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Univest Financial Corporation Reports Fourth Quarter and 2021 Results

Company Release - 1/26/2022

(Loan Growth of 9.4% for last twelve months (excluding PPP loans 1 ))  

SOUDERTON, Pa., Jan. 26, 2022 (GLOBE NEWSWIRE) -- Univest Financial Corporation (“Univest” or the "Corporation") (NASDAQ: UVSP), parent company of Univest Bank and Trust Co. (the "Bank") and its insurance, investments and equipment financing subsidiaries, today announced net income for the year ended December 31, 2021 of $91.8 million, or $3.11 diluted earnings per share, compared to net income of $46.9 million, or $1.60 diluted earnings per share, for the year ended December 31, 2020. Net income for the quarter ended December 31, 2021 was $17.4 million, or $0.59 diluted earnings per share, compared to net income of $25.9 million, or $0.88 diluted earnings per share, for the quarter ended December 31, 2020.

Pre-tax pre-provision income1 for the year ended December 31, 2021 was $104.2 million, an increase of $6.5 million, or 6.7%, from the prior year. Pre-tax pre-provision income1 for the quarter ended December 31, 2021 was $23.4 million, an increase of $456 thousand, or 2.0%, from the fourth quarter of 2020.

Acquisition
On December 1, 2021, Univest Insurance, LLC., the Bank's insurance subsidiary, completed the acquisition of the Paul I. Sheaffer Insurance Agency, a full-service firm providing insurance solutions to businesses and individuals in Central Pennsylvania.

Paycheck Protection Program
As of December 31, 2021, $31.7 million in PPP loans remain outstanding. During the fourth quarter, we recorded income of $1.6 million within net interest income related to these loans, of which $1.4 million was the result of recognition of associated net deferred loan fees upon forgiveness and pay downs of PPP loans totaling $55.4 million. During the year ended December 31, 2021, we recorded income of $15.0 million within net interest income related to these loans, of which $10.4 million was the result of recognition of associated net deferred loan fees upon forgiveness and pay downs of PPP loans totaling $630.7 million. As of December 31, 2021, we had $817 thousand of net deferred fees on our balance sheet, which represented approximately 4.5% of the initial deferred fee amount.

Loans
Gross loans and leases, excluding PPP loans1, increased $455.2 million, or 9.4%, from December 31, 2020 due to increases in commercial, construction, commercial real estate, and residential mortgage loans and lease financings. Gross loans and leases, excluding PPP loans1, increased $111.8 million, or 8.7% (annualized), from September 30, 2021 due to increases in construction, commercial real estate and commercial loans and lease financings.
  
Deposits
Total deposits increased $812.4 million, or 15.5%, from December 31, 2020, primarily due to increases in commercial, consumer and public funds deposits offset by a decrease in brokered deposits. Total deposits increased $117.0 million, or 7.9% (annualized), from September 30, 2021, primarily due to increases in commercial and consumer deposits offset by a decrease in public funds deposits.

Net Interest Income and Margin
Net interest income of $47.5 million for the three months ended December 31, 2021 increased $3.0 million, or 6.7%, from the three months ended December 31, 2020. The increase in net interest income for the three months ended December 31, 2021 compared to the same period of 2020 was primarily due to overall growth in loans, led by an increase in commercial real estate loan income of $2.2 million, and a $2.1 million decrease in the cost of interest-bearing liabilities offset by a decrease in PPP loan income of $1.6 million.

Net interest income of $188.4 million for the year ended December 31, 2021 increased $14.0 million, or 8.0%, from the prior year. The increase in net interest income for the year ended December 31, 2021 compared to 2020 was primarily due to an increase in PPP loan income of $7.0 million, an $8.2 million decrease in the cost of interest-bearing liabilities and growth in loans, primarily commercial real estate loans, partially offset by a decrease in loan yields, excluding PPP loans, and investment yields.

Net interest margin, on a tax-equivalent basis, was 2.86% for the fourth quarter of 2021, compared to 3.11% for the third quarter of 2021 and 3.02% for the fourth quarter of 2020. Excess liquidity reduced net interest margin by approximately 43 basis points for the quarter ended December 31, 2021 compared to 27 basis points for the quarter ended September 30, 2021 and 13 basis points for the quarter ended December 31, 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 eight basis points for the quarter ended December 31, 2021 compared to 20 basis points for the quarter ended September 30, 2021 and an unfavorable impact of seven basis points for the quarter ended December 31, 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 3.21% for the quarter ended December 31, 2021 compared to 3.18% for the quarter ended September 30, 2021 and 3.22% for the quarter ended December 31, 2020.

Net interest margin, on a tax-equivalent basis, was 3.06% for the year ended December 31, 2021, compared to 3.16% for the year ended December 31, 2020. Excess liquidity reduced net interest margin by approximately 23 basis points for the year ended December 31, 2021 compared to 14 basis points for the year ended December 31, 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 11 basis points for the year ended December 31, 2021 compared to an unfavorable impact of seven basis points for the year ended December 31, 2020. Excluding the impact of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was 3.18% for the year ended December 31, 2021 compared to 3.37% for the year ended December 31, 2020.

Noninterest Income
Noninterest income for the quarter ended December 31, 2021 was $19.2 million, a decrease of $947 thousand, or 4.7%, from the comparable period in the prior year. Noninterest income for the year ended December 31, 2021 was $83.2 million, an increase of $4.9 million, or 6.3%, from the prior year.

