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Univest Financial Corporation Reports First Quarter Results

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Univest Financial Corporation
Univest Financial Corporation

(Announces 5% increase in dividend and plan to commence quarterly share repurchases)

SOUDERTON, Pa., April 27, 2022 (GLOBE NEWSWIRE) -- Univest Financial Corporation (“Univest” or the "Corporation") (NASDAQ: UVSP), parent company of Univest Bank and Trust Co. and its insurance, investments and equipment financing subsidiaries, today announced net income for the quarter ended March 31, 2022 was $20.3 million, or $0.68 diluted earnings per share, compared to net income of $32.6 million, or $1.11 diluted earnings per share, for the quarter ended March 31, 2021.

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

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

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

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

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

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

Deposits
Total deposits decreased $7.2 million, or 0.5% (annualized), from December 31, 2021, primarily due to decreases in consumer and public funds deposits offset by an increase in commercial deposits. Total deposits increased $736.3 million, or 13.9%, from March 31, 2021, primarily due to increases in commercial, consumer and public funds deposits.

Net Interest Income and Margin
Net interest income of $46.7 million for the first quarter of 2022 increased $1.2 million, or 2.7%, from the first quarter of 2021. The increase in net interest income for the first quarter of 2022 compared to the first quarter of 2021 was due to loan and investment balance growth outpacing declines in yield on interest-bearing assets and a decrease in the cost of interest-bearing liabilities, offset by a decrease in PPP loan income.

Net interest margin, on a tax-equivalent basis, was 2.89% for the first quarter of 2022, compared to 2.86% for the fourth quarter of 2021 and 3.12% for the first quarter of 2021. Excess liquidity reduced net interest margin by approximately 33 basis points for the quarter ended March 31, 2022 compared to 43 basis points for the quarter ended December 31, 2021 and 11 basis points for the quarter ended March 31, 2021. This excess liquidity was primarily driven by strong growth of deposit balances since the beginning of the COVID-19 pandemic, primarily due to the various pandemic-related stimulus initiatives. PPP loans had a favorable impact on net interest margin of three basis points for the quarter ended March 31, 2022 compared to eight basis points for the quarter ended December 31, 2021 and four basis points for the quarter ended March 31, 2021. As PPP loans are forgiven, the associated deferred fees are recognized in earnings, which occurred with greater frequency in 2021 as compared to 2022. Excluding the impact of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was 3.19% for the quarter ended March 31, 2022 compared to 3.21% for the quarter ended December 31, 2021 and 3.19% for the quarter ended March 31, 2021.

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

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

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

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

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

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

Data processing expenses increased $517 thousand, or 17.0%, for the quarter ended March 31, 2022 primarily due to continued investments in our end-to-end loan origination solution for loans below $1.0 million, customer relationship management software, internal infrastructure improvements, outsourced data processing solutions, and $103 thousand in support of our digital transformation initiative.

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

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

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

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

Net loan and lease charge-offs were $76 thousand during the first quarter of 2022 compared to $288 thousand for the quarter ended March 31, 2021. The reversal of provision for credit losses was $3.5 million for the first quarter of 2022, of which $5.7 million (after-tax benefit of $4.5 million), or $0.15 diluted earnings per share, was attributable to favorable changes in economic-related assumptions within the Corporation’s CECL model, partially offset by increases in reserves for loans, unfunded commitments and investment securities. The reversal of provision for credit losses was $11.3 million for the quarter ended March 31, 2021, of which $12.9 million (after-tax benefit of $10.2 million), or $0.35 diluted earnings per share, was attributable to favorable changes in economic-related assumptions within the Corporation’s CECL model partially offset by a reserve increase attributable to loan growth.

The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment was 1.26% at March 31, 2022, compared to 1.35% at December 31, 2021, and 1.32% at March 31, 2021. The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment, excluding PPP loans1, was 1.27% at March 31, 2022 compared to 1.36% at December 31, 2021 and 1.46% at March 31, 2021.

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

1Non-GAAP metric. A reconciliation of this and other non-GAAP financial measures is included within this document.

