UVSP - Earnings call transcript Q4 2017 | Univest Financial Corporation

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Operator

Good morning, and welcome to the Univest Corporation of Pennsylvania Fourth Quarter and Year End 2017 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jeff Schweitzer, President and CEO of Univest Corporation of Pennsylvania. Please go ahead, sir.

Jeff Schweitzer

Thank you, Rachel, and good morning, and thank you to all of our listeners for joining us.

call and is our Trust; Officer. the of Keim, Chief on Bank Univest and me this Mike morning President Financial Joining Roger Deacon,

we you management's this related conference forward-looking can management Investor may on meaning of advised under the asset be at univest.net from to Before to million of statements Laws. $X.XX during filings. our or call, remind tab. of included $X.XX Univest's Relations forward-looking that expectations forward-looking in of of website Please I found to actual the those materially contemplated express Securities from chance differ XXXX. Jobs a that statements. a and by our of revaluation disclaimer. Federal it earnings our beliefs share. be Act the the related in course the the will Hopefully, make statements may we refer the cautionary begin, review reported release quarter share our forward-looking these or intentions, tax results statements per everyone $X.X per during of within of release cuts $XX.X to the net everyone We and charge earnings This fourth the had income the SEC not, yesterday. passage tax million If deferred net our or

highlight which purposes quarter common advantage a peers our for quarter the annualized, strategic $XX.X which loan offering. $X.XX than and corporate we growth in year capital heading momentum December to quarter, our loan million with in of loan follow-on future. provides capital in stock $XXX.X $XXX.X for million or for more the of ending be XXXX. and as loan million resulted line the balance billion was the in During raised take used the this The opportunities XX.X%. occurred net to levels for a This general of was average into capital of a will was balance Much solid higher growth of used bring million or the of $XXX.X growth XX.X%

the the footprint we of quarter, of expand locations footprint. these we opened footprint. each center by and dollars Valley by XXXX, locations the physical one to offset January announced record centers of three are for legacy our with a will historical The XX, discussion these Lehigh our to was that closing charge centers will closing in locations technology as continue and $XXX,XXX of core and additional quarter locations of financial these over I new closures opening During our close the financial some two to new first and we it reinvesting our related results. Lancaster, to of associated on market locations between to other the fourth proximity $XXX,XXX and Roger financial center during the in consolidating our on extended financial We announced in throw as XXXX. optimize continue of these

Roger Deacon

everyone thank for XXXX us to to quarter, guidance. one related focus Jeff you, discuss joining primarily item would on to fourth remarks I'm and like but I my today. Thank also going the

minor third X.XX% related net margin to two to fee quarter quarter, quarter. core or interest the $XXX,XXX income. basis of X.XX% in for the a our margin for increase benefit the to points This relates it fourth was compared a approximately As the nonrecurring included

our The XXXX. which I is impact interest was one like to So points for flat reported accretion linked purchase our that only of purchase accretion relatively points to quarter will basis this decrease will basis the year. margin accounting the quarter for throughout core points to would seven and everybody account margin I'd and basis. be that remind included we consistent two say, expectations net four for our the basis with anticipate

and it to other rate federal as awards. quarter ASU as is incorporated of for tax of our benefit closing $XXX,XXX first of has this to our businesses equity includes of to change tax be guidance in portfolios. timing benefit in approximately just between anticipated to of but XXXX. a and municipal XXXX The range to charge one-time XXXX, and XXXX, exercise XX%. guidance of will prior related XX%, currently rate growth guidance XXXX-X municipal Jeff the of already a growth remind the a tax $XXX,XXX the we towards of the result of guidance that We approximately reduction building our by XXXX. approximately referred compensation. folks $X.X and fees are expense annual for estimated The road XXXX prior investing bond wanted million, XX%, prior a and be of been the is our are guidance we branches and free related of to of loan well for increase X.X% anticipate benefit which our quarterly to of tax three amount effective X% the will XX%. effective down as X% activity of to This relates guiding no anticipating impacted for associated our from have the $XXX,XXX As rate The for XX% lease with this stock-based sizable fluctuate result as to

purchase accounting, relatively On to anticipating the are year. flat be excluding we margin perspective, margin the for core

financial in increased our a result report that costs anticipating reported X to rate basis, compared competing margin aggressive loan reported the more increases our cut to region a benefit result when to equivalent X will our institutions XXXX any we with federal XXXX. the ratios of some margin related could of That interest reported tax with account basis and other decrease see our the high on tax from an the combining the reporting deposit by for to could related said, points are We rate XX to year-over-year which offset deposit be Accordingly and/or because of in on net away pricing. XX we as our to down competition, be margin credit, benefit will as margin the basis due tax revised benefit comparative points. purchase accretion, decline to increase

to as loan Finally points. million to quarter relates change. but approximately still approximately we XX growth a guidance, loss to to quarterly loan or million and by guiding provision is it X.X on per $X XX the provision we're driven have the credit basis losses no basis Obviously

