UVSP - Earnings call transcript Q1 2021 | Univest Financial Corporation

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Operator

Good morning and welcome to the Univest Financial Corporation First Quarter 2021 Earnings Call. All participants will be in listen-only mode. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Mr. Schweitzer. Jeffrey sir. ahead, go Please

Jeffrey Schweitzer

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

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

from a reported would this make I the begin, can management's start conference of at was statements to the intentions, everyone forward-looking million remind statements. Univest's materially forward-looking as income XX.X% the of quarter forward-looking during the for beliefs per Securities also pretax listening forward-looking need first I in will year. meaning $X.XX We our review compared these very our differ up quarter statements hope quarter actual $X filings. $XX.X and I your Federal SEC Relations statements univest.net cautionary Hopefully, release the the If management pleased by million earnings our and the the be income during our our chance staying from for We our to results tab. or the were refer call, to course pre-provision may with safe, last of website to by Before share. first quarter or in of Investor you found to I on advised that disclaimer. and those results families yesterday. everyone not, had net under release earnings like may be or express it expectations we the contemplated laws. saying within is are that you Please healthy. of everyone

or growth experienced solid with $XX.X loans excluding During growing annualized. loans the quarter, X.X% PPP loan we million

our first The is historically growth. of lighter quarters loan one for quarter

million annualized. in X.X% deposits loans with or growing $XX.X Additionally, grew step

Our continue perform in markets. be both team margins our continues very lower to and banking despite to as volume well strong, inventory mortgage

same the compared new due prior income, period strong conditions year which investment to we increased to advisory had favorable in Additionally, and XX.X% market the relationships.

and open continue future the looks for As economy our and improving. the be administered, vaccinations to to economies local foreseeable continue solid

we favorable our $XX.X million credit to economic-related to result, of assumptions changes due losses a our model. for in $XX.X with were million within As provision CECL reverse able

to Before to just I I over it and work the through to turn Brian environment forward. each for it a on of job continue move I serving Univest results. the continue family. we discussion members communities other our to turn our want over current They our customers, Brian, wonderful thank further now Univest as do and the will to Brian?

Brian Richardson

Jeff. you, thank would joining for And Thank I us like to today. also everyone

presented displayed loan achieved loan During ability the headwinds our loans, growth growth. to despite the by PPP the continued In quarter, inherent of generate pandemic. we XXXX, excluding X.X%, organic we

traditionally quarter commercial As achieve Jeff to X.X% growth slower able in a utilization. still but decrease quarter despite is first annualized of $XX.X mentioned, million for were a us, the line we growth

December XX, XX.X% December to at XXXX As was XXXX. of XXXX, commercial it utilization March compared and line XX% - at XX, was XX.X% XX,

performance to ability core addition our continued continued In business. grow our strong in demonstrating we loans, to our

the now would on the pretax I touch of four we a to release. items earnings ROAA For quarter, pre-provision like X.XX%. from produced

in XX, million reserves PPP coverage X.XX% loan at ratio, X.XX% during which CECL by excluding offset our favorable attributable XX, quarter. loans, for reversal XX, $XX.X our to to quarter, First, as by changes compared the the and at credit allowance our credit driven XXXX. X.X% December for annualized XXXX, to at loss March Jeff March growth economic-related was was benefit X.XX% The XXXX, mentioned, of within due assumptions for losses $XX.X was million provision a model,

X.X% relatively of stable, quarter, During COVID-related first million activity was or the our March portfolio. $XX deferral the ending at

release reserve supported assets, by was the during and in quarter. decreases the charge-offs Additionally, net delinquencies nonperforming

excess basis Reported fourth million loans fourth of the for X.XX% X compared negatively $X.X up the to the downs compared liquidity $XXX interest third the to in PPP and NIM quarter decrease impact, totaling was X.XX%, PPP points quarter XX margin, during of of compared and of $XXX a margin points NIM $XXX.X reported the million pay XXXX. basis in to of XX by was Second, of impacted million of X fourth quarter the contributed million. quarter $XXX was which the and to liquidity, averaged points XXXX. of income, points result was million by loans excess net increased forgiveness quarter Core quarter. which $X.X million basis excluding the basis when and

As of PPP deferred remained net XX% deferred XX, represents of sheet, on net loans fees balance the March million initial of fee $X.X which approximately from amount. the

$X.X or was quarter Third, up the XX.X% when of million noninterest income compared XXXX. to first

perform volumes well, by very margins. As strong banking mortgage to continues Jeff driven and mentioned, our business

XXXX. also income a - nice $X.X also advisory of investment with contingent totaled million $X.X which XXXX. income which commission year-over-year. the million, consistent Additionally, was first fees and Swap the quarter increase Insurance for million, compensation was This fourth Fourth, of $X.X fee capitalized was loans income quarter included or saw of originated $X.X quarter expense first PPP includes X% during with the the and compared associated XXXX. $XXX,XXX quarter of incremental to compared for $XXX,XXX million for non-interest the to quarter. the quarter first up of

during remainder strong the After for up included and quarter that the charges was release of straightforward pretax compensation believe adjusting earnings variable debt of remarks. concludes partially the of compared my Additionally, prepared were expenses XXXX. our X.X% to the was XXXX increase of the by pre-provision first income quarter two to extinguishment driven long-term items, I these quarter. This first $XXX,XXX. due

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

Operator

[Operator is of Our go first Andrew DeFranco Instructions] Please question ahead. KBW. from

Andrew DeFranco

Andrew. good guys, for is questions. for I'm stepping today. Hi, Thanks This morning. in our take Mike

Brian Richardson

Good morning, Andrew.

