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Univest Financial Corporation Reports First Quarter Results

Company Release - 4/28/2021

SOUDERTON, Pa., April 28, 2021 (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 quarter ended March 31, 2021 was $32.6 million, or $1.11 diluted earnings per share, compared to net income of $838 thousand, or $0.03 diluted earnings per share, for the quarter ended March 31, 2020.

Pre-tax pre-provision income1 for the quarter ended March 31, 2021 was $29.1 million, an increase of $7.0 million, or 31.9%, from the first quarter of 2020.

COVID-19
As the re-opening of our local economy continues and progress is made in getting the COVID-19 vaccines distributed and administered, access to all Univest financial center lobbies resumed on April 5, 2021.

Throughout the COVID-19 pandemic, we have taken various actions to support our customers and the communities we collectively serve, including modifying outstanding loans and leases. Loans and leases that were modified via principal and/or interest deferrals were done so in accordance with Section 4013 of the CARES Act, the Consolidated Appropriations Act, 2021 and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus and have not been categorized as troubled debt restructurings. These loans and leases had a combined principal balance of approximately $73.0 million as of March 31, 2021, which represents approximately 1.5% of the loan portfolio, excluding Paycheck Protection Program (PPP) loans1. For more information on these loans, including a breakdown of such loans by type, please see the "Loan Portfolio Overview" table within this document.

Paycheck Protection Program
On December 27, 2020, the Consolidated Appropriations Act, 2021, was signed into law, which provides new COVID-19 relief funds, additional funding under the PPP and the establishment of PPP Second Draw Loans. The Small Business Administration (SBA) announced the taking of certain steps under the PPP to further promote equitable relief for smaller businesses. Under this program, we successfully originated approximately 1,200 PPP loans and secured funding of approximately $168.6 million for our customers as of April 15, 2021.

As of March 31, 2021, $528.5 million in PPP loan originations remain outstanding. During the quarter, we recorded income of $4.5 million within net interest income related to these loans, of which $2.3 million was the result of forgiveness and pay downs of PPP loans totaling $119.7 million. As of March 31, 2021, we have $9.5 million of net deferred fees on our balance sheet, which represents approximately 55% of the initial deferred fee amount.

Loans
Gross loans and leases, excluding PPP loans1, increased $63.5 million, or 5.3% (annualized), from December 31, 2020 primarily due to increases in commercial real estate loans, despite a $58.1 million decrease in commercial line utilization. Gross loans and leases, excluding PPP loans1, increased $437.7 million, or 9.8%, from March 31, 2020 primarily due to increases in commercial real estate loans. As of March 31, 2021, commercial line utilization was 30.2% compared to 34.0% at December 31, 2020 and 38.3% at March 31, 2020.
  
Deposits
Total deposits increased $68.9 million, or 5.3% (annualized), from December 31, 2020 primarily due to an increase in consumer and commercial deposits offset by a decrease in public funds and brokered deposits. Total deposits increased $904.3 million, or 20.5%, from March 31, 2020 primarily due to increases in commercial, consumer and public funds deposits.

Net Interest Income and Margin
Net interest income of $45.4 million for the first quarter of 2021 increased $2.9 million, or 6.9%, from the first quarter of 2020. The increase in net interest income for the first quarter of 2021 compared to the first quarter of 2020 was primarily due to $4.5 million in PPP income, a $3.5 million decrease in the cost of interest-bearing liabilities and growth in loans partially offset by a decrease in loan and investment yields.

Net interest margin, on a tax-equivalent basis, was 3.12% for the first quarter of 2021, compared to 3.02% for the fourth quarter of 2020 and 3.48% for the first quarter of 2020. Excess liquidity reduced net interest margin by approximately eleven basis points for the quarter ended March 31, 2021 compared to thirteen basis points for the quarter ended December 31, 2020 and six basis points for the quarter ended March 31, 2020. This excess liquidity was primarily driven by strong deposit balance growth during the last twelve months, which was partially attributable to the various stimulus initiatives associated with the COVID-19 pandemic. PPP loans had a favorable impact on net interest margin of four basis points for the quarter ended March 31, 2021 compared to an unfavorable impact of seven basis points for the quarter ended December 31, 2020 and had no impact for the quarter ended March 31, 2020. Excluding the impacts of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was 3.19% for the quarter ended March 31, 2021 compared to 3.22% for the quarter ended December 31, 2020 and 3.54% for the quarter ended March 31, 2020.

