Univest Financial Corporation Reports First Quarter Results

Univest Financial Corporation

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availability under these uncommitted funding sources is subject to the prerogatives of the granting banks and may be withdrawn at will.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

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