UVSP - Earnings call transcript Q2 2021 | Univest Financial Corporation

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Operator

Good morning and welcome to the Univest Financial Corporation Second Quarter 2021 Earnings Conference Call. [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 Financial Corporation. Please go ahead.

Jeffrey Schweitzer

Thank you, Debby, 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 Brian Richardson,

not, XX.X% to strength demonstrates the we our commitment loans. or Generating pandemic level team found growth during the past million statements management's were we second of your during We this families saying with $X.XX it this made million, express of actual materially a meaning annualized for in forward-looking XX%, chance healthy. I advised to pleased during start that laws. contemplated is reported Hopefully, million release intentions, earnings Before tab. our as to that communities. to over the resulting results safe within the PPP statements the excluding of from customers are $XXX.X like per conference remind growth experienced earnings our disclaimer. quarter and need share. $XX.X may our everyone be the review everyone we these staying cents in can refer and are XX the release beliefs, net Relations or our of the filings. website results yesterday. everyone have $XXX.X total expectations growth on hope at make forward-looking in the had quarter loan call, under federal Investor listening be very If by you securities and also quarter, or income I'd the begin, statements SEC forward-looking the univest.net months strong of course statements. of forward-looking by from I of a Univest's and management I to We our or will the differ Please cautionary may of those during our

we investments in production and mortgage have past strong process talent the banking the We enhancements due to to results see over made also continue in years. two

increased six year, income, have the advisory improving over Delta same conditions our markets Additionally, and we to first period has Varian strong In of of investment the which relationships. due year concerns new spite in to market XX.X% the the favorable prior continues had and be economies compared as up. activity to in our local in the opened months solid

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

Brian Richardson

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

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

the the During to ROAA pretax pre-provision of produced X.XX%. release. from six items earnings like months first of would on a four the touch we I year,

points of to million the was excess quarter. from margin when expected impact basis the quarter. excluding and liquidity, net averaged the and to compared reflects quarter. expand first PPP interest slightly for savings quarterly a basis second third XX impacted million at redemption debt the is of $XX margin basis excess X.XX% reported the was excess points basis the PPP approximately was X.XX%, the points This the $XXX,XXX liquidity of quarter. subordinated impact compared income. three margin, contributed to five First end and first decrease in the by Core of quarter. increased up million Reported NIM PPP excluding points which Core $X.X $XXX NIM negatively loans to by XX of liquidity

represents which of fees deferred June to million as balance As remained PPP, XXth, $X.X net sheet, deferred of fee the XX% relates on approximately initial amount. of it the

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

of charge our the first related for quarter, deferral the basis. offs million quarter basis of the $XX.X points COVID X.X% reduced on half the Net the activity During annualized to an were two or and portfolio. year

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

growth this investment primarily by mentioned, line Jeff fueled business. advisory our As was of

benefit quarter $X.X compared to second XXXX. BOLI death increased of the and XX.X% the $X.X noninterest or half million claim. X.X% when for the included an variances the for expense $XXX,XXX million Fourth, partially year first driven XXXX quarter compensation were loans or for related Additionally, to capitalized And the due specifically by in the of to lower quarter $X.X the lower $XXX,XXX relatively in periods first and XXXX. half our of related in COVID-XX. impacts, million expenses second low the PPP was comparable These

increase increased for Additionally, June specifically and in quarter consulting training banking our and June in mortgage quarter, profitability, as and lines for of the costs $XXX,XXX $X ended product and six months initiatives, as management $X.X XX, XXXX to variable six XXXX. due $X.X support the an our and XX, enhancements. our the to in the business. million million compensation fees for months ended DE&I treasury management Professional attributable wealth overall well for fees Primarily of increased more increased million

months of of subsequent the the initiatives. was straightforward, half updates related these $XXX,XXX in expenses are expenses our guidance. now six to to XXXX full provide of periods. to and of like a not reoccur in the earnings expected year the release I and remainder approximately During to believe year would additional incur I initiatives, to the XXXX, we these expect second on These $XXX,XXX we spent first few