Noninterest Income
Noninterest income for the quarter ended March 31, 2021 was $23.3 million, an increase of $4.9 million, or 26.5%, compared to the first quarter of 2020.

Net gain on mortgage banking activities increased $3.2 million, or 116.4%, for the quarter primarily due to an increase in volume and expansion of margins. Investment advisory commission and fee income increased $442 thousand, or 10.4%, due to increased assets under management driven by favorable market conditions and new customer relationships. Insurance commission and fee income increased $223 thousand, or 4.7%, for the quarter ended March 31, 2021, primarily due to an increase in premiums for group life and health and commercial lines and an increase in contingent commission income of $36 thousand, which was $1.1 million for each of the quarters ended March 31, 2021 and 2020. Contingent commission income is largely recognized in the first quarter of the year.

Other income increased $1.3 million, for the quarter primarily due to an increase of $967 thousand in fees on risk participation agreements for interest rate swaps driven by increased customer activity due to the current rate environment. Additionally, equity securities measured at fair value increased $384 thousand for the quarter.

Noninterest Expense
Noninterest expense for the quarter ended March 31, 2021 was $39.5 million, an increase of $763 thousand, or 2.0%, compared to the first quarter of 2020.

Salaries, benefits and commissions increased $944 thousand, or 4.0%, for the quarter primarily attributable to additional staff hired to support revenue generation across all business lines, annual merit increases and increased variable compensation due to strong pre-tax pre-provision income during the first quarter of 2021. The increases in salaries, benefits and commissions were offset by $582 thousand of incremental capitalized compensation related to the origination of PPP loans. Professional fees increased $431 thousand, or 32.7%, for the quarter primarily attributable to increased consultant fees in support of our Diversity, Equity and Inclusion and training initiatives. Data processing expenses increased $290 thousand, or 10.5%, for the quarter primarily due to continued investments in customer relationship management software, internal infrastructure improvements and outsourced data processing solutions. Deposit insurance premiums increased $132 thousand, or 26.2%, for the quarter primarily due to an increased assessment base due to asset growth.

Other expense decreased $947 thousand, or 15.6%, for the quarter primarily due to a $656 thousand charge related to the extinguishment of long-term debt that occurred in the first quarter of 2020 and a $295 thousand decrease in travel and entertainment expenses due to COVID-19 related restrictions.

Asset Quality and Provision for Credit Losses
Nonperforming assets were $38.2 million at March 31, 2021, compared to $40.5 million at December 31, 2020 and $39.0 million at March 31, 2020.

Net loan and lease charge-offs were $288 thousand during the first quarter of 2021 compared to $489 thousand for the quarter ended March 31, 2020. The reversal of provision for credit losses was $11.3 million for the first quarter of 2021, of which $12.9 million (after-tax benefit of $10.2 million), or $0.35 diluted earnings per share, was attributable to favorable changes in economic-related assumptions within the Corporation’s CECL model partially offset by a reserve increase attributable to loan growth. The provision for credit losses was $21.8 million for the quarter ended March 31, 2020, of which $20.3 million (after-tax charge of $16.1 million), or $0.55 diluted earnings per share, was attributable to adverse changes in economic-related assumptions.

The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment was 1.32% at March 31, 2021, compared to 1.56% at December 31, 2020, and 1.53% at March 31, 2020. The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment, excluding PPP loans1, was 1.46% at March 31, 2021 compared to 1.72% at December 31, 2020 and 1.53% at March 31, 2020.

Tax Provision
The effective income tax rate was 19.3% for the quarter ended March 31, 2021 compared to an effective income tax rate of (261.2%) for the quarter ended March 31, 2020. The effective tax rate for the quarter ended March 31, 2021 reflects the benefits of tax-exempt income from investments in municipal securities and loans and leases.

Dividend
On April 28, 2021, Univest declared a quarterly cash dividend of $0.20 per share. The dividend will be paid on May 26, 2021 to shareholders of record as of May 12, 2021.

