Please ensure Javascript is enabled for purposes of website accessibility

WSFS Financial Corporation (WSFS) Q3 2021 Earnings Call Transcript

By Motley Fool Transcribers – Oct 22, 2021 at 5:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

WSFS earnings call for the period ending September 30, 2021.

Logo of jester cap with thought bubble.

Image source: The Motley Fool.

WSFS Financial Corporation (WSFS -1.04%)
Q3 2021 Earnings Call
Oct 22, 2021, 1:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, and thank you for standing by. Welcome to WSFS Financial Corporation Third Quarter 2021 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Dominic Canuso, Chief Financial Officer. Please go ahead.

10 stocks we like better than WSFS Financial
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* 

They just revealed what they believe are the ten best stocks for investors to buy right now... and WSFS Financial wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of October 20, 2021

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

Thank you, Charlie. 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 I begin with remarks on the quarter, 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 included 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.

Good afternoon, everyone and thank you for joining us on the call. Our earnings release and investor presentation which we will refer to on today's call can be found in the Investor Relations section of our Company's website.

We had another solid quarter, consistent with the first half of the year, driven by our diversified business model and the strength of our strategic position in our marketplace. Local economic activity continued to rebound throughout the summer and into the fall across our footprint. Bolstered by very positive sentiments from our customers, growth in our commercial loan pipeline, continued strength across our fee-based businesses and positive credit trends.

Highlighted on slide 4 of our investor presentation, third quarter core net income was $56.7 million, a $1.19 earnings per share and a 1.48% return on assets. Reported net income was $2.3 million lower than core results, primarily driven from corporate development cost related to the BMT combination and in line with original deal model expectations.

Excess liquidity continues to have a significant influence on our near-term performance, including impacts on our net loan growth, deposit levels, growth in our treasury investment portfolio and diluting NIM, PPNR as a percentage of assets and ROA. As seen on slide 5, net growth in loans in the quarter when excluding PPP and purposeful run-off portfolios was down $80 million. We had another strong quarter of new commercial loan growth originations near $400 million as seen on slide 6. This is relatively consistent with 2Q, continuing our recovery nicely from prior year lows and almost fully back to pre-pandemic levels. And our loan generation should grow from those levels that we were before the full opportunities of beneficial -- the benefits from our investment in delivery transformation, an additional strategic RM hires.

However, existing commercial loan payoffs remain elevated in this environment. With heightened payoffs in construction and commercial mortgages along with a reduction in our held for sale resi portfolio in the quarter. Consumer loans grew 5% annualized in the quarter as we launched our new digital consumer lending product, powered by Upstart. Our lending partnerships, including Spring EQ, LendKey, cred.ai and Upstart now account for almost $500 million in total consumer loans.

Customer deposits grew another $64 million in the quarter from seasonal growth in municipal and public funded account. Customer deposits are now up 14% or $1.6 billion year-over-year and up 35% or $3.3 billion from March 2020 at the onset of the pandemic. This excess liquidity is the positive outcome from our strong response to our customers' PPP needs, our relationship-based business model and the diversity of our deposit base with over 50% of deposits coming from commercial, small business and wealth management.

Total deposit costs are now at a very low 10 basis points. And our loan-to-deposit ratio is at 63%, providing significant capacity for future low cost loan growth. We have put this excess liquidity to good use by paying down over 90% of our wholesale funding over the past six quarters, and over doubling our treasury investment portfolio from $2.1 billion at the beginning of 2020 or 17% of assets at the time, the $4.3 billion currently, which is 28% of assets. These additional investments are comprised of high quality marketable investment grade securities, consistent with our overall investment portfolio strategy.

In the quarter, excess liquidity, including the impacts of these incremental investments reduces ROA by 23 basis points and net interest margin by 61 basis points. We expect some additional treasury purchases in 4Q to bring the investment portfolio asset mix into the low-30s as a percentage of assets, which will blend down to the mid-20% post BMT. We anticipate the impact on an interest margin from excess liquidity come down to approximately 50 basis point by the beginning of 2022 and down from there as excess liquidity runs down and the cash flows from the investment portfolio is consumed by net loan growth that we anticipate and are well positioned for.

Net interest margin in the quarter detailed on slide 6 is 3.05%, which includes 18 basis points of purchase accounting accretion and 5 basis points of PPP income. Both more than offset by the 61 basis points of negative impact from excess liquidity.

