WSFS Financial ascends to next tier
By Sam Waltz
It may come as a huge surprise to most that Delaware’s own WSFS Bank – once known as Wilmington Savings Fund Society – is now is the largest bank and trust company headquartered in the Delaware Valley region of Greater Philadelphia, Delaware and the abutting South Jersey counties.
In addition, it likely is the only bank in the country to enjoy a stock split since the 2008 credit meltdown-precipitated economic crisis, with a 3-1 split on May 19 this year, a reflection of the perception of the bank in the investment community. WSFS closed at $29.40 share Oct. 19, meaning its pre-split value would have been an unheard-of $90 a share, up from $16 at the nadir of the recession.
Once solely a local northern Delaware community bank, WSFS seems to have entered the rarefied atmosphere in the rapidly shrinking middle market of banks, between huge national and regional banks – M&T, PNC, Wells Fargo, TD come to mind – and the classic local bank, like the First National Bank of Wyoming, Del., which WSFS acquired in 2014 and Alliance Bank based in Delaware County, Pa., which WSFS acquired this year.
Such growth likely is to continue, and it’s not unreasonable to expect another WSFS acquisition in 2016 in the Commonwealth of Pennsylvania, perhaps in Chester County, with a focus on acquiring attractive accounts and business, not just branches.
Those are some key insights from a recent interview with Mark Turner, who became president of WSFS Bank in April 2007, succeeding his mentor Marvin “Skip” Schoenhals, the man widely credited with saving WSFS from an earlier banking crisis-induced near failure about 1989.
And, at age 52, Turner prospectively has a long run ahead of him to continue to grow WSFS Bank.
“With the acquisition of Alliance, WSFS now is a $5.5 billion [in assets] bank,” Turner said. “Ten billion is now in our sights – it would be doubling our size – and that means it would still be five or six years away.”
Founded in 1832, WSFS is America’s seventh-oldest bank continuously operating under the same name, the bank promotes proudly, as it’s less than a generation away from its own 200th anniversary. WSFS operates from 63 offices, including 44 in Delaware, 17 in Pennsylvania, and one each in Virginia and Nevada.
WSFS Financial Corp., as it’s officially known, has other units in addition to the retail and commercial WSFS Bank, among them, Greenville-based Christiana Trust which it acquired years ago for wealth management and financial planning, Cypress Capital Management founded by Dick Arvedlund after he left the DuPont Co., Cash Connect which operates a national, mostly unbranded network of ATMs, and Array Financial and Arrow Land Transfer.
The WSFS wealth management “book” has about $1.2 billion in AUM (Assets Under Management), an area of growth opportunity, Turner acknowledged. For perspective, many individual wealth managers – whether employed by a “wire house” or an independent RIA – often will carry a “book” of about $25 million to $50 million, and the elite managers will reach and exceed $100 million.
The “secret sauce” at WSFS, Turner said, is that “we are one of the few banks left [in the country] that are both local and capable,” he said, pointing to the economies of scale in the middle market where WSFS operates, as well as WSFS distinguishable focus on a customer-centric culture.
“Having been in banking for 30 years, my feeling is that our country became great because of the local banks who got to know the people, the businesses, the communities,” he added.
Bob Piane Jr., a local businessman in the fitness equipment industry who is the scion of Delaware’s best-known Piane Catering business that was active for almost a half century, applauds the “local and capable.”
“When I walk into WSFS, where I’ve banked for years, and where I bank my business, they always treat me like family. I love WSFS,” Piane said.
Growth of the bank will be a bit different than many banks, said Turner, who noted WSFS had about $1 billion in assets when he joined it in 1996. Growth no longer is about branches. Bank branches in the United States peaked at about 100,000 in 2009, but have declined every year since, to about 93,500 now, according to industry reports.
“Our focus is on growing revenue not associated with assets; e.g., Cash Connect. Few people will realize that they’re dealing with WSFS when they withdraw cash in the Southwest from an ATM at a convenience store, or from a restaurant in the Great Lakes area, but in Cash Connect, WSFS has built the second largest independent ATM network in the country.
“But, in our core area of services, and in our core marketplace, for example, in commercial banking, we have been able to take market share by being a locally capable provider. We’re high touch, high service. We want access to you and to decision-makers.”
In market share in its principal market, WSFS is tied for No. 2 with PNC behind M&T, which retains strong market share from its Wilmington Trust roots, said Turner.
Near-term goals for WSFS, Turner said, focus now on “technology around mobile,” as well as “continued organic growth and prospective acquisitions.”
For years, WSFS leadership disdained the “acquisition premium” that analysts said the market put on its stock.
That premium likely still is there, Turner acknowledged. As compared to many community banks, where much if not most of the stock ownership is “retail,” that is, held in the community by local investors, WSFS on the other hand more recently is owned 80 percent by institutional investors such as funds, he said.
“One of the real ironies of Dodd Frank, one of the unintended consequences, because of the reporting and management hurdles, and the burden on operations, is that they will accelerate the consolidation in banking,” Turner said, ultimately decreasing the numbers of banks and making the survivors larger. The next change for WSFS in Dodd Frank requirements come at the $10 billion asset level, Turner said, and with those are dramatically increased regulatory costs.
The split helps make WSFS stock more attractive, both to individuals and to institutions, said Turner.
“The number of shares traded for a day, and the liquidity it provides, is an important metric for many investors,” Turner said. “With our stock at $70 or so, our liquidity often seemed low, and that made the bid-ask spread wider, often in the 25-50 cents range. Now, with the split, WSFS stock has greater liquidity because more shares are trading, and the bid-ask spread is reduced to about 5 cents.”
During the economic downturn, as the entire market tumbled, WSFS stock fell as low as $16, so its effective recovery to almost $90 – almost $30 share after the split – is nothing short of phenomenal, at many multiples of the market’s recovery.
Even though change at the top may be well in the future, succession planning at the Board and at the C-suite level always is ongoing, said Turner.
“We fundamentally understand that any institution that will thrive cannot be person-dependent. “˜Talentship’ is a term we use to describe talent development, in terms of both “˜bench strength’ and succession. In the concept of the old “˜hit by a bus,’ any number of things could happen to any of us. We have a great executive team at WSFS, eight people at the C level.”
WSFS Financial Corp. at a glance
- Founded in 1832
- Operates 63 offices, including 44 in Delaware
- $5.5 billion in assets
- Subsidiaries include Greenville-based Christiana Trust and Cypress Capital Management
- $1.2 billion in Assets Under Management (AUM)
- Provides residential and commercial real estate, commercial and consumer-lending services
- Provides wealth management and personal trust services
- Largest off-premise ATM network in Delaware
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