Conference Call
Univest will host a conference call to discuss first quarter 2021 results on Thursday, April 29, 2021 at 9:00 a.m. EST. Participants may preregister at https://dpregister.com/sreg/10154212/e624e999e4. The general public can access the call by dialing 1-888-338-6515. A replay of the conference call will be available through May 28, 2021 by dialing 1-877-344-7529; using Conference ID: 10154212.

1 Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included within this document.

About Univest Financial Corporation
Univest Financial Corporation (UVSP), including its wholly-owned subsidiary Univest Bank and Trust Co., Member FDIC, has approximately $6.4 billion in assets and $4.2 billion in assets under management and supervision through its Wealth Management lines of business at March 31, 2021. 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 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 trends or factors affecting the financial services industry and, specifically, the financial condition and results of operations, business and capital management strategies, markets and products of Univest. These forward-looking statements involve certain risks and uncertainties in that there are a number of important factors that could cause Univest's future results to differ materially from those expressed or implied by the forward-looking statements. These factors include, but are not limited to: (1) competition; (2) changes in interest rates; (3) changes in asset quality, prepayment speeds, loan sale volumes, charge-offs and credit 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.

Additionally, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and whether the continued reopening of businesses will result in a meaningful increase in economic activity. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: (1) demand for our products and services may decline; (2) if the economy is unable to remain open, and higher levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase; (3) collateral for loans, especially real estate, may decline in value; (4) our allowance for credit losses may have to be increased if borrowers experience financial difficulties; (5) the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; (6) a material decrease in net income or a net loss over several quarters could result in the elimination of or a decrease in the rate of our quarterly cash dividend; (7) our wealth management revenues may decline with continuing market turmoil; (8) litigation, regulatory enforcement risk and reputation risk regarding our participation in the Paycheck Protection Program and the risk that the Small Business Administration may not fund some or all PPP loan guarantees; (9) our cyber security risks are increased as the result of an increase in the number of employees working remotely; (10) Federal Deposit Insurance Corporation premiums may increase if the agency experiences additional resolution costs; and (11) further and sustained decline in our stock price or other triggering event could result in an impairment charge being recorded. Univest undertakes no obligation to revise these forward-looking statements or to reflect events or circumstances after the date of this press release.

(UVSP - ER)

Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
March 31, 2021
(Dollars in thousands)                  
                   
Balance Sheet (Period End) 03/31/21   12/31/20   09/30/20   06/30/20   03/31/20
Assets $ 6,416,665     $ 6,336,496     $ 6,382,831     $ 6,125,312     $ 5,464,768  
Investment securities, net of allowance for credit losses   377,506       373,176       368,830       397,852       423,521  
Loans held for sale   22,636       37,039       14,465       31,082       11,417  
Loans and leases held for investment, gross   5,415,006       5,306,841       5,211,856       4,951,809       4,448,825  
Allowance for credit losses, loans and leases   71,497       83,044       91,870       86,217       68,216  
Loans and leases held for investment, net   5,343,509       5,223,797       5,119,986       4,865,592       4,380,609  
Total deposits   5,311,592       5,242,715       5,211,603       4,869,329       4,407,303  
Noninterest-bearing deposits   1,857,547       1,690,663       1,714,505       1,725,819       1,318,270  
NOW, money market and savings   2,979,834       2,988,277       2,940,879       2,623,025       2,452,021  
Time deposits   474,211       563,775       556,219       520,485       637,012  
Borrowings   295,293       311,421       416,104       515,722       323,363  
Shareholders' equity   722,455       692,472       669,107       654,873       651,551  
                   
                   
Balance Sheet (Average) For the three months ended,
  03/31/21   12/31/20   09/30/20   06/30/20   03/31/20
Assets $ 6,383,463     $ 6,353,519     $ 6,265,605     $ 6,000,790     $ 5,409,561  
Investment securities, net of allowance for credit losses   374,369       369,511       385,221       411,957       441,900  
Loans and leases, gross   5,325,897       5,253,720       5,070,037       4,836,858       4,388,584  
Deposits   5,296,147       5,222,452       5,030,398       4,794,669       4,349,984  
Shareholders' equity   699,736       676,426       661,947       660,950       673,460  
                   