Excluding PAA, PPP and excess liquidity underlying NIM increased 2 basis points over prior quarter. Third quarter fee revenue again demonstrated the strength and diversity of our fee products and services, especially in this lower interest rate environment. Core fee revenue was a healthy 30% of total revenue when excluding PPP and supported by 16% year-over-year growth in wealth management and 10% year-over-year growth from Cash Connect. These were offset by lower mortgage banking fees as the consumer refi market slowed from record highs in 2020.

As seen on slide 9 and 29, overall credit quality continue to trend favorably following the peaks in late 2020. Criticized assets were down $93 million in the quarter to $532 million and down $233 million or 30% from the peak. And delinquencies were down to 0.57% of assets from the peak of 0.8% in late 2020.

Combined with a continued positive economic outlook, the ACL declined $27.5 million to $104.9 million or 1.30% of assets, which is a 1.58% when including estimated remaining credit marks from acquired portfolios. We continue to generate significant capital through earnings and have a strong capital position, heading into the combination with BMT, with the TCE of 9.17% and bank CET1 ratio of 14.59%. Our Board of Directors approved a quarterly cash dividend of $0.13 per share of common stock and no shares were purchased in the quarter as we have paused repurchases until the close of the BMT transaction.

We are optimistic and excited about our future prospects given our unique competitive and strategic position in our market, the strength of our national fee-based businesses along with the upcoming combination with BMT. Regarding BMT, on July 21, the OCC, our primary regulator approved the transaction. As we await final regulatory approval from the Federal Reserve in Washington, our highly engaged teams at BMT and WSFS continue to work together diligently preparing for quick close of the transaction and the bank conversion and integration planned for early 2022.

Thank you. And we will be happy to take your questions.

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from the line Michael Perito of KBW. Please go ahead.

Michael Perito -- KBW -- Analyst

Hey, guys. Good afternoon. Thanks for taking my questions.

Rodger Levenson -- Chairman, President and Chief Executive Officer

Hey, Michael.

Michael Perito -- KBW -- Analyst

Few things I wanted to hit. First is on loan growth. I realize the environment and with the pay downs is a little uncertain, but you do have pretty good line of sight on kind of the plan, run offs and when that should run its course. And I guess just that the simple question is, I mean when do you think it's going to start to get realistic to assume you guys can return to a net growth posture [Phonetic]. I mean I realized the origination side of that might be a little bit more complicated. Are we taking like, middle of next year or do you think post [Technical Issues] could push it out further than that? Just curious if you will offer any color on that.

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

Michael, this is a Steve Clark speaking. So actually the production side of our business we feel really, we're very pleased with the production side. As Dominic mentioned, the fundings in the third quarter, following a really strong second quarter and we definitely are seeing increased activity since September, more opportunities coming our way.

So we feel good about our pipeline and production forecast. The commercial 90-day weighted pipelines, about $250 million. We have a small business, fourth quarter pipeline of another $30 million. When you look at the combination of that along with our strategic partnerships on the consumer side and what NewLane Finance is generating, we feel that the production will be there. What we cannot control really is the pay-off side. So your question is really hard to answer. But we think we're really positioned well to take advantage of our current market position here in the greater Philly area.

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

And Michael, this is Dominic. Just to add to that pertaining to your question around the run-off portfolios. We had mentioned this as of last quarter that really all of the commercial lending that we acquired from -- beneficial that was non-relationship base has pretty much run its course at this point. So we don't anticipate really a net impact further from that. What's really remaining is the residential mortgage, which will run off based on its average 10-year life and impacts from the resi mortgage.

On the net loan growth side, as Steve mentioned, lots of opportunities on commercial as we discussed, both from the beneficial integration that we really never took full opportunity of because of COVID, the upcoming BMT opportunity, investments in delivery transformation and successful hires over the last few years, but round that out with continued additions of strategic partnerships and products on the consumer side, including the Upstart product we just launched in the third quarter, along with opportunities we see in our NewLane leasing business. So across all of our platforms, we see a lots of positivity and activity from our customers and anticipate that to lead to net growth in the future.

