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WSFS Financial Corporation (



Q1 2011 Earnings Call

April 29, 2011 1:00 pm ET


Stephen A. Fowle – Executive Vice President and Chief Financial Officer

Mark A. Turner – President and Chief Executive Officer

Rodger Levenson – Executive Vice President and Director of Commercial Banking

Richard M. Wright – Executive Vice President and Director of Retail Banking


Michael Sarcone – Sandler O’Neill & Partners L.P.

Andrew Stapp – B. Riley & Company, Inc.

Steve Moss – Janney Montgomery



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» WSFS Financial Corporation Q1 2010 Earnings Call Transcript

Good day, ladies and gentlemen, and welcome to the WSFS Financial Corp. First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference is being recorded.

I’d now like to introduce our speakers for today’s call; Mr. Mark Turner, President and CEO; Stephen A. Fowle, Chief Financial Officer; Rodger Levenson, Director of Commercial Banking; and Richard Wright, Director of Marketing and Retail Banking.

And I’d now like to hand the call over to Stephen Fowle. You may begin.

Stephen A. Fowle

Thank you, Mini, and thank you to everyone participating on this call. Before Mark begins with his opening remarks, I’d like to read our Safe-Harbor statement.

The following discussion may contain statements, which are not historical facts in our forward-looking statements as that is term defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements which are based on various assumptions some of which maybe beyond the company’s control are subject to risks and uncertainties and other factors which could cause actual results to differ materially from those currently anticipated.

Such risks and uncertainties include, but are not limited to, those related to the economic environment particularly in the market areas in which the company operates, the volatility of the financial and securities markets including changes with respect to market value of our financial assets, changes in government laws and regulations affecting financial institutions including potential expenses associated therewith, changes resulting from our participation in the CPP including additional conditions that may be imposed in the future on participating companies; costs and expenses that may be incurred and benefits achieved from acquisitions, and the costs associated with resolving problem loans and other risks and uncertainties, discussed in documents filed by WSFS Financial Corporation with the Securities and Exchange Commission from time to time.

The Corporation does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Corporation.

With that, I’ll turn the discussion over to Mark Turner, WSFS’ President and Chief Executive Officer.

Mark A. Turner

Thank you, Steve, and thank you all for your time and attention. In the first quarter of 2011, WSFS earned $4.2 million or $0.40 a share, which was a significant improvement over last quarter and the same quarter of last year.

The results include the first full quarter with Christiana Trust and details of the quarter results are presented in full in our press release. Therefore, I’d like to take about 10 minutes to provide some additional insight into WSFS markets, our plans for our franchise and some expectations we have.

The Delaware economy continues its slow recovery, unemployment at 8.4% in March is inching down and economic activity feels like it has improved slightly albeit still at low levels. Residential real estate values appear to be nearing a bottom, but activity is still like lacklustre and March average sales prices were down about 6% year-over-year. Like many, we believe that the mid-Atlantic region was later coming into the recession and probably it lags on the way out.

On the flip side of that same point, however, as the downturn is well into its third year, disruption in our banking market is at its high. For many months, by far the dominant player in our Delaware market has been working through issues and now the integration of its merger with an out of state buyer, it has been the largest player for 100 years and has twice the market share as the nearest competitor. Also in contiguous Chester County, Pennsylvania, the largest independent bank recently was purchased by an out of market institution.

In general, M&A activity and credit issues have significantly sidelined the appeal of these and other local bank competitors. We see this as a once-every-100-year opportunity in the local banking market. We feel we’re positioned extremely well to capitalize in the disruption we see, particularly because of our long local history and our reputation for superior service. In addition, our credit profile is manageable. That is, while headline statistics are mixed, taken as a whole, our asset quality is relatively good and improving.

On that credit quality front, the first quarter of 2011 continued our trend of improving provision expense and overall credit cost. Total credit costs including provision, letter of credit contingencies and loan workout and OREO cost declined $3.1 million from last quarters $11.5 million to $8.4 million this quarter. This was a result of net positive trends in credit migration as many customers have successfully adjusted to the new economic reality.

As a result, leading credit quality indicators like total problem loans decreased an additional 6% this quarter are coming down steadily and are down 24% from their peak. Total problem loans now stand at less than 10% of our loan portfolio. Based on a detailed analysis, we expect total problem loans to continue a steady decline through 2011.

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