About Univest Financial Corporation
Univest Financial Corporation (UVSP), including its wholly-owned subsidiary Univest Bank and Trust Co., Member FDIC, has approximately $7.1 billion in assets and $4.6 billion in assets under management and supervision through its Wealth Management lines of business at March 31, 2022. Headquartered in Souderton, Pa. and founded in 1876, the Corporation and its subsidiaries provide a full range of financial solutions for individuals, businesses, municipalities and nonprofit organizations primarily in the Mid-Atlantic Region. Univest delivers these services through a network of more than 50 offices and online at www.univest.net.

# # #

This press release and the reports Univest files with the Securities and Exchange Commission often contain "forward-looking statements" relating to trends or factors affecting the financial services industry and, specifically, the financial condition and results of operations, business and strategies of Univest. These forward-looking statements involve certain risks and uncertainties in that there are a number of important factors that could cause Univest's future results to differ materially from those expressed or implied by the forward-looking statements. These factors include, but are not limited to: (1) competition; (2) inflation and changes in interest rates, which may adversely impact our margins and yields, reduce the fair value of our financial instruments, reduce our loan originations of lead to higher operating costs; (3) changes in asset quality, prepayment speeds, loan sale volumes, charge-offs and credit loss provisions; (4) changes in economic conditions nationally and in our market; (5) economic assumptions that may impact our allowance for credit losses calculation; (6) legislative, regulatory or tax changes that may adversely affect businesses; (7) technological issues that may adversely affect our operations or those of our customers; (8) changes in the securities markets; (9) the current or anticipated impact of military conflict, terrorism or other geopolitical events; or (10) risk factors mentioned in the reports and registration statements Univest files with the Securities and Exchange Commission.

Additionally, it is difficult to predict the continued effects of the COVID-19 pandemic on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: (1) demand for our products and services may decline; (2) if economic conditions worsen, loan delinquencies, problem assets, and foreclosures may increase and our allowance for credit losses may have to be increased; (3) collateral for loans, especially real estate, may decline in value; (4) the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; (5) a material decrease in net income or a net loss over several quarters could result in the elimination of or a decrease in the rate of our quarterly cash dividend; (6) our wealth management revenues may decline with market turmoil; and (7) our cyber security risks may increase as the result of an increase in the number of employees working remotely. Univest undertakes no obligation to revise these forward-looking statements or to reflect events or circumstances after the date of this press release.

(UVSP - ER)


Univest Financial Corporation

Consolidated Selected Financial Data (Unaudited)

March 31, 2022

(Dollars in thousands)

Balance Sheet (Period End)

03/31/22

12/31/21

09/30/21

06/30/21

03/31/21

ASSETS

Cash and due from banks

$

57,307

$

49,202

$

67,517

$

50,358

$

35,117

Interest-earning deposits with other banks

716,474

840,948

834,840

153,091

152,200

Cash and cash equivalents

773,781

890,150

902,357

203,449

187,317

Investment securities held-to-maturity

166,339

176,983

112,643

119,692

135,153

Investment securities available for sale, net of allowance for credit losses

349,994

317,007

277,773

274,862

238,829

Investments in equity securities

2,569

2,999

2,961

2,872

3,524

Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost

26,330

28,186

28,679

25,228

25,571

Loans held for sale

14,521

21,600

29,093

27,322

22,636

Loans and leases held for investment

5,400,786

5,310,017

5,252,045

5,327,313

5,415,006

Less: Allowance for credit losses, loans and leases

(68,286

)

(71,924

)

(70,146

)

(71,355

)

(71,497

)

Net loans and leases held for investment

5,332,500

5,238,093

5,181,899

5,255,958

5,343,509

Premises and equipment, net

50,429

56,882

55,354

56,067

55,650

Operating lease right-of-use assets

30,498

30,407

31,570

33,688

34,317

Goodwill

175,510

175,510

172,559

172,559

172,559

Other intangibles, net of accumulated amortization

11,784

11,848

9,359

9,396

9,225

Bank owned life insurance

119,398

118,699

117,981

117,765

118,435

Accrued interest and other assets

54,087

54,057

57,624

57,447

69,940

Total assets

$

7,107,740

$

7,122,421

$

6,979,852

$

6,356,305

$

6,416,665

LIABILITIES

Noninterest-bearing deposits

$

2,136,467

$

2,065,423

$

1,861,007

$

1,872,031

$

1,857,547

Interest-bearing deposits:

