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Univest Financial Corporation Reports Third Quarter Results

Company Release - 10/27/2021

(Loan Growth of 9.7% for last twelve months (excluding PPP loans 1 ))

SOUDERTON, Pa., Oct. 27, 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 September 30, 2021 of $20.9 million, or $0.71 diluted earnings per share, compared to net income of $18.1 million, or $0.62 diluted earnings per share, for the quarter ended September 30, 2020. Net income for the nine months ended September 30, 2021 was $74.4 million, or $2.52 diluted earnings per share, compared to net income of $21.0 million, or $0.72 diluted earnings per share, for the nine months ended September 30, 2020.

Pre-tax pre-provision income1 for the quarter ended September 30, 2021 was $26.0 million, a decrease of $1.1 million, or 4.2%, from the third quarter of 2020. Pre-tax pre-provision income1 for the nine months ended September 30, 2021 was $80.8 million, an increase of $6.1 million, or 8.1%, from the comparable period in the prior year.

One-Time Items
The financial results for the three and nine months ended September 30, 2021 included tax-free bank owned life insurance ("BOLI") death benefit claims of $196 thousand and $1.1 million, respectively, which represents $0.01 and $0.04 diluted earnings per share, respectively.

Paycheck Protection Program
As of September 30, 2021, $85.6 million in PPP loan originations remain outstanding. During the quarter, we recorded income of $4.2 million within net interest income related to these loans, of which $3.7 million was the result of recognition of associated net deferred loan fees upon forgiveness and pay downs of PPP loans totaling $171.4 million. During the nine months ended September 30, 2021, we recorded income of $13.5 million within net interest income related to these loans, of which $8.6 million was the result of recognition of associated net deferred loan fees upon forgiveness and pay downs of PPP loans totaling $575.3 million. As of September 30, 2021, we had $2.4 million of net deferred fees on our balance sheet, which represented approximately 13.2% of the initial deferred fee amount.

Loans
Gross loans and leases, excluding PPP loans1, increased $92.0 million, or 7.3% (annualized), from June 30, 2021 due to increases in commercial real estate and residential mortgage loans. Gross loans and leases, excluding PPP loans, increased $343.4 million or 9.5% (annualized) from December 31, 2020 and $456.2 million, or 9.7%, from September 30, 2020 due to increases in commercial, construction, commercial real estate, and residential mortgage loans.

Deposits
Total deposits increased $619.5 million, or 46.6% (annualized), from June 30, 2021 due to increases in commercial deposits and seasonal increases in public funds deposits. Total deposits increased $695.4 million, or 17.7% (annualized), from December 31, 2020 and $726.6 million, or 13.9%, from September 30, 2020, primarily due to increases in commercial, consumer and public funds deposits offset by a decrease in brokered deposits.

Net Interest Income and Margin
Net interest income of $48.7 million for the three months ended September 30, 2021 increased $1.9 million, or 4.1%, from the three months ended June 30, 2021, and $4.8 million, or 11.0%, from the three months ended September 30, 2020. The increase in net interest income for the three months ended September 30, 2021 compared to the same period of 2020 was primarily due to an increase in PPP loan income of $1.4 million, a $1.9 million decrease in the cost of interest-bearing liabilities and growth in loans partially offset by a decrease in loan, excluding PPP, and investment yields.

Net interest income of $140.9 million for the nine months ended September 30, 2021 increased $11.0 million, or 8.5%, from the nine months ended September 30, 2020. The increase in net interest income for the nine months ended September 30, 2021 compared to the same period of 2020 was primarily due to an increase in PPP loan income of $8.5 million, a $6.2 million decrease in the cost of interest-bearing liabilities and growth in loans partially offset by a decrease in loans and investment yields.

Net interest margin, on a tax-equivalent basis, was 3.11% for the third quarter of 2021, compared to 3.15% for the second quarter of 2021 and 3.02% for the third quarter of 2020. Excess liquidity reduced net interest margin by approximately 27 basis points for the quarter ended September 30, 2021 compared to ten basis points for the quarter ended June 30, 2021 and 18 basis points for the quarter ended September 30, 2020. This excess liquidity was primarily driven by strong growth of deposit balances since the beginning of the COVID-19 pandemic, primarily due to the various pandemic-related stimulus initiatives. PPP loans had a favorable impact on net interest margin of 20 basis points for the quarter ended September 30, 2021 compared to 11 basis points for the quarter ended June 30, 2021 and an unfavorable impact of ten basis points for the quarter ended September 30, 2020. As PPP loans are forgiven, the associated deferred fees are recognized in earnings, which occurred with greater frequency in 2021 as compared to 2020. Excluding the impact of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was 3.18% for the quarter ended September 30, 2021 compared to 3.14% for the quarter ended June 30, 2021 and 3.30% for the quarter ended September 30, 2020.

Net interest margin, on a tax-equivalent basis, was 3.13% for the nine months ended September 20, 2021, compared to 3.21% for the nine months ended September 30, 2020. Excess liquidity reduced net interest margin by approximately 16 basis points for the nine months ended September 30, 2021 compared to 14 basis points for the nine months ended September 30, 2020. This excess liquidity was primarily driven by strong growth of deposit balances since the beginning of the COVID-19 pandemic, primarily due to the various pandemic-related stimulus initiatives. PPP loans had a favorable impact on net interest margin of 12 basis points for the nine months ended September 30, 2021 compared to an unfavorable impact of seven basis points for the nine months ended September 30, 2020. Excluding the impact of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was 3.17% for the nine months ended September 30, 2021 compared to 3.42% for the nine months ended September 30, 2020.

