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Univest Financial Corporation Reports Third Quarter Results

Company Release - 10/26/2022

SOUDERTON, Pa., Oct. 26, 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, announced net income for the quarter ended September 30, 2022 was $20.8 million, or $0.71 diluted earnings per share, compared to net income of $20.9 million, or $0.71 diluted earnings per share, for the quarter ended September 30, 2021.

One-Time Items
The financial results for the three and nine months ended September 30, 2022 included tax-free bank owned life insurance ("BOLI") death benefit claims of $446 thousand, which represented $0.02 diluted earnings per share for both periods.

Loans
Gross loans and leases, excluding Paycheck Protection Program ("PPP") loans1, increased $190.6 million, or 13.5% (annualized), from June 30, 2022, $568.8 million, or 14.4% (annualized), from December 31, 2021 and $680.6 million, or 13.2%, from September 30, 2021 primarily due to increases in commercial, commercial real estate, construction, residential mortgage loans, and lease financings.

Deposits
Total deposits increased $223.9 million, or 16.1% (annualized), from June 30, 2022, primarily due to increases in public funds deposits partially offset by decreases in commercial deposits. Total deposits decreased $268.1 million, or 5.9% (annualized), from December 31, 2021, primarily due to decreases in commercial and consumer deposits. Total deposits decreased $151.2 million, or 2.5%, from September 30, 2021, primarily due to a decrease in public funds deposits.

Net Interest Income and Margin
Net interest income of $58.3 million for the three months ended September 30, 2022 increased $6.8 million, or 13.2%, from the three months ended June 30, 2022, and $9.6 million, or 19.6%, from the three months ended September 30, 2021. The increase in net interest income for the three months ended September 30, 2022 compared to the same period of 2021 and the prior quarter was largely due to significant loan growth, the rapid increase in interest rates and the asset sensitivity position of the Corporation's balance sheet.

Net interest margin, on a tax-equivalent basis, was 3.67% for the third quarter of 2022, compared to 3.19% for the second quarter of 2022 and 3.11% for the third quarter of 2021. Excess liquidity reduced net interest margin by approximately one basis point for the quarter ended September 30, 2022 compared to 23 basis points for the quarter ended June 30, 2022 and 27 basis points for the quarter ended September 30, 2021. PPP loans had no impact on net interest margin for the quarter ended September 30, 2022 compared to one basis point for the quarter ended June 30, 2022 and 20 basis points for the quarter ended September 30, 2021. Excluding the impact of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was 3.68% for the quarter ended September 30, 2022 compared to 3.41% for the quarter ended June 30, 2022 and 3.18% for the quarter ended September 30, 2021.

Noninterest Income
Noninterest income for the quarter ended September 30, 2022 was $18.0 million, a decrease of $2.6 million, or 12.6%, compared to the third quarter of 2021.

Net gain on mortgage banking activities decreased $2.4 million, or 74.7%, for the quarter ended September 30, 2022 compared to the comparable period in the prior year, primarily due to a decrease in loan sales and a contraction of margins. BOLI increased $228 thousand, or 24.6%, for the quarter compared to the comparable period in the prior year, primarily due to death benefit claims of $446 thousand in the third quarter of 2022. Investment advisory commission and fee income decreased $597 thousand, or 12.4%, for the quarter ended September 30, 2022 compared to the comparable period in the prior year, primarily due to reduced assets under management, which was driven by market performance.

Other income decreased $758 thousand, or 46.6%, for the quarter ended September 30, 2022 compared to the comparable period in the prior year. Gains on the sale of Small Business Administration loans decreased $520 thousand for the quarter due to decreased sale activity. Fees on risk participation agreements for interest rate swaps decreased $171 thousand for the quarter driven by a decrease in customer demand due to the current interest rate environment.

Insurance commission and fee income increased $605 thousand, or 15.8%, for the quarter ended September 30, 2022 compared to the comparable period in the prior year, primarily due to incremental revenue attributable to the acquisition of the Paul I. Sheaffer insurance agency in the fourth quarter of 2021.

Other service fee income increased $548 thousand, or 21.3%, for the quarter ended September 30, 2022 compared to the comparable period in the prior year. Mortgage servicing fees increased $336 thousand for the quarter driven by reduced amortization as a result of a decrease in prepayment speeds.

Noninterest Expense
Noninterest expense for the quarter ended September 30, 2022 was $46.7 million, an increase of $3.4 million, or 7.9%, compared to the third quarter of 2021. The results for the three months ended September 30, 2022 included approximately $1.2 million in expenses related to our digital transformation initiative, 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.

Salaries, benefits and commissions increased $2.8 million, or 10.4%, for the quarter ended September 30, 2022 compared to the comparable period in the prior year. This increase reflects the insurance acquisition in the fourth quarter of 2021, our expansion into Maryland and Western PA, and annual merit increases.