Michael Perito -- KBW -- Analyst

Helpful. And the reason to phrase the question like that, alluding like two question is just from [Phonetic] post Bryn Mawr right, I mean obviously, I think the expectation that you guys are guiding to is that the core portfolio to grow and with all the contributors that you guys just name, that seems very reasonable, but assuming that the net, there is an overly robust for the next one, two or three quarters. I mean is it fair to assume that the buyback authorization will be used as it has been historically to deploy capital until there is growth that requires the excess capital?

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

Yeah, great question. As we've said we have paused our share repurchase program and we are generating significant in capital. We're pleased with the amount of capital that we have, going into the combination. As we have done historically, when we look at excess liquidity, we look at the economic environment, our organic opportunities and inorganic opportunities and we believe that we'll see in a very strong position to reengage with share repurchases after the close and still have capital remaining for the investment on the organic side of the loan book.

Michael Perito -- KBW -- Analyst

Helpful. And then just last one for me, I mean we saw a bank merger. I think they had pushed back their closing date waiting for the Board of Governors from the Fed to give them the final spin off. You guys still committed -- you still indicated the Q4 close was expected, but just curious if there is any kind of insights or color or concern that track [Phonetic] as you wait for that final approvals?

Rodger Levenson -- Chairman, President and Chief Executive Officer

Hey, Michael, it's Roger. And the short answer your question is, no. We said early fourth quarter. And as we outlined in Dominic's comments, we are pleased that we received the OCC approval in mid-July. As it relates to our Fed approval, we understand that we provided all the information that they need to vote on the application at some point, but I'm sure you've seen, there are others that -- the Fed is in the process of evaluating. So they're just going through their process. We're respectful of that. And I think the important thing is, once we receive that, we're ready to close immediately and most importantly the integration is going really, really well. The teams have come together well. We are moving full speed ahead and planning for that done, the conversion to happen in early 2022 and continue to move in that direction.

Michael Perito -- KBW -- Analyst

Perfect. That's really helpful insight. Thank you, guys for taking my questions. Appreciate it.

Operator

Your next question comes from the line of Erik Zwick with Boenning & Scattergood. Please go ahead.

Erik Zwickx -- Boenning & Scattergood -- Analyst

Hey, good afternoon, guys.

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

Hey, Erik

Erik Zwickx -- Boenning & Scattergood -- Analyst

I just stick on the loan growth theme for a second. Dominic, in your comments you mentioned, I mean, seeing some good growth in the commercial pipeline. I think Steve you added some commentary there. I wonder if you could add maybe just a little bit more color in terms of that -- maybe types of industries that are supporting the growth and strength there as well as kind of the average yields that you're seeing in the pipeline that you expect to bring on to the balance sheet at some point?

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

Yeah. So of our existing pipeline on the commercial side, about $174 million of that is C&I. So we're really pleased to see that versus about $77 million in CRE. So, as you know, our strategic focus continues to be C&I and that's where we're seeing really across a broad spectrum, no specific industry. On the CRE side, we still are seeing many opportunities in the multifamily space and in the kind of residential development sold units, some A&D [Phonetic] work, but really all underwritten around take on [Phonetic] agreements with national builders. So there is kind of the two sectors that we're seeing. On the yield side, for the quarter, new loans originated and funded during the quarter had a yield of about $379 million versus kind of payoff in the quarter of $358 million. I think as important to me year-to-date, those new fundings yields have been about $365 million. So we're targeting mid-3s versus payoff that year-to-date actually have been higher as you would expect of a $393 million.

Rodger Levenson -- Chairman, President and Chief Executive Officer

Yeah so, Erik. This is Rodger. And I just add into some additional color and maybe reinforce a couple of the points on the loan growth outlook. So as you heard from both Dominic and Steve, that we're very fortunate that while staying consistent with our relationship-based strategy, focus on this region, we have multiple levers to pull on the loan growth side and that we're very optimistic about the combination with BMT. Offers were made to all of their lending team to come over with us. There is -- I think, as I mentioned, there's a lot of good and positive momentum in the integration planning with those teams and having a bigger balance sheet and more robust product set, I think, bodes well for growth -- from those folks.

And then, just as a reminder, the 11 lenders that we've brought over, many of them were just crossing the one year anniversary in this quarter. And so their business is building and growing. And so I think all of that will help to contribute to the loan growth going forward.

Erik Zwickx -- Boenning & Scattergood -- Analyst

That's great. I really appreciate the detail there. And with regard to the new Upstart partnership, any color you can provide in terms of what you expect for average loan size, credit risk profile and just kind of the growth outlook going forward?