growth excluding strong year-to-date on interest our PPP. again, to are of to result growth, to First, X%, income PPP. previously loan increasing to we of which X% we we XX%, guidance guided to had in Based this growth X% X%, excluding net expect

previously Second, noninterest X% of now as advisory performance contraction income the to mortgage business, as noninterest X% strong X% year. recently Based hired expecting and year. lines we our the of our on of team, income are well investment the guided banking to X% for of for growth we SBA had

the continued growth variable the provision people our is noninterest Third, we updates net income. initiatives of in expense compensation X%. on are to pretax accretive these investment pre X% expense to It the for had Based of year. previously concludes to increasing my guidance guidance prepared growth and our discussed X% previously That is and consulting impact to important to we note X% remarks. costs, guided

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

Operator

[Operator Sandler. Instructions] The Frank Schiraldi first question with comes from

FrankSchiraldi

amount would about up loan primary expected? some here, Or your there greater Is the the sort increased guys ramping have than say teams a what you maybe the out just in demand the strong it you there? market? Hey, better obviously it's of driver Is it added opportunity. guide providing growth faster of wondering M&A guys, the of some deals of the you

MikeKeim

Mike. It's Frank. morning, good So,

call I guidance, So we customers We lending the this fact were going, momentum our and did never and get that pandemic. in the well. we continue we of more our we going prospects as but kept done last lending to underwriting and lend conservative have knew so to that. and the be that the think momentum. teams stopped talked the We first just about foremost Again, during quality would kept

up us, from that's So our that has helped yes, the we've of teams seen, some folks the And been hired. have quality outstanding. picked of we

above overall the and team. So it's continues -- of the the all real above. sauce But all secret be to quality of just strength the

FrankSchiraldi

on then for in to the again, the of advisory over investment a Brian, especially of could of potential drill some give next wondered given opportunity market, so, you months and drivers your trying Okay, just fair just rate growth the XX related business, or income if some fee deals. the the the into guide, to down thoughts

BrianRichardson

But double we're the from full course, to were that expect of from growth market the consideration to what the there. year digit we'd investment Yes, of expecting 'XX flat, advisory kind on a digit 'XX. double things year-over-year side, perspective, mid -- is assuming there's stayed

FrankSchiraldi

And just expanding is business. that driving great. the then Okay,

BrianRichardson

from Yes, a customer well as AUM valuation perspective, new improvement of to relationships. expand as business continuing and

JeffreySchweitzer

to area, even the assigned and in been we've added the are as mean, and one Schwab in network yet, Mid we order. that started I documents the referral all of the have RIA's I XX believe haven't have Yes, Atlantic to us we network, getting in that that branches been

So also organic normal we're what help on doing, top growth. of just that'll

FrankSchiraldi

the that year is pipeline wave is me it revenues, of the volatile margins see in more terms because Okay. to fee you of, side back share can are more Any opposed there given on quarter, refi sort remaining in we And in where model as expectation could of now, where are, of given difficult and moving to know for terms talked the banking thoughts, other then you on last that what and the business. strong piece volumes activity half wanes. the the bit of mortgage business. I more a income mortgage to purchase about

MikeKeim

X.XX% kind else, cyclicality strong. basis, X% so to year that will refis a will What what the rates nearing just of anything were come and fairly simply absent are quarter gross happened And Frank, again doesn't to I should said. drop hope third into pipelines margins, range, we would overall, happen, down dramatically And continue. you last The which expect play. to fourth Ye, has and unless be pulled that quarter still resurface. have the this that strong, you tell on that X%, I

XX% purchase, little, of the now reflects we relationships right pipeline with new more as realtors move more slightly forward. and strength alike Our and hires is the their than which

FrankSchiraldi

maybe I stronger we usually that it's that results? XQ the versus the think Okay, expectation of so Would be can quarter. see the third in