Professional fees increased $347 thousand, or 16.0%, for the quarter ended September 30, 2022 compared to the comparable period in the prior year. The increase for the three months ended September 30, 2022 was primarily due to $1.0 million in consultant fees attributable to the previously discussed digital transformation initiative, as compared to our $585 thousand investment in our Diversity, Equity and Inclusion program, training initiatives and treasury management product enhancements for the three months ended September 30, 2021.

Data processing expenses increased $627 thousand, or 19.2%, for the quarter ended September 30, 2022 compared to the comparable period in the prior year, primarily due to continued investments in technology including $180 thousand in support of the previously discussed digital transformation initiative for the respective period.

Tax Provision
The effective income tax rate was 19.7% for the nine months ended September 30, 2022, compared to an effective income tax rate of 19.4% for the nine months ended September 30, 2021. The effective tax rate for the nine months ended September 30, 2022 and 2021 reflects the benefits of tax-exempt income from investments in municipal securities and loans and leases. Additionally, the effective tax rate for the nine months ended September 30, 2022 was favorably impacted by discrete tax benefits and proceeds from BOLI death benefits. Excluding these items, the effective tax rate was 20.1% for the nine months ended September 30, 2022.

Asset Quality and Provision for Credit Losses
Nonperforming assets were $33.0 million at September 30, 2022, compared to $34.8 million at June 30, 2022 and $37.1 million at September 30, 2021.

Net loan and lease charge-offs were $1.2 million and $1.7 million for the three months ended September 30, 2022 and June 30, 2022, respectively, compared to net loan and lease recoveries of $75 thousand for the three months ended September 30, 2021. Net loan and lease charge-offs were $3.0 million and $456 thousand for the nine months ended September 30, 2022 and September 30, 2021, respectively.

The provision for credit losses was $3.6 million for the third quarter of 2022 compared to a provision for credit losses of $6.7 million for the second quarter of 2022 and a reversal of provision of $182 thousand for the third quarter of 2021. The provision for credit losses was $6.8 million for the nine months ended September 30, 2022 compared to a reversal of provision for credit losses of $11.5 million for the comparable period in the prior year. The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment was 1.28% at September 30, 2022 compared to 1.27% at June 30, 2022 and 1.34% at September 30, 2021.

Share Repurchases
During the three months ended September 30, 2022, the Corporation repurchased 150,000 shares at an average price of $25.41, for an aggregate cost of $3.8 million. During the nine months ended September 30, 2022, the Corporation repurchased 450,000 shares at an average price of $25.29, for an aggregate cost of $11.4 million. As of September 30, 2022, the Corporation has 229,174 shares remaining to repurchase under the program that was approved on May 27, 2015. On October 26, 2022, the Corporation’s Board of Directors approved an increase of 1,000,000 in the shares available for repurchase under the Corporation’s share repurchase program.

Dividend
On October 26, 2022, Univest declared a quarterly cash dividend of $0.21 per share to be paid on November 23, 2022 to shareholders of record as of November 9, 2022.

Conference Call
Univest will host a conference call to discuss third quarter 2022 results on Thursday, October 27, 2022 at 9:00 a.m. EDT. Participants may preregister at https://www.netroadshow.com/events/login?show=7205620b&confId=42951. The general public can access the call by dialing 1-844-200-6205; using Access Code 478630. A replay of the conference call will be available through November 24, 2022 by dialing 1-866-813-9403; using Access Code: 211821.

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 $6.9 billion in assets and $4.0 billion in assets under management and supervision through its Wealth Management lines of business at September 30, 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, business or strategies 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/or changes in interest rates, which may adversely impact our margins and yields, reduce the fair value of our financial instruments, reduce our loan originations or lead to higher operating costs; (3) changes in asset quality, prepayment speeds, loan sale volumes, charge-offs and/or 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; (7) technological issues that may adversely affect our operations or those of our customers; (8) changes in the securities markets; (9) the continuing effects resulting from the COVID-19 pandemic on our business and results of operation; (10) the current or anticipated impact of military conflict, terrorism or other geopolitical events; and/or (11) risk factors mentioned in the reports and registration statements Univest files with the Securities and Exchange Commission.

(UVSP - ER)

 
Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
September 30, 2022
(Dollars in thousands)                            
                             
Balance Sheet (Period End)   09/30/22   06/30/22   03/31/22   12/31/21   09/30/21        
ASSETS                            
Cash and due from banks   $ 65,859     $ 59,590     $ 57,307     $ 49,202     $ 67,517          
Interest-earning deposits with other banks     47,451       35,187       716,474       840,948       834,840          
Cash and cash equivalents     113,310       94,777       773,781       890,150       902,357          
Investment securities held-to-maturity     159,170       159,808       166,339       176,983       112,643          
Investment securities available for sale, net of allowance for credit losses     347,479       351,382       349,994       317,007       277,773          
Investments in equity securities     2,994       2,934       2,569       2,999       2,961          
Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost     29,475       29,116       26,330       28,186       28,679          
Loans held for sale     9,087       8,352       14,521       21,600       29,093          
Loans and leases held for investment     5,849,259       5,661,777       5,400,786       5,310,017       5,252,045          
Less: Allowance for credit losses, loans and leases     (74,929 )     (72,011 )     (68,286 )     (71,924 )     (70,146 )        
Net loans and leases held for investment     5,774,330       5,589,766       5,332,500       5,238,093       5,181,899          
Premises and equipment, net     50,533       50,080       50,429       56,882       55,354          
Operating lease right-of-use assets     30,654       30,929       30,498       30,407       31,570          
Goodwill     175,510       175,510       175,510       175,510       172,559          
Other intangibles, net of accumulated amortization     11,650       11,728       11,784       11,848       9,359          
Bank owned life insurance     120,035       120,103       119,398       118,699       117,981          
Accrued interest and other assets     83,170       76,328       54,087       54,057       57,624          
Total assets   $ 6,907,397     $ 6,700,813     $ 7,107,740     $ 7,122,421     $ 6,979,852          
                             
