating  effectiveness of internal control, and 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,   management's  assessment  that  the  Corporation  maintained
effective internal control over financial  reporting as of December 31, 2005, is
fairly stated, in all material respects,  based on criteria established in COSO.
Also, in our opinion,  the  Corporation  maintained,  in all material  respects,
effective  internal  control over  financial  reporting as of December 31, 2005,
based on criteria established in 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 WSFS Financial Corporation and subsidiaries as of December 31, 2005
and 2004,  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, 2005, and our report dated March 15, 2006 expressed an
unqualified opinion on those consolidated financial statements.


/s/KPMG LLP

March 15, 2006

Philadelphia, Pennsylvania

22


<PAGE>
                                                      WSFS FINANCIAL CORPORATION

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 Corporation) as of December 31, 2005
and 2004,  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, 2005. These consolidated  financial statements are the
responsibility of the Corporation'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, 2005 and 2004, and the results
of their operations and their cash flows for each of the years in the three-year
period ended  December 31, 2005,  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   effectiveness  of  the
Corporation's internal control over financial reporting as of December 31, 2005,
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 15, 2006 expressed an unqualified opinion on management's
assessment of, and the effective  operation of, internal  control over financial
reporting.


/s/KPMG LLP

March 15, 2006

Philadelphia, Pennsylvania


                                                                              23

<PAGE>
WSFS FINANCIAL CORPORATION


CONSOLIDATED STATEMENT OF OPERATIONS


<TABLE>
<CAPTION>
Year Ended December 31,                                                     2005         2004        2003  
----------------------------------------------------------------------------------------------------------
(Dollars in Thousands, Except Per Share Data)
<S>                                                                  <C>          <C>         <C>      
Interest income:
Interest and fees on loans                                             $ 105,639    $  78,101   $  72,001
Interest on mortgage-backed securities                                    25,687       20,326      14,874
Interest and dividends on investment securities                            2,580        3,099       1,503
Interest on investments in reverse mortgages                                 678        1,847         (24)
Other interest income                                                      1,438          737         945
----------------------------------------------------------------------------------------------------------
                                                                         136,022      104,110      89,299
----------------------------------------------------------------------------------------------------------
Interest expense:
Interest on deposits                                                      21,690        9,395       8,189
Interest on Federal Home Loan Bank advances                               30,659       23,430      19,918
Interest on federal funds purchased and securities sold under
  agreements to repurchase                                                 4,089        2,064         927
Interest on trust preferred borrowings                                     5,292        2,184       1,963
Interest on other borrowings                                                 650          173         304
----------------------------------------------------------------------------------------------------------
                                                                          62,380       37,246      31,301
----------------------------------------------------------------------------------------------------------
Net interest income                                                       73,642       66,864      57,998
Provision for loan losses                                                  2,582        3,217       2,550
----------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses                       71,060       63,647      55,448
----------------------------------------------------------------------------------------------------------

Noninterest income:
Credit/debit card and ATM income                                          15,049       12,137       9,749
Deposit service charges                                                   10,091        9,389       9,119
Investment advisory income                                                 2,519        2,262           -
Bank-owned life insurance income                                           2,003        2,190           -
Loan fee income                                                            1,999        2,182       2,850
Mortgage banking activities, net                                             391          439       1,517
Securities (losses) gains                                                   (605)         249         515
Other income                                                               3,206        3,102       2,416
----------------------------------------------------------------------------------------------------------
                                                                          34,653       31,950      26,166
----------------------------------------------------------------------------------------------------------

Noninterest expenses:
Salaries, benefits and other compensation                                 35,172       30,723      26,544
Occupancy expense                                                          5,168        4,666       4,040
Equipment expense                                                          3,879        3,696       3,777
Data processing and operations expense                                     3,465        3,246       2,812
Marketing expense                                                          2,745        2,329       1,602
Professional fees                                                          2,416        2,496       2,673
Other operating expenses                                                  10,032        8,543       7,969
----------------------------------------------------------------------------------------------------------
                                                                          62,877       55,699      49,417
----------------------------------------------------------------------------------------------------------
Income from continuing operations before minority interest and taxes      42,836       39,898      32,197
Less minority interest                                                       133          190           -
----------------------------------------------------------------------------------------------------------
Income from continuing operations before taxes                            42,703       39,708      32,197
Income tax provision                                                      14,847       13,951      10,964
----------------------------------------------------------------------------------------------------------
Income from continuing operations                                         27,856       25,757      21,233
Income on wind-down of discontinued operations, net of taxes                   -          143           -
Gain on sale of businesses held-for-sale, net of taxes                         -            -      41,789
----------------------------------------------------------------------------------------------------------
Net income                                                             $  27,856    $  25,900   $  63,022
==========================================================================================================
</TABLE>


24


<PAGE>
                                                      WSFS FINANCIAL CORPORATION


<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF OPERATIONS (continued)

Year Ended December 31,                                                     2005         2004        2003  
-----------------------------------------------------------------------------------------------------------
(Dollars in Thousands, Except Per Share Data)
<S>                                                                  <C>           <C>         <C>     
Earnings per share:
  Basic:
     Income from continuing operations                                 $    4.10    $    3.60    $   2.73
     Income on wind-down of discontinued operations, net of taxes              -         0.02           -
     Gain on sale of businesses held-for-sale, net of taxes                    -            -        5.38
----------------------------------------------------------------------------------------------------------
         Net income                                                    $    4.10    $    3.62    $   8.11
==========================================================================================================

  Diluted:
     Income from continuing operations                                 $    3.89    $    3.39    $   2.58
     Income on wind-down of discontinued operations, net of taxes              -         0.02           -
     Gain on sale of businesses held-for-sale, net of taxes                    -            -        5.07
----------------------------------------------------------------------------------------------------------
         Net income                                                    $    3.89    $    3.41    $   7.65
==========================================================================================================
</TABLE>


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

                                                                              25

<PAGE>
WSFS FINANCIAL CORPORATION


<TABLE>
<CAPTION>

CONSOLIDATED STATEMENT OF CONDITION

December 31,                                                                                               2005           2004 
------------------------------------------------------------------------------------------------------------------------------
(In Thousands)
<S>                                                                                                <C>            <C>        
  Assets
  Cash and due from banks                                                                           $    59,251    $    61,328
  Cash in non-owned ATMs                                                                                174,527        131,150
  Interest-bearing deposits in other banks                                                                  173            531
------------------------------------------------------------------------------------------------------------------------------
            Total cash and cash equivalents                                                             233,951        193,009
  Investment securities held-to-maturity (market value: 2005-$5,005; 2004-$8,286)                         4,806          7,767
  Investment securities available-for-sale                                                               52,683         89,609
  Mortgage-backed securities held-to-maturity (market value: 2005-$-; 2004-$4)                                -              4
  Mortgage-backed securities available-for-sale                                                         608,372        512,189
  Mortgage-backed securities trading                                                                     11,951         11,951
  Loans held-for-sale                                                                                       436          3,229
  Loans, net of allowance for loan losses of $25,381 at December 31, 2005 and
    $24,222 at December 31, 2004                                                                      1,774,858      1,532,238
  Bank-owned life insurance                                                                              54,193         52,190
  Stock in Federal Home Loan Bank of Pittsburgh, at cost                                                 46,293         43,946
  Assets acquired through foreclosure                                                                        59            217
  Premises and equipment                                                                                 22,904         22,835
  Accrued interest receivable and other assets                                                           36,212         32,684
  Loans, operating leases and other assets of discontinued operations                                        34          1,088
------------------------------------------------------------------------------------------------------------------------------
  Total assets                                                                                      $ 2,846,752    $ 2,502,956
==============================================================================================================================
  Liabilities and Stockholders' Equity

  Liabilities:

  Deposits:
Noninterest-bearing demand                                                                          $   279,415    $   246,592
Interest-bearing demand                                                                                 141,378        100,098
Money market                                                                                            209,398        123,523
Savings                                                                                                 251,675        289,041
Time                                                                                                    224,853        221,414
Jumbo certificates of deposit - retail                                                                   87,212         71,514
------------------------------------------------------------------------------------------------------------------------------
            Total retail deposits                                                                     1,193,931      1,052,182
Jumbo certificates of deposit - nonretail                                                                40,567         44,903
Brokered certificates of deposit                                                                        211,738        137,877
------------------------------------------------------------------------------------------------------------------------------
             Total deposits                                                                           1,446,236      1,234,962

  Federal funds purchased and securities sold under agreements to repurchase                             83,150        132,105
  Federal Home Loan Bank advances                                                                     1,008,721        837,063
  Trust preferred borrowings                                                                             67,011         51,547
  Other borrowed funds                                                                                   36,126         33,441
  Accrued interest payable and other liabilities                                                         23,327         17,296
------------------------------------------------------------------------------------------------------------------------------
  Total liabilities                                                                                   2,664,571      2,306,414
------------------------------------------------------------------------------------------------------------------------------

  Commitments and contingencies (see Note 16)

  Minority Interest                                                                                         206            239

  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 15,435,630
    at December 31, 2005 and 15,213,647 at December 31, 2004                                                154            152
  Capital in excess of par value                                                                         74,673         68,327
  Accumulated other comprehensive loss                                                                   (9,968)        (3,385)
  Retained earnings                                                                                     319,065        293,054
  Treasury stock at cost, 8,839,569 shares at December 31, 2005 and 8,127,269
    shares at December 31, 2004                                                                        (201,949)      (161,845)
------------------------------------------------------------------------------------------------------------------------------
  Total stockholders' equity                                                                            181,975        196,303
------------------------------------------------------------------------------------------------------------------------------
  Total liabilities, minority interest and stockholders' equity                                     $ 2,846,752    $ 2,502,956
==============================================================================================================================
</TABLE>


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

26

<PAGE>
WSFS FINANCIAL CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                                              Accumulated
                                                                Capital in          Other                               Total
                                                      Common    Excess of   Comprehensive Retained     Treasury Stockholders'
                                                       Stock    Par Value   (Loss) Income Earnings        Stock        Equity
-----------------------------------------------------------------------------------------------------------------------------
(In Thousands)
<S>                                                    <C>      <C>         <C>        <C>           <C>           <C>     
Balance, December 31, 2002                              $149     $ 59,789    $    904    $207,358      $ (85,528)    $182,672
Comprehensive income:
     Net income                                            -            -           -      63,022             -        63,022
     Other comprehensive loss (1)                          -            -      (2,652)          -             -        (2,652)
                                                                                                                     --------
Total comprehensive income                                                                                             60,370
                                                                                                                     --------
Cash dividend, $0.20 per share                             -            -           -      (1,583)            -        (1,583)
Exercise of common stock options                           2        3,054           -           -             -         3,056
Treasury stock at cost, 1,596,600 shares (2)               -           93           -           -       (58,418)      (58,325)
Tax benefit from exercises of common stock options         -        1,802           -           -             -         1,802
-----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2003                              $151     $ 64,738    $ (1,748)   $268,797     $(143,946)     $187,992
=============================================================================================================================

Comprehensive income:
     Net income                                            -            -           -      25,900             -        25,900
     Other comprehensive loss (1)                          -            -      (1,637)          -             -        (1,637)
                                                                                                                     --------
Total comprehensive income                                                                                             24,263
                                                                                                                     --------
Cash dividend, $0.23 per share                             -            -           -      (1,643)            -        (1,643)
Exercise of common stock options                           1        2,044           -           -             -         2,045
Treasury stock at cost, 368,400 shares (3)                 -          173           -           -       (17,899)      (17,726)
Tax benefit from exercises of common stock options         -        1,372           -           -             -         1,372
-----------------------------------------------------------------------------------------------------------------------------
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)
Exercise of common stock options                           2        3,120           -           -             -         3,122
Treasury stock at cost, 712,300 shares (4)                 -          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
=============================================================================================================================

(1) Other Comprehensive Income:                                                               2005         2004          2003
-----------------------------------------------------------------------------------------------------------------------------
     Net unrealized holding losses on securities available-for-sale arising during the 
         period net of taxes (2005 - $(4,540), 2004 - $(661), 2003 - $(1,455))            $ (7,407)   $  (1,078)     $ (2,374)

     Net unrealized   holding  gains  (losses)  arising  during  the  period  on
         derivatives, net of taxes (2005 - $241, 2004 - $(218), 2003 - $22)                    449         (405)           41

     Reclassification for losses (gains) included in income,  net of taxes 
        (2005 - $230, 2004 - $(94), 2003 - $(196))                                             375         (154)         (319)
-----------------------------------------------------------------------------------------------------------------------------
     Total other comprehensive (loss) income                                              $ (6,583)   $  (1,637)     $ (2,652)
=============================================================================================================================
</TABLE>


(2)      Net of reissuance of 5,000 shares.
(3)      Net of reissuance of 5,500 shares.
(4)      Net of reissuance of 7,200 shares.

