SOUDERTON, Pa., April 26, 2023 (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, announced net income for the quarter ended March 31, 2023 was $21.0 million, or $0.71 diluted earnings per share, compared to net income of $20.3 million, or $0.68 diluted earnings per share, for the quarter ended March 31, 2022.
Loans
Gross loans and leases increased $116.6 million, or 1.9% (7.6% annualized), from December 31, 2022, primarily due to increases in commercial real estate, residential mortgage loans, and lease financings. Gross loans and leases increased $839.0 million, or 15.5%, from March 31, 2022, primarily due to increases in commercial, commercial real estate, construction, residential mortgage loans, and lease financings.
Deposits and Liquidity
Total deposits decreased $78.9 million, or 1.3% (5.2% annualized), from December 31, 2022, primarily due to decreases in commercial and consumer deposits partially offset by increases in public funds and brokered deposits. Total deposits decreased $213.3 million, or 3.5%, from March 31, 2022, primarily due to decreases in commercial and consumer deposits partially offset by increases in public funds and brokered deposits. While we experienced certain expected outflows during the quarter, we saw net deposit inflows of $81.1 million during the month of March. Noninterest-bearing deposits represented 30.8% of total deposits at March 31, 2023, down from 34.6% at December 31, 2022. At March 31, 2023, uninsured deposits, adjusted to exclude internal accounts and collateralized trust and public funds deposit accounts, represented 27.2% of total deposits.
The Corporation and its subsidiaries had committed borrowing capacity of $3.1 billion at March 31, 2023, of which $1.9 billion was available. The Corporation and its subsidiaries also maintained uncommitted funding sources from correspondent banks of $410.0 million at March 31, 2023, of which $320.0 million was available. Future availability under these uncommitted funding sources is subject to the prerogatives of the granting banks and may be withdrawn at will.
Net Interest Income and Margin
Net interest income of $59.3 million for the first quarter of 2023 increased $12.7 million, or 27.1%, from the first quarter of 2022 and decreased $2.6 million, or 4.2%, from the fourth quarter of 2022. The increase in net interest income for the first quarter of 2023 compared to the first quarter of 2022 was largely due to significant loan balance growth and an increase in asset yields, offset by increases in the average balance of borrowings and the cost of funds.
Net interest margin, on a tax-equivalent basis, was 3.58% for the first quarter of 2023, compared to 3.76% for the fourth quarter of 2022 and 2.89% for the first quarter of 2022. Excess liquidity had no impact on net interest margin for the quarter ended March 31, 2023. Excess liquidity reduced net interest margin by approximately one basis point for the quarter ended December 31, 2022 and 33 basis points for the quarter ended March 31, 2022. Excluding the impact of excess liquidity, the net interest margin, on a tax-equivalent basis, was 3.77% for the quarter ended December 31, 2022 and 3.22% for the quarter ended March 31, 2022.
Noninterest Income
Noninterest income for the quarter ended March 31, 2023 was $19.7 million, a decrease of $790 thousand, or 3.9%, from the comparable period in the prior year.
Net gain on mortgage banking activities decreased $1.3 million, or 67.6%, for the quarter primarily due to a decrease in loan sales and a contraction of gain on sale margins due to the higher interest rate environment in 2023. Investment advisory commission and fee income decreased $400 thousand, or 7.8%, for the quarter ended March 31, 2023, primarily driven by reduced assets under management and supervision due to market volatility.
Insurance commission and fee income increased $917 thousand, or 16.5%, for the quarter ended March 31, 2023, primarily due to increases in premiums for group life and health and commercial lines and an increase in contingent commission income of $651 thousand, which was $1.8 million and $1.2 million for the quarters ended March 31, 2023 and 2022, respectively. Contingent income is largely recognized in the first quarter of the year.
Noninterest Expense
Noninterest expense for the quarter ended March 31, 2023 was $49.5 million, an increase of $4.1 million, or 9.1%, from the comparable period in the prior year.
Salaries, benefits and commissions increased $2.8 million, or 9.8%, for the quarter ended March 31, 2023. This increase reflects our expansion into Maryland and Western Pennsylvania and annual merit increases. Additionally, capitalized compensation decreased by $480 thousand due to reduced loan production.
Data processing expenses increased $462 thousand, or 13.0%, for the quarter ended March 31, 2023, primarily due to our investments in technology in recent years and general price increases incurred in the second half of 2022. Other expense increased $1.0 million, or 16.3%, for the quarter ended March 31, 2023, primarily due to increases in retirement plan costs of $407 thousand, which was primarily driven by the current interest rate environment, and Bank Shares tax expense of $110 thousand driven by year over year growth of the Bank's Shareholders' Equity.
Tax Provision
The effective income tax rate was 19.4% for the quarter ended March 31, 2023, compared to an effective income tax rate of 19.3% for the quarter ended March 31, 2022, which were favorably impacted by 7 and 8 basis points, respectively, of discrete tax benefits resulting from equity compensation awards vesting in the respective quarters. Additionally, the effective tax rates for the three months ended March 31, 2023 and 2022 reflected the benefits of tax-exempt income from investments in municipal securities and loans and leases.
Asset Quality and Provision for Credit Losses
Nonperforming assets were $32.4 million at March 31, 2023, compared to $33.5 million at December 31, 2022 and $31.4 million at March 31, 2022.
Net loan and lease charge-offs were $2.8 million during the first quarter of 2023 compared to $76 thousand for the quarter ended March 31, 2022. During the first quarter of 2023, $2.4 million of charge-offs were recorded against two existing nonaccrual commercial loans to one borrower. As of December 31, 2022, the allowance for credit losses included a $2.1 million specific reserve for this relationship.