Net gain on mortgage banking activities decreased $1.8 million, or 41.8%, for the quarter and $1.3 million, or 7.9%, for the year ended December 31, 2021 compared to the comparable periods in the prior year. The decrease for the three months and year ended December 31, 2021 was primarily due to a decrease in volume and a contraction of margins. Investment advisory commission and fee income increased $741 thousand, or 17.9%, for the quarter and $3.0 million, or 18.8%, for the year ended December 31, 2021 compared to the comparable periods in the prior year, due to increased assets under management driven by new customer relationships and favorable market conditions. BOLI income decreased $14 thousand, or 1.9%, for the quarter and increased $1.0 million, or 35.4%, for the year ended December 31, 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 quarters of 2021, respectively.

Other service fee income increased $667 thousand, or 31.9%, for the quarter and $2.7 million, or 36.2%, for the year ended December 31, 2021 compared to the comparable periods in the prior year. Interchange fee income increased $260 thousand for the quarter and $1.2 million for the year ended December 31, 2021 compared to the comparable periods in the prior year, due to increased customer activity. Mortgage servicing fees increased $299 thousand for the quarter and $1.2 million for the year ended December 31, 2021 compared to the comparable period in the prior year, driven by an increase in retained servicing associated with elevated mortgage volume and reduced amortization due to decreased refinance activity and lower prepayment assumptions.

Other income decreased $928 thousand, or 47.9%, for the quarter and $1.5 million, or 24.7%, for the year ended December 31, 2021 compared to comparable periods in the prior year. Fees on risk participation agreements for interest rate swaps decreased $1.2 million and $3.5 million during the quarter and year ended December 31, 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 $354 thousand and $1.3 million during the quarter and year ended December 31, 2021, respectively, compared to comparable periods in the prior year. This increase was reflective of the Corporation's continued commitment to delivering comprehensive financial solutions to small businesses through the expansion of the SBA lending team during the first half of 2021. Other income also increased $347 thousand driven by an increase in the fair value of equity securities during the year ended December 31, 2021 compared to the year ended December 31, 2020.

Noninterest Expense
Noninterest expense for the quarter ended December 31, 2021 was $43.3 million, an increase of $1.6 million, or 3.8%, from the comparable period in the prior year. Noninterest expense for the year ended December 31, 2021 was $167.4 million, an increase of $12.4 million, or 8.0%, from the prior year.

Salaries, benefits and commissions increased $3.8 million, or 15.9%, for the quarter and $11.0 million, or 11.8%, for the year ended December 31, 2021 compared to 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. The Corporation modified the vesting criteria for performance-based restricted stock grants in 2020 to better reflect the operating environment, which resulted in a benefit of $928 thousand in salaries, benefits and commissions in the fourth quarter of 2020. Additionally, variable incentive compensation expenses increased $999 thousand and $3.6 million for the quarter and year ended December 31, 2021, respectively, from the comparable periods in the prior year, due to increased profitability.

Professional fees increased $314 thousand, or 21.9%, for the quarter and $2.3 million, or 44.0%, for the year ended December 31, 2021 compared to 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 2021, we spent $1.5 million on these initiatives. These expenses are not expected to re-occur in subsequent periods. Data processing expenses increased $394 thousand, or 13.3%, for the quarter and $1.4 million, or 12.4%, for the year ended December 31, 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.

Restructuring charges decreased $1.4 million for the quarter and year ended December 31, 2021 compared to the comparable periods in the prior year. These charges relate to the Corporation's financial center optimization plan announced in the fourth quarter of 2020. Other expense decreased $1.3 million, or 18.1%, for the quarter and $961 thousand, or 4.1%, for the year ended December 31, 2021 compared to the comparable periods in the prior year, primarily driven by extinguishment of long-term debt expense of $1.1 million and $1.8 million for the quarter and year ended December 31, 2020, respectively, offset primarily by increases in interchange expense driven by increased customer activity.

Asset Quality and Provision for Credit Losses
Nonperforming assets were $34.0 million at December 31, 2021, compared to $37.1 million at September 30, 2021 and $40.5 million at December 31, 2020.

Net loan and lease recoveries were $243 thousand during the fourth quarter of 2021 compared to net loan and lease charge-offs of $618 thousand for the same period in the prior year. The provision for credit losses was $1.4 million for the fourth quarter of 2021, of which $788 thousand (after-tax expense of $623 thousand), or $0.02 diluted earnings per share, was attributable to unfavorable changes in economic-related assumptions within the Corporation’s CECL model and $1.3 million was attributable to an increase in reserves for loans. These increases were offset by a decrease of $681 thousand in reserves for unfunded commitments and investment securities. The reversal of provision for credit losses was $8.7 million for the comparable period in the prior year, due to a reserve decrease of $8.2 million related to loans and leases and $690 thousand related to unfunded commitments, offset by a reserve increase of $176 thousand related to investment securities. $11.6 million (after-tax benefit of $9.2 million), or $0.31 diluted earnings per share, of the $8.7 million reversal of provision for credit losses was attributable to changes in economic-related assumptions within the Corporation’s CECL model.

