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WSFS Financial Corp (NASDAQ:WSFS)
Q4 2020 Earnings Call
Jan 26, 2021, 1:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the WSFS Financial Corporation's Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions]

I would like to turn the conference over to your host for today, Mr. Dominic Canuso, Chief Financial Officer. Sir, you may begin.

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

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 management's 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 as 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 -- I'll turn the discussion over to Rodger Levenson.

Rodger Levenson -- Chairman, President and Chief Executive Officer

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.

WSFS had a very solid fourth quarter, reporting earnings per share of $1.20, return on assets of 1.73% and return on tangible common equity of 19.37%. 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 PPNR of $73.4 million represented an 8% increase over the prior quarter and translated into a very healthy 2.12% of assets. These results included the impact of interest income and fee accretion from PPP 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 the stable base margin, this translated into a net interest margin of 3.93%. 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 includes the multi-year delivery transformation project and continued talent acquisition, including a total of nine relationship managers who have joined WSFS over the past 12 months. Overall, credit trends remain stable. Total problem assets were flat to the third quarter.

In addition, delinquencies, nonperformers and charge-offs remain at low levels and loan modifications continue to decline to 1.4% of loans. ACL coverage of 2.73% excluding PPP was also flat to the third quarter. The provision in the quarter reflected economic forecast consistent with prior quarter's expectations and the overall stable portfolio performance. With our strong ACL and 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 2.9 million shares for a total of just over $116 million. Share repurchases remain a good use of excess capital with IRRs in excess of 20% at or near current price levels. We enter 2021 optimistic and well positioned for franchise growth and investment.

I will now turn it over to Dominic for the 2021 outlook overview. After Dominic's comments, the team will be available for Q&A.

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Thank you, Rodger. Good afternoon, everyone, and Happy New Year. As Rodger mentioned, we look toward 2021 with continued momentum and the organic opportunities ahead, while managing through the expectations of a slow and uneven economic recovery in COVID-19 succession. 2021 results will be impacted by the pace of the economic recovery, the timing of forgiveness of PPP loans, new PPP 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 the summary of our outlook on Slide 5 in the 4Q earnings supplement on the Investor Relations portion of our company website.

Our loan growth outlook is for mid-single digits when excluding both PPP and non-relationship run-off portfolios. Growth will primarily be driven by C&I, leasing and consumer loans. We anticipate approximately 90% of original PPP volume will be forgiven by year-end. For new PPP loans, we are partnering with a leading technology partner to support our customers and acquire new relationships, while new PPP loans will not be originated on our balance sheet, resulting deposits from these loans would be.

In addition, we anticipate approximately $200 million or 20% purposeful attrition in the 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 resulting from both additional PPP volume, government stimulus and the pace of the economic recovery.

Net interest margin outlook is in the range of 3.65% to 3.80%, which includes approximately 24 to 28 basis points of purchased loan accretion and approximately 6 to 10 basis points impact from PPP, including both interest income and fee accretion skewed toward the first half of the year.

The NIM range also includes an approximate 11 basis point negative impact from elevated customer liquidity. While we will optimize excess liquidity through our investment portfolio, it will generate lower yields in our loans and is dilutive to NIM. Our NIM range assumes deposit betas continue to improve in the first half of 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 and the lower mortgage fee revenue coming off a record year in 2020. Our diversified fee income result in a fee income ratio in the range of 26% to 28% and is supported by double-digit growth in wealth.

Provision cost expectations are in the range of $20 million to $25 million driven by loan growth. The combination of CECL and uncertain pace of economic recovery and the potential for additional government stimulus, all result in a very unpredictable credit environment. We're 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-60s 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 the full-year impact of new relationship managers across our lending businesses and continued investment in our delivery transformation, are all supported by business cases with strong return on investments and IRRs and are expected to increase future growth rates, improve 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% 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 as one of our primary vehicles for capital deployment. The pace and amount will be dependent upon a number of factors, including potential investment opportunities, WSFS 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 our region.

We will now open up the call for questions you may have.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Frank Schiraldi of Piper Sandler. Your line is open.

Frank Schiraldi -- Piper Sandler & Co. -- Analyst

Hi, good afternoon. Just a...

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Good afternoon, Frank.