The provision for credit losses was $3.4 million for the first quarter of 2023 compared to a reversal of provision for credit losses of $3.5 million for the quarter ended March 31, 2022. The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment was 1.28% at March 31, 2023 compared to 1.29% at December 31, 2022 and 1.26% at March 31, 2022.
Dividend
On April 26, 2023, Univest declared a quarterly cash dividend of $0.21 per share to be paid on May 24, 2023 to shareholders of record as of May 10, 2023.
Conference Call
Univest will host a conference call to discuss first quarter 2023 results on Thursday, April 27, 2023 at 9:00 a.m. EST. Participants may preregister at https://www.netroadshow.com/events/login'show=c7437c5e&confId=49225. The general public can access the call by dialing 1-833-470-1428; using Access Code 409762. A replay of the conference call will be available through May 27, 2023 by dialing 1-866-813-9403; using Access Code: 839460.
About Univest Financial Corporation
Univest Financial Corporation (UVSP), including its wholly-owned subsidiary Univest Bank and Trust Co., Member FDIC, has approximately $7.4 billion in assets and $4.3 billion in assets under management and supervision through its Wealth Management lines of business at March 31, 2023. 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, prospects 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 financial condition, results, business, prospects 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 liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio; (5) changes in economic conditions nationally and in our market; (6) economic assumptions that may impact our allowance for credit losses calculation; (7) legislative, regulatory, accounting or tax changes; (8) technological issues that may adversely affect our operations or those of our customers; (9) changes in the securities markets; (10) the continuing effects resulting from the COVID-19 pandemic on our business and results of operation; (11) the current or anticipated impact of military conflict, terrorism or other geopolitical events; (12) potential recessionary conditions and/or (13) 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) | ||||||||||||||||||||
| March 31, 2023 | ||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| Balance Sheet (Period End) | 03/31/23 | 12/31/22 | 09/30/22 | 06/30/22 | 03/31/22 | |||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and due from banks | $ | 71,215 | $ | 84,176 | $ | 65,859 | $ | 59,590 | $ | 57,307 | ||||||||||
| Interest-earning deposits with other banks | 67,109 | 68,623 | 47,451 | 35,187 | 716,474 | |||||||||||||||
| Cash and cash equivalents | 138,324 | 152,799 | 113,310 | 94,777 | 773,781 | |||||||||||||||
| Investment securities held-to-maturity | 151,347 | 154,727 | 159,170 | 159,808 | 166,339 | |||||||||||||||
| Investment securities available for sale, net of allowance for credit losses | 367,656 | 350,256 | 347,479 | 351,382 | 349,994 | |||||||||||||||
| Investments in equity securities | 3,105 | 2,579 | 2,994 | 2,934 | 2,569 | |||||||||||||||
| Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost | 43,792 | 33,841 | 29,475 | 29,116 | 26,330 | |||||||||||||||
| Loans held for sale | 5,425 | 5,037 | 9,087 | 8,352 | 14,521 | |||||||||||||||
| Loans and leases held for investment | 6,239,804 | 6,123,230 | 5,849,259 | 5,661,777 | 5,400,786 | |||||||||||||||
| Less: Allowance for credit losses, loans and leases | (80,034 | ) | (79,004 | ) | (74,929 | ) | (72,011 | ) | (68,286 | ) | ||||||||||
| Net loans and leases held for investment | 6,159,770 | - | 6,044,226 | 5,774,330 | 5,589,766 | 5,332,500 | ||||||||||||||
| Premises and equipment, net | 52,334 | 50,939 | 50,533 | 50,080 | 50,429 | |||||||||||||||
| Operating lease right-of-use assets | 31,663 | 30,059 | 30,654 | 30,929 | 30,498 | |||||||||||||||
| Goodwill | 175,510 | 175,510 | 175,510 | 175,510 | 175,510 | |||||||||||||||
| Other intangibles, net of accumulated amortization | 11,044 | 11,384 | 11,650 | 11,728 | 11,784 | |||||||||||||||
| Bank owned life insurance | 128,926 | 120,297 | 120,035 | 120,103 | 119,398 | |||||||||||||||