3,911,465

3,989,701

4,077,147

3,446,673

3,454,045

Total deposits

6,047,932

6,055,124

5,938,154

5,318,704

5,311,592

Short-term borrowings

18,976

20,106

14,101

25,251

26,676

Long-term debt

95,000

95,000

95,000

95,000

95,000

Subordinated notes

98,952

98,874

98,797

98,719

173,617

Operating lease liabilities

33,566

33,453

34,641

37,131

37,737

Accrued expenses and other liabilities

39,459

46,070

43,136

41,502

49,588

Total liabilities

6,333,885

6,348,627

6,223,829

5,616,307

5,694,210

SHAREHOLDER'S EQUITY

Common stock, $5 par value: 48,000,000 shares authorized and 31,556,799 shares issued

157,784

157,784

157,784

157,784

157,784

Additional paid-in capital

297,945

299,181

298,033

297,208

296,177

Retained earnings

389,332

375,124

363,607

348,579

333,581

Accumulated other comprehensive loss, net of tax benefit

(31,909

)

(16,353

)

(20,073

)

(19,545

)

(20,440

)

Treasury stock, at cost

(39,297

)

(41,942

)

(43,328

)

(44,028

)

(44,647

)

Total shareholders’ equity

773,855

773,794

756,023

739,998

722,455

Total liabilities and shareholders’ equity

$

7,107,740

$

7,122,421

$

6,979,852

$

6,356,305

$

6,416,665

For the three months ended,

Balance Sheet (Average)

03/31/22

12/31/21

09/30/21

06/30/21

03/31/21

Assets

$

7,047,980

$

7,088,289

$

6,698,177

$

6,443,629

$

6,383,463

Investment securities, net of allowance for credit losses

522,128

469,588

395,280

385,694

374,369

Loans and leases, gross

5,344,698

5,255,279

5,320,411

5,389,110

5,325,897

Deposits

5,984,815

6,041,798

5,666,725

5,351,089

5,296,147

Shareholders' equity

774,358

762,334

746,185

728,750

699,736


Univest Financial Corporation

Consolidated Summary of Loans by Type and Asset Quality Data (Unaudited)

March 31, 2022

(Dollars in thousands)

Summary of Major Loan and Lease Categories (Period End)

03/31/22

12/31/21

09/30/21

06/30/21

03/31/21

Commercial, financial and agricultural

$

932,485

$

956,396

$

927,015

$

920,621

$

871,996

Paycheck Protection Program

10,298

31,748

85,601

252,849

528,452

Real estate-commercial

2,816,737

2,718,535

2,669,898

2,600,919

2,531,700

Real estate-construction

285,083

283,918

260,874

274,529

249,652

Real estate-residential secured for business purpose

412,486

409,900

412,001

407,664

387,801

Real estate-residential secured for personal purpose

568,735

540,566

535,705

513,330

494,349

Real estate-home equity secured for personal purpose

160,134

158,909

159,029

160,018

162,529

Loans to individuals

26,249

25,504

26,458

25,845

25,468

Lease financings

188,579

184,541

175,464

171,538

163,059

Total loans and leases held for investment, net of deferred income

5,400,786

5,310,017

5,252,045

5,327,313

5,415,006

Less: Allowance for credit losses, loans and leases

(68,286

)

(71,924

)

(70,146

)

(71,355

)

(71,497

)

Net loans and leases held for investment

$

5,332,500

$

5,238,093

$

5,181,899

$

5,255,958

$

5,343,509

Asset Quality Data (Period End)

03/31/22

12/31/21

09/30/21

06/30/21

03/31/21

Nonaccrual loans and leases, including nonaccrual troubled debt restructured

loans and leases

$

30,876

$

33,210

$

34,528

$

37,466

$

29,996

Accruing loans and leases 90 days or more past due

274

498

2,204

750

664

Accruing troubled debt restructured loans and leases

51

51

51

52

52

Total nonperforming loans and leases

31,201

33,759

36,783

38,268

30,712

Other real estate owned

279

279

279

279

7,481

Total nonperforming assets

$

31,480

$

34,038

$

37,062

$

38,547

$

38,193

Nonaccrual loans and leases / Loans and leases held for investment and nonaccrual loans held for sale

