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WSFS Financial Corporation (WSFS)

Q4 2011 Earnings Call

January 27, 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


Matthew Clark – KBW

David Peppard – Janney Montgomery Scott LLC

Ross Haberman – Haberman Management

Michael Sarcone – Sandler O'Neill



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Good day, ladies and gentlemen, and welcome to the WSFS Financial Corporation Fourth Quarter 2011 Earnings 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 call is being recorded. I would now like to introduce your host for today’s conference, Stephen Fowle, Chief Financial Officer.

Stephen A. Fowle

Thank you, Juan, thank you all for taking the time to participate on this call. With me today is Mark Turner, President and CEO; Rodger Levenson, Director of Commercial Banking; Rick Wright, Director of Retail Banking; and Paul Geraghty, Chief Wealth Officer.

Before I turn the call over to Mark for his opening remarks, I would like to read our Safe Harbor statement. This report contains estimates, predictions, opinions, projections, and other statements that may be interpreted as forward-looking statements as that phrase is defined in the Private Securities Litigation Reform Act of 1995. Such statements include without limitation references to our financial goals, management's plans and objectives for future operations, financial and business trends, business prospects, and our outlook or 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 over time, 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 regulation affecting financial institutions, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the rules being issued in accordance with this stature, 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 documents filed by WSFS Financial Corporation with the Securities and Exchange Commission from time to time. Forward-looking statements speak only as of the date they are made, and the Company 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 Company.

Now with that read, I will turn the call over to Mark Turner for our opening comments.

Mark A. Turner

Thanks, Steve. Thanks everyone for your time and attention. I have about 10 minutes of opening comments, and then we’ll take all questions.

We’re pleased to report earnings in the fourth quarter, up $6.8 million, or $0.63 per share. This capped the year with net income increase 61% to $22.7 million, and earnings per share increased 56% to $2.28 per share. After an essentially break-even year in 2009, the bank has shown nice increases in profitability in each of the last two years. And there is much more room to improve.

Earnings in 2010 and 2011 could have been even greater, but we chose to strategically focus on franchise investments and a once in a lifetime period of market disruption. Among other things in the last two years, we have grown our commercial lenders 40%, added, relocated or renovated over 40 % of our branch network, significantly grown our Cash Connect ATM services business and Cypress Capital, our registered investment advisory business, and completed the successful integration of Christiana Bank & Trust adding great leadership platform and brand in trust services. Those investments are bearing significant fruit.

To that point, total customer funding was again up strongly in 2011, growing 10% and propelling us into a solid number three market share position in our primary market of Delaware. Moreover, core deposits were up 17% from prior year levels. Total loans were up 5% for the year, but more importantly our most profitable segment, C&I loans are loans to operating businesses, where we almost always get full relationships were up 18% in the year.

This continues to improve our portfolio mix and risk profile as stress construction loans and lower margin residential mortgages have played lesser role in our balance sheet and earnings stream.

Fee income excluding securities gains and losses was up 15% this year from the shear growth in our number of customers and from new fiduciary services. Fee income now solidly represents about a third of total revenues. As a result of all this total revenues increased nearly $19 million in 2011 or 11%, well above peer averages. Furthermore, in 2011, deposits, core deposits, loans and C&I loans all showed their best period of growth in the fourth quarter with much of that loan growth coming late in the fourth quarter. And Christiana Trust has the best year in its history with revenues up 15% in 2011. This all bodes well for 2012.

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