Noninterest Income
Noninterest income for the quarter ended September 30, 2021 was $20.6 million, a decrease of $1.3 million, or 5.7%, compared to the third quarter of 2020. Noninterest income for the nine months ended September 30, 2021 was $64.0 million, an increase of $5.8 million, or 10.0%, from the comparable period in the prior year.

Net gain on mortgage banking activities decreased $2.6 million, or 45.0%, for the quarter but increased $504 thousand, or 4.2%, for the nine months ended September 30, 2021 compared to the comparable periods in the prior year. The decrease for the three months ended September 30, 2021 was primarily due to a decrease in volume and a contraction of margins. Investment advisory commission and fee income increased $791 thousand, or 19.8%, for the quarter and $2.3 million, or 19.1%, for the nine months ended September 30, 2021 compared to the comparable periods in the prior year, due to increased assets under management driven by favorable market conditions and new customer relationships. BOLI income increased $184 thousand, or 24.8%, for the quarter and $1.1 million, or 47.8%, for the nine months ended September 30, 2021 compared to the comparable periods in the prior year, primarily due to proceeds from BOLI death benefits of $893 thousand and $196 thousand received in the second and third quarter of 2021, respectively.

Other service fee income increased $483 thousand, or 23.1%, for the quarter and $2.1 million, or 37.9%, for the nine months ended September 30, 2021 compared to the comparable periods in the prior year. Interchange fee income increased $290 thousand for the quarter and $962 thousand for the nine months ended September 30, 2021 compared to the comparable periods in the prior year, due to increased customer activity. Mortgage servicing fees increased $163 thousand for the quarter and $855 thousand for the nine months ended September 30, 2021 driven by an increase in retained servicing associated with elevated mortgage volume over the past eighteen months.

Other income decreased $546 thousand, or 25.1%, for the quarter and $543 thousand, or 13.5%, for the nine months ended September 30, 2021 compared to comparable periods in the prior year. Fees on risk participation agreements for interest rate swaps decreased $1.9 million and $2.3 million during the three and nine months ended September 30, 2021, respectively, compared to comparable periods in the prior year driven by a decrease in customer demand. Gain on the sale of SBA loans increased $897 thousand and $922 thousand during the three and nine months ended September 30, 2021, respectively. This increase was reflective of the Corporation's commitment to delivering comprehensive financial solutions to small businesses and the expansion of the SBA lending team during the first half of 2021. Net gains or losses related to valuations and sales of other real estate owned increased $297 thousand for the three and nine months ended September 30, 2021 compared to comparable periods in the prior year, primarily due to a $300 thousand valuation adjustment on other real estate owned during the third quarter of 2020. Other income increased $456 thousand for the nine months ended September 30, 2021 primarily driven by a gain on the value of equity securities measured at fair value of $164 thousand compared to a loss of $321 thousand for the nine months ended September 30, 2020.

Noninterest Expense
Noninterest expense for the quarter ended September 30, 2021 was $43.2 million, an increase of $4.7 million, or 12.3%, compared to the third quarter of 2020. Noninterest expense for the nine months ended September 30, 2021 was $124.1 million, an increase of $10.8 million, or 9.5%, from the comparable period in the prior year.

Salaries, benefits and commissions increased $2.6 million, or 10.7%, for the quarter and $7.2 million, or 10.4%, for the nine months ended September 30, 2021 from the comparable periods in the prior year. These increases reflect our continued investment in revenue producing staff across all business lines and annual merit increases. Additionally, variable incentive compensation expenses increased $829 thousand and $2.6 million for the three and nine months ended September 30, 2021, respectively, from the comparable periods in the prior year, due to increased profitability.

Professional fees increased $853 thousand, or 64.6%, for the quarter and $2.0 million, or 52.2%, for the nine months ended September 30, 2021 from the comparable periods in the prior year, primarily attributable to increased consultant fees in support of our Diversity, Equity and Inclusion program, training initiatives and treasury management product enhancements. During the first nine months of 2021, we have spent $1.4 million on these initiatives and we expect to incur approximately $70 thousand of additional expenses related to these initiatives in the fourth quarter of 2021. These expenses are not expected to re-occur in subsequent periods. Data processing expenses increased $412 thousand, or 14.4%, for the quarter and $1.0 million, or 12.1%, for the nine months ended September 30, 2021 compared to the comparable periods in the prior year, primarily due to continued investments in our end-to-end loan origination solution for loans below $1.0 million, customer relationship management software, internal infrastructure improvements and outsourced data processing solutions.

Other expense increased $865 thousand, or 16.5%, for the quarter compared to the comparable period in the prior year, due to increases in professional liability insurance, bank shares tax expense, interchange fee expense and travel and entertainment expenses, which are beginning to normalize as the markets we operate in continue to remain open.

Asset Quality and Provision for Credit Losses
Nonperforming assets were $37.1 million at September 30, 2021, compared to $38.5 million at June 30, 2021 and $41.9 million at September 30, 2020.