Net loan and lease charge-offs were $213 thousand for the year ended December 31, 2021 compared to $4.6 million for the same period in the prior year. The reversal of provision for credit losses was $10.1 million for the year ended December 31, 2021, of which $17.9 million (after-tax benefit of $14.2 million), or $0.48 diluted earnings per share, was attributable to favorable changes in economic-related assumptions within the Corporation’s CECL model partially offset by a $7.4 million increase in reserves for loans. The provision for credit losses was $40.8 million for the prior year due to a reserve increase of $39.4 million related to loans and leases, $786 thousand related to reserves for unfunded commitments, and $569 thousand related to investment securities. $27.4 million (after-tax charge of $21.6 million), or $0.74 diluted earnings per share, of the $40.8 million of provision for credit losses was attributable to changes in economic-related assumptions within the Corporation’s CECL model.

The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment was 1.35% at December 31, 2021, compared to 1.34% at September 30, 2021, and 1.56% at December 31, 2020. The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment, excluding PPP loans1, was 1.36% at December 31, 2021 compared to 1.36% at September 30, 2021 and 1.72% at December 31, 2020.

Tax Provision
The effective income tax rate was 19.7% for the year ended December 31, 2021 compared to an effective income tax rate of 17.5% for the year ended December 31, 2020. The effective tax rate for the year ended December 31, 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.

Dividend
On January 26, 2022, Univest declared a quarterly cash dividend of $0.20 per share. The dividend will be paid on February 23, 2022 to shareholders of record as of February 9, 2022.

Conference Call
Univest will host a conference call to discuss fourth quarter and year end 2021 results on Thursday, January 27, 2022 at 9:00 a.m. EST. Participants may preregister at https://www.incommglobalevents.com/registration/q4inc/9616/univest-financial-corporation-to-hold-fourth-quarter-and-year-end-2021-earnings-call/. The general public can access the call by dialing 1-844-200-6205; using Access Code 454983. A replay of the conference call will be available through February 28, 2022 by dialing 1-866-813-9403; using Access Code: 298990.

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 $4.9 billion in assets under management and supervision through its Wealth Management lines of business at December 31, 2021. Headquartered in Souderton, Pa. and founded in 1876, the Corporation and its subsidiaries provide a full range of financial solutions for individuals, businesses, municipalities and nonprofit organizations primarily in the Mid-Atlantic Region. Univest delivers these services through a network of more than 50 offices and online at www.univest.net.  

This press release 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) changes in interest rates; (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 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. 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 continuing market turmoil; (7) 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; and (8) our cyber security risks are increased 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)
December 31, 2021
(Dollars in thousands)                            
                             
Balance Sheet (Period End)   12/31/21   09/30/21   06/30/21   03/31/21   12/31/20        
Assets   $ 7,122,421     $ 6,979,852     $ 6,356,305     $ 6,416,665     $ 6,336,496          
Cash and cash equivalents     890,150       902,357       203,449       187,317       219,858          
Investment securities, net of allowance for credit losses     496,989       393,377       397,426       377,506       373,176          
Loans held for sale     21,600       29,093       27,322       22,636       37,039          
Loans and leases held for investment, gross     5,310,017       5,252,045       5,327,313       5,415,006       5,306,841          
Allowance for credit losses, loans and leases     71,924       70,146       71,355       71,497       83,044          
Loans and leases held for investment, net     5,238,093       5,181,899       5,255,958       5,343,509       5,223,797          
Total deposits     6,055,124       5,938,154       5,318,704       5,311,592       5,242,715          
Noninterest-bearing deposits     2,065,423       1,861,007       1,872,031       1,857,547       1,690,663          
Interest-bearing demand, money market and savings     3,505,535       3,583,107       2,954,450       2,979,834       2,988,277          
Time deposits     484,166       494,040       492,223       474,211       563,775          
Borrowings     213,980       207,898       218,970       295,293       311,421          
Shareholders' equity     773,794       756,023       739,998       722,455       692,472          
                             
                             
Balance Sheet (Average)   For the three months ended,   For the twelve months ended,
    12/31/21   09/30/21   06/30/21   03/31/21   12/31/20   12/31/21   12/31/20
Assets   $ 7,088,289     $ 6,698,177     $ 6,443,629     $ 6,383,463     $ 6,353,519     $ 6,655,443     $ 6,006,877  
Investment securities, net of allowance for credit losses     469,588       395,280       385,694       374,369       369,511       406,463       402,011  
Loans and leases, gross     5,255,279       5,320,411       5,389,110       5,325,897       5,253,720       5,322,475       4,888,801  
Deposits     6,041,798       5,666,725       5,351,089       5,296,147       5,222,452       5,591,195       4,850,890  
Shareholders' equity     762,334       746,185       728,750       699,736       676,426       734,456       668,201  
                             
                             
Asset Quality Data (Period End)                            
    12/31/21   09/30/21   06/30/21   03/31/21   12/31/20        
Nonaccrual loans and leases, including nonaccrual troubled debt restructured                            
loans and leases and nonaccrual loans held for sale   $ 33,210     $ 34,528     $ 37,466     $ 29,996     $ 31,692          
Accruing loans and leases 90 days or more past due     498       2,204       750       664       1,392          
Accruing troubled debt restructured loans and leases     51       51       52       52       53          
Total nonperforming loans and leases     33,759       36,783       38,268       30,712       33,137          
Other real estate owned     279       279       279       7,481       7,355          
Total nonperforming assets   $ 34,038     $ 37,062     $ 38,547     $ 38,193     $ 40,492          
Nonaccrual loans and leases / Loans and leases held for investment and nonaccrual loans held for sale     0.63 %     0.66 %     0.70 %     0.55 %     0.60 %        
Nonperforming loans and leases / Loans and leases held for investment     0.64 %     0.70 %     0.72 %     0.57 %     0.62 %        
Nonperforming assets / Total assets     0.48 %     0.53 %     0.61 %     0.60 %     0.64 %        
                             
