Q4 2020 WSFS Financial Corp Earnings Call
Ladies and gentlemen, thank you for standing by.
I can't thank you for standby.
Thanks, Paul.
[music].
Okay.
Ladies and gentlemen, thank you for standing by and welcome to the W. S.
<unk> Financial Corp, fourth quarter 2020 earnings conference call at this time, all participants on a listen only mode.
The speaker's presentation there'll be a question and answer session to.
To ask a question at that time from for Star then one on your tests on telephone.
And the amount of today's conference call is being recorded.
I would like to on a comparable to your host for today, Mr. Dominic <unk> Chief Financial Officer, Sir you may begin.
Thank you Valerie and thanks to all of you for taking the time to participate on our call today.
With me on this call are Rodger Levenson, Chairman, President and CEO Art Bacci, Chief Wealth Officer, Steve Clark, Chief Commercial banking Officer, and Rick Wright, Chief retail banking officer.
Before Rodger begins his remarks, I would like to read our safe Harbor statement.
Our discussion today will include information about our managements view of our future expectations plans and prospects that constitute forward looking statements.
Actual results may differ materially from historical results or those indicated by these forward looking statements due to risks and uncertainties, including but not limited to the risk factors, including in our annual report on form 10-K, and our most recent quarterly reports on form 10-Q as well.
There's other documents, we periodically file with the Securities and Exchange Commission.
All comments made during today's call are subject to the safe Harbor statement.
With that read I'll return the I'll turn the discussion over to Rodger Levenson.
Thanks, Dominic and thanks, everyone for joining us today.
Consistent with our recent practice, we will use the introductory section of this call to provide both a brief commentary on fourth quarter results as well as our outlook on 2021.
Which business had a very solid fourth quarter reporting earnings per share of $1.20 return on assets of 173% and return on tangible common equity of $19 three 7%.
As detailed in the release and earnings supplement core results were very close to the reported numbers after incorporating a nominal amount of non core items.
Core P. P N R of $73 $4 million represented an 8% increase over the prior quarter and translated into a very healthy $2, one 2% of assets.
These results included the impact of interest income and fee accretion from P. P. P. As approximately 22% of PPP loans had been forgiven by year end.
It also included modestly higher purchase loan accretion in conjunction with the continued accelerated run off of the non relationship portfolios primarily acquired from beneficial.
Combined with a stable base margin this translated into a net interest margin of 393%.
Excluding the expected reduction in mortgage banking activity fee income grew 5% versus the third quarter with contributions from across multiple business lines.
Expenses continued to be well managed even as we continue to make significant investments in our franchise. This.
This includes the multiyear delivery transformation project and continued talent acquisition, including a total of nine relationship managers, who are joined with FIS over the past 12 months.
Overall credit trends remained stable.
Total problem assets were flat to the third quarter.
In addition, delinquencies non performers and charge offs remain at low levels and loan modifications continued to decline to one 4% of loans.
ACL coverage of 273%, excluding PPP was also flat to the third quarter.
The provision in the quarter reflected economic forecast consistent with prior quarters expectations and the overall stable portfolio performance.
With our strong ACL on capital levels, we have ample capacity to cover potential future credit losses.
As stated in our third quarter call, we resumed our share repurchase program in the fourth quarter buying back two 9 million shares for a total of just over $116 million.
Share repurchases remain a good use of excess capital with IRR in excess of 20% at or near current price levels.
We enter 2021 optimistic and well positioned for France for franchise growth and investment.
I will now turn it over to Dominic for the 'twenty 'twenty one outlook overview.
After dominic's comments the team will be available for Q&A.
Yeah.
Thank you Rodger.
Good afternoon, everyone and happy new year.
As Roger mentioned, we look towards 2021 with continued momentum and the organic opportunities ahead, while managing through the expectations of a slow and uneven economic recovery and COVID-19 cessation.
2021 results will be impacted by the pace of the economic recovery.
Timing of forgiveness of P. P. P loans, new P. P P volume and the resulting effects of historically high liquidity positions.
With that said today, we will share our outlook for underlying business performance expectations that will drive our financial performance in 2021.
We have provided a summary of our outlook on slide five in the for Q earnings supplement on the Investor Relations portion of our company website.
Our loan growth outlook is for mid single digits, when excluding both P. P P and non relationship runoff portfolios.
Growth will primarily be driven by C&I leasing and consumer loans.