Net loan and lease recoveries were $75 thousand during the third quarter of 2021 compared to $35 thousand for the same period in the prior year. The reversal of provision for credit losses was $182 thousand for the third quarter of 2021, of which $2.9 million (after-tax benefit of $2.3 million), or $0.08 diluted earnings per share, was attributable to favorable changes in economic-related assumptions within the Corporation’s CECL model, partially offset by an increase in reserves for loans, unfunded commitments and investment securities. The provision for credit losses was $3.9 million for the comparable period in the prior year, of which $280 thousand (after-tax charge of $221 thousand), or $0.01 diluted earnings per share, was attributable to adverse changes in economic-related assumptions, which were predominately driven by COVID-19.

Net loan and lease charge-offs were $456 thousand for the nine months ended September 30, 2021 compared to $4.0 million for the same period in the prior year. The reversal of provision for credit losses was $11.5 million for the nine months ended September 30, 2021, of which $18.7 million (after-tax benefit of $14.8 million), or $0.50 diluted earnings per share, was attributable to favorable changes in economic-related assumptions within the Corporation’s CECL model partially offset by an increase in reserves for loans, unfunded commitments and investment securities. The provision for credit losses was $49.5 million for the comparable period in the prior year, of which $40.5 million (after-tax charge of $32.0 million), or $1.10 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 1.34% at September 30, 2021, compared to 1.34% at June 30, 2021, and 1.76% at September 30, 2020. The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment, excluding PPP loans1, was 1.36% at September 30, 2021 compared to 1.41% at June 30, 2021 and 1.95% at September 30, 2020.

Tax Provision
The effective income tax rate was 19.4% for the nine months ended September 30, 2021 compared to an effective income tax rate of 16.7% for the nine months ended September 30, 2020. The effective tax rate for the nine months ended September 30, 2021 and 2020 reflects the level of pre-tax income and the benefits of tax-exempt income from investments in municipal securities and loans and leases. Additionally, the effective income tax rate for the nine months ended September 30, 2021 was favorably impacted by discrete tax benefits and proceeds from BOLI death benefits. Excluding these items, the effective tax rate was 19.9% for the nine months ended September 30, 2021.

Dividend
On October 27, 2021, Univest declared a quarterly cash dividend of $0.20 per share. The dividend will be paid on November 24, 2021 to shareholders of record as of November 10, 2021.

Conference Call
Univest will host a conference call to discuss third quarter 2021 results on Thursday, October 28, 2021 at 9:00 a.m. EST. Participants may preregister at https://dpregister.com/sreg/10160789/ee1d498407. The general public can access the call by dialing 1-888-338-6515. A replay of the conference call will be available through November 28, 2021 by dialing 1-877-344-7529; using Conference ID: 10160789.

1Non-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 $7.0 billion in assets and $4.6 billion in assets under management and supervision through its Wealth Management lines of business at September 30, 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 nationally and in our market; (5) economic assumptions that may impact our allowance for credit losses calculation; (6) legislative, regulatory or tax changes that may adversely affect the businesses in which Univest is engaged; (7) technological issues that may adversely affect Univest financial operations or those of our customers; (8) changes in the securities markets or (9) 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 pandemic 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 economic conditions worsen or 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; and (10) Federal Deposit Insurance Corporation premiums may increase if the agency experiences additional resolution costs. 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)
September 30, 2021
(Dollars in thousands)                          
                           
Balance Sheet (Period End) 09/30/21   06/30/21   03/31/21   12/31/20   09/30/20        
Assets $ 6,979,852     $ 6,356,305     $ 6,416,665     $ 6,336,496     $ 6,382,831          
Cash and cash equivalents   902,357       203,449       187,317       219,858       387,676          
Investment securities, net of allowance for credit losses   393,377       397,426       377,506       373,176       368,830          
Loans held for sale   29,093       27,322       22,636       37,039       14,465          
Loans and leases held for investment, gross   5,252,045       5,327,313       5,415,006       5,306,841       5,211,856          
Allowance for credit losses, loans and leases   70,146       71,355       71,497       83,044       91,870          
Loans and leases held for investment, net   5,181,899       5,255,958       5,343,509       5,223,797       5,119,986          
Total deposits   5,938,154       5,318,704       5,311,592       5,242,715       5,211,603          
Noninterest-bearing deposits   1,861,007       1,872,031       1,857,547       1,690,663       1,714,505          
Interest-bearing demand, money market and savings   3,583,107       2,954,450       2,979,834       2,988,277       2,940,879          
Time deposits   494,040       492,223       474,211       563,775       556,219          
Borrowings   207,898       218,970       295,293       311,421       416,104          
Shareholders' equity   756,023       739,998       722,455       692,472       669,107          
                           
                           
Balance Sheet (Average) For the three months ended,   For the nine months ended,
  09/30/21   06/30/21   03/31/21   12/31/20   09/30/20   09/30/21   09/30/20
Assets $ 6,698,177     $ 6,443,629     $ 6,383,463     $ 6,353,519     $ 6,265,605     $ 6,509,576     $ 5,892,918  
Investment securities, net of allowance for credit losses   395,280       385,694       374,369       369,511       385,221       385,192       412,924  
Loans and leases, gross   5,320,411       5,389,110       5,325,897       5,253,720       5,070,037       5,345,119       4,766,274  
Deposits   5,666,725       5,351,089       5,296,147       5,222,452       5,030,398       5,439,345       4,726,132  
Shareholders' equity   746,185       728,750       699,736       676,426       661,947       725,061       665,439  
                           
