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Univest Financial Corporation Reports Year and Fourth Quarter Results

Company Release - 1/22/2020

SOUDERTON, Pa., Jan. 22, 2020 (GLOBE NEWSWIRE) -- Univest Financial Corporation (“Univest” or the “Corporation”) (NASDAQ: UVSP), parent company of Univest Bank and Trust Co. and its insurance, investments and equipment financing subsidiaries, today announced net income for the year ended December 31, 2019 of  $65.7 million, or $2.24 diluted earnings per share, compared to net income of $50.5 million, or $1.72 diluted earnings per share, for the year ended December 31, 2018. Net income for the quarter ended December 31, 2019 was $15.5 million, or $0.53 diluted earnings per share, compared to net income of $18.4 million, or $0.63 diluted earnings per share, for the quarter ended December 31, 2018.

One-Time Items
The financial results for the year ended December 31, 2019 included a Federal Deposit Insurance Corporation (FDIC) small bank assessment credit of $1.1 million (after-tax benefit of $871 thousand) of which $988 thousand was recognized during the third quarter of 2019 and $114 thousand was recognized during the fourth quarter of 2019. The FDIC credit represented a favorable impact to earnings per share of $0.03 during the third quarter of 2019 and for the year ended December 31, 2019. In addition, the fourth quarter and year ended December 31, 2019 included an expense related to a legal settlement with a former Fox Chase Bank customer of $869 thousand (after-tax charge of $687 thousand), or $0.02 diluted earnings per share.

The financial results for the year ended December 31, 2018 included a net provision for loan and lease losses of $10.9 million (after-tax charge of $8.6 million), or $0.29 diluted earnings per share related to fraudulent activities by employees of a borrower. The second quarter of 2018 included a pre-tax charge to the provision for loan and lease losses of $12.7 million (after-tax charge of $10.1 million), or $0.34 diluted earnings per share, related to this relationship, and the quarter ended December 31, 2018 included a recovery of $1.8 million (after-tax recovery of $1.5 million), which represented $0.05 diluted earnings per share.

The year ended December 31, 2018 included two additional items: a tax-free bank owned life insurance (BOLI) death benefit of $446 thousand during the second quarter of 2018, which represented $0.02 diluted earnings per share, and restructuring costs related to financial center closures of $451 thousand, net of tax, recognized in the first quarter of 2018, which represented $0.02 diluted earnings per share.

Loans
Gross loans and leases increased $380.3 million, or 9.5%, from December 31, 2018 and $134.9 million, or 12.7% (annualized), from September 30, 2019 primarily due to growth in commercial real estate and residential real estate loans.

Deposits
Total deposits increased $468.8 million, or 12.1%, from December 31, 2018 primarily due to an increase in public funds deposits of $201.9 million and increases in commercial and consumer deposits. Total deposits increased $16.8 million, or 1.5% (annualized), from September 30, 2019 primarily due to increases in commercial and consumer deposits partially offset by a seasonal decrease in public funds deposits of $166.3 million.

Net Interest Income and Margin
Net interest income of $169.2 million for the year ended December 31, 2019 increased $11.2 million, or 7.1%, from the prior year. The increase in net interest income for the year ended December 31, 2019 compared to the prior year was primarily due to a 9.8% increase in average loans during the last year. Net interest margin, on a tax-equivalent basis, was 3.59% for the year ended December 31, 2019 compared to 3.72% for the year ended December 31, 2018. The favorable impact of purchase accounting accretion was two basis points for each of the years ended December 31, 2019 and 2018. Excess liquidity reduced net interest margin by approximately eight basis points for the year ended December 31, 2019 compared to one basis point for the year ended December 31, 2018. This excess liquidity was primarily driven by strong deposit balance growth during 2019. Excluding purchase accounting accretion and the impact of excess liquidity, the net interest margin, on a tax-equivalent basis, was 3.65% for the year ended December 31, 2019 and 3.71% for the year ended December 31, 2018.

Net interest margin, on a tax-equivalent basis, was 3.44% for the fourth quarter of 2019, compared to 3.52% for the third quarter of 2019 and 3.72% for the fourth quarter of 2018. The favorable impact of purchase accounting accretion was three basis points for the quarter ended December 31, 2019 compared to no impact for the quarter ended September 30, 2019 and one basis point for the quarter ended December 31, 2018. Excess liquidity reduced net interest margin by approximately 12 basis points for the quarter ended December 31, 2019, compared to 13 basis points for the quarter ended September 30, 2019, and four basis points for the quarter ended December 31, 2018. Excluding purchase accounting accretion and the impact of excess liquidity, the net interest margin, on a tax-equivalent basis, was 3.53% for the quarter ended December 31, 2019 compared to 3.65% for the quarter ended September 30, 2019 and 3.75% for the quarter ended December 31, 2018.