Finally financial with our compensation to first straight to be ratios occupancy quarter for the that's lower I'd improve the the the accordingly throughout the our from tends items and other ROEs first efficiency due This prepared year. remaining seasonal every should that many cost. like ratio believe and release my like remarks. profitable quarter was I press it institutions, quarter and after higher forward to remind higher group quarter lease

any We you happy to please would be will questions. question-and-answer session. answer Operator, begin the

Operator

question Perito [Operator Instructions] Michael ahead. comes first go KBW. Please The with from

Michael Perito

I of apologize, minutes got couple on I late. a

about just the mortgage sorry from missed into on a curious business I we I'm year? thoughts impacts thinking the revenue balances. guys So But perspective move as comment the if XQ the supply I saw next as this, that that how you business the are release in any into kind XXXX. head we but of

Mike Keim

business underneath quarter. teams will is them. we when believe And that’s quarter bank in earnings recruit additional hired out the do are draw charged in And to talked about also not be a business us. third in these referrals two business in mortgage the to additional network. growing we for bring are on what fourth We purchase did. we we from what to They regard call, producing folks and go people rely who sales to managers With really the exactly going the

we ground the first mortgage that’s continue we believe has on to where levels as be the here then had through operate get spring the we we're strategy had will regain past able continuing seen. - on that market, - grow So and side. cold market move that and The been snow on the business to we mortgage January purchase our but we we clearly that and and into the quarter profitability

Michael Perito

Has of it so Or in point? there production this at all, at here? the first been kind of has guess, levels any I pickup been similar month or

Mike Keim

than and goes was goes of Two things higher year going been see January mix than higher P&L that in and slightly the what this into mix had was the our quarter salable fourth the quarter in as at were time of our fourth business you We it we ended well here through portfolio. portfolio can our Mike. part And The previously. and year. and is, the between last

we is into of really overtime. the pick weather. it down that does January. upon up somewhat also a but the purchase the From forward perspective, sale basically and impacts start drive That’s market So depended part mid-February early carry-forward to net interest see income levels

Michael Perito

another line And then any just for thoughts. question income sticking here, in the noninterest just

guys to You the strong line maybe if piece any start about followed a have side. on how insight of I opportunities that typically, yet kind onto got it just overall know could track, it curious trajectory insurance does. off first contingency thoughts XXXX. or that you the the any But always pretty in any quarter. in growth And

Roger Deacon

better that than slightly Last we’re of in first the be than a too $X about - quarter was year not to year. little what the in it was maybe anticipate range and higher significant. bit more last bit quarter within first We it but little million

Michael Perito

pipelines any wrong timing to you to this a The thoughts to us for get number. stuff seems was are think appropriate give is And more be expense when but like it, updated are there Jeff, growth on then -- side open you some around guys that how actually, finally, you the and over opportunities of next, still can XX I'm XX% to maybe the like guys early X you were solid. aggressive And is on on there's maybe and X% word, thinking Roger, some doing the part different it thoughts about ask more loan would a you sounds to guys call But and pivot good year. good growth question. the of you -- months be It mentioned capital. bank It M&A? going

Jeff Schweitzer

will Sure. then doing the on this said in market they will years year, the bank past as been the this out past. well what as that robust caution looking as and opportunities side, the there allow participated in But on at the a as others be us M&A of in Consistent lot looking more the of some in middle which aren’t few the will has were side. there consolidation stuff we're said proactive over still last through us we've to take at the as I with system past, which I that are we that

from with the banks that just and year, aren’t a once -- isn't opportunities ability when half into in it, fit it look solid and to of proactive be would just we many consolidation at do, more be that's look to is acquire the try looking really occurred, do what there we're but So there position. the as we that second out to to get would we

M&A those build acquisitions. a pipeline -- will strategy. lines looking wealth the their the it mortgage that business that anything eminent, and On we're say to something focused side are heads with always of is as insurance, of potential of always to there and growth other continue Not part there with of is but and on look

Michael Perito

-- like Or move M&A is encompass west that I you woods does that And for to mean, comment scope? of in north greater that in at I -- Philadelphia neck look guys Or and guys really the there this M&A region? kind all a you bank those more bit those just of is is of opportunities mean, those comments. that I organically, mean, the really that little is at? as point? broad

Jeff Schweitzer

we're encompasses Southeast much that looking at. We're pretty it from Pennsylvania. say would I markets the

do to you going small meet north, what We're little XX% said, a to is X% overall math, a As the west, bank we're little going this loans grow year small bank. our you looking we're would a if that deal. do a and to criteria, but going not we're

a is bank and small new unless us a is necessarily market. a supplier, disruptive it's it additive we're for entering So more

towards we supply that So go type the you we're overall of there, that I billion looking institutions which at out more would say look $X after. can limits what's when that

franchise to players Now but also acquire that that bigger. as bring we're not we just looking could into that we stuff the making geographically, the extent us expand and acquisitions to mix, enhances obviously the do

Operator

comes [Operator with The Matthew Piper instructions] go question next Jaffray. from Breese Please ahead.

