UVSP - Earnings call transcript Q3 2018 | Univest Financial Corporation

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Operator

Good morning and welcome to the Univest Corporation of Pennsylvania’s Third Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would like to turn the conference over to Jeff Schweitzer, President and CEO of Univest Corporation of Pennsylvania. ahead. go Please

Jeff Schweitzer

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

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

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

The loans. our is one growth quarters historically third slowest quarter for of

report of or annualized, to the X% XX% higher $XX.X year. our previously guidance loan we our X% communicated believe growth solid growth X.X% of the $XXX to year-to-date come million loan annualized. or in for at However, bringing million in We did will growth we end loans of

strong quarter public to was in quarter growth seasonal $XXX the due or deposits. deposit Additionally, primarily during deposits fund for annualized, the as grew XX% million increases

of deposit with quarter we XXX.X%. As a ended the a to ratio loan result,

X% discussion the Roger revenues operations prior in of management, XXXX includes the on to the our nine business up our Finally, over and trust diversified we from months X.X% see some respectively, continue throw to results. business for it first in same insurance compared are I'll additional our period model year. which lines wealth now as and to our for benefits

Roger Deacon

Jeff to and would like I very think to I'd for also off like thank saying start a you, I everyone today. quarter. had Thank by good joining us we

we XX.X% return on and to to quarter, average respectively. increased return the assets X.XX% tangible on were equity For increased report happy

our to was our was point be out X excess The $XX compared core excess strong press net average X to the basis liquidity As core to in we can interest average quarter. points. this about margin in like deposit had it by margin to to interest impact in million X.XX%, net I of reduce was margin release basis quarter. approximately seen balance the sheets down relates during due X.XX% the the second on interest which our that would as growth cash points net

XX% balance with of quarter to was XXXX, points asset which an of loan see only interest margin to adjustable and XX from interest with Chase, merger core X.XX% X.XX%. combined increased has net a the variable, Fox rate rate. slightly benefits continue with increase sensitive after the sheet XX% We the the basis our and of first fourth quarter fixed portfolios XX% the Since

income that our of beta same in and as increased months of cost significant of loan nine XX.X%. deposit the note compared XXXX. Due beta of is the to period for reported growth same cumulative lower our margin time net cumulative compared X.X% XXXX Additionally, our during the the XX.X% of funds would we to loan to a period yield stabilization interest

general loan The million income our XXXX, was first which net Excluding same the this required nine losses has by downgraded reserve variance purchase $X to our in declined or large for the XXXX. shared substandard. an incremental provision special The months primary slightly of from guidance guidance reason of million $X.X which significantly interest for national loan, higher increased credit $XXX,XXX the period quarter mentioned the $X.X was million. prior benefit, to one solid XX.X% for for accounting is than versus for from of

for event our provision run the driven. million the and losses aware to is XXXX. is to losses in believe rising with continue is the loan I credit rate million sheet $X everyone balance size modestly of As $X.X provision

Forth, to first the as quarter ratio and to our continue of this compared the expected our year. quarters efficiency noninterest expense two decline as

for XXXX This would to the you forward my X.X% fit items for prior prepared the represent session? change guidance please remaining accordingly an our would answer increase be noninterest year. is excluding any no best answer $XXX We’ll to question for begin the release remarks. I have charges. for of of million the We happy press expense and of straight restructuring operator questions, believe and

Operator

Absolutely.

now ahead. answer Michael Instructions] will question session. begin from with We Please go first Our the KBW. comes [Operator and Perito question

Michael Perito

guys. Hey, morning good questions. Thanks my for taking

Roger Deacon

Good morning, Mike.

Michael Perito

maybe in how guys, have and outlook the gain environment regional talking guys typically here? but kind thinking little guys And start pipeline to I quarter I a you I been growth, missed the the peers I the a you quarter I have growth the moving you of the and a competitive are of to been up remarks. growth I that great in west anything know on, got structure. obviously I if on the good But obviously I growth couple minutes, are your loan on seemingly hit Some so few apologize, close apologize third for was on -- and second typically of at ability want call loan have quality fourth the there. decent of in prepared bit strongest some and about could outlook to beginning this quarter want the deals curious

what you’re you seeing outlook your is updated loan growth I'm environment just curious achievable what and So think is with today? the on guys