Noninterest Income
Noninterest income for the quarter ended December 31, 2019 was $16.2 million, an increase of $1.8 million, or 12.2%, from the fourth quarter of 2018. Noninterest income for the year ended December 31, 2019 was $65.4 million, an increase of $5.2 million, or 8.7%, from the comparable period in the prior year.

The net gain on mortgage banking activities increased $325 thousand, or 45.6%, for the quarter and $821 thousand, or 26.3%, for the year ended December 31, 2019, primarily due to an increase in mortgage volume partially offset by contraction in margins to remain price competitive. Investment advisory commission and fee income increased $212 thousand, or 5.5%, for the quarter and $842 thousand, or 5.6%, for the year ended December 31, 2019, primarily due to new client relationships and appreciation of assets under management. Insurance commission and fee income increased $194 thousand, or 5.7%, for the quarter and $913 thousand, or 5.8%, for the year ended December 31, 2019, primarily due to an increase in premiums for commercial lines and group life and health for the quarter and year ended December 31, 2019 as well as an increase in contingent commission income of $316 thousand for the year ended December 31, 2019. Service charges on deposit accounts increased $314 thousand, or 5.6%, for the year ended December 31, 2019, primarily due to increased fee income on commercial cash management accounts. BOLI income increased $311 thousand for the quarter ended December 31, 2019 primarily due to a decline in the value of the non-qualified annuity portfolio of $287 thousand in the fourth quarter of 2018.

Other income increased $853 thousand for the quarter and $2.4 million for the year ended December 31, 2019. Fees on risk participation agreements increased $407 thousand for the quarter and $1.1 million for the year ended December 31, 2019, driven by increased customer activity. Gain on sale of small business administration (SBA) loans increased $94 thousand for the quarter and $462 thousand for the year ended December 31, 2019 due to increased SBA loan sale activity. Net loss on valuations and sales of other real estate owned was $28 thousand for the year ended December 31, 2019 compared to $626 thousand for the year ended December 31, 2018.

Noninterest Expense
Noninterest expense for the quarter ended December 31, 2019 was $37.5 million, an increase of $4.1 million, or 12.2%, compared to the fourth quarter of 2018. Noninterest expense for the year ended December 31, 2019 was $146.1 million, an increase of $8.8 million, or 6.4%, from the prior year.

Salaries, benefits and commissions increased $2.4 million, or 12.2%, for the quarter and $7.8 million, or 9.7%, for the year ended December 31, 2019, primarily attributable to additional staff hired to support revenue generation across all business lines, expansion of our commercial lending groups and annual merit increases. During the first quarter of 2019, Univest hired a team of eight commercial lenders and support staff to focus on increasing Univest’s presence in Western Lancaster and York Counties. During the second quarter of 2019, a team of three commercial lenders was hired to help expand Univest’s presence in the New Jersey suburbs of Philadelphia. Data processing expense increased $333 thousand, or 14.2%, for the quarter and $1.4 million, or 15.9%, for the year ended December 31, 2019, primarily due to continued investments in customer relationship management software and internal infrastructure improvements as well as outsourced data processing solutions for the year ended December 31, 2019. Other expense included a charge of $869 thousand related to a legal settlement with a former Fox Chase Bank customer.

These increases were partially offset by a decrease in deposit insurance premiums of $1.1 million for the year ended December 31, 2019 due to the previously discussed FDIC small bank assessment credit. Intangible expenses decreased by $107 thousand, or 22.2%, for the quarter and $571 thousand, or 26.4%, for the year ended December 31, 2019 due to a run-off of intangible assets from prior acquisitions. In addition, restructuring costs related to financial center closures and staffing rationalization were $571 thousand during the first quarter of 2018. There were no restructuring costs incurred during 2019.  Excluding the FDIC small bank assessment credit, the legal settlement charge and restructuring costs, noninterest expense for the year ended December 31, 2019 increased $9.6 million, or 7.1%.

Asset Quality and Provision for Loan and Lease Losses
Nonperforming assets were $39.3 million at December 31, 2019, compared to $40.4 million at September 30, 2019 and $28.1 million at December 31, 2018. The increase in nonperforming assets at December 31, 2019 compared to December 31, 2018 was primarily due to one commercial banking relationship, totaling $11.9 million as of December 31, 2019, which was placed on non-accrual status during 2019.