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

                                                                              27

<PAGE>


CONSOLIDATED STATEMENT OF CASH FLOWS


<TABLE>
<CAPTION>
Year Ended December 31,                                                           2005         2004         2003
----------------------------------------------------------------------------------------------------------------
                                                                                           (revised)    (revised)
(In Thousands) 
<S>                                                                         <C>          <C>          <C>      
Operating activities:
Net income                                                                   $  27,856    $  25,900    $  63,022
Adjustments to reconcile net income to net cash provided by
(used for)  operating activities:
     Provision for loan losses                                                   2,582        3,217        2,550
     Depreciation, accretion and amortization                                    5,440        6,022       11,562
     Increase in accrued interest receivable and other assets                   (1,952)      (2,831)     (10,060)
     Origination of loans held-for-sale                                        (37,222)     (42,647)     (73,679)
     Proceeds from sales of loans held-for-sale                                 38,721       38,223       68,338
     Gain on sale of loans held-for-sale                                           (84)        (205)        (751)
     Loss (gain) on sale of loans                                                    1         (234)        (766)
     Loss (gain) on sale of investments                                            605         (249)        (515)
     Minority interest in net income                                               133          190            -
     Increase (decrease) in accrued interest payable and other liabilities       6,031        2,648      (22,526)
     Gain on businesses held-for-sale                                                -            -      (65,689)
     Gain on sale of assets acquired through foreclosure                          (137)         (60)         (99)
     Increase in value of bank-owned life insurance                             (2,003)      (2,190)           -
     Increase in capitalized interest, net                                        (678)      (2,271)        (502)
----------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) operating activities                            39,293       25,513      (29,115)
----------------------------------------------------------------------------------------------------------------

Investing activities:

     Maturities of investment securities                                         6,990        2,675          500
     Sales of investment securities available-for-sale                          60,454       25,057       21,292
     Purchases of investment securities available-for-sale                     (26,744)      (9,930)    (116,088)
     Sales of mortgage-backed securities available-for-sale                          -       51,634      109,502
     Sales of mortgage-backed securities held-to-maturity                            -            -       14,772
     Repayments of mortgage-backed securities held-to-maturity                       4        1,813       22,809
     Repayments of mortgage-backed securities available-for-sale               112,395      150,988      333,460
     Purchases of mortgage-backed securities available-for-sale               (220,816)    (200,696)    (874,560)
     Repayments on reverse mortgages                                               177        2,619        1,789
     Disbursements for reverse mortgages                                          (393)        (470)        (877)
     Purchase of Cypress Capital Management, LLC                                  (452)      (1,122)           -
     Sale of loans                                                                 688       13,435       47,174
     Purchase of loans                                                         (15,831)     (14,767)     (14,370)
     Purchase of bank-owned life insurance                                           -      (50,000)           -
     Sale of businesses held-for-sale                                                -            -      129,283
     Net increase in loans                                                    (228,758)    (228,001)    (254,676)
     Net increase in stock of Federal Home Loan Bank of Pittsburgh              (2,347)        (270)     (21,697)
     Sales of assets acquired through foreclosure, net                             683          532        1,322
     Purchase of land                                                             (925)      (2,860)           -
     Purchase of office building                                                     -       (3,507)           -
     Sale of real estate held-for-investment                                     5,296            -            -
     Investment in real estate partnership                                      (1,196)           -            -
     Investment in premises and equipment, net                                  (4,202)      (6,378)      (2,800)
----------------------------------------------------------------------------------------------------------------
Net cash used for investing activities                                        (314,977)    (269,248)    (603,165)
----------------------------------------------------------------------------------------------------------------
                                                                                         (Continued on next page)
</TABLE>


28


<PAGE>
                                                      WSFS FINANCIAL CORPORATION


<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)


Year Ended December 31,                                                                           2005         2004         2003 
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                           (revised)    (revised) 
(In Thousands)
<S>                                                                                         <C>          <C>          <C>      
  Financing activities:
       Net increase in demand and savings deposits                                           $ 125,297    $ 102,368    $  68,612
       Net increase (decrease) in time deposits                                                 87,875      202,933      (40,876)
       Net increase in federal funds purchased                                                       -            -       50,000
       Net (decrease) increase in securities sold under agreements to repurchase               (48,955)     (16,276)      72,456
       Net increase (decrease) in FHLB advances                                                171,658       (6,233)     439,797
       Redemption of WSFS Capital Trust I Preferred Securities                                 (51,547)           -            -
       Issuance of Pooled Floating Rate Capital Securities                                      67,011            -            -
       Dividends paid on common stock                                                           (1,845)      (1,643)      (1,583)
       Issuance of common stock and exercise of common stock options                             6,348        3,590        4,951
       Purchase of treasury stock, net of reissuance                                           (40,104)     (17,899)     (58,418)
       (Decrease) increase in minority interest                                                   (166)           3      (12,845)
--------------------------------------------------------------------------------------------------------------------------------
       Net cash provided by financing activities                                               315,572      266,843      522,094
--------------------------------------------------------------------------------------------------------------------------------
       Increase (decrease) in cash and cash equivalents                                         39,888       23,108     (110,186)
       Net cash provided by operating activities of discontinued operations (1)                  1,141        7,746       43,077
       Net cash (used for) provided by investing activities of discontinued operations (1)         (87)         640       (5,155)
       Cash and cash equivalents at beginning of period                                        193,009      161,515      233,779
--------------------------------------------------------------------------------------------------------------------------------
       Cash and cash equivalents at end of period                                            $ 233,951    $ 193,009    $ 161,515
--------------------------------------------------------------------------------------------------------------------------------

  Supplemental Disclosure of Cash Flow Information:

       Cash paid for interest                                                                $  58,080    $  36,355    $  31,617
       Cash paid for income taxes from continuing operations, net                               10,151        9,803       61,984
       Cash (refunded) paid for taxes of discontinued operations, net                              (45)         396        1,087
       Loans transferred to assets acquired through foreclosure                                    388          388          620
       Net change in other comprehensive loss                                                   (6,583)      (1,637)      (2,652)
       Net transfer of loans held-for-sale to loans                                              1,378        2,858        8,150
       Deconsolidation of WSFS Capital Trust I                                                       -        1,547            -
       Transfer of building to real estate held-for-investment                                   1,878            -            -
</TABLE>


(1)  In 2005, the Company has  separately  disclosed the operating and investing
     portions  of the cash flows  attributable  to its  discontinued  operations
     which,  in prior  periods,  were  reported on a combined  basis as a single
     amount.

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

                                                                              29

<PAGE>
WSFS FINANCIAL CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------

WSFS Financial  Corporation (Company or Corporation) is a thrift holding company
organized under the laws of the State of Delaware.  The Corporation's  principal
wholly-owned  subsidiary,  Wilmington  Savings  Fund  Society,  FSB (the Bank or
WSFS),  is a federal  savings bank organized under the laws of the United States
which, at December 31, 2005,  serves  customers from its main office,  24 retail
banking  offices,  loan  production  offices and operations  centers  located in
Delaware and southeastern Pennsylvania.

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,
investment in reverse mortgages,  contingencies (including indemnifications) and
income tax taxes.

Basis of Presentation

The  consolidated  Financial  Statements  include  the  accounts  of the  parent
company,  Montchanin Capital  Management,  Inc.  (Montchanin) and its non-wholly
owned  subsidiary,  Cypress  Capital  Management,  LLC  (Cypress),  WSFS and its
wholly-owned subsidiaries, WSFS Investment Group, Inc., WSFS Reit, Inc. and WSFS
Credit Corporation (WCC), as well as not wholly-owned,  but majority  controlled
and  consolidated  subsidiary,  Wilmington  Finance,  Inc.  (WF). WF was sold in
January 2003.  This subsidiary was classified as a business  held-for-sale.  See
Note  3  of  the  Financial   Statements  for  further  discussion  of  Business
Held-for-Sale.  As discussed in Note 2 of the Financial Statements,  the results
of WCC, the  Corporation's  wholly-owned  indirect  auto  financing  and leasing
subsidiary, are presented as discontinued operations.

WSFS  Capital  Trust III is an  unconsolidated  affiliate of the Company 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.  WSFS Investment Group, Inc. markets
various third-party  insurance and securities products to Bank customers through
WSFS' retail banking system.  WSFS Reit, Inc. is a real estate  investment trust
that was formed to hold  qualifying  real  estate  assets and may be used in the
future as a vehicle to raise  capital.  Montchanin  was formed to provide  asset
management products and services to customers in the Bank's primary market area.
In 2004,  Montchanin  acquired a 60%  interest in Cypress,  a  Wilmington  based
investment advisory firm servicing high net-worth  individuals and institutions.
In January 2005, Montchanin increased its ownership in Cypress to 80%.

During  2005,  the  Corporation  announced  that it  would  move  its  corporate
headquarters in early 2007. As part of the transaction, the Corporation acquired
a passive  ownership  interest in a limited  partnership  created to develop the
office building in which the Corporation will be a tenant. Related to this move,
the Company sold the land on which the WSFS Bank Center is to be built.  As part
of this agreement,  the property  developer has agreed to purchase the Company's
current  headquarters,  which is  expected  to  result in  approximately  a $3.0
million gain at the time of the move, expected to be early 2007.

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,
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:

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.

30

<PAGE>
                                                      WSFS FINANCIAL CORPORATION

Debt and equity securities  include  mortgage-backed  securities,  corporate and
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  has the  discretion  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

The Corporation  accounts for its investment in reverse  mortgages in accordance
with the  instructions  provided  by the staff of the  Securities  and  Exchange
Commission  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,  the  Corporation  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. Accordingly, 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 the  Corporation's
commercial,  commercial  mortgage and commercial  construction  portfolios.  The
Corporation's policy for recognition of interest income on impaired loans is the
same as for nonaccrual loans discussed below.

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 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  the   Corporation's   previously   established
loan-to-value policies.

Allowances for Loan Losses

The  Corporation  maintains  allowances  for credit losses and charges 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.
                                                                              31

<PAGE>
WSFS FINANCIAL CORPORATION

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 that a loss has been incurred.

The formula  allowances  for  commercial  and  commercial  real estate loans are
calculated by applying loss factors to  outstanding  loans in each case based on
the  internal  risk grade of each loan.  As a result,  changes in risk grades of
both  performing  and  nonperforming  loans  affect  the  amount of the  formula
allowance.  Loss  factors by risk grade  have a basis in WSFS'  historical  loss
experience for such loans and may be adjusted for  significant  factors that, in
management's  judgement,  affect the  collectability  of the portfolio as of the
evaluation date. See discussion of historical loss adjustment factors below.

Pooled  loans are loans that are usually  smaller,  not-individually-graded  and
homogeneous  in  nature,  such as  consumer  installment  loans and  residential
mortgages.  Pooled loan loss  allowances are based on historical net charge-offs
for ten years.  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
historical 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  (including  trends in  nonperforming  loans expected
     to result from existing conditions),
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.

WSFS' 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 the Corporation's  allowance for loan
losses. The Company also gives  consideration to the results of these regulatory
agency examinations.

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.  Vehicles
that have been returned to the Company upon the  expiration of their lease terms
have been included in the net assets of discontinued operations.

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
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.  Accelerated  methods
are used in depreciating certain assets for income tax purposes.

32

<PAGE>
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase

The Corporation  enters 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 remain in the
asset accounts.

Loss Contingency for Standby Letters of Credit

The Corporation  maintains a loss  contingency for standby letters of credit and
charges 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.

Earnings Per Share

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


<TABLE>
<CAPTION>
                                                                                                2005      2004      2003
------------------------------------------------------------------------------------------------------------------------
(In Thousands, Except Per Share Data)
<S>                                                                                         <C>       <C>       <C>    
      Numerator:
              Income from continuing operations                                              $27,856   $25,757   $21,233
              Income on wind-down of discontinued operations, net of taxes                         -       143         -
              Gain on sale of businesses held-for-sale, net of taxes                               -         -    41,789
------------------------------------------------------------------------------------------------------------------------
              Net income                                                                     $27,856   $25,900   $63,022
------------------------------------------------------------------------------------------------------------------------

           Denominator:
             Denominator for basic earnings per share - weighted average shares                6,795     7,158     7,774
             Effect of dilutive employee stock options                                           373       435       464
------------------------------------------------------------------------------------------------------------------------
             Denominator for diluted earnings per share - adjusted weighted average
               shares and assumed exercise                                                     7,168     7,593     8,238
========================================================================================================================

         Earnings per share:
             Basic:
              Income from continuing operations                                              $  4.10   $  3.60   $  2.73
              Income on wind-down of discontinued operations, net of taxes                         -      0.02         -
              Gain on sale of businesses held-for-sale, net of taxes                               -         -      5.38
------------------------------------------------------------------------------------------------------------------------
              Net income                                                                     $  4.10   $  3.62   $  8.11
========================================================================================================================

             Diluted:
              Income from continuing operations                                              $  3.89   $  3.39   $  2.58
              Income on wind-down of discontinued operations, net of taxes                         -      0.02         -
              Gain on sale of businesses held-for-sale, net of taxes                               -         -      5.07
------------------------------------------------------------------------------------------------------------------------
              Net income                                                                     $  3.89   $  3.41   $  7.65
========================================================================================================================

              Outstanding common stock equivalents having no dilutive effect, in thousands       173         4         4
</TABLE>


                                                                              33

<PAGE>
WSFS FINANCIAL CORPORATION

Stock Options

At December 31, 2005, the Corporation had two stock-based employee  compensation
plans that are described more fully in Note 15 to the Financial Statements.  The
Corporation  accounts  for these plans  under the  recognition  and  measurement
principles of Accounting  Principles Board (APB) Opinion No. 25,  Accounting for
Stock Issued to Employees, and Related Interpretations.  No stock-based employee
compensation  cost is reflected in the net income,  as all options granted under
those  plans had an  exercise  price at least  equal to the market  value of the
underlying  common stock on the date of grant.  The following table  illustrates
the effect on net income and earnings per share had the Company applied the fair
value recognition  provision of the Statement of Financial  Accounting Standards
(SFAS) No. 123, Accounting for Stock-Based Compensation, to stock-based employee
compensation.