Allowance for credit losses, loans and leases   $ 71,924     $ 70,146     $ 71,355     $ 71,497     $ 83,044          
Allowance for credit losses, loans and leases / Loans and leases held for investment     1.35 %     1.34 %     1.34 %     1.32 %     1.56 %        
Allowance for credit losses, loans and leases / Loans and leases held for investment, excluding Paycheck Protection Program loans (1)     1.36 %     1.36 %     1.41 %     1.46 %     1.72 %        
Allowance for credit losses, loans and leases / Nonaccrual loans and leases held for investment     216.57 %     203.16 %     212.97 %     238.36 %     262.03 %        
Allowance for credit losses, loans and leases / Nonperforming loans and leases held for investment     213.05 %     190.70 %     208.00 %     232.80 %     250.61 %        
                             
    For the three months ended,   For the twelve months ended,
    12/31/21   09/30/21   06/30/21   03/31/21   12/31/20   12/31/21   12/31/20
Net loan and lease (recoveries) charge-offs   $ (243 )   $ (75 )   $ 243     $ 288     $ 618     $ 213     $ 4,648  
Net loan and lease (recoveries) charge-offs (annualized)/Average loans and leases     (0.02 %)     (0.01 %)     0.02 %     0.02 %     0.05 %     0.00 %     0.10 %
                             
(1) Non-GAAP metric. A reconciliation of this and other non-GAAP financial measures is included at the end of this document.  
                             


Univest Financial Corporation  
Consolidated Selected Financial Data (Unaudited)  
December 31, 2021  
(Dollars in thousands, except per share data)                              
    For the three months ended,   For the twelve months ended,  
For the period:   12/31/21   09/30/21   06/30/21   03/31/21   12/31/20   12/31/21   12/31/20  
Interest income   $ 52,262   $ 53,571     $ 52,441     $ 51,457     $ 51,334     $ 209,731     $ 203,945  
Interest expense     4,737     4,884       5,684       6,043       6,813       21,348       29,584  
Net interest income     47,525     48,687       46,757       45,414       44,521       188,383       174,361  
Provision (reversal of provision) for credit losses     1,392     (182 )     (59 )     (11,283 )     (8,721 )     (10,132 )     40,794  
Net interest income after provision for credit losses     46,133     48,869       46,816       56,697       53,242       198,515       133,567  
Noninterest income:                              
Trust fee income     2,086     2,126       2,157       2,034       1,974       8,403       7,703  
Service charges on deposit accounts     1,486     1,422       1,314       1,282       1,371       5,504       4,845  
Investment advisory commission and fee income     4,885     4,796       4,558       4,697       4,144       18,936       15,944  
Insurance commission and fee income     3,726     3,837       3,839       4,955       3,512       16,357       16,087  
Other service fee income     2,759     2,576       2,748       2,192       2,092       10,275       7,543  
Bank owned life insurance income     719     925       1,620       717       733       3,981       2,940  
Net gain on sales of investment securities     5     21       54       65       54       145       871  
Net gain on mortgage banking activities     2,518     3,224       3,461       5,938       4,323       15,141       16,442  
Other income     1,008     1,625       479       1,370       1,936       4,482       5,953  
Total noninterest income     19,192     20,552       20,230       23,250       20,139       83,224       78,328  
Noninterest expense:                              
Salaries, benefits and commissions     27,374     26,641       25,396       24,780       23,613       104,191       93,208  
Net occupancy     2,477     2,525       2,656       2,739       2,697       10,397       10,358  
Equipment     985     1,000       968       946       951       3,899       3,841  
Data processing     3,355     3,274       3,064       3,050       2,961       12,743       11,333  
Professional fees     1,750     2,174       2,015       1,748       1,436       7,687       5,338  
Marketing and advertising     683     539       561       280       575       2,063       1,975  
Deposit insurance premiums     698     765       613       636       765       2,712       2,591  
Intangible expenses     267     214       249       249       282       979       1,216  
Restructuring charges     -     -       -       -       1,439       -       1,439  
Other expense     5,746     6,116       5,764       5,112       7,015       22,738       23,699  
Total noninterest expense     43,335     43,248       41,286       39,540       41,734       167,409       154,998  
Income before taxes     21,990     26,173       25,760       40,407       31,647       114,330       56,897  
Income tax expense     4,578     5,262       4,885       7,804       5,773       22,529       9,981  
Net income   $ 17,412   $ 20,911     $ 20,875     $ 32,603     $ 25,874     $ 91,801     $ 46,916  
Net income per share:                              
Basic   $ 0.59   $ 0.71     $ 0.71     $ 1.11     $ 0.88     $ 3.12     $ 1.60  
Diluted   $ 0.59   $ 0.71     $ 0.71     $ 1.11     $ 0.88     $ 3.11     $ 1.60  
Dividends declared per share   $ 0.20   $ 0.20     $ 0.20     $ 0.20     $ -     $ 0.80     $ 0.60  
Weighted average shares outstanding     29,471,304     29,420,256       29,389,525       29,327,432       29,274,915       29,402,845       29,243,773  
Period end shares outstanding     29,500,542     29,438,402       29,411,731       29,379,575       29,295,052       29,500,542       29,295,052  
                               


Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
December 31, 2021
                             
    For the three months ended,   For the twelve months ended,
Profitability Ratios (annualized)   12/31/21   09/30/21   06/30/21   03/31/21   12/31/20   12/31/21   12/31/20
                             
Return on average assets     0.97 %     1.24 %     1.30 %     2.07 %     1.62 %     1.38 %     0.78 %
Return on average assets, excluding restructuring   0.97 %     1.24 %     1.30 %     2.07 %     1.69 %     1.38 %     0.80 %
charges (1)                            
Return on average shareholders' equity     9.06 %     11.12 %     11.49 %     18.90 %     15.22 %     12.50 %     7.02 %
Return on average shareholders' equity, excluding   9.06 %     11.12 %     11.49 %     18.90 %     15.89 %     12.50 %     7.19 %
restructuring charges (1)                            
Return on average tangible common equity (1)     11.79 %     14.51 %     15.11 %     25.20 %     20.54 %     16.41 %     9.52 %
Return on average tangible common equity, excluding   11.79 %     14.51 %     15.11 %     25.20 %     21.44 %     16.41 %     9.76 %
restructuring charges (1)                            
Net interest margin (FTE)     2.86 %     3.11 %     3.15 %     3.12 %     3.02 %     3.06 %     3.16 %
Efficiency ratio (2)     64.3 %     61.8 %     60.7 %     57.0 %     63.8 %     60.9 %     60.6 %
Efficiency ratio, excluding restructuring charges (1) (2)   64.3 %     61.8 %     60.7 %     57.0 %     61.6 %     60.9 %     60.0 %
                             
Capitalization Ratios                            
                             
Dividends declared to net income (3)     33.9 %     28.1 %     28.2 %     18.0 %     0.0 %     25.6 %     37.4 %
Shareholders' equity to assets (Period End)     10.86 %     10.83 %     11.64 %     11.26 %     10.93 %     10.86 %     10.93 %
Tangible common equity to tangible assets (1)     8.56 %     8.55 %     9.15 %     8.77 %     8.40 %     8.56 %     8.40 %
Common equity book value per share   $ 26.23     $ 25.68     $ 25.16     $ 24.59     $ 23.64     $ 26.23     $ 23.64  
Tangible common equity book value per share (1) $ 20.14     $ 19.75     $ 19.22     $ 18.64     $ 17.66     $ 20.14     $ 17.66  
                             
Regulatory Capital Ratios (Period End)                            
Tier 1 leverage ratio     9.13 %     9.53 %     9.64 %     9.45 %     9.08 %     9.13 %     9.08 %
Common equity tier 1 risk-based capital ratio     11.08 %     11.15 %     11.04 %     11.08 %     10.76 %     11.08 %     10.76 %
Tier 1 risk-based capital ratio     11.08 %     11.15 %     11.04 %     11.08 %     10.76 %     11.08 %     10.76 %
Total risk-based capital ratio     13.77 %     13.87 %     13.82 %     15.13 %     15.31 %     13.77 %     15.31 %
                             
(1) Non-GAAP metric. A reconciliation of this and other non-GAAP financial 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 December 31, 2021   September 30, 2021  
  Average Income/ Average   Average Income/ Average  
(Dollars in thousands) Balance Expense Rate   Balance Expense Rate  
Assets:                
Interest-earning deposits with other banks $ 914,287   $ 370 0.16 % $ 530,191   $ 189 0.14 %
U.S. government obligations   6,999     37 2.10     6,999     36 2.04  
Obligations of state and political subdivisions   2,334     19 3.23     2,992     24 3.18  
Other debt and equity securities   460,255     1,845 1.59     385,289     1,516 1.56  
Federal Home Loan Bank, Federal Reserve Bank and other stock   28,402     375 5.24     26,713     334 4.96  
Total interest-earning deposits, investments and other interest-earning assets   1,412,277     2,646 0.74     952,184     2,099 0.87  
                 
Commercial, financial, and agricultural loans   869,471     7,022 3.20     880,986     7,412 3.34  
Paycheck Protection Program loans   53,745     1,568 11.57     162,611     4,162 10.15  
Real estate—commercial and construction loans   2,826,720     26,669 3.74     2,784,398     25,634 3.65  
Real estate—residential loans   1,107,911     10,165 3.64     1,100,799     10,171 3.67  
Loans to individuals   26,462     249 3.73     26,048     253 3.85  
Municipal loans and leases   245,038     2,515 4.07     247,603     2,504 4.01  
Lease financings   125,932     1,951 6.15     117,966     1,856 6.24  
Gross loans and leases   5,255,279     50,139 3.79     5,320,411     51,992 3.88  
Total interest-earning assets   6,667,556     52,785 3.14     6,272,595     54,091 3.42  
Cash and due from banks   54,958           59,642        
Allowance for credit losses, loans and leases   (71,020 )         (72,606 )      
Premises and equipment, net   56,087           55,685        
Operating lease right-of-use assets   31,048           31,998        
Other assets   349,660           350,863        
Total assets $ 7,088,289         $ 6,698,177        
                 
Liabilities:                
Interest-bearing checking deposits $ 939,478   $ 493 0.21 % $ 857,098   $ 537 0.25 %
Money market savings   1,616,890     968 0.24     1,382,832     922 0.26  
Regular savings   997,814     253 0.10     998,568     281 0.11  
Time deposits   487,434     1,370 1.12     496,702     1,490 1.19  
Total time and interest-bearing deposits   4,041,616     3,084 0.30     3,735,200     3,230 0.34  
                 