Net loan and lease charge-offs were $558 thousand during the fourth quarter of 2019 and $2.6 million for the year ended December 31, 2019. The provision for loan and lease losses was $2.2 million for the fourth quarter of 2019 and $8.5 million for the year ended December 31, 2019. Net loan and lease recoveries were $1.9 million during the fourth quarter of 2018, which included the $1.8 million recovery related to the previously discussed commercial loan charge-off. The provision for loan and lease losses was $103 thousand for the fourth quarter of 2018. For the year ended December 31, 2018, net loan and lease charge-offs of $12.5 million and the provision for loan and lease losses of $20.3 million include the previously discussed $10.9 million commercial loan net charge-off.

The allowance for loan and lease losses as a percentage of loans and leases held for investment, excluding covered loans acquired in the Fox Chase and Valley Green Bank acquisitions, which were recorded at fair value as of the acquisition date, was 0.85% at December 31, 2019 and September 30, 2019 and 0.81% at December 31, 2018.

Tax Provision  
The effective income tax rate was 17.9% for the quarter ended December 31, 2019, compared to an effective income tax rate of 17.6% for the quarter ended December 31, 2018. The effective income tax rate was 17.9% for the year ended December 31, 2019 compared to an effective income tax rate of 16.7% for the year ended December 31, 2018.

Dividend
On December 9, 2019, Univest declared a quarterly cash dividend of $0.20 per share, payable on January 2, 2020. This represented a 3.01% annualized yield based on the closing price of Univest’s stock on the date the dividend was paid.

Conference Call
Univest will host a conference call to discuss fourth quarter and year end 2019 results on Thursday, January 23, 2020 at 9:00 a.m. EST. Participants may preregister at http://dpregister.com/10137953. The general public can access the call by dialing 1-888-338-6515. A replay of the conference call will be available through February 23, 2020 by dialing 1-877-344-7529; using Conference ID: 10137953.

About Univest Financial Corporation
Univest Financial Corporation (UVSP), including its wholly-owned subsidiary Univest Bank and Trust Co., Member FDIC, has approximately $5.4 billion in assets and $3.8 billion in assets under management and supervision through its Wealth Management lines of business at December 31, 2019. Headquartered in Souderton, Pa. and founded in 1876, the Corporation and its subsidiaries provide a full range of financial solutions for individuals, businesses, municipalities and nonprofit organizations primarily in the Mid-Atlantic Region. Univest delivers these services through a network of more than 50 offices in southeastern Pennsylvania extending to the Lehigh Valley and Lancaster, as well as in New Jersey and Maryland and online at www.univest.net.

This press release of Univest and the reports Univest files with the Securities and Exchange Commission often contain "forward-looking statements" relating to present or future trends or factors affecting the financial services industry and, specifically, the financial operations, markets and products of Univest. These forward-looking statements involve certain risks and uncertainties. There are a number of important factors that could cause Univest’s future results to differ materially from historical performance or projected performance. These factors include, but are not limited to: (1) competitive pressures among financial institutions; (2) changes in the interest rate environment; (3) changes in asset quality, prepayment speeds, loan sale volumes, charge-offs and loan loss provisions; (4) general economic conditions; (5) legislative or regulatory changes that may adversely affect the businesses in which Univest is engaged; (6) technological issues that may adversely affect Univest financial operations or customers; (7) changes in the securities markets or (8) risk factors mentioned in the reports and registration statements Univest files with the Securities and Exchange Commission. Univest undertakes no obligation to revise these forward-looking statements or to reflect events or circumstances after the date of this press release.

Univest Financial Corporation 
Consolidated Selected Financial Data (Unaudited) 
December 31, 2019 
(Dollars in thousands)               
                
Balance Sheet (Period End) 12/31/19 09/30/19 06/30/19 03/31/19 12/31/18     
Assets $5,375,614  $5,353,611  $5,154,298  $5,035,527  $4,984,347      
Investment securities  441,599   448,447   468,833   466,883   473,306      
Loans held for sale  5,504   2,893   1,498   921   1,754      
Loans and leases held for investment, gross  4,386,836   4,251,933   4,167,904   4,067,879   4,006,574      
Allowance for loan and lease losses  35,331   33,662   32,600   31,602   29,364      
Loans and leases held for investment, net  4,351,505   4,218,271   4,135,304   4,036,277   3,977,210      
Total deposits  4,354,765   4,337,991   4,122,110   4,003,153   3,885,933      
Noninterest-bearing deposits  1,279,681   1,198,425   1,166,301   1,103,674   1,055,919      
NOW, money market and savings  2,469,074   2,421,466   2,246,372   2,260,795   2,159,937      
Time deposits  606,010   718,100   709,437   638,684   670,077      
Borrowings  263,596   273,855   304,241   313,083   429,672      
Shareholders' equity  675,122   664,299   651,670   637,606   624,133      
                
