FWP 1 fwp_080210-0312.htm FREE WRTING PROSPECTUS - WSFS FINANCIAL CORPORATION fwp_080210-0312.htm
 
 
WSFS Financial Corporation
Follow-on Offering of Common Shares
$40,000,000
August 2010
NASDAQ: WSFS
Free Writing Prospectus
Filed Pursuant to Rule 433
Registration No. 333-167404
August 2, 2010
 
 
 
 
2
Mark A. Turner
President and Chief Executive Officer
302-571-7160
 
Rodger Levenson
Director of Commercial Banking
302-571-7296
 
Stephen A. Fowle
Chief Financial Officer
302-571-6833
 
Stockholders or others seeking information regarding the Company may call or write:
WSFS Financial Corporation
Investor Relations
WSFS Bank Center
500 Delaware Avenue
Wilmington, DE 19801
302-571-7264
www.wsfsbank.com
 
 
 
 
3
Statements contained in this report which are not historical facts, 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; that
Christiana Bank & Trust Company’s (CBT) business will not be integrated successfully or such integration may be more
difficult, time-consuming or costly than expected; expected revenue synergies and cost savings from the proposed acquisition
of CBT may not be fully realized or realized within the expected time frame; revenues following the proposed acquisition of CBT
may be lower than expected; customer and employee relationships and business operations may be disrupted by the proposed
acquisition; the ability to obtain required governmental approvals, and the ability to complete the proposed acquisition of CBT
on the expected timeframe; changes in government regulation affecting financial institutions, including the Dodd-Frank Wall
Street Reform and Consumer Protection Act which, among other things, eliminates the OTS as our primary regulator and as a
result our new regulator will be the Board of Governors of the Federal Reserve System, and WSFS Bank’s new primary
banking regulator will be the Office of the Comptroller of the Currency, 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. 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.
The Company has filed a registration statement (including a prospectus and a related prospectus supplement) with the SEC for
the offering.  Before you invest, you should read the prospectus and the prospectus supplement contained in that registration
statement and other documents the Company has filed with the SEC for more complete information about the Company and
the offering.  You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov.  Alternatively, the
Company, any underwriter, or any dealer participating in the offering will arrange to send you the prospectus and prospectus
supplement if you request them by calling Sandler O’Neill & Partners, L.P. toll free at (866) 805-4128.
 
 
 
 
4
Table of Contents
 Section       Pg #
 • Offering Details       5-6
 • Recent Results        7-9
 • The WSFS Franchise and Opportunities    10-18
 • Credit / Risk Management     19-24
 • Capital Position      25-26
 • CB&T Acquisition      27-29
 • Alignment of Insiders and Owners     30-31
 • Appendices (Management Team, Business Model, Balance Sheet,
   Local Economic Trends)    32-41
 
 
 
 
5
Offering Details
 
 
 
 
6
Issuer: WSFS Financial Corporation (“WSFS” or the “Company")
Ticker/Exchange: WSFS / NASDAQ
Offering: Follow-on Public Common Stock Offering
Transaction Size: $40 million  
Over-Allotment Option: 15%
Use of Proceeds: General corporate purposes including:
 - Support of organic growth arising in the Company’s market place  
  and resulting from the current market environment
 - Acquisition-based growth in the Company’s target markets, including
  markets, including the recently-announced acquisition of acquisition
  of Christiana Bank & Trust Company
 - The potential repurchase of TARP preferred stock and the associated
  warrants, when deemed prudent
Lead Manager: Sandler O’Neill + Partners, L.P. 
Co-Manager: Janney Montgomery Scott LLC  
Offering Details
 
 
 
 
7
Recent Results
 
 
 
 
8
Review of 2Q 2010 Results (vs. 1Q 2010)
Recent Results
 • Net Income $3.3 million or, $0.36 diluted EPS; vs 1Q 2010 loss of $0.03 EPS and 2Q 09 loss of $0.50 EPS
 • Revenues of $43.1 million continued strong growth trends, increasing $2.7 million or 7% from 1Q 2010
 – Net interest margin increased $1.4 million or 5%, and 9 bps to 3.66% from 1Q 2010
 – Fee income increased $1.3 million, or 12%
 – Recent strong deposit growth has moderated but growth continues
 – Commercial loans continued growing despite intentional decrease in construction loan balances
 • Credit continued to stabilize
 – Loan delinquency trend flat at $71.2 million or 2.82% of loans from $71.3 million or 2.80%
 – Early stage delinquency declined $17.3 million, or 0.67%, to 0.98% of total loans
 – NPAs increased slightly to $85.8 million from $82.1 million in 1Q 2010
 – $4 million of additional NPA sales were marked to contract sales price and awaiting closure at the end of the
 quarter; and NPAs up only $5.9 million or 7% from 2Q 2009
 – WSFS continues allowance for loan loss build now at 2.48% of loans
 – NCOs decreased $2.4 million to $5.4 million; provision of $10.6 million
 • Capital grew from already strong levels
 – Tangible common book value per share increased $1.15 or 3% to $35.02 and the TCBV ratio increased
 27 bps to 6.60%; and risk based capital increased 18 bps to 12.51%
 – All regulatory capital ratios remain well in excess of “well-capitalized”
 