Andrew DeFranco

growth also loan conditions, improving So seem but to active. economic pretty opportunities you guys be mentioned the

the the level? how think ratio and So the balance and going forward expense reserve overall do you guys provision about

Brian Richardson

That's Moody's. to do going be improving. conditions to of see to economic And those are as a tied function continue we we

see forecast that Moody's experienced at If to come fourth we here as quarter coverage at back coverage ratio. would the and improve, That's CECL, a implementation what we that again being think quarter in XXX% our where So first was were XXX% we ratio. in coverage of the through. the we at

coverage we would I should But initial land. to things slightly of would where I So they where trending expect implementation can operate for think improve think X.X% down a that longer-term play of level continue things range would to XXX% to conceptually continue you kind that in about us of as are as improve. a

Andrew DeFranco

Great, thanks. had quarter. as contribution first And strong you guys fee the well in

mortgage the on side. and Just the the pipelines as now. those But the on insurance couple of update in And had seasonally in I think secondly, dynamics questions any a market and Wondering any updates if right you on the QX businesses wealth that. pipeline on benefits growth well?

Michael Keim

Andrew. So I'll take first part Keim. It's this, Mike the of

On the comments, to problem the but And the we But our continue area and off to to we continue the or clearly when lack a from when pipeline in mortgage in as officers then opening purchase-oriented loan inventory. Jeff get be strong, of refi on business live them. refis to we to changing is biggest mix purchase is side alluded his more our remains side, purchase oriented. drive the hire

Jeffrey Schweitzer

there That the fee to as we which in what's the around repeat on isn't itself income year. unusual really during a million the With this dynamic. that The following market. with business get items any to necessarily the first quarter contingent quarter, is doesn't we've quarter seen. first quarters with $X.X drive insurance, that that the increases we from first respect correct. And would Brian you're respect happened there the driver profit wealth, is the quarter. sharing That's income, real With side, carriers that do alluded

over up assets when this and under year back. market from last at management the time Our $XXX million supervision pulled are

So overall, banking and more. we've a lighter a with office have I getting appointments insurance people than revenue, which wealth harder side, also, lot as on directors on to lot to of good seen working little are the side just with like Predominantly we're group. are. a lot comes it's it benefits. remotely, the get are historically traction and up a we're but HR say, a working pipelines a they solid. with employee market, of side, with pipelines And We of wealth opportunities started The market conditions, opened where the would increased little well our seeing the things a the still private result the appreciation when

with respect a which lag much to opening that's So pipelines. things as compared pretty while bit vaccinated, are they improve wealth, people historical little up getting back to levels and starting is been of a more are to to are

Andrew DeFranco

deployment Thank update priorities, is you building And and for that. nicely. capital including repurchases capital share and bank Any Great. lastly, nonbank M&A? on

Jeffrey Schweitzer

expand on we're build as alluded as be June. and that, want to of pay buybacks, keep will right entertaining continue its everything our as end to start it we've robust to something that to do challenged we've we've respect our $XX our Once happening But organic solid back to our dry opportunities necessarily million the to which capital in that's insurance now. So the when powder June, we we about will with in the pay first And to subordinated wealth growth debt loan share be of treatment table. to to goal growth more continuing will With the is not losing and debt, pipelines subordinated have still M&A. off capital, past, and we comes some see we be markets. heads respect of to been

dry our to for and M&A think want in really We well. rest we all insurance the year wealth solid have capital do growth want for those - And the some operate we our side. the markets as combined we continues we the what economy loan potential fairly So powder with on for opportunities. of as keep adequate - see to

Andrew DeFranco

much, so taking my you questions. Thank for

Jeffrey Schweitzer

Thank you.