                
Balance Sheet (Average) For the three months ended, For the twelve months ended, 
  12/31/19 09/30/19 06/30/19 03/31/19 12/31/18 12/31/19 12/31/18 
Assets $5,400,533  $5,317,867  $5,170,448  $5,004,253  $4,890,519  $5,224,569  $4,737,772  
Investment securities  445,932   460,099   471,422   470,196   464,684   461,841   456,612  
Loans and leases, gross  4,280,430   4,170,485   4,123,069   4,017,362   3,894,298   4,148,619   3,776,940  
Deposits  4,374,528   4,288,170   4,145,411   3,931,199   3,938,378   4,186,325   3,696,264  
Shareholders' equity  672,647   659,523   645,538   631,574   619,204   652,453   612,197  
                
                
Asset Quality Data (Period End)                
  12/31/19 09/30/19 06/30/19 03/31/19 12/31/18     
Nonaccrual loans and leases, including nonaccrual troubled debt restructured loans and leases $38,578  $37,368  $25,147  $25,952  $26,208      
Accruing loans and leases 90 days or more past due  143   2,488   1,379   636   192      
Accruing troubled debt restructured loans and leases  54   54   55   270   542      
Total nonperforming loans and leases  38,775   39,910   26,581   26,858   26,942      
Other real estate owned  516   495   540   540   1,187      
Total nonperforming assets  39,291   40,405   27,121   27,398   28,129      
Nonaccrual loans and leases / Loans and leases held for investment  0.88%  0.88%  0.60%  0.64%  0.65%     
Nonperforming loans and leases / Loans and leases held for investment  0.88%  0.94%  0.64%  0.66%  0.67%     
Nonperforming assets / Total assets  0.73%  0.75%  0.53%  0.54%  0.56%     
                
Allowance for loan and lease losses  35,331   33,662   32,600   31,602   29,364      
Allowance for loan and lease losses / Loans and leases held for investment  0.81%  0.79%  0.78%  0.78%  0.73%     
Allowance for loan and lease losses / Loans and leases held for investment  0.85%  0.85%  0.85%  0.85%  0.81%     
(excluding acquired loans at period-end)               
Allowance for loan and lease losses / Nonaccrual loans and leases held for investment 91.58%  90.08%  129.64%  121.77%  112.04%     
Allowance for loan and lease losses / Nonperforming loans and leases held for investment  91.12%  84.34%  122.64%  117.66%  108.99%     
Acquired credit impaired loans $264  $568  $569  $693  $695      
                
  For the three months ended, For the twelve months ended, 
  12/31/19 09/30/19 06/30/19 03/31/19 12/31/18 12/31/19 12/31/18 
Net loan and lease charge-offs (recoveries) $558  $468  $1,078  $447  $(1,890) $2,551  $12,501  
Net loan and lease charge-offs (recoveries) (annualized)/Average loans and leases  0.05%   0.04%   0.10%   0.05%   (0.19%)  0.06%   0.33%  


