WSFS to acquire Philadelphia’s Beneficial Bancorp in $1.5 billion deal


WSFS Financial and Beneficial Bancorp, Inc. signed an agreement that calls for the Wilmington financial services company to acquire the Philadelphia community bank in a $1.5 billion deal.

Beneficial, will merge into Wilmington-based WSFS Bank, a wholly owned subsidiary of WSFS, creating the largest locally-headquartered (full-service) community bank in the Philadelphia area, with the sixth-largest deposit market share.

The combined banks will have $13 billion in assets.

Beneficial ended up as the largest Philadelphia-based bank as rivals such as CoreStates were and Provident were acquired.

A release noted that WSFS Bank and Beneficial Bank share similar histories as savings banks that served working-class residents. WSFS Bank was founded as Wilmington Savings Fund Society in Wilmington, Del. in 1832, Beneficial was founded in 1853 in Philadelphia as Beneficial Savings Fund Society.

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 in the City of Philadelphia and neighboring communities in southeastern Pennsylvania and southern New Jersey.

About a quarter of offices that are viewed as overlapping are expected be combined within the next two years.

“This is an historic combination,” said WSFS’ 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, 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.”

The combination is WSFS’ eighth acquisition since 2010, including traditional banks and other fee-based businesses in southeastern Pennsylvania and Delaware.

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 anticipates consolidating approximately 25 percent of the combined physical banking offices over the next 12 to 24 months.

WSFS plans to reinvest an incremental $32 million, or about 50 percent of the estimated cost savings from the network optimization, into a five-year investment in technology and delivery systems

“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, 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.

Upon completion of the acquisition, Gerard P. Cuddy, 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.

WSFS Financial had $7.11 billion in assets on its balance sheet and $19.09 billion in assets under management and administration.

As of June 30, 2018, Beneficial Bancorp has $5.77 billion in assets on its balance sheet. Beneficial Bank is the oldest and largest bank headquartered in Philadelphia with 61 banking offices in the greater Philadelphia and South New Jersey regions.

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