Mark Turner's WSFS, the last bank standing
Banker seeks private-sector revival but welcomes gov't aid to big corporate projects
Mark Turner's WSFS, the last bank standing
Joseph N. DiStefano
WSFS Bank survived the Shore development-loan debacle that destroyed its larger rival, Wilmington Trust Corp. The $4.2 billion-asset lender is Delaware's largest surviving bank, the second-largest (after Beneficial Bank) based in the Philadelphia Federal Reserve district, and a growing business credit source in the bigger city's Chester and Delaware County suburbs. (Corrected)
Under recently retired chief executive Marvin "Skip" Schoenhals and his tight-fisted team, who piloted WSFS from the savings-and-loan debacle of the early 1990s through the aftermath of the 2008 financial crisis, WSFS limited construction loans "by county and by type of loan," says Mark Turner, who now holds the top job at the bank's midrise Wilmington headquarters.
When loans started going bad in larger numbers, WSFS moved aggressively to seize debtor assets, write down losses and resell the properties, even at a loss. As a result, Turner says, "we had pain, but it was not debilitating, it was not crippling, it was not deathly."
Now the Wilmington-based bank is trying to grow its way out of the recession by lending money to new business clients faster than it writes down the bad development loans still on its books. It's been recruiting Chester County businessmen and bankers, like lawyer and former community-bank chairman James McErlane, for local advisory committees to boost WSFS's small-business clientele. It's often a difficult sell, these days. "Customers are paying down credit lines and conserving cash" instead of boosting borrowing, Turner told me. WSFS is stealing market share from other banks, rather than funding new firms. Business owners complain "they don't know where the economy is going. They don't know what the political environment is going to be like. They don't know what the regulatory environment is going to be like," Turner said. "They're doing all right, but they're not building capacity, adding equipment, or hiring people. They're waiting. Demand is going to need to pick up. Confidence is going to need to pick up."
Whose job is that? "The Fed at this point has done most everything they can. The federal government still has a role - providing more economic certainy, reducing the regulatory burden, making it easier for companies to repatriate foreign earnings. Reforming the tax code. We want to look at Washington ansd see people working together. Not this gridlock. But really it's up to the business community, to do what businss does best."
WSFS still owes the government $53 million in TARP rescue investmewnts, on which the bank pays the government a dividend, notes David C. Peppard, bank analyst at Janney Capital Markets in Philadelphia, in a note to clients. Still, he likes the stock: total WSFS loans rose 5% last quarter, as other community banks reported flat or declining loans, Peppard wrote.
Business loans, including deals for commercial (not residential) construction projects, were up 20% (vs last year) as WSFS 's campaign to hire veteran lenders and branch managers from Wilmington Trust and other defunct banks "is really starting to pay off," wrote analyst Michael Sarcone at Sandler O'Neill and Partners.
Charge-offs rose last quarter, but fewer loans are starting to go bad, noted Matthew Schultheis at Boenning & Scattergood. "WSFS is availing itself of the disruption in the Delaware market" caused by Wilmington Trust's sale to M&T Bank last year, he noted.
Turner, a Logan native who belives Holy Child parish school and St. Joseph's Prep taught him the discipline and respect for the community that makes an effective banker, says we're living through one of Austrian economist Joseph Schumpeter's "creative destruction" periods. He says the seeds of the next boom are already apparent in the rapid growth of small mobile-software, energy and health-tech firms.
Yet, at least until the next economy gains traction, Turner is also a supporter of Delaware Democratic Gov. Jack Markell's corporate-subsidy programs. He spoke approvingly of Markell's federally-backed efforts to help lure California-based Fisker Automotive to the closed GM plant in Wilmington, Bloom Fuel Cells' state-aided proposal to build a manufacturing facility at the University of Delaware's former Chrysler plant site, and PBF's state-aided project rebuilding the shuttered former oil refinery near Delaware City. "These companies are moving toward being the next catalysts for our economy," Turner told me. With that kind of focused government-corporate stimulus, Turner says he's looking for the economy to turn up as soon as 2013 - "once we get more direction out of Washington" following next fall's elections. WSFS's blue-glassed office building is decorated with images of the Depression-era mural from its old Market Street lobby and pictures of the solemn-faced bankers who ran things during the 150 years when it was a depositor-owned savings bank (like Philadelphia's late PSFS), before it was sold to investors in the 1980s. The tower is unusual in one key respect: There are no corner offices. Corners and spectacular views "are for our conference rooms," where business customers visit, Turner said. "That sends a message."