Frank Schiraldi -- Piper Sandler & Co. -- Analyst

Just a couple of -- First, I wondered, Dominic, if you could talk a little bit more about the NIM mechanics for next year. And specifically, you talked about the slightly less in excess liquidity and continued reduction in deposit rates. I know, originally, when you did the Beneficial deal, the idea was the loan replacement rates as you switch from non-relationship to relationship commercial would create increased loan yields overall, is that still the case? And it doesn't -- wouldn't seemed to be given what your margin expectations are next year?

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Sure. Thanks, Frank. Yeah, clearly, as shown on Slide 6 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, that base NIM in the range of 3.35% to 3.42% next year. To your question regarding portfolio migration, as we focus on continuing to grow the portfolio and improve the mix toward relationship-based higher yielding C&I that continues to be true. The challenge in this environment is that loans that are paying off at are a higher rate than loans being booked and so that's skewing in the short-term, the -- that migration benefit. But as rates stabilize and in fact improve, you would see that more prevalent in our base NIM going forward.

Frank Schiraldi -- Piper Sandler & Co. -- Analyst

Okay. So with the rate picture as it is, which of course, you point out that's the outlook for 2021, the replacement rates -- setting aside PPP the replacement rates on the loan book as you mix shift will continue to eat away at yields, is that fair?

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

That is correct. It would continue to put pressure on the base NIM, but that would be offset by improved customer funding cost and the portfolio migration.

Frank Schiraldi -- Piper Sandler & Co. -- Analyst

Right, OK. And then, in terms of the problem, total problem loans have been pretty stable and obviously, the COVID modifications continue to fall. Just wondering, how do you see -- do you think that those classified criticized balances -- do you assume that they'll be fairly flat for the next few quarters until you get better outlook on the economic side or do you start to see that fall as we start to see charge-offs pick up? Just wondering, how -- and timing of what we should look for and how you see those balances playing out directionally over the next few quarters?

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Sure. I'll pass it off to Steve Clark, to talk a little bit about what he is seeing 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 CECL on the provision.

Steve Clark -- Executive Vice President and Chief Commercial Banking Officer

Yeah, Frank, this is Steve. I would just say that, as we've spoken in past quarters, we really have completed our review of risk ratings and the migration was minimal in the fourth quarter kind of consistent with our expectation. We continue on a quarterly basis to review all of our risk ratings, so certainly, any improvement or deterioration will be dependent upon the economy and 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 ratings.

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

And Frank, just to kind of share thoughts around how CECL considers this. As we've laid out on Slide 8 in our materials, of the $229 million of ACL that we have currently, around $100 million or 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 have been reserved against. But as Steve mentioned, we've gone through the significant reviews and now it's just based on quarterly performance.

Frank Schiraldi -- Piper Sandler & Co. -- Analyst

Okay. And then, just a quick one on comp. I think you had said that the fourth quarter was impacted by incentive comp. And just wondering, as it pertains to modeling for next year, what a reasonable run rate would be for the comp line?

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Sure. Well, as I mentioned, our compensation and salaries would continue to increase as we 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 metrics on a normal -- more normalized basis. Hopefully that helps answer your question.

Frank Schiraldi -- Piper Sandler & Co. -- Analyst

So you do think that the comp will migrate higher from -- if I just compare 4Q to the run rate beginning next year that's a decent place to start, and then to your point, you continue to invest in new lenders.

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

That's correct.

Frank Schiraldi -- Piper Sandler & Co. -- Analyst

Okay. All right. Thank you.

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Thank you, Frank.

Operator

Thank you. Our next question comes from Michael Perito of KBW. Your line is open.

Michael Perito -- Keefe, Bruyette & Woods, Inc. -- Analyst

Hey, good afternoon, guys. Happy New Year.

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Hey, Michael.

Rodger Levenson -- Chairman, President and Chief Executive Officer

Hey, Mike.

Michael Perito -- Keefe, Bruyette & Woods, Inc. -- Analyst

Couple of things. Rodger, I was wondering if maybe just to start here before we -- I'll 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, how do you -- where should we think about you guys kind of -- from here in terms of -- I know you guys typically layout a multi-year internal strategic plan and I mean, can you maybe just give us an update about how you're thinking about that process? I mean, is it 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 was laid out 12 months ago after the kind of the obscure 12 months here? Just any thoughts or insights around how you guys are thinking about the next handful of years and planning and after the year we just had would be great to start.