Effective January 1, 2006, the Corporation  will implement SFAS No. 123 (revised
2004),  Share-Based-Payment.   The  impact  to  the  Corporation's  Consolidated
Statement  of  Operations  for 2006,  on  existing  options,  is  expected to be
approximately $1.1 million.


<TABLE>
<CAPTION>
                                                                                                    2005        2004        2003
--------------------------------------------------------------------------------------------------------------------------------
(In Thousands, Except Per Share Data)
<S>                                                                                             <C>         <C>         <C>    
Income from continuing operations, as reported                                                   $27,856     $25,757     $21,233
Less:  Total stock-based employee compensation expense determined
           under fair value based methods for all awards, net of related tax effects                (972)       (590)       (708)
--------------------------------------------------------------------------------------------------------------------------------
Pro forma income from continuing operations                                                      $26,884     $25,167     $20,525
================================================================================================================================

Earnings per share:
  Basic:
    Income from continuing operations                                                            $  4.10    $   3.60   $    2.73
    Less: Total stock-based employee compensation expense determined                    
       under fair value based methods for all awards, net of related tax effects                   (0.14)      (0.08)      (0.09)
--------------------------------------------------------------------------------------------------------------------------------
          Pro forma income from continuing operations                                            $  3.96    $   3.52   $    2.64
================================================================================================================================

  Diluted:
    Income from continuing operations                                                            $  3.89    $   3.39   $    2.58
    Less: Total stock-based employee compensation expense determined                   
       under fair value based methods for all awards, net of related tax effects                   (0.14)      (0.08)      (0.09)
--------------------------------------------------------------------------------------------------------------------------------
    Pro forma income from continuing operations                                                  $  3.75    $   3.31   $    2.49
================================================================================================================================
</TABLE>
                                                 

2.       DISCONTINUED OPERATIONS OF A BUSINESS SEGMENT
--------------------------------------------------------------------------------

In December  2000,  the  Corporation  discontinued  the  operations  of WCC, its
indirect auto financing and vehicle  leasing  subsidiary.  At December 31, 2000,
WCC had 7,300 lease contracts and 2,700 loan  contracts,  compared to zero lease
contracts and 31 loan contracts at December 31, 2005.

At December 31, 2005,  loans,  operating leases and other assets of discontinued
operations, net were $34,000 compared to $1.1 million at December 31, 2004. This
decrease was mainly due to scheduled  maturities in the remaining  indirect loan
and lease  portfolios.  At December  31,  2004,  the  Corporation  reviewed  the
remaining  used  car  residual  values  and  determined  that its  exposure  was
significantly  reduced.  As a result,  at December  31,  2004,  the  Corporation
reduced its reserve for  discontinued  operations by $143,000,  net of taxes. At
December  31, 2005,  there were  $74,000 in indirect  loans and zero in indirect
leases,  net,  still  outstanding.  At December 31,  2005,  WSFS had exposure to
$19,000  in  remaining  used car  residuals,  for which it  estimates  a loss of
$8,000.  Management has provided for this loss in the Financial Statements.  Due
to the provision for this estimated  exposure in the Financial  Statements,  the
Corporation  did  not  recognize  any  additional  losses  on the  wind-down  of
discontinued operations in 2005, 2004 and 2003.

34


<PAGE>
                                                      WSFS FINANCIAL CORPORATION


              The   following   table   depicts  the  net  income   (loss)  from
discontinued operations for the years ended December 31, 2005, 2004 and 2003:


<TABLE>
<CAPTION>
Year Ended December 31,                                         2005       2004       2003 
------------------------------------------------------------------------------------------
(In Thousands)
<S>                                                         <C>        <C>        <C>    
Interest income                                              $    27    $   140    $   422
Allocated interest expense (1)                                    14        161        987
------------------------------------------------------------------------------------------
  Net interest income (expense)                                   13        (21)      (565)

Loan and lease servicing fee income                               72        237        292
Rental income on operating leases, net                            63        377       (529)
Other Income                                                       -         (2)         2
------------------------------------------------------------------------------------------
  Net revenues                                                   148        591       (800)

Noninterest expenses                                             358        352        557
------------------------------------------------------------------------------------------

(Loss) income before taxes                                      (210)       239     (1,357)
Charge (credit) to the reserve for discontinued operations       210       (239)     1,357
------------------------------------------------------------------------------------------
Income from discontinued operations                                -          -          -
Income on wind-down of discontinued operations                     -        143          -
------------------------------------------------------------------------------------------
Total                                                        $     -    $   143    $     -
==========================================================================================
</TABLE>


(1)  The allocated  interest  expense for 2005 was based on the Company's annual
     average wholesale  borrowing rate of 3.41%,  which  approximated a marginal
     funding cost for the  business.  For the years ended  December 31, 2004 and
     2003, the allocated interest expense was based on a direct matched-maturity
     funding of the net non-cash assets of discontinued operations.  The average
     borrowing rates for 2004 and 2003 were 3.40% and 3.51%, respectively.

3.   BUSINESSES HELD-FOR-SALE
--------------------------------------------------------------------------------
     
In November  2002,  WSFS  signed a  definitive  agreement  for the sale of WSFS'
majority-owned subsidiary, Wilmington Finance, Inc. (WF). The sale was completed
in  January  2003 and  WSFS  recognized  an after  tax gain on the sale of $41.3
million or $5.01 per diluted share.  The sale included $148.2 million in assets,
of which $117.6 million were residential mortgage loans  held-for-sale.  Under a
provision  of the  agreement  between  the  sellers  and  buyers,  certain  sale
consideration  was withheld in a separate  escrow account pending the resolution
of certain events.  During 2003, WSFS received the entire amount held in escrow.
As a result in 2003, the Company recorded  $325,000  ($208,000 after taxes) as a
gain on sale of businesses held-for-sale which is included in the total recorded
gain on sale of $41.3 million.

Also in  November  2002,  the  Corporation  completed  the  sale of  CustomerOne
Financial  Network,  Inc.  (C1FN)  and its  related  interests  in its  Everbank
Division. Under a provision of the agreement between sellers and buyers, certain
sale  consideration  was withheld in two separate  escrow  accounts  pending the
resolution of certain events.  During 2003,  those events were resolved and WSFS
received the entire  amount held in escrow.  As a result,  the Company  recorded
$786,000   ($517,000   after  taxes)  as  a  gain  on  the  sale  of  businesses
held-for-sale.

The gains  realized on the sale of WF and C1FN are  presented  separately on the
statement of operations, net of tax.

                                                                              35


<PAGE>
WSFS FINANCIAL CORPORATION

4.  INVESTMENT SECURITIES
--------------------------------------------------------------------------------

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


<TABLE>
<CAPTION>
                                                         Gross        Gross
                                         Amortized  Unrealized   Unrealized     Fair
                                              Cost       Gains       Losses    Value 
------------------------------------------------------------------------------------
(In Thousands)
<S>                                      <C>         <C>        <C>        <C>     
Available-for-sale securities:
    December 31, 2005:
       Reverse mortgages (1)              $    785    $    -     $      -   $    785
       U.S. Government and agencies         51,702         -          785     50,917
       State and political subdivisions        975         6            -        981
------------------------------------------------------------------------------------
                                          $ 53,462    $    6     $    785   $ 52,683
====================================================================================

     December 31, 2004:
       Reverse mortgages (1)              $   (109)   $    -     $      -   $   (109)
       U.S. Government and agencies         90,730         -        1,012     89,718
------------------------------------------------------------------------------------
                                          $ 90,621    $    -     $  1,012   $ 89,609
====================================================================================

Held-to-maturity:

    December 31, 2005:
       State and political subdivisions   $  4,806    $    199   $      -   $  5,005
------------------------------------------------------------------------------------
                                          $  4,806    $    199   $      -   $  5,005
====================================================================================

     December 31, 2004:
       Corporate bonds                    $    310    $     13   $      -   $    323
       State and political subdivisions      7,457         507          1      7,963
------------------------------------------------------------------------------------
                                          $  7,767    $    520   $      1   $  8,286
====================================================================================
</TABLE>


(1)  See Note 6 of the Financial  Statements for a further discussion of Reverse
     Mortgages.

Securities with book values  aggregating $52.8 million at December 31, 2005 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 $434,000 and
$728,000 at December 31, 2005 and 2004, respectively.

36

<PAGE>
                                                      WSFS FINANCIAL CORPORATION

         The scheduled maturities of investment securities  held-to-maturity and
securities available-for-sale at December 31, 2005 were as follows:

                                       Held-to-Maturity       Available-for-Sale
                                     -------------------      ------------------
                                     Amortized      Fair      Amortized     Fair
                                          Cost     Value           Cost    Value
--------------------------------------------------------------------------------
(In Thousands)                                                
Within one year (1)                    $     -   $     -       $13,714   $13,693
After one year but within five years     3,299     3,482        39,408    38,646
After five but within ten years              -         -           340       344
After ten years                          1,507     1,523             -         -
--------------------------------------------------------------------------------
                                       $ 4,806   $ 5,005       $53,462   $52,683
================================================================================

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

During 2005,  proceeds  from the sale of  investment  securities  classified  as
available-for-sale  were $61.1 million,  with a loss of $609,000 realized on the
sales.  Municipal bonds totaling  $180,000 and corporate bonds totaling $251,553
were  called by the  issuers,  with a gain of $4,000  realized  on these  calls.
Proceeds from the sale of investments  classified as  available-for-sale  during
2004 and 2003 were $25.0 million and $21.2  million,  respectively.  There was a
net gain of $1,000  realized on sales in 2004 and $200,000 net gain  realized in
2003. 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 2005, 2004 and 2003.

At December 31, 2005,  the Company owned  investment  securities  totaling $51.0
million where the amortized  cost basis  exceeded fair value.  Total  unrealized
losses on those  securities  were $785,000 at December 31, 2005.  This temporary
impairment is the result of changes in market  interest rates since the purchase
of the securities.  Securities amounting to $36.0 million have been impaired for
12 months or longer.  The Corporation  has determined that these  securities are
not "other than temporarily"  impaired. The following table lists the unrealized
losses aggregated by category:


<TABLE>
<CAPTION>
                                               Less than 12 months    12 months or longer          Total       
                                               -------------------    -------------------    -------------------
  
                                                 Fair   Unrealized      Fair   Unrealized      Fair   Unrealized
                                                Value         Loss     Value         Loss     Value         Loss
----------------------------------------------------------------------------------------------------------------
(In Thousands)                                                                                       
<S>                                          <C>         <C>       <C>           <C>       <C>           <C>     
Held-to-maturity                                                                                         
  State and political subdivisions            $    71     $     -   $     -       $     -   $    71       $     - 
Available-for-sale                                                                                       
  State and political subdivisions                  -           -         -             -         -             -
  U.S. Government and agencies                 14,898           5    36,019           780    50,917           785
-----------------------------------------------------------------------------------------------------------------
     Total temporarily impaired investments   $14,969     $     5   $36,019       $   780   $50,988       $   785
=================================================================================================================
</TABLE>
                                                           

                                                                              37

<PAGE>
WSFS FINANCIAL CORPORATION

5.  MORTGAGE-BACKED SECURITIES
--------------------------------------------------------------------------------

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


<TABLE>
<CAPTION> 
                                                               Gross      Gross
                                               Amortized  Unrealized Unrealized       Fair
                                                    Cost       Gains     Losses      Value 
------------------------------------------------------------------------------------------
(In Thousands)
<S>                                        <C>         <C>        <C>        <C>     
Available-for-sale securities:
  December 31, 2005:
    Collateralized mortgage obligations         $526,546    $    205   $ 11,199   $515,552
    FNMA                                          49,785           -      2,010     47,775
    FHLMC                                         32,211           -      1,554     30,657
    GNMA                                          14,643           -        255     14,388
------------------------------------------------------------------------------------------
                                                $623,185    $    205   $ 15,018   $608,372
==========================================================================================
    Weighted average yield                          4.63%

  December 31, 2004:
    Collateralized mortgage obligations         $402,513    $  1,319   $  2,601   $401,231
    FNMA                                          59,774           -      1,124     58,650
    FHLMC                                         34,731           -        943     33,788
    GNMA                                          18,408         165         53     18,520
------------------------------------------------------------------------------------------
                                                $515,426    $  1,484   $  4,721   $512,189
==========================================================================================

      Weighted average yield                        4.27%

Held-to-maturity securities:
  December 31, 2005:
    FHLMC                                       $      -    $      -   $      -   $      -
------------------------------------------------------------------------------------------
                                                $      -    $      -   $      -   $      -
==========================================================================================

    Weighted average yield                             -%

  December 31, 2004:
    FHLMC                                       $      4    $      -   $      -   $      4
------------------------------------------------------------------------------------------
                                                $      4    $      -   $      -   $      4
==========================================================================================
    Weighted average yield                          6.06%

Trading securities:

  December 31, 2005:
    Collateralized mortgage obligations         $ 11,951    $      -   $      -   $ 11,951
------------------------------------------------------------------------------------------
                                                $ 11,951    $      -   $      -   $ 11,951
==========================================================================================

    Weighted average yield                         7.38%

  December 31, 2004:
    Collateralized mortgage obligations        $ 11,951    $      -   $      -   $ 11,951
------------------------------------------------------------------------------------------
                                               $ 11,951    $      -   $      -   $ 11,951
==========================================================================================
    Weighted average yield                         5.32%
</TABLE>


The portfolio of available-for-sale  mortgage-backed  securities consist of 100%
AAA-rated,  currently  cash flowing  securities,  backed by  conventional  15 or
20-year  mortgages.   The  weighted  average  duration  of  the  mortgage-backed
securities was 3.1 years at December 31, 2005.