LIABILITIES                            
Noninterest-bearing deposits   $ 1,968,422     $ 2,062,538     $ 2,136,467     $ 2,065,423     $ 1,861,007          
Interest-bearing deposits:     3,818,554       3,500,510       3,911,465       3,989,701       4,077,147          
Total deposits     5,786,976       5,563,048       6,047,932       6,055,124       5,938,154          
Short-term borrowings     80,711       97,606       18,976       20,106       14,101          
Long-term debt     95,000       95,000       95,000       95,000       95,000          
Subordinated notes     99,107       99,030       98,952       98,874       98,797          
Operating lease liabilities     33,718       33,951       33,566       33,453       34,641          
Accrued expenses and other liabilities     57,698       48,253       39,459       46,070       43,136          
Total liabilities     6,153,210       5,936,888       6,333,885       6,348,627       6,223,829          
                             
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     299,791       298,800       297,945       299,181       298,033          
Retained earnings     410,942       396,295       389,332       375,124       363,607          
Accumulated other comprehensive loss, net of tax benefit     (64,985 )     (42,781 )     (31,909 )     (16,353 )     (20,073 )        
Treasury stock, at cost     (49,345 )     (46,173 )     (39,297 )     (41,942 )     (43,328 )        
Total shareholders’ equity     754,187       763,925       773,855       773,794       756,023          
Total liabilities and shareholders’ equity   $ 6,907,397     $ 6,700,813     $ 7,107,740     $ 7,122,421     $ 6,979,852          
                             
                             
    For the three months ended,   For the nine months ended,
Balance Sheet (Average)   09/30/22   06/30/22   03/31/22   12/31/21   09/30/21   09/30/22   09/30/21
Assets   $ 6,797,466     $ 6,962,401     $ 7,047,980     $ 7,088,289     $ 6,698,177     $ 6,935,031   $ 6,509,576
Investment securities, net of allowance for credit losses     517,335       515,741       522,128       469,588       395,280       518,383     385,192
Loans and leases, gross     5,752,119       5,520,580       5,344,698       5,255,279       5,320,411       5,540,624     5,345,119
Deposits     5,645,291       5,903,173       5,984,815       6,041,798       5,666,725       5,843,182     5,439,345
Shareholders' equity     773,099       771,410       774,358       762,334       746,185       772,951     725,061

 

 
Univest Financial Corporation
Consolidated Summary of Loans by Type and Asset Quality Data (Unaudited)
September 30, 2022
(Dollars in thousands)                            
                             
Summary of Major Loan and Lease Categories (Period End)   09/30/22   06/30/22   03/31/22   12/31/21   09/30/21        
Commercial, financial and agricultural   $ 1,052,733     $ 1,028,354     $ 932,485     $ 956,396     $ 927,015          
Paycheck Protection Program     2,207       5,358       10,298       31,748       85,601          
Real estate-commercial     2,936,204       2,870,286       2,816,737       2,718,535       2,669,898          
Real estate-construction     329,915       319,449       285,083       283,918       260,874          
Real estate-residential secured for business purpose     443,837       419,652       412,486       409,900       412,001          
Real estate-residential secured for personal purpose     685,771       629,144       568,735       540,566       535,705          
Real estate-home equity secured for personal purpose     175,843       168,536       160,134       158,909       159,029          
Loans to individuals     26,679       27,061       26,249       25,504       26,458          
Lease financings     196,070       193,937       188,579       184,541       175,464          
Total loans and leases held for investment, net of deferred income     5,849,259       5,661,777       5,400,786       5,310,017       5,252,045          
Less: Allowance for credit losses, loans and leases     (74,929 )     (72,011 )     (68,286 )     (71,924 )     (70,146 )        
Net loans and leases held for investment   $ 5,774,330     $ 5,589,766     $ 5,332,500     $ 5,238,093     $ 5,181,899          
                             