| Accrued interest and other assets | 90,095 | 90,362 | 83,170 | 76,328 | 54,087 | |||||||||||||||
| Total assets | $ | 7,358,991 | $ | 7,222,016 | $ | 6,907,397 | $ | 6,700,813 | $ | 7,107,740 | ||||||||||
| LIABILITIES | ||||||||||||||||||||
| Noninterest-bearing deposits | $ | 1,799,225 | $ | 2,047,263 | $ | 1,968,422 | $ | 2,062,538 | $ | 2,136,467 | ||||||||||
| Interest-bearing deposits: | 4,035,432 | 3,866,263 | 3,818,554 | 3,500,510 | 3,911,465 | |||||||||||||||
| Total deposits | 5,834,657 | 5,913,526 | 5,786,976 | 5,563,048 | 6,047,932 | |||||||||||||||
| Short-term borrowings | 271,881 | 197,141 | 80,711 | 97,606 | 18,976 | |||||||||||||||
| Long-term debt | 220,000 | 95,000 | 95,000 | 95,000 | 95,000 | |||||||||||||||
| Subordinated notes | 148,385 | 148,260 | 99,107 | 99,030 | 98,952 | |||||||||||||||
| Operating lease liabilities | 34,846 | 33,153 | 33,718 | 33,951 | 33,566 | |||||||||||||||
| Accrued expenses and other liabilities | 50,726 | 58,436 | 57,698 | 48,253 | 39,459 | |||||||||||||||
| Total liabilities | 6,560,495 | 6,445,516 | 6,153,210 | 5,936,888 | 6,333,885 | |||||||||||||||
| SHAREHOLDERS' 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 | 298,167 | 300,808 | 299,791 | 298,800 | 297,945 | |||||||||||||||
| Retained earnings | 443,493 | 428,637 | 410,942 | 396,295 | 389,332 | |||||||||||||||
| Accumulated other comprehensive loss, net of tax benefit | (55,550 | ) | (62,104 | ) | (64,985 | ) | (42,781 | ) | (31,909 | ) | ||||||||||
| Treasury stock, at cost | (45,398 | ) | (48,625 | ) | (49,345 | ) | (46,173 | ) | (39,297 | ) | ||||||||||
| Total shareholders' equity | 798,496 | 776,500 | 754,187 | 763,925 | 773,855 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 7,358,991 | $ | 7,222,016 | $ | 6,907,397 | $ | 6,700,813 | $ | 7,107,740 | ||||||||||
| For the three months ended, | ||||||||||||||||||||
| Balance Sheet (Average) | 03/31/23 | 12/31/22 | 09/30/22 | 06/30/22 | 03/31/22 | |||||||||||||||
| Assets | $ | 7,219,211 | $ | 7,019,381 | $ | 6,797,466 | $ | 6,962,401 | $ | 7,047,980 | ||||||||||
| Investment securities, net of allowance for credit losses | 515,880 | 505,717 | 517,335 | 515,741 | 522,128 | |||||||||||||||
| Loans and leases, gross | 6,164,890 | 5,979,581 | 5,752,119 | 5,520,580 | 5,344,698 | |||||||||||||||
| Deposits | 5,834,415 | 5,837,823 | 5,645,291 | 5,903,173 | 5,984,815 | |||||||||||||||
| Shareholders' equity | 789,153 | 767,192 | 773,099 | 771,410 | 774,358 | |||||||||||||||
| Univest Financial Corporation | ||||||||||||||||||||
| Consolidated Summary of Loans by Type and Asset Quality Data (Unaudited) | ||||||||||||||||||||
| March 31, 2023 | ||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| Summary of Major Loan and Lease Categories (Period End) | 03/31/23 | 12/31/22 | 09/30/22 | 06/30/22 | 03/31/22 | |||||||||||||||
| Commercial, financial and agricultural | $ | 1,032,753 | $ | 1,088,928 | $ | 1,054,940 | $ | 1,033,712 | $ | 942,783 | ||||||||||
| Real estate-commercial | 3,128,210 | 3,027,955 | 2,936,204 | 2,870,286 | 2,816,737 | |||||||||||||||
| Real estate-construction | 376,569 | 381,811 | 329,915 | 319,449 | 285,083 | |||||||||||||||
| Real estate-residential secured for business purpose | 498,505 | 478,254 | 443,837 | 419,652 | 412,486 | |||||||||||||||
| Real estate-residential secured for personal purpose | 779,557 | 730,395 | 685,771 | 629,144 | 568,735 | |||||||||||||||
| Real estate-home equity secured for personal purpose | 172,073 | 176,699 | 175,843 | 168,536 | 160,134 | |||||||||||||||
| Loans to individuals | 28,656 | 27,873 | 26,679 | 27,061 | 26,249 | |||||||||||||||
| Lease financings | 223,481 | 211,315 | 196,070 | 193,937 | 188,579 | |||||||||||||||
| Total loans and leases held for investment, net of deferred income | 6,239,804 | 6,123,230 | 5,849,259 | 5,661,777 | 5,400,786 | |||||||||||||||
| Less: Allowance for credit losses, loans and leases | (80,034 | ) | (79,004 | ) | (74,929 | ) | (72,011 | ) | (68,286 | ) | ||||||||||
| Net loans and leases held for investment | $ | 6,159,770 | $ | 6,044,226 | $ | 5,774,330 | $ | 5,589,766 | $ | 5,332,500 | ||||||||||
