UVSP - Earnings call transcript Q4 2018 | Univest Financial Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Univest Financial Corporation Fourth Quarter 2018 and Year-End Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Jeffrey Schweitzer, President and Chief Executive Officer. Please go ahead.

Jeffrey Schweitzer

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

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

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

market previously guidance to as and economy. XX% to the the of X% of local which bringing of during loan to growth to XX.X%, the pleased of were as quarter year activities Our the strength loan We tax related results disruption see demand $X.XX related XX.X% the growth of finished fourth we in borrower. for communicated $X.X to employees our or loan year the our very or previously the million quarter quarter fraudulent strong results annualized, per for include due loan continue during the exceeded quarter $XXX.X we recovery our second solid we year the $XXX.X or of million share after million to with charged with the off growth

deposit million to quarter seasonal the or deposits as $XX.X consumer primarily was Additionally, in fund in declines due deposits by growth deposits. increases and quarter grew the annualized, during commercial solid public for X.X% offset

year, or grew $XXX deposits For the X.X%. million

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

Roger Deacon

items to I Jeff, for everyone a couple to was think strong would of earnings fourth Thank quarter by release. company. our I'd to saying joining like discuss like you, from thank the I'm I quarter another for very today. also off the going and us start

earnings $X.XX per $X.XX press year. was for As for loan quarter. and we X per per our Jeff to unusual and we or impact $X.X the mentioned, to diluted highlighted of which after-tax, $XX.X we In $X.XX share second charged the fully million loss $X.X million in per recognized quarter off as the or this of related total we $X.XX the million the items: nonrecurring First, share for equates earnings share. reported mentioned, diluted recovery The release, year Jeff the

the tied reduction items and were the measurement reduced $XXX,XXX to of during as These achieved $XXX,XXX which to by income recognized metrics offset compensation vesting performance-based certain $X.X approximately invested market of in a stock also executive nonqualified of are performance we We not have BOLI related restricted equity as volatility. annuities, were period. million bonuses X

seen to compared income. increase to of the deposit basis balance be was we due press to can related $XXX,XXX sheets our increase back The quarter. As as during this or fee of like and our had million quarter in deposit interest strong benefit quarter. XX.X%. or quarter core growth average experienced liquidity the with compared excess that quarter reduced the it basis the by interest the net increase fourth and funds benefit XX to beta the margin balance the first our release, relates from X.XX% This of the to during growth, ended continues a about quarter lower X to margin, year. approximately sheet loan the consistent is the rate point interest combined asset-sensitive of points, nonrecurring cash up yield which third excess September. point X to we slightly net of core approximately XXXX, with the cumulative cost our points an in X cumulative basis loan Since margin included with basis our in post-merger impact out, of was of Net third a in interest the is XX.X% I rate margin points $XX an entity, would beta average

broker we income deposit and core is that to compared the XXXX our the loan same in for our the increased note Due increase deposits, XX.X% modest net will for core funds excludes public in X.X% reported which margin, beta, and period. same Additionally, significant to period XXXX. only growth interest

net interest benefit Excluding the increased XXXX. for significantly XX% accounting the XXXX, accretion, purchase income which of from in declined year our

the benefited recoveries provision for the the quarter. losses of $X.X loan which $XXX,XXX, from million for net Second,

As guide loan $X.X will in to XXXX, provision. million loss to approximately million to $X.X we quarter we look per

quarters as efficiency to continued year. decline Third, compared this expense and ratio as our first to expected, X the noninterest of the quarter

first noninterest quarter be will fourth If X.X% quarter charges, the to adjustments, were $XXX.X the restructuring for back add compensation year. increase that of the for XXXX. increase executive the expense an X.X% year we was Excluding million, from representing

to to including insurance lenders as platforms. increase relates As invest guide a in employees expenses we X% management would well revenue-producing digital we to technology, XXXX, to X.X% as it additional continue and wealth the in as hire

We have for new no XXXX. planned financial centers

straightforward lower seasonal year payroll with tends of be ROA least to I Finally, quarter this increases quarter profitable our happy ratio and would I each Operator, accordingly, questions. answer will the and quarter the prepared please release items to press any be to for would for was merit remaining to throughout XXXX, begin the We'll Similar and efficiency group to first remarks. you the that session? due ratio taxes, it occupancy improve like costs. remind every our XXXX. that's the higher question-and-answer believe

Operator

[Operator Instructions].

first Schiraldi The of Frank from O'Neill comes question + Partners. Sandler

Frank Schiraldi

a loan you NIM, about I the Rog, obviously, NIM if, growth. sort bit could Wondered maybe the of little mentioned look -- what could about if you talk the wonder talk you the back-loaded like what the anticipation NIM your the just of going Or month forward. later and does December. in just some expectations give that mechanics maybe to your for the maybe us of for color year, on

Roger Deacon

Sure.

we in not quarters, have first forward the a going excess we're in liquidity. to be So situation couple where going