Univest Financial Corporation 
Consolidated Selected Financial Data (Unaudited) 
December 31, 2019 
(Dollars in thousands, except per share data)               
  For the three months ended, For the twelve months ended, 
For the period: 12/31/19 09/30/19 06/30/19 03/31/19 12/31/18 12/31/19 12/31/18 
Interest income $53,369 $54,300  $54,060 $52,364 $51,239 $214,093 $190,488 
Interest expense  10,940  11,655   11,425  10,841  9,862  44,861  32,426 
Net interest income  42,429  42,645   42,635  41,523  41,377  169,232  158,062 
Provision for loan and lease losses  2,227  1,530   2,076  2,685  103  8,518  20,310 
Net interest income after provision  40,202  41,115   40,559  38,838  41,274  160,714  137,752 
Noninterest income:               
Trust fee income  1,912  1,973   2,054  1,887  1,882  7,826  7,882 
Service charges on deposit accounts  1,551  1,513   1,447  1,435  1,516  5,946  5,632 
Investment advisory commission and fee income  4,064  4,032   4,055  3,789  3,852  15,940  15,098 
Insurance commission and fee income  3,609  3,877   3,941  5,144  3,415  16,571  15,658 
Other service fee income  2,229  2,255   2,590  2,267  2,448  9,341  9,332 
Bank owned life insurance income  741  743   743  952  430  3,179  3,174 
Net gain on sales of investment securities  13  33   7  1  -  54  10 
Net gain on mortgage banking activities  1,038  1,629   796  483  713  3,946  3,125 
Other income  1,013  544   723  339  160  2,619  262 
Total noninterest income  16,170  16,599   16,356  16,297  14,416  65,422  60,173 
Noninterest expense:               
Salaries, benefits and commissions  21,933  22,758   22,052  21,546  19,544  88,289  80,488 
Net occupancy  2,534  2,475   2,601  2,611  2,455  10,221  10,260 
Equipment  1,027  1,088   1,065  990  1,014  4,170  4,146 
Data processing  2,685  2,624   2,627  2,514  2,352  10,450  9,014 
Professional fees  1,475  1,517   1,307  1,264  1,335  5,563  5,391 
Marketing and advertising  710  558   786  540  655  2,594  2,642 
Deposit insurance premiums  342  (444)  430  452  449  780  1,836 
Intangible expenses  374  378   417  426  481  1,595  2,166 
Restructuring charges  -  -   -  -  -  -  571 
Other expense  6,398  5,316   5,493  5,214  5,111  22,421  20,725 
Total noninterest expense  37,478  36,270   36,778  35,557  33,396  146,083  137,239 
Income before taxes  18,894  21,444   20,137  19,578  22,294  80,053  60,686 
Income tax expense  3,384  3,782   3,669  3,499  3,922  14,334  10,143 
Net income $15,510 $17,662  $16,468 $16,079 $18,372 $65,719 $50,543 
Net income per share:               
Basic $0.53 $0.60  $0.56 $0.55 $0.63 $2.24 $1.72 
Diluted $0.53 $0.60  $0.56 $0.55 $0.63 $2.24 $1.72 
Dividends declared per share $0.20 $0.20  $0.20 $0.20 $0.20 $0.80 $0.80 
Weighted average shares outstanding  29,327,169  29,305,524   29,287,754  29,277,339  29,319,664  29,299,599  29,370,217 
Period end shares outstanding  29,334,629  29,312,534   29,294,942  29,272,502  29,270,852  29,334,629  29,270,852 


Univest Financial Corporation 
Consolidated Selected Financial Data (Unaudited) 
December 31, 2019 
                   
                   
                   
     For the three months ended, For the twelve months ended, 
Profitability Ratios (annualized) 12/31/19 09/30/19 06/30/19 03/31/19 12/31/18 12/31/19 12/31/18 
                   
Return on average assets   1.14%  1.32%  1.28%  1.30%  1.49%  1.26%  1.07% 
Return on average assets, excluding restructuring charges (1), (2)   1.14%  1.32%  1.28%  1.30%  1.49%  1.26%  1.08% 
Return on average shareholders' equity  9.15%  10.62%  10.23%  10.32%  11.77%  10.07%  8.26% 
Return on average shareholders' equity, excluding restructuring charges (1), (2) 9.15%  10.62%  10.23%  10.32%  11.77%  10.07%  8.33% 
Return on average tangible common equity, excluding restructuring charges (1), (2) 12.40%  14.52%  14.10%  14.36%  16.52%  13.82%  11.77% 
Net interest margin (FTE)   3.44%  3.52%  3.67%  3.75%  3.72%  3.59%  3.72% 
Efficiency ratio (3)    63.0%  60.4%  61.5%  60.5%  59.0%  61.4%  61.9% 
Efficiency ratio, excluding restructuring charges (1), (3), (4) 63.0%  60.4%  61.5%  60.5%  59.0%  61.4%  61.6% 
                   
Capitalization Ratios                
                   
Dividends declared to net income   37.8%  33.2%  35.6%  36.4%  31.9%  35.7%  46.5% 
Shareholders' equity to assets (Period End)  12.56%  12.41%  12.64%  12.66%  12.52%  12.56%  12.52% 
Tangible common equity to tangible assets (1) 9.60%  9.42%  9.54%  9.47%  9.29%  9.60%  9.29% 
Common equity book value per share $23.01  $22.66  $22.25  $21.78  $21.32  $23.01  $21.32  
Tangible common equity book value per share (1)$17.01  $16.64  $16.20  $15.72  $15.25  $17.01  $15.25  
                   
Regulatory Capital Ratios (Period End)                
Tier 1 leverage ratio    10.02%  9.97%  10.01%  10.10%  10.13%  10.02%  10.13% 
Common equity tier 1 risk-based capital ratio 11.03%  11.03%  10.99%  10.93%  10.88%  11.03%  10.88% 
Tier 1 risk-based capital ratio   11.03%  11.03%  10.99%  10.93%  10.88%  11.03%  10.88% 
Total risk-based capital ratio   13.78%  13.81%  13.79%  13.77%  13.70%  13.78%  13.70% 
                   
                   
(1)This consolidated selected financial data schedule contains supplemental financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”). The management of Univest Financial Corporation uses these non-GAAP measures in its analysis of the Corporation's performance. These measures should not be considered a substitute for GAAP basis measures nor should they be viewed as a substitute for operating results determined in accordance with GAAP. Management believes the presentation of the non-GAAP financial measures, which exclude the impact of the specified items, provides useful supplemental information that is essential to a proper understanding of the financial results of the Corporation. See below table for additional information. 
                   