We anticipate approximately 90% of original P. P. P volume will be forgiven by year end.
For new PPP loans, we are partnering with the leading technology partner to support our customers and acquire new relationships.
While new PPP loans will not be originated on our balance sheet resulted in deposits from these loans would be.
In addition, we anticipate approximately $200 million or 20% purposeful attrition in our run off non relationship portfolios.
Deposit growth is expected in the mid single digits, driven by existing customer loyalty and continued market share growth.
Our expectations would be either enhanced or offset by excess customer liquidity impacts.
<unk> from both additional P. P P volume government stimulus and the pace of the economic recovery.
Net interest margin outlook is in the range of $3, six 5% to 380%, which.
Which includes approximately 24 to 28 basis points on purchase loan accretion.
And approximately six to 10 basis points impact from PPP, including both interest income and fee accretion.
<unk> towards the first half for the year.
The name range also includes an approximate 11 basis point net negative impact from elevated customer liquidity.
While we will optimize excess liquidity through our investment portfolio it will generate lower yields on our loans and it's dilutive to NIM.
Our NIM range.
Deposit betas continue to improve in the first half for the year, resulting in a very low average total customer deposits cost for the year of approximately 14 basis points.
Our fee income growth is in the mid single digits, when excluding the full year impact of Durbin.
In the lower mortgage fee revenue coming off a record year in 2020.
Our diversified fee income results in our fee income ratio in the range of 26% to 28%.
And it's supported by double digit growth and wealth.
Provision cost expectations are in the range of 20 to 25 million driven.
Driven by loan growth.
The combination of Cecil and uncertain pace of economic recovery and the potential for additional government stimulus. All result in a very unpredictable credit environment.
We are very comfortable with our ACL coverage and to the extent the economy recovers faster and loss content is expected to be lower we would be in a position to release reserves.
And efficiency ratio outlook in the low Sixty's is driven by the expectations I've just walked through.
Along with our continued long term strategic investments in our franchise.
These investments in talent, specifically for full year impact of new relationship managers across our lending businesses.
And continued investment in our delivery transformation on.
All supported by business cases, with strong return on investments and the Irr's and are expected to increase future growth rates.
<unk> the scale of our business model and products.
Enhance operational efficiencies.
And support our sustainable high performing financial results.
Going forward.
The tax rate is expected to be approximately 24 per cent for the year.
Lastly, we remain in the fortunate position of having strong capital and liquidity levels that are well in excess of our internal targets.
We intend to continue share buybacks in 2021 is one of our primary vehicles for capital deployment.
The pace and amount will be dependent upon a number of factors, including potential investment opportunities with the share price.
Ongoing capital generation.
And potential reserve releases, if the economy, if the economic recovery accelerates.
We are excited about the prospects of our future growth opportunities executing on our strategic investments and strengthening our position as the largest locally headquartered community bank in on.
Our region.
We will now open up the call for questions you may have.
Yeah.
Thank you.
Again, ladies and gentlemen, if you like the Apple questions from Star then one on you touched on the telephone.
Okay.
Our first question comes from <unk> of Piper Sandler Your line is open.
Hi, good afternoon.
Good afternoon.
So those are couple of a first time I wonder Dominic if you could talk a little bit.
More about the NIM mechanics for next year and specifically.
You talk about the.
Slightly less in excess liquidity and continue.
Continued reduction in deposit rates I know originally when you did the beneficial deal. The idea was you know the loan replacement rates.
Switch from non relationship to two relationship commercial would create.
Kris.
On loan yields overall is that still the case and it doesn't seem to be given.
What are your margin expectations on next year.
Sure. Thanks, Frank Yes, clearly as shown on slide six of our supplement there is a lot of moving parts with regard to NIM as we exit 2020 into 2021, we do see the continued improvement in customer deposits as I mentioned, so that will improve what we.
Call that basic NIM in the range of $3 35 to $3 42 next year.
For your question regarding portfolio migration as we focus on continuing to grow the portfolio.
And improve the mix towards.
Relationship based higher yielding C&I that continues to be true.
The challenge in this environment is that loans that are paying off at a higher rate than loans being booked and so that's skewing in the short term.
That migration benefit but as.
Rates stabilize and in fact improve you would see that more prevalent in our base NIM going forward.
Okay. So with the rate picture as it is which of course you pointed out that's the outlook for 2021.