| Asset Quality Data (Period End) | 03/31/23 | 12/31/22 | 09/30/22 | 06/30/22 | 03/31/22 | |||||||||||||||
| Nonaccrual loans and leases | $ | 11,362 | $ | 13,353 | $ | 13,620 | $ | 13,355 | $ | 30,876 | ||||||||||
| Accruing loans and leases 90 days or more past due | 1,996 | 875 | 416 | 2,784 | 274 | |||||||||||||||
| Total nonperforming loans and leases | 13,358 | 14,228 | 14,036 | 16,189 | 31,201 | |||||||||||||||
| Other real estate owned | 19,000 | 19,258 | 18,960 | 18,604 | 279 | |||||||||||||||
| Total nonperforming assets | $ | 32,358 | $ | 33,486 | $ | 32,996 | $ | 34,793 | $ | 31,480 | ||||||||||
| Nonaccrual loans and leases / Loans and leases held for investment | 0.18 | % | 0.22 | % | 0.23 | % | 0.24 | % | 0.57 | % | ||||||||||
| Nonperforming loans and leases / Loans and leases held for investment | 0.21 | % | 0.23 | % | 0.24 | % | 0.29 | % | 0.58 | % | ||||||||||
| Nonperforming assets / Total assets | 0.44 | % | 0.46 | % | 0.48 | % | 0.52 | % | 0.44 | % | ||||||||||
| Allowance for credit losses, loans and leases | $ | 80,034 | $ | 79,004 | $ | 74,929 | $ | 72,011 | $ | 68,286 | ||||||||||
| Allowance for credit losses, loans and leases / Loans and leases held for investment | 1.28 | % | 1.29 | % | 1.28 | % | 1.27 | % | 1.26 | % | ||||||||||
| Allowance for credit losses, loans and leases / Nonaccrual loans and leases held for investment | 704.40 | % | 591.66 | % | 550.14 | % | 539.21 | % | 221.16 | % | ||||||||||
| Allowance for credit losses, loans and leases / Nonperforming loans and leases held for investment | 599.15 | % | 555.27 | % | 533.83 | % | 446.19 | % | 219.22 | % | ||||||||||
| For the three months ended, | ||||||||||||||||||||
| 03/31/23 | 12/31/22 | 09/30/22 | 06/30/22 | 03/31/22 | ||||||||||||||||
| Net loan and lease charge-offs | $ | 2,842 | $ | 908 | $ | 1,196 | $ | 1,715 | $ | 76 | ||||||||||
| Net loan and lease charge-offs (annualized)/Average loans and leases | 0.19 | % | 0.06 | % | 0.08 | % | 0.12 | % | 0.01 | % | ||||||||||
| Univest Financial Corporation | |||||||||||||||||||
| Consolidated Selected Financial Data (Unaudited) | |||||||||||||||||||
| March 31, 2023 | |||||||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||||||
| For the three months ended, | |||||||||||||||||||
| For the period: | 03/31/23 | 12/31/22 | 09/30/22 | 06/30/22 | 03/31/22 | ||||||||||||||
| Interest income | $ | 83,253 | $ | 77,401 | $ | 66,877 | $ | 56,717 | $ | 51,198 | |||||||||
| Interest expense | 23,936 | 15,485 | 8,627 | 5,246 | 4,538 | ||||||||||||||
| Net interest income | 59,317 | 61,916 | 58,250 | 51,471 | 46,660 | ||||||||||||||
| Provison (reversal of provision) for credit losses | 3,387 | 5,416 | 3,558 | 6,674 | (3,450 | ) | |||||||||||||
| Net interest income after provision for credit losses | 55,930 | 56,500 | 54,692 | 44,797 | 50,110 | ||||||||||||||
| Noninterest income: | |||||||||||||||||||
| Trust fee income | 1,955 | 1,808 | 1,835 | 1,998 | 2,102 | ||||||||||||||
| Service charges on deposit accounts | 1,547 | 1,575 | 1,522 | 1,574 | 1,504 | ||||||||||||||
| Investment advisory commission and fee income | 4,752 | 5,585 | 4,199 | 4,812 | 5,152 | ||||||||||||||
| Insurance commission and fee income | 6,487 | 4,424 | 4,442 | 4,629 | 5,570 | ||||||||||||||
| Other service fee income | 3,076 | 3,236 | 3,124 | 3,309 | 2,756 | ||||||||||||||
| Bank owned life insurance income | 767 | 1,230 | 1,153 | 705 | 699 | ||||||||||||||
| Net gain on sales of investment securities | - | - | - | - | 30 | ||||||||||||||
| Net gain on mortgage banking activities | 625 | 436 | 817 | 1,230 | 1,929 | ||||||||||||||
| Other income | 471 | 2,164 | 867 | 741 | 728 | ||||||||||||||
| Total noninterest income | 19,680 | 20,458 | 17,959 | 18,998 | 20,470 | ||||||||||||||
| Noninterest expense: | |||||||||||||||||||
| Salaries, benefits and commissions | 31,014 | 29,028 | 29,400 | 29,133 | 28,245 | ||||||||||||||
| Net occupancy | 2,727 | 2,551 | 2,504 | 2,422 | 2,716 | ||||||||||||||
| Equipment | 993 | 977 | 968 | 977 | 982 | ||||||||||||||
| Data processing | 4,029 | 4,039 | 3,901 | 3,708 | 3,567 | ||||||||||||||