Short-term borrowings   14,144     1 0.03     15,116     2 0.05  
Long-term debt   95,000     325 1.36     95,000     324 1.35  
Subordinated notes   98,833     1,327 5.33     98,754     1,328 5.34  
Total borrowings   207,977     1,653 3.15     208,870     1,654 3.14  
Total interest-bearing liabilities   4,249,593     4,737 0.44     3,944,070     4,884 0.49  
Noninterest-bearing deposits   2,000,182           1,931,525        
Operating lease liabilities   34,114           35,094        
Accrued expenses and other liabilities   42,066           41,303        
Total liabilities   6,325,955           5,951,992        
                 
Shareholders' Equity:                
Common stock   157,784           157,784        
Additional paid-in capital   298,508           297,482        
Retained earnings and other equity   306,042           290,919        
Total shareholders' equity   762,334           746,185        
Total liabilities and shareholders' equity $ 7,088,289         $ 6,698,177        
Net interest income   $ 48,048       $ 49,207    
                 
Net interest spread     2.70       2.93  
Effect of net interest-free funding sources     0.16       0.18  
Net interest margin     2.86 %     3.11 %
Ratio of average interest-earning assets to average interest-bearing liabilities   156.90 %         159.04 %      
                 
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 December 31, 2021 and September 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 December 31,      
Tax Equivalent Basis   2021       2020    
  Average Income/ Average   Average Income/ Average  
(Dollars in thousands) Balance Expense Rate   Balance Expense Rate  
Assets:                
Interest-earning deposits with other banks $ 914,287   $ 370 0.16 % $ 296,258   $ 82 0.11 %
U.S. government obligations   6,999     37 2.10     6,998     36 2.05  
Obligations of state and political subdivisions   2,334     19 3.23     14,269     129 3.60  
Other debt and equity securities   460,255     1,845 1.59     348,244     1,237 1.41  
Federal Home Loan Bank, Federal Reserve Bank and other stock   28,402     375 5.24     29,838     438 5.84  
Total interest-earning deposits, investments and other interest-earning assets   1,412,277     2,646 0.74     695,607     1,922 1.10  
                 
Commercial, financial, and agricultural loans   869,471     7,022 3.20     824,374     7,366 3.55  
Paycheck Protection Program loans   53,745     1,568 11.57     497,035     3,133 2.51  
Real estate—commercial and construction loans   2,826,720     26,669 3.74     2,518,056     24,388 3.85  
Real estate—residential loans   1,107,911     10,165 3.64     1,025,818     10,345 4.01  
Loans to individuals   26,462     249 3.73     27,427     289 4.19  
Municipal loans and leases   245,038     2,515 4.07     258,627     2,776 4.27  
Lease financings   125,932     1,951 6.15     102,383     1,690 6.57  
Gross loans and leases   5,255,279     50,139 3.79     5,253,720     49,987 3.79  
Total interest-earning assets   6,667,556     52,785 3.14     5,949,327     51,909 3.47  
Cash and due from banks   54,958           53,360        
Allowance for credit losses, loans and leases   (71,020 )         (92,766 )      
Premises and equipment, net   56,087           55,653        
Operating lease right-of-use assets   31,048           34,272        
Other assets   349,660           353,673        
Total assets $ 7,088,289         $ 6,353,519        
                 
Liabilities:                
Interest-bearing checking deposits $ 939,478   $ 493 0.21 % $ 838,323   $ 537 0.25 %
Money market savings   1,616,890     968 0.24     1,213,585     898 0.29  
Regular savings   997,814     253 0.10     905,918     341 0.15  
Time deposits   487,434     1,370 1.12     582,782     2,034 1.39  
Total time and interest-bearing deposits   4,041,616     3,084 0.30     3,540,608     3,810 0.43  
                 
Short-term borrowings   14,144     1 0.03     15,091     2 0.05  
Long-term debt   95,000     325 1.36     169,623     611 1.43  
Subordinated notes   98,833     1,327 5.33     193,244     2,390 4.92  
Total borrowings   207,977     1,653 3.15     377,958     3,003 3.16  
Total interest-bearing liabilities   4,249,593     4,737 0.44     3,918,566     6,813 0.69  
Noninterest-bearing deposits   2,000,182           1,681,844        
Operating lease liabilities   34,114           37,616        
Accrued expenses and other liabilities   42,066           39,067        
Total liabilities   6,325,955           5,677,093        
                 
Shareholders' Equity:                
Common stock   157,784           157,784        
Additional paid-in capital   298,508           296,810        
Retained earnings and other equity   306,042           221,832        
Total shareholders' equity   762,334           676,426        
Total liabilities and shareholders' equity $ 7,088,289         $ 6,353,519        
Net interest income   $ 48,048       $ 45,096    
                 
Net interest spread     2.70       2.78  
Effect of net interest-free funding sources     0.16       0.24  
Net interest margin     2.86 %     3.02 %
Ratio of average interest-earning assets to average interest-bearing liabilities   156.90 %         151.82 %      
                 