Operator

Stephens, from question Inc. Matthew ahead. of next is The go Please Breese

Matthew Breese

Hey, good morning.

color and by on XX the will at this you have months extent given books, on we Or we surprise year nonperforming - a what advantage the closely give over From ground bit of firmer us how and we've charge-offs do over charge-offs out you underneath us might you of and has cadence charge-offs assets quarter more us? the think some resemble two the that the more this now last think were. current last the where years? your all little I seen a play taken looking could like over certainly feel now last

Brian Richardson

Yes.

direction, for the the just I is the of quarters flat right inherent of experience had we And holding of the pandemic. as foreseeable we've out that the think charge-offs I what where continues as last everything quarters Again, the uncertainty we've seen couple think is reasonable relatively expectation. last come to there occur. of expect a that be in the future, kind as to long couple in head to we would

Matthew Breese

Okay. the And stripping then just PPP on liquidity. and away margin,

a on the Just process where get we kind wanted are income in margin? sense think inflection hit And where of bottom net to can you that go you point the a interest of we for here? finding core think have from

Brian Richardson

Yes.

to that starting forward. be certainly slight There we're hit think pressure going could trough. I

a You're you PPP have a think trough liquidity. that to on and reported basis, basis noise this hitting we're normalized point time. in to certainly at But going due on said like I excess

Matthew Breese

the you just be what's could terms that you that? Could on remind the the impact of And us NIM what could from debt impact? the of repay and the sub

Brian Richardson

Yes.

roughly So around be flipping variable to the one the X% to that's will million flipping X%. is our annualized. $X will that be goes be savings level - X% below it flipping those be once other piece that There today of would expense either is a just interest fixed and will

annualized savings. look So right of when $X that, at you million around you're interest expense

Matthew Breese

also actually question last Pennsylvania. the have verticals been be the look? lot there's from income disruption done then kind to on on front, in continued the is also more does hiring How insurance you of recent that And Historically, verticals Eastern I'm a Pennsylvania, me deals, particularly Great. job disrupted. all of Okay. a in sorry, fee - some lending - there's the pipeline lending commercial side. And great

and wealth curious well. the front Just if opportunity as there's hiring on insurance

Jeffrey Schweitzer

just that and I'll off insurance wealth the on acquired gets have to challenge kick non-compete that front. in And those always Unfortunately, non-solicits. and doesn't same away. Well, wealth the mean somebody is we because go insurance

They good be still us so on to a being the is still acquired when not will side. that with it one insurance to a of the commercial in part the open With it hiring on be they the way non-solicits So over. from where challenge. like It's disruption have and a wealth eyes the side where customer bank maybe provide carry team said, take can you things they're which talent lift or our - opportunity the or in be away in somebody they're out always of going does because for a thing conversation. changing obviously might still non-competes other,

Michael Keim

for in as on the Pennsylvania, to continuing commercial we banking we're the on had Central our the to people closed we've grow active mortgage look quarter added the them. the of of And the very capital them benefit on equation, can value prop pipeline side, side and And side the region. to Matt, equation. a and deals markets recruits, - our of expanded on get in first we continue to We'd

active be it. in after to continue we getting So

Matthew Breese

Got it.

sneak more core growth had you ex-PPP you the any growth, just in. Okay. mid if I'm think just for a a updates for sorry, think could Could like maybe loan year? you to there's just curious give mentioned one us previously what single-digit there. but to high I look sense

Brian Richardson

to X% true hold PPP think time. to year at this excluding point continues X% for Yes, and in had previously to We we Matt. the that guided

Matthew Breese

you. Appreciated. That's had. Thank all I

Operator

Instructions]. Frank [Operator The ahead. go Schiraldi question Piper of Please next is from Sandler.

Frank Schiraldi

a commercial footprint. morning. that more for of Most there's hiring the or even the questions answered, would than my competition more, lot question of been lender. so follow-up have in Good a just good of usual lenders I imagine on

how guess, case, expectations the tougher hiring anticipate bring been growth? to the if - Are for expectations that And over such bring if it's just So individuals. teams, that over that's does been impact is that your wondering you your - Or loan individuals thoughts of to to quarter? rest are on you amount what come doesn't continue year? fruition, if or of growth your if people able the that certain through hire I another to if loan the per you're

Jeffrey Schweitzer

Yes.

Frank, people successful, strong. the people we're it, of you part after the like competition would quality And first for is us good grab folks. tell on because impact the So I is would and always bigger come to our that

the growth strongly keep really our our because the making that we're good is that defending secret and folks quality loan our is to folks. position sure we success of sauce So our

is to can our to we number a have no X% add like I ramp-up magic staff. who that on Remember, X% say, to period that to to that But strength continue that it. after quality there's team a we'll But put We get anyway. Brian feel referenced with do anytime number we a the we add people the deliver on then that can X% to broader our we can them. teams, we is we're for add today. existing X% recruit. always find like there that. the as trying I scale, to What that person I'd with will deliver don't

Frank Schiraldi

great. Okay, you. Thank

Operator

much. Thank you very

to hand And questions for remarks. closing So like I'd any we the to queue. Mr. Schweitzer in conference further the no have back

Jeffrey Schweitzer

the quarter. open looks a Have everyone, the thank looks look definitely us in questions. and We this pretty day. in in a again for to you, release everybody and strong Chris, the We be call earnings appreciate economy to markets, after our look the morning. participation to activity on up our and continues and attention to and joining look and XXXX talking robust to forward Thank what second that we to as forward we great participate you,

Operator

presentation for and may now Thank Thank sir. disconnect. you the now much, you you conference gentlemen, attending is today's very and Ladies concluded.

Univest Financial (UVSP) 2 May 212021 Q1 Earnings call transcript