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Univest Financial Corporation Reports First Quarter Results

Company Release - 4/27/2022
(Announces 5% increase in dividend and plan to commence quarterly share repurchases)

SOUDERTON, Pa., April 27, 2022 (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, 2022 was $20.3 million, or $0.68 diluted earnings per share, compared to net income of $32.6 million, or $1.11 diluted earnings per share, for the quarter ended March 31, 2021.

Expansion Markets
The Corporation announced expansion into two new markets with the hiring of Chris Trombetta, Market President of the Western Pennsylvania ("PA") region, and Matthew Cohen, Market President of the Maryland region. Mr. Trombetta joins Univest from a regional bank where he served as SVP and Commercial Banking Team Leader for Western PA. Mr. Cohen joins Univest from a regional bank where he served as the Business Banking Regional Manager in Baltimore. Messrs. Trombetta and Cohen each will be working to identify a site in their respective regions to serve as the Corporation's regional headquarters. In addition to building commercial lending teams, Messrs. Trombetta and Cohen will be working with Univest's various lines of business to ensure that they collectively bring the full suite of products and services into these new markets. Jeffrey Schweitzer, President and CEO, commented on the recent additions and the expansion markets, "We are very excited to welcome Chris and Matt to the Univest family and are thrilled about the opportunity to enter these new markets. The success we have seen in our Central PA region demonstrates our ability to enter and grow in new markets. Our Central PA region started as a lift out of fifteen employees in 2016 and has grown to a team of over sixty-five with $1.2 billion in loans outstanding."

Digital Transformation
During the first quarter of 2022, the Corporation began development of a comprehensive digital platform which will blend our core operating systems together and allow Univest to seamlessly sell existing products and services, digitally, across an expanded footprint. Mr. Schweitzer commented, "This platform will enable us to achieve our long-term vision for a hub and spoke approach, creating an operating model that allows Univest to lean on digital capabilities as the 'spoke' and regional headquarters as the 'hubs'." The Corporation expects to launch the new digital platform by the end of the first quarter of 2023. The first quarter of 2022 results include approximately $779 thousand in expenses related to this initiative.

Dividend and Share Repurchases
On April 27, 2022, Univest declared a quarterly cash dividend of $0.21 per share to be paid on May 25, 2022 to shareholders of record as of May 11, 2022. This dividend represents an increase of $0.01 per share, or 5.0%, and is the first change in our dividend since 2006. While the Corporation has not repurchased stock in the open market since March of 2020, the Corporation intends to begin repurchasing approximately 150,000 shares per quarter. There are currently 679,174 shares available for repurchase under the Corporation's existing Repurchase Plan.

Mr. Schweitzer commented, "The dividend increase and planned repurchase activity reflect the strong capital position of the Corporation, the benefit of the rising interest rates on our profitability, and our commitment to returning value to our shareholders."

Paycheck Protection Program
As of March 31, 2022, $10.3 million in Paycheck Protection Program ("PPP") loans remained outstanding. During the quarter, $591 thousand was recorded as net interest income related to these loans, of which $552 thousand was the result of recognition of associated net deferred loan fees upon forgiveness and pay downs of PPP loans totaling $22.0 million. As of March 31, 2022, the Corporation had $272 thousand of net deferred fees on the balance sheet, which represented approximately 1.5% of the initial deferred fee amount.

Loans
Gross loans and leases, excluding PPP loans1, increased $112.2 million, or 8.5% (annualized), from December 31, 2021 primarily due to increases in commercial real estate and residential mortgage loans. Gross loans and leases, excluding PPP loans1, increased $503.9 million, or 10.3%, from March 31, 2021 primarily due to increases in commercial, commercial real estate, construction, residential mortgage loans, and lease financings.

Deposits
Total deposits decreased $7.2 million, or 0.5% (annualized), from December 31, 2021, primarily due to decreases in consumer and public funds deposits offset by an increase in commercial deposits. Total deposits increased $736.3 million, or 13.9%, from March 31, 2021, primarily due to increases in commercial, consumer and public funds deposits.
  
Net Interest Income and Margin
Net interest income of $46.7 million for the first quarter of 2022 increased $1.2 million, or 2.7%, from the first quarter of 2021. The increase in net interest income for the first quarter of 2022 compared to the first quarter of 2021 was due to loan and investment balance growth outpacing declines in yield on interest-bearing assets and a decrease in the cost of interest-bearing liabilities, offset by a decrease in PPP loan income.