Rodger Levenson -- Chairman, President and Chief Executive Officer

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 situation. So as we move through this year as it's 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 CECL that weren't contemplated on its 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 an updated three-year plan when we get to the end of next year. I would say, overall, though Mike, the takeaway I would want everybody to come away with is, everything that has occurred this year for us just confirms the strategic rationale of the combination with Beneficial and the very large opportunity we see that that presented to us. We 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.

Michael Perito -- Keefe, Bruyette & Woods, Inc. -- Analyst

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 in the slide deck, but after that -- after this -- after fourth quarter with share repurchases, there actually seems like there might be some line of sight depending on your activity in the next quarter or two to kind of get into a more normalized capital basis than the levels you were at post-Beneficial. Just can you remind us how you think about the capital levels at a more normalized level for this balance sheet at this time?

Rodger Levenson -- Chairman, President and Chief Executive Officer

Yes. So as we've talked about -- as we've laid out the impact of the reserve build and the capital buffers that we have, we remain over our internal bank and holding company capital level targets and we like to have a buffer above that. Obviously, the buyback program in the fourth quarter significantly reduced those buffers, but we still have our ways to go. And there's a lot of things that go into the mix there in terms of, as Dominic outlined, what we see as potential opportunities to invest in the business, what's going on with the credit, whether it's 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 is still some more excess capital for us to deploy within the construct of all those dynamics.

Michael Perito -- Keefe, Bruyette & Woods, Inc. -- Analyst

Great, helpful. Thank you. And then, just two, my own questions for Dominic. One, just the noninterest income outlook commentary, does that -- I think all inclusive flat year-on-year, is that based around approximately $169 million kind of core fee number for 2020 or is there other adjustments to that that we should be thinking of when you guys lay that out?

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

No, I think the number you just mentioned is in the ballpark of growth. I think the two significant impacts that are in play, it's first, 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 as mortgage banking has been around mid-to-high teens of our total fee income and clearly then would have an impact. So we've strip those two out to provide an outlook on the remaining fee trends.

Michael Perito -- Keefe, Bruyette & Woods, Inc. -- Analyst

Got it. And then, as I think about the balance sheet mix and -- it's -- obviously, there will still be quite a bit of run-off in 2021 as you guys laid out, but if we -- any initial thoughts, Dominic, I realize we're moving out a little bit here. But -- and I'm just kind of piggyback some earlier question. But as we get into 2022, I mean, do you kind of see that -- assuming the rate environment is pretty similar, I mean, do you kind of see that becoming the year where some of the remixing will take hold in the margin in terms of kind of getting out of some of the stuff you're running off and reshuffling into the commercial lending that you guys are targeting, but do you think that that's probability that the kind of impact to 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?

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Yeah. 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 rate, you'll see the expansion of the NIM based on those relationship-based spread that we have in the marketplace. And then, it would continue to accelerate from there, particularly, as we focus on the C&I and even some of our leasing growth that we see with high-single digits, low-double digit yields from that portfolio as well.

Michael Perito -- Keefe, Bruyette & Woods, Inc. -- Analyst

Great. Thank you, guys. Appreciate it.

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Thanks, Mike.

Operator

Thank you. Our next question comes from Erik Zwick of Boenning & Scattergood. Your line is open.

Erik Zwick -- Boenning & Scattergood, Inc. -- Analyst

Good afternoon, guys.

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Hey, Erik.

Rodger Levenson -- Chairman, President and Chief Executive Officer

Good afternoon, Erik.

Erik Zwick -- Boenning & Scattergood, Inc. -- Analyst

If I could just -- starting with the loan growth. I'm curious where the pipeline sits today versus maybe three months ago and have you seen any improvement in that over the past month or two since we've gotten some progress on vaccine approval and distribution or what may drive that to help support the outlook that you've talked about previously?

Rodger Levenson -- Chairman, President and Chief Executive Officer

Sure. Steve, do you want to handle that question.

Steve Clark -- Executive Vice President and Chief Commercial Banking Officer

Yeah, sure. Hey, Erik. So the commercial pipeline, we look at it like a 90-day weighted average, is up from where it was a quarter ago. It's about $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 million, $165 million going back a quarter or two. So we certainly see increased activity. For us, it's really market share opportunities related to in part our new relationship managers that have joined us and in part to some of the disruption we're seeing at some of the bigger bank competitors. So it's really not related to economic growth, it is really related to market share opportunities.

