PHILADELPHIA >> WSFS Financial Corporation (NASDAQ: WSFS) and Beneficial Bancorp, Inc. (NASDAQ: BNCL), jointly announced on August 8 the signing of a definitive agreement whereby WSFS Financial Corporation (“WSFS”) will combine with Beneficial Bancorp, Inc. (“Beneficial”), in a transaction valued at approximately $1.5 billion.
With the acquisition, Beneficial Bank will merge into WSFS Bank creating the largest, premier, locally-headquartered community bank for the Greater Delaware Valley with the sixth-largest deposit market share.
With approximately $13 billion in assets and growing, WSFS will be the only bank in the region with distinct market-share advantages, including local market knowledge and decision-making, a full-service product suite, the balance sheet to compete with larger regional and national banks, and most importantly, an ingrained culture of engaged Associates that bring to life WSFS’ mission of We Stand For Service in our daily delivery of stellar Customer experiences.
WSFS Bank and Beneficial Bank share similar histories, missions, heritages and footprints.
WSFS Bank was founded as Wilmington Savings Fund Society in Wilmington, Del. in 1832, for working citizens to encourage thrift and to safeguard their savings. Beneficial was founded in 1853 in Philadelphia as Beneficial Savings Fund Society to provide a safe and secure place for immigrants to deposit their savings.
Both banks offer retail, commercial and mortgage products and each provide specialized solutions that will round out the combined bank’s full service product offerings. WSFS operates from 77 offices, including 60 banking offices, predominantly in Delaware and southeastern Pennsylvania. Beneficial operates from 72 offices, including 61 banking offices, that are predominantly in the City of Philadelphia and neighboring communities in southeastern Pennsylvania and southern New Jersey.
“This is an historic combination,” said WSFS’ Chairman, President and CEO Mark A. Turner, who will become WSFS’ Executive Chairman on January 1, 2019. “As a native Philadelphian and a lifelong resident of the Delaware Valley, I believe this combination provides a compelling opportunity to serve our combined markets as it fills a long-standing gap between big banks and smaller community banks in this market. Together, we are poised and positioned to serve Customers, to capture good market share, to expand the reach of our proven successful business model, and to deliver sustainable high performance for years to come.”
Gerard P. Cuddy, President and CEO of Beneficial said, “We strongly believe there is value in partnering with WSFS and combining the strengths of our institutions. This is a sound decision for Beneficial, our stockholders, our employees and the communities we serve. We are combining with WSFS because it is an established institution with deep roots in the Delaware Valley, shares our values, and has the utmost respect for Beneficial’s legacy.”
“We are excited to be joining WSFS,” added Frank A. Farnesi, Beneficial’s Chairman. “It’s a superior financial services company that has consistently delivered outstanding value to its stockholders. The combination of these two banking franchises will create a financial powerhouse uniquely dedicated to the customers and communities of the Delaware Valley.”
The combination is WSFS’ eighth acquisition since 2010, including traditional banks and other fee-based businesses in southeastern Pennsylvania and Delaware. WSFS’ proven track record of successful integrations, combined with its strong organic growth and purposeful expansion into the greater Delaware Valley, has resulted in the creation of new jobs and significant community and economic investments.
WSFS anticipates consolidating approximately 25% of the combined physical banking offices over the next 12 to 24 months due to geographic overlap, changing Customer needs and optimization opportunities within the network. WSFS plans to reinvest an incremental $32 million, or about 50% of the estimated cost savings from the network optimization, into a five-year transformational investment in technology and delivery systems. The delivery transformation will produce a top-tier physical and digital servicing platform that will significantly enhance customer experiences across all business lines.
“This partnership and our delivery transformation aligns with our Strategic Plan,” said longtime Delaware Valley banker Rodger Levenson, WSFS’ Executive Vice President and Chief Operating Officer who will become President and CEO of WSFS on January 1, 2019. “Our combination with Beneficial creates the ideal opportunity to transform WSFS’ Customer delivery and back office systems that will secure our competitive edge in a fast-changing financial services industry. This combination and the complementary technological investment aligns with WSFS’ proven strategy of accelerating investment spending over the short-term to deliver superior long-term returns for WSFS Owners. Our combined organization, with over 350 years of banking history, better positions us to continue to serve and outperform for all of our constituents, and vaults us past the $10 billion Dodd-Frank threshold in an economical way.”
Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, stockholders of Beneficial will receive 0.3013 shares of WSFS common stock and $2.93 in cash for each share of Beneficial common stock. Based on WSFS’ closing price as of August 7, 2018, the per share value equates to $19.61 for Beneficial stockholders.
WSFS expects to incur pre-tax merger and restructuring costs related to both the merger and transformation investments of approximately $146 million and to achieve annual synergies of $68 million per year, once fully phased in by 2021. Approximately $56 million of such synergies, or 37% of Beneficial’s year-to-date 2018 annualized non-interest expense, are anticipated to be derived from non-branch operations and personnel costs, with the balance stemming from both organizations as a part of the delivery transformation initiative. The acquisition is expected to be accretive to WSFS’ earnings per share in the first full year of combined operations, excluding the one-time merger and restructuring costs noted above, and 8% accretive once all synergies are achieved in 2021, generating an internal rate of return (IRR) of approximately 19%. The transaction is expected to close during the first quarter of 2019.
Upon completion of the acquisition, Gerard P. Cuddy, President and CEO of Beneficial, will become Vice Chairman of WSFS Bank and will join the Boards of Directors of WSFS Financial and WSFS Bank along with two mutually agreed upon current directors of Beneficial’s Board.
Boenning & Scattergood, Inc. acted as financial advisor to WSFS and its legal counsel was Covington & Burling LLP. Sandler O’Neill + Partners, L.P acted as financial advisor to Beneficial and its legal counsel was Kilpatrick Townsend & Stockton LLP.