                           
Asset Quality Data (Period End)                          
  09/30/21   06/30/21   03/31/21   12/31/20   09/30/20        
Nonaccrual loans and leases, including nonaccrual troubled debt restructured loans and leases and nonaccrual loans held for sale $ 34,528     $ 37,466     $ 29,996     $ 31,692     $ 30,019          
Accruing loans and leases 90 days or more past due   2,204       750       664       1,392       3,573          
Accruing troubled debt restructured loans and leases   51       52       52       53       53          
Total nonperforming loans and leases   36,783       38,268       30,712       33,137       33,645          
Other real estate owned   279       279       7,481       7,355       8,270          
Total nonperforming assets $ 37,062     $ 38,547     $ 38,193     $ 40,492     $ 41,915          
Nonaccrual loans and leases / Loans and leases held for investment and nonaccrual loans held for sale   0.66 %     0.70 %     0.55 %     0.60 %     0.58 %        
Nonperforming loans and leases / Loans and leases held for investment   0.70 %     0.72 %     0.57 %     0.62 %     0.65 %        
Nonperforming assets / Total assets   0.53 %     0.61 %     0.60 %     0.64 %     0.66 %        
                           
Allowance for credit losses, loans and leases $ 70,146     $ 71,355     $ 71,497     $ 83,044     $ 91,870          
Allowance for credit losses, loans and leases / Loans and leases held for investment   1.34 %     1.34 %     1.32 %     1.56 %     1.76 %        
Allowance for credit losses, loans and leases / Loans and leases held for investment, excluding Paycheck Protection Program loans (1)   1.36 %     1.41 %     1.46 %     1.72 %     1.95 %        
Allowance for credit losses, loans and leases / Nonaccrual loans and leases held for investment   203.16 %     212.97 %     238.36 %     262.03 %     306.04 %        
Allowance for credit losses, loans and leases / Nonperforming loans and leases held for investment   190.70 %     208.00 %     232.80 %     250.61 %     273.06 %        
                           
  For the three months ended,   For the nine months ended,
  09/30/21   06/30/21   03/31/21   12/31/20   09/30/20   09/30/21   09/30/20
Net loan and lease (recoveries) charge-offs $ (75 )   $ 243     $ 288     $ 618     $ (35 )   $ 456     $ 4,030  
Net loan and lease (recoveries) charge-offs (annualized)/Average loans and leases   (0.01 %)     0.02 %     0.02 %     0.05 %     (0.00 %)     0.01 %     0.11 %
                           
(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)
September 30, 2021
(Dollars in thousands, except per share data)                          
  For the three months ended,
  For the nine months ended,
For the period: 09/30/21   06/30/21   03/31/21   12/31/20   09/30/20
  09/30/21   09/30/20
Interest income $ 53,571     $ 52,441     $ 51,457     $ 51,334     $ 50,612     $ 157,469     $ 152,611  
Interest expense   4,884       5,684       6,043       6,813       6,758       16,611       22,771  
Net interest income   48,687       46,757       45,414       44,521       43,854       140,858       129,840  
(Reversal of provision) provision for credit losses   (182 )     (59 )     (11,283 )     (8,721 )     3,935       (11,524 )     49,515  
Net interest income after provision for credit losses   48,869       46,816       56,697       53,242       39,919       152,382       80,325  
Noninterest income:                              
Trust fee income   2,126       2,157       2,034       1,974       1,915       6,317       5,729  
Service charges on deposit accounts   1,422       1,314       1,282       1,371       1,187       4,018       3,474  
Investment advisory commission and fee income   4,796       4,558       4,697       4,144       4,005       14,051       11,800  
Insurance commission and fee income   3,837       3,839       4,955       3,512       3,776       12,631       12,575  
Other service fee income   2,576       2,748       2,192       2,092       2,093       7,516       5,451  
Bank owned life insurance income   925       1,620       717       733       741       3,262       2,207  
Net gain on sales of investment securities   21       54       65       54       57       140       817  
Net gain on mortgage banking activities   3,224       3,461       5,938       4,323       5,860       12,623       12,119  
Other income   1,625       479       1,370       1,936       2,171       3,474       4,017  
Total noninterest income   20,552       20,230       23,250       20,139       21,805       64,032       58,189  
Noninterest expense:                              
Salaries, benefits and commissions   26,641       25,396       24,780       23,613       24,059       76,817       69,595  
Net occupancy   2,525       2,656       2,739       2,697       2,609       7,920       7,661  
Equipment   1,000       968       946       951       972       2,914       2,890  
Data processing   3,274       3,064       3,050       2,961       2,862       9,388       8,372  
Professional fees   2,174       2,015       1,748       1,436       1,321       5,937       3,902  
Marketing and advertising   539       561       280       575       463       1,380       1,400  
Deposit insurance premiums   765       613       636       765       707       2,014       1,826  
Intangible expenses   214       249       249       282       283       712       934  
Restructuring charges   -       -       -       1,439       -       -       -  
Other expense   6,116       5,764       5,112       7,015       5,251       16,992       16,684  
Total noninterest expense   43,248       41,286       39,540       41,734       38,527       124,074       113,264  
Income before taxes   26,173       25,760       40,407       31,647       23,197       92,340       25,250  
Income tax expense   5,262       4,885       7,804       5,773       5,078       17,951       4,208  
Net income $ 20,911     $ 20,875     $ 32,603     $ 25,874     $ 18,119     $ 74,389     $ 21,042  
Net income per share:                              
Basic $ 0.71     $ 0.71     $ 1.11     $ 0.88     $ 0.62     $ 2.53     $ 0.72  
Diluted $ 0.71     $ 0.71     $ 1.11     $ 0.88     $ 0.62     $ 2.52     $ 0.72  
Dividends declared per share $ 0.20     $ 0.20     $ 0.20     $ -     $ 0.20     $ 0.60     $ 0.60  
Weighted average shares outstanding   29,420,256       29,389,525       29,327,432       29,274,915       29,226,627       29,379,774       29,233,317  
Period end shares outstanding   29,438,402       29,411,731       29,379,575       29,295,052       29,241,302       29,438,402       29,241,302  
                               