0.57

%

0.63

%

0.66

%

0.70

%

0.55

%

Nonperforming loans and leases / Loans and leases held for investment

0.58

%

0.64

%

0.70

%

0.72

%

0.57

%

Nonperforming assets / Total assets

0.44

%

0.48

%

0.53

%

0.61

%

0.60

%

Allowance for credit losses, loans and leases

$

68,286

$

71,924

$

70,146

$

71,355

$

71,497

Allowance for credit losses, loans and leases / Loans and leases held for investment

1.26

%

1.35

%

1.34

%

1.34

%

1.32

%

Allowance for credit losses, loans and leases / Loans and leases held for investment, excluding Paycheck Protection Program loans (1)

1.27

%

1.36

%

1.36

%

1.41

%

1.46

%

Allowance for credit losses, loans and leases / Nonaccrual loans and leases held for investment

221.16

%

216.57

%

203.16

%

212.97

%

238.36

%

Allowance for credit losses, loans and leases / Nonperforming loans and leases held for investment

218.86

%

213.05

%

190.70

%

208.00

%

232.80

%

For the three months ended,

03/31/22

12/31/21

09/30/21

06/30/21

03/31/21

Net loan and lease charge-offs (recoveries)

$

76

$

(243

)

$

(75

)

$

243

$

288

Net loan and lease charge-offs (annualized)/Average loans and leases

0.01

%

(0.02

%)

(0.01

%)

0.02

%

0.02

%

(1) Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included at the end of this document.


Univest Financial Corporation

Consolidated Selected Financial Data (Unaudited)

March 31, 2022

(Dollars in thousands, except per share data)

For the three months ended,

For the period:

03/31/22

12/31/21

09/30/21

06/30/21

03/31/21

Interest income

$

51,198

$

52,262

$

53,571

$

52,441

$

51,457

Interest expense

4,538

4,737

4,884

5,684

6,043

Net interest income

46,660

47,525

48,687

46,757

45,414

(Reversal of provision) provision for credit losses

(3,450

)

1,392

(182

)

(59

)

(11,283

)

Net interest income after provision for credit losses

50,110

46,133

48,869

46,816

56,697

Noninterest income:

Trust fee income

2,102

2,086

2,126

2,157

2,034

Service charges on deposit accounts

1,504

1,486

1,422

1,314

1,282

Investment advisory commission and fee income

5,152

4,885

4,796

4,558

4,697

Insurance commission and fee income

5,570

3,726

3,837

3,839

4,955

Other service fee income

2,756

2,759

2,576

2,748

2,192

Bank owned life insurance income

699

719

925

1,620

717

Net gain on sales of investment securities

30

5

21

54

65

Net gain on mortgage banking activities

1,929

2,518

3,224

3,461

5,938

Other income

728

1,008

1,625

479

1,370

Total noninterest income

20,470

19,192

20,552

20,230

23,250

Noninterest expense:

Salaries, benefits and commissions

28,245

27,374

26,641

25,396

24,780

Net occupancy

2,716

2,477

2,525

2,656

2,739

Equipment

982

985

1,000

968

946

Data processing

3,567

3,355

3,274

3,064

3,050

Professional fees

2,138

1,750

2,174

2,015

1,748

Marketing and advertising

425

683

539

561

280

Deposit insurance premiums

893

698

765

613

636

Intangible expenses

341

267

214

249

249

Other expense

6,105

5,746

6,116

5,764

5,112

Total noninterest expense

45,412

43,335

43,248

41,286

39,540

Income before taxes

25,168

21,990

26,173

25,760

40,407

Income tax expense

4,851

4,578

5,262

4,885

7,804

Net income

$

20,317

$

17,412

$

20,911

$

20,875

$

32,603

Net income per share:

Basic

$

0.69

$

0.59

$

0.71

$

0.71

$

1.11

Diluted

$

0.68

$

0.59

$

0.71

$

0.71

$

1.11

Dividends declared per share

$

0.20

$

0.20

$

0.20

$

0.20

$

0.20

Weighted average shares outstanding

29,542,467

29,471,304

29,420,256

29,389,525

29,327,432

Period end shares outstanding

29,636,425

29,500,542

29,438,402

29,411,731

29,379,575


Univest Financial Corporation

Consolidated Selected Financial Data (Unaudited)

March 31, 2022

For the three months ended,

Profitability Ratios (annualized)

03/31/22

12/31/21

09/30/21

06/30/21

03/31/21

Return on average assets

1.17

%

0.97

%

1.24

%

1.30

%

2.07

%

Return on average shareholders' equity

10.64

%

9.06

%

11.12

%

11.49

%

18.90

%

Return on average tangible common equity (1)(3)

14.04

%

11.93

%

14.63

%

15.26

%

25.35

%

Net interest margin (FTE)

2.89

%

2.86

%

3.11

%

3.15

%

3.12

%

Efficiency ratio (2)

67.0

%

64.3

%

61.8

%

60.7

%

57.0

%

Capitalization Ratios

Dividends declared to net income

29.1

%

33.9

%

28.1

%

28.2

%

18.0

%

Shareholders' equity to assets (Period End)

10.89

%

10.86

%

10.83

%

11.64

%

11.26

%

Tangible common equity to tangible assets (1)

8.58

%

8.56

%

8.55

%

9.15

%

8.77

%

Common equity book value per share

$

26.11

$

26.23

$

25.68

$

25.16

$

24.59

Tangible common equity book value per share (1)

$

20.06

$

20.14

$

19.75

$

19.22

$

18.64

Regulatory Capital Ratios (Period End)

Tier 1 leverage ratio

9.35

%

9.13

%

9.53

%

9.64

%

9.45

%

Common equity tier 1 risk-based capital ratio

11.07

%

11.08

%

11.15

%

11.04

%

11.08

%

Tier 1 risk-based capital ratio

11.07

%

11.08

%

11.15

%

11.04

%

11.08

%

Total risk-based capital ratio

13.73

%

13.77

%

13.87

%

13.82

%

15.13

%

(1) Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included below.

(2) Noninterest expense to net interest income before loan loss provision plus noninterest income adjusted for tax equivalent income.

(3) Net income before amortization of intangibles to average tangible common equity.


Univest Financial Corporation

Average Balances and Interest Rates (Unaudited)

For the Three Months Ended,

Tax Equivalent Basis

March 31, 2022

December 31, 2021

Average

Income/

Average

Average

Income/

Average

(Dollars in thousands)

Balance

Expense

Rate

Balance

Expense

Rate

Assets:

Interest-earning deposits with other banks

$

733,173

$

357

0.20

%

$

914,287

$

370

0.16

%

U.S. government obligations

5,222

26

2.02

6,999

37

2.10

Obligations of state and political subdivisions*

2,332

19

3.30

2,334

19

3.23

Other debt and equity securities

514,574

2,339

1.84

460,255

1,845

1.59

Federal Home Loan Bank, Federal Reserve Bank and other stock

27,115

355

5.31

28,402

375

5.24

Total interest-earning deposits, investments and other interest-earning assets

1,282,416

3,096

0.98

1,412,277

2,646

0.74

Commercial, financial, and agricultural loans

901,555

7,571

3.41

869,471

7,022

3.20

Paycheck Protection Program loans

18,402

591

13.02

53,745

1,568

11.57

Real estate—commercial and construction loans

2,904,602

25,820

3.61

2,826,720

26,669

3.74

Real estate—residential loans

1,116,356

9,882

3.59

1,107,911

10,165

3.64

Loans to individuals

25,799

238

3.74

26,462

249

3.73

Municipal loans and leases *

242,508

2,434

4.07

245,038

2,515

4.07

Lease financings

135,476

2,075

6.21

125,932

1,951

6.15

Gross loans and leases

5,344,698

48,611

3.69

5,255,279

50,139

3.79

Total interest-earning assets

6,627,114

51,707

3.16

6,667,556

52,785

3.14

Cash and due from banks

53,698

54,958

Allowance for credit losses, loans and leases

(72,067

)

(71,020

)

