Skip to main content

WSFS Financial Corporation (WSFS)

Q3 2010 Earnings Call Transcript

October 29, 2010 1:00 pm ET


Steve Fowle – EVP and CFO

Mark Turner – President and CEO

Rodger Levenson – EVP and Director, Commercial Banking

Rick Wright – EVP and Director, Retail Banking


Michael Sarcone – Sandler O’Neill

Steve Moss – Janney Montgomery Scott

Matt Schultheis – Boenning & Scattergood

Andy Stapp – B. Riley & Co.

Nancy Frohna – 1492 Capital Management

TheStreet Recommends



Compare to:
Previous Statements by WSFS
» WSFS Financial Corporation Q2 2010 Earnings Call Transcript
» WSFS Financial Corporation Q1 2010 Earnings Call Transcript
» WSFS Financial Q2 2009 Earnings Call Transcript

Good day, ladies and gentlemen, welcome to your WSFS Financial Corporation’s third quarter 2010 earnings release 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 be given at that time. If anyone should require assistance during the program, please press star then zero on your touchtone telephone. And as a reminder, this is being recorded.

I would now like to introduce Mr. Stephen Fowle, Chief Financial Officer. Please begin.

Steve Fowle

Thank you, Mary. Today, I also have participating on the call, Mark Turner, our President and CEO; Rick Wright, Head of Retail Lending; Rodger Levenson, Head of Commercial. And before we start, I am going to read our Safe Harbor statement. The following discussion may contain statements which are not historical facts and are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements, which are based on various assumptions, some of which may be 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 the 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 expense that may be incurred pending future acquisitions including risks and uncertainties related to the integration of any such acquisitions; and the costs associated with resolving any problem loans and other risks and uncertainties discussed in the 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 statements whether written or oral that may be made from time to time by, or on behalf of the company. With that, I will turn the discussion over to Mark Turner.

Mark Turner

Thanks, Steve, and thanks everyone on the call for your time. We're pleased to have reported our highest quarter of earnings in over two years, $8.2 million or $0.94 a share. Excluding our recovery and other items which were positive, core earnings were still our highest in over two years. Overall it was a quarter with many highlights. Deposit growth continued to be strong, up 15% annualized. Recently released FDIC data also shows that our deposit growth and traditional customer deposits far outstripped market competitors' growth.

Further, bucking an industry trend, loans grew in the quarter at a 2% annualized rate as desirable commercial and industrial loan growth of 14% annualized offset planned attrition in construction loans and consumer mortgages. Our above-market growth is coming from a solid reputation, a focused business model, and our engaged Associates. And we have attracted more talented, seasoned Associates each month, including lenders and branch managers, as we were again named number one on the list of top workplaces in Delaware in an independent survey conducted by the state's largest newspaper.

Our talent and market share gains have been further accelerated by distracted competitors in and around our core markets. We see this trend continuing for some time. To better serve those customers, in the past year we have relocated and upgraded two of our existing branches in southeastern Pennsylvania. We are doing similar things in our Delaware market and now have approval for adding two more branches in nearby markets in coming months.

The margin declined modestly 5 basis points to 3.61% primarily due to sales, pay-downs, and reinvestments of securities as we continue to actively manage this high-quality portfolio. Some interest reversals on non-accrual loans impacted the margin, as well. We expect the margin will remain at about this level next quarter as securities reinvestment risk at lower rates is offset by greater than $100 million of maturing Federal Home Loan Bank advances currently costing us about 4.5%. These could re-price to short-term funding, costing only about 50 to 60 basis points right now while still maintaining our healthy interest rate risk position. Importantly, asset quality was stable to improved in key areas.

There was a slight uptick in later stage metrics, like nonperforming assets, which increased just under $3 million or only 3%. We continue to be proactive in managing and reserving for distressed situations. Essentially, one large land development loan, which we aggressively reserved for in the quarter, was responsible for the small uptick in NPAs and exceeded our otherwise very successful resolution efforts. We still have a few larger loans that we are managing closely and have taken appropriate reserves for at this time.

Notably, our construction loan portfolio is now only 7% of total loans and residential construction loans, a component of that makes up only 3% of total loans. And we're seeing other positive trends, as well. As there is strong improvement in early-stage metrics, like total problem loans which consist of all criticized classified and nonperforming loans and other real estate owned, which improved 13% in this quarter alone and 17% year-over-year. Total delinquencies also improved over $5 million or 22 basis points to 2.60%.

Read the rest of this transcript for free on