Net interest margin, on a tax-equivalent basis, was 2.89% for the first quarter of 2022, compared to 2.86% for the fourth quarter of 2021 and 3.12% for the first quarter of 2021. Excess liquidity reduced net interest margin by approximately 33 basis points for the quarter ended March 31, 2022 compared to 43 basis points for the quarter ended December 31, 2021 and 11 basis points for the quarter ended March 31, 2021. 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 three basis points for the quarter ended March 31, 2022 compared to eight basis points for the quarter ended December 31, 2021 and four basis points for the quarter ended March 31, 2021. As PPP loans are forgiven, the associated deferred fees are recognized in earnings, which occurred with greater frequency in 2021 as compared to 2022. Excluding the impact of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was 3.19% for the quarter ended March 31, 2022 compared to 3.21% for the quarter ended December 31, 2021 and 3.19% for the quarter ended March 31, 2021.

Noninterest Income
Noninterest income for the quarter ended March 31, 2022 was $20.5 million, a decrease of $2.8 million, or 12.0%, compared to the first quarter of 2021.

Net gain on mortgage banking activities decreased $4.0 million, or 67.5%, for the quarter primarily due to a decrease in loan sales and a contraction of margins. Other income decreased $642 thousand, or 46.9%, for the quarter ended March 31, 2022, primarily due to a decrease of $657 thousand in fees on risk participation agreements for interest rate swaps driven by a decrease in customer demand.

Investment advisory commission and fee income increased $455 thousand, or 9.7%, for the quarter ended March 31, 2022, primarily due to new customer relationships and appreciation of assets under management, as a majority of investment advisory fees are billed based on the prior quarter-end assets under management balance. Insurance commission and fee income increased $615 thousand, or 12.4%, for the quarter ended March 31, 2022, primarily due to incremental revenue attributable to the insurance agency the Corporation acquired in the fourth quarter of 2021.

Other service fee income increased $564 thousand, or 25.7%, for the quarter ended March 31, 2022. Interchange fee income increased $176 thousand for the quarter ended March 31, 2022 due to increased customer activity. Mortgage servicing fees increased $262 thousand for the quarter ended March 31, 2022 driven by reduced amortization as a result of a decrease in prepayment speeds.

Noninterest Expense
Noninterest expense for the quarter ended March 31, 2022 was $45.4 million, an increase of $5.9 million, or 14.9%, compared to the first quarter of 2021.

Salaries, benefits and commissions increased $3.5 million, or 14.0%, for the quarter ended March 31, 2022. These increases reflect our continued investment in revenue producing staff across all business lines, including the acquisition of the Paul I. Schaeffer insurance agency, and annual merit increases. Additionally, during the first quarter of 2022, we incurred $387 thousand of short-term incremental guaranties related to the hiring of new producers in our Mortgage Banking line of business. Finally, the first quarter of 2021 was benefited by $582 thousand of incremental capitalized compensation related to the origination of PPP loans.

Data processing expenses increased $517 thousand, or 17.0%, for the quarter ended March 31, 2022 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, outsourced data processing solutions, and $103 thousand in support of our digital transformation initiative.

Professional fees increased $390 thousand, or 22.3%, for the quarter ended March 31, 2022, primarily attributable to $658 thousand in consultant fees spent in support of our digital transformation initiative, as compared to our $276 thousand investment in support of our Diversity, Equity and Inclusion training initiatives in the quarter ended March 31, 2021. Deposit insurance premiums increased $257 thousand, or 40.4%, for the quarter ended March 31, 2022, attributable to an increased assessment base primarily driven by excess liquidity.

Other expense increased $993 thousand, or 19.4%, for the quarter ended March 31, 2022 driven by increases in recruiting costs of $282 thousand due to increased hiring activity and travel and entertainment expenses of $265 thousand, which have begun to normalize as the markets we operate in continue to remain open. Additionally, we incurred costs of $330 thousand as a result of a customer who was defrauded.

Tax Provision
The effective income tax rate was 19.3% for the quarters ended March 31, 2022 and March 31, 2021, which were favorably impacted by 8 and 4 basis points, respectively, of discrete tax benefits resulting from equity compensation awards vesting in the respective quarters. Additionally, the effective tax rate reflects the benefits of tax-exempt income from investments in municipal securities and loans and leases.

Asset Quality and Provision for Credit Losses
Nonperforming assets were $31.5 million at March 31, 2022, compared to $34.0 million at December 31, 2021 and $38.2 million at March 31, 2021.

Net loan and lease charge-offs were $76 thousand during the first quarter of 2022 compared to $288 thousand for the quarter ended March 31, 2021. The reversal of provision for credit losses was $3.5 million for the first quarter of 2022, of which $5.7 million (after-tax benefit of $4.5 million), or $0.15 diluted earnings per share, was attributable to favorable changes in economic-related assumptions within the Corporation’s CECL model, partially offset by increases in reserves for loans, unfunded commitments and investment securities. The reversal of provision for credit losses was $11.3 million for the quarter ended March 31, 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 allowance for credit losses on loans and leases as a percentage of loans and leases held for investment was 1.26% at March 31, 2022, compared to 1.35% at December 31, 2021, and 1.32% at March 31, 2021. The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment, excluding PPP loans1, was 1.27% at March 31, 2022 compared to 1.36% at December 31, 2021 and 1.46% at March 31, 2021.