 (a) Restructuring charges$-  $-  $-  $-  $-  $-  $571  
 Tax effect on restructuring charges -   -   -   -   -   -   (120) 
 (b) Restructuring charges, net of tax$-  $-  $-  $-  $-  $-  $451  
                   
 (c) Shareholders' equity$675,122  $664,299  $651,670  $637,606  $624,133  $675,122  $624,133  
 Goodwill (172,559)  (172,559)  (172,559)  (172,559)  (172,559)  (172,559)  (172,559) 
 Other intangibles (i)  (3,658)  (4,026)  (4,396)  (4,805)  (5,222)  (3,658)  (5,222) 
 (d) Tangible common equity$498,905  $487,714  $474,715  $460,242  $446,352  $498,905  $446,352  
                   
 (e) Total assets$5,375,614  $5,353,611  $5,154,298  $5,035,527  $4,984,347  $5,375,614  $4,984,347  
 Goodwill (172,559)  (172,559)  (172,559)  (172,559)  (172,559)  (172,559)  (172,559) 
 Other intangibles (i)  (3,658)  (4,026)  (4,396)  (4,805)  (5,222)  (3,658)  (5,222) 
 (f) Tangible assets$5,199,397  $5,177,026  $4,977,343  $4,858,163  $4,806,566  $5,199,397  $4,806,566  
                   
 (g) Average shareholders' equity$672,647  $659,523  $645,538  $631,574  $619,204  $652,453  $612,197  
 Average goodwill (172,559)  (172,559)  (172,559)  (172,559)  (172,559)  (172,559)  (172,559) 
 Average other intangibles (i)  (3,853)  (4,234)  (4,615)  (5,031)  (5,473)  (4,430)  (6,233) 
 (h) Average tangible common equity$496,235  $482,730  $468,364  $453,984  $441,172  $475,464  $433,405  
                   
 (i) Amount does not include servicing rights              
                   
(2)Net income in this ratio excludes restructuring charges, net of tax. See (1)(b) above.           
(3)Noninterest expense to net interest income before loan loss provision plus noninterest income adjusted for tax equivalent income.     
(4)Noninterest expense in this ratio excludes restructuring charges. See (1)(a) above.           
                   


Univest Financial Corporation  
Average Balances and Interest Rates (Unaudited)  
  For the Three Months Ended,    
Tax Equivalent BasisDecember 31, 2019 September 30, 2019  
 AverageIncome/Average AverageIncome/Average  
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate  
Assets:         
Interest-earning deposits with other banks$205,645 $8601.66%$213,623 $1,1782.19% 
U.S. government obligations 7,297  372.01  14,154  621.74  
Obligations of state and political subdivisions 35,938  3243.58  42,465  3162.95  
Other debt and equity securities 402,697  2,6842.64  403,480  2,5192.48  
Federal Home Loan Bank, Federal Reserve Bank and other stock 30,653  5146.65  30,857  5196.67  
Total interest-earning deposits, investments and other interest-earning assets 682,230  4,4192.57  704,579  4,5942.59  
          
Commercial, financial, and agricultural loans 830,757  9,1974.39  800,006  9,9524.94  
Real estate—commercial and construction loans 2,040,442  23,5264.57  1,966,593  23,4394.73  
Real estate—residential loans 966,370  11,5664.75  956,224  11,5704.80  
Loans to individuals 31,694  4585.73  31,504  4906.17  
Municipal loans and leases 325,939  3,3234.04  333,734  3,4134.06  
Lease financings 85,228  1,5287.11  82,424  1,4827.13  
Gross loans and leases 4,280,430  49,5984.60  4,170,485  50,3464.79  
Total interest-earning assets 4,962,660  54,0174.32  4,875,064  54,9404.47  
Cash and due from banks 50,794     53,019     
Reserve for loan and lease losses (34,392)    (33,152)    
Premises and equipment, net 57,043     57,881     
Operating lease right-of-use assets 34,693     35,238     
Other assets 329,735     329,817     
Total assets$5,400,533    $5,317,867     
          
Liabilities:         
Interest-bearing checking deposits$566,904 $9410.66%$497,185 $6780.54% 
Money market savings 1,074,066  3,7491.38  1,004,806  4,1121.62  
Regular savings 798,087  8700.43  805,632  9630.47  
Time deposits 648,726  3,2611.99  715,520  3,6812.04  
Total time and interest-bearing deposits 3,087,783  8,8211.13  3,023,143  9,4341.24  
          
