UVSP - Earnings call 4 2023 | Univest Financial Corporation

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Operator

Good morning, everyone, and welcome. My name is Drew, and I'll be your operator today. At this time, I would like to welcome everyone to the Univest Financial Corporation Fourth Quarter 2020 Earnings Call. [Operator Instructions].

I will now turn the call over to your host, Jeff Schweitzer, President and CEO of Univest Financial Corporation. ahead. go Please

Jeff Schweitzer

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

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

meaning I'd the remind that securities contemplated Management may these call, within we cautionary refer or Please forward-looking federal the statements earnings of disclaimer. management's everyone materially may forward-looking differ forward-looking intentions, expectations filings. the conference begin, SEC Before advised of that this of statements our to express will beliefs results the release actual Univest's laws. our and be during I from forward-looking like by to those in you in the course statements statements. make

chance a our found be review Relations tab. to it release under Investor our on not, If from the had everyone Hopefully, yesterday. can website univest.net at earnings

or reported net share. of during $XX.X million We fourth income $X.XX per quarter the

the of deposits to During mix the of cost in with see the deposits. shift quarter, stabilization along the and started we

during to declined as enter problem general the credits XXXX. in a due we higher rate to slightly pipelines environment, some the and loans While slowdown activity, economic potential have the solid payoff continue of quarter we

relationship We provide continue full in to focus Brian customers will prospects XXXX and comments. on additional guidance his for

Brian, to serving work thank communities to efforts like it each our the family just their pass do they that great and I'd every for customers, Univest I the over day Before our other. continued entire and

our Brian discussion results. it turn I'll over on to further now for

Brian Richardson

like items start us to earnings like from today. by would touching Thank I you, and I X thank everyone Jeff, for release. the on joining to would also

of the NIM during stabilization. saw signs we First, quarter,

third compares quarter. NIM Reported the quarter. the third an basis basis point X.XX% X.XX%, from to decline This XX declined XX in points during of

XX basis excess third excludes last the This point X.XX%, a quarter. which declined the decline to liquidity quarter. basis compares points NIM, compared to during of core Additionally, X

million relates quarter XXXX. deposit grew our million it $X.X $XXX during the loan contracted by during as and and X.X% Second, to activity, loans or

Deposits $XXX.X million XXXX. brokered X.X% quarter million decrease reduction contracted grew million in The by quarter a and included during fourth CDs. the million in the $XX.X by $XX.X in or $XX.X

During saw of to noninterest-bearing which as the a it of million stabilization $XXX fourth by quarter, million compared quarter. we signs $XX.X last relates decrease deposits, increased to

As XX. XX, September December of deposits deposits to of noninterest-bearing XX% XX.X% represented total compared at

for of during million. Third, the provision we a recorded $X.X credit losses quarter,

X.XX% September ratio for Our annualized. coverage to at December charge-offs million X XX. or the compared quarter Net totaled was XX $X.X points X.X% at basis

Fourth, the This noninterest fourth million fourth expense decreases These of of to of the BOLI assessment were death which XXXX. the BOLI FDIC by quarter which X% income XXXX. increased rate. driven also noninterest million during in income management was quarter adjustment $X.X by management a both and previously for primarily driven benefits, related million or decreased fourth wealth recorded wealth decreases revenue, to compared and of swap driven by revenue fees. income $X.X $XXX,XXX quarter $X.X XXXX. swap includes primarily rate of of industry-wide million Interest recognized were incremental XXXX. Fifth, X.X% or $X.X compared the to increased of fourth is the quarter decreased This compared expense $XXX,XXX

earnings I XXXX and it I plan of repurchased guidance. opportunistically the to release Lastly, and straightforward, was would believe during now to like to on X shares stock remainder we shares relates the fourth the quarter, of items XXXX. repurchase focus XX,XXX as in

totaled net XXXX, for interest $XXX First, million. income

start be in stable we stability X%. interest first of the to of side, out XXXX, expect and NIM as in on This approximately X% net and of loan to a environment repricing down the flat continued we assumes we assets. the coupled year to For growth bottoming and half expect with see rate X%, to liability climbing income thereafter