 

Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
September 30, 2021
                           
                           
  For the three months ended,   For the nine months ended,
Profitability Ratios (annualized) 09/30/21   06/30/21   03/31/21   12/31/20   09/30/20   09/30/21   09/30/20
                           
Return on average assets   1.24 %     1.30 %     2.07 %     1.62 %     1.15 %     1.53 %     0.48 %
Return on average assets, excluding restructuring charges (1)   1.24 %     1.30 %     2.07 %     1.69 %     1.15 %     1.53 %     0.48 %
Return on average shareholders' equity   11.12 %     11.49 %     18.90 %     15.22 %     10.89 %     13.72 %     4.22 %
Return on average shareholders' equity, excluding restructuring charges (1)   11.12 %     11.49 %     18.90 %     15.89 %     10.89 %     13.72 %     4.22 %
Return on average tangible common equity (1)   14.51 %     15.11 %     25.20 %     20.54 %     14.82 %     18.07 %     5.74 %
Return on average tangible common equity, excluding restructuring charges (1)   14.51 %     15.11 %     25.20 %     21.44 %     14.82 %     18.07 %     5.74 %
Net interest margin (FTE)   3.11 %     3.15 %     3.12 %     3.02 %     3.02 %     3.13 %     3.21 %
Efficiency ratio (2)   61.8 %     60.7 %     57.0 %     63.8 %     58.0 %     59.8 %     59.5 %
Efficiency ratio, excluding restructuring charges (1) (2)   61.8 %     60.7 %     57.0 %     61.6 %     58.0 %     59.8 %     59.5 %
                           
Capitalization Ratios                          
                           
Dividends declared to net income (3)   28.1 %     28.2 %     18.0 %     0.0 %     32.3 %     23.7 %     83.3 %
Shareholders' equity to assets (Period End)   10.83 %     11.64 %     11.26 %     10.93 %     10.48 %     10.83 %     10.48 %
Tangible common equity to tangible assets (1)   8.55 %     9.15 %     8.77 %     8.40 %     7.95 %     8.55 %     7.96 %
Common equity book value per share $ 25.68     $ 25.16     $ 24.59     $ 23.64     $ 22.88     $ 25.68     $ 22.88  
Tangible common equity book value per share (1) $ 19.75     $ 19.22     $ 18.64     $ 17.66     $ 16.88     $ 19.75     $ 16.89  
                           
Regulatory Capital Ratios (Period End)                          
Tier 1 leverage ratio   9.53 %     9.64 %     9.45 %     9.08 %     8.97 %     9.53 %     8.97 %
Common equity tier 1 risk-based capital ratio   11.15 %     11.04 %     11.08 %     10.76 %     10.52 %     11.15 %     10.52 %
Tier 1 risk-based capital ratio   11.15 %     11.04 %     11.08 %     10.76 %     10.52 %     11.15 %     10.52 %
Total risk-based capital ratio   13.87 %     13.82 %     15.13 %     15.31 %     15.35 %     13.87 %     15.35 %
                           
(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 September 30, 2021   June 30, 2021  
  Average Income/ Average   Average Income/ Average  
(Dollars in thousands) Balance Expense Rate   Balance Expense Rate  
Assets:                
Interest-earning deposits with other banks $ 530,191   $ 189   0.14 % $ 215,349   $ 46   0.09 %
U.S. government obligations   6,999     36   2.04     6,999     35   2.01  
Obligations of state and political subdivisions   2,992     24   3.18     6,070     58   3.83  
Other debt and equity securities   385,289     1,516   1.56     372,625     1,364   1.47  
Federal Home Loan Bank, Federal Reserve Bank and other stock   26,713     334   4.96     25,872     360   5.58  
Total interest-earning deposits, investments and other interest-earning assets   952,184     2,099   0.87     626,915     1,863   1.19  
                 