Short-term borrowings 30,404  630.82  32,375  941.15  
Long-term debt 153,049  7952.06  167,338  8662.05  
Subordinated notes 94,786  1,2615.28  94,724  1,2615.28  
Total borrowings 278,239  2,1193.02  294,437  2,2212.99  
Total interest-bearing liabilities 3,366,022  10,9401.29  3,317,580  11,6551.39  
Noninterest-bearing deposits 1,286,745     1,265,027     
Operating lease liabilities 37,867     38,364     
Accrued expenses and other liabilities 37,252     37,373     
Total liabilities 4,727,886     4,658,344     
          
Shareholders' Equity:         
Common stock 157,784     157,784     
Additional paid-in capital 294,731     294,138     
Retained earnings and other equity 220,132     207,601     
Total shareholders' equity 672,647     659,523     
Total liabilities and shareholders' equity$5,400,533    $5,317,867     
Net interest income $43,077   $43,285   
          
Net interest spread  3.03   3.08  
Effect of net interest-free funding sources  0.41   0.44  
Net interest margin  3.44%  3.52% 
Ratio of average interest-earning assets to average interest-bearing liabilities 147.43%    146.95%    
          
Note 1: For rate calculation purposes, average loan and lease categories include deferred fees and costs, purchase accounting adjustments and unearned discount. Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included in the average loan balances. Tax-equivalent amounts for the three months ended December 31, 2019 and September 30, 2019 have been calculated using the Corporation’s federal applicable rate of 21.0%.


Univest Financial Corporation   
Average Balances and Interest Rates (Unaudited)   
  For the Three Months Ended December 31,     
Tax Equivalent Basis  2019    2018    
 AverageIncome/Average AverageIncome/Average   
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate   
Assets:          
Interest-earning deposits with other banks$205,645 $8601.66%$89,784 $4802.12%  
U.S. government obligations 7,297  372.01  22,307  891.58   
Obligations of state and political subdivisions 35,938  3243.58  65,134  5533.37   
Other debt and equity securities 402,697  2,6842.64  377,243  2,4942.62   
Federal Home Loan Bank, Federal Reserve Bank and other stock 30,653  5146.65  30,175  4686.15   
Total interest-earning deposits, investments and other interest-earning assets 682,230  4,4192.57  584,643  4,0842.77   
       -   
Commercial, financial, and agricultural loans 830,757  9,1974.39  782,666  10,3225.23   
Real estate—commercial and construction loans 2,040,442  23,5264.57  1,766,543  21,3094.79   
Real estate—residential loans 966,370  11,5664.75  910,620  11,1024.84   
Loans to individuals 31,694  4585.73  31,902  5116.35   
Municipal loans and leases 325,939  3,3234.04  323,904  3,1603.87   
Lease financings 85,228  1,5287.11  78,663  1,4077.10   
Gross loans and leases 4,280,430  49,5984.60  3,894,298  47,8114.87   
Total interest-earning assets 4,962,660  54,0174.32  4,478,941  51,8954.60   
Cash and due from banks 50,794     47,429      
Reserve for loan and lease losses (34,392)    (28,499)     
Premises and equipment, net 57,043     60,448      
Operating lease right-of-use assets 34,693     -      
Other assets 329,735     332,200      
Total assets$5,400,533    $4,890,519      
           
Liabilities:          
Interest-bearing checking deposits$566,904 $9410.66%$491,749 $7080.57%  
Money market savings 1,074,066  3,7491.38  889,165  3,3721.50   
Regular savings 798,087  8700.43  768,825  6370.33   
Time deposits 648,726  3,2611.99  676,256  2,9581.74   
Total time and interest-bearing deposits 3,087,783  8,8211.13  2,825,995  7,6751.08   
           
Short-term borrowings 30,404  630.82  56,215  2331.64   
Long-term debt 153,049  7952.06  140,597  6941.96   
Subordinated notes 94,786  1,2615.28  94,542  1,2605.29   
Total borrowings 278,239  2,1193.02  291,354  2,1872.98   
Total interest-bearing liabilities 3,366,022  10,9401.29  3,117,349  9,8621.26   
Noninterest-bearing deposits 1,286,745     1,112,383      
Operating lease liabilities 37,867     -      
Accrued expenses and other liabilities 37,252     41,583      
Total liabilities 4,727,886     4,271,315      
           
Shareholders' Equity:          
Common stock 157,784     157,784      
Additional paid-in capital 294,731     292,342      
Retained earnings and other equity 220,132     169,078      
Total shareholders' equity 672,647     619,204      
Total liabilities and shareholders' equity$5,400,533    $4,890,519      
Net interest income $43,077   $42,033    
           
Net interest spread  3.03   3.34   
Effect of net interest-free funding sources  0.41   0.38   
Net interest margin  3.44%  3.72%  
Ratio of average interest-earning assets to average interest-bearing liabilities 147.43%    143.68%     
           
Note 1: For rate calculation purposes, average loan and lease categories include deferred fees and costs, purchase accounting adjustments and unearned discount. Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included in the average loan balances. Tax-equivalent amounts for the three months ended December 31, 2019 and 2018 have been calculated using the Corporation’s federal applicable rate of 21.0%. 