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

Yeah, sure, so obviously, it's in the early stages. This is a primarily unsecured product and as we've seen is more of a debt consolidation. The yields are in the low-single -- low-double digits, so 12% to 14%. Average loan is about 15,000 [Phonetic]. All of this is within our footprint, utilizing our underwriting approach and strategy, applying [Phonetic] Upstart's AI proprietary scoring system. And all with the opportunity to build into further relationships beyond the loan into deposits, mortgage and deepening the relationship across WSFS.

Erik Zwickx -- Boenning & Scattergood -- Analyst

Thanks, Dominic. And just one last one for me. Maybe for you again. Do you have the remaining -- for the PPP loans, the remaining fees as well as maybe your expectation for forgiveness timing.

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

Yeah. So we anticipate almost all of the remaining PPP loans, the $67 million at quarter end to be forgiven or in process of forgiving. At this point in time, they will begin to accrue interest, but there could be -- maybe $5 million to $10 million that ultimately doesn't get forgiven and stays as loans. The impact going forward from the unaccredited fees will be nominal, around 1 basis point beginning in the fourth quarter and going forward.

Erik Zwickx -- Boenning & Scattergood -- Analyst

Okay, thank you. That's all from me today. Thanks for taking all my questions.

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

Thanks, Erik.

Rodger Levenson -- Chairman, President and Chief Executive Officer

Thanks, Erik.

Operator

Your next question comes from the line of Russell Gunther with D.A. Davidson. Please go ahead.

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

Hey, good afternoon, guys.

Rodger Levenson -- Chairman, President and Chief Executive Officer

Hi, Russell.

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

I wanted to ask, I always appreciate the slide 5 that tracks the loan growth, the moving pieces. Could you remind us as the beneficial commercial run-off is almost done, will there be any add to either commercial or resi run-off portfolios once the Bryn Mawr transaction is closed?

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

Sure. Yeah. There will be some additional resi mortgage added to this run-off population as BMT continues to originate and hold assets versus our originate and sell. There is very small pockets, nominal amounts of C&I that we believe would be non-relationship based or not on strategy. So probably $50 million to $100 million in that range.

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

Okay, got it. Thanks, Dominic. And then you guys commented about strategic RM hires. I think Rodger mentioned 11 just crossed, so one year anniversary. If could you talk to any additional add in the quarter, where these guys are kind of coming from in terms of contributions across the loan portfolio and geographies? Any planned additions?

Rodger Levenson -- Chairman, President and Chief Executive Officer

So, Russell, it's Rodger, again. I just want to make clear, we hired 11, but many of those 11 were just crossing the one year anniversary. Some had been here a little bit longer. But I think the broader point what's really positive about this is, we're seeing this impact all of our businesses, so -- and all of our geographies. So we've added people in C&I, in the City of Philadelphia, in the western suburbs, in South Jersey, and we continue to receive a lot of -- and we've also hired folks in our private banking group.

And we continue to receive a lot of inbound inquiries, particularly from RMs that are working at larger banks that either are going through some of their own changes or for some reason they feel like they don't have the ability to serve their customers in a way that they used to serve. But I would tell you our bar is pretty high. We clearly are only going to bring over people that we feel are consistent with our business model, relationship driven and that can bring a book of business, because of the significant investment, we already have.

So we continue to have those conversations. We added another one this recent quarter and we will continue to talk to folks moving forward. But I would tell you and there is a slide in there that outlines the commercial business that we have. We have just significant people in the street in this region right now and I wouldn't expect that you would see a significant add to that going forward unless some very unique opportunity came about. Post BMT, we just feel really good about the team that we have and the opportunity we have to grow the loan book.

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

I appreciate the color, Rodger. Thank you. And then just final loan growth question. You guys mentioned total consumer loans, about $500 million from your digital partnerships. Could you kind of frame up what you think the aggregate growth rate could be from those partnerships going forward?

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

Yeah. We do anticipate the opportunity to continue to grow those. We haven't necessarily communicated our 2022 plan and assumptions yet, which we will along with fourth quarter results in January. But we see tremendous opportunity to build relationships through those partners. Obviously the Spring EQ product is a function of the mortgage market. LendKey, a function of the student lending. But we do see the opportunity with Upstart to see some incremental net growth to that population and then to continue to build those relationships from there.