On the replacement rates setting aside triple P for replacement rates on on the loan book as you mix shift will continue to eat away at yields that for.
Sure.
That is correct. It would it would continue to put pressure on the base NIM, but that would be offset by improved.
Improved customer funding cost and the portfolio migration.
Alright, okay.
Tom.
And then.
In terms of.
The problem total problem loans have been pretty stable and obviously the COVID-19 modifications continue to fall.
Wondering how do you see you know do you.
You think that those classified criticized balances do you assume that they will be fairly flat for the next <unk>.
Few quarters until you get better.
No.
Better.
Outlook on the economic side or do you start to see that Paul is as we start to see charge offs pick up just wondering how you know and timing of what we should look for.
And how you see those balances playing out directionally over the next few quarters.
Sure I'll pass it off to Steve Clark to talk a little bit about what he's seen.
In regard to specific customers and working with those relationships and then I can speak a bit to how we're thinking about those trends with regard to see so on the provision.
Yes, Frank this is Steve.
I'd, just say that as we've spoken in past quarters, we really have completed.
Our review of risk ratings.
And you know the migration was minimal in the fourth quarter kind of consistent with our expectations. We continue on a quarterly basis to review all of our risk ratings. So.
So certainly any.
Improvement or deterioration will be dependent upon the economy on the recovery in the vaccine, but right now we think we've taken an appropriately conservative approach and feel like we really have a good handle on our current risk rating.
And Frank just to kind of share thoughts around how Cecil considers this as we've laid out on slide eight in our materials of the $229 million of ACL.
On that we have currently.
Round 100 million for 44% of it is related to economic forecast impact so that would presume.
The economic factors would.
Put pressure on some of those metrics and those had been reserved against but as Steve mentioned.
We've gone through the significant reviews and now it's just based on quarterly performance.
Okay.
And then just a quick one on on comp.
You had said that the fourth quarter was impacted by incentive comp and just wondering.
It pertains a modeling for next year.
Reasonable run rate would be for the for the comp line.
Sure.
I mentioned, our compensation and salaries would continue to increase as we've made strategic investments to add to our associate base, particularly on the lending side and through relationship managers. When we plan, we presume we will hit target and that would be more therefore, our incentive compensation.
Tricks on a normal more normalized basis.
Hopefully that helps answer your question.
So so you do think that the comp will migrate higher from if I just compare for Q2 the run rate beginning next year, that's a decent place to start and then.
To your point you continue to invest.
And and new lenders.
That's correct.
Alright, thank you.
Thank you Frank.
Thank you. Our next question comes from Michael Perito of Hayden Debbie Your line is open.
Hey, good afternoon, guys happy new year.
Hey, Mike Mike.
A couple things Rodger I was wondering if maybe just to start.
Here before I ask a little bit about the model. Obviously 2020 was not the year I imagine you guys expected or planned for and I was just curious you know how do you.
Where should we think about you guys kind of from here in terms of I know you guys typically lay out a multiyear internal strategic plan and you know I mean can you maybe just give us an update about how youre thinking about that process. I mean, there is a situation where you kind of take 2020, and then readjust everything going around or do you try to get right back on the plan that.
As laid out you know 12 months ago. After the kind of the day obscure 12 months here, just just any thoughts or insights around how you guys are thinking about the next handful of years in planning and after the year. We just have would be great to start.
Sure and thanks for the question Mike It is something that the management team and the board have been spending time on over the last several months as you recall. This is the final year of the current strategic plan and obviously the middle year was certainly impacted by the whole COVID-19 situation. So as we move through.
This year as has been our historical practice, we will update that with a new three year strategic plan.
Obviously, the financial metrics for this year are impacted by the significant rate and credit environment changes with Cecil that Werent contemplated in Asia.
Original financial metrics, but the overall strategy has not changed and then as we move through this year, we'll be working on that strategic plan and we'll present on up.
David three year plan, when we get to the end of next year I would say overall, though Mike take.
Takeaway.
Want everybody to come away with is on everything that has occurred this year for us just confirms the strategic rationale of the combination with beneficial and a very large opportunity we see the debt.
<unk> to us.
<unk> got interrupted but we've continued to invest heavily as we've talked about with RMS and other things and we feel very optimistic about.
Our growth opportunities in 2021 and beyond.
And can you remind us how you guys think about kind of core capital.