At December 31, 2005,  mortgage-backed  securities  with par values  aggregating
$369.0  million  were  pledged  as  collateral  for retail  customer  repurchase
agreements,  municipal  deposits  and Federal Home Loan Bank  advances.  Accrued
interest receivable relating to mortgage-backed  securities was $2.4 million and
$1.9 million at December 31, 2005 and 2004, respectively. There were no sales of
mortgage-backed  securities in 2005.  Proceeds from the sale of  mortgage-backed
securities available-for-sale

38

<PAGE>
                                                      WSFS FINANCIAL CORPORATION

were $51.4 million in 2004,  resulting in a gain of $248,000.  The cost basis of
all  mortgage-backed  securities  sales  are  based on  specific  identification
method.

The  Corporation  owns $12.0  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 the reverse
mortgage portfolio, while an additional $1.0 million was purchased at par at the
time of the  securitization  and $950,000  from accrued  interest  paid in kind.
These  floating rate notes  represent  the BBB traunche of the 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
M
anagement's Discussion and Analysis and Note 6 to the Financial Statements.

Based on accounting  rules under SFAS 115, when these  securities  were acquired
they were  classified as "trading." It was the Company's  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 the intent of the Corporation to sell these
securities  if and when an  active  market  develops.  Since  there is no active
market for these  securities,  the  Corporation has used the guidance under SFAS
115 to provide a reasonable  estimate of fair value.  The Corporation  estimated
the value of these  securities  as of December  31, 2005 based on the pricing of
similar securities that have an active market as well as a fundamental  analysis
of the actual cash flows of the  underlying  securities.  The  Corporation  also
obtained an estimate,  from an independent  securities  dealer,  of the value of
these  securities,  which  was  also  based in part on  similar  actively-traded
securities.

At December 31, 2005,  the Company  owned  mortgage-backed  securities  totaling
$563.7  million  where the  amortized  cost basis  exceeded  fair  value.  Total
unrealized  losses on those  securities were $15.0 million at December 31, 2005.
This  temporary  impairment  is the result of changes in market  interest  rates
since  the  purchase  of the  securities.  Some of these  securities  have  been
impaired for twelve months or longer.  The Corporation has determined that these
securities are not "other than temporarily"  impaired. The following table lists
the unrealized losses aggregated by category:

<TABLE>
<CAPTION>
                                      Less than 12 months     12 months or longer            Total  
                                      -------------------     -------------------   ---------------------
                                         Fair  Unrealized        Fair  Unrealized        Fair  Unrealized
                                        Value        Loss       Value        Loss       Value        Loss   
---------------------------------------------------------------------------------------------------------
(In Thousands)                                                                                 
<S>                                 <C>         <C>         <C>         <C>         <C>         <C>      
Available-for-sale                                                                             
   CMO                               $260,241    $ (4,433)   $210,657    $ (6,766)   $470,898    $(11,199)
   FNMA                                     -           -      47,775      (2,010)     47,775      (2,010)
   FHLMC                                2,257         (57)     28,400      (1,497)     30,657      (1,554)
   GNMA                                11,066        (143)      3,322        (112)     14,388        (255)
---------------------------------------------------------------------------------------------------------
     Total temporarily impaired MBS  $273,564    $ (4,633)   $290,154    $(10,385)   $563,718    $(15,018)
=========================================================================================================
</TABLE>


6.  REVERSE MORTGAGES AND RELATED ASSETS
--------------------------------------------------------------------------------

The Corporation holds an investment in reverse mortgages of $785,000 at December
31, 2005 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.

The Corporation  accounts for its 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,  2005,  the  Corporation  earned  $678,000  in
interest  income on reverse  mortgages  as compared to $1.8  million in 2004 and
$(24,000) in 2003.

         The projected  cash flows depend on assumptions  about life  expectancy
and the changes in future  collateral  values.  Projecting the changes in future
collateral  values is the most  significant  factor  impacting the volatility of
future cash flows. The Corporation is currently  estimating 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 $150,000.
Conversely,  if the  long-term  appreciation  rate was  decreased to -0.5%,  the
resulting impact on income would have been $(130,000).
                                                                              39

<PAGE>
WSFS FINANCIAL CORPORATION

         The Corporation  also holds $12.0 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  previously  held  by the  Corporation.  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 very long-term assets.  Hence, 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,  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 133,
Accounting for Derivative and Hedging Activities.

7.  LOANS
--------------------------------------------------------------------------------

The following tables detail the Corporation's loan portfolio:

December 31,                                    2005                   2004    
--------------------------------------------------------------------------------
(In Thousands)                                                 
                                                               
Real estate mortgage loans:                                    
     Residential (1-4 family)            $   457,213            $   439,774
     Other                                   432,660                433,947
Real estate construction loans               194,002                137,395
Commercial loans                             511,798                370,660
Consumer loans                               244,820                210,959
--------------------------------------------------------------------------------
                                           1,840,493              1,592,735
Less:                                                          
     Loans in process                         40,560                 36,359
     Deferred fees                              (306)                   (84)
                                                               
     Allowance for loan losses                25,381                 24,222
--------------------------------------------------------------------------------
        Net loans                        $ 1,774,858            $ 1,532,238
================================================================================

The Corporation had impaired loans of approximately $3.4 million at December 31,
2005  compared to $4.4 million at December  31,  2004. 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 $3.9 million and
$4.8 million  during 2005 and 2004,  respectively.  The  allowance for losses on
impaired  loans was $480,000 at December  31,  2005,  as compared to $750,000 at
December 31, 2004. There was no interest income recognized on impaired loans.

The total  amount of loans  serviced  for others  were  $255.8  million,  $245.5
million and $244.7  million at December 31, 2005,  2004 and 2003,  respectively.
The Corporation received fees from the servicing of loans of $769,000,  $800,000
and $831,000 during 2005, 2004 and 2003, respectively.

Beginning  in 2005,  the  Corporation  began  prospectively  recording  mortgage
servicing rights on its 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 the Corporation.  At December
31, 2005, the total of this portfolio was $37.6 million. 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 $308,000 of
noninterest income. 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 $7.9  million and $5.7
million at December 31, 2005 and 2004, respectively.

Nonaccruing  loans  aggregated  $3.4  million,  $4.4 million and $5.2 million at
December 31, 2005,  2004 and 2003,  respectively.  If interest on all such loans
had been recorded in accordance  with  contractual  terms,  net interest  income
would have increased by $133,000 in 2005, $150,000 in 2004 and $218,000 in 2003.

40


<PAGE>
WSFS FINANCIAL CORPORATION

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

Year Ended December 31,                  2005            2004            2003 
--------------------------------------------------------------------------------
(In Thousands)                                                     
                                                                   
Beginning balance                    $ 24,222        $ 22,386        $ 21,452
     Provision for loan losses          2,582           3,217           2,550
     Loans charged-off                 (1,873)         (1,843)         (2,016)
     Recoveries                           450             462             400
--------------------------------------------------------------------------------
Ending balance                       $ 25,381        $ 24,222        $ 22,386
================================================================================

8.  ASSETS ACQUIRED THROUGH FORECLOSURE                
--------------------------------------------------------------------------------

Assets acquired through foreclosure are summarized as follows:


December 31,                                                  2005         2004
--------------------------------------------------------------------------------
(In Thousands)                                                           
                                                                         
Real estate                                                   $ 59         $217
Less allowance for losses                                        -            -
--------------------------------------------------------------------------------
Ending balance                                                $ 59         $217
================================================================================

9.  PREMISES AND EQUIPMENT                               
--------------------------------------------------------------------------------

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

December 31,                                                  2005          2004
--------------------------------------------------------------------------------
(In Thousands)                                                          
Land                                                       $ 4,440       $ 3,946
Buildings                                                   11,052        12,224
Leasehold improvements                                      13,094        11,878
Furniture and equipment                                     21,917        22,082
--------------------------------------------------------------------------------
                                                            50,503        50,130
Less:                                                                   
Accumulated depreciation                                    27,599        27,295
--------------------------------------------------------------------------------
                                                           $22,904       $22,835
================================================================================

         The  Corporation   occupies   certain  premises  and  operates  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 $2.2  million in 2005,  $2.3 million in
2004 and $1.8 million in 2003.  Future  minimum  payments  under these leases at
December 31, 2005 are as follows:

                   (In Thousands)                                          
                   
                   2006                                         $ 2,253
                   2007                                           2,328
                   2008                                           3,222
                   2009                                           2,800
                   2010                                           2,724
                   Thereafter                                    23,961
                   ----------------------------------------------------
                      Total future minimum lease payments       $37,288
                   ====================================================

                                                                              41


<PAGE>
WSFS FINANCIAL CORPORATION

10.  DEPOSITS
--------------------------------------------------------------------------------

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

December 31,                                                   2005         2004
--------------------------------------------------------------------------------
(In Thousands)

Money market and demand:
    Noninterest-bearing demand                           $  279,415   $  246,592
    Interest-bearing demand                                 141,378      100,098
    Money market                                            209,398      123,523
--------------------------------------------------------------------------------
       Total money market and demand                        630,191      470,213
--------------------------------------------------------------------------------

Savings                                                     251,675      289,041
--------------------------------------------------------------------------------

Retail certificates of deposits by maturity:
    Less than one year                                      152,891      109,664
    One year to two years                                    59,269       97,569
    Two years to three years                                  8,137        9,517
    Three years to four years                                 2,346        2,573
    Over four years                                           2,210        2,091
--------------------------------------------------------------------------------
       Total retail time certificates                       224,853      221,414
--------------------------------------------------------------------------------

Jumbo certificates of deposit-retail, by maturity:
    Less than one year                                       69,716       23,118
    One year to two years                                    15,950       47,532
    Two years to three years                                  1,292          301
    Three years to four years                                   100          415
    Over four years                                             154          148
--------------------------------------------------------------------------------
      Total jumbo certificates of deposit-retail             87,212       71,514
--------------------------------------------------------------------------------
Subtotal retail deposits                                  1,193,931    1,052,182
--------------------------------------------------------------------------------

Jumbo certificates of deposit-non-retail, by maturity:
    Less than one year                                       36,935       43,246
    One year to two years                                     1,496         --
    Two years to three years                                   --          1,250
    Three years to four years                                   415         --
    Over four years                                           1,721          407
--------------------------------------------------------------------------------
       Total jumbo time certificates-non-retail              40,567       44,903
--------------------------------------------------------------------------------

Brokered certificates of deposit less than one year         211,738      137,877
--------------------------------------------------------------------------------

Total deposits                                           $1,446,236   $1,234,962
================================================================================

42

<PAGE>
                                                      WSFS FINANCIAL CORPORATION

Interest expense by category follows:

Year Ended December 31,                           2005        2004        2003 
--------------------------------------------------------------------------------
(In Thousands)                                                       
Interest-bearing demand                        $   297     $   193     $   196
Money market                                     3,837         665         119
Savings                                          1,738       1,257       1,627
Retail time deposits                             8,098       5,002       5,785
--------------------------------------------------------------------------------
      Total retail interest expense             13,970       7,117       7,727
--------------------------------------------------------------------------------

Jumbo certificates of deposit-non-retail         1,374         768         462
Brokered certificates of deposit                 6,346       1,510           -
--------------------------------------------------------------------------------
      Total interest expense on deposits       $21,690     $ 9,395     $ 8,189
================================================================================
                                                             
11.  BORROWED FUNDS

The following is a summary of borrowed funds by type:


<TABLE>
<CAPTION>
                                                                                       Maximum
                                                                                          Amount                  Weighted
                                                                                     Outstanding       Average     Average
                                                                        Weighted        at Month        Amount    Interest
                                                               Balance   Average             End   Outstanding        Rate
                                                             at End of  Interest      During the    During the  During the
                                                                Period      Rate         Period         Period      Period      
---------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S>                                                        <C>             <C>       <C>             <C>            <C>  
2005
----
FHLB advances                                               $1,008,721      4.12%     $1,008,721      $887,822       3.41%
Trust preferred borrowings                                      67,011      6.18          67,011        62,986       8.29
Federal funds purchased and securities
  sold under agreements to repurchase                           83,150      4.24         172,135       128,062       1.67
Other borrowed funds                                            36,126      3.05          42,037        37,344       1.74

2004
----
FHLB advances                                              $   837,063      2.90%       $915,181      $859,742       2.70%
Trust preferred borrowings                                      51,547      4.90          51,547        51,162       4.20
Federal funds purchased and securities
  sold under agreements to repurchase                          132,105      2.33         158,195       145,321       1.42
Other borrowed funds                                            33,441      0.65          39,317        36,013       0.48
</TABLE>


Federal Home Loan Bank Advances

Advances from the Federal Home Loan Bank (FHLB) of Pittsburgh with rates ranging
from 2.00% to 5.45% at December 31, 2005 are due as follows:

                                                                  Weighted
                                                                   Average
                                                   Amount             Rate  
       --------------------------------------------------------------------
       (Dollars in Thousands)
       2006.........................          $   661,000             4.03%
       2007.........................              125,000             3.37
       2008.........................               84,900             5.17
       2009.........................               35,000             4.48
       2010 - 2013..................              102,821             4.61
       --------------------------------------------------
                                               $1,008,721
      ===================================================


                                                                              43

<PAGE>
WSFS FINANCIAL CORPORATIOn

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,  WSFS is  required  to acquire  and hold
shares of capital stock in the FHLB of Pittsburgh in an amount at least equal to
4.55% of its advances  (borrowings)  from the FHLB of Pittsburgh,  plus 0.55% of
the unused borrowing capacity. WSFS was in compliance with this requirement with
a stock investment in FHLB of Pittsburgh of $46.3 million at December 31, 2005.