| Professional fees | 1,941 | 1,829 | 2,521 | 2,844 | 2,138 | ||||||||||||||
| Marketing and advertising | 371 | 739 | 605 | 693 | 425 | ||||||||||||||
| Deposit insurance premiums | 1,101 | 708 | 662 | 812 | 893 | ||||||||||||||
| Intangible expenses | 253 | 301 | 309 | 342 | 341 | ||||||||||||||
| Restructuring charges | - | 184 | - | - | - | ||||||||||||||
| Other expense | 7,100 | 6,970 | 5,795 | 6,440 | 6,105 | ||||||||||||||
| Total noninterest expense | 49,529 | 47,326 | 46,665 | 47,371 | 45,412 | ||||||||||||||
| Income before taxes | 26,081 | 29,632 | 25,986 | 16,424 | 25,168 | ||||||||||||||
| Income tax expense | 5,047 | 5,796 | 5,185 | 3,258 | 4,851 | ||||||||||||||
| Net income | $ | 21,034 | $ | 23,836 | $ | 20,801 | $ | 13,166 | $ | 20,317 | |||||||||
| Net income per share: | |||||||||||||||||||
| Basic | $ | 0.72 | $ | 0.82 | $ | 0.71 | $ | 0.45 | $ | 0.69 | |||||||||
| Diluted | $ | 0.71 | $ | 0.81 | $ | 0.71 | $ | 0.45 | $ | 0.68 | |||||||||
| Dividends declared per share | $ | 0.21 | $ | 0.21 | $ | 0.21 | $ | 0.21 | $ | 0.20 | |||||||||
| Weighted average shares outstanding | 29,312,265 | 29,251,293 | 29,290,829 | 29,490,154 | 29,542,467 | ||||||||||||||
| Period end shares outstanding | 29,427,696 | 29,271,915 | 29,242,451 | 29,365,775 | 29,636,425 | ||||||||||||||
| Univest Financial Corporation | |||||||||||||||||||
| Consolidated Selected Financial Data (Unaudited) | |||||||||||||||||||
| March 31, 2023 | |||||||||||||||||||
| For the three months ended, | |||||||||||||||||||
| Profitability Ratios (annualized) | 03/31/23 | 12/31/22 | 09/30/22 | 06/30/22 | 03/31/22 | ||||||||||||||
| Return on average assets | 1.18 | % | 1.35 | % | 1.21 | % | 0.76 | % | 1.17 | % | |||||||||
| Return on average assets, excluding restructuring charges (1) | 1.18 | % | 1.36 | % | 1.21 | % | 0.76 | % | 1.17 | % | |||||||||
| Return on average shareholders' equity | 10.81 | % | 12.33 | % | 10.67 | % | 6.85 | % | 10.64 | % | |||||||||
| Return on average shareholders' equity, excluding restructuring charges (1) | 10.81 | % | 12.40 | % | 10.67 | % | 6.85 | % | 10.64 | % | |||||||||
| Return on average tangible common equity (1)(3) | 14.11 | % | 16.23 | % | 14.06 | % | 9.10 | % | 14.04 | % | |||||||||
| Return on average tangible common equity, excluding restructuring charges (1)(3) | 14.11 | % | 16.33 | % | 14.06 | % | 9.10 | % | 14.04 | % | |||||||||
| Net interest margin (FTE) | 3.58 | % | 3.76 | % | 3.67 | % | 3.19 | % | 2.89 | % | |||||||||
| Efficiency ratio (2) | 62.2 | % | 56.9 | % | 60.6 | % | 66.6 | % | 67.0 | % | |||||||||
| Efficiency ratio, excluding restructuring charges (1)(2) | 62.2 | % | 56.7 | % | 60.6 | % | 66.6 | % | 67.0 | % | |||||||||
| Capitalization Ratios | |||||||||||||||||||
| Dividends declared to net income | 29.2 | % | 25.8 | % | 29.6 | % | 47.1 | % | 29.1 | % | |||||||||
| Shareholders' equity to assets (Period End) | 10.85 | % | 10.75 | % | 10.92 | % | 11.40 | % | 10.89 | % | |||||||||
| Tangible common equity to tangible assets (1) | 8.63 | % | 8.49 | % | 8.55 | % | 8.97 | % | 8.58 | % | |||||||||
| Common equity book value per share | $ | 27.13 | $ | 26.53 | $ | 25.79 | $ | 26.01 | $ | 26.11 | |||||||||
| Tangible common equity book value per share (1) | $ | 21.07 | $ | 20.42 | $ | 19.67 | $ | 19.91 | $ | 20.06 | |||||||||
| Regulatory Capital Ratios (Period End) | |||||||||||||||||||
| Tier 1 leverage ratio | 9.71 | % | 9.81 | % | 9.87 | % | 9.45 | % | 9.35 | % | |||||||||
| Common equity tier 1 risk-based capital ratio | 10.43 | % | 10.37 | % | 10.51 | % | 10.62 | % | 11.07 | % | |||||||||
| Tier 1 risk-based capital ratio | 10.43 | % | 10.37 | % | 10.51 | % | 10.62 | % | 11.07 | % | |||||||||
| Total risk-based capital ratio | 13.78 | % | 13.67 | % | 13.10 | % | 13.23 | % | 13.73 | % | |||||||||
(1) Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included below.
(2) Noninterest expense to net interest income before loan loss provision plus noninterest income adjusted for tax equivalent income.
(3) Net income before amortization of intangibles to average tangible common equity.