I know I think couple of quarters ago, you mentioned something about it on the slide deck, but now after that after this act of fourth quarter with share repurchases. It actually seems like there might be some line of sight, depending on your activity in the next quarter or two to kind of getting to a more normalized capital basis than the levels. You were out post beneficial just can you remind us how you think about the capital levels.
A more normalized level for this balance sheet at this time.
Yeah. So we've talked about as we've laid out the impact of the reserve build in the capital buffers that we have we remain over our internal.
Our bank and holding company capital level targets, and we'd like to have a buffer above that obviously.
On the buyback program in the fourth quarter.
Significantly reduce those buffers, but we still have a ways to go.
And there's a lot of things that go into the mix there in terms of as Dominic outline what we see as potential opportunities to invest in the business, what's going on with the credit whether it's good.
Good things like reserve releases or future challenges.
And then just the.
Overall economic environment. So we're closer to those levels than we were before with what occurred in the fourth quarter, but there's still there's still some more excess capital for us to deploy within the construct of all of those dynamics.
Great helpful. Thank you and then just.
Two modeling questions for Dominic one just the noninterest income outlook commentary.
I think all inclusive.
Flat year on year is is that based around approximately $169 million kind of core fee number for 2020 years or other adjustments to that that we should be thinking of when you guys lay that out.
No I think the.
Number you just mentioned is in the ballpark on growth I think.
Two significant impacts that are in play for the full year impact of Durbin and then clearly what may happen with mortgage banking and the volumes and particularly.
In the refi space and secondary market rates.
Mortgage banking has been around mid to high teens of our total fee income and clearly then would have an impact. So we strip those two out to provide an outlook on the remaining fee trends.
Got it and then as I think about the balance sheet mix.
There'll still be quite a bit of run off in 2021, as you guys laid out but.
Any initial thoughts Tom I realized we're moving out a little bit here, but you know and I'm just kind of piggybacking on the earlier question, but as we get into 2022, I mean, do you kind of see that assuming the rate environment pretty similar I mean, do you kind of see that becoming a year, where some of the remixing will take hold in the margin in terms of kind of getting on to some of this stuff youre running.
And and reshuffling into the commercial lending that you guys are targeting but.
Do you think that thats probability that the kind of impact on the margin will be more at least noticeable in 2022 as you see it today or is there any other dynamics, we should be thinking about.
Yes, I think it's a great question and first and foremost is the balance sheet.
Migration is occurring today, it's just difficult to see in this interest rate environment. So.
With a stable rate environment for a period of time, and then or rising rates you will see the expansion of the NIM based on those relationship based spreads that we have in the marketplace.
And then it would continue to accelerate from there, particularly as we focus on on the C&I and even even some of our leasing growth that we see with high single digits low double digit yields from that portfolio as well.
Great. Thank you guys appreciate it.
Thanks Mark.
Thank you. Our next question comes from Eric.
Boenning and Scattergood your line is open.
Good afternoon guys.
Eric.
Mark.
If I could just starting with net loan growth I'm. Just curious you know where the pipeline sits today versus maybe three months ago on have you seen any improvement in that over the past month or two since you've gotten some progress on vaccine approval in distribution or what may drive that to help support.
The outlook that you've talked about previously.
Sure Steve do you want to handle that question.
Yeah, sure Hey, Eric So the commercial pipeline and we look at like a 90 day weighted average.
<unk> is up from where it was a quarter ago, it's about a $215 million and that's kind of our forecast of what we expect to close and fund over that period of time on a weighted average basis.
The pipeline had gotten as low as 175 165.
Going back a quarter or two so we certainly see increased activity for us it's really.
Market share opportunities.
<unk>.
Related to in part our new relationship managers that have joined us and in part for some of the disruption we're seeing at some other bigger bank competitors.
So it's really not related to economic growth that is really related to market share opportunities.
Thanks, I appreciate the color there and then just thinking about.
Particular industries that are that are driving that and then also just as the bank has grown larger over the past few years.
Are you starting to have some success moving up in terms of customer size and is that presenting more opportunities as well.
So I think.
There is no specific industries in the C&I space.
We are generalists.
Look at all industries across the board in the CRE side, we continue to see.
Miss opportunities in multifamily space and residential land and residential vertical development for.
For those segments continue to be to be active.
And I apologize for.
Forgot the second half for your question.
Just in terms of customer size in loan size have you had success kind of moving up market now that the balance sheet is larger.