                   
Asset Quality Data (Period End)                  
  03/31/21   12/31/20   09/30/20   06/30/20   03/31/20
Nonaccrual loans and leases, including nonaccrual troubled debt restructured                  
loans and leases $ 29,996     $ 31,692     $ 30,019     $ 26,141     $ 36,626  
Accruing loans and leases 90 days or more past due   664       1,392       3,573       1,193       1,777  
Accruing troubled debt restructured loans and leases   52       53       53       53       54  
Total nonperforming loans and leases   30,712       33,137       33,645       27,387       38,457  
Other real estate owned   7,481       7,355       8,270       8,642       516  
Total nonperforming assets $ 38,193     $ 40,492     $ 41,915     $ 36,029     $ 38,973  
Nonaccrual loans and leases / Loans and leases held for investment   0.55 %     0.60 %     0.58 %     0.53 %     0.82 %
Nonperforming loans and leases / Loans and leases held for investment   0.57 %     0.62 %     0.65 %     0.55 %     0.86 %
Nonperforming assets / Total assets   0.60 %     0.64 %     0.66 %     0.59 %     0.71 %
                   
Allowance for credit losses, loans and leases $ 71,497     $ 83,044     $ 91,870     $ 86,217     $ 68,216  
Allowance for credit losses, loans and leases / Loans and leases held for investment   1.32 %     1.56 %     1.76 %     1.74 %     1.53 %
Allowance for credit losses, loans and leases / Loans and leases held for investment, excluding Paycheck Protection Program loans (1)   1.46 %     1.72 %     1.95 %     1.94 %     1.53 %
Allowance for credit losses, loans and leases / Nonaccrual loans and leases held for investment   238.36 %     262.03 %     306.04 %     329.82 %     186.25 %
Allowance for credit losses, loans and leases / Nonperforming loans and leases held for investment   232.80 %     250.61 %     273.06 %     314.81 %     177.38 %
                   
  For the three months ended,
  03/31/21   12/31/20   09/30/20   06/30/20   03/31/20
Net loan and lease charge-offs (recoveries) $ 288     $ 618     $ (35 )   $ 3,576     $ 489  
Net loan and lease charge-offs (annualized)/Average loans and leases   0.02 %     0.05 %     (0.00 %)     0.30 %     0.04 %
                   
(1) Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included at the end of this document.



Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
March 31, 2021
(Dollars in thousands, except per share data)                  
  For the three months ended,
For the period: 03/31/21   12/31/20   09/30/20   06/30/20   03/31/20
Interest income $ 51,457     $ 51,334     $ 50,612   $ 49,980     $ 52,019  
Interest expense   6,043       6,813       6,758     6,462       9,551  
Net interest income   45,414       44,521       43,854     43,518       42,468  
Provision (reversal of provision) for credit losses   (11,283 )     (8,721 )     3,935     23,737       21,843  
Net interest income after provision for credit losses   56,697       53,242       39,919     19,781       20,625  
Noninterest income:                  
Trust fee income   2,034       1,974       1,915     1,924       1,890  
Service charges on deposit accounts   1,282       1,371       1,187     890       1,397  
Investment advisory commission and fee income   4,697       4,144       4,005     3,540       4,255  
Insurance commission and fee income   4,955       3,512       3,776     4,067       4,732  
Other service fee income   2,192       2,092       2,093     1,488       1,870  
Bank owned life insurance income   717       733       741     732       734  
Net gain on sales of investment securities   65       54       57     65       695  
Net gain on mortgage banking activities   5,938       4,323       5,860     3,515       2,744  
Other income   1,370       1,936       2,171     1,779       67  
Total noninterest income   23,250       20,139       21,805     18,000       18,384  
Noninterest expense:                  
Salaries, benefits and commissions   24,780       23,613       24,059     21,700       23,836  
Net occupancy   2,739       2,697       2,609     2,478       2,574  
Equipment   946       951       972     923       995  
Data processing   3,050       2,961       2,862     2,750       2,760  
Professional fees   1,748       1,436       1,321     1,264       1,317  
Marketing and advertising   280       575       463     535       402  
Deposit insurance premiums   636       765       707     615       504  
Intangible expenses   249       282       283     321       330  
Restructuring charges   -       1,439       -     -       -  
Other expense   5,112       7,015       5,251     5,374       6,059  
Total noninterest expense   39,540       41,734       38,527     35,960       38,777  
Income before taxes   40,407       31,647       23,197     1,821       232  
Income tax expense (benefit)   7,804       5,773       5,078     (264 )     (606 )
Net income $ 32,603     $ 25,874     $ 18,119   $ 2,085     $ 838  
Net income per share:                  
Basic $ 1.11     $ 0.88     $ 0.62   $ 0.07     $ 0.03  
Diluted $ 1.11     $ 0.88     $ 0.62   $ 0.07     $ 0.03  
Dividends declared per share $ 0.20     $ -     $ 0.20   $ 0.20     $ 0.20  
Weighted average shares outstanding   29,327,432       29,274,915       29,226,627     29,187,197       29,286,200  
Period end shares outstanding   29,379,575       29,295,052       29,241,302     29,201,985       29,164,782  