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

Third, million. XXXX noninterest $XX.X income totaled

For noninterest we income approximately noninterest XXXX. X% X% $XXX.X XXXX, we of expense expect million of $XX.X base. growth the to for Fourth, of reported million

X%. approximately expect For XXXX, growth we of to X%

Lastly, XX.X% tax effective expect approximately based as to it on our relates to current XX% rates. to income be taxes, rate statutory we

concludes That my remarks. prepared

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

Operator

[Operator from Instructions] from comes KBW. first Tim Switzer Our question today

Timothy Switzer

maybe stable if I two, think we of impact about of you year. some half assuming the rates. the rate first the NII talk guide cut, in your get question the Could is or be what I have back would

the assuming bottomed, What's Xx a or has X Fed if NIM cuts. the deeper XXXX we more. after from little deposit couple maybe moderated like and of does competition a to expect the say, cut cycle rate then just has impact saying the So cut get you that change And impact into bit.

Brian Richardson

Sure, that Tim. take one. Brian. is This I'll

but So forward bit of a impact customer really of on liability the competition got -- customer rate on little an with really expectations and has that side. it's things, certainly and environment it rates behavior, coupled

driven, loans public have variable automatically deposits well funding variable reprice variable because minimal will its rate variable that rate cost first So on on deposits, which we the expect that as $X.X abatement an billion do impact and is as some will like, have pressures. will that but seen actions be the We deposit of couple do we . I automatically of said, on which think reprice. couple would kind about now forward will first instantly. Fed largely of expectations have relatively reprice really we based funds have the right --

couple a of I moves on the will offset. our first think And pretty natural impact that's minimal be So financials.

Jeff Schweitzer

Yes.

huge it's competition, Everybody out impact pointing to a looking on Brian Just deposits. this. is have Tim, for going

the competition sure any and everybody for lower-cost really type side on right XX when XX going of or -- first looking So deposits deposits. to points things. of not so of lot There's I'm a now that movement basis cause the is is

So it's very of comes very, when funding still it things. side to competitive market a the

Timothy Switzer

what kind was of of Yes, And that makes I a lot that's expecting. sense.

part start to your second cuts, far sheet NII? your of is, looking or is So more then X get of the down this given to X to line. the I the how would my if impact makeup know now, rate balance that question But we expect you

Brian Richardson

bit So across sensitive the coming that, flipped a into asset cycle, than that we it, have modeled different were this the to we were we clearly, rising rate liability-sensitive. as little behaviors and had industry

would flow benefit continue behavior to to things that in you point again, continue really a to there be rates to gets are back But time. customer if competitive as So pressures it start decline, you'd hold, and what see that through. expect at to

Timothy Switzer

talk Okay. variable that about you And the you asset deposits. side Can of what rate of be mentioned, you have on variable rate would $X.X billion instantly. kind

Brian Richardson

that book of we years of I higher on-pay down the reprice loan a that It's couple we've which that than fixed brings basis, Yes. Effectively, but XX% loan instantly immediately. our it's effective a do ago, have of to done XX% range said, would about slightly like on notional reprices. our book, so variable received swap slightly,

that that's XX% XX% dated, long a have We in the adjustable, more variables instant but another little range. bit that's

Timothy Switzer

does The Yes, Okay. I have your the that -- like? adjustable is sense. got makes have schedule, you. question look that CD then last I you what maybe Do maturity

Brian Richardson

total, X at year. environment. half through We probably we backfill $XXX have [ doing kind the rate rate coming lower in the at was of to the stuff would that similar to X.XX rates, will be in in million XXXX, some start current of honestly, in the because first would That nonpromotional promotional And a X-month tranches were roll quite rate. promotional which at ], a off anything

to We on those level. come a expect lower at

point, don't impactful. from expect be that at But this will CD I overly to So maturities. there some pressure be

Operator

question comes from next Our from Frank Schiraldi Piper today Sandler.