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

Okay, great. Thanks, Dominic. And then just final question. Rodger, you mentioned the expectations to kind of stick with the early next year conversion of Bryn Mawr. So I just want to make sure you guys are still comfortable with the timing and magnitude of cost savings there? And then as a follow-up, any color you can provide in terms of framing up where that expense run rate could shake out as cost saves are realized and franchise investment continues? Thank you.

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

Sure. This is Dominic. I'll start on the costs saves. As part of the combinations modeling and expectations, really the bank conversion integration starts off the phasing of the cost, primarily with the branch closures and consolidations, followed by some staff savings and ultimately technology saves and those well curve throughout the year with the expectation by the end of the year we're heading close to a 100% of the anticipated cost saves that we've communicated as part of that combination such that in 2023 we would have really the full impact of those days.

Rodger Levenson -- Chairman, President and Chief Executive Officer

And Russ, I would just add to that, the confidence we have on the timing in addition to what's going on with the regulatory approval is, we have a playbook and that playbook has gotten better as we're going through these combinations including with Beneficial, which is actually a little bit larger in terms of size than Bryn Mawr is. And as I said, the teams have been working together really, really well now for over eight months on planning for this. So sitting here today, we feel good about that -- about that timeline.

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

Thank you, both for taking my questions.

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

Thank you.

Operator

Your next question comes from the line of Brody Preston with Stephens Inc. Please go ahead.

Brody Preston -- Stephens Inc. -- Analyst

Hey, good afternoon, everyone.

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

Hey, Brody.

Brody Preston -- Stephens Inc. -- Analyst

Hey, Dominic I just wanted to ask on the provision guidance, the negative $90 million -- the negative $100 million in the year. So, year-to-date, you all are at negative $109 million on the loan loss provision. And so the guidance would seem to imply that excluding Bryn Mawr, you think you'd return to a positive provision from here, which is given that you're still 30 bps or so on the next PPP basis above your day one kind of CECL adjust the reserve. Why is the guidance kind of indicating that you'd see a positive provision in the fourth quarter here?

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

Sure. And thanks for that question. The full year 2021 core outlook that we've laid out on slide 10, really is that just communicating what we had presented as part of our mid-year update. And we didn't want to take that out of the deck. So that we're transparent around the full year expectations that we had communicated. Clearly we're running ahead of that on the provision and favorably given the released in the third quarter. I think we're at the 130 basis point mark. It's unlikely that we would ever get back to the day one CECL just as the way the model works, incorporating most recent behaviors and trends.

So we would expect, given where criticized and classified loans are, that if there is continued reduction in that, there could be opportunity to release additional reserves. But ultimately anticipate with loan growth that we would build reserves in the future that correspond with the net growth rate.

Brody Preston -- Stephens Inc. -- Analyst

Got it. Okay. Thank you for the clarification. And just, on the criticized loans, just down in the deeper parts of the deck, you have -- you kind of outlined select portfolio. So I just wanted to ask on the hotel and the foodservices, understand that those are challenged kind areas over the last 18 months or so. As I think about a normalization of that criticize rate percentage, what do we need to see before those kind of normalize over the next couple of years?

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

So, this is Steve, again Brody. On the hotel side, I just think we need to see continued improvement in occupancy and ADR are criticized in the hotel book, I think peaked at around 50% of that book. It's down to 33% now. And we continue to see really, really strong performance on the leisure side of that business, about 35% of that book is leisure. And in fact, at the Jersey Shore and the Delaware beaches, the performance of those properties has exceeded 2019 in many cases significantly. I think what we need to see is continued improvement in the kind of -- in the business act, primarily the Philadelphia market. We do see improvements coming out of market data and out of our own customer data in occupancy and ADR, certainly improved from 2020 but not back to 2019 or '18. So we're just waiting to see if that continues.

On the foodservice side, I think we need to see there is so much stimulus in those businesses. And many of those businesses are still sitting on significant stimulus money. I really think we need to see that spend and then how do these companies perform. So a little bit of wait and see. But as you can see by our credit stats, looking at the linked delinquency and such, all those businesses continue to perform and pay.