 
 
 
9
EPS Trend*
Net Interest Income Trend*
Provision for Loan Loss*
(’000)
(’000)
* Charts reflect quarterly results
Recent Results
 
 
 
 
10
The WSFS Franchise and
Opportunities
 
 
 
 
11
The WSFS Franchise and Opportunities
 • Well-positioned community banking franchise with a strong and
 growing market share
 • Managed risks coming into recession and addressed issues earlier in
 this credit cycle - which has improved credit position and helped to
 stabilize credit metrics recently
 • Robust core earnings capability that will be improved by the recently
 announced acquisition of Christiana Bank & Trust
 • WSFS will continue building its franchise value by taking advantage
 of dislocation in the local banking market
 
 
 
 
12
The WSFS Franchise and Opportunities
 • $3.8 billion in assets
 • 36 branches and 4 LPO’s
 • Founded in 1832, WSFS
 is one of the ten oldest
 banks in the U.S.
 • Second largest
 independent bank in
 Delaware
 • Major business lines
 – Retail 
 – Commercial
 – Trust and Wealth Management
 – Cash Connect (ATM cash and
  related business)
 
 
 
 
13
 
Market opportunities from significant disruption/distraction among major competitors
Delaware Traditional Bank’s Deposits
(June 30, 2009)
 
Rank
 
Institution
 
Branch Count
Total Deposits in
Market
Total Market
Share
1
Wilmington Trust Corp. (DE)
43
5,412,467
28.06%
2
Wachovia/Wells Fargo & Company (CA)
19
3,738,859
19.38%
3
PNC Financial Services Group (PA)
50
2,742,396
14.22%
4
WSFS
37
2,045,533
10.60%
5
TD Bank (formerly Commerce) (Canada)
13
1,565,871
8.12%
6
Royal Bank of Scotland Group/Citizens (Scotland)
27
1,147,287
5.95%
7
Artisan’s Bank (DE)
14
585,166
3.03%
8
Fulton Financial Corp. (PA)
13
369,403
1.91%
9
County Bank (DE)
9
345,007
1.79%
10
First Wyoming Financial Corp. (DE)
6
231,063
1.20%
11
Christiana Bank & Trust Co. (DE)*
3
198,621
1.02%
 
Top 11
234
18,381,673
95.28%
*See pages 27-29 for planned acquisition
The WSFS Franchise and Opportunities
 
 
 
 
14
Deposit Growth
Comments
*
The WSFS Franchise and Opportunities
 Customer Deposit Growth
 • Increased $26.6 million or 5% annualized from
  1Q 2010
 • Increased $254.8 million or 13% from 2Q 2009
 • Currently, core deposits are $1.6 billion or 70%
  of customer deposits
 • 33% of deposit base is in non-interest bearing
  or low rate DDA accounts
 Loan Growth
 • Growth in WSFS C&I loans offsetting planned
  declines in construction and mortgage lending
 
 
 
 
15
 
2Q10
1Q10
4Q09
30-89 Delinquencies
0.66%
1.05%
0.66%
90+ Delinquencies
0.87%
0.55%
0.52%
Total Delinquencies
1.53%
1.60%
1.18%
Commercial & Industrial, $1.1 billion or 45% of Loans
*
*
Other services includes service oriented industries
Industry Diversification
Delinquency Trends
Comments
• In market; WSFS is primary bank / whole
 relationship focus
• Low overall delinquencies
• No one industry representing more than
 11% of portfolio
• Weakness is in smaller C&I credits (most
 less than $1 million)
The WSFS Franchise and Opportunities
 
 
 