Conference Call
Univest will host a conference call to discuss first quarter 2022 results on Thursday, April 28, 2022 at 9:00 a.m. EST. Participants may preregister at https://www.incommglobalevents.com/registration/q4inc/10559/univest-financial-corporation-to-hold-first-quarter-2022-earnings-call/. The general public can access the call by dialing 1-844-200-6205; using Access Code 206799. A replay of the conference call will be available through May 28, 2022 by dialing 1-866-813-9403; using Access Code: 439536.

1 Non-GAAP metric. A reconciliation of this and other non-GAAP financial 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 $7.1 billion in assets and $4.6 billion in assets under management and supervision through its Wealth Management lines of business at March 31, 2022. 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 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 strategies 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) inflation and changes in interest rates, which may adversely impact our margins and yields, reduce the fair value of our financial instruments, reduce our loan originations of lead to higher operating costs; (3) changes in asset quality, prepayment speeds, loan sale volumes, charge-offs and credit loss provisions; (4) changes in 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 businesses; (7) technological issues that may adversely affect our operations or those of our customers; (8) changes in the securities markets; (9) the current or anticipated impact of military conflict, terrorism or other geopolitical events; or (10) risk factors mentioned in the reports and registration statements Univest files with the Securities and Exchange Commission.

Additionally, it is difficult to predict the continued effects 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. 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 economic conditions worsen, loan delinquencies, problem assets, and foreclosures may increase and our allowance for credit losses may have to be increased; (3) collateral for loans, especially real estate, may decline in value; (4) the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; (5) 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; (6) our wealth management revenues may decline with market turmoil; and (7) our cyber security risks may increase as the result of an increase in the number of employees working remotely. 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, 2022
(Dollars in thousands)                    
                     
Balance Sheet (Period End)   03/31/22   12/31/21   09/30/21   06/30/21   03/31/21
ASSETS                    
Cash and due from banks   $ 57,307     $ 49,202     $ 67,517     $ 50,358     $ 35,117  
Interest-earning deposits with other banks     716,474       840,948       834,840       153,091       152,200  
Cash and cash equivalents     773,781       890,150       902,357       203,449       187,317  
Investment securities held-to-maturity     166,339       176,983       112,643       119,692       135,153  
Investment securities available for sale, net of allowance for credit losses     349,994       317,007       277,773       274,862       238,829  
Investments in equity securities     2,569       2,999       2,961       2,872       3,524  
Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost     26,330       28,186       28,679       25,228       25,571  
Loans held for sale     14,521       21,600       29,093       27,322       22,636  
Loans and leases held for investment     5,400,786       5,310,017       5,252,045       5,327,313       5,415,006  
Less: Allowance for credit losses, loans and leases     (68,286 )     (71,924 )     (70,146 )     (71,355 )     (71,497 )
Net loans and leases held for investment     5,332,500       5,238,093       5,181,899       5,255,958       5,343,509  
Premises and equipment, net     50,429       56,882       55,354       56,067       55,650  
Operating lease right-of-use assets     30,498       30,407       31,570       33,688       34,317  
Goodwill     175,510       175,510       172,559       172,559       172,559  
Other intangibles, net of accumulated amortization     11,784       11,848       9,359       9,396       9,225  
Bank owned life insurance     119,398       118,699       117,981       117,765       118,435  
Accrued interest and other assets     54,087       54,057       57,624       57,447       69,940  
Total assets   $ 7,107,740     $ 7,122,421     $ 6,979,852     $ 6,356,305     $ 6,416,665  
                     
LIABILITIES                    
Noninterest-bearing deposits   $ 2,136,467     $ 2,065,423     $ 1,861,007     $ 1,872,031     $ 1,857,547  
Interest-bearing deposits:     3,911,465       3,989,701       4,077,147       3,446,673       3,454,045  
Total deposits     6,047,932       6,055,124       5,938,154       5,318,704       5,311,592  
Short-term borrowings     18,976       20,106       14,101       25,251       26,676  
Long-term debt     95,000       95,000       95,000       95,000       95,000  
Subordinated notes     98,952       98,874       98,797       98,719       173,617  
Operating lease liabilities     33,566       33,453       34,641       37,131       37,737  
Accrued expenses and other liabilities     39,459       46,070       43,136       41,502       49,588  
Total liabilities     6,333,885       6,348,627       6,223,829       5,616,307       5,694,210  
                     