Four advances are outstanding at December 31, 2005 totaling $145.0 million, with
a  weighted  average  rate of  4.96%  maturing  in 2008  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.
WSFS has the option to prepay  these four  advances  at  predetermined  times or
rates.

Trust Preferred Borrowings

On April 6, 2005,  the  Corporation  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 2005, WSFS purchased  federal funds as a short-term  funding  source.  At
December 31, 2005,  WSFS had purchased  $50.0 million in federal funds at a rate
of 4.19%. At December 31, 2004, WSFS had $50.0 million federal funds purchased.

During 2005, WSFS sold securities under agreements to repurchase as a short-term
funding  source.  At December  31, 2005,  securities  sold under  agreements  to
repurchase  had  fixed  rates  ranging  from  4.20%  to  4.36%.  The  underlying
securities  are U.S.  Government  agency  securities  with a book value of $34.8
million at December 31, 2005.  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)
2005
Up to 30 days           $  33,150    4.31%    $  34,795    $  34,036   $   299
=================================             ================================

2004
Up to 30 days           $  82,105    2.34%    $  84,716    $  83,769  $    583
=================================             ================================

Other Borrowed Funds

Included in other borrowed funds are collateralized  borrowings of $36.1 million
and $33.4  million at December 31, 2005 and 2004,  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
mortgaged-backed  securities.  The average rates on these  borrowings were 3.05%
and 0.65% at December 31, 2005 and 2004, respectively.

44

<PAGE>
WSFS FINANCIAL CORPORATION

12.  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, 2005 and 2004, 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, 2005 and 2004:


<TABLE>
<CAPTION>

                                                                                                   To Be Well-Capitalized
                                                                                                         Under Prompt
                                                       Consolidated             For Capital               Corrective
                                                       Bank Capital         Adequacy Purposes          Action Provisions  
-----------------------------------------------------------------------  ------------------------  ------------------------
                                                     Amount    Percent        Amount    Percent         Amount      Percent  
---------------------------------------------------------------------------------------------------------------------------
 (Dollars in Thousands)                                                                       
<S>                                              <C>           <C>        <C>            <C>        <C>             <C>   
 As of December 31, 2005:
   Total Capital (to risk-weighted assets)        $ 265,269     13.38%     $ 158,620      8.00%      $ 198,274       10.00%
   Core Capital (to adjusted tangible assets)       244,164      8.56        114,097      4.00         142,622        5.00
   Tangible Capital (to tangible assets)..          244,164      8.56         42,786      1.50             N/A         N/A
   Tier 1 Capital (to risk-weighted assets)         244,164     12.31         79,310      4.00         118,965        6.00

 As of December 31, 2004:
   Total Capital (to risk-weighted assets)        $ 257,933     15.34%     $ 134,552      8.00%      $ 168,190       10.00%
   Core Capital (to adjusted tangible assets)       242,289      9.69        100,049      4.00         125,061        5.00
   Tangible Capital (to tangible assets)..          242,289      9.69         37,518      1.50             N/A         N/A
   Tier 1 Capital (to risk-weighted assets)         242,289     14.41         67,276      4.00         100,914        6.00
</TABLE>


      The  Corporation  has a simple capital  structure with one class of $ 0.01
 par common  stock  outstanding,  each share  having  equal  voting  rights.  In
 addition,  the  Corporation  has  authorized  7,500,000  shares  of  $0.01  par
 preferred  stock.  No preferred  stock was outstanding at December 31, 2005 and
 2004. When infused into the Bank, the Trust Preferred Securities issued in 2005
 qualify as Tier 1 capital.  WSFS is  prohibited  from  paying any  dividend  or
 making any other capital  distribution if, after making the distribution,  WSFS
 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,  the Corporation  acquired  approximately  719,500 shares in 2005 for
 $40.2 million and 373,900 shares in 2004 for $18.0 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, 2005,  the coupon rate of the Capital Trust III  securities  was
6.18% with a scheduled  maturity of June 1, 2035. The  Corporation  purchased an
interest  rate cap that  effectively  limits the  three-month  LIBOR to 6.00% on
$50.0 million of the recently  purchased $67.0 million of securities until 2008.
The effective rate of these securities,  including the cost of the cap was 8.29%
at December 31, 2005. The effective rate will vary, however, due to fluctuations
in  interest  rates.  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 11 and
20 to the 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 Corporation.

                                                                              45



<PAGE>
WSFS FINANCIAL CORPORATIOn


13. ASSOCIATE (EMPLOYEE) BENEFIT PLANS
--------------------------------------------------------------------------------

Associate 401(k) Savings Plan

Certain  subsidiaries  of the  Corporation  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 the  Corporation's  common  stock.
Generally,  the principal and earnings thereon are tax deferred until withdrawn.
The Company matches a portion of the Associates'  contributions and periodically
makes discretionary contributions based on Company performance into the plan for
the benefit of Associates.  The  Corporation's  total cash  contributions to the
plan on behalf of its Associates resulted in a cash expenditure of $1.4 million,
$1.6 million and $1.3 million for 2005, 2004 and 2003, respectively.

All Company contributions are made in the form of the Corporation's common stock
that Associates may transfer to various other  investment  vehicles  without any
significant restrictions. The plan purchased 36,000, 46,000 and 56,000 shares of
common stock of the Corporation during 2005, 2004 and 2003, respectively.

Postretirement Benefits

The  Corporation  shares  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 the Corporation.

The Corporation  accounts for its  obligations  under the provisions of SFAS No.
106, Employers' Accounting for Postretirement Benefits Other Than Pensions. 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  are in  accordance  with SFAS No. 132
(Revised),   Employers'  Disclosure  About  Pensions  and  Other  Postretirement
Benefits.

In December 2003, President Bush signed into law the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (the "Act"). The Act expanded Medicare
to include, for the first time, coverage for prescription drugs.

In May 2004, the FASB issued  accounting  guidance  applicable to the Act in the
form of FASB Staff Position (FSP) 106-2. The guidance  states,  in part, that it
applies  only to a health care plan for which the employer  has  concluded  that
prescription drug benefits  available under the plan to some or all participants
for some or all future years are "actuarially equivalent" to Medicare Part D and
thus qualify for subsidy under the Act. The Company, using an analysis performed
by an independent  actuary,  has determined that it is unlikely that its retiree
medical plan would  qualify as  actuarially  equivalent  to the Medicare  Part D
benefit as of December 31, 2005.

46


<PAGE>
                                                      WSFS FINANCIAL CORPORATION

The following  disclosures relating to postretirement  benefits were measured at
December 31, 2005:


<TABLE>
<CAPTION>

                                                                                    2005        2004        2003
----------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S>                                                                            <C>         <C>         <C>    
Change in benefit obligation:
Benefit obligation at beginning of year                                          $ 2,086     $ 2,083     $ 1,815
Service cost                                                                         106          97          74
Interest cost                                                                        122         122         119
Actuarial (gain)/loss                                                                200         (81)        169
Benefits paid                                                                       (227)       (135)        (94)
----------------------------------------------------------------------------------------------------------------
      Benefit obligation at end of year                                          $ 2,287     $ 2,086     $ 2,083
================================================================================================================

Change in plan assets:
Fair value of plan assets at beginning of year                                   $     -     $     -     $     -
Employer contributions                                                               227         135          94
Benefits paid                                                                       (227)       (135)        (94)
----------------------------------------------------------------------------------------------------------------
      Fair value of plan assets at end of year                                   $     -     $     -     $     - 
================================================================================================================

Funded status:
Funded status                                                                    $(2,287)    $(2,086)    $(2,083)
Unrecognized transition obligation                                                   429         491         552
Unrecognized net loss                                                                647         461         563
----------------------------------------------------------------------------------------------------------------
      Net amount recognized                                                      $(1,211)    $(1,134)    $  (968)
================================================================================================================

Components of net periodic benefit cost:
Service cost                                                                     $   106     $    97     $    74
Interest cost                                                                        122         122         119
Amortization of transition obligation                                                 61          61          61
Net loss recognition                                                                  15          21          13
----------------------------------------------------------------------------------------------------------------
      Net periodic benefit cost                                                  $   304     $   301     $   267
================================================================================================================

Assumptions used to determine net periodic benefit cost:
       Discount rate                                                                6.00%       6.00%       6.75%
       Health care cost trend rate                                                  5.50%       5.50%       6.00%

Sensitivity analysis of health care cost trends:
Effect of +1% on service cost plus interest cost                                 $     3     $     3     $     2
Effect of -1% on service cost plus interest cost                                      (1)         (1)          -
Effect of +1% on APBO                                                                 18          18          15
Effect of -1% on APBO                                                                 (9)        (10)         (8)

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

Estimated future benefit payments:
The following table shows the expected future payments for the next ten years:
During 2006                                                                      $   115
During 2007                                                                          115
During 2008                                                                          114
During 2009                                                                          107
During 2010                                                                          108
During 2011 through 2015                                                             659
----------------------------------------------------------------------------------------
                                                                                 $ 1,218
========================================================================================
</TABLE>


                                                                              47

<PAGE>
WSFS FINANCIAL CORPORATION

The  Corporation  assumes  that the average  annual rate of increase for medical
benefits will  decrease by one-half of 1% per year and  stabilizes 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  Corporation.  For 2005,  this
annual  premium cap amounted to $2,133 per retiree.  The  Corporation  estimates
that it will contribute approximately $115,000 to the plan during fiscal 2006.

Supplemental Pension Plan

The Corporation  provided a nonqualified  plan that gives credit for 25 years of
service  based on the  qualified  plan  formula.  This plan is  currently  being
provided to two retired  executives  of the  Corporation.  The plan is no longer
being  provided to  Associates  of the  Corporation.  Unrecognized  net gains or
losses resulting from experience different from that assumed and from changes in
assumptions  is recognized  immediately  as a component of net periodic  benefit
cost.

The  following  disclosures  relating  to the  supplemental  pension  plan  were
measured at December 31, 2005:


<TABLE>
<CAPTION>
                                                                                  2005      2004      2003
----------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S>                                                                             <C>       <C>       <C>  
Change in benefit obligation:
Benefit obligation at beginning of year                                          $ 760     $ 784     $ 767
Service cost                                                                         -         -         -
Interest cost                                                                       43        45        49
Actuarial loss                                                                      58        15        52
Benefits paid                                                                      (84)      (84)      (84)
----------------------------------------------------------------------------------------------------------
      Benefit obligation at end of year                                          $ 777     $ 760     $ 784
==========================================================================================================
Change in plan assets:
Fair value of plan assets at beginning of year                                   $   -     $   -     $   -
Employer contributions                                                              84        84        84
Benefits paid                                                                      (84)      (84)      (84)
----------------------------------------------------------------------------------------------------------
      Fair value of plan assets at end of year                                   $   -     $   -     $   -   
==========================================================================================================
Funded status:
Funded status                                                                    $(777)    $(760)    $(784)
Unrecognized net loss                                                                -         -         -
----------------------------------------------------------------------------------------------------------
      Net amount recognized                                                      $(777)    $(760)    $(784)
==========================================================================================================
Components of net periodic benefit cost:
Service cost                                                                     $   -     $   -     $   -
Interest cost                                                                       43        45        49
Amortization of transition obligation                                                -         -         -
Net loss recognition                                                                58        15        52
----------------------------------------------------------------------------------------------------------
      Net periodic benefit cost                                                  $ 101     $  60     $ 101
==========================================================================================================
Assumptions used to determine net periodic benefit cost:
       Discount rate                                                              6.00%     6.00%     6.75%

Assumptions used to value the Supplemental Pension Plan
  Obligation:
       Discount rate                                                              5.50%     6.00%     6.00%

Estimated future supplemental pension plan payments:
The following table shows the expected future payments for the next ten years:
During 2006                                                                       $  84
During 2007                                                                          84
During 2008                                                                          84
During 2009                                                                          83
During 2010                                                                          83
During 2011 through 2015                                                            418
---------------------------------------------------------------------------------------
                                                                                  $ 836
=======================================================================================
</TABLE>


The Corporation  estimates that it will contribute  approximately $84,000 to the
plan during fiscal 2006.

     The Corporation has two additional plans. They are a Director's Plan with a
corresponding  liability of $171,000 and an Early Retirement  Window Plan with a
corresponding liability of $607,000.