 
16
 
2Q10
1Q10
4Q09
30-89 Delinquencies
0.46%
1.35%
0.34%
90+ Delinquencies
0.61%
0.14%
0.20%
Total Delinquencies
1.07%
1.49%
0.54%
Industry Diversification
Delinquency Trends
• Predominantly in-market to stable projects, local,
 long-term operators, “with recourse”
• Low overall delinquencies
• Largest property concentration in retail-
 related* ($157 million)
 – Average loan size $1.4 million, only 8
  loans > $5 million and none > $10
  million
*
*
Comments
The WSFS Franchise and Opportunities
Commercial Real Estate (excluding CLD), $543 million or 21% of loans
 
 
 
 
17
Geographic Diversification
Delinquency Trends
 
2Q10
1Q10
4Q09
30-89 Delinquencies
2.19%
4.14%
0.75%
90+ Delinquencies
9.17%
5.89%
7.06%
Total Delinquencies
11.36%
10.03%
7.81%
• Predominantly in-market; “with recourse”
• Residential CLD = $91 million, now < 4% of loans
• Average RCLD loan size $1.4 million, only 4 loans
 between $5 and $10 million
• Sussex County, DE residential concentration only $33
 million, < 2% of loans
• Land hold exposure $47 million, < 2% of loans
Comments
*Includes $37.8 million of owner occupied construction
The WSFS Franchise and Opportunities
Construction & Land Development (CLD), $192 million or < 8% of loans*
 
 
 
 
18
Product Diversification
Delinquency Trends
 
2Q10
1Q10
4Q09
30-89 Delinquencies
1.68%
2.26%
1.62%
90+ Delinquencies
2.50%
1.62%
1.75%
Total Delinquencies
4.18%
3.88%
3.37%
Comments
• Delinquency increasing, but better than
 national average
• Very little unsecured consumer loans
• Loss severities overall relatively low, due
 to collateral and underwriting
The WSFS Franchise and Opportunities
1st Mortgage and Consumer Loans, $640 million or 26% of loans
 
 
 
 
19
Credit / Risk Management
 
 
 
 
20
Credit / Risk Management
 What We Didn’t Have Coming Into This Down Cycle
 ü Collateralized Debt Obligations (CDOs)
 ü Bank Trust Preferred Securities
 ü Fannie or Freddie stock or preferred securities
 ü Equity Securities in Other FDIC-Insured Banks or Thrifts
 ü Weak Non-Agency MBS - no meaningful OTTI
 ü BOLI insurance wrap issues
 ü Credit Card Portfolio
 ü Any meaningful sub-prime exposure
 ü Any meaningful unsecured loans
 ü Any significant concentration in residential construction lending
 ü Indirect auto financing
 ü Any sizeable goodwill
 ü Any deferred tax asset issues
 
 
 
 
21
Credit / Risk Management
Proactively addressing credit environment
 • People
 – Hired an experienced (over 30 years) head of Asset Recovery along with two
 seasoned recovery specialists
 – Highly skilled Asset Disposition function with dedicated SVP
 – Significantly enhanced Credit Administration team with seasoned professionals
 • Process
 – Expanded Internal loan review augmented by a quarterly external loan review
 – Intensive Executive Management and Board involvement
 – Weekly NPA/ORE meetings
 • Policies
 – Ongoing enhancements to credit policy
 – Periodic updates to portfolio limits
 • Plan
 – Implemented loan-by-loan plan to aggressively address criticized assets
     
 
 
 
 
22
 Stabilization in Credit Statistics - Nonperforming Assets
Nonperforming Assets to Total Assets
Comments
2.26%
Credit / Risk Management
 During 2Q 2010:
 • $18.4 million new non-performing
 asset inflows
 – Mostly small business and
 consumer credits ( < $1 million)
 – Lower expected loss severities
 vs. larger construction loans in
 prior periods
 Offset by
 • $6.6 million of resolution/ paydowns
 • $8.0 million of net charge-offs and
 REO write-downs
 • Plus: $4 million marked to sales price
 and awaiting closing at June 30, 2010
 
 
 
 
23
Stabilization in Credit Statistics - Loan Delinquencies
Loan Portfolio Delinquency Trends
Comments
Credit / Risk Management
 During 2Q 2010:
 • Total delinquency remained flat from
 1st Quarter, and increased only
 modestly from June 2009
 • Early-stage delinquencies decreased
 from $42.1 million to $24.8 million or
 1.65% to 0.98%
 
 
 