 

Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
March 31, 2021
                   
                   
                   
  For the three months ended,
Profitability Ratios (annualized) 03/31/21   12/31/20   09/30/20   06/30/20   03/31/20
                   
Return on average assets   2.07 %     1.62 %     1.15 %     0.14 %     0.06 %
Return on average assets, excluding restructuring   2.07 %     1.69 %     1.15 %     0.14 %     0.06 %
charges (1)                  
Return on average shareholders' equity   18.90 %     15.22 %     10.89 %     1.27 %     0.50 %
Return on average shareholders' equity, excluding   18.90 %     15.89 %     10.89 %     1.27 %     0.50 %
restructuring charges (1)                  
Return on average tangible common equity (1)   25.19 %     20.53 %     14.82 %     1.73 %     0.68 %
Return on average tangible common equity, excluding   25.19 %     21.44 %     14.82 %     1.73 %     0.68 %
restructuring charges (1)                  
Net interest margin (FTE)   3.12 %     3.02 %     3.02 %     3.18 %     3.48 %
Efficiency ratio (2)   57.0 %     63.8 %     58.0 %     57.7 %     62.8 %
Efficiency ratio, excluding restructuring charges (1) (2)   57.0 %     61.6 %     58.0 %     57.7 %     62.8 %
                   
Capitalization Ratios                  
                   
Dividends declared to net income (3)   18.0 %     0.0 %     32.3 %     278.7 %     699.9 %
Shareholders' equity to assets (Period End)   11.26 %     10.93 %     10.48 %     10.69 %     11.92 %
Tangible common equity to tangible assets (1)   8.77 %     8.40 %     7.96 %     8.06 %     8.99 %
Common equity book value per share $ 24.59     $ 23.64     $ 22.88     $ 22.43     $ 22.34  
Tangible common equity book value per share (1) $ 18.64     $ 17.66     $ 16.89     $ 16.41     $ 16.31  
                   
Regulatory Capital Ratios (Period End)                  
Tier 1 leverage ratio   9.45 %     9.08 %     8.97 %     9.15 %     9.90 %
Common equity tier 1 risk-based capital ratio   11.08 %     10.76 %     10.52 %     10.73 %     10.79 %
Tier 1 risk-based capital ratio   11.08 %     10.76 %     10.52 %     10.73 %     10.79 %
Total risk-based capital ratio   15.13 %     15.31 %     15.35 %     13.72 %     13.65 %
                   
(1) Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included below.      
(2) Noninterest expense to net interest income before loan loss provision plus noninterest income adjusted for tax equivalent income.    
(3) As announced in the September 30, 2020 Earnings Release, the Corporation changed the timing of future dividend declarations and payments.

 

Univest Financial Corporation  
Average Balances and Interest Rates (Unaudited)  
    For the Three Months Ended,      
Tax Equivalent Basis March 31, 2021   December 31, 2020  
  Average Income/ Average   Average Income/ Average  
(Dollars in thousands) Balance Expense Rate   Balance Expense Rate  
Assets:                
Interest-earning deposits with other banks $ 237,548   $ 56 0.10 % $ 296,258   $ 82 0.11 %
U.S. government obligations   6,998     36 2.09     6,998     36 2.05  
Obligations of state and political subdivisions   11,544     105 3.69     14,269     129 3.60  
Other debt and equity securities   355,827     1,267 1.44     348,244     1,237 1.41  
Federal Home Loan Bank, Federal Reserve Bank and other stock   26,368     348 5.35     29,838     438 5.84  
Total interest-earning deposits, investments and other interest-earning assets   638,285     1,812 1.15     695,607     1,922 1.10  
                       