48

<PAGE>
                                                      WSFS FINANCIAL CORPORATION


14.  TAXES ON INCOME
--------------------------------------------------------------------------------

The  Corporation  and its  subsidiaries  file a consolidated  federal income tax
return and separate state income tax returns.  The income tax provision consists
of the following:


<TABLE>
<CAPTION>
Year Ended December 31,                                          2005       2004        2003
--------------------------------------------------------------------------------------------
(In Thousands)
<S>                                                         <C>        <C>         <C>     
From continuing operations:
Current income taxes:
     Federal taxes                                           $ 11,118   $ 12,175    $ 11,212
     State and local taxes                                      2,197      1,993       1,695
Deferred income taxes:
     Federal taxes                                              1,445        (22)     (1,943)
     State and local taxes                                         87       (195)          -
--------------------------------------------------------------------------------------------
           Subtotal                                            14,847     13,951      10,964
--------------------------------------------------------------------------------------------

From discontinued operations and businesses held-for-sale:
Current income taxes:
     Federal taxes                                                  -        112      26,826
     State and local taxes                                          -         65       2,210
Deferred income taxes:
     Federal taxes                                                  -          -      (4,258)
     State and local taxes                                          -          -        (878)
--------------------------------------------------------------------------------------------
           Subtotal                                                 -        177      23,900
--------------------------------------------------------------------------------------------
           Total                                             $ 14,847   $ 14,128    $ 34,864
============================================================================================
</TABLE>


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 the Corporation's  deferred tax assets
and liabilities as of December 31, 2005 and 2004:


                                                              2005        2004 
--------------------------------------------------------------------------------
(In Thousands)
Deferred tax liabilities:
     Accelerated depreciation                             $   (856)   $ (1,256)
     Other                                                    (310)       (321)
     Prepaid expenses                                       (1,109)       (990)
     Deferred loan costs                                    (1,866)          -
--------------------------------------------------------------------------------
Total deferred tax liabilities                              (4,141)     (2,567)
--------------------------------------------------------------------------------

Deferred tax assets:
     Bad debt deductions                                     8,849       8,462
     Tax credit carryforwards                                  150         150
     Net operating loss carryforwards                        3,911       4,484
     Loan fees                                                  28          12
     Reserves and other                                      1,748       1,646
     Unrealized losses on available-for-sale securities      6,088       2,019
--------------------------------------------------------------------------------
Total deferred tax assets                                   20,774      16,773
--------------------------------------------------------------------------------

Valuation allowance                                         (2,702)     (2,812)
--------------------------------------------------------------------------------
Net deferred tax asset                                    $ 13,931    $ 11,394
================================================================================

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,  Accounting  for  Certain
Investments in Debt and Equity Securities, and certain adjustments in non-wholly
owned subsidiaries.

                                                                              49

<PAGE>
WSFS FINANCIAL CORPORATION

Based on the Corporation's history of prior earnings and its expectations of the
future,  it is anticipated that operating income and the reversal pattern of its
temporary differences will, more likely than not, be sufficient to realize a net
deferred  tax asset of $13.9  million at December  31, 2005.  An  adjustment  to
decrease  gross deferred tax assets and the related  valuation  allowance in the
amount of $110,000 was made in 2005 to reflect  state tax net  operating  losses
that have expired.  An adjustment to the valuation allowance was made in 2004 to
reflect benefits  previously  recognized for state tax net operating losses that
are not realizable  due to changes in state tax law enacted in 2004,  along with
further  unrealized  benefits  related  to the  discontinuance  of  the  leasing
company. No adjustments to the valuation allowance were made in 2003.

At December 31, 2005, approximately $3.3 million in gross deferred tax assets of
the  Corporation   were  related  to  net  operating   losses  and  tax  credits
attributable  to a former  subsidiary.  The Corporation has assessed a valuation
allowance  of $1.96  million  on a portion of these  deferred  tax assets due to
limitations imposed by the Internal Revenue Code.

Approximately  $744,000  in gross  deferred  tax  assets of the  Corporation  at
December 31, 2005 are related to state tax net operating losses. The Company has
assessed a valuation allowance of $744,000 on this entire deferred tax asset due
to an expectation of such net operating losses expiring before being utilized.

Net operating loss carryforwards  (NOLs) of $21.6 million remain at December 31,
2005. The expiration dates and amounts of such carryforwards are listed below:


                                            Federal              State  
              --------------------------------------------------------
              (In Thousands)
              2007                          $     -            $ 8,479
              2008                            2,291                  -
              2009                            6,755                  -
              2017                                -                 31
              2018                                -              4,071
              --------------------------------------------------------
                                            $ 9,046            $12,581
              ========================================================

The  Corporation's  ability to use its 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  $9.0  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.

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

Year Ended December 31,                            2005       2004       2003
-----------------------------------------------------------------------------
Statutory federal income tax rate                  35.0%      35.0%      35.0%
State tax net of federal tax benefit                3.2        3.0        1.2
Interest income 50% excludable                     (1.7)      (1.9)      (0.8)
Bank-owned life insurance income                   (1.6)      (1.9)         -
Utilization of loss carryforwards and          
       valuation allowance adjustments                -        1.1          -
Other                                              (0.1)         -        0.2
-----------------------------------------------------------------------------
Effective tax rate                                 34.8%      35.3%      35.6%
=============================================================================

50

<PAGE>
                                                      WSFS FINANCIAL CORPORATION


15.  STOCK OPTION PLANS
--------------------------------------------------------------------------------

The  Corporation  has stock  options  outstanding  under two stock  option plans
(collectively,  "Option  Plans") for officers,  directors and  Associates of the
Corporation 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 originally  authorized under the 2005 Plan
is 400,000. At December 31, 2005, there were 268,193 shares available for future
grants under the 2005 Plan.

The Option 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 the  Corporation's  common stock
on the date of the grant.  All Stock Options granted between October 1, 1996 and
December  14, 2005 are  exercisable  one year from grant  date,  vest in 20% per
annum  increments  and expire no later than ten years from the grant  date.  All
Stock  Options  granted  between  December  15, 2005 and  December  31, 2005 are
exercisable  one year from  grant  date,  vest in 25% per annum  increments  and
expire no later  than five  years  from the grant  date.  Generally,  all awards
become immediately  exercisable in the event of a change in control,  as defined
within the Option Plans.

A summary of the status of the  Corporation's  Option  Plans as of December  31,
2005, 2004 and 2003, and changes during the years then ended is presented below:


<TABLE>
<CAPTION>
                                             2005                       2004                          2003              
                                       ----------------------     -----------------------       ---------------------- 
                                                  Weighted-                  Weighted-                    Weighted-
                                                   Average                    Average                      Average
                                       Shares  Exercise Price     Shares   Exercise Price       Shares  Exercise Price 
---------------------------------------------------------------------------------------------------------------------- 
<S>                                 <C>         <C>            <C>            <C>          <C>             <C>   
Stock Options:
Outstanding at beginning of year      873,360     $23.48         938,264        $19.49       1,080,060       $16.33
Granted                               109,847      62.69          87,495         55.10          91,455        42.52
Exercised                            (226,963)     15.05        (131,849)        15.51        (220,441)       13.86
Canceled                              (10,295)     38.98         (20,550)        26.92         (12,810)       14.55
                                     --------                   --------                     ---------    
Outstanding at end of year            745,949      31.60         873,360         23.48         938,264        19.49
                                                                                            
Exercisable at end of year            434,144      20.51         499,496         16.90         436,863        15.70
Weighted-average fair value                                                                 
  of awards granted                    $15.13                     $13.90                         $9.19
                                                                                            
</TABLE>


The  Black-Scholes  option-pricing  model was used to determine  the  grant-date
fair-value  of options.  Significant  assumptions  used in the model  included a
weighted-average risk-free rate of return of 4.3% in 2005, 3.7% in 2004 and 3.3%
in 2003;  expected option life of between three and  three-quarter and six years
for all awards;  and expected stock price volatility of 19% in 2005, 19% in 2004
and 17% in 2003.  For the purposes of this  option-pricing  model 1% was used as
the expected dividend yield.

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

SFAS No. 123, Accounting for Stock-Based Compensation,  encourages, but does not
require, the adoption of fair-value  accounting for stock-based  compensation to
Associates.  The Company, as permitted,  had elected not to adopt the fair value
accounting provisions of SFAS 123, and has instead continued to apply Accounting
Principles Board (APB) Opinion 25, Accounting for Stock Issued to Employees, and
Related Interpretations, and related interpretations in accounting for the Stock
Plans and to provide the  required  pro forma  disclosures  of SFAS 123. Had the
grant-date fair-value provisions of SFAS 123 been adopted, the Corporation would
have recognized pretax compensation expense of $1.2 million in 2005, $907,000 in
2004 and $1.1  million in 2003  related to its Option  Plans.  As a result,  pro
forma income from  continuing  operations  for the  Corporation  would have been
$26.9  million in 2005,  $25.2  million in 2004 and $20.5  million in 2003.  Pro
forma  diluted  earnings per share from  continuing  operations  would have been
$3.75 in 2005, $3.31 in 2004 and $2.49 in 2003.

                                                                              51

<PAGE>
WSFS FINANCIAL CORPORATION

         The effects on pro forma net income and diluted  earnings  per share of
applying  the  disclosure  requirement  of  SFAS  123 in past  years  may not be
representative  of the future pro forma effects on net income and EPS due to the
vesting  provisions  of the options and future  awards that are  available to be
granted.

         The  following  table  summarizes  all stock  options  outstanding  and
exercisable  for Option  Plans as of December  31,  2005,  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:

$  0.00-$ 6.37      6,545      $    -       2.8 years             -      $    -
$  6.38-$12.73     90,427       10.92       4.8 years        90,427       10.92
$12.74-$19.10     288,603       16.00       5.0 years       244,203       15.87
$25.47-$31.83       4,000       31.60       7.2 years         1,600       31.60
$31.84-$38.20      90,971       33.41       7.0 years        50,675       33.40
$38.21-$44.57      77,955       43.71       7.8 years        30,948       43.71
$44.58-$50.94       5,080       48.67       8.5 years         1,016       48.67
$50.95-$57.30       8,907       53.86       9.4 years           220       53.26
$57.31-$63.67     173,461       61.49       6.7 years        15,055       58.78
                  -------                                   -------
Total             745,949      $31.60       6.0 years       434,144      $20.51
=========================                                   =======

16.  COMMITMENTS AND CONTINGENCIES
--------------------------------------------------------------------------------

Lending Operations

At December 31, 2005, the Corporation had commitments to extend credit of $503.4
million.  Consumer  lines of credit totaled $49.7 million of which $38.7 million
was secured by real estate. Outstanding letters of credit were $26.7 million and
outstanding  commitments  to make or acquire  mortgage  loans  aggregated  $37.7
million.  Approximately  $20.7 million of which were at fixed rates ranging from
5.25% to 7.88%, and  approximately  $17.0 million were at variable rates ranging
from 4.38% to 7.38%.  Mortgage commitments generally have closing dates within a
six-month period.

Data Processing Operations

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

                       2006                          $3,364
                       2007                           3,417
                       2008                           2,730
                       2009                           2,421
                       2010                             655
      
Legal Proceedings

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

The  Bank,  as  successor  to  originators,  is 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 the Bank's reverse mortgage rights and obligations.

52


<PAGE>
                                                      WSFS FINANCIAL CORPORATION


Financial Instruments With Off Balance Sheet Risk

The Corporation is a party to financial  instruments with off balance sheet risk
in the normal course of business  primarily to meet the  financing  needs of its
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.  The
Corporation  generally requires collateral to support such financial instruments
in excess of the contractual  amount of those  instruments and essentially  uses
the same credit policies in making  commitments as it does for on-balance  sheet
instruments.

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

December 31,                                                 2005          2004
-------------------------------------------------------------------------------
(In Thousands)
Financial instruments with contract amounts which 
  represent potential credit risk:
       Construction loan commitments                     $104,000     $  68,905
       Commercial mortgage loan commitments                93,966        85,204
       Commercial loan commitments                        176,344       142,081
       Commercial standby letters of credit                26,720        13,348
       Residential mortgage loan commitments               37,692        19,923
       Consumer loan commitments                           64,676        57,250

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.  The  Corporation  evaluates each customer's  creditworthiness  and
obtains collateral based on management's credit evaluation of the counterparty.

Indemnifications

Secondary  Market Loan Sales.  The  Company  generally  does 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. The Company typically sells  fixed-rate,  conforming first mortgage loans
to Freddie Mac as part of its 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,  WSFS  provides  indemnifications  to the buyers
under certain  circumstances.  These indemnifications may include the repurchase
of loans by WSFS.  Repurchases and losses are rare, and no provision is made for
losses at the time of sale. During 2005, the Company had no repurchases.

Swap  Guarantees.  The Company  entered into an agreement  with an  unaffiliated
financial  institution whereby that financial  institution entered into interest
rate  derivative  contracts  (interest  rate swap  transactions)  with customers
referred to them by the Company.  By the terms of the agreement,  that financial
institution has recourse to the Company 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 such as
WSFS to provide  access to interest  rate swap  transactions  for its  customers
without WSFS creating the swap itself.

At December  31,  2005 there were  eighteen  variable-rate  to  fixed-rate  swap
transactions between the third-party financial institution and customers of WSFS
with an initial notional amount  aggregating  approximately  $57.9 million,  and
with  maturities  ranging from two to ten years.  The aggregate  market value of
these swaps to the customers was an asset of $98,600 as of December 31, 2005.

                                                                              53

<PAGE>
WSFS FINANCIAL CORPORATION


17.  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 the Corporation's 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.

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 the  Corporation  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.