Erik Zwick -- Boenning & Scattergood, Inc. -- Analyst

Thanks. I appreciate the color there. And then, just thinking about any particular industries 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?

Steve Clark -- Executive Vice President and Chief Commercial Banking Officer

So I think there is no specific industries in the C&I space. We are generalist and we look at all industries across the board. In the CRE side, we continue to see nice opportunities in multi-family space and residential -- land and residential vertical development. So those segments continue to be active. And I apologize, I forgot the second half of your question.

Erik Zwick -- Boenning & Scattergood, Inc. -- Analyst

Just in terms of customer size and loan size, have you had success kind of moving up market now that the balance sheet is larger?

Steve Clark -- Executive Vice President and Chief Commercial Banking Officer

Yeah. So we don't -- we're not focused on moving up market per se. Our core business is privately held companies with revenues in the commercial bank range from $3 million to $5 million up to about $150 million, that is our market. We really don't view us as going above that, we really think that space, privately held companies gives us the best opportunity to really deliver all of our products and services across the bank.

Erik Zwick -- Boenning & Scattergood, Inc. -- Analyst

Got it, thank you. And then, switching gears a little bit. In terms of the Delivery Transformation, as you look at 2021, are there any particular areas of the organizations or businesses lines that are targeted for investment this year? And what specific kind of products or systems are you looking to invest in?

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Sure. Thanks, Erik, this is Dominic. Yeah, I would just remind everyone that, as we've said, this is Delivery Transformation initiative. These are just a few projects, but significant investment across the board, including customer-facing risk modules and a back office efficiency. So it's really across the board and they're intended to provide value across the entire organizations, including the implementation of CRM tool specifically, Salesforce across the bank this year. Enhancements in nCino for customer-facing, speed to market and tying that into CRM, some other infrastructure capabilities like something like MuleSoft to ensure that our technology stack is compatible across all these types of investments, next-generation sales and service for on-boarding and support of both our retail customers, and in the branch, online, on the phone and even small business.

So it's really a significant investment across all our platforms to really drive growth and efficiency going forward.

Erik Zwick -- Boenning & Scattergood, Inc. -- Analyst

Thanks, Dominic. And then, just kind of changing gears again to asset quality and the $15 million multi-family 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 the total relationship and what is the plan to kind of manage that at the...

Steve Clark -- Executive Vice President and Chief Commercial Banking Officer

Yeah, Erik, this is Steve again. So that particular relationship, it is one CRE relationship consisting of two loans that total $15 million and the properties are actually multi-family, student housing located in a very desirable section of Philadelphia. So 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.

Erik Zwick -- Boenning & Scattergood, Inc. -- Analyst

Thanks, Steve. And 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. You didn't increase the common dividend in 2020, what would prompt you to potentially do that in '21 or in the years ahead?

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Sure, Erik, this is Dominic. So just to restate our long-stated practice with regard to capital deployment is, 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 in capital and positive share price to redeploy that through incremental share repurchases.

Clearly, this is an unique environment and we would want to see the sustainable earnings that we anticipate coming out of 2020 into 2021 and then we'd look to maintain those relationships of returning 25% of that core capital between the share buyback and the dividend moving forward, as we had in the five years leading up to 2020.

Erik Zwick -- Boenning & Scattergood, Inc. -- Analyst

Great, thanks for taking my questions this afternoon.

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Thanks, Erik.

Operator

Thank you. Our next question comes from Russell Gunther of Davidson. Your line is open.

Russell Gunther -- D.A. Davidson & Co. -- Analyst

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 '21. Just -- are you able to share any colors to the fundamentals behind, that would support that growth rate?

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Art, do you want to take that question?

Arthur J. Bacci -- Executive Vice President and Chief Wealth Officer

Sure. Hey, good afternoon, Russell. Our institutional trust business has grown double-digit for the last eight years and right now I can tell you that January, typically is a slower month after the rush to securitize it in the year, but this January continues to be fairly active with tax law changes proposed -- potentially out there and gifting rules potentially changing.

There is still a very active personal trust activity and 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 -- on the advisory side, the AUM was at a record high for us in the market at the end of the year was -- our 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 and then you'd add on hopefully, some good net client inflows and I feel pretty confident that double-digit is achievable.