Commercial, financial, and agricultural loans   782,208     6,798 3.52     824,374     7,366 3.55  
Paycheck Protection Program loans   506,939     4,524 3.62     497,035     3,133 2.51  
Real estate—commercial and construction loans   2,621,981     24,458 3.78     2,518,056     24,388 3.85  
Real estate—residential loans   1,037,000     9,873 3.86     1,025,818     10,345 4.01  
Loans to individuals   26,447     265 4.05     27,427     289 4.19  
Municipal loans and leases   245,638     2,530 4.18     258,627     2,776 4.27  
Lease financings   105,684     1,737 6.67     102,383     1,690 6.57  
Gross loans and leases   5,325,897     50,185 3.82     5,253,720     49,987 3.79  
Total interest-earning assets   5,964,182     51,997 3.54     5,949,327     51,909 3.47  
Cash and due from banks   55,311           53,360        
Allowance for credit losses, loans and leases   (83,254 )         (92,766 )      
Premises and equipment, net   55,826           55,653        
Operating lease right-of-use assets   34,033           34,272        
Other assets   357,365           353,673        
Total assets $ 6,383,463         $ 6,353,519        
                 
Liabilities:                
Interest-bearing checking deposits $ 817,940   $ 490 0.24 % $ 838,323   $ 537 0.25 %
Money market savings   1,243,673     853 0.28     1,213,585     898 0.29  
Regular savings   959,232     298 0.13     905,918     341 0.15  
Time deposits   525,800     1,759 1.36     582,782     2,034 1.39  
Total time and interest-bearing deposits   3,546,645     3,400 0.39     3,540,608     3,810 0.43  
                 
Short-term borrowings   17,894     2 0.05     15,091     2 0.05  
Long-term debt   101,333     348 1.39     169,623     611 1.43  
Subordinated notes   183,340     2,293 5.07     193,244     2,390 4.92  
Total borrowings   302,567     2,643 3.54     377,958     3,003 3.16  
Total interest-bearing liabilities   3,849,212     6,043 0.64     3,918,566     6,813 0.69  
Noninterest-bearing deposits   1,749,502           1,681,844        
Operating lease liabilities   37,415           37,616        
Accrued expenses and other liabilities   47,598           39,067        
Total liabilities   5,683,727           5,677,093        
                 
Shareholders' Equity:                
Common stock   157,784           157,784        
Additional paid-in capital   296,136           296,810        
Retained earnings and other equity   245,816           221,832        
Total shareholders' equity   699,736           676,426        
Total liabilities and shareholders' equity $ 6,383,463         $ 6,353,519        
Net interest income   $ 45,954       $ 45,096    
                 
Net interest spread     2.90       2.78  
Effect of net interest-free funding sources     0.22       0.24  
Net interest margin     3.12 %     3.02 %
Ratio of average interest-earning assets to average interest-bearing liabilities   154.95 %         151.82 %      
                 
Note 1: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
      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 March 31, 2021 and December 31, 2020 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 March 31,      
Tax Equivalent Basis 2021
  2020
 
  Average Income/ Average   Average Income/ Average  
(Dollars in thousands) Balance Expense Rate   Balance Expense Rate  
Assets:                
Interest-earning deposits with other banks $ 237,548   $ 56 0.10 % $ 118,108   $ 325 1.11 %
U.S. government obligations   6,998     36 2.09     7,298     37 2.04  
Obligations of state and political subdivisions   11,544     105 3.69     33,595     289 3.46  
Other debt and equity securities   355,827     1,267 1.44     401,007     2,668 2.68  
Federal Home Loan Bank, Federal Reserve Bank and other stock   26,368     348 5.35     31,450     527 6.74  
Total interest-earning deposits, investments and other interest-earning assets   638,285     1,812 1.15     591,458     3,846 2.62  
                       