So saw quarter be that this excess we points X of would liquidity would add-back. an -- kind be basis of

would March. got December competition. margin so increases this rate first deposit I rate to pricing their depend only that it's I this anticipate the forward in be benefit we've quarter, would going And would flat then on pause on the and the Fed relatively that does increase thing of the For our quarter. Again, going is say

slight side. we little at second rates. fact the compression, tend The won't borrowings and asset -- And a the mature at of on as forward, see -- the our like, bit we'll they'll get a liabilities CDs will that reprice on higher quarter an increase probably and just

to a for be you compression is first we're little pause to think of So I believe going flat Fed bit quarter forward. going if the and the probably going

Frank Schiraldi

what mentioned -- you bit little Okay. if you above on And more XXXX, color in a expense a then give I the which had. I can just for increased wonder expectations is

And about incremental versus of maybe could how just bringing you a little revenue-facing tech talk on so employees? bit that much is

Roger Deacon

strategy to business the continue and to a -- all investments. our It's Yes. revenue-producing invest the is It's of combination both. in

lenders So we trying we -- to year. new hire aggressive be plan in this will to

out and aggressiveness that we in in that advance so to And going there that incorporates wanted lay the investing to are be business. we just that

to That's now a mentioned side. why side. not We're the really that, more be Additionally, end to on we're but infrastructure, we centers, to invest starting the on in that of in technology done we've investment of financial the initiatives. digital investing lot close in we're going but digital

Michael Keim

would One, a new It's we app be out for the first Mike tell I things. technology bank rolling from mobile a Yes, will a perspective, in the week you, February. couple Keim. Frank. of

what personal the we continue continue in enhance Encino customers loan We the well as we're to as that on our so digital consumer utilizing doing as deposits well make at looking Encino from have possibly to that loan side to side expect. commercial investments we're experience a and

infrastructure from the an we're Office perspective, to in cloud. Beyond moving XXX process of in the that,

going that's well also. So

continue to efficiency while in expense So for we to never to increase going consistent we're we to think it's forward the drive relatively to ratio. can Roger's investing keeping point, because so critical the down us not we're stop that drive the base business revenue --

Frank Schiraldi

finally just on then And buybacks.

about So the that in some end quarter. your looked of and period that it sort XQ later like made call, you talked given last in where back were off October quarter on trailed of you repurchases just the shares versus the

So activity current have program? some your given buyback how still, under are here you thinking about you think, I

Roger Deacon

Frank. What consistent in another good on did so redeeming And we sub-debt of a this we're I do, I another focused our XX,XXX XXX,XXX with mentioned it's of really a bit little total. XXXX. think We last Yes, did quarter. we March quarter, is what portion

in want to keep our XXXX. more but with to reducing XXX,XXX dry. that were folks really shares operating what that doing, that focused given Again, comfortable are we And -- appropriate. pricing, on But other significant powder so run, in where level is thought to relative that's we'll that we not a sub-debt was we're long the we

Operator

The Michael KBW. comes of next from Perito question

Michael Perito

you go us about liquidity curious, you the guys you a we things. is guys -- of that can I But you liquidity core are level talking were going what build forward? think bps from away. kind one, to remind that to I operate guess, expect you with a of ask should wanted Roger, just the I'm should X couple just

Roger Deacon

in is we we my short-term with nice strong the -- forward... that so and I'm loan-to-deposit balance are none. have I happened On the But growth excess offset doing an -- sheet November public October and liquidity continued than did excess deposits would It quarter without fund we XXX%, liquidity December, operate just going the now our excess just by borrowing if mean in basis, deal liquidity. quarter. in fourth later ratio in deposit greater growth with third loan the

Michael Perito

over question sorry. I have No, yes. incorrectly. I that we and with cash forward? you $XXX about should look to but Yes, that if operate half the million of built cash portfolio the normalized in going XXXX, I at of the $XX been million to I'm year, asked million, year. bit million, it's the is you to was what's guys fairly $XXX over mean must the the course back level steady, expect position and liquidity the $XXX a start million $XXX equivalents investment Because

to So curious, million? that. I'm you're it is that higher thinking closer balance curious just the than $XX Just a sheet about growth? it given now how Is little

Roger Deacon

still million in would about were at of that it be the beginning year. $XX No, we the number talking

Michael Perito

got about The rating run Okay, to seems -- income it. in are million it side. noninterest like then on last $XX And $XX.X few the quarters. million the you guys

do. the in are in income, if I you out be will little contingency back what we guys bump typically like maybe my think insurance the expectation business, the have for the -- first obviously, of seen, quarter, that? the a you you But give you're there rate some about on us given core thinking help how market there volatility you environment? some any we've a about thinking run can mortgage there Is

Roger Deacon

Yes.