Note 1: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been  
included in the average loan balances. Tax-equivalent amounts for the three months ended December 31, 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 Twelve Months Ended December 31,  
Tax Equivalent Basis     2021         2020    
  Average Income/ Average   Average Income/ Average  
(Dollars in thousands) Balance Expense Rate   Balance Expense Rate  
Assets:                
Interest-earning deposits with other banks $ 476,351   $ 661 0.14 % $ 274,372   $ 574 0.21 %
U.S. government obligations   6,999     144 2.06     7,132     145 2.03  
Obligations of state and political subdivisions   5,702     206 3.61     23,065     825 3.58  
Other debt and equity securities   393,762     5,992 1.52     371,814     7,697 2.07  
Federal Home Loan Bank, Federal Reserve Bank and other stock   26,844     1,417 5.28     29,726     1,746 5.87  
Total interest-earning deposits, investments and other interest-earning assets   909,658     8,420 0.93     706,109     10,987 1.56  
                 
Commercial, financial, and agricultural loans   840,133     28,142 3.35     817,489     30,657 3.75  
Paycheck Protection Program loans   281,484     15,032 5.34     342,920     8,072 2.35  
Real estate—commercial and construction loans   2,734,259     101,692 3.72     2,312,996     94,962 4.11  
Real estate—residential loans   1,077,952     40,045 3.71     1,007,915     42,047 4.17  
Loans to individuals   26,062     1,018 3.91     28,792     1,332 4.63  
Municipal loans and leases   247,396     10,147 4.10     283,495     11,857 4.18  
Lease financings   115,189     7,363 6.39     95,194     6,498 6.83  
Gross loans and leases   5,322,475     203,439 3.82     4,888,801     195,425 4.00  
Total interest-earning assets   6,232,133     211,859 3.40     5,594,910     206,412 3.69  
Cash and due from banks   55,724           52,000        
Allowance for credit losses, loans and leases   (74,943 )         (73,459 )      
Premises and equipment, net   55,875           55,888        
Operating lease right-of-use assets   32,758           34,277        
Other assets   353,896           343,261        
Total assets $ 6,655,443         $ 6,006,877        
                 
Liabilities:                
Interest-bearing checking deposits $ 850,713   $ 2,007 0.24 % $ 692,049   $ 2,173 0.31 %
Money market savings   1,366,762     3,574 0.26     1,113,039     5,551 0.50  
Regular savings   983,752     1,114 0.11     874,366     2,057 0.24  
Time deposits   498,638     6,178 1.24     572,103     9,835 1.72  
Total time and interest-bearing deposits   3,699,865     12,873 0.35     3,251,557     19,616 0.60  
                 
Short-term borrowings   16,552     8 0.05     86,658     327 0.38  
Long-term debt   96,562     1,318 1.36     189,410     2,879 1.52  
Subordinated notes   137,896     7,149 5.18     134,949     6,762 5.01  
Total borrowings   251,010     8,475 3.38     411,017     9,968 2.43  
Total interest-bearing liabilities   3,950,875     21,348 0.54     3,662,574     29,584 0.81  
Noninterest-bearing deposits   1,891,330           1,599,333        
Operating lease liabilities   36,001           37,557        
Accrued expenses and other liabilities   42,781           39,212        
Total liabilities   5,920,987           5,338,676        
                 
Shareholders' Equity:                
Common stock   157,784           157,784        
Additional paid-in capital   297,189           296,023        
Retained earnings and other equity   279,483           214,394        
Total shareholders' equity   734,456           668,201        
Total liabilities and shareholders' equity $ 6,655,443         $ 6,006,877        
Net interest income   $ 190,511       $ 176,828    
                 
Net interest spread     2.86       2.88  
Effect of net interest-free funding sources     0.20       0.28  
Net interest margin     3.06 %     3.16 %
Ratio of average interest-earning assets to average interest-bearing liabilities   157.74 %         152.76 %      
                 
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 twelve months ended December 31, 2021 and 2020 have
been calculated using the Corporation’s federal applicable rate of 21.0%.
                 


Univest Financial Corporation  
Loan Portfolio Overview (Unaudited)  
                 
(Dollars in thousands) As of December 31, 2021
Industry Description Total Outstanding
Balance (excl PPP)
  % of Commercial
Loan Portfolio
  $ Balance of
Modified Loans (1)
  Modified Loans
as a % of
Portfolio (1)
 
CRE - Retail   350,373   8.0 %   $ -   - %
Animal Production   304,487   7.0       -   -  
CRE - 1-4 Family Residential Investment   255,397   5.8       -   -  
CRE - Office   235,078   5.4       -   -  
CRE - Multi-family   222,488   5.1       -   -  
Nursing and Residential Care Facilities   169,708   3.9       -   -  
Hotels & Motels (Accommodation)   169,397   3.9       1,437   0.8  
CRE - Industrial / Warehouse   169,329   3.9       -   -  
Education   162,776   3.7       -   -  
Specialty Trade Contractors   130,418   3.0       -   -  
CRE - Mixed-Use - Residential   121,019   2.8       3,405   2.8  
Merchant Wholesalers, Durable Goods   110,675   2.5       -   -  
CRE - Medical Office   106,348   2.4       -   -  
Homebuilding (tract developers, remodelers)   93,469   2.1       -   -  
Real Estate Lenders, Secondary Market Financing   87,389   2.0       -   -  
Crop Production   81,704   1.9       -   -  
Motor Vehicle and Parts Dealers   78,292   1.8       -   -  
Food Manufacturing   75,587   1.7       -   -  
Wood Product Manufacturing   70,769   1.6       -   -  
Rental and Leasing Services   69,048   1.6       -   -  
Administrative and Support Services   66,529   1.5       -   -  
Personal and Laundry Services   62,051   1.4       -   -  
Food Services and Drinking Places   59,636   1.4       -   -  
Fabricated Metal Product Manufacturing   58,924   1.3       -   -  
Merchant Wholesalers, Nondurable Goods   57,114   1.3       -   -  
Repair and Maintenance   53,820   1.2       -   -  
Miniwarehouse / Self-Storage   51,987   1.2       -   -  
Religious Organizations, Advocacy Groups   50,432   1.2       -   -  
Industries with >$50 million in outstandings $ 3,524,244   80.7 %   $ 4,842   0.1 %
Industries with <$50 million in outstandings $ 844,505   19.3 %   $ 981   0.1 %
Total Commercial Loans $ 4,368,749   100.0 %   $ 5,823   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   540,566         338   0.1 %
Real Estate-Home Equity Secured for Personal Purpose   158,909         -   -  
Loans to Individuals   25,504         14   0.1  
Lease Financings   184,541         33   -  
Total - Consumer Loans and Lease Financings $ 909,520       $ 385   - %
                 