Commercial, financial, and agricultural loans   782,208     6,798 3.52     821,267     8,631 4.23  
Paycheck Protection Program loans   506,939     4,524 3.62     -     - -  
Real estate—commercial and construction loans   2,621,981     24,458 3.78     2,139,369     23,917 4.50  
Real estate—residential loans   1,037,000     9,873 3.86     991,550     11,052 4.48  
Loans to individuals   26,447     265 4.05     30,016     407 5.45  
Municipal loans and leases   245,638     2,530 4.18     317,006     3,265 4.14  
Lease financings   105,684     1,737 6.67     89,376     1,554 6.99  
Gross loans and leases   5,325,897     50,185 3.82     4,388,584     48,826 4.47  
Total interest-earning assets   5,964,182     51,997 3.54     4,980,042     52,672 4.25  
Cash and due from banks   55,311           50,891        
Allowance for credit losses, loans and leases   (83,254 )         (44,372 )      
Premises and equipment, net   55,826           56,399        
Operating lease right-of-use assets   34,033           34,545        
Other assets   357,365           332,056        
Total assets $ 6,383,463         $ 5,409,561        
                 
Liabilities:                
Interest-bearing checking deposits $ 817,940   $ 490 0.24 % $ 584,391   $ 796 0.55 %
Money market savings   1,243,673     853 0.28     1,057,336     2,903 1.10  
Regular savings   959,232     298 0.13     816,760     792 0.39  
Time deposits   525,800     1,759 1.36     602,903     2,915 1.94  
Total time and interest-bearing deposits   3,546,645     3,400 0.39     3,061,390     7,406 0.97  
                 
Short-term borrowings   17,894     2 0.05     40,126     106 1.06  
Long-term debt   101,333     348 1.39     169,205     764 1.82  
Subordinated notes   183,340     2,293 5.07     94,847     1,275 5.41  
Total borrowings   302,567     2,643 3.54     304,178     2,145 2.84  
Total interest-bearing liabilities   3,849,212     6,043 0.64     3,365,568     9,551 1.14  
Noninterest-bearing deposits   1,749,502           1,288,594        
Operating lease liabilities   37,415           37,766        
Accrued expenses and other liabilities   47,598           44,173        
Total liabilities   5,683,727           4,736,101        
                 
Shareholders' Equity:                
Common stock   157,784           157,784        
Additional paid-in capital   296,136           295,318        
Retained earnings and other equity   245,816           220,358        
Total shareholders' equity   699,736           673,460        
Total liabilities and shareholders' equity $ 6,383,463         $ 5,409,561        
Net interest income   $ 45,954       $ 43,121    
                 
Net interest spread     2.90       3.11  
Effect of net interest-free funding sources     0.22       0.37  
Net interest margin     3.12 %     3.48 %
Ratio of average interest-earning assets to average interest-bearing liabilities   154.95 %         147.97 %      
                 
Note 1: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
      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 March 31, 2021 and 2020 have  
      been calculated using the Corporation’s federal applicable rate of 21.0%.          

 

Univest Financial Corporation  
Loan Portfolio Overview (Unaudited)  
   
                 
(Dollars in thousands) As of March 31, 2021  
Industry Description Total Outstanding
Balance (excl PPP)
  % of
Commercial
Loan Portfolio
  $ Balance of
Modified Loans (1)
  Modified Loans
as a % of
Portfolio (1)
 
CRE - Retail $ 356,690   8.8 % $ -   - %
Animal Production   269,608   6.7     27   -  
CRE - Office   247,320   6.1     -   -  
CRE - 1-4 Family Residential Investment   246,643   6.1     1,097   0.4  
CRE - Multi-family   213,065   5.3     -   -  
CRE - Industrial / Warehouse   180,254   4.5     738   0.4  
Hotels & Motels (Accommodation)   174,751   4.3     35,222   20.2  
Education   155,589   3.9     2,638   1.7  
Nursing and Residential Care Facilities   152,016   3.8     -   -  
CRE - Mixed-Use - Residential   120,629   3.0     3,530   2.9  
Specialty Trade Contractors   117,204   2.9     85   0.1  
Real Estate Lenders, Secondary Market Financing   106,027   2.6     12   -  
CRE - Medical Office   93,834   2.3     -   -  
Homebuilding (tract developers, remodelers)   81,879   2.0     -   -  
Merchant Wholesalers, Durable Goods   73,063   1.8     -   -  
Crop Production   69,853   1.7     -   -  
Motor Vehicle and Parts Dealers   65,839   1.6     -   -  
Rental and Leasing Services   61,096   1.5     -   -  
Fabricated Metal Product Manufacturing   60,472   1.5     -   -  
Administrative and Support Services   58,298   1.4     101   0.2  
Wood Product Manufacturing   57,180   1.4     -   -  
Food Services and Drinking Places   53,168   1.3     3,300   6.2  
Industries with >$50 million in outstandings $ 3,014,478   74.5 % $ 46,750   1.6 %
Industries with <$50 million in outstandings $ 1,026,671   25.5 % $ 24,277   2.4 %
Total Commercial Loans $ 4,041,149   100.0 % $ 71,027   1.8 %
                 
