UVSP - Earnings call transcript Q4 2021 | Univest Financial Corporation

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Operator

Hello, and welcome to the Univest Financial Corporation Fourth Quarter and Year-End 2021 Earnings Call. My name is Alex and I'll be coordinating the call today.

If you'd like to ask a question at the end of the presentation, [Operator instructions]. I will now hand over to your host, Jeff Schweitzer, President and CEO of Univest Financial Corporation. Over to you, Jeff.

Jeffrey Schweitzer

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

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

management forward-looking the and yesterday; I I begin, start you differ review to I remind forward-looking univest.net of share. of statements. call, make the million Hopefully, on materially SEC from also listening or fourth it actual course need forward-looking securities like to of that Please from statements of release management's earnings hope and forward-looking laws. your $XX.X will had statements by to those be and advised the staying to express or in conference could during release safe would our you statements Investor I our that during everyone not, reported disclaimer. income expectations our found this We within families the Univest's everyone may intentions, beliefs, we Before may saying, is are in filings. the these per healthy. everyone results $X.XX meaning by the tab. chance cautionary under quarter refer be if a net earnings at the website our contemplated Relations federal

of or per $X.XX income million reported $XX.X the net we For year, share.

Chase growth and million PPP along for to $XXX.X we averaged in our continued resulting which the and year, the $XXX.X income We we excluding are success excluding or with payoffs Even fee as quarter our Bank loan growth both solid team, XX% we in or quarter, Fox occurred the loans. our of experienced the due Since total the very X.X% in businesses. X.X% acquisition of year, the offset lift-out loan with Lancaster to XXXX for of loan customers, per of annualized growth of the experience pleased of growth PPP loans. mid-XXXX, continue million during results strong have the production with

our bolster market, I. strong expanding banking Sheaffer make Xst, on the we we December in the was operations. continue lines Lancaster completed have grow as of our to Agency, Additionally, business, XXXX and our significant year for for the fee insurance the to acquisition where income in future of technology. businesses team Paul Insurance and investments both we Univest to people a

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

Brian Richardson

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

continued deposits. increase ability of As X.XX% quarter, of Reported in the quarter. which in averaged Jeff quarter. pleased points compared public with increase XX Reported loans. in million third million million to increase seasonal This business of to touch model performance liquidity, direct to well as deposits basis $XXX by liquidity excess driven million the by like negatively compared on to XX the basis points excess X.XX%. a in said, as third average pre This fund average would the of a a NIM was grow commercial $XXX ROAA strength $XXX our was impacted $XXX X. for produced items and a release. was of we from -tax our pre during XXXX, the we was reflection -provision diversified margin earnings very four down I are

to by Core basis points net X fourth impact X X.XX%, the PPP margin, of excludes quarter, of increase the excess when $X.X which NIM to was and million increased interest an liquidity points income. PPP, contributed compared loans During third basis the and quarter.

deferred on remained balance As $XXX,XXX it the relates of XXst, PPP, to December sheet. of fees as net

interest of we XXXX, loans. PPP net related $XX million recognized to income During

Second, during provision credit million. quarter, losses the XXth. with a on coverage for fourth excluding for we loans loss credit which was allowance was consistent X.XX% The September recorded $X.X of ratio, XXst, PPP December

net deferral During our million total model. the X. year recovery the portfolio. business continued to the $X.X the XXXX, of increased net of which diversified $XXX,XXX XXXX quarter, X.X% to experienced million our $X.X We XXX,XXX. income the of benefit declined compared Noninterest reflects and or X.X% charge-offs quarter COVID-related or in during for

compared During the X. commissions XXXX, hiring revenue. we XX.X% and $XX.X for expenses full increased or noninterest to income to total increased when the XXXX. presented opportunity. be year or benefits, million as in represented Noninterest when $XX revenue XX% Salaries, continue million, aggressive producers X% of

We cost, which have and the our in XXXX. million to strong due also experienced cost incentive wage variable compensation increases $X.X increased merit due impact inflation, to year-over-year increases, performance of

Excluding primarily increased training or over our to the $X.X DE&I initiatives, well management as consulting incentive as expense product X.X% XX% attributable fees million variable in enhancements. increase fees compensation, noninterest increased and and Professional process in our increased of treasury XXXX. support

to software, Data below due remainder XXXX, improvements, relates for XX.X% loan end-to-end or as on focus to $X.X items was investments expenses relationship During primarily loans management and our to I processing now $X.X increased customer processing spent initiatives. million, five would guidance. solutions. we continued of million and the XXXX data straightforward, believe the solution in internal $X it origination on like these release infrastructure million outsourced earnings I