                             
Asset Quality Data (Period End)   09/30/22   06/30/22   03/31/22   12/31/21   09/30/21        
Nonaccrual loans and leases, including nonaccrual troubled debt restructured loans and leases   $ 13,620     $ 13,355     $ 30,876     $ 33,210     $ 34,528          
Accruing loans and leases 90 days or more past due     416       2,784       274       498       2,204          
Accruing troubled debt restructured loans and leases     50       50       51       51       51          
Total nonperforming loans and leases     14,086       16,189       31,201       33,759       36,783          
Other real estate owned     18,960       18,604       279       279       279          
Total nonperforming assets   $ 33,046     $ 34,793     $ 31,480     $ 34,038     $ 37,062          
Nonaccrual loans and leases / Loans and leases held for investment     0.23 %     0.24 %     0.57 %     0.63 %     0.66 %        
Nonperforming loans and leases / Loans and leases held for investment     0.24 %     0.29 %     0.58 %     0.64 %     0.70 %        
Nonperforming assets / Total assets     0.48 %     0.52 %     0.44 %     0.48 %     0.53 %        
                             
Allowance for credit losses, loans and leases   $ 74,929     $ 72,011     $ 68,286     $ 71,924     $ 70,146          
Allowance for credit losses, loans and leases / Loans and leases held for investment     1.28 %     1.27 %     1.26 %     1.35 %     1.34 %        
Allowance for credit losses, loans and leases / Loans and leases held for investment, excluding Paycheck Protection Program loans (1)     1.28 %     1.27 %     1.27 %     1.36 %     1.36 %        
Allowance for credit losses, loans and leases / Nonaccrual loans and leases held for investment     550.14 %     539.21 %     221.16 %     216.57 %     203.16 %        
Allowance for credit losses, loans and leases / Nonperforming loans and leases held for investment     531.94 %     444.81 %     218.86 %     213.05 %     190.70 %        
                             
    For the three months ended,   For the nine months ended,
    09/30/22   06/30/22   03/31/22   12/31/21   09/30/21   09/30/22   09/30/21
Net loan and lease charge-offs (recoveries)   $ 1,196     $ 1,715     $ 76     $ (243 )   $ (75 )   $ 2,987     $ 456  
Net loan and lease charge-offs (recoveries) (annualized)/Average loans and leases     0.08 %     0.12 %     0.01 %     (0.02 %)     (0.01 %)     0.07 %     0.01 %
                             
(1) Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included at the end of this document.  
                             

 

Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
September 30, 2022
(Dollars in thousands, except per share data)                            
    For the three months ended,   For the nine months ended,
For the period:   09/30/22   06/30/22   03/31/22   12/31/21   09/30/21   09/30/22   09/30/21
Interest income   $ 66,877   $ 56,717   $ 51,198     $ 52,262   $ 53,571     $ 174,792   $ 157,469  
Interest expense     8,627     5,246     4,538       4,737     4,884       18,411     16,611  
Net interest income     58,250     51,471     46,660       47,525     48,687       156,381     140,858  
Provision (reversal of provision) for credit losses     3,558     6,674     (3,450 )     1,392     (182 )     6,782     (11,524 )
Net interest income after provision for credit losses     54,692     44,797     50,110       46,133     48,869       149,599     152,382  
Noninterest income:                            
Trust fee income     1,835     1,998     2,102       2,086     2,126       5,935     6,317  
Service charges on deposit accounts     1,522     1,574     1,504       1,486     1,422       4,600     4,018  
Investment advisory commission and fee income     4,199     4,812     5,152       4,885     4,796       14,163     14,051  
Insurance commission and fee income     4,442     4,629     5,570       3,726     3,837       14,641     12,631  
Other service fee income     3,124     3,309     2,756       2,759     2,576       9,189     7,516  
Bank owned life insurance income     1,153     705     699       719     925       2,557     3,262  
Net gain on sales of investment securities     -     -     30       5     21       30     140  
Net gain on mortgage banking activities     817     1,230     1,929       2,518     3,224       3,976     12,623  
Other income     867     741     728       1,008     1,625       2,336     3,474  
Total noninterest income     17,959     18,998     20,470       19,192     20,552       57,427     64,032  
Noninterest expense:                            
Salaries, benefits and commissions     29,400     29,133     28,245       27,374     26,641       86,778     76,817  
Net occupancy     2,504     2,422     2,716       2,477     2,525       7,642     7,920  
Equipment     968     977     982       985     1,000       2,927     2,914  
Data processing     3,901     3,708     3,567       3,355     3,274       11,176     9,388  
Professional fees     2,521     2,844     2,138       1,750     2,174       7,503     5,937  
Marketing and advertising     605     693     425       683     539       1,723     1,380  
Deposit insurance premiums     662     812     893       698     765       2,367     2,014  
Intangible expenses     309     342     341       267     214       992     712  
Other expense     5,795     6,440     6,105       5,746     6,116       18,340     16,992  
Total noninterest expense     46,665     47,371     45,412       43,335     43,248       139,448     124,074  
Income before taxes     25,986     16,424     25,168       21,990     26,173       67,578     92,340  
Income tax expense     5,185     3,258     4,851       4,578     5,262       13,294     17,951  
Net income   $ 20,801   $ 13,166   $ 20,317     $ 17,412   $ 20,911     $ 54,284   $ 74,389  
Net income per share:                            
Basic   $ 0.71   $ 0.45   $ 0.69     $ 0.59   $ 0.71     $ 1.85   $ 2.53  
Diluted   $ 0.71   $ 0.45   $ 0.68     $ 0.59   $ 0.71     $ 1.84   $ 2.52  
Dividends declared per share   $ 0.21   $ 0.21   $ 0.20     $ 0.20   $ 0.20     $ 0.62   $ 0.60  
Weighted average shares outstanding     29,290,829     29,490,154     29,542,467       29,471,304     29,420,256       29,440,228     29,379,774  
Period end shares outstanding     29,242,451     29,365,775     29,636,425       29,500,542     29,438,402       29,242,451     29,438,402  
                             