Russell Gunther -- D.A. Davidson & Co. -- Analyst

I appreciate the color there. And switching gears a bit, Dominic, I think I heard you say $200 million is the targeted run-off portfolio shrinkage for this year. And if I heard that right, it's a bit of a deceleration from a more recent clip. So just curious as to what's driving that assumption?

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Sure. I think, it would be relatively consistent trends, as we've seen in that run-off residential mortgage portfolio, but some of the other categories, the participation portfolios and leverage loans had chunkier larger loans that had either refinanced or paid-off over the last few years that will not reoccur. So when you take the blended portfolio as it stands today, we'd like to see somewhat of a lower run rate than we've seen in the last few years. Again though, that's contingent upon I think a significant portion to what will happen with the residential mortgage market.

Russell Gunther -- D.A. Davidson & Co. -- Analyst

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?

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

So we don't share that level of detail. What we can say, and clearly, you've seen in our credit metrics that the performance continues to be relatively stable. I think there is still a lot in play with regard to the pace of the economic recovery. What we have seen in the last few quarters is that the major forecast for GDP and unemployment are stable to slightly improving, so that's helping. But ultimately, what 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.

Russell Gunther -- D.A. Davidson & Co. -- Analyst

Okay. No, I get that. And then, last question, we're back to capital deployment. The three-year strategic plan was mentioned, and I believe, the one that we're currently in and at some point articulated. Remaining on the sidelines from the depository M&A perspective, is that still the case or are there opportunities that may present themselves where WSFS would be willing to announce a depository deal in 2021?

Rodger Levenson -- Chairman, President and Chief Executive Officer

Yeah. So this is Rodger, I'll jump in on that, Russell. So it's -- as we've said 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 size and scale to compete with the big guys, that's a very unique market position. So 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 the 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 opportunity.

Russell Gunther -- D.A. Davidson & Co. -- Analyst

Understood. Okay, great. Rodger, Dominic, everybody, thanks for taking my questions. That's it for me.

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Thanks, Russell.

Operator

Thank you. [Operator Instructions] Our next question comes from Brody Preston of Stephens Inc. Your line is open.

Brody Preston -- Stephens Inc. -- Analyst

Hey, good afternoon, everyone.

Rodger Levenson -- Chairman, President and Chief Executive Officer

Hey, Brody.

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Hey, Brody.

Brody Preston -- Stephens Inc. -- Analyst

Hey, I just wanted to circle back on a couple of fee income businesses, Dominic, just on Cash Connect. You all have done a pretty good job in terms of the unit growth there, in terms of the ATMs and particularly on the smart safe side of the business. But net revenue trends seemed relatively flattish from 3Q to 4Q, how should we be thinking about the revenue growth trajectory of that business in 2021, especially now that interest rates definitely come to bottom?

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Sure. Good question. So, yes, we continue to see top-line opportunity particularly with regard to units and total cash serviced. In particular, we're seeing outsized growth continue in reconciliation products, which bring higher yielding returns to the division and to the bank. Year-over-year though, clearly, the impacts of COVID and the lower interest rate will have somewhat of an impact. So 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 won't necessarily see 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 ROAs consistent with 2020.

Brody Preston -- Stephens Inc. -- Analyst

Okay, OK. Thank you for that. And then, on the wealth side of the business, obviously, continued strong growth there and I appreciate some of the guidance, but I just wanted to ask about one of the hires you made earlier in the summer, Salvatore coming over from PNC, has 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 and bring over some of his old book?

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Steve, do you want to start with just on-boarding and what you see in the future and I think there is a tremendous overlap with Art's and maybe you can share his thoughts as well.

Steve Clark -- Executive Vice President and Chief Commercial Banking Officer

Yes. So as it relates to Sal Patti, he joined us in August of last year and after 23 or so years at a competitor bank, the last three or so of those years, he ran the wealth business for that bank, but prior to that and all of his career prior, he was really in the commercial lending, commercial banking space. So his activity -- while he has a kind of a foot in both commercial and wealth, 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 is in wealth's forecast.