| Univest Financial Corporation | |||||||||||||||||
| Average Balances and Interest Rates (Unaudited) | |||||||||||||||||
| For the Three Months Ended, | |||||||||||||||||
| Tax Equivalent Basis | March 31, 2023 | December 31, 2022 | |||||||||||||||
| Average | Income/ | Average | Average | Income/ | Average | ||||||||||||
| (Dollars in thousands) | Balance | Expense | Rate | Balance | Expense | Rate | |||||||||||
| Assets: | |||||||||||||||||
| Interest-earning deposits with other banks | $ | 47,835 | $ | 479 | 4.06 | % | $ | 57,059 | $ | 487 | 3.39 | % | |||||
| Obligations of state and political subdivisions* | 2,286 | 17 | 3.02 | 2,266 | 17 | 2.98 | |||||||||||
| Other debt and equity securities | 513,594 | 3,495 | 2.76 | 503,451 | 3,316 | 2.61 | |||||||||||
| Federal Home Loan Bank, Federal Reserve Bank and other stock | 34,742 | 609 | 7.11 | 29,401 | 493 | 6.65 | |||||||||||
| Total interest-earning deposits, investments and other interest-earning assets | 598,457 | 4,600 | 3.12 | 592,177 | 4,313 | 2.89 | |||||||||||
| Commercial, financial, and agricultural loans | 991,876 | 15,538 | 6.35 | 1,007,121 | 14,471 | 5.70 | |||||||||||
| Real estate-commercial and construction loans | 3,342,199 | 42,421 | 5.15 | 3,223,822 | 39,459 | 4.86 | |||||||||||
| Real estate-residential loans | 1,408,292 | 15,730 | 4.53 | 1,335,220 | 14,340 | 4.26 | |||||||||||
| Loans to individuals | 27,254 | 449 | 6.68 | 26,772 | 401 | 5.94 | |||||||||||
| Municipal loans and leases * | 229,955 | 2,341 | 4.13 | 233,684 | 2,433 | 4.13 | |||||||||||
| Lease financings | 165,314 | 2,541 | 6.23 | 152,962 | 2,416 | 6.27 | |||||||||||
| Gross loans and leases | 6,164,890 | 79,020 | 5.20 | 5,979,581 | 73,520 | 4.88 | |||||||||||
| Total interest-earning assets | 6,763,347 | 83,620 | 5.01 | 6,571,758 | 77,833 | 4.70 | |||||||||||
| Cash and due from banks | 58,035 | 56,428 | |||||||||||||||
| Allowance for credit losses, loans and leases | (79,977 | ) | (75,390 | ) | |||||||||||||
| Premises and equipment, net | 51,583 | 50,803 | |||||||||||||||
| Operating lease right-of-use assets | 31,303 | 30,413 | |||||||||||||||
| Other assets | 394,920 | 385,369 | |||||||||||||||
| Total assets | $ | 7,219,211 | $ | 7,019,381 | |||||||||||||
| Liabilities: | |||||||||||||||||
| Interest-bearing checking deposits | $ | 857,891 | $ | 3,164 | 1.50 | % | $ | 924,012 | $ | 2,746 | 1.18 | % | |||||
| Money market savings | 1,489,129 | 11,081 | 3.02 | 1,365,502 | 7,670 | 2.23 | |||||||||||
| Regular savings | 985,716 | 669 | 0.28 | 1,045,261 | 492 | 0.19 | |||||||||||
| Time deposits | 566,308 | 3,422 | 2.45 | 433,010 | 1,586 | 1.45 | |||||||||||
| Total time and interest-bearing deposits | 3,899,044 | 18,336 | 1.91 | 3,767,785 | 12,494 | 1.32 | |||||||||||
| Short-term borrowings | 240,318 | 2,728 | 4.60 | 101,126 | 852 | 3.34 | |||||||||||
| Long-term debt | 112,222 | 591 | 2.14 | 95,000 | 324 | 1.35 | |||||||||||
| Subordinated notes | 148,319 | 2,281 | 6.24 | 124,250 | 1,815 | 5.80 | |||||||||||
| Total borrowings | 500,859 | 5,600 | 4.53 | 320,376 | 2,991 | 3.70 | |||||||||||
| Total interest-bearing liabilities | 4,399,903 | 23,936 | 2.21 | 4,088,161 | 15,485 | 1.50 | |||||||||||
| Noninterest-bearing deposits | 1,935,371 | 2,070,038 | |||||||||||||||
| Operating lease liabilities | 34,438 | 33,492 | |||||||||||||||
| Accrued expenses and other liabilities | 60,346 | 60,498 | |||||||||||||||
| Total liabilities | 6,430,058 | 6,252,189 | |||||||||||||||
| Total interest-bearing liabilities and noninterest-bearing deposits ("Cost of Funds") | 6,335,274 | 1.53 | 6,158,199 | 1.00 | |||||||||||||
| Shareholders' Equity: | |||||||||||||||||
| Common stock | 157,784 | 157,784 | |||||||||||||||
| Additional paid-in capital | 300,293 | 300,121 | |||||||||||||||
| Retained earnings and other equity | 331,076 | 309,287 | |||||||||||||||
| Total shareholders' equity | 789,153 | 767,192 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 7,219,211 | $ | 7,019,381 | |||||||||||||
| Net interest income | $ | 59,684 | $ | 62,348 | |||||||||||||
| Net interest spread | 2.80 | 3.20 | |||||||||||||||
| Effect of net interest-free funding sources | 0.78 | 0.56 | |||||||||||||||
| Net interest margin | 3.58 | % | 3.76 | % | |||||||||||||
| Ratio of average interest-earning assets to average interest-bearing liabilities | 153.72 | % | 160.75 | % | |||||||||||||
| * 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 amortization of $465 thousand and $516 thousand for the three months ended March 31, 2023 and December 31, 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 March 31, 2023 and December 31, 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 March 31, | |||||||||||||||||