 

Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
September 30, 2022
                             
                             
                             
    For the three months ended,   For the nine months ended,
Profitability Ratios (annualized)   09/30/22   06/30/22   03/31/22   12/31/21   09/30/21   09/30/22   09/30/21
                             
Return on average assets     1.21 %     0.76 %     1.17 %     0.97 %     1.24 %     1.05 %     1.53 %
Return on average shareholders' equity     10.67 %     6.85 %     10.64 %     9.06 %     11.12 %     9.39 %     13.72 %
Return on average tangible common equity (1)(3)     14.06 %     9.10 %     14.04 %     11.93 %     14.63 %     12.40 %     18.21 %
Net interest margin (FTE)     3.67 %     3.19 %     2.89 %     2.86 %     3.11 %     3.25 %     3.13 %
Efficiency ratio (2)     60.6 %     66.6 %     67.0 %     64.3 %     61.8 %     64.6 %     59.8 %
                             
Capitalization Ratios                            
                             
Dividends declared to net income     29.7 %     47.1 %     29.1 %     33.9 %     28.1 %     33.7 %     23.7 %
Shareholders' equity to assets (Period End)     10.92 %     11.40 %     10.89 %     10.86 %     10.83 %     10.92 %     10.83 %
Tangible common equity to tangible assets (1)     8.55 %     8.97 %     8.58 %     8.56 %     8.55 %     8.55 %     8.55 %
Common equity book value per share   $ 25.79     $ 26.01     $ 26.11     $ 26.23     $ 25.68     $ 25.79     $ 25.68  
Tangible common equity book value per share (1)   $ 19.67     $ 19.91     $ 20.06     $ 20.14     $ 19.75     $ 19.67     $ 19.75  
                             
Regulatory Capital Ratios (Period End)                            
Tier 1 leverage ratio     9.87 %     9.45 %     9.35 %     9.13 %     9.53 %     9.87 %     9.53 %
Common equity tier 1 risk-based capital ratio     10.51 %     10.62 %     11.07 %     11.08 %     11.15 %     10.51 %     11.15 %
Tier 1 risk-based capital ratio     10.51 %     10.62 %     11.07 %     11.08 %     11.15 %     10.51 %     11.15 %
Total risk-based capital ratio     13.10 %     13.23 %     13.73 %     13.77 %     13.87 %     13.10 %     13.87 %
                             
(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 September 30, 2022   June 30, 2022  
  Average Income/ Average   Average Income/ Average  
(Dollars in thousands) Balance Expense Rate   Balance Expense Rate  
Assets:                
Interest-earning deposits with other banks $ 49,476   $ 252 2.02 % $ 474,260   $ 824 0.70 %
U.S. government obligations   565     3 2.11     2,000     11 2.21  
Obligations of state and political subdivisions*   2,308     18 3.09     2,302     17 2.96  
Other debt and equity securities   514,462     3,010 2.32     511,439     2,727 2.14  
Federal Home Loan Bank, Federal Reserve Bank and other stock   28,368     435 6.08     26,221     344 5.26  
Total interest-earning deposits, investments and other interest-earning assets   595,179     3,718 2.48     1,016,222     3,923 1.55  
                 
Commercial, financial, and agricultural loans   977,549     11,996 4.87     937,846     9,037 3.86  
Paycheck Protection Program loans   3,754     40 4.23     7,644     155 8.13  
Real estate—commercial and construction loans   3,105,821     34,100 4.36     3,004,509     28,527 3.81  
Real estate—residential loans   1,256,509     12,492 3.94     1,166,201     10,758 3.70  
Loans to individuals   27,197     381 5.56     26,782     305 4.57  
Municipal loans and leases *   235,433     2,432 4.10     235,922     2,404 4.09  
Lease financings   145,856     2,195 5.97     141,676     2,105 5.96  
Gross loans and leases   5,752,119     63,636 4.39     5,520,580     53,291 3.87  
Total interest-earning assets   6,347,298     67,354 4.21     6,536,802     57,214 3.51  
Cash and due from banks   62,930           55,634        
Allowance for credit losses, loans and leases   (72,355 )         (68,426 )      
Premises and equipment, net   50,476           50,266        
Operating lease right-of-use assets   30,740           30,222        
Other assets   378,377           357,903        
Total assets $ 6,797,466         $ 6,962,401        
                 