Frank Schiraldi

the Curious on on Brian, guide. fee income the --

environment as I you as said far flat a NII the So guide. think rate

the the lower rate income growth what on sort -- we growth. year? If Or -- is have rates the do of we come in curious cuts that do half see does of rates back some imply the in -- fee the Just banking? mortgage the if that of in drivers

Brian Richardson

Yes.

couple there's a into play So components that. of that

mid- businesses, expected is to And low the businesses kind we to environment. insurance on do our Of year-over-year. production of digit single course, stable high and expect growth be a side, in banking those in while wealth mortgage in to double-digit increase we some less expect of level

We line. have sale noninterest on larger on more saleable focus a production, will gain which the income benefit generate and income

Frank Schiraldi

terms Okay. banking, guess, of the outside of I like? it in growth year-over-year, is sounds The driver more mortgage

Brian Richardson

But a component of the mortgage businesses to diversified kind that will we contributors of the but be growth. it, all of have them it's is

Frank Schiraldi

I a stabilization. that maybe loan early terms in sorry in about sounds reported curious to in Okay. is And it also assume term. liquidity the build expect XXXX. NIM, takes of if growth inflect approaching in here, then NIM just said, just get little continued near know you maybe you I terms little of if to can you like a I'm But -- -- if you core some of do more missed, as measured bit don't you -- bit if longer there

Brian Richardson

Frank. I -- this is think Brian. again, both the

But in like, and reported think I to to expect runoff excess start kind we the of increases to expect liquidity term continue and both I to near out will see of then as as other. funds actually and with and the see both core year would move we bottom those do first in in of converge well. the line -- of of public those will each half of some the I kind thereafter. that What diminish

Frank Schiraldi

mentioned of just reprice that piece you variable Okay. loan then will And immediately. book the rate the

basically about fair a renewal? in book, talk what assume reprices terms can you of just is rates a maybe to seeing just currently duration curious that just I'm the bit you're the pickup longer CRE in book, the XX% year? little it If

Brian Richardson

We seen I what half have but a expect XX% is we've Yes. of kind see to XX% from little XX% bit historically, 'XX, I you the back XX% environment range somewhere definitely mean a there. been could number. would slowing reasonably in would a to in the reasonable churn down say, that current that in slowdown,

as yield rates far just below is And portfolio at current as commercial our It's -- X.XX%. X%.

For that the up basis XX was was and kind of at commercial fourth quarter. points, basis production points last from X.XX%, -- quarter, core XX production

nearest and as all there again, reprice churn, as assets you So those an opportunity well. lift a get there's there

Frank Schiraldi

Great. one then just Okay. in if last sneak one. And I could

modifications it somewhere side. on in I'm the release. or in And didn't Just on rate if not term the curious sure maybe loan making made of of or that? modifications you I Do you But on side terms guys made disclose CRE book. -- see in have what sort rate just are level of that you the guys have the

Brian Richardson

be will substantial it it We I or disclosed our has ultimately XX-K in that in our footnote, structure not disclosed included and in modifications there be would been say there. Q rate But loan disclosure. will that

Operator

today from our comes Breese Instructions] question Stephens Inc. [Operator Matthew next from

Matthew Breese

start was with in the cycle? much we could And we I quarter? the where this deposit are just manageable that dynamics telling deposit first played role a how in

Mike Keim

municipality are Where municipal the you're the -- It's at in of is quarter if resets going part it by quarter, and deposits be and start peak early deposits want that's to then have to other we some the get third fourth like the traditionally. ramp the then and second municipalities fill valley. gradual you Mike. ] end see the to look financials, the quarter you like itself. end kind But done is in balance in able third of quarter What the quarter on fourth we our to ramp do our and [ of sheet fourth pronounced to and work for when small of first end, cycle, for that reduce the peak very really continues and down with of down thinking peak in we've in quarter a at county especially September, you forward. the kind us And the a quarter

Brian Richardson

would that million this that around that At next is some Matt, and down quarter. kind and billion expect X/XX, by public in of we through $X.XXX put numbers see Brian. were to the just -- wind we'd that year sorry, in rebuild decrease Matt, of quarter, at the third continue the second fourth to to $XXX funds Yes, quarter