SHAREHOLDER'S EQUITY                    
Common stock, $5 par value: 48,000,000 shares authorized and 31,556,799 shares issued     157,784       157,784       157,784       157,784       157,784  
Additional paid-in capital     297,945       299,181       298,033       297,208       296,177  
Retained earnings     389,332       375,124       363,607       348,579       333,581  
Accumulated other comprehensive loss, net of tax benefit     (31,909 )     (16,353 )     (20,073 )     (19,545 )     (20,440 )
Treasury stock, at cost     (39,297 )     (41,942 )     (43,328 )     (44,028 )     (44,647 )
Total shareholders’ equity     773,855       773,794       756,023       739,998       722,455  
Total liabilities and shareholders’ equity   $ 7,107,740     $ 7,122,421     $ 6,979,852     $ 6,356,305     $ 6,416,665  
                     
                     
    For the three months ended,
Balance Sheet (Average)   03/31/22   12/31/21   09/30/21   06/30/21   03/31/21
Assets   $ 7,047,980     $ 7,088,289     $ 6,698,177     $ 6,443,629     $ 6,383,463  
Investment securities, net of allowance for credit losses     522,128       469,588       395,280       385,694       374,369  
Loans and leases, gross     5,344,698       5,255,279       5,320,411       5,389,110       5,325,897  
Deposits     5,984,815       6,041,798       5,666,725       5,351,089       5,296,147  
Shareholders' equity     774,358       762,334       746,185       728,750       699,736  
                     

 

Univest Financial Corporation
Consolidated Summary of Loans by Type and Asset Quality Data (Unaudited)
March 31, 2022
(Dollars in thousands)                    
                     
Summary of Major Loan and Lease Categories (Period End)   03/31/22   12/31/21   09/30/21   06/30/21   03/31/21
Commercial, financial and agricultural   $ 932,485     $ 956,396     $ 927,015     $ 920,621     $ 871,996  
Paycheck Protection Program     10,298       31,748       85,601       252,849       528,452  
Real estate-commercial     2,816,737       2,718,535       2,669,898       2,600,919       2,531,700  
Real estate-construction     285,083       283,918       260,874       274,529       249,652  
Real estate-residential secured for business purpose     412,486       409,900       412,001       407,664       387,801  
Real estate-residential secured for personal purpose     568,735       540,566       535,705       513,330       494,349  
Real estate-home equity secured for personal purpose     160,134       158,909       159,029       160,018       162,529  
Loans to individuals     26,249       25,504       26,458       25,845       25,468  
Lease financings     188,579       184,541       175,464       171,538       163,059  
Total loans and leases held for investment, net of deferred income     5,400,786       5,310,017       5,252,045       5,327,313       5,415,006  
Less: Allowance for credit losses, loans and leases     (68,286 )     (71,924 )     (70,146 )     (71,355 )     (71,497 )
Net loans and leases held for investment   $ 5,332,500     $ 5,238,093     $ 5,181,899     $ 5,255,958     $ 5,343,509  
                     
                     
Asset Quality Data (Period End)   03/31/22   12/31/21   09/30/21   06/30/21   03/31/21
Nonaccrual loans and leases, including nonaccrual troubled debt restructured                    
  loans and leases   $ 30,876     $ 33,210     $ 34,528     $ 37,466     $ 29,996  
Accruing loans and leases 90 days or more past due     274       498       2,204       750       664  
Accruing troubled debt restructured loans and leases     51       51       51       52       52  
Total nonperforming loans and leases     31,201       33,759       36,783       38,268       30,712  
Other real estate owned     279       279       279       279       7,481  
Total nonperforming assets   $ 31,480     $ 34,038     $ 37,062     $ 38,547     $ 38,193  
Nonaccrual loans and leases / Loans and leases held for investment and nonaccrual loans held for sale     0.57 %     0.63 %     0.66 %     0.70 %     0.55 %
Nonperforming loans and leases / Loans and leases held for investment     0.58 %     0.64 %     0.70 %     0.72 %     0.57 %
Nonperforming assets / Total assets     0.44 %     0.48 %     0.53 %     0.61 %     0.60 %
                     
Allowance for credit losses, loans and leases   $ 68,286     $ 71,924     $ 70,146     $ 71,355     $ 71,497  
Allowance for credit losses, loans and leases / Loans and leases held for investment     1.26 %     1.35 %     1.34 %     1.34 %     1.32 %
Allowance for credit losses, loans and leases / Loans and leases held for investment, excluding Paycheck Protection Program loans (1)     1.27 %     1.36 %     1.36 %     1.41 %     1.46 %
Allowance for credit losses, loans and leases / Nonaccrual loans and leases held for investment     221.16 %     216.57 %     203.16 %     212.97 %     238.36 %
Allowance for credit losses, loans and leases / Nonperforming loans and leases held for investment     218.86 %     213.05 %     190.70 %     208.00 %     232.80 %
                     
