UVSP - Earnings call transcript Q3 2024 | Univest Financial Corporation

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Operator

Good morning, all. Thank you for joining us for the Univest Financial Corporation Third Quarter 2024 Earnings Call. My name is Karli, and I'll be the call coordinator for today. [Operator Instructions]. I'd now like to hand over to your host, Jeff Schweitzer, Chairman, CEO, to begin. yours. is floor The

Jeff Schweitzer

Good for thank joining Karli. of to our listeners us. morning, you, 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

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

chance $XX.X during a our found be review Relations tab. net to it share. per release We under Investor our quarter on not, If from the million had reported everyone the of Hopefully, third yesterday. or can $X.XX website univest.net at earnings income

$XX.X quarter, our During to deposits or $XXX.X during in of a slightly deposits. quarter increase annualized. growth large due muted the at saw public X.X% was build million Loan of seasonal we funds million the

lines line we with been solid, their was to production loan elevated While customers impacted usage by payoff as existing on combined have drawing hand on to down declining cash by activity. utilize continue they as opposed

with our the insurance of well our X%, compared diversified in we to prior income third Our of seen to as to and year up respectively, as year. up the lines noninterest prior have $X.X nonbanking management and continues us serve quarter or compared business the business was X.X% million X.X% model wealth growth

year. prudently manage were as to Additionally, prior the down $XXX,XXX we expenses or X.X% compared continue noninterest to expenses

which shares continue the stock book year-to-date. of active and December value per be XXXX XXX,XXX tangible of repurchased X.XX% to active outstanding shares to as respect we X.XX% capital, buybacks quarter shares of share stock represents on as plan with during year-to-date, continuing XX, With and growing we to be while XXX,XXX

Board X Finally, shares the for yesterday, at our available Board an meeting repurchase. million increase approved of

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

Brian Richardson

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

reported X.XX% public X of quarter, NIM seasonal quarter excess points liquidity in the funds decreased the X.XX% basis prior from from due bill. during the First, in to the increase

of NIM core X.XX%, excludes liquidity, to expanded the X compared the excess points of basis second expected, which quarter. As impact

slightly assuming flat the in FOMC to NIM core the XX at point rate cut fourth a to meetings be November December. quarter, expect We basis in up each of and

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

from Our coverage for which charge-offs XX annualized. basis September totaled June the $XXX,XXX unchanged XX. X was was ratio at X.XX%, quarter points or Net

in stability delinquencies and continued loans. nonperforming classified saw and we quarter, assets, third the During loan criticized

service diversification interest decrease businesses. fee and our driven increases million gains quarter. very mortgage valuation management in our increase from a recorded to happy wealth and fee driven or the and business XXXX. Overall, primarily SBA allowance we was an rates income these contributions insurance contributions to of X.X% prepayment noninterest which a speeds $X.X with the to We was was from sale This reduction saw in Third, income, quarter due increased increased increased on our third servicing Offsetting loans. income continue the during by of lines allowance be of $XXX,XXX compared on in assumed asset. by the

X.X% or during reduction commitment to $XXX,XXX the strategies and prudent compared XXXX of we deployed to continued various our Fourth, the third management. noninterest expense This expense quarter the benefit decreased reflects ongoing of XXXX. expense

to I update an our believe I the to guidance. XXXX remainder of the like would was straightforward, earnings provide release and now

the of expect approximately growth First, of of full to and income XXXX. we XXXX, to expect contract for interest year the net X% for compared loan we XXXX full to year X% X%,

Second, being our $X year guidance $X for is to to million. provision for the credit loss reduced million

portfolio, in will provision credits. growth, event-driven, assumptions changes performance to of the However, the economic-related loan be the including credit including and continue specific

noninterest XX% when the the the to guidance on the year sale the to in MSRs, at for the XX%. expense X% growth first remains on the X% income MSRs quarter. year Including of remains growth noninterest guidance of million the our gain gain Third, excluding pretax at $X.X sale for

XXXX As our million. of a of XXXX, this $XX.X off the is Fourth, the charges. when reminder, totaled $XXX.X expense $X.X noninterest million base restructuring in excluding million

growth to X% of we the For expect $XXX.X XXXX, of X% off million. base

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

prepared That concludes my remarks.

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

Operator

Our Sandler. of Schiraldi first comes from question Piper Frank

Frank Schiraldi

front, that imply mentioned bit little over a I seem X% think, $XX million would the fourth quarter. expense the, $XX to on in little to Just Brian, the million -- X% of you growth, off I be over then, starting quarter run if talk might is kind about just for there? that Can linked for a driving decent that year? growth have things rate And that, you next right? What and

Brian Richardson

a quarter. give it Yes, I million for range, think put for fourth take, $XX that's you next And do year. the starting would point or that reasonable in

that like be a into next year, the merit you increases but Of course, the start of so going to occurs would that early ramp growth jumping good with that the year see up some in point early part year. the in occur for and

Frank Schiraldi

modeling? XQ bit for to there that other And Okay. normalizing? of that think expenses sort you can Or by results driven $XX an mostly kind when about the to you uptick get million, of a color any give is versus of