Matthew Breese

this. want both color It the was well. more expectations thing I in All Very this for appreciate little hoping sounds Okay. the we're One bit right. around all ] then guidance. for And and drive on I a [ like of I terms point composition the noninterest-bearing but year deposits on to was starting critical hit to helpful. fee, stability growth as

Brian Richardson

is this Brian. Matt,

it growth we'll said, match being of high deposit or growth. relates really kind look with public an at deposits, all-time As to will with -- loan to funds That to we XXXX. match the in look

on see some saw and overall loan as remaining growth normalization The the you a we deposit exceeding book, If goal, with is normalized mismatch slight forward, growth progress deposit there then there. you matching might growth. or

As again we in stabilizes at quarter said, it XX% saw to a the at. relates ended a range, we think that's at if noninterest-bearing. in that that I component XX% here quarter, low think that slight to composition, look increase But the I reasonable fourth in

funds bolster As out other XXXX of at that the kind to and Mike to base. cap be of said, that backfilling we with deposit public saw beat we'll look for deposits help components level in

Matthew Breese

[ peak NIM to peak out expect of Okay. year? out cost your ], do do guidance? to you align total So after Does this deposits the it half with And XXXX you that. first it where expect of

Brian Richardson

it No, of the expect That to of There be really 'XX. by will but be expect really to slight year, of would bit kind normalize in will tail kind that the end little the we 'XX. a end. peak occur throughout it rationing of up more

Matthew Breese

Okay.

'XX. You the end mean peak of at

Brian Richardson

at the 'XX. of end Peak Right.

Matthew Breese

Got it.

portfolio. Last for was Okay. securities just me one the on

color or or any there Just expectations, growing in stay or whether cloud. guidance it's on shrinking

Brian Richardson

exclude to currently mark-to-market, X% in least had similar of where we've that it's size at. that to kind and give take, and you the around No. look a look when assets. of range, or to we be portfolio X% We to at total where right remain as targeted the composition X% keep it at That's stands, in really in We've that past.

Matthew Breese

And general boots customer from you're ground, sneaking rate weakness kind of the provision customer. it. Are front, kind NPAs And sounds be Got Are the and by by like trends, determined credit 'XX. on to starting to more. expectations your what credit see things see that. curious rolls? seeing a comes on will like I'm just way. your Okay. in ratios, one you what concerns starting you debt-to-coverage in charge-offs on It of for

Mike Keim

on a it the make just doing ] through feel as But but given go more happen rates working projects with job sure on ahead our been base, I'll for of let rates we everybody, put things, elevated the with good you give that Brian we've we the customer pressure environment, the forward. guidance obviously specific know on working very that. proactively getting will out reset and [

the generally, part, luxury of is Philadelphia most at thing be look exposure continue And the honest, our in doing there some is level as itself. has The homes everybody exist still fairly that to slowness that About market million. that only yet. to $XX we to

somebody price it. this significant. not time. if those a struggling it's But rates point to got was to going in We most projects financing to at of seem say combination just So with be the and the do interest point

Brian Richardson

Matt, this Brian. is

normally as not on said, quarter-by-quarter. of continue that criticized loans, expectations a Mike of but But nonperforming point and at we [indiscernible] to give relates suggest guidance, change this will be fundamental do to loans. event-driven As kind guidance nothing it detailed

Operator

no this further time. have at We questions

I over remarks. So now hand Jeff any will to for you shut final back

Jeff Schweitzer

Thank you, everybody, you, thank today. listening Drew, and for in

beyond. to While we position made it pulled levers a lot good year challenging XXXX we've us good and a of the lot a of industry, 'XX I head for was progress into and in feel as

have in. we place backs what As the team get the in markets half the feel we about year. wind the have Brian at we're noted, in optimistic some of in we're our And place, second be we into as that there'll we

Thanks look end of to a the we first lot. the quarter. everybody at to talking forward So

Operator

concludes Univest Corporation Earnings That Fourth XXXX Quarter Call. Financial today's

disconnect lines. now may your You

Univest Financial (UVSP) 25 Jan 242023 Q4 Earnings call transcript