    For the three months ended,
    03/31/22   12/31/21   09/30/21   06/30/21   03/31/21
Net loan and lease charge-offs (recoveries)   $ 76     $ (243 )   $ (75 )   $ 243     $ 288  
Net loan and lease charge-offs (annualized)/Average loans and leases     0.01 %     (0.02 %)     (0.01 %)     0.02 %     0.02 %
                     
(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, 2022  
(Dollars in thousands, except per share data)                      
    For the three months ended,  
For the period:   03/31/22   12/31/21   09/30/21   06/30/21   03/31/21  
Interest income   $ 51,198     $ 52,262   $ 53,571     $ 52,441     $ 51,457    
Interest expense     4,538       4,737     4,884       5,684       6,043    
Net interest income     46,660       47,525     48,687       46,757       45,414    
(Reversal of provision) provision for credit losses     (3,450 )     1,392     (182 )     (59 )     (11,283 )  
Net interest income after provision for credit losses     50,110       46,133     48,869       46,816       56,697    
Noninterest income:                      
Trust fee income     2,102       2,086     2,126       2,157       2,034    
Service charges on deposit accounts     1,504       1,486     1,422       1,314       1,282    
Investment advisory commission and fee income     5,152       4,885     4,796       4,558       4,697    
Insurance commission and fee income     5,570       3,726     3,837       3,839       4,955    
Other service fee income     2,756       2,759     2,576       2,748       2,192    
Bank owned life insurance income     699       719     925       1,620       717    
Net gain on sales of investment securities     30       5     21       54       65    
Net gain on mortgage banking activities     1,929       2,518     3,224       3,461       5,938    
Other income     728       1,008     1,625       479       1,370    
Total noninterest income     20,470       19,192     20,552       20,230       23,250    
Noninterest expense:                      
Salaries, benefits and commissions     28,245       27,374     26,641       25,396       24,780    
Net occupancy     2,716       2,477     2,525       2,656       2,739    
Equipment     982       985     1,000       968       946    
Data processing     3,567       3,355     3,274       3,064       3,050    
Professional fees     2,138       1,750     2,174       2,015       1,748    
Marketing and advertising     425       683     539       561       280    
Deposit insurance premiums     893       698     765       613       636    
Intangible expenses     341       267     214       249       249    
Other expense     6,105       5,746     6,116       5,764       5,112    
Total noninterest expense     45,412       43,335     43,248       41,286       39,540    
Income before taxes     25,168       21,990     26,173       25,760       40,407    
Income tax expense     4,851       4,578     5,262       4,885       7,804    
Net income   $ 20,317     $ 17,412   $ 20,911     $ 20,875     $ 32,603    
Net income per share:                      
     Basic   $ 0.69     $ 0.59   $ 0.71     $ 0.71     $ 1.11    
     Diluted   $ 0.68     $ 0.59   $ 0.71     $ 0.71     $ 1.11    
Dividends declared per share   $ 0.20     $ 0.20   $ 0.20     $ 0.20     $ 0.20    
Weighted average shares outstanding     29,542,467       29,471,304     29,420,256       29,389,525       29,327,432    
Period end shares outstanding     29,636,425       29,500,542     29,438,402       29,411,731       29,379,575    
                       

 

Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
March 31, 2022
                           
          For the three months ended,
Profitability Ratios (annualized)     03/31/22   12/31/21   09/30/21   06/30/21   03/31/21
                           
Return on average assets       1.17 %     0.97 %     1.24 %     1.30 %     2.07 %
Return on average shareholders' equity     10.64 %     9.06 %     11.12 %     11.49 %     18.90 %
Return on average tangible common equity (1)(3)   14.04 %     11.93 %     14.63 %     15.26 %     25.35 %
Net interest margin (FTE)       2.89 %     2.86 %     3.11 %     3.15 %     3.12 %
Efficiency ratio (2)         67.0 %     64.3 %     61.8 %     60.7 %     57.0 %
                           
Capitalization Ratios                        
                           
Dividends declared to net income       29.1 %     33.9 %     28.1 %     28.2 %     18.0 %
Shareholders' equity to assets (Period End)     10.89 %     10.86 %     10.83 %     11.64 %     11.26 %
Tangible common equity to tangible assets (1)     8.58 %     8.56 %     8.55 %     9.15 %     8.77 %
Common equity book value per share   $ 26.11     $ 26.23     $ 25.68     $ 25.16     $ 24.59  
Tangible common equity book value per share (1) $ 20.06     $ 20.14     $ 19.75     $ 19.22     $ 18.64  
                           