Rodger Levenson -- Chairman, President and Chief Executive Officer

Yeah. The other thing I would add on the hotel sector is, I'm sure you saw in the release, we are very actively monitoring all of these portfolios, especially the hotel. And you might have seen that we did sell two loans related to one relationship in the hotel space, because we felt that that particular borrower, which was -- had been a classified asset for a while now, was very -- relatively weak global cash flow and concentrated in business travel.

And we felt that that had a significant likelihood of going to NPA in the future, if there was a situation where the recovery didn't continue. And just based on their the nature of the relationship with the borrower, we decided to sell those two loans. I would say we sold them for north of $0.90 on the dollar. And we will continue to monitor that portfolio very actively.

Brody Preston -- Stephens Inc. -- Analyst

Thank you for that. I did see that, Rodger, and you answered my question on what those note sales garnered. So I appreciate that. I also noted in the Cash Connect, you all called out some investments you made in personnel in armored carrier services. Given the growth -- given the successful growth of that business, were those investments done for growth purposes, or was it for any other reason?

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

Yeah, no, it's primarily timing consistent with our strategy with the business. We continue to look for positive operating leverage and invest in technology, consistent with the overall delivery transformation strategy of the business to create back office a Finnish efficiencies along with revenue opportunities. And at the end of the day, it's just somewhat of a timing play in the third quarter, but continue to anticipate strong ROAs and top and bottom line growth from that business going forward.

Brody Preston -- Stephens Inc. -- Analyst

Got it. Sort of couple more. I'm a pretty simple guy and my thought process and so I look at the channel strategy and digital adoption slide and I see that you all are consistently on the branch transactions, hovering around two-thirds of -- you know, of what you had been doing. And so I guess the simple question would be, why couldn't you just close the 30 branches if transactions are down a third or should we expect some kind of larger kind of branch rationalization coming down the pike as you evaluate the 2022 plan here at the end of the year?

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

So, Brody, I would just hark it back to the announcement when we made Bryn Mawr. Bryn Mawr gave us the opportunity to take a look at the combined retail footprint that we had, of the two organizations coming together. And as you know, we announced a very significant reduction in locations as part of that, which really incorporated not just geographic overlap, but foot traffic and all of the metrics of performance of those location.

But we did say at that point that we were going to continue to evaluate and it's likely we will do more. It will just be in smaller pieces. And that process continues as we speak. So net, net, just as a starting point, we said we would be back to legacy WSFS totals. Once we got through the first phase of that, we are at 89 locations, before the combination Bryn Mawr brought over -- just over 40. We said we get back to around 89 and then we would go from there. But likely in pieces, a smaller pieces. But it's something we constantly evaluate. And it's also something that we look at the rollout of some of our investments in delivery transformation that make sure that we have the products that we feel can help those customers impacted by those closures to have a rich digital interaction with us.

Rodger Levenson -- Chairman, President and Chief Executive Officer

[Indecipherable] Go ahead.

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

To evaluate the branch count, our clearly transactions is part of it has -- that has been the primary expectation and performance of our branch. But as the model shifts not only through the adoption of technology, these branches are as much sales centers. Our wealth business have folks there. Our small business utilize these offices for sales. So they are as much of sales center as they are transaction center and that's part of the view in which we take when we evaluate the consolidations.

Brody Preston -- Stephens Inc. -- Analyst

All right, thank you both for that detail. And my last one would be one of the real success stories for you all. You all end for Bryn Mawr for that matter has been the growth of the wealth platform and so I guess I wanted to ask, what is driving the market share gains that you all are seeing on the trust and the bankruptcy side of the business? Is there anything specific to what you all are doing that is enabling you to take greater market share there every quarter?

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

Hey, Brody, this is Art. I appreciate the comment. We've seen very strong growth in the corporate trust side, probably less on the bankruptcy, a clearly there's not much activity going on there, but I had attributed to just -- we've brought on some new people in the business development side that have opened up some doors we didn't have before.

So there is new relationships being formed. We've also formed some partnerships with firms like [Indecipherable] where we're able to do some really interesting -- implement some really interesting technology that automate some of the reporting the trust company has to do. And I think when we package that up, all the services that we're putting together and going to the marketplace is resonating well and, as you noted, the market share growth, I think we went from 6% about a year ago to about 8% in the structured product market this year and we just continue to see a good inflow. And we're living in an environment right now where the securitization market still remains very strong.