| Tax Equivalent Basis | 2023 | 2022 | |||||||||||||||
| Average | Income/ | Average | Average | Income/ | Average | ||||||||||||
| (Dollars in thousands) | Balance | Expense | Rate | Balance | Expense | Rate | |||||||||||
| Assets: | |||||||||||||||||
| Interest-earning deposits with other banks | $ | 47,835 | $ | 479 | 4.06 | % | $ | 733,173 | $ | 357 | 0.20 | % | |||||
| U.S. government obligations | - | - | - | 5,222 | 26 | 2.02 | |||||||||||
| Obligations of state and political subdivisions* | 2,286 | 17 | 3.02 | 2,332 | 19 | 3.30 | |||||||||||
| Other debt and equity securities | 513,594 | 3,495 | 2.76 | 514,574 | 2,339 | 1.84 | |||||||||||
| Federal Home Loan Bank, Federal Reserve Bank and other stock | 34,742 | 609 | 7.11 | 27,115 | 355 | 5.31 | |||||||||||
| Total interest-earning deposits, investments and other interest-earning assets | 598,457 | 4,600 | 3.12 | 1,282,416 | 3,096 | 0.98 | |||||||||||
| Commercial, financial, and agricultural loans | 991,876 | 15,538 | 6.35 | 919,957 | 8,162 | 3.60 | |||||||||||
| Real estate-commercial and construction loans | 3,342,199 | 42,421 | 5.15 | 2,904,602 | 25,820 | 3.61 | |||||||||||
| Real estate-residential loans | 1,408,292 | 15,730 | 4.53 | 1,116,356 | 9,882 | 3.59 | |||||||||||
| Loans to individuals | 27,254 | 449 | 6.68 | 25,799 | 238 | 3.74 | |||||||||||
| Municipal loans and leases* | 229,955 | 2,341 | 4.13 | 242,508 | 2,434 | 4.07 | |||||||||||
| Lease financings | 165,314 | 2,541 | 6.23 | 135,476 | 2,075 | 6.21 | |||||||||||
| Gross loans and leases | 6,164,890 | 79,020 | 5.20 | 5,344,698 | 48,611 | 3.69 | |||||||||||
| Total interest-earning assets | 6,763,347 | 83,620 | 5.01 | 6,627,114 | 51,707 | 3.16 | |||||||||||
| Cash and due from banks | 58,035 | 53,698 | |||||||||||||||
| Allowance for credit losses, loans and leases | (79,977 | ) | (72,067 | ) | |||||||||||||
| Premises and equipment, net | 51,583 | 53,948 | |||||||||||||||
| Operating lease right-of-use assets | 31,303 | 30,394 | |||||||||||||||
| Other assets | 394,920 | 354,893 | |||||||||||||||
| Total assets | $ | 7,219,211 | $ | 7,047,980 | |||||||||||||
| Liabilities: | |||||||||||||||||
| Interest-bearing checking deposits | $ | 857,891 | $ | 3,164 | 1.50 | % | $ | 881,462 | $ | 443 | 0.20 | % | |||||
| Money market savings | 1,489,129 | 11,081 | 3.02 | 1,542,581 | 904 | 0.24 | |||||||||||
| Regular savings | 985,716 | 669 | 0.28 | 1,021,550 | 238 | 0.09 | |||||||||||
| Time deposits | 566,308 | 3,422 | 2.45 | 473,589 | 1,306 | 1.12 | |||||||||||
| Total time and interest-bearing deposits | 3,899,044 | 18,336 | 1.91 | 3,919,182 | 2,891 | 0.30 | |||||||||||
| Short-term borrowings | 240,318 | 2,728 | 4.60 | 17,636 | 2 | 0.05 | |||||||||||
| Long-term debt | 112,222 | 591 | 2.14 | 95,000 | 317 | 1.35 | |||||||||||
| Subordinated notes | 148,319 | 2,281 | 6.24 | 98,911 | 1,328 | 5.45 | |||||||||||
| Total borrowings | 500,859 | 5,600 | 4.53 | 211,547 | 1,647 | 3.16 | |||||||||||
| Total interest-bearing liabilities | 4,399,903 | 23,936 | 2.21 | 4,130,729 | 4,538 | 0.45 | |||||||||||
| Noninterest-bearing deposits | 1,935,371 | 2,065,633 | |||||||||||||||
| Operating lease liabilities | 34,438 | 33,452 | |||||||||||||||
| Accrued expenses and other liabilities | 60,346 | 43,808 | |||||||||||||||
| Total liabilities | 6,430,058 | 6,273,622 | |||||||||||||||
| Total interest-bearing liabilities and noninterest-bearing deposits ("Cost of Funds") | 6,335,274 | 1.53 | 6,196,362 | 0.30 | |||||||||||||
| Shareholders' Equity: | |||||||||||||||||
| Common stock | 157,784 | 157,784 | |||||||||||||||
| Additional paid-in capital | 300,293 | 298,975 | |||||||||||||||
| Retained earnings and other equity | 331,076 | 317,599 | |||||||||||||||
| Total shareholders' equity | 789,153 | 774,358 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 7,219,211 | $ | 7,047,980 | |||||||||||||
| Net interest income | $ | 59,684 | $ | 47,169 | |||||||||||||
| Net interest spread | 2.80 | 2.71 | |||||||||||||||
| Effect of net interest-free funding sources | 0.78 | 0.18 | |||||||||||||||
| Net interest margin | 3.58 | % | 2.89 | % | |||||||||||||
| Ratio of average interest-earning assets to average interest-bearing liabilities | 153.72 | % | 160.43 | % | |||||||||||||
| * 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 amortization of $465 thousand and $136 thousand for the three months ended March 31, 2023 and 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 March 31, 2023 and 2022 have been calculated using the Corporation's federal applicable rate of 21.0%. | ||
| Univest Financial Corporation | ||||||
| Loan Portfolio Overview (Unaudited) | ||||||