MikeKeim

was to the say I that X.X% elevated don't than because would XQ XQ of closer to I beginning were the necessarily is at X.XX% just XQ stronger margins say because range.

from a yet. bit second we third So see in would quarter little the quarter a expectation pullback were could be not we the a where reasonable in

X% it it quarters, if relative If you're a at third to dominated now. will strong to refi a at you basis, on looked historical a be would historic, historical it margin looking be

Operator

KBW. with question comes Switzer The Tim from next

TimSwitzer

morning. for Perito. Tim This Mike is Switzer Good on

have several and PPP as going had guys and you origination guys you DE&I on temporary pretty on expense the they training, that compensation comp, you well. they're items look So like variable such as some the touched

I kind of rate run expense how out, going of trying just kind these many expenses what's us and, mean exit XXXX. help can into to quantify, this the transitory help figure quarter So of to you us going

BrianRichardson

that Certainly the that an expense budget guidance not through related From point had we look of a I things full those perspective growth updated I is if at thereafter. certainly the an as expense We'll additional behind we growth. accordingly process timer year be we of X% quarter think X% get And year, I run later rate XXXX expense one to this handful full this reflective be going we'll us. do to back timer that normalizing the initiatives in year. communicating give position of perspective, guidance the But year. in expect the from be in to items again, kind for provided of of this expect half the at and that one to overall,

TimSwitzer

else other come that follow bottom these growth with temporary more that costs line. will as or like and you you two something allow to those maybe out investments the or Okay, replace

BrianRichardson

by case and decisions, the digital uncertain continues like, environment, obviously, depending evolve. to things, on are everything case Those and

importance we'll required time; of time And are to maximizing understand some on operating the And that be from the we to however, leverage. possible. investments incremental focusing do extent

TimSwitzer

grown can great. returns, move book guys strong And good pretty capital loan really capital if quick, quickly also to levels, really your Okay, I have generating you here. on but

So And capital what plans And priorities? are with excess capital you your how deal on have that? any you'd deployment? do to like

JeffreySchweitzer

Jeff. this Yes, is

we of continuing see, we have front, strong we're really for which said, right to kind the the capital exciting for past, us capital the everything support, make on growth positive term. that want table sure we loan to is as and the very now, the is in On long

keeping the also all look some fronts, you on opportunities dividend would dry on that of we looking then at, supporting That's standpoint. always now, cetera. say it's any opportunities in to and trying go growth, talked for than, opportunities buybacks, for further wealth making M&A and case once I on then the But would table. M&A et that even arise we've actively a would powder sure right management if depending insurance how we're organic front. at the focus an as in look we're those and from things on peel look And Additionally, back past, we

Operator

The Piper from next question Breese is from Jaffray. Matthew

MatthewBreese

to more sets. how insight Thank strength your changed six product sense bit months. And you. a pipeline, hoping then are a what last what little us loan learn some Good I give morning. that's was about size or maybe over for the geographies and perhaps, to as showing just the

MikeKeim

morning, CRE our their and off quarter warehouse get facility, in the a what issue sell off having loan customers forward unanticipated the here market sizable they be pay sell pay to to terms hot strong. largely sell, business area, second and the going Good pipelines gain. of coming going we pipeline, as to that The to And is to Matt, Mike. pretty and/or which whether very it's an unanticipated. quarter are point strong in hot, the growth continue opportunity very at were it's the either projects the in Look, this to activity it biggest look deal third of with perhaps And regard is time. activities if and this is be because is a

whether is continues Central of to across we markets, are, market strong. perform to truth. Lancaster all markets our The there continue terms In be of PA the

there. to We perform continue well

area. look call book, But strong. issue and loan is sense. as to team economy across Dolphin very very Cumberland CRE. look what to the very York, Penn it's strong, continue New and same We counties, add at we for markets diversified and in perform we at Jersey It's it's not office look East C&I, the the to whether in doing people and We're strong traditional then whether the s we well; our board. the Again, been and

is area of everybody I than this other knows that vaccinated the parts think more country.