Commercial, financial, and agricultural loans   880,986     7,412   3.34     826,464     6,910   3.35  
Paycheck Protection Program loans   162,611     4,162   10.15     408,928     4,778   4.69  
Real estate—commercial and construction loans   2,784,398     25,634   3.65     2,701,137     24,931   3.70  
Real estate—residential loans   1,100,799     10,171   3.67     1,065,065     9,836   3.70  
Loans to individuals   26,048     253   3.85     25,284     251   3.98  
Municipal loans and leases   247,603     2,504   4.01     251,311     2,598   4.15  
Lease financings   117,966     1,856   6.24     110,921     1,819   6.58  
Gross loans and leases   5,320,411     51,992   3.88     5,389,110     51,123   3.80  
Total interest-earning assets   6,272,595     54,091   3.42     6,016,025     52,986   3.53  
Cash and due from banks   59,642           52,948        
Allowance for credit losses, loans and leases   (72,606 )         (73,052 )      
Premises and equipment, net   55,685           55,903        
Operating lease right-of-use assets   31,998           33,992        
Other assets   350,863           357,813        
Total assets $ 6,698,177         $ 6,443,629        
                 
Liabilities:                
Interest-bearing checking deposits $ 857,098   $ 537   0.25 % $ 786,931   $ 487   0.25 %
Money market savings   1,382,832     922   0.26     1,219,375     831   0.27  
Regular savings   998,568     281   0.11     978,807     282   0.12  
Time deposits   496,702     1,490   1.19     485,060     1,559   1.29  
Total time and interest-bearing deposits   3,735,200     3,230   0.34     3,470,173     3,159   0.37  
                 
Short-term borrowings   15,116     2   0.05     19,109     3   0.06  
Long-term debt   95,000     324   1.35     95,000     321   1.36  
Subordinated notes   98,754     1,328   5.34     172,016     2,201   5.13  
Total borrowings   208,870     1,654   3.14     286,125     2,525   3.54  
Total interest-bearing liabilities   3,944,070     4,884   0.49     3,756,298     5,684   0.61  
Noninterest-bearing deposits   1,931,525           1,880,916        
Operating lease liabilities   35,094           37,426        
Accrued expenses and other liabilities   41,303           40,239        
Total liabilities   5,951,992           5,714,879        
                 
Shareholders' Equity:                
Common stock   157,784           157,784        
Additional paid-in capital   297,482           296,599        
Retained earnings and other equity   290,919           274,367        
Total shareholders' equity   746,185           728,750        
Total liabilities and shareholders' equity $ 6,698,177         $ 6,443,629        
Net interest income   $ 49,207         $ 47,302      
                 
Net interest spread     2.93       2.92  
Effect of net interest-free funding sources     0.18       0.23  
Net interest margin     3.11 %     3.15 %
Ratio of average interest-earning assets to average interest-bearing liabilities   159.04 %         160.16 %      
                 
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 September 30, 2021 and June 30, 2021 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 September 30,  
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 $ 530,191   $ 189   0.14 % $ 368,181   $ 100   0.11 %
U.S. government obligations   6,999     36   2.04     6,998     36   2.05  
Obligations of state and political subdivisions   2,992     24   3.18     18,004     167   3.69  
Other debt and equity securities   385,289     1,516   1.56     360,219     1,610   1.78  
Federal Home Loan Bank, Federal Reserve Bank and other stock   26,713     334   4.96     28,651     419   5.82  
Total interest-earning deposits, investments and other interest-earning assets   952,184     2,099   0.87     782,053     2,332   1.19  
                 
Commercial, financial, and agricultural loans   880,986     7,412   3.34     807,376     7,330   3.61  
Paycheck Protection Program loans   162,611     4,162   10.15     500,549     2,811   2.23  
Real estate—commercial and construction loans   2,784,398     25,634   3.65     2,358,971     23,547   3.97  
Real estate—residential loans   1,100,799     10,171   3.67     1,009,407     10,380   4.09  
Loans to individuals   26,048     253   3.85     28,663     309   4.29  
Municipal loans and leases   247,603     2,504   4.01     267,364     2,839   4.22  
Lease financings   117,966     1,856   6.24     97,707     1,662   6.77  
Gross loans and leases   5,320,411     51,992   3.88     5,070,037     48,878   3.84  
Total interest-earning assets   6,272,595     54,091   3.42     5,852,090     51,210   3.48  
Cash and due from banks   59,642           56,715        
Allowance for credit losses, loans and leases   (72,606 )         (87,046 )      
Premises and equipment, net   55,685           55,755        
Operating lease right-of-use assets   31,998           33,875        
Other assets   350,863           354,216        
Total assets $ 6,698,177         $ 6,265,605        
                 
Liabilities:                
Interest-bearing checking deposits $ 857,098   $ 537   0.25 % $ 725,580   $ 468   0.26 %
Money market savings   1,382,832     922   0.26     1,116,628     897   0.32  
Regular savings   998,568     281   0.11     901,716     449   0.20  
Time deposits   496,702     1,490   1.19     525,656     2,214   1.68  
Total time and interest-bearing deposits   3,735,200     3,230   0.34     3,269,580     4,028   0.49  
                 
Short-term borrowings   15,116     2   0.05     130,359     97   0.30  
Long-term debt   95,000     324   1.35     208,776     742   1.41  
Subordinated notes   98,754     1,328   5.34     155,945     1,891   4.82  
Total borrowings   208,870     1,654   3.14     495,080     2,730   2.19  
Total interest-bearing liabilities   3,944,070     4,884   0.49     3,764,660     6,758   0.71  
Noninterest-bearing deposits   1,931,525           1,760,818        
Operating lease liabilities   35,094           37,170        
Accrued expenses and other liabilities   41,303           41,010        
Total liabilities   5,951,992           5,603,658        
                 