                 
Consumer Loans and Lease Financings Total Outstanding
Balance
      $ Balance of
Modified Loans (1)
  Modified Loans
as a % of
Portfolio (1)
 
Real Estate-Residential Secured for Personal Purpose $ 494,349       $ 1,712   0.3 %
Real Estate-Home Equity Secured for Personal Purpose   162,529         84   0.1  
Loans to Individuals   25,468         -   -  
Lease Financings   163,059         212   0.1  
Total - Consumer Loans and Lease Financings $ 845,405       $ 2,008   0.2 %
                 
Total $ 4,886,554       $ 73,035   1.5 %
                 
(1) Loan modifications referenced above were made in accordance with Section 4013 of the CARES Act and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus and therefore were not classified as TDRs as of March 31, 2021.

 

Univest Financial Corporation
Non-GAAP Reconciliation
March 31, 2021
                   
 
 
Non-GAAP to GAAP Reconciliation
Management uses 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 the table below for additional information on non-GAAP measures used throughout this earnings release.
                   
  For the three months ended,
  03/31/21   12/31/20   09/30/20   06/30/20   03/31/20
Restructuring charges (a) $ -     $ 1,439     $ -     $ -     $ -  
Tax effect of restructuring charges   -       (302 )     -       -       -  
Restructuring charges, net of tax $ -     $ 1,137     $ -     $ -     $ -  
                   
Shareholders' equity $ 722,455     $ 692,472     $ 669,107     $ 654,873     $ 651,551  
Goodwill   (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )
Other intangibles (b)   (2,210 )     (2,458 )     (2,736 )     (3,017 )     (3,333 )
Tangible common equity $ 547,686     $ 517,455     $ 493,812     $ 479,297     $ 475,659  
                   
Total assets $ 6,416,665     $ 6,336,496     $ 6,382,831     $ 6,125,312     $ 5,464,768  
Goodwill   (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )
Other intangibles (b)   (2,210 )     (2,458 )     (2,736 )     (3,017 )     (3,333 )
Tangible assets $ 6,241,896     $ 6,161,479     $ 6,207,536     $ 5,949,736     $ 5,288,876  
                   
Average shareholders' equity $ 699,736     $ 676,426     $ 661,947     $ 660,950     $ 673,460  
Average goodwill   (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )
Average other intangibles (b)   (2,344 )     (2,606 )     (2,889 )     (3,185 )     (3,506 )
Average tangible common equity $ 524,833     $ 501,261     $ 486,499     $ 485,206     $ 497,395  
                   
Net income before taxes $ 40,407     $ 31,647     $ 23,197     $ 1,821     $ 232  
Provision for credit losses   (11,283 )     (8,721 )     3,935       23,737       21,843  
Pre-tax pre-provision income $ 29,124     $ 22,926     $ 27,132     $ 25,558     $ 22,075  
                   
Loans and leases held for investment, gross $ 5,415,006     $ 5,306,841     $ 5,211,856     $ 4,951,809     $ 4,448,825  
Paycheck Protection Program ("PPP") loans   (528,452 )     (483,773 )     (501,580 )     (498,978 )     -  
Gross loans and leases excluding PPP loans $ 4,886,554     $ 4,823,068     $ 4,710,276     $ 4,452,831     $ 4,448,825  
                   
(a) Associated with financial center optimization plan                  
(b) Amount does not include servicing rights                  

 

 


CONTACT:
Brian J. Richardson
UNIVEST FINANCIAL CORPORATION
Chief Financial Officer
215-721-2446, richardsonb@univest.net

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Source: Univest Financial Corporation