 
24
Stabilization in Credit Statistics - Loan Loss Provision
Quarterly Provision Expense
Comments
2.05%
2.12%
2.27%
1.63%
- Allowance for loan losses to loans:
2.48%
 During 2Q 2010:
 • ALLL continues to build as the provision
 well outpaces charge-offs
 • Loan Loss Provision of $10.6 million
 • 2Q provision driven by continued
 deterioration of property values and
 to a lesser extent by migration of
 loans to higher risk ratings
 • Also implemented a prudent change in
 estimate ($1 million) relating to the
 expected credit losses in the
 consumer loan portfolio
Credit / Risk Management
 
 
 
 
25
Capital Position
 
 
 
 
26
Total Risk-Based Capital
12.13%
 
11.00%
 
12.24%
 
12.33%
 
12.51%
 
13.37%
Tier 1 Capital
11.16%
 
9.90%
 
11.02%
 
11.07%
 
11.26%
 
12.12%
Excess Risk Based Capital
$52,737
 
$27,728
 
$65,881
 
$68,169
 
$73,186
 
$98,186
Tangible Common Equity
6.52%
 
5.88%
 
6.31%
 
6.33%
 
6.60%
 
6.60%
Risk-Based Capital
(’000)
*Proforma for 3Q 2009 $25 million capital raise currently at Holding Company infused to the Bank
Capital Position
 
 
 
 
27
CB&T Acquisition
 
 
 
 
28
* Based on first quarter 2010 reported results
 Christiana Bank & Trust Merger - Transaction Highlights
CB&T Acquisition
 • A highly strategic transaction with compelling financial results
 • Christiana has a strong and growing trust business and solid banking
 relationships
 • $6.0 billion in fiduciary assets at May 31, 2010; national presence
 • Trust and other non-interest revenues of $6.5 million in 2009 (52% of total revenue), grown
 from $3.1 million five years earlier
 • Market presence built by strong management and business development team
 • Further builds WSFS’ traditional market share in an attractive market
 • Through the acquisition of Christiana, WSFS will meaningfully
 accelerate its position in the trust and custody businesses
 • Christiana will increase WSFS' non-interest income by approximately 14%*
 • Advances WSFS' trust initiatives by several years and provides critical mass and scale
 • Results in WSFS now having a strong and diversified revenue platform in Retail Banking,
 Commercial Banking, AND Trust & Wealth Management
 • Significant synergies; accretive in 2011 (est. 4%); > 20% IRR expected
 
 
 
 
29
Transaction: WSFS will acquire 100% of the stock of Christiana, which is
 currently a wholly-owned subsidiary of National Penn Bancshares,
 Inc.
Purchase Price: $34.5 million in cash
Key Provisions: Clean balance sheet: all currently classified and non-accrual loans
 and OREO at Christiana will be retained by NPBC
Board Roles: Christiana CEO to become member of WSFS Board; WSFS to
 establish Trust Advisory Board
Due Diligence: Completed comprehensive due diligence, including detailed
 review of loans utilizing WSFS senior personnel and outside loan
 review firm
Expected Closing: Fourth Quarter of 2010
Conditions to Closing: Customary regulatory approvals
CB&T Acquisition
 
 
 
 
30
Alignment of Insiders and
Owners
 
 
 
 
31
* As defined in the proxy plus WSFS 401K
Alignment of Insiders and Owners
• Near 33% insider ownership*
• Executive Management bonuses and equity awards
 based on performance
 – ROA, ROE, EPS growth
 – No incentive payments of any kind made to
 executives for 2009, due to breakeven results
 
 
 
Appendices
 
 
 
 
33
Appendix - Table of Contents
 Section      Pg #
 • Appendix 1 - Management Team    34
 • Appendix 2 - Business Model    35
 • Appendix 3 - Balance Sheet - Assets, Funding, MBS  36
 • Appendix 4 - Local Economic Trends   39
 
 
 