Matthew Breese

potential there to outcomes in and about extent? talked go raise, update your want just get accomplishing have of an one we to when seeing you're folks to growth to was I if you and outlook, wanted hire the to I the actually market the capital what opportunities

Mike Keim

and So markets to in pick Lehigh recruit we run to There Valley present there would we market, potentially whole primary Valley during a people. is quarter there. Lancaster Delaware together as the is continuing to Lehigh up continue we from to a for at commercial where the the our forward be addition the as in to fourth to perspective, the to move time there's opportunities but continue three us all and team nothing looking out, another out be lift the Division team well Valley. talk which we're of that a We did cobble as call

the just terms at of time, payments because in institutions for period people several are and getting market to tight move and stay So people would at discussions talent are we're recruit of close their trying bonus looking especially most we a forward. at and continue of It but deep time to people we is year, this that. to that in with

Matthew Breese

So what you timing, goal the do this to picked up, where you people you understand year? in by that gets want I the of is terms be next that point you totally one think

Jeff Schweitzer

don't of people look up. at pick number typically focus people we Matt, on that I the the of that get. quality can we I necessarily

a team more of limit if of try there a that a people on is we us, I'd people? quality on I the sense to I But Yes. number that help book for budget ourselves. of group make So they or is can of rather focus not Do the to there am focused us grow. business

on going the to tell discussed not to number discussed raise to call. that am other what in specific we and capital earnings would comment similar what I a So, you was

look Lancaster forward that would we we continue that. do team, another find We to could certainly

to people we certainly do We’re bolster that quality to but county do we things looking a going because and number to specific as get Lancaster number talk not people to past bit and market would your little can that a want. not of into other because of the problems you caused that's to higher drive We the some in and pay the some go you that actually there. specific of we’re people my try it's necessarily

Matthew Breese

headed will of just And your changes, obviously in then tax the parts frame Year to with outlook are moving net the New on the income Roger it maybe year-over-year the NIM another lot a what question there? I interest as leave we way expectations for growth

Roger Deacon

of remember Sure. a looking the accounting. X.X%. The purchase interest roughly exclude increase report purchase is When we the then for accounting X.X%, approximately net we’re that includes

Matthew Breese

Right, okay. That's helpful. very

Roger Deacon

margin. consistent kind So growth of with of with kind it’s consistent a flat that

Matthew Breese

to expect the you the volatility on low then year, the rate about and And spoke points do some tax you where throughout be? high the

Roger Deacon

stock invest quarter, but biggest invest but quarter we third be. The our restricted have quarter, first that third of low in the somewhat will will well as in the some the the be do in that’s where in quarter the most benefit and first

Matthew Breese

Understood, okay.

Roger Deacon

little get when Yes, are predict can’t because options they tougher you really exercised.

Matthew Breese

seeing really the some is a curve pass-through around one conversely seeing wanted and way backed quite and spread last the bit, sense the way? where of and you’re years obviously shape My it five higher you’re get that up I XX to compete just yields for yield of

Roger Deacon

new five to loan the XX commercial uptick but points the relates during about it it. as basis so Yes, that's see year we to production, modest maybe

primarily in to yields to year interest portfolio haven't the seen in repricing. increase we’ve a over our origination on related benefit The our new relates really pricing. earning just existing of course increase we loan So assets the seen significant

we've So, up what year from I we free relatively and really our - actually three the points what great two our non-interest-bearing us increasing last a this basis helped call margin, keep quarter what’s job last fourth where of deposits is of our is done would value know for quarters the flat flow that's been year. to the six say you

should In deposit and rate theory, what’s flat of don't know a towards So going of just why really a benefit relatively little increase, on a pricing side. we guided that's it’s number. happen we that get competitive a have I to bit

So haven't year, on of for hoping and margin I’m conservatively and we up are flat out by it’s get by but benefit don't with seen to the going coming a cut it what don't the it tax the loans we competitive pricing compete deposits. aggressive calling on know, more but away or we aggressive yet competitors if on know more

watch-and-see a really right now. situation it’s so And

Matthew Breese

in power Obviously a or one better tax there? it generation just something or capital I sack bottom rate where more. a or wanted curious be change added first were line like And and you will bit cash the put are that if what sense I in get with just what cash way be the just could maybe to to your Cecil should for thoughts your look dividend higher acquisitions for

Roger Deacon

usage. place or bank an kind is on acquisition on if I the first obviously side, wealth expense folding we’ve I there we’re time, borrowings. intention spend would But and have environment. growth don't maybe kept reduce to I’d of and current I'd to really really insurance the and organic short-term the it the my through using put investments the management it lift-outs at Jeff spend think don't our had at growth capital I like, holding a time. like put to opportunity the of have and current do intention like the strategy I to to capital it or company M&A, Well at the the already M&A discussed capital the the it the you and via in changing use that just additional

Operator

the to any over session. back like to question-and-answer Schweitzer our turn would concludes Jeff This I conference closing remarks. Instructions] [Operator for

Jeff Schweitzer

Well to at and like to today, end good looking quarter. forward thank everybody are to the participating XXXX forward to first talking a And everybody the Eagles. a just solid we Have day. for go and looking really of

Operator

now today's conference you concluded. for Thank The attending has presentation.

may You disconnect. now

Univest Financial (UVSP) 25 Jan 182017 Q4 Earnings call transcript