Brian Richardson

just you would to it and quarter, start the of that run favorable but small benefits have year. we is see think the I of in the that normalize, couple current a throughout were normalization Yes, things

things expect normalize. the some just quarter, So looking to to forward you'd fourth

Frank Schiraldi

you just muni, through the seasonal much Okay. run there, remind or the of sheet balance And kind is of run And then in that off terms how how us in of of the muni? timing? does $XXX seasonality million the can that again terms

Brian Richardson

Yes.

in So month the occurs we'll specific give fourth third then or depending in $XXX on the potential take, every overall build million, year. And cases quarter quarter. a see the outflows

start back of the down the hitting quarter. and that the wind You then and into then first in at see second end the again see build quarter to you quarter the fourth that in trough

Frank Schiraldi

the million, $XXX about that Is -- that inflows this And that? were quarter Okay. is right? that

Brian Richardson

on a muni It than bit little were and million that. They $XXX to closer specifically. higher was change

Frank Schiraldi

then And this I lastly, great. the could Okay, in the more sneak on quarter. X buyback. I just if in activity uptick saw

a sense think a maybe activity? up get terms be Is to a to X around that trying buybacks million and level I of quarterly you that's a guardrails annual of you do place Could of ramp reasonable ramp that going that up just I'm -- X million shares? in shares? of that's reasonable curious, Just of given forward. the, think, expectation kind

Jeff Schweitzer

Yes.

excess that we -- that towards have So using we're using and generating we're we're to basically capital buybacks. we capital Frank, maintain want levels

year. basically, wouldn't up is plan. a we in $X we're be generated million that shares, million in buybacks we sorry, continue a up So be year a our capital, -- wouldn't grow be using But to used not used towards year excess X as have capital -- we'll is

Operator

Emily question of comes from Our Lee KBW. next

Emily Noelle Lee

I today. to Tim guidance. wanted could Switzer for downside I'm or on what ask drive upside to your factors

Brian Richardson

that repeat of didn't question? you I the end it. can Sorry, catch

Emily Noelle Lee

factors just -- updated gave? Yes, I just direction some that you potentially was downside could either upside wondering drive in the guidance to what guidance the or

Brian Richardson

Sure.

on you be go the at there. wildcard deposit occurs and side, through, look the the side as income overall of So kind pricing on to continues interest competitive net the clearly, you what if environment

As fourth and the areas. business that MSRs has would on and our or now other play course, fee line, to that quarters. of impact the quarter right or subside the wildcards of on allowance the wealth an valuation you in some one valuations But subsequent go how management market through like is through and bigger continue income

side, that, maintained provided. negative, time that time, guidance things you that could the but and have positive to potentially drive that I from then we've And to over expense Again, event-driven. management on both the prudent occur really variances

Emily Noelle Lee

estimate Great. I question cuts. just NII I to And was wondering impact another the you cuts margin? be potential moved Fed was to Fed the margin had related expected, and do of what impact the more than to if the

Brian Richardson

for rate future expect foreseeable really the to ourselves be cuts. We neutral in

variable you our reprice. have book. automatically cash, We going to that's rate at a when And look loan

price and adjust that that book will We a a have offsetting portion exception also then automatically, there's largely that's accordingly. offset deposit we

are it we that good several made. to expected to be pretty the first So have relates as matching moves

we ourselves course, other as inherent repricing things NII, have to to and provides NII all maturities So as of potential and NIM view you book really NIM upside equal. of neutral that With, churn, being and a being here. tailwind loan the

Emily Noelle Lee

right. have coming just loans more in with was is I if and Great. wondering rates a particularly few I competition trending all your down. deposits, that's for how markets

far? pricing deposit reaction And rates? what's to rational your lower has so I been So guess, customers'

Jeff Schweitzer

of customers we the I come customers, And in perspective, talk deposit are rate down to might you as has a have deposit pricing if the Fed moves mean, lot our Fed perhaps more they So ago. been general a years with X look our X cognizant from yes, move. than to

you're of not people competition deposits. deposits are that were any intense call with I liquidity to that. regard on, But more stiff and going don't provides. to talk I still is it top to be about think think the for people on being going So competition

line remarks, From that and perspective, to that had we'll perspective, to where we've loan higher, us. in a are the the forward, payoffs strong which need price accordingly deposit to because Brian's I -- you somewhat surprising move was maintain we NIM. people bit make is pricing on be. little despite continue seen is a pricing some evaluate we get new side as want therefore, we a that are and to tighter priced a larger that credits where point be we would actually production had, to earlier a his still we -- offering down, that spreads, world to we are we in credits on several sure seems tell our we quarter And loan from activity able to

Emily Noelle Lee

into we about any how That's plan was continue the then had last the I reserve would And spoke capital I if to in for great. capital to you deploying potential M&A question was, like future. But excess share repurchases. you wondering