Shareholders' Equity:                
Common stock   157,784           157,784        
Additional paid-in capital   297,482           296,272        
Retained earnings and other equity   290,919           207,891        
Total shareholders' equity   746,185           661,947        
Total liabilities and shareholders' equity $ 6,698,177         $ 6,265,605        
Net interest income   $ 49,207         $ 44,452      
                 
Net interest spread     2.93       2.77  
Effect of net interest-free funding sources     0.18       0.25  
Net interest margin     3.11 %     3.02 %
Ratio of average interest-earning assets to average interest-bearing liabilities   159.04 %         155.45 %      
                 
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 September 30, 2021 and 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 Nine Months Ended September 30,  
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 $ 328,768   $ 291   0.12 % $ 267,023   $ 492   0.25 %
U.S. government obligations   6,999     107   2.04     7,176     109   2.03  
Obligations of state and political subdivisions   6,838     187   3.66     26,019     696   3.57  
Other debt and equity securities   371,355     4,147   1.49     379,729     6,460   2.27  
Federal Home Loan Bank, Federal Reserve Bank and other stock   26,319     1,042   5.29     29,689     1,308   5.88  
Total interest-earning deposits, investments and other interest-earning assets   740,279     5,774   1.04     709,636     9,065   1.71  
                 
Commercial, financial, and agricultural loans   830,248     21,120   3.40     815,178     23,291   3.82  
Paycheck Protection Program loans   358,231     13,464   5.03     291,173     4,939   2.27  
Real estate—commercial and construction loans   2,703,100     75,023   3.71     2,244,143     70,574   4.20  
Real estate—residential loans   1,067,855     29,880   3.74     1,001,904     31,702   4.23  
Loans to individuals   25,925     769   3.97     29,251     1,043   4.76  
Municipal loans and leases   248,191     7,632   4.11     291,845     9,081   4.16  
Lease financings   111,569     5,412   6.49     92,780     4,808   6.92  
Gross loans and leases   5,345,119     153,300   3.83     4,766,274     145,438   4.08  
Total interest-earning assets   6,085,398     159,074   3.49     5,475,910     154,503   3.77  
Cash and due from banks   55,983           51,544        
Allowance for credit losses, loans and leases   (76,265 )         (66,977 )      
Premises and equipment, net   55,803           55,967        
Operating lease right-of-use assets   33,334           34,278        
Other assets   355,323           342,196        
Total assets $ 6,509,576         $ 5,892,918        
                 
Liabilities:                
Interest-bearing checking deposits $ 820,800   $ 1,514   0.25 % $ 642,935   $ 1,636   0.34 %
Money market savings   1,282,470     2,606   0.27     1,079,279     4,653   0.58  
Regular savings   979,013     861   0.12     863,772     1,716   0.27  
Time deposits   502,414     4,808   1.28     568,517     7,801   1.83  
Total time and interest-bearing deposits   3,584,697     9,789   0.37     3,154,503     15,806   0.67  
                 
Short-term borrowings   17,363     7   0.05     110,689     325   0.39  
Long-term debt   97,088     993   1.37     196,053     2,268   1.55  
Subordinated notes   151,060     5,822   5.15     115,376     4,372   5.06  
Total borrowings   265,511     6,822   3.44     422,118     6,965   2.20  
Total interest-bearing liabilities   3,850,208     16,611   0.58     3,576,621     22,771   0.85  
Noninterest-bearing deposits   1,854,648           1,571,629        
Operating lease liabilities   36,636           37,538        
Accrued expenses and other liabilities   43,023           41,691        
Total liabilities   5,784,515           5,227,479        
                 
Shareholders' Equity:                
Common stock   157,784           157,784        
Additional paid-in capital   296,744           295,759        
Retained earnings and other equity   270,533           211,896        
Total shareholders' equity   725,061           665,439        
Total liabilities and shareholders' equity $ 6,509,576         $ 5,892,918        
Net interest income   $ 142,463         $ 131,732      
                 
Net interest spread     2.91       2.92  
Effect of net interest-free funding sources     0.22       0.29  
Net interest margin     3.13 %     3.21 %
Ratio of average interest-earning assets to average interest-bearing liabilities   158.05 %         153.10 %      
                 