Premises and equipment, net

53,948

56,087

Operating lease right-of-use assets

30,394

31,048

Other assets

354,893

349,660

Total assets

$

7,047,980

$

7,088,289

Liabilities:

Interest-bearing checking deposits

$

881,462

$

443

0.20

%

$

939,478

$

493

0.21

%

Money market savings

1,542,581

904

0.24

1,616,890

968

0.24

Regular savings

1,021,550

238

0.09

997,814

253

0.10

Time deposits

473,589

1,306

1.12

487,434

1,370

1.12

Total time and interest-bearing deposits

3,919,182

2,891

0.30

4,041,616

3,084

0.30

Short-term borrowings

17,636

2

0.05

14,144

1

0.03

Long-term debt

95,000

317

1.35

95,000

325

1.36

Subordinated notes

98,911

1,328

5.45

98,833

1,327

5.33

Total borrowings

211,547

1,647

3.16

207,977

1,653

3.15

Total interest-bearing liabilities

4,130,729

4,538

0.45

4,249,593

4,737

0.44

Noninterest-bearing deposits

2,065,633

2,000,182

Operating lease liabilities

33,452

34,114

Accrued expenses and other liabilities

43,808

42,066

Total liabilities

6,273,622

6,325,955

Shareholders' Equity:

Common stock

157,784

157,784

Additional paid-in capital

298,975

298,508

Retained earnings and other equity

317,599

306,042

Total shareholders' equity

774,358

762,334

Total liabilities and shareholders' equity

$

7,047,980

$

7,088,289

Net interest income

$

47,169

$

48,048

Net interest spread

2.71

2.70

Effect of net interest-free funding sources

0.18

0.16

Net interest margin

2.89

%

2.86

%

Ratio of average interest-earning assets to average interest-bearing liabilities

160.43

%

156.90

%

* Obligations of states and political subdivisions and municipal loans and leases are tax-exempt earning assets.

Notes:

For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.

Net interest income includes net deferred (costs) fees of $(136) thousand and $707 thousand for the three months ended March 31, 2022

and December 31, 2021, respectively.

Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included

in the average loan balances. Tax-equivalent amounts for the three months ended March 31, 2022 and December 31, 2021 have

been calculated using the Corporation’s federal applicable rate of 21.0%.


Univest Financial Corporation

Average Balances and Interest Rates (Unaudited)

For the Three Months Ended March 31,

Tax Equivalent Basis

2022

2021

Average

Income/

Average

Average

Income/

Average

(Dollars in thousands)

Balance

Expense

Rate

Balance

Expense

Rate

Assets:

Interest-earning deposits with other banks

$

733,173

$

357

0.20

%

$

237,548

$

56

0.10

%

U.S. government obligations

5,222

26

2.02

6,998

36

2.09

Obligations of state and political subdivisions*

2,332

19

3.30

11,544

105

3.69

Other debt and equity securities

514,574

2,339

1.84

355,827

1,267

1.44

Federal Home Loan Bank, Federal Reserve Bank and other stock

27,115

355

5.31

26,368

348

5.35

Total interest-earning deposits, investments and other interest-earning assets

1,282,416

3,096

0.98

638,285

1,812

1.15

Commercial, financial, and agricultural loans

901,555

7,571

3.41

782,208

6,798

3.52

Paycheck Protection Program loans

18,402

591

13.02

506,939

4,524

3.62

Real estate—commercial and construction loans

2,904,602

25,820

3.61

2,621,981

24,458

3.78

Real estate—residential loans

1,116,356

9,882

3.59

1,037,000

9,873

3.86

Loans to individuals

25,799

238

3.74

26,447

265

4.06

Municipal loans and leases*

242,508

2,434

4.07

245,638

2,530

4.18

Lease financings

135,476

2,075

6.21

105,684

1,737

6.67

Gross loans and leases

5,344,698

48,611

3.69

5,325,897

50,185

3.82

Total interest-earning assets

6,627,114

51,707

3.16

5,964,182

51,997

3.54

Cash and due from banks

53,698

55,311

Allowance for credit losses, loans and leases

(72,067

)

(83,254

)

Premises and equipment, net

53,948

55,826

Operating lease right-of-use assets

30,394

34,033

Other assets

354,893

357,365

Total assets

$

7,047,980

$

6,383,463

Liabilities:

Interest-bearing checking deposits

$

881,462

$

443

0.20

%

$

817,940

$

490

0.24

%

Money market savings

1,542,581

904

0.24

1,243,673

853

0.28

Regular savings

1,021,550

238

0.09

959,232

298

0.13

Time deposits

473,589

1,306

1.12

525,800

1,759

1.36

Total time and interest-bearing deposits

3,919,182

2,891

0.30

3,546,645

3,400

0.39

Short-term borrowings

17,636

2

0.05

17,894

2

0.05

Long-term debt

95,000

317

1.35

101,333

348

1.39

Subordinated notes

98,911

1,328

5.45

183,340

2,293

5.07

Total borrowings

211,547

1,647

3.16

302,567

2,643

3.54

Total interest-bearing liabilities

4,130,729

4,538

0.45

3,849,212

6,043

0.64

Noninterest-bearing deposits

2,065,633

1,749,502

Operating lease liabilities

33,452

37,415

Accrued expenses and other liabilities

43,808

47,598

Total liabilities

6,273,622

5,683,727

Shareholders' Equity:

Common stock

157,784

157,784

Additional paid-in capital

298,975

296,136

Retained earnings and other equity

317,599

245,816

Total shareholders' equity

774,358

699,736

Total liabilities and shareholders' equity

$

7,047,980

$

6,383,463

Net interest income

$

47,169

$

45,954

Net interest spread

2.71

2.90

Effect of net interest-free funding sources

0.18

0.22

Net interest margin

2.89

%

3.12

%

Ratio of average interest-earning assets to average interest-bearing liabilities

160.43

%

154.95

%

* Obligations of states and political subdivisions and municipal loans and leases are tax-exempt earning assets.

Notes:

For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.

Net interest income includes net deferred (costs) fees of $(136) thousand and $2.3 million for the three months ended March 31, 2022 and

2021, respectively.

Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been

included in the average loan balances. Tax-equivalent amounts for the three months ended March 31, 2022 and 2021 have

been calculated using the Corporation’s federal applicable rate of 21.0%.


Univest Financial Corporation

Loan Portfolio Overview (Unaudited)

(Dollars in thousands)

As of March 31, 2022

Industry Description

Total Outstanding Balance (excl PPP)

% of Commercial Loan Portfolio

$ Balance of Modified Loans (1)

Modified Loans as a % of Portfolio (1)

CRE - Retail

359,125

8.1

%

$

-

-

%

Animal Production

310,747

7.0

-

-

CRE - Multi-family

244,480

5.5

-

-

CRE - 1-4 Family Residential Investment

234,653

5.3

-

-

CRE - Office

231,125

5.2

-

-

Hotels & Motels (Accommodation)

186,497

4.2

1,437

0.8

Nursing and Residential Care Facilities

168,896

3.8

-

-

CRE - Industrial / Warehouse

160,318

3.6

-

-

Education

151,238

3.4

-

-

Specialty Trade Contractors

133,455

3.0

-

-

CRE - Mixed-Use - Residential

116,479

2.6

-

-

CRE - Medical Office

108,836

2.4

-

-

Homebuilding (tract developers, remodelers)

101,112

2.3

-

-

Merchant Wholesalers, Durable Goods

93,073

2.1

-

-

Motor Vehicle and Parts Dealers

89,723

2.0

-

-

Crop Production

85,886

1.9

-

-

Food Manufacturing

78,597

1.8

-

-

Wood Product Manufacturing

77,165

1.7

-

-

Rental and Leasing Services

72,878

1.6

-

-

Food Services and Drinking Places

71,327

1.6

473

0.7

Administrative and Support Services

69,578

1.6

-

-

Merchant Wholesalers, Nondurable Goods

64,564

1.5

-

-

Personal and Laundry Services

61,402

1.4

-

-

Fabricated Metal Product Manufacturing

60,398

1.4

-

-

Religious Organizations, Advocacy Groups

56,869

1.3

-

-

Miniwarehouse / Self-Storage

54,382

1.2

-

-

Repair and Maintenance

53,267

1.2

-

-

Industries with >$50 million in outstandings

$

3,496,070

78.6

%

$

1,910

0.1

%

Industries with <$50 million in outstandings

$

950,721

21.4

%

$

790

0.1

%

Total Commercial Loans

$

4,446,791

100.0

%

$

2,700

0.1

%

Consumer Loans and Lease Financings

Total Outstanding Balance

$ Balance of Modified Loans (1)