First, PPP million income income when $XXX.X during million. interest excluding $XX totaled of XXXX, net

$X expect in million. to to This result loan loans, $X.X in million. this PPP is in of basis annualized we X% XXX additional income of $XXX.X growth interest approximately approximately X% excluding to Each and we expect expected point assumes increase, of growth to increase basis of interest point XX rate XX% XXXX, base March. to approximately result net the For income net off X%

credit time, provision the provision driven be $X will economic for Second, portfolio. be performance XXXX in by losses to government expect to for forecasts, and to stimulus, we million. continue At approximately the $X of the changes this

XXXX income noninterest [Indiscernible] death of million $X.X benefits. included Third,

Excluding these income benefits, in totaled $XX.X XXXX. non-interest BOLI million death

XXXX, off we of $XX.X to X% X% income reported expense XXXX. the base non-interest of For in approximately to to to approximately rate of and growth of X% expect from X% This of to compound XXXX expect in noninterest growth approximately $XXX.X X% XXXX. translates XXXX million. Fourth, we growth a annual million X%

That remarks. approximately rate assuming remains relates it as my to be Lastly, to XX% we that concludes XX%, prepared income expect our statutory rate effective unchanged. to tax taxes, current

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

Operator

Thank you.

a investor. We Q&A. Michael you. Michael, first with to Our the Instructions] over private will now comes from who [Operator is Thereto, proceed question

Michael Thereto

Hey, you? How're morning, Good everybody.

Jeffrey Schweitzer

Good Mike, are you? how

Michael Thereto

Good. Thanks.

in Just to a of X% couple the we how little could X% to should environmental of question be how pushing in of Can I there next that on up in but give of some is XXXX? budgeting, much to that. is is citing peers the higher lot much split budgeting and continue that the your growth. you general of a and number that a you're us pressure be expenses seems just to investments of business, I invest Brian, much that tech are think guys mean, guess, bit pressures appreciate thorough guidance expense the how maybe that there of about that year. you how when that hiring, guiding environmental

Brian Richardson

range the just Yeah, all as hire kind single-digit in low high of to assumption benefits staff and continue growth that that We're to producers, commission a in high single-digit, as That's for pressures on and at double-digit well kind range the in, grow we be area year-over-year. of describing. growth year-over-year. you're as other look big And would adds side. kind we of just of processing data salary as kind then the

drivers our main Those So to evolve dollars those to products. that about digital of as do to investment X% numbers us we X%. are continue million get that $X include assumed the

that that's X% X% in to I guidance So that reflective provided.

Michael Thereto

loan from And just of the I'm or a loan if curious you bit competitive growth been months. the even landscape perhaps strong. growth look to then and through mean, year pretty it really accommodating the is won't terms growth more next seems have here. for your guidance Helpful, your they getting have, loans and for a growth do bullish thanks. obviously of But variety is it sustain maybe you perspective which XX I on over become as guys able more Mike, environment Jeff could you obviously the question of even environment a -- a was regional a the I in than to think mean, prior peers are grow lot year? last

further. some there's think accelerate I'm trying could just if you even that you to help growth guys set level maybe So tailwinds,

Michael Keim

It's I Mike. think Mike. it's -- good morning,

think marketplace. still a be going it's I to competitive

everybody don't to a think I about to mechanisms. growth that back our are. at think But competitive the the team. Fed continues is to competitors loan pricing our strength continues I increases for and come point headwind Larger to their The be secret fully this in us. time, thinking of

that forward. grow And even operating very could detail. the as So we be, referenced to larger with forth market the move guidance comfortable with also the in I'm we'll on Brian team bullish players more what becoming they put the the as expense continue

Jeffrey Schweitzer

Yes.

projects customers and that is have the lot been you seeing year we're some that we're Mike, happen. strong, thing, loan continuing we happening that a their also of very anticipate other successful The The got net sizable. growth our selling while forecasting, to that are payoffs to in throughout remember, of