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 nine months ended September 30, 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 September 30, 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   365,379   8.6 %   -   - %
Animal Production   291,723   6.8     -   -  
CRE - 1-4 Family Residential Investment   255,116   6.0     -   -  
CRE - Office   240,011   5.6     -   -  
CRE - Multi-family   206,667   4.8     -   -  
CRE - Industrial / Warehouse   180,421   4.2     -   -  
Nursing and Residential Care Facilities   171,482   4.0     -   -  
Hotels & Motels (Accommodation)   170,042   4.0     10,613   6.2  
Education   156,395   3.7     -   -  
Specialty Trade Contractors   122,222   2.9     -   -  
CRE - Mixed-Use - Residential   120,873   2.8     -   -  
CRE - Medical Office   103,553   2.4     -   -  
Real Estate Lenders, Secondary Market Financing   98,983   2.3     -   -  
Homebuilding (tract developers, remodelers)   92,782   2.2     -   -  
Merchant Wholesalers, Durable Goods   87,849   2.1     -   -  
Crop Production   75,439   1.8     -   -  
Private Equity & Special Purpose Entities   74,026   1.7     -   -  
Rental and Leasing Services   70,499   1.7     -   -  
Motor Vehicle and Parts Dealers   66,880   1.6     -   -  
Food Manufacturing   65,857   1.5     -   -  
Wood Product Manufacturing   64,403   1.5     -   -  
Fabricated Metal Product Manufacturing   60,991   1.4     -   -  
Merchant Wholesalers, Nondurable Goods   60,276   1.4     -   -  
Food Services and Drinking Places   57,794   1.3     -   -  
Administrative and Support Services   53,430   1.3     104   0.2  
Miniwarehouse / Self-Storage   52,815   1.2     -   -  
Industries with >$50 million in outstandings $ 3,365,908   78.8 % $ 10,717   0.3 %
Industries with <$50 million in outstandings $ 903,880   21.2 % $ 6,878   0.8 %
Total Commercial Loans $ 4,269,788   100.0 % $ 17,595   0.4 %
                 
                 
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   535,705         337   0.1 %
Real Estate-Home Equity Secured for Personal Purpose   159,029         -   -  
Loans to Individuals   26,458         15   0.1  
Lease Financings   175,464         107   0.1  
Total - Consumer Loans and Lease Financings $ 896,656       $ 459   0.1 %
                 
Total $ 5,166,444       $ 18,054   0.3 %
                 
(1) Loan modifications referenced above were made 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 therefore were not classified as TDRs as of September 30, 2021.        
                 

 

Univest Financial Corporation
Non-GAAP Reconciliation
September 30, 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.
                           
  As of or for the three months ended,   As of or for the nine months ended,
  09/30/21   06/30/21   03/31/21   12/31/20   09/30/20   09/30/21   09/30/20
Restructuring charges (a) $ -     $ -     $ -     $ 1,439     $ -     $ -     $ -  
Tax effect of restructuring charges   -       -       -       (302 )     -       -       -  
Restructuring charges, net of tax $ -     $ -     $ -     $ 1,137     $ -     $ -     $ -  
                           
Shareholders' equity $ 756,023     $ 739,998     $ 722,455     $ 692,472     $ 669,107     $ 756,023     $ 669,107  
Goodwill   (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )
Other intangibles (b)   (1,922 )     (2,073 )     (2,326 )     (2,580 )     (2,866 )     (1,922 )     (2,866 )
Tangible common equity $ 581,542     $ 565,366     $ 547,570     $ 517,333     $ 493,682     $ 581,542     $ 493,682  
                           
Total assets $ 6,979,852     $ 6,356,305     $ 6,416,665     $ 6,336,496     $ 6,382,831     $ 6,979,852     $ 6,382,831  
Goodwill   (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )
Other intangibles (b)   (1,922 )     (2,073 )     (2,326 )     (2,580 )     (2,866 )     (1,922 )     (2,866 )
Tangible assets $ 6,805,371     $ 6,181,673     $ 6,241,780     $ 6,161,357     $ 6,207,406     $ 6,805,371     $ 6,207,406  
                           
Average shareholders' equity $ 746,185     $ 728,750     $ 699,736     $ 676,426     $ 661,947     $ 725,061     $ 665,439  
Average goodwill   (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )
Average other intangibles (b)   (1,983 )     (2,209 )     (2,464 )     (2,734 )     (3,019 )     (2,217 )     (3,332 )
Average tangible common equity $ 571,643     $ 553,982     $ 524,713     $ 501,133     $ 486,369     $ 550,285     $ 489,548  
                           
Net income before taxes $ 26,173     $ 25,760     $ 40,407     $ 31,647     $ 23,197     $ 92,340     $ 25,250  
Provision for credit losses   (182 )     (59 )     (11,283 )     (8,721 )     3,935       (11,524 )     49,515  
Pre-tax pre-provision income $ 25,991     $ 25,701     $ 29,124     $ 22,926     $ 27,132     $ 80,816     $ 74,765  
                           
Loans and leases held for investment, gross $ 5,252,045     $ 5,327,313     $ 5,415,006     $ 5,306,841     $ 5,211,856     $ 5,252,045     $ 5,211,856  
Paycheck Protection Program ("PPP") loans   (85,601 )     (252,849 )     (528,452 )     (483,773 )     (501,580 )     (85,601 )     (501,580 )
Gross loans and leases excluding PPP loans $ 5,166,444     $ 5,074,464     $ 4,886,554     $ 4,823,068     $ 4,710,276     $ 5,166,444     $ 4,710,276  
                           
Allowance for credit losses, loans and leases $ 70,146     $ 71,355     $ 71,497     $ 83,044     $ 91,870     $ 70,146     $ 91,870  
Gross loans and leases excluding PPP loans   5,166,444       5,074,464       4,886,554       4,823,068       4,710,276       5,166,444       4,710,276  
Allowance for credit losses, loans and leases as a percentage of gross loans and leases excluding PPP loans   1.36 %     1.41 %     1.46 %     1.72 %     1.95 %     1.36 %     1.95 %
                           
(a) Associated with financial center optimization plan             
(b) Amount does not include mortgage 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