Arthur J. Bacci -- Executive Vice President and Chief Wealth Officer

Brody, this is Art. We do work closely with Sal and I do think there'll be some benefit to the wealth team from Sal. And I think one of the nice things I'm seeing is just the coordination and the communication, the teamwork that's really going well between the commercial RM and the wealth team and it's really generated a very nice strong pipeline coming into 2021.

And we, like commercial, has spent a good portion of the fourth quarter talking to private bankers and advisors and the amount of the year and has passed that we probably will restart some of those conversations. So I think, in general, we have the opportunity to continue to invest in talent in the wealth. And with the coming together with commercial and being able to the go get clients with a offering that's both for their business and for them personally, I think is a great opportunity for us.

Brody Preston -- Stephens Inc. -- Analyst

Okay, thank you for that. And then, one of the, I guess, the highlights of the Beneficial deal was the ability to cross-sell some of the fee income line items that you have that Beneficial didn't necessarily have and part of that was mortgage and obviously, you and others have had a great year there, but I wanted to ask have -- did -- were you able to sort of penetrate that market and cross-sell into Beneficial's customers and did, I guess, maybe the low rate environment help pull that through or is there still more wood to chop there where 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?

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Sure. Brody, this is Dominic. Yeah, there is a tremendous opportunity ahead, both from not only cross-selling to existing and legacy Beneficial customers who did not have those products served to them at Beneficial, but across our extended footprint due to that combination in the Greater Philadelphia markets and New Jersey, South Jersey, Southeastern Pennsylvania and Delaware.

And so, while 2020 was disruptive and 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 overall volume in customer service. We still see the opportunity, whether it's credit cards, small business, SBA, private banking, etc. a tremendous opportunity ahead, we're still very focused on that.

We had made significant investments in staffing and capabilities in 2019 and 2020 to take advantage of those opportunities and we were prepared, if you recall, right when COVID hit was our one-year anniversary of the close of the combination and it's 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, the opportunities ahead are as big if not bigger than what we had anticipated from the combination.

Arthur J. Bacci -- Executive Vice President and Chief Wealth Officer

And Dominic, this is Art, if I may add on. We added four advisors at the end of 2019 in anticipation of being able to work with the Beneficial branch network. Clearly, COVID with the shutdown of the branches or restricting access to the branches impacted that, but we continued to do outreach and email and we've really seen the benefit of that as the branches opened up in the second half of the year. WIG investment group AUM grew well-well into the double-digits as we saw the relationships with the Beneficial branches really start to kick in. So really hopeful that we continue that momentum into 2021.

Brody Preston -- Stephens Inc. -- Analyst

Okay, great. And then, last one for me. Dominic, I'm sorry if you covered it already, but the margin guidance, it seems to imply less of a liquidity drag in 2021 than what happened in the fourth quarter. And so, should the expectation be for you to deploy some of the excess liquidity that you got in this quarter into -- further into securities balances or is it earmarked for -- obviously, it would be better for loan growth, but just wanted to get a sense for what the plan is for the excess liquidity moving forward?

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Sure, yeah. As -- and even in 2020, we increased the size of our investment portfolio about 20% year-over-year and we'd see continued opportunity to do that to leverage this excess liquidity in a disciplined and appropriate manner. So that's where we would deploy it and then put it to work. Clearly, the pace of recovery customer behaviors and spending with those deposits and any 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.

Brody Preston -- Stephens Inc. -- Analyst

Yeah. All right, great. Thank you all for taking my questions. That's it and I appreciate it.

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Thanks, Brody.

Operator

Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to Rodger Levenson for any closing remarks.

Rodger Levenson -- Chairman, President and Chief Executive Officer

I just would like to say thanks for everybody for joining us on the call today. Dom 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.

Operator

[Operator Closing Remarks]

Duration: 47 minutes

Call participants:

Dominic C. Canuso -- Executive Vice President and Chief Financial Officer

Rodger Levenson -- Chairman, President and Chief Executive Officer

Steve Clark -- Executive Vice President and Chief Commercial Banking Officer

Arthur J. Bacci -- Executive Vice President and Chief Wealth Officer

Frank Schiraldi -- Piper Sandler & Co. -- Analyst

Michael Perito -- Keefe, Bruyette & Woods, Inc. -- Analyst

Erik Zwick -- Boenning & Scattergood, Inc. -- Analyst

Russell Gunther -- D.A. Davidson & Co. -- Analyst

Brody Preston -- Stephens Inc. -- Analyst

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