Mike Keim

the higher that believe we’ll would Hey, it's that previously of and tell year for of I at XX% comments Jeff’s we that had range the Mike, stated with you range. to that Keim. Mike be a X% we end

of as at our our as There good of some and on well a growth in a markets. from such. primarily growing correct looking we’re well. A coming team competitors we forward more be core do a When next budget on local lot of will but that’s little going portion are look to of is of Lancaster our an year growth. at structure the price, lot to a continue competition we’ve to is X% bit of and You looked

Michael Perito

of of Mike a And year-on-year? Or a was lower will be -- is thanks that think levels pipelines, you pipeline an rate. helpful. stable assumption down that overall but Is reflective reflective closing around that do

Mike Keim

pipeline now through close Pipelines year-over-year, a and on fourth right quarter. the will we still we good have

X% forward just that the think we're it's looking -- to been into market range. just And us For we we're go realistic commentary absorbing we're that getting. more

Jeff Schweitzer

just add, would I -- Mike. Mike

If notional XXXX. dollar XX% you dollar. X% on Yes, is year next as a about that in basis approximately the the think X% to a same

perspective the it's not a it's our in it’s more sheet. balance we from -- reduction a not what can a size we of So believe significant of as produce company,

Michael Perito

so No, helpful. there’s just the I guys XXX some mean obviously it's was you. not, that's because But fair and commentary, of it’s curious seeing, you basis that are Thank what points.

thoughts of mean, start and kind I from in the guys to on And you're Roger on past yields loan pricing that? where point credits. but might does pricing terms incremental getting Secondly, especially more much of you guess be on and competition. from that then I guess can away of understand initial market any how that secondly, how walking is room the same credit credit, production the as quarter with I any thoughts, there kind vary the next move into it margin I broadly. play we in

Roger Deacon

Sure.

job team done Our credits attaining a has rates. of at really new good good

X.X%. During rate was average the commercial the loans our quarter new on approximately

it X% I'll we've increases seen the a credits three last in improve through whole little getting and So new relates to competitive, we're marginal is now, on you but leverage. next our nice metric. operating over tell we're that is for as going what north our continue year the Yes it bit to just process right to P&L quarters our budget is is goal the it of

the pressure my more deposits that we at funds. slightly But XXX to we're sensitive what I think margin? little pace business. little on as did XXX there's targeting X.X% really -- X% that's do do if and to because a be to the keep equation balance macro funds were in improve won level bit I’ve so asset going we our bit sheet. on of can points a basis I a had expenses higher revenues cost said, of little of public at this that's quarter there's X.X% that to bit, grow And with a a and and we grow Do able of to think that X% I our

be year, loans. I on focused we're of our it through seeing little a work can growth rate what through, seeing. we are but see might continued variable perspective in think on compression I So margin our other next institutions working from we’re bit don't There

Michael Perito

XXXX. towards credit of next the has at and guess there this into loan been sneak the you events in episodic and of the a as we’re Couple of kind we quarter, year, I’ll of in share the Okay. One couple outlook credit the stable, obviously end How here. you seems move in a feeling more, credit, because in a point the obviously but metrics just on perspective from actually national overall credit about portfolio year are strange all the I the year?

Roger Deacon

accurate. the the Mike, here. generally in in I and obviously is [ph] of about depiction and your the do Overall sneak we portfolio. we did our have had credit think are second third got quarter charge-off quality downgraded good feel the the We strong quarter metrics the

credit speaking from influence that us trends when you our quarter. believe that on there would quality any and couple they a see So no the of take But credit portfolio away size, we obviously is provision given strong generally in larger the are we that. see

Mike Keim

capital is kind less, just and make to lastly, feel the ratio this of it the capital a you're dent XX% organic like year. at in situation that a deployment side, the obviously dividend. it's then or growth year going raise end and able to year be does last at quarter X% left growth Jeff, solid guys again, the And been unique the one you capital long current And go But of more of not not too at especially here. ago that consecutive growth there if because kind second on obviously really

in just how especially to would helpful. I'm you -- be here marketplace was maybe does the about I thinking of bit deployment look go guys the have broaden maybe share to just dividend? recent XXXX? back updated you budget mean, do the little repurchases are for to curious capital as and some start a So you thoughts or I the increasing weakness any with at curious toolbox

Jeff Schweitzer

raise the we reason the capital was Overall multi-fold. capital, on

continuous good we are necessarily We anything continue it's at see But level pipeline do a did that you out the that continue capital about that a a basis we build actively doing, We look look diversified continue for of and we’ve will and buyback that XXX,XXX not said, it to opportunities this shares model. but to on to year. work toward do something as our organic we We quarter. at to closed is not on wealth raised. insurance as that in growth, this acquisitions we eat

