UVSP - Earnings call transcript Q2 2022 | Univest Financial Corporation

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

Operator

Good morning. And thank you for attending today's Univest Financial Corporation to hold Second Quarter 2022 Earnings Call. My name is Austin, and I'll be your moderator for today. [Operator Instructions] I would now like to pass the conference over to our host, Jeff Schweitzer with Univest. Jeff, you may proceed.

Jeff Schweitzer

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

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

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

income the from our interest from net quarter we rates asset rising due XX.X% of Our first sensitivity. year the interest increased benefited as to

comments. growth will annualized, his on continue losses quarter, which an Additionally, in lease XX.X% during more during very go PPP the excluding loans loan strong resulted into detail or strong for to million loans loan have quarter. grew CECL we loan growth Brian increased in $XXX.X as under and the provision This

of first as quarter. to income the continues the volatility and for are pre-provision lease solid increased loan be losses pretax result quarter. happy our provision the CECL And there and while is with our growth, in We results to from our loan X.X% due a strong for

banking, for continues growth management, and decline along assets increasing management established businesses mortgage wealth banking have been future continued to negatively by markets we impacted our of for impacting margins have while us all decreasing up growth. set the in Additionally, financial engine revenues mortgage rates under with for and across of lines and wealth supervision the

Brian, thank Univest I the every further like discussion day pass turn and I each will work the for our would customers, efforts Brian now to entire to they it family great serving to communities over it and results. for their I continued other. Before over our do on for

Brian Richardson

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

strong with ability growth pleased during generate very rate environment. this continued our loan to rising are We

the annualized, increased During loans. quarter, PPP million XX.X% $XXX.X as Jeff loans said, or excluding

For X loans of the have million I or year, like earnings now release. increased XX.X% to months the from annualized. items the first touch $XXX.X X on would

points Reported XX excess quarter averaged liquidity, X.XX% the of quarter. in margin the was first to basis $XXX impacted by XX first NIM basis which compared increased million $XXX for the quarter. reported First, negatively to compared points of million

by diminished, the one quarter $XX.X outflow our a borrowing declines was customer. and second-half strong we million This the during commercial excess driven a growth, for in our June fund position. liquidity primarily the quarter, However, of public loan seasonal and in ended large

quarter. an to variable rate to and X.XX%, by fixed equal the of approximately equates a to of excess implied this entered loans. into quarter, X $XXX an impacts and notional the point variable forward lock the NIM pays points XX.X% last margin, curve. rate compared loans when basis first and income. was interest Net benefit The increased May of quarter. $X.X basis $XXX,XXX of in PPP During $XXX the the million XX compared as increased increase company a prime. million our the Core XX% a which portion bank excludes under to of of a by X-year contributed to swap, On amount the opportunity interest X, to We or which rate million liquidity X.XX% view interest income receives net PPP,

Second, credit with losses driven was provision $X.X $X.X our recorded for of from the and provision loans. quarter strong growth primarily a non-accrual million we $X.X quarter, provision This loan the during during resulting million a million. totaling by associated a two

was ratio, Our XX, June with which was coverage PPP XX. consistent X.XX% on excluding March loans,

points $X.X to million During related This the a we loan. experienced driven non-accrual net quarter, basis primarily was annualized. or of charge-off charge-offs XX one by commercial

$X.X charge-off the related of not million year, net or portfolio. loans, to we the the in the had points X event-driven pervasive of credit seeing basis Despite of we quality non-accrual signs For X charge-offs annualized. deterioration months first and provision are

last to to hired Fourth, these income $X.X year, claim Agency, on Offsetting decreased $X.X expense year. million compared non-interest were recently second $XXX,XXX which resulting in benefit X to business of inclusion the of quarter a insurance the a due of decrease on $X.X guarantees banking net of primarily the other our investment into and debt lines Maryland. in increased of fee digital the non-interest gains producers quarter mortgage of income quarter service million to expansion $XXX,XXX second streams. and our or was an in to by Paul BOLI Sheaffer our XXXX. PA $XXX,XXX the decrease decreases XXXX, Third, management Insurance mortgage This $X.X and and or in Western to paid includes income million from increases X.X% transformation million $XXX,XXX driven of which and compared XX.X% I. $XXX,XXX second December last the related project, was acquired related

like of now update non-interest X.X% XXXX. the guidance. earnings or compared these Excluding increased would I -- million and I was to provide to we items, to quarter to the our second expense the would believe like of remainder an straightforward, $X.X XXXX release

XX% income excluding reminder, growth of guidance a $XX Based to on X% to when million. the are XXXX. interest to as our strong of we for quarter, net I XX%. to income XX% loan call, PPP quarter's million First, On growth increasing during totaled during last had guided XXXX, this $XXX.X

in net We assumed interest includes XX% off rate $XXX.X expect and This the XX of impact basis XXXX. September. an to XX%, base this increase growth of of of points point to approximately the yesterday's million income in increase result XX basis in

the in for continue Second, specific loan be changes to losses our provision including of credit the growth, credit assumptions will that performance portfolio, driven credits. and by economic-related of