Regulatory Capital Ratios (Period End)                    
Tier 1 leverage ratio         9.35 %     9.13 %     9.53 %     9.64 %     9.45 %
Common equity tier 1 risk-based capital ratio     11.07 %     11.08 %     11.15 %     11.04 %     11.08 %
Tier 1 risk-based capital ratio       11.07 %     11.08 %     11.15 %     11.04 %     11.08 %
Total risk-based capital ratio       13.73 %     13.77 %     13.87 %     13.82 %     15.13 %
                           
(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) Net income before amortization of intangibles to average tangible common equity.            
                           

 

Univest Financial Corporation  
Average Balances and Interest Rates (Unaudited)  
    For the Three Months Ended,      
Tax Equivalent Basis March 31, 2022   December 31, 2021  
  Average Income/ Average   Average Income/ Average  
(Dollars in thousands) Balance Expense Rate   Balance Expense Rate  
Assets:                
Interest-earning deposits with other banks $ 733,173   $ 357 0.20 % $ 914,287   $ 370 0.16 %
U.S. government obligations   5,222     26 2.02     6,999     37 2.10  
Obligations of state and political subdivisions*   2,332     19 3.30     2,334     19 3.23  
Other debt and equity securities   514,574     2,339 1.84     460,255     1,845 1.59  
Federal Home Loan Bank, Federal Reserve Bank and other stock   27,115     355 5.31     28,402     375 5.24  
Total interest-earning deposits, investments and other interest-earning assets   1,282,416     3,096 0.98     1,412,277     2,646 0.74  
                 
Commercial, financial, and agricultural loans   901,555     7,571 3.41     869,471     7,022 3.20  
Paycheck Protection Program loans   18,402     591 13.02     53,745     1,568 11.57  
Real estate—commercial and construction loans   2,904,602     25,820 3.61     2,826,720     26,669 3.74  
Real estate—residential loans   1,116,356     9,882 3.59     1,107,911     10,165 3.64  
Loans to individuals   25,799     238 3.74     26,462     249 3.73  
Municipal loans and leases *   242,508     2,434 4.07     245,038     2,515 4.07  
Lease financings   135,476     2,075 6.21     125,932     1,951 6.15  
Gross loans and leases   5,344,698     48,611 3.69     5,255,279     50,139 3.79  
Total interest-earning assets   6,627,114     51,707 3.16     6,667,556     52,785 3.14  
Cash and due from banks   53,698           54,958        
Allowance for credit losses, loans and leases   (72,067 )         (71,020 )      
Premises and equipment, net   53,948           56,087        
Operating lease right-of-use assets   30,394           31,048        
Other assets   354,893           349,660        
      Total assets $ 7,047,980         $ 7,088,289        
                 
Liabilities:                
Interest-bearing checking deposits $ 881,462   $ 443 0.20 % $ 939,478   $ 493 0.21 %
Money market savings   1,542,581     904 0.24     1,616,890     968 0.24  
Regular savings   1,021,550     238 0.09     997,814     253 0.10  
Time deposits   473,589     1,306 1.12     487,434     1,370 1.12  
     Total time and interest-bearing deposits   3,919,182     2,891 0.30     4,041,616     3,084 0.30  
                 
Short-term borrowings   17,636     2 0.05     14,144     1 0.03  
Long-term debt   95,000     317 1.35     95,000     325 1.36  
Subordinated notes   98,911     1,328 5.45     98,833     1,327 5.33  
     Total borrowings   211,547     1,647 3.16     207,977     1,653 3.15  
     Total interest-bearing liabilities   4,130,729     4,538 0.45     4,249,593     4,737 0.44  
Noninterest-bearing deposits   2,065,633           2,000,182        
Operating lease liabilities   33,452           34,114        
Accrued expenses and other liabilities   43,808           42,066        
     Total liabilities   6,273,622           6,325,955        
                 
Shareholders' Equity:                
Common stock   157,784           157,784        
Additional paid-in capital   298,975           298,508        
Retained earnings and other equity   317,599           306,042        
     Total shareholders' equity   774,358           762,334        
     Total liabilities and shareholders' equity $ 7,047,980         $ 7,088,289        
Net interest income   $ 47,169       $ 48,048    
                 
Net interest spread     2.71       2.70  
Effect of net interest-free funding sources     0.18       0.16  
Net interest margin     2.89 %     2.86 %
Ratio of average interest-earning assets to average interest-bearing liabilities   160.43 %         156.90 %      
                 