Jeffrey Schweitzer

the insurance always which on Rog higher in at of came let year. But the backing into the numbers. that's is side, the I'll X.X% quarter that to X%, Well, out, contingent this first income. because X% But we get

yearly the we a in So X% conditions. Wealth the market impacted by the basis. market was year-over-year fourth of or in We just lost X% so because decline. that type to increase million expect of AUM $XXX quarter on

revenue hurts bit. obviously, that a on So building little

growth. we to as it quarter, bit percent got XX% about to the of a half little the into growth head year. of overall, at But of the some impact we type already of is is first type due Now X-ish beginning really but of have and that the of XX% will recovery trust the back an RIA

mortgage, So really the the overall business. in X% frankly, talk XX% for growth average about want management if And wealth that to mortgage, is you amount to Mike.

Michael Keim

Yes.

The be one going first because the seasonality. to just always quarter of is slow a

have We stabilized.

down. I good. at been our think has come month point, so last consistent this or pipeline the have that Margins two looks

and at expect operations also and seen points margins come regional on We competitors, at I you've not think this as or out side our of down again. the money to side kind that, center dramatically. settles the are but itself market mortgage the so Margins of capacity pretty the basis I normalize down equation. just down the margin excess banks. of on XX were would the Ultimately,

some continue also widen bankers see can that net, better in of we'll to that we in, well. the So back, extend area that that for lack loan a as we area as officers join us totality recruiting so we the term, we our widen recruit that area come and to we operate of mortgage mortgage -- widen

the better hopefully, see a So we'll mortgage as of term, lack on side for well. some come-back,

Roger Deacon

factors, be those the would at So combining macro at level, X% level macro year-over-year. for look income, noninterest of about up we all a to --

Michael Perito

update And can just can more in. us just on a recovery, specifics there you guess, Just out this of room some just there. But the an played eliminated? on for any helpful. us I point? just provide share you interest at if more squeeze to couple that I update that can is kind One, recovered? you could that do think broadly be give them Okay. can you it's Or credit? That's be

Roger Deacon

and We don't were we If get really the something, the that just $X.X that's guess we to perspective. time. with where couldn't at it's a if that still get be we still worth being up know. our ended gravy little mean, good -- worked. more, get a If bit, getting it we year million. I but from current we little feel we It'll

Michael Perito

for Sounds loan growth on good. And then next year.

could I -- last your quarter at range rates. that have run like scenario? -- strong we discussed obviously, XX% into here. also then of fourth if to case. a still similar it into call, are conservatively year? baking hires curious be think but guys we it just you Or more It be could X%. seems a But in I'm this And you're is the a X% expense looking X%, additional type

Michael Keim

this the to Mike, Roger But time. we're both we active, at to in staff in stay as folks. be X% place, in appropriate that at going point Jeff recruiting is referenced, this committed have continue the in to given X% existing point and the We'll number. time,

Roger Deacon

that. bringing growth last that, to portfolio, Mike, to the we our is a higher we in portfolio of goal down the growth that the and part a And item targets. overall One bring mortgage on got be significant sell that Yes. note keep year, of in down could would percentage which is reason

Operator

[Operator Instructions]. next of from Jaffray. comes The question Preston Piper Brody

Broderick Preston

most to, just tax think impact XXXX. wanted based you and I I New was the guys in your know New change Chase in Jersey tax some rate expecting Jersey bit. to I into guess, been answered. of guess, any were if in But rates tax the Fox have from broader questions to of little wanted looking know, a add my I I I back, rate

Roger Deacon

we would -- it not material. or would significant be Brody,

for we're XX% next rate targeting year XX.X%. is tax to overall Our

Broderick Preston

impact And on Midwest, then -- for your to some and the broadly from on exposure instance, just your ag and loans There's had negative some I just ag touch some speaking, have leasing farm this in, -- a weakness And Okay. farming. the competitors in quarter. of to tariffs been there's and guess, I exposure. for our wanted

industries guys so wanted sort gauge And what exposed through I you to of there. most are

Michael Keim

have farms, industry not, would farms. lot of but They're for say, be one terms. they're what better I diversified lack dairy, number and smaller, farms Our conglomerate would we of a family-owned

one, as exposure well. just the customer the nature to themselves our them -- diversifies base So of and due minimized is

Broderick Preston

guys any you that And weakness book? on haven't going within Okay. noticed

Michael Keim

prices I been run book to performed book's customers extremely testament dairy largely The down, No. that's to a and but well. the mean, have their our continues perform businesses. how

Operator

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

Jeffrey Schweitzer

this morning. to you for everybody and just thank Andrew, participating Thanks,

the some impact momentum could quarter, that macro have the We are good of year excited out economy. we we heading there feel the first into even are about that all items given how finished and like the

continues economy local solid. be Our to pretty

looking the forward to of a great first at the and quarter, everybody talking So end have to day.

Operator

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

You disconnect. may now

Univest Financial (UVSP) 24 Jan 192018 Q4 Earnings call transcript