Modified Loans as a % of Portfolio (1)

Real Estate-Residential Secured for Personal Purpose

$

568,735

$

-

-

%

Real Estate-Home Equity Secured for Personal Purpose

160,134

-

-

Loans to Individuals

26,249

-

-

Lease Financings

188,579

-

-

Total - Consumer Loans and Lease Financings

$

943,697

$

-

-

%

Total

$

5,390,488

$

2,700

0.1

%

(1) Loan modifications referenced above were made in accordance with Section 4013 of the CARES Act and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus and therefore were not classified as TDRs as of March 31, 2022.


Univest Financial Corporation

Non-GAAP Reconciliation

March 31, 2022

Non-GAAP to GAAP Reconciliation

Management uses non-GAAP measures in its analysis of the Corporation's performance. These measures should not be considered a substitute for GAAP basis measures nor should they be viewed as a substitute for operating results determined in accordance with GAAP. Management believes the presentation of the non-GAAP financial measures, which exclude the impact of the specified items, provides useful supplemental information that is essential to a proper understanding of the financial results of the Corporation. See the table below for additional information on non-GAAP measures used throughout this earnings release.

For the three months ended,

(Dollars in thousands)

03/31/22

12/31/21

09/30/21

06/30/21

03/31/21

Net income

$

20,317

$

17,412

$

20,911

$

20,875

$

32,603

Amortization of intangibles, net of tax

269

211

169

197

197

Net income before amortization of intangibles

$

20,586

$

17,623

$

21,080

$

21,072

$

32,800

Shareholders' equity

$

773,855

$

773,794

$

756,023

$

739,998

$

722,455

Goodwill

(175,510

)

(175,510

)

(172,559

)

(172,559

)

(172,559

)

Other intangibles (a)

(3,936

)

(4,210

)

(1,922

)

(2,073

)

(2,326

)

Tangible common equity

$

594,409

$

594,074

$

581,542

$

565,366

$

547,570

Total assets

$

7,107,740

$

7,122,421

$

6,979,852

$

6,356,305

$

6,416,665

Goodwill

(175,510

)

(175,510

)

(172,559

)

(172,559

)

(172,559

)

Other intangibles (a)

(3,936

)

(4,210

)

(1,922

)

(2,073

)

(2,326

)

Tangible assets

$

6,928,294

$

6,942,701

$

6,805,371

$

6,181,673

$

6,241,780

Average shareholders' equity

$

774,358

$

762,334

$

746,185

$

728,750

$

699,736

Average goodwill

(175,510

)

(173,553

)

(172,559

)

(172,559

)

(172,559

)

Average other intangibles (a)

(4,090

)

(2,696

)

(1,983

)

(2,209

)

(2,464

)

Average tangible common equity

$

594,758

$

586,085

$

571,643

$

553,982

$

524,713

Loans and leases held for investment, gross

$

5,400,786

$

5,310,017

$

5,252,045

$

5,327,313

$

5,415,006

Paycheck Protection Program ("PPP") loans

(10,298

)

(31,748

)

(85,601

)

(252,849

)

(528,452

)

Gross loans and leases excluding PPP loans

$

5,390,488

$

5,278,269

$

5,166,444

$

5,074,464

$

4,886,554

Allowance for credit losses, loans and leases

$

68,286

$

71,924

$

70,146

$

71,355

$

71,497

Gross loans and leases excluding PPP loans

5,390,488

5,278,269

5,166,444

5,074,464

4,886,554

Allowance for credit losses, loans and leases as a percentage of gross loans and leases excluding PPP loans

1.27

%

1.36

%

1.36

%

1.41

%

1.46

%

(a) Amount does not include mortgage servicing rights

CONTACT: CONTACT: Brian J. Richardson UNIVEST FINANCIAL CORPORATION Chief Financial Officer 215-721-2446, richardsonb@univest.net


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