* Obligations of states and political subdivisions and municipal loans and leases are tax-exempt earning assets.      
Notes:
For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
Net interest income includes net deferred (costs) fees of $(136) thousand and $707 thousand for the three months ended March 31, 2022
and December 31, 2021, respectively.                
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, 2022 and December 31, 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 March 31,      
Tax Equivalent Basis    2022        2021    
  Average Income/ Average   Average Income/ Average  
(Dollars in thousands) Balance Expense Rate   Balance Expense Rate  
Assets:                
Interest-earning deposits with other banks $ 733,173   $ 357 0.20 % $ 237,548   $ 56 0.10 %
U.S. government obligations   5,222     26 2.02     6,998     36 2.09  
Obligations of state and political subdivisions*   2,332     19 3.30     11,544     105 3.69  
Other debt and equity securities   514,574     2,339 1.84     355,827     1,267 1.44  
Federal Home Loan Bank, Federal Reserve Bank and other stock   27,115     355 5.31     26,368     348 5.35  
Total interest-earning deposits, investments and other interest-earning assets   1,282,416     3,096 0.98     638,285     1,812 1.15  
                 
Commercial, financial, and agricultural loans   901,555     7,571 3.41     782,208     6,798 3.52  
Paycheck Protection Program loans   18,402     591 13.02     506,939     4,524 3.62  
Real estate—commercial and construction loans   2,904,602     25,820 3.61     2,621,981     24,458 3.78  
Real estate—residential loans   1,116,356     9,882 3.59     1,037,000     9,873 3.86  
Loans to individuals   25,799     238 3.74     26,447     265 4.06  
Municipal loans and leases*   242,508     2,434 4.07     245,638     2,530 4.18  
Lease financings   135,476     2,075 6.21     105,684     1,737 6.67  
     Gross loans and leases   5,344,698     48,611 3.69     5,325,897     50,185 3.82  
Total interest-earning assets   6,627,114     51,707 3.16     5,964,182     51,997 3.54  
Cash and due from banks   53,698           55,311        
Allowance for credit losses, loans and leases   (72,067 )         (83,254 )      
Premises and equipment, net   53,948           55,826        
Operating lease right-of-use assets   30,394           34,033        
Other assets   354,893           357,365        
      Total assets $ 7,047,980         $ 6,383,463        
                 
Liabilities:                
Interest-bearing checking deposits $ 881,462   $ 443 0.20 % $ 817,940   $ 490 0.24 %
Money market savings   1,542,581     904 0.24     1,243,673     853 0.28  
Regular savings   1,021,550     238 0.09     959,232     298 0.13  
Time deposits   473,589     1,306 1.12     525,800     1,759 1.36  
     Total time and interest-bearing deposits   3,919,182     2,891 0.30     3,546,645     3,400 0.39  
                 
Short-term borrowings   17,636     2 0.05     17,894     2 0.05  
Long-term debt   95,000     317 1.35     101,333     348 1.39  
Subordinated notes   98,911     1,328 5.45     183,340     2,293 5.07  
     Total borrowings   211,547     1,647 3.16     302,567     2,643 3.54  
     Total interest-bearing liabilities   4,130,729     4,538 0.45     3,849,212     6,043 0.64  
Noninterest-bearing deposits   2,065,633           1,749,502        
Operating lease liabilities   33,452           37,415        
Accrued expenses and other liabilities   43,808           47,598        
     Total liabilities   6,273,622           5,683,727        
                 
Shareholders' Equity:                
Common stock   157,784           157,784        
Additional paid-in capital   298,975           296,136        
Retained earnings and other equity   317,599           245,816        
     Total shareholders' equity   774,358           699,736        
     Total liabilities and shareholders' equity $ 7,047,980         $ 6,383,463        
Net interest income   $ 47,169       $ 45,954    
                 
Net interest spread     2.71       2.90  
Effect of net interest-free funding sources     0.18       0.22  
Net interest margin     2.89 %     3.12 %
Ratio of average interest-earning assets to average interest-bearing liabilities   160.43 %         154.95 %      
                 