Liabilities:                
Interest-bearing checking deposits $ 881,395   $ 1,251 0.56 % $ 851,324   $ 570 0.27 %
Money market savings   1,246,795     3,709 1.18     1,405,536     1,552 0.44  
Regular savings   1,086,191     302 0.11     1,070,480     237 0.09  
Time deposits   416,539     1,189 1.13     452,989     1,227 1.09  
Total time and interest-bearing deposits   3,630,920     6,451 0.70     3,780,329     3,586 0.38  
                 
Short-term borrowings   104,453     524 1.99     17,253     11 0.26  
Long-term debt   95,000     324 1.35     95,000     321 1.36  
Subordinated notes   99,065     1,328 5.32     98,988     1,328 5.38  
Total borrowings   298,518     2,176 2.89     211,241     1,660 3.15  
Total interest-bearing liabilities   3,929,438     8,627 0.87     3,991,570     5,246 0.53  
Noninterest-bearing deposits   2,014,371           2,122,844        
Operating lease liabilities   33,786           33,300        
Accrued expenses and other liabilities   46,772           43,277        
Total liabilities   6,024,367           6,190,991        
                 
Shareholders' Equity:                
Common stock   157,784           157,784        
Additional paid-in capital   299,135           298,241        
Retained earnings and other equity   316,180           315,385        
Total shareholders' equity   773,099           771,410        
Total liabilities and shareholders' equity $ 6,797,466         $ 6,962,401        
Net interest income       $ 58,727       $ 51,968    
                 
Net interest spread     3.34       2.98  
Effect of net interest-free funding sources     0.33       0.21  
Net interest margin     3.67 %     3.19 %
Ratio of average interest-earning assets to average interest-bearing liabilities   161.53 %         163.77 %      
                 
* 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 of $(498) thousand and $(618) thousand for the three months ended September 30, 2022 and June 30, 2022, 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 September 30, 2022 and June 30, 2022 have been calculated using the Corporation’s federal applicable rate of 21.0%. 
                 

 

Univest Financial Corporation  
Average Balances and Interest Rates (Unaudited)  
    For the Three Months Ended September 30,      
Tax Equivalent Basis   2022     2021    
  Average Income/ Average   Average Income/ Average  
(Dollars in thousands) Balance Expense Rate   Balance Expense Rate  
Assets:                
Interest-earning deposits with other banks $ 49,476   $ 252 2.02 % $ 530,191   $ 189 0.14 %
U.S. government obligations   565     3 2.11     6,999     36 2.04  
Obligations of state and political subdivisions*   2,308     18 3.09     2,992     24 3.18  
Other debt and equity securities   514,462     3,010 2.32     385,289     1,516 1.56  
Federal Home Loan Bank, Federal Reserve Bank and other stock   28,368     435 6.08     26,713     334 4.96  
Total interest-earning deposits, investments and other interest-earning assets   595,179     3,718 2.48     952,184     2,099 0.87  
                 
Commercial, financial, and agricultural loans   977,549     11,996 4.87     880,986     7,412 3.34  
Paycheck Protection Program loans   3,754     40 4.23     162,611     4,162 10.15  
Real estate—commercial and construction loans   3,105,821     34,100 4.36     2,784,398     25,634 3.65  
Real estate—residential loans   1,256,509     12,492 3.94     1,100,799     10,171 3.67  
Loans to individuals   27,197     381 5.56     26,048     253 3.85  
Municipal loans and leases*   235,433     2,432 4.10     247,603     2,504 4.01  
Lease financings   145,856     2,195 5.97     117,966     1,856 6.24  
Gross loans and leases   5,752,119     63,636 4.39     5,320,411     51,992 3.88  
Total interest-earning assets   6,347,298     67,354 4.21     6,272,595     54,091 3.42  
Cash and due from banks   62,930           59,642        
Allowance for credit losses, loans and leases   (72,355 )         (72,606 )      
Premises and equipment, net   50,476           55,685        
Operating lease right-of-use assets   30,740           31,998        
Other assets   378,377           350,863        
Total assets $ 6,797,466         $ 6,698,177        
                 
Liabilities:                
Interest-bearing checking deposits $ 881,395   $ 1,251 0.56 % $ 857,098   $ 537 0.25 %
Money market savings   1,246,795     3,709 1.18     1,382,832     922 0.26  
Regular savings   1,086,191     302 0.11     998,568     281 0.11  
Time deposits   416,539     1,189 1.13     496,702     1,490 1.19  
Total time and interest-bearing deposits   3,630,920     6,451 0.70     3,735,200     3,230 0.34  
                 
Short-term borrowings   104,453     524 1.99     15,116     2 0.05  
Long-term debt   95,000     324 1.35     95,000     324 1.35  
Subordinated notes   99,065     1,328 5.32     98,754     1,328 5.34  
Total borrowings   298,518     2,176 2.89     208,870     1,654 3.14  
Total interest-bearing liabilities   3,929,438     8,627 0.87     3,944,070     4,884 0.49  
Noninterest-bearing deposits   2,014,371           1,931,525        
Operating lease liabilities   33,786           35,094        
Accrued expenses and other liabilities   46,772           41,303        
Total liabilities   6,024,367           5,951,992        
                 