So we don't we're not focused on moving upmarket per se.
Our core.
Our business is privately held companies.
With revenues in the commercial bank, ranging from $3 million to $5 million up to about $150 million.
That is our market.
Really.
Don't view us as growing above that we really think that space privately held companies.
It gives us the best opportunity to really deliver all of our products and services across the bank.
Got it thank you.
Switching gears, a little bit in terms of the delivery transformation.
As you look at 2021 are there any particular areas of the organization or business lines that are targeted for investment.
Year on what specific kind of on our products. Our systems are you looking to invest in.
Sure. Thanks, Eric This is Dominic.
Yes.
Remind everyone that as we've said this is the delivery transformation initiatives. These are just a few projects that significant investment across the board, including customer facing risk.
Modules and.
On a.
Our back office efficiencies, so it's really across the board and they are intended to provide value across the entire organizations, including.
The implementation of our CRM tool.
Pacifically sales force across the bank this year enhancements in encino for customer facing speed to market and.
Uh huh.
Tying that into CRM, some other for infrastructure capabilities like <unk>.
Something like a mute you'll soft to ensure that our technology stack is.
Compatible across all of these types of investments.
Next generation sales and service for on boarding and support both.
Our retail customers.
In the branch online I'm on the phone and even small business. So it's really a significant investment across all our platforms to.
To really drive growth and efficiency going forward.
Thanks, Dominic and then just kind of changing gears again to asset quality and the $15 million multifamily commercial rate relationship that moved to non accrual that was noted in the press release any kind of specifics you can provide there was that one specific project or is that debt to total relationship and what is the plan to kind of manage that.
Got.
At this point.
Eric This is Steve again.
So that particular relationship as one CRE relationship consisting of two loans that total 15 million and the properties are actually multifamily student housing.
Located in a very desirable section of Philadelphia for the.
The loans were originally underwritten at 65% loan to value and the properties are currently 80% occupied so we are working with the borrower and we.
Certainly expect this situation to be resolved.
Favorably.
Thanks, Stephen just one last one for me and then I'll drop off you talked a lot about capital already and.
Feeling there is a good use for deploying capital into share repurchases.
An increase in the common dividend in 2020, what would prompt you to potentially do that.
'twenty, one or or in the years ahead.
Sure. This is Dominic so just to restate, our long stated practice with regard to capital deployment.
First looking at our core earnings.
And typically returning 25% of our core earnings split equally between routine share buybacks, regardless of price and then a purposely low dividend and then to the extent as we've seen recently is given excess capacity and capital and positive share price to redeploy that through incremental share repurchases.
As you know clearly this isn't you.
Unique environment, and we would want to see.
Yeah.
The sustainable earnings that we anticipate coming out of 2020 into 2021, and then we'd look to maintain those relationships of returning 25 per cent of that core capital.
The share buyback and the dividend.
Moving forward as we had in the for five years, leading up to 2020.
Great. Thanks for taking my questions. This afternoon.
Yeah.
Thanks, Paul.
Next question comes from Russell Gunther from Davidson Your line is open.
Hey, good afternoon, guys I just have a few follow ups the first.
With regard to the fee income conversation you guys mentioned the double digit in wealth management for 'twenty one.
Are you able to share any colors to the fundamentals behind.
That would support that growth rate.
Yeah.
Or do you want to take that question.
Sure Good afternoon Russell.
Our institutional trust business has grown double digits for the last.
Eight years.
And right now I can tell you that January typically.
Ah is a slower month after the rush to securitize at the end of the year, but this January continues to be fairly active.
With tax law changes proposed potentially out there and.
Gifting.
Well.
Rules potentially changing is still very active.
Personal trust activity, we saw a 13% increase in account openings at the end of the year, so that bodes well for.
Fee income going into 2021 as well as we ended the year with them on the advisory side.
AUM was at a record high for us from the market at the end of the year was for AUM was up 7% from third quarter. So since we bill in arrears, we've got 7% first quarter.
Fee income growth just based on the market.
Net on hopefully some good net climb.
Client inflows and I feel pretty confident that double digit is achievable.
I appreciate the color there.
Switching gears a bit.
I think I heard you say $200 million is the targeted run off portfolio shrinkage for this year on.
I heard that right, it's a bit of a deceleration from from our more recent clips. So just curious as to.
Whats driving that assumption.