Brody Preston -- Stephens Inc. -- Analyst

Great, thank you for answering my question. I appreciate you taking all my questions you, guys.

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

Thank you.

Rodger Levenson -- Chairman, President and Chief Executive Officer

Thanks, Brody.

Operator

[Operator Instructions] Your next question comes from the line of David Bishop with Seaport Research. Please go ahead.

David Bishop -- Seaport Research -- Analyst

Yeah. Thank you. Good afternoon, gentlemen. Most of my questions have been asked and answered. But I was wondering, I don't think I heard this earlier but commercial line usage, just curious where that this quarter versus last quarter or maybe the same time last year?

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

Yeah. So David, Steve again. So actually in the quarter, the utilization rate for commercial lines went down to 33.3%. So that was down from 35.4% the prior quarter and that's about $35 million of outstanding balances being paid -- paid back. I don't have quarter, a year-over-year, quarter-to-quarter, but I can tell you from year end 2019, the utilization rate on Commercial Lines was 43.5% and compared to this quarter that represents about $219 million of balances paid back.

Rodger Levenson -- Chairman, President and Chief Executive Officer

Yeah, I think, David, it's Rodger. I think if we look historically, kind of mid '40s is where we were operating, mid 40% utilization pre-pandemic, pretty consistently throughout various cycles. So moving back toward that would be an indication of I think, where things stand in the economy.

David Bishop -- Seaport Research -- Analyst

Got it. That's good color. And maybe another way to ask in terms of the consumer lending segments, maybe not so much the growth but as you look, I think you said it was at $500 million alone. How big are -- I don't know if you thought it this way, but percentage of loans, just curious of how big you might see that the partnerships getting? Thanks. That's all I had.

Rodger Levenson -- Chairman, President and Chief Executive Officer

So I would just -- just say broadly around consumer loans. We would like to have a nice mix on the balance sheet -- around 20%, consumer loans, 80% commercial loans overtime and it's going to takes a little while for us to get there, particularly with that, Bryn Mawr coming over. They had significant commercial loans. And just as Dominic said, a modest resi mortgage portfolio.

So that would be the -- it's sort of if you wanted to think about how we think about things overtime, kind of where we would want to get too. But, we are also entering a new phase here with some of these partnerships that we think has great promise as Dominic said, not just from loan totals, but from a customer and relationship acquisition strategy. And so I think it will be something we'll have to watch as we grow.

David Bishop -- Seaport Research -- Analyst

Great, thank you.

Operator

Your next question comes from the line of Erik Zwick with Boenning & Scattergood. Please go ahead.

Erik Zwickx -- Boenning & Scattergood -- Analyst

Hey, just a quick follow-up from me and apologies if I missed this discussion earlier. Looking at the core net interest margin at 2.82% today, and Dominic, your comments about making -- putting some of the liquidity to work in 4Q into the investment securities portfolio. Is it right to infer then that 2.82% maybe a bottom for the core margin and we could see some expansion going forward?

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

Yeah, I think that's fair to expect. We do anticipate the drag from excess liquidity, as I mentioned in my comments to continue to come back down closer to 50 basis points by the beginning of next year. That will remain in that area until really the excess liquidity runs off for net loan growth, consumes the cash flowing from that portfolio. And then at this point, it's really comes down to the mix and the growth of the portfolio. We think between NewLane an Upstart and some of those products which have really nice yields relative to commercial, along with just where the pipeline is looking from a yield perspective that NIM should expect -- the core NIM there should expand from here.

Erik Zwickx -- Boenning & Scattergood -- Analyst

Thanks, Dominic. That's all from me.

Operator

And that concludes the question-and-answer session for today. I will now turn the call over back to Dominic Canuso for final comments.

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

Thank you all again for attending today. Rodger and I will be attending investor conferences and events during the fourth quarter and look forward to meeting with many of you then. Have a good weekend. Thank you.

Rodger Levenson -- Chairman, President and Chief Executive Officer

Thank you.

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

Thank you.

Operator

[Operator Closing Remarks]

Duration: 44 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

Michael Perito -- KBW -- Analyst

Erik Zwickx -- Boenning & Scattergood -- Analyst

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

Brody Preston -- Stephens Inc. -- Analyst

David Bishop -- Seaport Research -- Analyst

More WSFS analysis

All earnings call transcripts

AlphaStreet Logo

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.