* Obligations of states and political subdivisions and municipal loans and leases are tax-exempt earning assets.    
Notes:
For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
Net interest income includes net deferred (costs) fees of $(136) thousand and $2.3 million for the three months ended March 31, 2022 and
2021, respectively.                
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, 2022 and 2021 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, 2022    
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   359,125   8.1 % $ -   - %  
Animal Production   310,747   7.0     -   -    
CRE - Multi-family   244,480   5.5     -   -    
CRE - 1-4 Family Residential Investment   234,653   5.3     -   -    
CRE - Office   231,125   5.2     -   -    
Hotels & Motels (Accommodation)   186,497   4.2     1,437   0.8    
Nursing and Residential Care Facilities   168,896   3.8     -   -    
CRE - Industrial / Warehouse   160,318   3.6     -   -    
Education   151,238   3.4     -   -    
Specialty Trade Contractors   133,455   3.0     -   -    
CRE - Mixed-Use - Residential   116,479   2.6     -   -    
CRE - Medical Office   108,836   2.4     -   -    
Homebuilding (tract developers, remodelers)   101,112   2.3     -   -    
Merchant Wholesalers, Durable Goods   93,073   2.1     -   -    
Motor Vehicle and Parts Dealers   89,723   2.0     -   -    
Crop Production   85,886   1.9     -   -    
Food Manufacturing   78,597   1.8     -   -    
Wood Product Manufacturing   77,165   1.7     -   -    
Rental and Leasing Services   72,878   1.6     -   -    
Food Services and Drinking Places   71,327   1.6     473   0.7    
Administrative and Support Services   69,578   1.6     -   -    
Merchant Wholesalers, Nondurable Goods   64,564   1.5     -   -    
Personal and Laundry Services   61,402   1.4     -   -    
Fabricated Metal Product Manufacturing   60,398   1.4     -   -    
Religious Organizations, Advocacy Groups   56,869   1.3     -   -    
Miniwarehouse / Self-Storage   54,382   1.2     -   -    
Repair and Maintenance   53,267   1.2     -   -    
Industries with >$50 million in outstandings $ 3,496,070   78.6 % $ 1,910   0.1 %  
Industries with <$50 million in outstandings $ 950,721   21.4 % $ 790   0.1 %  
Total Commercial Loans $ 4,446,791   100.0 % $ 2,700   0.1 %  
                   
                   
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 $ 568,735       $ -   - %  
Real Estate-Home Equity Secured for Personal Purpose   160,134         -   -    
Loans to Individuals   26,249         -   -    
Lease Financings   188,579         -   -    
Total - Consumer Loans and Lease Financings $ 943,697       $ -   - %  
                   
Total $ 5,390,488       $ 2,700   0.1 %  
                   
(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, 2022.  
 
 

 

Univest Financial Corporation
Non-GAAP Reconciliation
March 31, 2022
 
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,
(Dollars in thousands) 03/31/22   12/31/21   09/30/21   06/30/21   03/31/21
Net income $ 20,317     $ 17,412     $ 20,911     $ 20,875     $ 32,603  
Amortization of intangibles, net of tax   269       211       169       197       197  
Net income before amortization of intangibles $ 20,586     $ 17,623     $ 21,080     $ 21,072     $ 32,800  
                         
Shareholders' equity $ 773,855     $ 773,794     $ 756,023     $ 739,998     $ 722,455  
Goodwill   (175,510 )     (175,510 )     (172,559 )     (172,559 )     (172,559 )
Other intangibles (a)     (3,936 )     (4,210 )     (1,922 )     (2,073 )     (2,326 )
Tangible common equity $ 594,409     $ 594,074     $ 581,542     $ 565,366     $ 547,570  
                         
Total assets $ 7,107,740     $ 7,122,421     $ 6,979,852     $ 6,356,305     $ 6,416,665  
Goodwill   (175,510 )     (175,510 )     (172,559 )     (172,559 )     (172,559 )
Other intangibles (a)     (3,936 )     (4,210 )     (1,922 )     (2,073 )     (2,326 )
Tangible assets $ 6,928,294     $ 6,942,701     $ 6,805,371     $ 6,181,673     $ 6,241,780  
                         
Average shareholders' equity $ 774,358     $ 762,334     $ 746,185     $ 728,750     $ 699,736  
Average goodwill   (175,510 )     (173,553 )     (172,559 )     (172,559 )     (172,559 )
Average other intangibles (a)     (4,090 )     (2,696 )     (1,983 )     (2,209 )     (2,464 )
Average tangible common equity $ 594,758     $ 586,085     $ 571,643     $ 553,982     $ 524,713  
                         
Loans and leases held for investment, gross $ 5,400,786     $ 5,310,017     $ 5,252,045     $ 5,327,313     $ 5,415,006  
Paycheck Protection Program ("PPP") loans   (10,298 )     (31,748 )     (85,601 )     (252,849 )     (528,452 )
Gross loans and leases excluding PPP loans $ 5,390,488     $ 5,278,269     $ 5,166,444     $ 5,074,464     $ 4,886,554  
                         
Allowance for credit losses, loans and leases $ 68,286     $ 71,924     $ 70,146     $ 71,355     $ 71,497  
Gross loans and leases excluding PPP loans   5,390,488       5,278,269       5,166,444       5,074,464       4,886,554  
Allowance for credit losses, loans and leases as a percentage of gross loans and leases excluding PPP loans   1.27 %     1.36 %     1.36 %     1.41 %     1.46 %
                         
(a) 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