Sure I think it would be relatively consistent trends as we've seen in that runoff residential mortgage portfolio, but some of the other.
Categories participation portfolios in leveraged loans chunkier larger loans that had either refinanced or paid off over the last few years debt will not reoccur. So when you take the blended portfolio as it stands today, we'd likely see somewhat of a lower run rate than we've seen.
In the last few years again, though that's contingent upon.
A significant portion to what will happen with the residential mortgage market.
Got it okay very helpful. Thank you.
And then within the provision guidance are you guys able to share a range and sort of timing and magnitude of what that contemplates for realized losses and net charge offs.
So we don't share that level of detail, what we can say and clearly you have seen in our credit metrics that.
Performance continues to be relatively stable I think theres still a lot in play with regard to them.
For the economic recovery.
What we have seen in the last few quarters is that the major forecasts for GDP and unemployment are stable to slightly improving.
So that's that's helping but ultimately well.
Needs to be understood is the extent to which PPP and government stimulus are either pushing out.
The loss content or otherwise mitigating it and I think we have a couple of quarters to go here to fully understand that.
Okay.
And then last question.
We're back to capital deployment.
Three year strategic plan was mentioned and I believe the one that we're currently in.
At some point articulated.
Remaining on the sidelines from a depository M&A perspective.
Is that still the case or.
Are there opportunities that may present themselves, where with fees would be willing to announce a depository deal in 2021.
Yeah. So this is Roger I'll jump in on that.
Russell so.
We set a number of times the strategic plan and our focus has been on this what we think is just an incredible organic growth opportunity in this greater Philadelphia, Delaware region as being the only locally headquartered bank of a size and scale to compete with the big guys just very unique market.
So we.
We are very focused on that we keep our eyes open for other things, but it really would have to be something that would be consistent with our strategic plan and additive to that objective in terms of our current market position for us to pick our heads up and turn away from the organic growth opportunities.
Understood Okay, great Rodger Dominic everybody. Thanks for taking my questions Thats It for me.
Thanks for asking.
Thank you again, ladies I know you'd like to ask a question. Please press Star then one on your Touchtone telephone.
Thank you. Our next question comes from Brody Preston with Stephens, Inc. Your line is open.
Hey, good afternoon, everyone.
For Iot.
Roni.
I just wanted to circle back on a couple of the fee income businesses Dominic just on cash connect.
All of it on a pretty good job.
Terms of the unit growth there in terms of the Atms and particularly on the smart sales side of the business.
But you know net revenue trends seem relatively flattish from <unk> to <unk>.
How should we be thinking about.
On the revenue the revenue growth trajectory of that business.
In 2021, especially now that interest rates.
Definitely on the bottom.
Sure. Good question. So yes, we continue to see tops top line opportunity, particularly with regard to two units and total cash serviced in.
In particular, we're seeing outsized growth continue in our smart safe and reconciliation products, which bring higher yielding returns.
For the division and two to.
For the bank.
Year over year, though.
Clearly the impacts of Covid and the lower interest rate will have somewhat of an impact.
There will be muted year over year growth in net revenues, but a lot of that is managed also in our expense base and some improvements we made in the scalability of the business so while net.
Revenues in particular fee revenue well necessarily see meaning.
Meaningful growth year over year again, because of the full year impact of the interest rate environment and Covid, we do anticipate to see continued bottom line growth and to see our.
Consistent with 2020.
Okay.
Okay. Thank you for that.
On the wealth side on.
<unk> of the business.
Obviously continued strong growth there and I appreciate.
Some of the some of the guidance, but I just wanted to ask about you know.
One of the hires you made earlier in the summer Ah Salvator.
Coming out of them from PNC as as he got on him as he gotten up to speed yet or is it is part of your guide for double digit growth part of him continuing to build his business.
Uh huh.
Excuse me and bring over bring over some of his old book.
Steve do you want to start with just.
Onboarding.
And.
What you see in the future and I think there's a tremendous overlap with ours. So maybe you can share his thoughts as well.
Yes, so as it relates to Sal Patty joined.
Joined us in August of last year and after.
23, or so years on a competitor bank.
The last three or so of those years and you ran the wealth business for that bank, but but prior to that and all of his career. Prior he was really on the commercial lending commercial banking space.
His activity, while he has of kind of a foot in both commercial and well his activity really has been focused so far on commercial opportunities.