54


<PAGE>
WSFS FINANCIAL CORORATION


The  book  value  and  estimated  fair  value  of  the  Corporation's  financial
instruments are as follows:


<TABLE>
<CAPTION>
December 31,                                                           2005                    2004     
------------------------------------------------------------------------------------   ----------------------
                                                                Book          Fair         Book         Fair
                                                                Value        Value        Value        Value  
-------------------------------------------------------------------------------------------------------------
(In Thousands)
<S>                                                       <C>          <C>          <C>          <C>       
Financial assets:
     Cash and cash equivalents                             $  233,951   $  233,951   $  193,009   $  193,009
     Investment securities                                     57,489       57,688       97,376       97,895
     Mortgage-backed securities                               620,323      620,323      524,144      524,144
     Loans, net                                             1,775,294    1,779,746    1,535,467    1,542,006
     Bank-owned life insurance                                 54,193       54,193       52,190       52,190
     Stock in Federal Home Loan Bank of Pittsburgh46,293       46,293       46,293       43,946       43,946
     Accrued interest receivable                               11,070       11,070        8,656        8,656
     Interest rate cap                                            125          125          322          322

Financial liabilities:
     Deposits                                               1,446,236    1,447,165    1,234,962    1,237,779
     Borrowed funds                                         1,195,008    1,200,477    1,054,156    1,060,555
     Accrued interest payable                                   7,554        7,554        3,863        3,863
</TABLE>


The  estimated  fair  value of the  Corporation's  off-balance  sheet  financial
instruments is as follows:


<TABLE>
<CAPTION>
December 31,                                                                               2005          2004    
-------------------------------------------------------------------------------------------------------------
(In Thousands)
<S>                                                                                     <C>           <C>   
Off-balance sheet instruments:
     Commitments to extend credit                                                        $4,120        $3,171
     Standby letters of credit                                                              267           133
</TABLE>



18.  RELATED PARTY TRANSACTIONS
--------------------------------------------------------------------------------

The  Corporation  routinely  enters into  transactions  with its  directors  and
officers.  Such  transactions  are made in the  ordinary  course of  business on
substantially  the same  terms  and  conditions,  including  interest  rates and
collateral,  as those  prevailing at the same time for  comparable  transactions
with other  customers,  and do not, in the opinion of  management,  involve more
than the normal credit risk or present other unfavorable features. The aggregate
amount of loans to such  related  parties was $6.9  million and $7.9  million at
December 31, 2005 and 2004, respectively. During 2005, new loans and credit line
advances  to such  related  parties  amounted  to $5.9  million  and  repayments
amounted to $6.9 million.

A director of the Corporation is also a director of a loan customer of the Bank.
At December 31, 2005,  the principal  balance  outstanding of that loan was $8.5
million.

The Chairman of the  Corporation is also the Chairman of the FHLB of Pittsburgh.
At December 31, 2005, the Bank had borrowed funds  outstanding  from the FHLB of
Pittsburgh of $1.0 billion and owned $46.3 million of FHLB of Pittsburgh  stock.
These transactions have the same terms and conditions as comparable transactions
with other financial institutions.

                                                                              55

<PAGE>
WSFS FINANCIAL CORPORATION


19.  PARENT COMPANY FINANCIAL INFORMATION
--------------------------------------------------------------------------------

Condensed Statement of Financial Condition


<TABLE>
<CAPTION>
December 31,                                                                    2005         2004 
-------------------------------------------------------------------------------------------------
(In Thousands)
<S>                                                                       <C>          <C>       
Assets:
     Cash                                                                  $  10,097    $   1,574 
     Investment in subsidiaries                                              236,095      240,892
     Investment in interest rate cap                                             125          322
     Investment in Capital Trust I                                                 -        1,547
     Investment in Capital Trust III                                           2,011            -
     Other assets                                                              1,056        2,240
-------------------------------------------------------------------------------------------------
Total assets                                                               $ 249,384    $ 246,575
=================================================================================================

Liabilities:                                                               
     Borrowings                                                            $  67,011    $  50,000
     Interest payable                                                            357          217
     Other liabilities                                                            41           55
-------------------------------------------------------------------------------------------------
     Total liabilities                                                        67,409       50,272
-------------------------------------------------------------------------------------------------
                                                                           
Stockholders' equity:                                                      
     Common stock                                                                154          152
     Capital in excess of par value                                           74,673       68,327
     Comprehensive loss                                                       (9,968)      (3,385)
     Retained earnings                                                       319,065      293,054
     Treasury stock                                                         (201,949)    (161,845)
-------------------------------------------------------------------------------------------------
     Total stockholders' equity                                              181,975      196,303
-------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                                 $ 249,384    $ 246,575
=================================================================================================
</TABLE>



<TABLE>
<CAPTION>
Condensed Statement of Operations

Year Ended December 31,                                               2005        2004        2003 
--------------------------------------------------------------------------------------------------
(In Thousands)                                                   
<S>                                                              <C>         <C>         <C>     
Income:                                                          
     Interest income                                              $    533    $    101    $    631
     Noninterest income                                                139         139         118
--------------------------------------------------------------------------------------------------
                                                                       672         240         749
--------------------------------------------------------------------------------------------------
Expenses:                                                        
     Interest expense                                                5,292       2,246       2,023
     Other operating expenses                                       (1,567)       (681)       (401)
--------------------------------------------------------------------------------------------------
                                                                     3,725       1,565       1,622
--------------------------------------------------------------------------------------------------
                                                                 
Loss before equity in undistributed income of subsidiaries          (3,053)     (1,325)       (873)
Equity in undistributed income of subsidiaries                      30,909      27,225      63,895
--------------------------------------------------------------------------------------------------
Net income                                                        $ 27,856    $ 25,900    $ 63,022
==================================================================================================
</TABLE>
                                                       

56

<PAGE>
                                                      WSFS FINANCIAL CORPORATION


Condensed Statement of Cash Flows


<TABLE>
<CAPTION>
Year Ended December 31,                                                              2005        2004        2003 
-----------------------------------------------------------------------------------------------------------------
(In Thousands)
<S>                                                                             <C>         <C>         <C>     
Operating activities:
Net income                                                                       $ 27,856    $ 25,900    $ 63,022
Adjustments to reconcile net income to net cash used for operating activities:
     Equity in undistributed income of subsidiaries                               (30,909)    (27,225)    (63,895)
     Amortization                                                                   1,398         175          50
     Decrease (increase) in other assets                                              432        (600)        160
     Increase (decrease) in other liabilities                                         126          37         (20)
-----------------------------------------------------------------------------------------------------------------
Net cash used for operating activities                                             (1,097)     (1,713)       (683)
-----------------------------------------------------------------------------------------------------------------

Investing activities:
     Decrease in investment in subsidiaries                                        28,210      18,577      52,000
     Net issuance of Pooled Floating Rate Capital Securities                       17,011           -           -   
-----------------------------------------------------------------------------------------------------------------
Net cash provided by investing activities                                          45,221      18,577      52,000
-----------------------------------------------------------------------------------------------------------------

Financing activities:
     Issuance of common stock                                                       6,348       3,590       4,951
     Dividends paid on common stock                                                (1,845)     (1,643)     (1,583)
     Treasury stock, net of reissuance                                            (40,104)    (17,899)    (58,418)
-----------------------------------------------------------------------------------------------------------------
Net cash used for financing activities                                            (35,601)    (15,952)    (55,050)
-----------------------------------------------------------------------------------------------------------------

Increase (decrease) in cash                                                         8,523         912      (3,733)
Cash at beginning of period                                                         1,574         662       4,395
-----------------------------------------------------------------------------------------------------------------
Cash at end of period                                                            $ 10,097    $  1,574    $    662
=================================================================================================================
</TABLE>


                                                                              57

<PAGE>
WSFS FINANCIAL CORPORATION


20.  ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
--------------------------------------------------------------------------------

The  Corporation  has 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.  Until  December 31, 2003, the cap qualified as a hedge of the
cash flows on $50.0 million in trust preferred floating rate debt. The change in
the fair value of the cap during  the  hedging  relationship,  was  captured  in
accumulated  other  comprehensive  income.  The  remaining  amount  recorded  in
accumulated  other   comprehensive   income  from  December  31,  2003  will  be
reclassified into interest expense when each of the quarterly  interest payments
is made on the trust  preferred  debt.  During  2006,  the  company  anticipates
recognizing  a  non-cash  charge  of  $74,000  for  interest  expense  from  the
amortization of the balance in accumulated other comprehensive income.

The fair value of the cap is estimated using a standard  option model.  The fair
value of the  interest  rate  cap at  December  31,  2005  was  $125,000  and is
considered a freestanding derivative.

The  following  depicts  the  change  in  fair  market  value  of the  Company's
derivatives from January 1, 2003 to December 31, 2005:


<TABLE>
<CAPTION>
                    Carrying                  Carrying                 Carrying                Carrying
                       Value                     Value                    Value                   Value
                   at Jan. 1,               at Dec. 31,              at Dec. 31,             at Dec. 31,
                        2003    Activity          2003   Activity          2004  Activity          2005 
-------------------------------------------------------------------------------------------------------
(In Thousands)                                                                                  
<S>                  <C>           <C>         <C>        <C>              <C>    <C>             <C> 
Interest Rate Cap     $1,012        $60         $1,072     $(750)           322    $(197)          $125
=======================================================================================================
</TABLE>



58


<PAGE>
WSFS FINNACIAL CORORATION


21. SEGMENT INFORMATION
--------------------------------------------------------------------------------

Under  the  definition  of  SFAS  No.  131,  Disclosures  About  Segments  of an
Enterprise and Related Information,  the Corporation has two operating segments:
WSFS and CashConnect, the ATM division of WSFS. WSFS provides financial products
through its main office, 24 retail banking offices,  loan production offices and
operations  centers to commercial  and retail  customers.  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 further are
appropriately  aggregated  within the WSFS segment of the Company in  accordance
with SFAS No. 131.  CashConnect  provides turnkey ATM services through strategic
partnerships  with several of the largest  networks,  manufacturers  and service
providers in the ATM industry.

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
maker to make  decisions  about  resources  to be  allocated  to the segment and
assess  its  performance,  and  for  which  discrete  financial  information  is
available. The Corporation evaluates performance based on pretax ordinary income
relative to resources  used,  and allocates  resources  based on these  results.
Segment  information  for the years ended  December 31, 2005,  2004 and 2003 are
shown below.


<TABLE>
<CAPTION>
For the year ended December 31, 2005:               WSFS  CashConnect        Total    
----------------------------------------------------------------------------------
(in thousands)
<S>                                            <C>           <C>         <C>     
External customer revenues:
    Interest income                             $136,022      $     -     $136,022
    Noninterest income                            22,114       12,539       34,653
----------------------------------------------------------------------------------
Total external customer revenues                 158,136       12,539      170,675
----------------------------------------------------------------------------------

Inter-segment revenues:
    Interest income                                4,729            -        4,729
    Noninterest income                               778          682        1,460
----------------------------------------------------------------------------------
Total inter-segment revenues                       5,507          682        6,189
----------------------------------------------------------------------------------

Total revenue                                    163,643       13,221      176,864
----------------------------------------------------------------------------------

External customer expenses:
    Interest expense                              62,380            -       62,380
    Noninterest expenses                          58,921        3,956       62,877
    Provision for loan loss                        2,582            -        2,582
----------------------------------------------------------------------------------
Total external customer expenses                 123,883        3,956      127,839
----------------------------------------------------------------------------------

Inter-segment expense:
    Interest expense                                   -        4,729        4,729
    Noninterest expenses                             682          778        1,460
----------------------------------------------------------------------------------
Total inter-segment expenses                         682        5,507        6,189
----------------------------------------------------------------------------------

Total expenses                                   124,565        9,463      134,028
----------------------------------------------------------------------------------

Income before taxes and extraordinary items   $   39,078   $    3,758       42,836

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

Cash and cash equivalents                     $   59,424   $  174,527   $  233,951
Other segment assets                           2,605,648        7,153    2,612,801
----------------------------------------------------------------------------------
Total segment assets                          $2,665,072   $  181,680   $2,846,752
==================================================================================

Capital expenditures                          $   15,703   $      811   $   16,514
</TABLE>

                                                                              59

<PAGE>
WSFS FINANCIAL CORPORATION



<TABLE>
<CAPTION>
For the year ended December 31, 2004:                                WSFS   CashConnect       Total    
---------------------------------------------------------------------------------------------------
(in thousands)
<S>                                                           <C>          <C>          <C>       
External customer revenues:
    Interest income                                            $  104,110   $        -   $  104,110
    Noninterest income                                             21,874       10,076       31,950
---------------------------------------------------------------------------------------------------
Total external customer revenues                                  125,984       10,076      136,060
---------------------------------------------------------------------------------------------------

Inter-segment revenues:
    Interest income                                                 1,771            -        1,771
    Noninterest income                                                717          742        1,459
---------------------------------------------------------------------------------------------------
Total inter-segment revenues                                        2,488          742        3,230
---------------------------------------------------------------------------------------------------

Total revenue                                                     128,472       10,818      139,290
---------------------------------------------------------------------------------------------------

External customer expenses:
    Interest expense                                               37,246            -       37,246
    Noninterest expenses                                           52,183        3,516       55,699
    Provision for loan loss                                         3,217            -        3,217
---------------------------------------------------------------------------------------------------
Total external customer expenses                                   92,646        3,516       96,162
---------------------------------------------------------------------------------------------------

Inter-segment expense:
    Interest expense                                                    -        1,771        1,771
    Noninterest expenses                                              742          717        1,459
---------------------------------------------------------------------------------------------------
Total inter-segment expenses                                          742        2,488        3,230
---------------------------------------------------------------------------------------------------

Total expenses                                                     93,388        6,004       99,392
---------------------------------------------------------------------------------------------------

