WSFS Financial (WSFS) Gets Fed’s Nod to Buy Bryn Mawr (BMTC)

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WSFS Financial Corporation WSFS received a regulatory approval from the board of governors of the Federal Reserve System for the acquisition of Bryn Mawr Bank Corporation BMTC. The deal had already been approved by the board of directors and stockholders of both companies as well as from the Office of the Comptroller of Currency. The transaction, announced in March 2021, is expected to close on Jan 1, 2022.

BMTC and WSFS will continue their operations separately until systems and brand conversion in late first-quarter 2022. Wealth management clients of BMTC will continue to be served by the same BMTC professionals. Moreover, the integration of the WSFS and BMTC wealth management groups will be conducted throughout the year 2022. Upon deal closure, both banks’ customers will have prompt and chargeless access to the combined WSFS and BMTC Automated Teller Machine (ATM) network comprising more than 600 ATMs.

WSFS Financial’s chairman, president and CEO Rodger Levenson remarked, “This combination brings together both companies’ long history of service for our Customers and Communities to form the premier, locally headquartered bank and wealth management franchise in the Greater Philadelphia and Delaware region.”

According to the terms of the deal announced in March 2021, shareholders of Bryn Mawr will get 0.90 of share of WSFS Financial common stock for each share of Bryn Mawr. This will result in approximately 27% ownership of Bryn Mawr’s shareholders in the combined company.

Going by the previous disclosure, WSFS Financial expects the acquisition to be 6.7% accretive to earnings (excluding the one-time merger and restructuring costs) in 2022 and 13.4% in 2023.

The transaction will result in one-time merger-related costs of $127 million. Nonetheless, WSFS Financial projects nearly $73 million of annual cost savings, with 65% to be realized by next year and 100% in 2023.

Additionally, the transaction will result in a 30% reduction in total branch count, mainly owing to “geographic overlap and optimization opportunities within the network.”

The combined entity will have $20 billion of assets, $12.6 billion worth net loans, $16.2 billion of total deposits and a roughly $43 billion in Wealth Management business based on the Dec 31, 2020 data.

Our Take

Following the executive order by President Joe Biden in July that proposes a more rigid scrutiny of bank mergers, an extending timeline for the regulatory approvals can be seen of late.

Over the years, WSFS has grown meaningfully through acquisitions. Specifically, since 2010, WSFS Financial has acquired eight banks, which substantially strengthened its position in the regional market and improved its financials. The acquisition deal will strengthen WSFS’ share and is likely to improve its balance-sheet position, thereby helping it compete with the large regional and national banks.

Over the past six months, shares of WSFS Financial and Bryn Mawr have gained 3.1% and 3.6%, respectively.

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Currently, WSFS Financial carries a Zacks Rank #2 (Buy) and Bryn Mawr a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Inorganic Growth Efforts by Other Firms

Several companies from the finance sector are making consolidation efforts to counter the low-interest-rate environment and heightened costs of investments in technology.

FirstCash Holdings, Inc. FCFS completed the previously-announced acquisition of American First Finance, a technology-driven, virtual lease-to-own and retail finance provider for underserved, non-prime customers. The cash-and-stock transaction, valued at $916 million (based on FCFS’s closing stock price on Dec 3, 2021), was announced this October.

FirstCash has a proven performance history in retail-based operations, primarily for cash-and-credit constrained consumers. Via this acquisition, FCFS will become a pioneer in the complementary and burgeoning point-of-sale and buy-now-pay-later payment space.

Walker & Dunlop, Inc. WD successfully closed a $696-million deal to acquire tax credit syndicators and affordable housing developers, Alliant Capital, Ltd. and its affiliates Alliant Strategic Investments and ADC Communities.

Apart from steering Walker & Dunlop deeper into the affordable housing domain, Alliant’s competencies, assets and personnel will boost WD’s goals of furthering debt financing, property brokerage and assets under management as underlined in its Drive to ’25 strategic plan.

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December 22, 2021 at 06:13PM