BOLI of in benefits, slightly non-interest XXXX. million I non-interest income down million. totaled flat Last $X.X that XXXX's excluding to Third, would be guided quarter, $XX.X debt income

saleable business and equity pressure mortgage volatility banking of non-interest volume AUM. We due expect impacting income line our on the additional in wealth management market our to reduced

As base PA to base for a markets our the transformation. full-year $XX.X to million X% result, $XXX.X the and off includes digital growth and our the base in we expansion remains of the expense XXXX -- our non-interest guidance expect Fourth, the XX% XXXX million. unchanged. investments X%, of down This to of of off non-interest income Western XX% be Maryland

XX% The from for Excluding XX% compared updates, effective non-interest our of on of XX% us highlight Lastly, our the pretax be approximately often impact to X% our up tax are expected a above to declining guidance expect for the diversified cycle. to XXXX. and pandemic rate of in guidance model these based strength the year.\ We year-to-date during investments, pretax diversification during expenses very be This XXXX to rate results with revenue core business served earnings our well income. increased XXXX. approximately cumulative as approximately taxes, increase relates for to full-year the income of of we XX% pre-provision the last it being the the

While seeing income it we This our more remarks. in are net benefit interest certain lines from -- asset under than now sensitivity. are income is by my certainly offset of we the while concludes fee prepared business pressure,

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

Operator

from Instructions] line Our first Tim, your Tim is from [Operator Thank question Switzer open. is you. KBW.

Tim Switzer

Hey, good for morning. my taking question. Thanks

Jeff Schweitzer

Good morning, Tim.

Brian Richardson

Tim. morning, Good

Tim Switzer

do still With growth driven curious, in the but of loan you like increase you the what And are forward, loan I'm just on puts and your off wondering in -- that there. like or like Fed of from all obviously, things just the year lot given seems being takes QX. here strong expect of in kind of upside still probably a second-half going -- it's at a guys and I'm moderation conservative the the are guidance, tightening that

Mike Keim

Tim. Keim, Mike is this So,

the feel guidance comfortable with continue with that customers. things Brian the second we guidance lack for that term in continue the quarter pace did, gave. because So, we we moderating better some same The our two believe activity payoff of see will is to that us we a kind we don't obviously, of have

answer a are perspective. gave is and an of be interest to think a we've from doing definitive of previously your see relative that's question driving result people as things for, the bit. of always would have And but we rate of the everybody. us that forward those that the X Brian growth I So, the back question that a growth pace little kind to the heart being pulled had is, pulling And Fed cautionary what guidance loan don't

Tim Switzer

have would There's like, I have growth. the a upside a seen you anything? yes, this, come out strong GDP question just guess you deceleration beginning loan I GDP we chance yet is And if growth. if, economy Like the don't can think came Okay. probably for two obviously, mean, growth I But landing. out quarters say, at or the negative here? there's QX of of a there -- pretty guess the numbers economy my upside it's is hard in -- still

Mike Keim

No.

but like the interest the some -- haven't that for there forward for people it, loans as reflect have said, that demand has on seen while fact we slow the payoff activity we not rise the continues down, raise to And have manage. we any that Fed We possibility do activity seen rates. is always pulled I been risk

Tim Switzer

Right.

Okay, that How rates impact million just basis should your as cycle, last quarter, NII there $X you that? NII for lessen deeper XX And does are on swap the And rate given think mentioned the the probably to higher, guys all that sensitivity, million points. well. each into I sense. $X.X impact annual of we're about was that makes

update you maybe could sensitivity. us If on the

Brian Richardson

is we quarter. little bit last was had when this higher Yes. given And Correct. Brian. It a

we incremental million increases an that to annualized as kind to basis said $X up the we've expect, to expected move also, contribute would an rising impact. range. of million the you of point initial Considering basis. rate XX in some contribute each forward this that XX point had as of well clearly, as that migrated of expect the environment, you September as were has XX in moves point to said, on handful we $X in kind range impact here, we swap, this However, $X basis through the million after But swap the

Tim Switzer

great. that's all Okay, you, Thank me. That's from guys.

Brian Richardson

you. Thank

Jeff Schweitzer

Thank you.

Operator

Our next Sandler. is Frank, your with Schiraldi is Frank line from Piper question open.

Frank Schiraldi

guys. morning, Good

Jeff Schweitzer

morning, Good Frank.