And I don't want to speak for art, but I don't believe.
Any production that may be generated by Sal.
As in wealth forecast.
Really this was arent we on we.
We do work closely with with sound right I do think there'll be some benefit to the wealth team from <unk>.
John I think one other nice things I'm seeing is just the coordination and communication and teamwork.
Really doing well between the commercial RMS in the wealth team, it's really generating very nice strong pipeline coming into 2021.
We like commercial has been.
A good portion of the fourth quarter.
Mark into private bankers and advisers in the amount of the year and has passed.
We will restart some of those conversations, but I think in general and we have the opportunity to continue to invest in talent on the well.
And with the him coming.
Coming together with commercial and being able to on the declines with me on offering thats both for their business and for them personally I think it's going to be a great opportunity for us.
Okay. Thank you for that.
And then.
One of the one day I guess are the highlights of the book.
The beneficial deal was the ability to cross sell some of the some of the fee income line items that you have the beneficial didn't necessarily have in and part of that was mortgage.
Obviously, you and others have had a great year, there, but I wanted to ask.
Did were you able to sort of penetrate that market and cross sell into beneficial as customers.
Maybe the low rate environment to help pull that through or is there still more wood to chop there where you know you could better penetrate I guess beneficial's customer base and help mortgage.
Out a little bit more in 2021 to a greater degree than maybe some of your peers have the ability to do.
Sure Brian This is Dominic yes.
There's tremendous opportunity ahead, both from not only cross selling too.
Existing and legacy beneficial customers.
Who did not have those products start to them.
At beneficial but across our expanded footprint due to that combination in the greater Philadelphia.
Markets.
New Jersey, South Jersey, South Eastern Pennsylvania, and Delaware and so while 2020 was was disruptive in the interest rate environment was a bit challenging I think what we saw in mortgage was an example of the opportunities that exist with that significant growth in that business both in originations.
And loans closed and an overall volume and customer service, we still see the opportunity whether it's credit cards small business.
SBA private banking etcetera tremendous opportunity ahead.
Still very focused on that we had made significant investments in staffing and capabilities in 2019 in 2020 to take advantage of those opportunities and.
And we were prepared if you recall right when Covid hit was our one year anniversary of the close.
The combination in the six month anniversary of the conversion. So we were very focused on executing on those business cases, and strategies and Covid did disrupt that for a couple of quarters here.
But if anything what we've learned so far as the opportunities ahead or are as big if not bigger than what we had anticipated.
From the combination.
Dominic this is on if I may add.
That on we added for advisers at the end of 2019 in anticipation of being able to work with the beneficial branch net.
We're clearly COVID-19 with the shutdown of the branches that are restricting access to the branches impacted that but we continue to do outreach in email and we've really seen the benefit of that as the book is the branches opened up from the second half of the year.
<unk> investment group AUM grew.
Well well into the double digits as we saw the.
The relationships with the beneficial branches really start to kick in so I'm really hopeful that we continue that momentum into 2021.
Okay, Great and then last one for me Dominic I'm, sorry, if you've covered it already but the margin guidance.
It seems to imply less of a liquidity drag in 2021, and then what happened in the fourth quarter and so it should the expectation be for you to deploy some of the excess liquidity that you got this quarter into further into securities balances or does it earmarked for.
For obviously it'd be better for loan growth, but just wanted to get a sense for what the plan is for for the excess liquidity moving forward.
Sure, Yes, and even in 2020, we increase the size of our investment portfolio about 20%.
Year over year, and we would we'd see continued opportunities to do that to leverage this excess liquidity in a disciplined and appropriate manner.
So that's where we would deploy it and put it to work.
Clearly the pace of recovery customer behaviors.
And spending with those deposits and then the incremental.
Deposits that would result from the second round of PPP.
Would put pressure on the NIM rate, but obviously be accretive on an earnings perspective.
Yep.
Alright, great. Thank you Paul for taking my questions. This afternoon I appreciate it.
Thanks Louis.
Thank you I'm.
Im showing no further questions at this Tom ill turn the call back over 2011 from for any closing remarks.
I just would like to say thanks for everybody for joining us on the call today, Tom and I, Dominic and I will be virtually out on the road in the coming weeks and look forward to connecting with many of you at that time. Thanks everybody.
Thank you ladies and down on this does conclude today's conference. Thank you for participating you may all disconnect have a great day.
Okay.
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