Univest Financial Corporation  
Average Balances and Interest Rates (Unaudited)  
  For the Twelve Months Ended December 31,   
Tax Equivalent Basis  2019    2018   
 AverageIncome/Average AverageIncome/Average  
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate  
Assets:         
Interest-earning deposits with other banks$141,760 $2,8762.03%$56,984 $1,1011.93% 
U.S. government obligations 14,665  2541.73  22,930  3641.59  
Obligations of state and political subdivisions 50,360  1,6933.36  69,842  2,3303.34  
Other debt and equity securities 396,816  10,4062.62  363,840  9,0242.48  
Federal Home Loan Bank, Federal Reserve Bank and other stock 31,446  2,1546.85  30,786  1,9656.38  
Total interest-earning deposits, investments and other interest-earning assets 635,047  17,3832.74  544,382  14,7842.72  
          
Commercial, financial, and agricultural loans 815,472  40,4964.97  793,028  39,1564.94  
Real estate—commercial and construction loans 1,936,073  91,6344.73  1,689,983  78,4984.64  
Real estate—residential loans 950,743  46,0314.84  870,846  41,2704.74  
Loans to individuals 31,912  1,9766.19  30,242  1,8666.17  
Municipal loans and leases 331,831  13,2624.00  316,280  12,0493.81  
Lease financings 82,588  5,9047.15  76,561  5,5147.20  
Gross loans and leases 4,148,619  199,3034.80  3,776,940  178,3534.72  
Total interest-earning assets 4,783,666  216,6864.53  4,321,322  193,1374.47  
Cash and due from banks 48,877     45,979     
Reserve for loan and lease losses (32,389)    (25,154)    
Premises and equipment, net 58,237     61,006     
Operating lease right-of-use assets 35,712     -     
Other assets 330,466     334,619     
Total assets$5,224,569    $4,737,772     
          
Liabilities:         
Interest-bearing checking deposits$500,295 $2,7900.56%$461,676 $1,9240.42% 
Money market savings 995,403  15,8431.59  764,777  9,1371.19  
Regular savings 802,851  3,6600.46  798,332  2,3570.30  
Time deposits 677,199  13,2761.96  601,674  8,7681.46  
Total time and interest-bearing deposits 2,975,748  35,5691.20  2,626,459  22,1860.84  
          
Short-term borrowings 56,882  1,0121.78  144,312  2,4201.68  
Long-term debt 156,366  3,2362.07  150,032  2,7771.85  
Subordinated notes 94,695  5,0445.33  94,451  5,0435.34  
Total borrowings 307,943  9,2923.02  388,795  10,2402.63  
Total interest-bearing liabilities 3,283,691  44,8611.37  3,015,254  32,4261.08  
Noninterest-bearing deposits 1,210,577     1,069,805     
Operating lease liabilities 38,791     -     
Accrued expenses and other liabilities 39,057     40,516     
Total liabilities 4,572,116     4,125,575     
          
Shareholders' Equity:         
Common stock 157,784     157,784     
Additional paid-in capital 293,784     291,148     
Retained earnings and other equity 200,885     163,265     
Total shareholders' equity 652,453     612,197     
Total liabilities and shareholders' equity$5,224,569    $4,737,772     
Net interest income $171,825   $160,711   
          
Net interest spread  3.16   3.39  
Effect of net interest-free funding sources  0.43   0.33  
Net interest margin  3.59%  3.72% 
Ratio of average interest-earning assets to average interest-bearing liabilities 145.68%    143.32%    
          
Note 1: For rate calculation purposes, average loan and lease categories include deferred fees and costs, purchase accounting adjustments and unearned discount. Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included in the average loan balances. Tax-equivalent amounts for the twelve months ended December 31, 2019 and 2018 have been calculated using the Corporation’s federal applicable rate of 21.0%.
CONTACT:
Brian J. RichardsonUNIVEST FINANCIAL CORPORATION
Chief Financial Officer
215-721-2446, richardsonb@univest.net  

Univest Corporation

Source: Univest Financial Corporation