Michael Thereto

the you've rate have, legacy side of curious assuming? some think type are to core you beta are in then, about thinking relative particularly lot new some betas the just of historically a of markets, it. of as [Indiscernible] the thinking Got extremely new funding guys of equation? What lastly, which guys are NIM the guys funding you And I on deposit just the you just is those expanded on helpful. I Thanks. And like into funding, generally guide, the how you low. know Very sensitivities you Brian, brought of have what

Brian Richardson

the in basis currently be mean, especially range will roughly thinking the sitting have the the excess of have. I XX% the first excess will that increases. first increasing think tied Betas point low of of for deposits for defend liquidity the we're that of the rate of that We in XX% against variable just the increases sitting kind we with be increases, with environment, couple to couple $XXX here are roughly Historically, funds. liquidity Beta Yeah. million first of do and XX that XX% we with, saw rate that last we couple pretty

So instantly that will adjust up.

with book But some that. relatively the pricing think So expense on small with be otherwise we'll incremental across deviations. rest that will the hold to we able bring flat of

Michael Thereto

us can remind immediately? And what prices asset you just side on the

Brian Richardson

Yes.

overall, XX% the book bulk loan adjustable variable. the our So in bulk of XX% is fixed, XX%

it's that adjust XX% immediately. So really that's variable

Michael Thereto

you color. guys. Good the Perfect. Great. Appreciate Thank quarter.

Jeffrey Schweitzer

Thanks Mike.

Michael Keim

Mike. you, Thank

Operator

Thank from [Operator Sandler. line Instructions] open. question Schiraldi is next comes Frank from Frank, you, Our your Michael. now Piper

Frank Schiraldi

Good morning.

Jeffrey Schweitzer

morning, Good Frank.

Brian Richardson

Good morning, Frank.

Frank Schiraldi

NII missed then your your the deployment assume On or? sorry the on as -- mentioned guide, that says -- but on securities really on I growth does and it purchases amounts obviously well that if you robust driver deposits. thoughts It the the what -- are Brian, loan that's through the additional

your room let to base need if is be, what got some case those there? but You one-off

Brian Richardson

$XXX we seen sit excited hard book sub-X% the that a mortgage-backed. too year. million million the about see up of $XXX meaningful without spot $XXX by back historically. end in just range year. investment between a midway to we by anything of $X.X at path the or approximately to our the the this from through first purchased of in investments, We a then that, range we're sheet a Yes, of we XXX And perspective. fashion, see ended liquidity, billion we where year the investment we the last on today, year, yields of and That in we here a million range. be to We're really like down said, incremental million fourth year, currently $XXX get -- the into quarter can But purchases that to where excess balance to our percentage the get have disciplined we've quarter in a incremental doing

at go nibbling but disciplined, we're being as So opportunistic. it through, but we

Frank Schiraldi

a income off think just XXXX. to little X% on then you side, the down was are then the on front what fee for for guys I guide there I if are? wondering expecting And that you normalized could wonder growth what X% the banking the mortgage offsets bit specific drill and Okay.

Brian Richardson

in to that pulling from what volume we XXXX. perspective, to expect Really, fall We side, type we fee relatively mid banking XX% counting at tightening mortgage good see kind versus experienced but back, a XXX to threes the of steady, are for expect that XXX We'd a of the range margin were on up. income at Yeah, hold reported to margins to XXXX. range. we part low in XX% on

So that be pullback. about that investment and advisory. is offsetting XX% drives in and - of The itself XX% area driving growth would that

We the And side we a of mid-to-high both year-over-year. low I. on growth growth continue addition double-digit kind there. well, Sheaffer double-digit the to see nice then single-digit, nice of the as organic, high being Agency, Paul but with see that insurance

Frank Schiraldi

Okay, all color. the right. Great. Thanks for all

Jeffrey Schweitzer

Thanks, Frank.

Operator

further Schweitzer closing We questions, to for have any currently Frank. I Jeff you, no remarks. Thank back so hand will

Jeffrey Schweitzer

today. Alex. thanks everybody And for Thanks, call on our to participating

head the produce, and 'XX, that for has we the as great and we everybody we Univest lot. the continue we to stay and about as were long-term to of and With reward able excited to our momentum make healthy. a shareholders. that, have a are success hope Thanks investments I We into year XXXX day,

Operator

joining you for today's call. Thank

You disconnect. may now

Univest Financial (UVSP) 27 Jan 222021 Q4 Earnings call transcript