Delaware's WSFS buys Wayne-based Penn Liberty Bank
WSFS isn't a radio station - it's the largest bank still based in the Philadelphia region. Lately, WSFS has been buying branches and spreading, from its Wilmington home, up the Brandywine, to the Main Line and nearby suburbs.
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WSFS isn't a radio station - it's the largest bank still based in the Philadelphia region.
Lately, WSFS has been buying branches and spreading, from its Wilmington home, up the Brandywine, to the Main Line and nearby suburbs.
On Monday, it agreed to pay $101 million in cash and stock for Wayne-based Penn Liberty Bank and its 11 branches, buying out 400 investors who pumped $44 million into Penn Liberty from 2004 to 2006. WSFS also bought Broomall-
based Alliance Bancorp this year.
"Penn Liberty is a good fit" for WSFS - if the bank can make good on its plans to sell investments, loans, and financial systems to businesses and their owners in and around Chester County, Pennsylvania's wealthiest, bank analyst Joseph Gladue told clients of Merion Capital Group in a report Tuesday.
"The price paid is on the high end," but there aren't that many other Philadelphia-area banks left to buy, Gladue added.
The deal for Penn Liberty, which has been modestly profitable each year since 2009, follows the sales of National Penn and Susquehanna Banks to North Carolina-based BB&T, and the planned acquisition of First Niagara (including the former Harleysville National) by Ohio-based KeyBank.
"The deal is a bit pricey," agreed Matthew Schultheis, research director at Boenning & Scattergood in West Conshohocken. He notes that WSFS plans to shave more than $6 million a year, or one-third, from Penn Liberty costs.
Chief executive Mark Turner, a Philadelphia native, says he'll turn Penn Liberty's Lancaster Avenue headquarters into WSFS's Pennsylvania hub. Penn Liberty workers who lose their jobs might apply to openings at WSFS headquarters off I-95 in Wilmington.
Backed by investors eager for future deal profits, local branch-banking companies focused on family-owned businesses expanded in the early 2000s, after Philadelphia's major banks were sold to out-of-town companies, dislocating workers and clients.
But the banks have struggled with slow loan demand, new tech and security challenges, higher compliance costs since the government tightened capital requirements in the last recession, and pressure from impatient investors.
Who's left? "Us, Beneficial, Bryn Mawr Trust, Firstrust and maybe Univest," says Rodger Levenson, executive vice president at WSFS. With $6 billion in loans and other assets, WSFS is the largest of that group, at least until the next Beneficial acquisition.
Levenson said WSFS's goal in Pennsylvania is to lure small-business owners away from out-of-town banks, as it has in Delaware by poaching former Wilmington Trust Co. borrowers since that once-dominant bank was bought at a deep discount by Buffalo-based M&T Bank in 2011.
WSFS, which overexpanded and nearly failed in the early 1990s, revived under Turner's predecessor, Marvin "Skip" Schoenhals, with backing from such investors as R. Ted Wechsler (still a major shareholder), plus a tough credit culture. The bank has a history of experiments with out-of-state loan offices and Internet, subprime, and reverse-mortgage loans.
Current WSFS-backed projects include Zenbanx, run by former ING Direct CEO Arkadi Kuhlmann, with offices in Bellevue, Del., and Redwood City, Calif. Iit offers a currency-exchange smartphone app to make payments between personal and business accounts and between dollars, euros, and other currencies.
WSFS chief executive Turner says the bank's Delaware home market has slowly recovered from the housing market debacle; steel, chemical and auto-plant shutdowns; and corporate-merger layoffs of the early 2010s. Barclaycard, Capital One, Citibank, and JPMorgan Chase have lately renewed hiring for their Wilmington-area offices.
But Chester County and neighboring slices of Montgomery and Delaware Counties are richer and faster-growing, so WSFS is following business there.
Penn Liberty CEO Patrick Ward will join the WSFS board and oversee Pennsylvania. President Brian Zwaan will be WSFS senior VP for Pennsylvania commercial lending.
WSFS descends from the Wilmington Savings Fund Society, a sister to PSFS, the old Philadelphia Saving Fund Society. Both were founded in the early 1800s to help working-class member-owners boost savings, pool credit, and finance mortgages.
I asked whether Turner might revive the PSFS brand. That bank, once ubiquitous in city and suburban business districts, vanished after Citizens Financial Corp. bought its last offices in 2001, though its name remains blazoned on Philadelphia's skyline at PSFS's former Market Street headquarters, now a Loews Hotel.
"As a guy who opened my first passbook account at PSFS, and used to bug the tellers at Broad and Lindley every Friday to post my interest, [reviving the name] has a certain degree of strategic appeal," Turner told me.
But in Delaware, the WSFS name is universally pronounced "Wiss-fiss," Turner added.
Putting a "P" in front, he worried, "wouldn't sound as good."
215-854-5194@PhillyJoeD