Frank Schiraldi

On deposit here the getting seasonal quarters. for a liquidity the what front, some or ratio in And expect where was just might levels. have to trend balances. you to I loan-to-deposit you back you wondering mentioned be where targeting [pros] pre-pandemic you good you [Ph] you're the coming obviously, swings in

Brian Richardson

this do that going Brian. We loan-to-deposit in kind managed range. we to to had Frank, would forward. of XXX XXX to ratio Pre-pandemic, expect is that continue

kind While total of see my earnings we accounts things we isolated as the a base remarks. the it well largely -- a consumer for excess that in of on that million liquidity, called to quarter. personal down in Quite honestly, billion I runoff $XX release handful was as of $X.X like prepared of accounts saw did out the really

see customer. across large one commercial as that decreases It public the is decline, driven really to was as by seasonal, significant board. we a outflow which So, related well didn't fund

Frank Schiraldi

on That Was maybe more large follow-up in defending was relationships? have any there? you rate? aggressive the all outflow. Yes. it Right. gotten my color more these And Any

Brian Richardson

funds wasn't by that purposes. at all, was that deployed quite held been a It ultimately were fund It for rate-driven investment honestly. had

calls it So, and kind then capital was been up just deployed have that of funded subsequently.

Frank Schiraldi

I bought Okay. And shares. of back, buyback, you like the XXX,XXX think, terms in then

think Is but decision, you bit, in know forward. more that than that I trying coming I little to buybacks the something a authorization. you here the quarters? going about continue it's have a You under just think Board to guess, utilize current

Jeff Schweitzer

provide is until a XXX,XXX this And a exhaust to Similar continue then Yes. discussion powder -- be to pace going quarter continue we'll forward. Board authorized. on some is that on planned we to Frank of we with we what announced quarter, what's we there the shares more last currently have be to do Jeff,

Frank Schiraldi

geography can to or color then any terms you that reserve was And lastly give Okay. estate just any non-accrual, loan on real on specific put that on the in related further there of one? that commercial detail

Brian Richardson

was booked some the but specific occupancy market. as that a on well drove reserve, $X.X It's really taxes well challenges The charge-off, when property in CRE delinquent reserve Yes. not use as it non-accrual on. some There's as putting our one the mixed core million the we current placed on -- been the that need. the non-accrual reserve as

working we to on are kind that prudent the thought with discussing we'll borrower, But continue through we However, in and it it to so. put quarter. of non-accrual do was the year it and

Frank Schiraldi

Okay.

So, retail mix is that multifamily? with

Brian Richardson

Yes.

Frank Schiraldi

great. you. Okay, Thank

Brian Richardson

are You welcome.

Jeff Schweitzer

you. Thank

Operator

Our from is next Varga Stephens. line question is from Samuel your Samuel, open.

Samuel Varga

morning. Good

Jeff Schweitzer

Good morning.

Samuel Varga

one rates question C&I front. at point? growth this on some Could more you I loan give utilization the wanted to the color ask just on

Mike Keim

Is rates that asking about? line utilization that you're

Samuel Varga

correct. that's Yes,

Mike Keim

around to is utilization So, our commercial XX% XX%. somewhere line

Samuel Varga

So, sort expect to the attention? any do you see of

Mike Keim

range it historical that in been of us. kind is XX% to for as has XX% The

Brian Richardson

Pre-COVID.

Mike Keim

it little cycle, is did This COVID the back In bit. decline. a a jump Pre-COVID.

benefit line utilization, quarter the these at in we levels. did growth loan from are So, second our but historical somewhat in

Samuel Varga

And Understood, those this year is my you as of second-half inflows size some color then on of sort the return? of funds. thank of just you. you're expecting question on the the last in Could give what specific public kind

Brian Richardson

$XXX build kind normally quarter the kind like collections out to the We what the with and we million see see quarter of anywhere fourth $XXX public that third always of is bill. Yes. the from funds into range that of in tax million

Samuel Varga

give as quarter on rate-sensitive. I one some your a in. relationships that, just you what sneak specific can slightly We've guess these color to I And you're to more follow-up some if commentary Could being seeing heard this relationships? around more

Brian Richardson

Sure.

they beta or as Largely, as annual give it tend an the certainly look side, build fund overall. they take, see you you to more On close public be rate-sensitive. on at basis, to, XXX% pretty

XX% there. the a rate So, last on deposits. saw some environment, In certainly there'll be we rising pressure beta

like quarter-to-quarter, kind this be that coming through expect will expect could that environment. cycle. beta and see play the XX% coming rate normalize the volatility some this to beta we but be will rising the rising year that in things on rate these through over to of just build here or on quarters of the timing We based through There cycle. the We'll that end there

Samuel Varga

questions, my taking for you thank I it. appreciate Understood,

Operator

time, further this no At are no registered. questions [Operator Instructions] There there questions. further are

closing to remarks. the I management conference for So, the would like team to pass back any

Jeff Schweitzer

Thank joining everybody, thank you, you, Austin, for and today. us

I really technology will manage help provide engine as to and provide pay benefits, for -- future us said new to growth continue as in benefits investments We earlier, continue obviously, us our markets. continues we in and to through our this

with So, talking again at end everybody look day. we're pleased Have third to a quarter, the quarter. of the and we great the forward to

Operator

your Thank you concludes call. That for today's participation.

You may now lines. your disconnect

Univest Financial (UVSP) 29 Jul 222022 Q2 Earnings call transcript