Total $ 5,278,269       $ 6,208   0.1 %
                 
(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 December 31, 2021.
                 


Univest Financial Corporation
Non-GAAP Reconciliation
December 31, 2021
 
Non-GAAP to GAAP Reconciliation
Management uses non-GAAP measures in its analysis of the Corporation's performance. These measures should not be considered a substitute for GAAP basis measures nor should they be viewed as a substitute for operating results determined in accordance with GAAP. Management believes the presentation of the non-GAAP financial measures, which exclude the impact of the specified items, provides useful supplemental information that is essential to a proper understanding of the financial results of the Corporation. See the table below for additional information on non-GAAP measures used throughout this earnings release.
                             
    As of or for the three months ended,   As of or for the twelve months ended,
    12/31/21   09/30/21   06/30/21   03/31/21   12/31/20   12/31/21   12/31/20
Restructuring charges (a)   $ -     $ -     $ -     $ -     $ 1,439     $ -     $ 1,439  
Tax effect of restructuring charges   -       -       -       -       (302 )     -       (302 )
Restructuring charges, net of tax   $ -     $ -     $ -     $ -     $ 1,137     $ -     $ 1,137  
                             
Shareholders' equity $ 773,794     $ 756,023     $ 739,998     $ 722,455     $ 692,472     $ 773,794     $ 692,472  
Goodwill   (175,510 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )     (175,510 )     (172,559 )
Other intangibles (b)     (4,210 )     (1,922 )     (2,073 )     (2,326 )     (2,580 )     (4,210 )     (2,580 )
Tangible common equity $ 594,074     $ 581,542     $ 565,366     $ 547,570     $ 517,333     $ 594,074     $ 517,333  
                             
Total assets $ 7,122,421     $ 6,979,852     $ 6,356,305     $ 6,416,665     $ 6,336,496     $ 7,122,421     $ 6,336,496  
Goodwill   (175,510 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )     (175,510 )     (172,559 )
Other intangibles (b)     (4,210 )     (1,922 )     (2,073 )     (2,326 )     (2,580 )     (4,210 )     (2,580 )
Tangible assets $ 6,942,701     $ 6,805,371     $ 6,181,673     $ 6,241,780     $ 6,161,357     $ 6,942,701     $ 6,161,357  
                             
Average shareholders' equity $ 762,334     $ 746,185     $ 728,750     $ 699,736     $ 676,426     $ 734,456     $ 668,201  
Average goodwill   (173,553 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,810 )     (172,559 )
Average other intangibles (b)     (2,696 )     (1,983 )     (2,209 )     (2,464 )     (2,734 )     (2,338 )     (3,181 )
Average tangible common equity $ 586,085     $ 571,643     $ 553,982     $ 524,713     $ 501,133     $ 559,308     $ 492,461  
                             
Net income before taxes $ 21,990     $ 26,173     $ 25,760     $ 40,407     $ 31,647     $ 114,330     $ 56,897  
Provision for credit losses     1,392       (182 )     (59 )     (11,283 )     (8,721 )     (10,132 )     40,794  
Pre-tax pre-provision income $ 23,382     $ 25,991     $ 25,701     $ 29,124     $ 22,926     $ 104,198     $ 97,691  
                             
Loans and leases held for investment, gross $ 5,310,017     $ 5,252,045     $ 5,327,313     $ 5,415,006     $ 5,306,841     $ 5,310,017     $ 5,306,841  
Paycheck Protection Program ("PPP") loans   (31,748 )     (85,601 )     (252,849 )     (528,452 )     (483,773 )     (31,748 )     (483,773 )
Gross loans and leases excluding PPP loans $ 5,278,269     $ 5,166,444     $ 5,074,464     $ 4,886,554     $ 4,823,068     $ 5,278,269     $ 4,823,068  
                             
Allowance for credit losses, loans and leases $ 71,924     $ 70,146     $ 71,355     $ 71,497     $ 83,044     $ 71,924     $ 83,044  
Gross loans and leases excluding PPP loans   5,278,269       5,166,444       5,074,464       4,886,554       4,823,068       5,278,269       4,823,068  
Allowance for credit losses, loans and leases as a percentage of gross loans and leases excluding PPP loans   1.36 %     1.36 %     1.41 %     1.46 %     1.72 %     1.36 %     1.72 %
                             
(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