Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Univest Financial Corp (UVSP, Financial) reported a net income of $18.2 million for the second quarter, equating to $0.62 per share.
- The company experienced a significant growth in deposits, increasing by $90 million or 5.6% annualized during the quarter.
- Loan growth was robust, with an increase of approximately $106 million or 6.4% annualized.
- Noninterest income rose by $1.1 million or 5.8% compared to the previous year, driven by gains in mortgage banking activities and investment advisory fees.
- The company actively repurchased 190,808 shares of stock, contributing to a growth in tangible book value.
Negative Points
- Net interest margin (NIM) decreased slightly, with reported NIM at 2.84%, down from 2.88% in the first quarter.
- The cost of interest-bearing liabilities increased by 9 basis points, indicating rising funding costs.
- Provision for credit losses was recorded at $707,000, reflecting ongoing credit risk management challenges.
- Despite a decrease in noninterest expense, excluding restructuring charges, expenses were up by $239,000 or 0.5% year over year.
- The competitive environment for deposits remains intense, impacting the cost and availability of funds.
Q & A Highlights
Q: In terms of the fee income guide, it seems like it calls for total fees to decline slightly from second-quarter levels. Is that correct, and what is driving this?
A: Brian Richardson, CFO: The fee income is expected to be relatively stable compared to the second quarter. The first quarter was elevated due to insurance contingent income, but we anticipate stability in the third and fourth quarters.
Q: What are your expectations for deposit growth in the back half of the year, and what specifics are driving that?
A: Brian Richardson, CFO: We expect continued growth in core deposits, along with a seasonal increase in public funds in the third quarter. Our goal is to match or exceed loan growth with deposits, aiming to reduce the loan-to-deposit ratio over time.
Q: Could you provide any guidance on your thoughts for repurchase activity in the back half of the year?
A: Jeffrey Schweitzer, CEO: We are not looking to grow capital levels, so we plan to deploy excess capital into buybacks, given that loan pipelines remain solid.
Q: How is competition trending in your markets for loans and deposits, and are there any growth opportunities from others pulling back?
A: Michael Keim, COO: Competition remains strong, especially for high-quality credits. While some competitors were aggressive with pricing earlier, it has stabilized. Deposits are highly competitive as everyone manages liquidity.
Q: What is your outlook for the cost of deposits going forward, given the competitive market?
A: Brian Richardson, CFO: We expect the cost of funds to pick up in the third quarter due to the public loan build, but at similar or slightly slower rates than previously seen.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
