WSFS Financial Corporation (



Q2 2011 Earnings Call

July 29, 2011 1:00 PM ET


Stephen Fowle – EVP and CFO

Mark Turner – President and CEO

Rodger Levenson, Head of Commercial Lending

Rick Wright, Head of Retail and Marketing


Michael Sarcone – Sandler O’Neill

Matthew Clark – KBW

Andy Stapp – B. Riley & Company

Steve Moss – Janney Montgomery Scott



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Previous Statements by WSFS
» WSFS Financial CEO Discusses Q1 2011 Results - Earnings Call Transcript
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» WSFS Financial Corporation Q2 2010 Earnings Call Transcript

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

I would now like to introduce Mr. Steve Fowle, Chief Financial Officer. You may begin.

Stephen Fowle

Thank you, Mary. And thank all of you for taking the time to participate on this call. Participating with me on this call is Mark Turner, President and CEO at WSFS; Rodger Levenson, Head of Commercial Lending; and Rick Wright, Head of Retail and Marketing for the organization.

Before Mark begins his opening remarks, I would like to read our Safe Harbor statements. This call will contain estimates predictions, opinions, projections, and other statements that may be interpreted as forward-looking statements as that phrases defined in the Private Securities Litigation Reform Act of 1995.

Such statements include without limitation, references to our financial goals, management plans and objectives for future operations, financial and business trends, business prospects, and our outlook and expectations for earnings revenues, expenses, capital levels, liquidity levels, asset quality, or other future financial or business performance strategies or expectations. Such forward-looking statements are based on various assumptions, some of which may be beyond the company’s control and are subject to risks and uncertainties which change overtime 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 market interest rates, changes in government regulations affecting financial institutions, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the roles has being issued in accordance with this sachet and 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; 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. Forward-looking statements, speak only as of date they are made and the Company 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.

All that said, I will turn the call over to Mark Turner for his opening comments.

Mark Turner

Thanks, Steve. And thank you all for your time and attention. We are pleased to report second-quarter earnings of $0.55 per share. This exceeds results for our last quarter of $0.40 per share and also beat results for this quarter last year of $0.36 per share by 53%. There were a few non-routine items identified in a written release that netted us a positive $0.14 per share.

Core results were good and were driven by strong growth in the fundamental areas including C&I loans, core deposits, margins and fee income. And also in the control expenses taken in the context of our growing franchise. These all over came a somewhat higher provision expense which covered charge offs resulting in no earnings boost from so-called reserve releases. The higher provision which driven primarily by declining collateral values on a few problem loans mostly residential construction loans and a higher level of retail loans charge-offs both due to the protracted sluggish economy.

As a reminder, we said in the past the total credit cost, which include provision REO write-downs letter of credit reserves et cetera would be uneven at this point in the cycle especially on a quarterly basis, but that are best estimate is that they would be $35 million plus or minus couple of million for the full year 2011.

Total credit costs for the first six months totaled $18.6 million in line with that full-year expectation. This fact in our latest analysis of our loan book and the local economy affirm that earlier full year estimate absent a meaningful deterioration in the economy from here. We would note that like recent national statistics the local economy has shown a more sluggish recovery than expected even six or nine months ago.

Delaware our primary market has an unemployment rate of 8% and that is meaningfully better than the national average of 9.2%, but it’s still historically high and it’s improving suddenly. Housing activity and housing price changes at the law like national average which is to say there are down from last year and down for where we and others expected them to be at this point in a recovery.

Despite all that, we were pleased to show improvements in most all major asset quality statistics both leading and lagging indicators. These include declines in total problem loans, delinquencies, non-performing assets and charge-offs.

These improvements are the result of although a sluggish and still slightly improving local economy or well underwritten loan book and diligent loan by loan credit management starting early in the cycle. We note again that our biggest pain point over this cycle residential construction loans are now only 2% of total loans and I think closely and continually examined over the last three years now.

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