I oh, as to want without continue making just And sure having that as say, look growth move pay against what repeat will to we we you any loan The loan at forward can looking that said, off more? result have things hopefully and is look can we for move good. delta be growth net the So like do But reality interruption that to of out is activity our a variants. everybody because I forward.

MatthewBreese

is. what where maybe maybe incremental new Understood, give us okay. sense And are conditions then loan competitive a you yields just mentioned blended and for the competition

BrianRichardson

Matt. Brian. traditional a X% Hi, around X.XX% kind from for From standpoint, our production of production that's This the new first loans and quarter, CRE in from C&I is quarter. around averaged a from the up a

match, just you don't from and production that CRE at at some or that loan tell perspective, were So can for a characteristics a like and lower time X.XX% of to quarter, you and that, those go But got won't things yields there. you things course, blocks you some have other C&I S from have that we I'll time. that various have doing Matt, if to traditional people the lower yields we And unique look around our still types competitive like want

still So rate the craziness of wish some the everybody that just side, XX seven or not there it's levels luck. best to. five, But I there. is on years whether there's we fixed will go out

MatthewBreese

to want with point, floors rate Got it, provide hike, see end? loan how by be portfolio your and for if loan at this will me the when sense that unencumbered get just okay. Could floating do your and on responsive we percentage that's yields you if of a

BrianRichardson

had million in out XX% the our their so at second fixed of XX% about points. basis perspective, loan From loan $XXX variable. quarter, by that loans a XX% remainder They're we the end as is book money. and floor money were Brian, of of floors overall, the Yes, the in the and this adjustable is there is again, XX --

variable on rate would would two reset or impact have would a there happen an more it get to moves lift what increase those, in book a environment. is of be of take depending on dates rest on So the immediate to the adjustable, three would what

MatthewBreese

Okay.

end, mentioned, so the expenses expect year. should half to -- up fees of just kind clarifying fees clarification this Just ramp couple I higher expect the or think $XXX,XXX, some already, that training on additional you $XXX,XXX back my in to Professional just on others just are bit we a of the in continue you higher a level of for there. wanted

BrianRichardson

enhancements to Yes, half training. and that's treasury, and just related product clarify the our DE&I, year, management $XXX,XXX to back in the of and our

So it quarterly training. quarter. pretty be honesty, the kind at I to if of wasn't just third quarter in here look of to In second be of solely simply on a kind level lift to to related incremental from would not guidance the expenses you basis expect an $XXX,XXX you'd on to there the that X% X% now. all all But expect

MatthewBreese

you. Thank Understood. Okay.

Just last tax back new one should just the XX%, reversion for or level. higher my projections. kind we is of touch couple to a quarters normal expect, last the me; the if rate the XX% is of Curious than been XX.X% kind a

BrianRichardson

income we income, as like from tax forgiveness providing now taxable continue is Yes, which in coming upside have effective rate. PPP and and increased to translates that the

expect term, I extent the in kind to a PPP indicator, So to income would down historical norms. near is good starts that effective a wind of to reversion rate then think you'd back current the

Operator

no there At questions. are this further time,

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

Jeffrey Schweitzer

day great We And again your Have we end thank to you everybody of the forward questions. you participating quarter. stay the and safe. to for Thank talking and third look a Debbie, at to appreciate and today. good you, your participation

Operator

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

disconnect. now may You

Jeffrey Schweitzer	President and Chief Executive Officer
Brian Richardson	Senior Executive Vice President and Chief Financial Officer
Mike Keim	President, Univest Bank and Trust Co.
Frank Schiraldi	Sandler O'Neill & Partners
Tim Switzer	KBW
Matthew Breese	Piper Jaffray

Univest Financial (UVSP) 1 Aug 212021 Q2 Earnings call transcript