| March 31, 2023 | ||||||
| (Dollars in thousands) | ||||||
| Industry Description | Total Outstanding Balance | % of Commercial Loan Portfolio | ||||
| CRE - Retail | 443,932 | 8.8 | % | |||
| Animal Production | 341,832 | 6.8 | ||||
| CRE - Office | 308,583 | 6.1 | ||||
| CRE - Multi-family | 294,816 | 5.8 | ||||
| CRE - 1-4 Family Residential Investment | 269,295 | 5.3 | ||||
| Hotels & Motels (Accommodation) | 207,019 | 4.1 | ||||
| CRE - Industrial / Warehouse | 199,372 | 4.0 | ||||
| Nursing and Residential Care Facilities | 165,160 | 3.3 | ||||
| Homebuilding (tract developers, remodelers) | 156,753 | 3.1 | ||||
| Education | 155,441 | 3.1 | ||||
| Specialty Trade Contractors | 149,939 | 3.0 | ||||
| Merchant Wholesalers, Durable Goods | 128,837 | 2.6 | ||||
| Motor Vehicle and Parts Dealers | 123,448 | 2.5 | ||||
| CRE - Mixed-Use - Residential | 111,124 | 2.2 | ||||
| Crop Production | 93,487 | 1.9 | ||||
| Administrative and Support Services | 85,589 | 1.7 | ||||
| Rental and Leasing Services | 79,800 | 1.6 | ||||
| Wood Product Manufacturing | 78,939 | 1.6 | ||||
| CRE - Mixed-Use - Commercial | 78,628 | 1.6 | ||||
| Real Estate Lenders, Secondary Market Financing | 76,798 | 1.5 | ||||
| Religious Organizations, Advocacy Groups | 74,590 | 1.5 | ||||
| Fabricated Metal Product Manufacturing | 70,896 | 1.4 | ||||
| Merchant Wholesalers, Nondurable Goods | 68,129 | 1.3 | ||||
| Food Services and Drinking Places | 66,605 | 1.3 | ||||
| Food Manufacturing | 66,425 | 1.3 | ||||
| Personal and Laundry Services | 64,434 | 1.3 | ||||
| Amusement, Gambling, and Recreation Industries | 61,295 | 1.2 | ||||
| Repair and Maintenance | 56,749 | 1.1 | ||||
| Miniwarehouse / Self-Storage | 56,336 | 1.1 | ||||
| Private Equity & Special Purpose Entities (excluding Trusts, Estates and Agency Accounts) | 54,918 | 1.1 | ||||
| Truck Transportation | 52,263 | 1.0 | ||||
| Industries with >$50 million in outstandings | $ | 4,241,432 | 84.2 | % | ||
| Industries with <$50 million in outstandings | $ | 794,605 | 15.8 | % | ||
| Total Commercial Loans | $ | 5,036,037 | 100.0 | % | ||
| Consumer Loans and Lease Financings | Total Outstanding Balance | |||||
| Real Estate-Residential Secured for Personal Purpose | $ | 779,557 | ||||
| Real Estate-Home Equity Secured for Personal Purpose | 172,073 | |||||
| Loans to Individuals | 28,656 | |||||
| Lease Financings | 223,481 | |||||
| Total - Consumer Loans and Lease Financings | $ | 1,203,767 | ||||
| Total | $ | 6,239,462 | ||||
Univest Financial Corporation
Non-GAAP Reconciliation
March 31, 2023
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, | |||||||||||||||||||
| (Dollars in thousands) | 03/31/23 | 12/31/22 | 09/30/22 | 06/30/22 | 03/31/22 | ||||||||||||||
| Restructuring charges (a) | $ | - | $ | 184 | $ | - | $ | - | $ | - | |||||||||
| Tax effect of restructuring charges | - | (39 | ) | - | - | - | |||||||||||||
| Restructuring charges, net of tax | $ | - | $ | 145 | $ | - | $ | - | $ | - | |||||||||
| Net income | $ | 21,034 | $ | 23,836 | $ | 20,801 | $ | 13,166 | $ | 20,317 | |||||||||
| Amortization of intangibles, net of tax | 200 | 238 | 244 | 270 | 269 | ||||||||||||||
| Net income before amortization of intangibles | $ | 21,234 | $ | 24,074 | $ | 21,045 | $ | 13,436 | $ | 20,586 | |||||||||
| Shareholders' equity | $ | 798,496 | $ | 776,500 | $ | 754,187 | $ | 763,925 | $ | 773,855 | |||||||||
| Goodwill | (175,510 | ) | (175,510 | ) | (175,510 | ) | (175,510 | ) | (175,510 | ) | |||||||||
| Other intangibles (b) | (3,054 | ) | (3,251 | ) | (3,485 | ) | (3,678 | ) | (3,936 | ) | |||||||||
| Tangible common equity | $ | 619,932 | $ | 597,739 | $ | 575,192 | $ | 584,737 | $ | 594,409 | |||||||||
| Total assets | $ | 7,358,991 | $ | 7,222,016 | $ | 6,907,397 | $ | 6,700,813 | $ | 7,107,740 | |||||||||
| Goodwill | (175,510 | ) | (175,510 | ) | (175,510 | ) | (175,510 | ) | (175,510 | ) | |||||||||
| Other intangibles (b) | (3,054 | ) | (3,251 | ) | (3,485 | ) | (3,678 | ) | (3,936 | ) | |||||||||
| Tangible assets | $ | 7,180,427 | $ | 7,043,255 | $ | 6,728,402 | $ | 6,521,625 | $ | 6,928,294 | |||||||||
| Average shareholders' equity | $ | 789,153 | $ | 767,192 | $ | 773,099 | $ | 771,410 | $ | 774,358 | |||||||||
| Average goodwill | (175,510 | ) | (175,510 | ) | (175,510 | ) | (175,510 | ) | (175,510 | ) | |||||||||
| Average other intangibles (b) | (3,137 | ) | (3,355 | ) | (3,550 | ) | (3,791 | ) | (4,090 | ) | |||||||||
| Average tangible common equity | $ | 610,506 | $ | 588,327 | $ | 594,039 | $ | 592,109 | $ | 594,758 | |||||||||
(a) Associated with the consolidation of 2 financial centers
(b) Amount does not include mortgage servicing rights