Mike Keim

the In October. month of

Jeff Schweitzer

for seem month sorry, take share our of mean, of of price. what us month to I it's some the In buyback to October investment in ridiculous be shares. a October organization job advantage the in a -- to good to

that at These use look pipelines. in to do have at on continue a numbers. XXXX look On the think increase back payout before to should there said time, to happen to to forward still in firm move to but non-bank be we to as opportunities to we capital low-XX% peer see that list could continue ratio what continue will all the is things with take more need that dividend, we and out is dividend I we get that to level always that work which of I there continue acquisitions. start we've we of do that type front, hold

Michael Perito

just of remind buyback, me guys XXX,XXX authorization current the Jeff in Roger, Outstanding still can or that October? you the And size have? after what's the you the that

Roger Deacon

slightly It's XXX,XXX. more than

Michael Perito

guys. questions, Okay. All my the right, all color. great. Thanks for taking Appreciate

Jeff Schweitzer

Mike. Thanks

Operator

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

Matthew Breese

everybody. morning Good

Jeff Schweitzer

Matt. morning, Good

Matthew Breese

bit, to buyback entire Just want you current levels going you back little the feel authorization? a to like use the do at

Roger Deacon

No.

we current One is, have of around that's so. to its quite XXXX sub-debt fixed will convert out the where LIBOR that looking rate a frankly based we're things to rate X% from some or right

of some to I down pay keep dry So to do that want powder sub-debt.

in do scenario right. a what of been hit where a it's little look bit you So have hard, stocks

our good that I be down so also would stock portion believe at it's in a And all concept be do sub-debt the levels. buying I decent would But able pay want think these that to investment a own to that XXXX. we of

ways. looking we're it at So both

Matthew Breese

Understood.

Okay. there give situation rate tax any I Is the for location changed. little tax has in you Jersey, there a bit us XXXX? outlook South know Fox -- could has Chase the for an of some and XQ in

there any impact there? is So

Roger Deacon

really. Not

So we’re would have free function income less of we now the a say XX.X% out just that year we current of we XX% a And municipal fourth benefit is bit pre-tax we we your quarter. the than did differences. do about tax increased are from less ago. would little range to guide XXXX, it for look a to XX.X%. to When A of loans

we're up year. for at that would it bring bit. a and XX% little XX.X% So But looking just next

Matthew Breese

get maybe X of basis Okay. I and in noted And you see you that that the used margin, the we was comments going back? just back the for cash in should for some impacted margin we could some XQ? see by to excess that And if think I quarter your and expansion liquidity that then had we curious, maybe XQ Should points. margin

Roger Deacon

One the back to ended going that that the loan is things anticipating growth be this is quarter. of we're

over the next that. today, So have I to two have excess do goal I months cash. some But utilize is the

excess see function that. we like still the really relationships the on by that's the the quarter versus time be little And of the did arena, to So we deposit third in a it quarter, have end timing loan for to value that on mean, for And just the mind deposit fourth developing growth year, seasonal front on in I long we'll decline don't liquidity the of a averages, quarter. that going the utilize in is you'll run-off. it’s we quarter good just are there know funds the come. the public within of

Matthew Breese

deeper assets Okay. banks I just go And then and sensitive defend one Northeast staying the the into margins, is on in number the retain this we that observing every population smaller position. of gets I’m cycle, quarter. able an NIM just as to the and smaller mean, thing The

deposits, there’s tipping do And you you point sort compression of are metrics I you might so at as curious, shortfall And was we feel look like you’re, of your where competition? where pricing current that versus margin any for versus see versus stability?

Roger Deacon

our feel I last think quarter. we good communicated about deposit pricing as we’ve

X%, a XX borrowings. operating that’s in feel at basis are X.XX% that X.XX%. at I go at We a XX about lower. out if promotion, to borrow relative These to to and had XX-month XX-month and term pricing CD We XX-months points good pricings

of able to borrowers able XX% and is to getting lending on that’s little the a borrower. bit lock that just individual may think bit I be variable, side we’ve going So starting where swap fixed, depends are in. there’s where not I possibility to And been squeezed switch where a do on XX% think to a little the to

you fixed So the there. in new originations a of decline variable rate more might nature see and

be So would slower a do where would it grind see But margin, some that’s say. on would I you pressure. think I

Matthew Breese

Right, okay.