Shareholders' Equity:                
Common stock   157,784           157,784        
Additional paid-in capital   299,135           297,482        
Retained earnings and other equity   316,180           290,919        
Total shareholders' equity   773,099           746,185        
Total liabilities and shareholders' equity $ 6,797,466         $ 6,698,177        
Net interest income       $ 58,727       $ 49,207    
                 
Net interest spread     3.34       2.93  
Effect of net interest-free funding sources     0.33       0.18  
Net interest margin     3.67 %     3.11 %
Ratio of average interest-earning assets to average interest-bearing liabilities   161.53 %         159.04 %      
                 
* 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 $(498) thousand and $3.0 million for the three months ended September 30, 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 September 30, 2022 and 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 Nine Months Ended September 30,    
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 $ 416,466   $ 1,433 0.46 % $ 328,768   $ 291 0.12 %
U.S. government obligations   2,578     40 2.07     6,999     107 2.04  
Obligations of state and political subdivisions*   2,314     54 3.12     6,838     187 3.66  
Other debt and equity securities   513,491     8,076 2.10     371,355     4,147 1.49  
Federal Home Loan Bank, Federal Reserve Bank and other stock   27,239     1,134 5.57     26,319     1,042 5.29  
Total interest-earning deposits, investments and other interest-earning assets   962,088     10,737 1.49     740,279     5,774 1.04  
                 
Commercial, financial, and agricultural loans   939,261     28,604 4.07     830,248     21,120 3.40  
Paycheck Protection Program loans   9,880     786 10.64     358,231     13,464 5.03  
Real estate—commercial and construction loans   3,005,714     88,447 3.93     2,703,100     75,023 3.71  
Real estate—residential loans   1,180,202     33,132 3.75     1,067,855     29,880 3.74  
Loans to individuals   26,598     924 4.64     25,925     769 3.97  
Municipal loans and leases*   237,928     7,270 4.09     248,191     7,632 4.11  
Lease financings   141,041     6,375 6.04     111,569     5,412 6.49  
Gross loans and leases   5,540,624     165,538 3.99     5,345,119     153,300 3.83  
Total interest-earning assets   6,502,712     176,275 3.62     6,085,398     159,074 3.49  
Cash and due from banks   57,455           55,983        
Allowance for credit losses, loans and leases   (70,950 )         (76,265 )      
Premises and equipment, net   51,551           55,803        
Operating lease right-of-use assets   30,453           33,334        
Other assets   363,810           355,323        
Total assets $ 6,935,031         $ 6,509,576        
                 
Liabilities:                
Interest-bearing checking deposits $ 871,393   $ 2,264 0.35 % $ 820,800   $ 1,514 0.25 %
Money market savings   1,397,220     6,165 0.59     1,282,470     2,606 0.27  
Regular savings   1,059,644     777 0.10     979,013     861 0.12  
Time deposits   447,497     3,722 1.11     502,414     4,808 1.28  
Total time and interest-bearing deposits   3,775,754     12,928 0.46     3,584,697     9,789 0.37  
                 
Short-term borrowings   46,765     537 1.54     17,363     7 0.05  
Long-term debt   95,000     962 1.35     97,088     993 1.37  
Subordinated notes   98,989     3,984 5.38     151,060     5,822 5.15  
Total borrowings   240,754     5,483 3.04     265,511     6,822 3.44  
Total interest-bearing liabilities   4,016,508     18,411 0.61     3,850,208     16,611 0.58  
Noninterest-bearing deposits   2,067,428           1,854,648        
Operating lease liabilities   33,514           36,636        
Accrued expenses and other liabilities   44,630           43,023        
Total liabilities   6,162,080           5,784,515        
                 
Shareholders' Equity:                
Common stock   157,784           157,784        
Additional paid-in capital   298,784           296,744        
Retained earnings and other equity   316,383           270,533        
Total shareholders' equity   772,951           725,061        
Total liabilities and shareholders' equity $ 6,935,031         $ 6,509,576        
Net interest income       $ 157,864       $ 142,463    
                 
Net interest spread     3.01       2.91  
Effect of net interest-free funding sources     0.24       0.22  
Net interest margin     3.25 %     3.13 %
Ratio of average interest-earning assets to average interest-bearing liabilities   161.90 %         158.05 %      
                 
* 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 $(1.3) million and $8.0 million for the nine months ended September 30, 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 nine months ended September 30, 2022 and 2021 have been calculated using the Corporation’s federal applicable rate of 21.0%.
   