Jeff Schweitzer

-- can back. With that best buying challenging hopefully, stock as point, the at make we norm. more rate and like is in feel will that get the curve a So it this environment, historical the get yield investment still Fed our cuts, still will own we interest

with really interest -- However, a plan. we doubling margin environment, business is short-term something still challenging of part rate are not on strategic is not our that the down

we anticipate to the future. the So really capital that of type used than more towards building in excess buybacks do a some war deal chest be will

Operator

comes Instructions] Our Inc. [Operator question Breese next of from Matthew Stephens

Matthew Breese

loans? I of some but that volatility due start will excess and expect be first how kind reinvested And used kind today. cash you quarters? balance be through, that us the with going of Is hoping Brian, sheet hoping couple to swings? over next position the munis, securities was was can you be to much Obviously, to muni there's I And how could of cash two, walk one, for much potentially the on when into normalize? to

Brian Richardson

Yes.

of towards look would we point-to-point hold QX. liquidity, the as half relatively that inherently drop latter to latter expect we'd of to portion your get the at the QX excess as of fourth But or quarter So we average course, stable be of about the going kind that available million million quarter. then was running liquidity forward. $XXX there deployment for fourth think built asset amount will out -- other excess $XXX But into to and of would classes be you remaining

Matthew Breese

Great.

does what then yield in sense about Where of little kind spending us it? pipeline you time? look loan of pipeline. maybe bit the What's overall you are growth. an And a could the your talk give loan like? near-term Just loan for Okay. And kind

Jeff Schweitzer

Yes.

have some Matt, overall, do the there, We in pipeline fairly So healthy. full but those primarily are is It's CRE CRE customers. relationship in C&I.

pricing are discussion drives time. Like in of present before, the Fed forward So as above to the that we that at our go-forward going does we XXX foresee are those But fixed at in we've the the just here. will move forward we said may not we what that will something in in. frankly a the that for participate the because in priced forward and pricing. that what variable is There I credits environment discipline. continue Xs that a write-up we we're We'll current maintaining play today as -- be quite the participate as rates see is here terms alluded that quarter in less we time throughout we credit and environment SOFR to not the where can well our we where move

least needs the to to not and maintain it play in at So be. NIM where

So off healthy in to And pipeline for overall bottom the discipline sure gave growth and loan will bounce we fourth Brian maintaining NIM pricing continues where for our that guidance come year. making the here. our quarter. full the think

Matthew Breese

it. Got

have deposits, I how far. talk cost kind your could you deposit us moved by you a bit kind Okay. of base cut hoping mentioned categories of amount? about little Brian, deposit so I deposits. exception have sense and Fed was of give much some had some into the for Maybe what and fits the higher already taken actions higher-cost think you and

Brian Richardson

walk Sure, be Matt. through happy I'd that. to

just that reprice automatically that So are we the deposit that about side $X automatically have on indexed. billion

kind have occurs. exception billion $X you, September. roughly ratcheting that of, exception-priced, where So $XXX result it, there. a call But the of tell Then had as had that on fall in in chain, will XXX% those from that were billion, move we a beta exception-priced I of we of down that a Fed million automatically range $X.X pricing a we wide portfolio is

deposits XX Fed something So went full actively at similar out kind the of XXX% worth we so kind to ratcheted a plan those. be navigate moves. And reduction of going down would $XXX of forward to with that point million beta, that's basis as actions on the

Matthew Breese

hiking on saw you the we expecting during similar cycle? down as deposit kind last and betas of Are loan way the

Brian Richardson

the do some what on initially fall yes, competition side we would that process. down at bit at the But be norms wildcard a looking Again, but absent would depending on a of migrate on we deposit -- becomes side. further a mean, and expect anything would get side. out of else, upside expect thing the up, you way here behave they to from I would potential little XX% We'd historical I way -- on the course, differently, bit that the a deposit as then I the in range looking in on down. happens as think to reasonable competition kind

Matthew Breese

Okay. Last one for me.

to I fair higher be a excluding think stuff. that the assumptions? year-over-year fee income the guide wealth growth, be is I'm X% Are place to kind trust those in business lines, single-digit will for And insurance X% the that of that primary reasonable Is XXXX? MSR assuming range.

Brian Richardson

Yes, I general range, we're think take. give in or that

you had of year we when at mortgage bump course, Of year-over-year. a this look kind

single we up wealth, of is what go low high digits, year. the opportunity would look putting to kind that's bump as you this well. digits But if be So at they there's something that a forward for they're be that as double

it similar going somewhere did have contingent You Insurance that neighborhood be would year. to income in big forward. a expect

year, you normalizing of that as little to range So But that think of thing a with -- at reasonable kind I upside potentially some a that's an potential look is you conclude. offset. in bit yes, next general

Operator

no have further currently questions. We

to So closing Jeff any back for I'd remarks. hand like Schweitzer to

Jeff Schweitzer

and to a the today, we of day. to listening for at speaking the great you end everyone, you, thank And Have Karli. you, Thank look forward year.

Operator

As we thank for we call, would to conclude today's everyone like joining.

disconnect now lines. your may You

Univest Financial (UVSP) 24 Oct 242024 Q3 Earnings call transcript