And quarters so a accurate? core some that we’re if out six margin is slight the basis. guide, Is next five over you compression on looking or

Roger Deacon

correct. is that Yes,

Matthew Breese

into outflow? one deposits next the first is last quarter my the of muni then What And for the Okay. just fourth is and on year. quarter estimated

Roger Deacon

districts their year, then quarter year. big believe cyclical raise within the outflow. respective So quarter the the districts, the for for that’s And was Pennsylvania, million fourth when In becomes in about next it taxes the school $XX is school next the third just cycles. I of

early in year you There’s highest XXth, the quarter it the of all that. get accordingly loan our June their will the August, that, they we a So be on second low where deposit year liquidation to funds ratio. throughout every can tell basically September. and I is again. for And recycles of rest the plan But will then point

Matthew Breese

Understood.

Okay, I Thank all you. I it. that’s had. appreciate

Operator

Our Please Chris with next from Reynolds ahead. question go Berman. Neuberger comes

Chris Reynolds

gentlemen. morning, Good

Jeff Schweitzer

Chris. morning, Good

Chris Reynolds

questions. I have two

to New market been prices your Jersey seeing where the And I’m over soft wondering you’re general housing is the relates operating the also an growth? quarters. there’s then you on It’s the in Northeast, and provide that can your update couple what just in in has which The your of and last first around footprint? market, you important for expansion operating activity or well documented footprint. Philadelphia for housing just in Connecticut

Mike Keim

So the housing first its regard to on market. Keim. Chris, Mike With the

footprint wasn’t supply is was just our On the Turnover there quarter-over-quarter. side, out down. in there the it’s added lot that’s quick and is the available that residential markets simply a and

bit, So a the actually little home down. but appreciations up supply is

us had hurt out, from regard mortgage next centers we to Philadelphia So City six laid has hurts and go Philadelphia. Center that question, have with -- the we and LPO clearly regard sits on With that and to in a there. the side financial We we’ve expansion.

add add look at time, have additional but talent in looking add We people continue not to we added go, as physical not to to additional we’re and infrastructure. this point infrastructure. And physical we

We’re for side more putting the a of of equations lot digital our on growth. focus the

Chris Reynolds

lot. a thanks Okay,

Operator

with Sandler next Our comes go from O'Neill. Frank ahead. Please question Schiraldi

Frank Schiraldi

Most about. just want on just answered. to Roger, But have morning. you I following of my ask, Good talked been the up questions promotions

all? wondering to that of you the on then are these compares And the getting finally, how what then brokered Just off sheet, sort shut to at you’re pricing in there? balance traction looking just liquidity days? And CDs given taps

Roger Deacon

not to about I a excess bit I and of question, am your answer liquidity so having Sure, little first worried own.

P&L on the about that. me I to to in wash So am

bit I interest about really dent And really don’t the income. net because care, I so care margins it’s a a to of little

of because on term successful sense decisions. if quite primarily think X you time then programs, get a the only more other going early rates intention have ticket the you decisions off to would in on, am have to So going are it’s times to The that am continue not be CD if CD five CDs not turning just that thought does use the frankly this is I have for I were borrowings they I the going to Fed I I replace, change longer going to on the just think increase don’t I going little and a really X programs. any I -- too been correct maturing, really us turn to quarters and the way next going to are these the what’s am

it five to X.XX% year relates in As costs Fed CD example, our rates, five year on the brokered about comparative for overnight a with a is X.XX%. a all is

our basis am new new I into with CDs of the that more was customers, had with XXX points dollars we new for it quarter new we million customer million. deposit this new track customers XX $XX programs to are that thing which this much attractive. by example, doing I One would So last CD am better come say it I obviously quarter And dollars $XX bank, dollars. XXX quarter related and

that’s the to as new way attracting well customers a market opportunity and nice sell. cross our So area within traction make to of

out the stone really wholesale relative kind on market. winning So I am one birds to just to two going

Frank Schiraldi

Great.

Okay, the for thank color. you all

Roger Deacon

Sure.

Operator

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

Jeff Schweitzer

the to forward everybody you report for to on to quarter in great thanks We January and talking earnings. us look again today. a day. everybody after participating Brandon we and joining call fourth Have Thanks, appreciate

Operator

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

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Univest Financial (UVSP) 25 Oct 182018 Q3 Earnings call transcript