 

Univest Financial Corporation  
Loan Portfolio Overview (Unaudited)  
September 30, 2022  
             
(Dollars in thousands)            
Industry Description   Total Outstanding Balance
(excl PPP)
  % of Commercial Loan
Portfolio
   
CRE - Retail $ 378,087   7.9 %  
Animal Production   332,130   7.0    
CRE - Multi-family   263,698   5.5    
CRE - 1-4 Family Residential Investment   249,149   5.2    
CRE - Office   201,659   4.2    
CRE - Industrial / Warehouse   185,952   3.9    
Hotels & Motels (Accommodation)   170,627   3.6    
Nursing and Residential Care Facilities   168,576   3.5    
Education   155,122   3.3    
Specialty Trade Contractors   147,227   3.1    
Homebuilding (tract developers, remodelers)   133,902   2.8    
Motor Vehicle and Parts Dealers   113,639   2.4    
Merchant Wholesalers, Durable Goods   108,825   2.3    
CRE - Medical Office   105,744   2.2    
CRE - Mixed-Use - Residential   105,702   2.2    
Crop Production   91,597   1.9    
CRE - Mixed-Use - Commercial   85,172   1.8    
Food Manufacturing   84,131   1.8    
Wood Product Manufacturing   75,768   1.6    
Rental and Leasing Services   74,514   1.6    
Administrative and Support Services   73,558   1.5    
Religious Organizations, Advocacy Groups   73,091   1.5    
Merchant Wholesalers, Nondurable Goods   70,679   1.5    
Food Services and Drinking Places   70,498   1.5    
Personal and Laundry Services   60,651   1.3    
Fabricated Metal Product Manufacturing   56,640   1.2    
Repair and Maintenance   56,623   1.2    
Miniwarehouse / Self-Storage   56,279   1.2    
Truck Transportation   50,969   1.1    
Industries with >$50 million in outstandings $ 3,800,209   79.8 %  
Industries with <$50 million in outstandings $ 962,480   20.2 %  
Total Commercial Loans $ 4,762,689   100.0 %  
             
             
Consumer Loans and Lease Financings   Total Outstanding Balance        
Real Estate-Residential Secured for Personal Purpose $ 685,771        
Real Estate-Home Equity Secured for Personal Purpose   175,843        
Loans to Individuals   26,679        
Lease Financings   196,070        
Total - Consumer Loans and Lease Financings $ 1,084,363        
             
Total $ 5,847,052        
             

 

Univest Financial Corporation
Non-GAAP Reconciliation
September 30, 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.
                             
    As of or for the three months ended,   As of or for the nine months ended,
(Dollars in thousands) 09/30/22   06/30/22   03/31/22   12/31/21   09/30/21   09/30/22   09/30/21
Net income $ 20,801     $ 13,166     $ 20,317     $ 17,412     $ 20,911     $ 54,284     $ 74,389  
Amortization of intangibles, net of tax   244       270       269       211       169       784       562  
Net income before amortization of intangibles $ 21,045     $ 13,436     $ 20,586     $ 17,623     $ 21,080     $ 55,068     $ 74,951  
                             
Shareholders' equity $ 754,187     $ 763,925     $ 773,855     $ 773,794     $ 756,023     $ 754,187     $ 756,023  
Goodwill   (175,510 )     (175,510 )     (175,510 )     (175,510 )     (172,559 )     (175,510 )     (172,559 )
Other intangibles (a)     (3,485 )     (3,678 )     (3,936 )     (4,210 )     (1,922 )     (3,485 )     (1,922 )
Tangible common equity $ 575,192     $ 584,737     $ 594,409     $ 594,074     $ 581,542     $ 575,192     $ 581,542  
                             
Total assets $ 6,907,397     $ 6,700,813     $ 7,107,740     $ 7,122,421     $ 6,979,852     $ 6,907,397     $ 6,979,852  
Goodwill   (175,510 )     (175,510 )     (175,510 )     (175,510 )     (172,559 )     (175,510 )     (172,559 )
Other intangibles (a)     (3,485 )     (3,678 )     (3,936 )     (4,210 )     (1,922 )     (3,485 )     (1,922 )
Tangible assets $ 6,728,402     $ 6,521,625     $ 6,928,294     $ 6,942,701     $ 6,805,371     $ 6,728,402     $ 6,805,371  
                             
Average shareholders' equity $ 773,099     $ 771,410     $ 774,358     $ 762,334     $ 746,185     $ 772,951     $ 725,061  
Average goodwill   (175,510 )     (175,510 )     (175,510 )     (173,553 )     (172,559 )     (175,510 )     (172,559 )
Average other intangibles (a)     (3,550 )     (3,791 )     (4,090 )     (2,696 )     (1,983 )     (3,808 )     (2,217 )
Average tangible common equity $ 594,039     $ 592,109     $ 594,758     $ 586,085     $ 571,643     $ 593,633     $ 550,285  
                             
Loans and leases held for investment, gross $ 5,849,259     $ 5,661,777     $ 5,400,786     $ 5,310,017     $ 5,252,045     $ 5,849,259     $ 5,252,045  
Paycheck Protection Program ("PPP") loans     (2,207 )     (5,358 )     (10,298 )     (31,748 )     (85,601 )     (2,207 )     (85,601 )
Gross loans and leases excluding PPP loans $ 5,847,052     $ 5,656,419     $ 5,390,488     $ 5,278,269     $ 5,166,444     $ 5,847,052     $ 5,166,444  
                             
(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