 
34
Appendix 1 - Management Team
 • Mark A. Turner, 47, has served as President and Chief Executive Officer since 2007. Mr. Turner was previously
  both the Chief Operating Officer and the Chief Financial Officer for WSFS. Prior to joining WSFS, his
  experience includes working at CoreStates Bank and Meridian Bancorp. Mr. Turner started his career at the
  international professional services firm of KPMG, LLP. He received his MBA from the Wharton School of the
  University of Pennsylvania, his Masters Degree in Executive Leadership from the University of Nebraska and
  his Bachelor’s Degree in Accounting and Management from LaSalle University.
 • Peggy H. Eddens, 54, Executive Vice President, Human Capital Management since 2007.  From 2003 to 2007 she
  was Senior Vice President for Human Resources and Development for NexTier Bank, Butler PA. Ms. Eddens
  received a Master of Science Degree in Human Resource Management from La Roche College and her
  Bachelor of Science Degree in Business Administration with minors in Management and Psychology from
  Robert Morris University.
 • Stephen A. Fowle, 45, Executive Vice President and Chief Financial Officer since 2005. From 2000 to 2004, he was
  Chief Financial Officer at Third Federal Savings and Loan Association of Cleveland. Mr. Fowle received his
  Masters of Management, Finance and Marketing from Northwestern University and his Bachelor’s Degree in
  Chemistry from Stanford University.
 • Richard Immesberger, 44, Executive Vice President, Trust and Wealth Management since 2008. From 2003 to
  2008, Mr. Immesberger was Senior Vice President, Private Client Advisor for Bank of America. Mr.
  Immesberger received his Bachelor’s Degree in Finance and Investments from Baruch College, City
  University of New York.
 • Rodger Levenson, 49, Executive Vice President/Director of Commercial Banking since 2006. From 2003 to 2006,
  Mr. Levenson was Senior Vice President and Manager of the Specialized Banking and Business Banking
  Divisions of Citizens Bank. Mr. Levenson received his MBA in Finance from Drexel University and his
  Bachelor’s Degree in Finance from Temple University.
 • S. James Mazarakis, 53, Appointed Executive Vice President and Chief Technology Officer February 1, 2010. Mr.
  Mazarakis served in a senior leadership role as Chief Information Officer for T. Rowe Price, and Managing
  Director and Divisional CIO at JP Morgan Investment Asset Management He received his Master of Science
  degree in Management of Technology from Polytechnic Institute of New York University and his Bachelor of
  Science degree from Rensselaer Polytechnic Institute.
 • Richard M. Wright, 57, Executive Vice President/Director of Retail Banking and Marketing  since 2006. From 2003
  to 2006, Mr. Wright was Executive Vice President, Retail Banking and Marketing for DNB First in
  Downingtown, PA. Mr. Wright received his MBA in Management Decision Systems from the University of
  Southern California and his Bachelor’s Degree in Marketing and Economics from California State University.
 
 
 
 
35
• Consistently ranked in the
 top quartile of all
 companies surveyed *
• WSFS has been
 recognized by The
 Wilmington News Journal
 as a “Best in the
 Business” company four
 years in a row; and
 ranked #1 in 2009
• Customer advocacy survey
 places WSFS above the
 92nd percentile, which is
 considered a world-class
 service level *
• On a scale of 1-5, 41% of
 WSFS customers gave us
 a “5” saying “I can’t
 imagine a world without
 WSFS” *
• Builds sustainable real
 profit growth
• Leads to increased
 shareholder value
* Completed by the Gallup Organization
Engaged
Associates
Creating
Customer
Advocates
Building
Shareholder
Value
Delivering
Stellar
Service
• Gallup survey shows
 WSFS best among top
 players in market at
 delivering service *
 Focused Business Model
Appendix 2 - Business Model
 
 
 
 
36
CCLD = Commercial Construction & Land Development
Asset Composition - June 30, 2010
Appendix 3 - Balance Sheet
 
 
 
 
37
Liabilities & Equity - $3.8 billion
Customer Funding - $2.2 billion
Appendix 3 - Balance Sheet
 
 
 
 
38
 
Non-Agency MBS, $462 million
Appendix 3 - Balance Sheet
 • All AAA at purchase, significant internal pre-purchase due diligence
 • 24 bonds downgraded at least one full grade ($76.8 million par value);
 8 Bonds, $32.7 million book value downgraded below investment
 grade
 – Only one bond downgraded in 1st half of 2010
 – Independent stress tests project losses of only $106,000 in a “housing  depression”
 scenario
 – Assumes that an additional 10% decline in housing prices over the next 24
 months
 • Recorded no OTTI in 2Q 2010, only $86 thousand cycle-to-date
 • Unrealized gain/loss improvement of $4.2 million in 2Q 2010
 
 
 
 
39
Unemployment Rate
9.5%
8.5%
Appendix 4 - Local Economic Trends
 
 
 
 
40
Annual Home Sales in Delaware, by County
Homes Sold Per Year
Median Price Per Year
Average Days on Market Per Year
Appendix 4 - Local Economic Trends
 
 
 
 
41
2009/10 Quarterly Home Sales in Delaware, by County
*All figures were derived from the Sussex County Association of Realtors & TREND MLS 2009/10 quarterly reports.
Homes Sold Per Quarter 2009/10
Median Price Per Quarter 2009/10
Average Days on Market Per Quarter 2009/10
Appendix 4 - Local Economic Trends