WSFS Financial Corp. and Bryn Mawr Bank Corp. view their announced tie-up as a fast track to becoming a wealth management "powerhouse."
On a conference call the discuss the deal, management from both companies touted the opportunities that will come from the combination of wealth management franchises, organic growth and increased branch consolidation.
"These are really additive and complementary businesses. Both have things to bring to the table to continue to build out these two wealth management businesses," Frank Leto, president and CEO of Bryn Mawr, said. "I look at it as really becoming a real powerhouse in the wealth space."
A slew of U.S. banks have looked to boost their fee-based businesses through acquisitions amid the tough operating environment created by COVID-19. The addition of Bryn Mawr's wealth management franchise will be a growth engine for WSFS Financial and boost the company's fee-based revenue, WSFS Financial Chairman, President and CEO Rodger Levenson said.
"We have significantly enhanced our fee-based businesses with the combination of our wealth management platform," he said. "We see significant growth potential in the wealth business, especially as we meet the needs of the growing and maturing baby boomers and millennials."
The combination will create the 6th largest wealth management franchise in terms of fiduciary fee revenue among full-service banks with less than $100 billion in assets, according to the investor presentation. The combined companies will have about $10 billion in assets under management. The Bryn Mawr brand will be the face of the combined companies wealth management business.
"The [Bryn Mawr] brand will be the prominent or preeminent brand in the wealth space," Levenson said. "It has a long history and I think is widely recognized in the wealth management and trust space."
To minimize customer disruption, the companies will take a "thoughtful" approach to combining their wealth management platforms.
"We've talked a lot about this and we see the opportunity to take our time because both businesses are performing so well and not necessarily be married to the timeline for the bank integration. It will happen over time," Levenson said. "I would expect from all of that very minimal disruption. We want everyone to be focused on the potential of the size of this business and the customer retention and growing the business."
After casually discussing the strength of a potential tie-up between the two companies for years, Levenson and Leto got serious about combining at the beginning of 2021. "Things moved very quickly from there because of the familiarity we had," Levenson said.
Management is eager for the organic growth opportunities that the pro-forma company will have. "This is a case of one plus one equals more than two," Levenson said. "This unique and highly desirable competitive positioning provides a very significant opportunity for long-term organic growth."
WSFS Financial estimates about $73 million in annual cost savings, representing about 45% of Bryn Mawr's operating expenses. They estimate that 65% of the cost savings will be realized in the first year and full cost savings will be realized in the second year. A significant portion of cost savings will come from branch and office consolidation.
"The significant branch overlap enhances the next phase of our delivery transformation initiative. Our plans call for the consolidation of 30% of our combined locations," Levenson said. "This strategy has been validated by the events of the past year due to the acceleration of the shift to increase digital interaction by our customers."
WSFS Financial plans to run off 25%, or about $900 million, of Bryn Mawr's loan book. Some of the runoffs will be participation loans where Bryn Mawr is not the core relationship and some specialty commercial real estate, WSFS CFO Dominic Canuso said.