Income before taxes and extraordinary items                    $   35,084   $    4,814       39,898

Provision for income taxes                                                                   13,951
Minority interest                                                                               190
Income on wind-down of discontinued operations, net of taxes                                    143
---------------------------------------------------------------------------------------------------
Consolidated net income                                                                  $   25,900
---------------------------------------------------------------------------------------------------
Cash and cash equivalents                                      $   61,328   $  131,150   $  192,478
Other segment assets                                            2,302,895        7,583    2,310,478
---------------------------------------------------------------------------------------------------
Total segment assets                                           $2,364,223   $  138,733   $2,502,956
===================================================================================================

Capital expenditures                                           $    5,886   $      522   $    6,408

</TABLE>


60

<PAGE>
                                                      WSFS FINANCIAL CORPORATION



<TABLE>
<CAPTION>

For the year ended December 31, 2003:               WSFS   CashConnect       Total    
----------------------------------------------------------------------------------
 (in thousands)
<S>                                            <C>          <C>         <C>     
External customer revenues:
    Interest income                             $ 89,299     $      -     $ 89,299
    Noninterest income                            18,386        7,780       26,166
----------------------------------------------------------------------------------
Total external customer revenues                 107,685        7,780      115,465
----------------------------------------------------------------------------------

Inter-segment revenues:
    Interest income                                1,110            -        1,110
    Noninterest income                               662          747        1,409
----------------------------------------------------------------------------------
Total inter-segment revenues                       1,772          747        2,519
----------------------------------------------------------------------------------

Total revenue                                    109,457        8,527      117,984
----------------------------------------------------------------------------------

External customer expenses:
    Interest expense                              31,301            -       31,301
    Noninterest expenses                          46,311        3,106       49,417
    Provision for loan loss                        2,550            -        2,550
----------------------------------------------------------------------------------
Total external customer expenses                  80,162        3,106       83,268
----------------------------------------------------------------------------------

Inter-segment expense:
    Interest expense                                   -        1,110        1,110
    Noninterest expenses                             747          662        1,409
----------------------------------------------------------------------------------
Total inter-segment expenses                         747        1,772        2,519
----------------------------------------------------------------------------------

Total expenses                                    80,909        4,878       85,787
----------------------------------------------------------------------------------

Income before taxes and extraordinary items   $   28,548     $  3,649       32,197

Provision for income taxes                                                  10,964
Gain on sale of businesses held-for-sale                                    41,789
----------------------------------------------------------------------------------
Consolidated net income                                                 $   63,022
==================================================================================

Cash and cash equivalents                     $   46,709     $113,711   $  160,420
Other segment assets                           2,043,162        3,495    2,046,657
----------------------------------------------------------------------------------
Total segment assets                          $2,089,871     $117,206   $2,207,077
==================================================================================

Capital expenditures                          $    2,496     $    301   $    2,797

</TABLE>


                                                                              61


<PAGE>
                                                      WSFS FINANCIAL CORPORATION



<TABLE>
<CAPTION>

QUARTERLY FINANCIAL SUMMARY  (Unaudited)
---------------------------------------------------------------------------------------------------------------

Three Months Ended               12/31/05   9/30/05   6/30/05   3/31/05  12/31/04   9/30/04   6/30/04   3/31/04
---------------------------------------------------------------------------------------------------------------
(In Thousands, Except Per Share Data)
<S>                              <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>    
Interest income                   $37,835   $35,136   $32,886   $30,165   $29,065   $26,601   $24,282   $24,162
Interest expense                   19,299    15,921    15,108    12,052    10,809     9,481     8,674     8,282
---------------------------------------------------------------------------------------------------------------
Net interest income                18,536    19,215    17,778    18,113    18,256    17,120    15,608    15,880
Provision for loan losses           1,006       225       772       579       847       996       687       687
---------------------------------------------------------------------------------------------------------------
Net interest income after
   provision for loan losses       17,530    18,990    17,006    17,534    17,409    16,124    14,921    15,193
Noninterest income                  9,499     8,584     8,714     7,856     8,012     8,160     8,220     7,558
Noninterest expenses               16,154    16,150    15,603    14,970    15,105    14,167    13,189    13,238
---------------------------------------------------------------------------------------------------------------
Income from continuing
  operations before
  minority interest and taxes      10,875    11,424    10,117    10,420    10,316    10,117     9,952     9,513
Less minority interest                 11        48        37        37        32        66        47        45
---------------------------------------------------------------------------------------------------------------
Income from continuing
   operations before taxes         10,864    11,376    10,080    10,383    10,284    10,051     9,905     9,468
Income tax provision                3,771     3,969     3,514     3,593     3,528     3,499     3,638     3,286
---------------------------------------------------------------------------------------------------------------
Income from continuing
  operations                        7,093     7,407     6,566     6,790     6,756     6,552     6,267     6,182
Income on wind-down of
   discontinued operations,
   net of taxes                         -         -         -         -       143         -         -         -
---------------------------------------------------------------------------------------------------------------
Net income                        $ 7,093   $ 7,407   $ 6,566   $ 6,790   $ 6,899   $ 6,552   $ 6,267   $ 6,182
===============================================================================================================

Earnings per share:
Basic:
   Income from continuing
       operations                 $  1.09   $  1.12   $  0.95   $  0.96   $  0.96   $  0.93   $  0.87   $  0.84
   Income on wind-down of
       discontinued operations,
      net of taxes                      -         -         -         -      0.02         -         -         -
---------------------------------------------------------------------------------------------------------------
Net income                        $  1.09   $  1.12   $  0.95   $  0.96   $  0.98   $  0.93   $  0.87   $  0.84
===============================================================================================================

Diluted:
   Income from continuing
      operations                  $  1.03   $  1.06   $  0.90   $  0.90   $  0.90   $  0.88   $  0.82   $  0.79
   Income on wind-down of
      discontinued operations,
     net of taxes                       -         -         -         -      0.02         -         -         -
---------------------------------------------------------------------------------------------------------------
Net income                        $  1.03   $  1.06   $  0.90   $  0.90   $  0.92   $  0.88   $  0.82   $  0.79
===============================================================================================================
</TABLE>


62

                         Subsidiaries of the Registrant
                         ------------------------------


<TABLE>
<CAPTION>
                                                                                             State or
                                                                          Percent       Other Jurisdiction
Parent Company                             Subsidiary                      Owned         of Incorporation
--------------                             ----------                      -----         ----------------

<S>                          <C>                                        <C>           <C>
WSFS Financial Corporation       Wilmington Savings Fund Society,          100%            United States
                                    Federal Savings Bank
                                 WSFS Capital Trust, III                   100%            Delaware
                                 Montchanin Capital Management, Inc.        94%(1)         Delaware

Wilmington Savings Fund          WSFS Reit, Inc                            100%            Delaware
 Society, Federal                WSFS Investment Group, Inc.               100%            Delaware
 Savings Bank                    WSFS Credit Corporation                   100%            Delaware


Montchanin Capital               Cypress Capital Management, LLC            80%(2)         Delaware
Management, Inc.

</TABLE>


(1)  During 2006 this ownership percentage increased to 100%.
(2)  During 2006 this ownership percentage increased to 90%.






                                  

                               CONSENT OF KPMG LLP

            Consent of Independent Registered Public Accounting Firm
            --------------------------------------------------------




    The Board of Directors
    WSFS Financial Corporation:


    We consent to the incorporation by reference in the registration  statements
    (No.  333-106561,  No.  333-26099,  No. 333-33713,  No.  333-40032,  and No.
    333-127225)  on Form S-8 of WSFS  Financial  Corporation of our report dated
    March 15, 2006, with respect to the  consolidated  statement of condition of
    WSFS  Financial  Corporation  and  subsidiaries  as of December 31, 2005 and
    2004,  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, 2005, management's assessment of the effectiveness
    of internal  control over  financial  reporting as of December 31, 2005, and
    the  effectiveness  of  internal  control  over  financial  reporting  as of
    December  31,  2005,  which  reports  appear in the December 31, 2005 annual
    report on Form 10-K of WSFS Financial Corporation.

     /s/ KPMG LLP

     Philadelphia, Pennsylvania
     March 15, 2006



                            SECTION 302 CERTIFICATION

     I, Marvin N.  Schoenhals,  President and Chief Executive  Officer,  certify
that:

1.  I  have  reviewed  this  annual  report  on  Form  10-K  of  WSFS  Financial
Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact  necessary to make the statements
made, in light of the  circumstances  under which such statements were made, not
misleading with respect to the period covered by this report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information included in this report, fairly present in all material respects the
financial  condition,  results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rule 13a-15(e)) and internal  control over financial  reporting (as
defined in Exchange Act Rule 13a-15(f)) for the registrant and have:

         (a) Designed such disclosure  controls and  procedures,  or caused such
disclosure  controls and  procedures to be designed  under our  supervision,  to
ensure that  material
  information  relating to the  registrant,  including  its
consolidated subsidiaries,  is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

         (b) Designed such internal control over financial reporting,  or caused
such  internal  control  over  financial  reporting  to be  designed  under  our
supervision,  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;

         (c) Evaluated the effectiveness of the registrant's disclosure controls
and  procedures  and  presented  in  this  report  our  conclusions   about  the
effectiveness  of the disclosure  controls and procedures,  as of the end of the
period covered by this report based on such evaluation; and

         (d)  Disclosed in this report any change in the  registrant's  internal
control over financial  reporting  that occurred  during the  registrant's  most
recent fiscal quarter that has materially  affected,  or is reasonably likely to
materially affect, the registrant's  internal control over financial  reporting;
and

5. The registrant's other certifying officer and I have disclosed,  based on our
most recent  evaluation of internal  control over  financial  reporting,  to the
registrant's  auditors  and the audit  committee  of the  registrant's  board of
directors:

         (a) All significant  deficiencies and material weaknesses in the design
or operation of internal  control over financial  reporting which are reasonably
likely to adversely  affect the issuer's ability to record,  process,  summarize
and report financial information; and

         (b) Any fraud,  whether or not material,  that  involves  management or
other  employees who have a significant  role in the issuer's  internal  control
over financial reporting.


Date: March 15, 2006                       /s/ Marvin N. Schoenhals
                                           ------------------------
                                           Marvin N. Schoenhals
                                           President and Chief Executive Officer
                                      
                        

<PAGE>



                            SECTION 302 CERTIFICATION


     I, Stephen A. Fowle,  Executive Vice President and Chief Financial Officer,
certify that:

1.  I  have  reviewed  this  annual  report  on  Form  10-K  of  WSFS  Financial
Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact  necessary to make the statements
made, in light of the  circumstances  under which such statements were made, not
misleading with respect to the period covered by this report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information included in this report, fairly present in all material respects the
financial  condition,  results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rule 13a-15(e)) and internal  control over financial  reporting (as
defined in Exchange Act Rule 13a-15(f)) for the registrant and have:

         (a) Designed such disclosure  controls and  procedures,  or caused such
disclosure  controls and  procedures to be designed  under our  supervision,  to
ensure that  material  information  relating to the  registrant,  including  its
consolidated subsidiaries,  is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

         (b) Designed such internal control over financial reporting,  or caused
such  internal  control  over  financial  reporting  to be  designed  under  our
supervision,  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;

         (c) Evaluated the effectiveness of the registrant's disclosure controls
and  procedures  and  presented  in  this  report  our  conclusions   about  the
effectiveness  of the disclosure  controls and procedures,  as of the end of the
period covered by this report based on such evaluation; and

         (d)  Disclosed in this report any change in the  registrant's  internal
control over financial  reporting  that occurred  during the  registrant's  most
recent fiscal quarter that has materially  affected,  or is reasonably likely to
materially affect, the registrant's  internal control over financial  reporting;
and

5. The registrant's other certifying officer and I have disclosed,  based on our
most recent  evaluation of internal  control over  financial  reporting,  to the
registrant's  auditors  and the audit  committee  of the  registrant's  board of
directors:

         (a) All significant  deficiencies and material weaknesses in the design
or operation of internal  control over financial  reporting which are reasonably
likely to adversely  affect the issuer's ability to record,  process,  summarize
and report financial information; and

         (b) Any fraud,  whether or not material,  that  involves  management or
other  employees who have a significant  role in the issuer's  internal  control
over financial reporting.


Date: March 15, 2006                              /s/ Stephen A. Fowle
                                                  --------------------
                                                  Stephen A. Fowle
                                                  Executive Vice President and
                                                  Chief Financial Officer
                                           
                             



                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



         In connection with the Annual Report of WSFS Financial Corporation (the
"Corporation")  on Form 10-K for the year ended  December 31, 2005 as filed with
the Securities and Exchange  Commission on the date hereof (the  "Report"),  we,
Marvin N.  Schoenhals,  Chairman,  President and Chief  Executive  Officer,  and
Stephen  A.  Fowle,   Executive  Vice  President  and  Chief  Financial  Officer
(Principal Accounting Officer),  hereby certify, pursuant to 18 U.S.C. ss. 1350,
as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:


1)   This annual report fully complies with the requirements of Section 13(a) or
     15(d) of the Securities Exchange Act of 1934; and

2)   The  information  contained in this annual report fairly  presents,  in all
     material respects, the financial condition and results of operations of the
     Corporation.




/s/ Marvin N. Schoenhals                   /s/ Stephen A. Fowle
------------------------                   --------------------

Marvin N. Schoenhals                       Stephen A. Fowle
Chairman and President                     Executive Vice President and
                                           Chief Financial Officer


March 15, 2006