Univest Financial Corporation Reports Third Quarter Results

Wednesday, 27. October 2021 22:15

(Loan Growth of 9.7% for last twelve months (excluding PPP loans1))

SOUDERTON, Pa., Oct. 27, 2021 (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 September 30, 2021 of $20.9 million, or $0.71 diluted earnings per share, compared to net income of $18.1 million, or $0.62 diluted earnings per share, for the quarter ended September 30, 2020. Net income for the nine months ended September 30, 2021 was $74.4 million, or $2.52 diluted earnings per share, compared to net income of $21.0 million, or $0.72 diluted earnings per share, for the nine months ended September 30, 2020.

Pre-tax pre-provision income1 for the quarter ended September 30, 2021 was $26.0 million, a decrease of $1.1 million, or 4.2%, from the third quarter of 2020. Pre-tax pre-provision income1 for the nine months ended September 30, 2021 was $80.8 million, an increase of $6.1 million, or 8.1%, from the comparable period in the prior year.

One-Time Items
The financial results for the three and nine months ended September 30, 2021 included tax-free bank owned life insurance ("BOLI") death benefit claims of $196 thousand and $1.1 million, respectively, which represents $0.01 and $0.04 diluted earnings per share, respectively.

Paycheck Protection Program
As of September 30, 2021, $85.6 million in PPP loan originations remain outstanding. During the quarter, we recorded income of $4.2 million within net interest income related to these loans, of which $3.7 million was the result of recognition of associated net deferred loan fees upon forgiveness and pay downs of PPP loans totaling $171.4 million. During the nine months ended September 30, 2021, we recorded income of $13.5 million within net interest income related to these loans, of which $8.6 million was the result of recognition of associated net deferred loan fees upon forgiveness and pay downs of PPP loans totaling $575.3 million. As of September 30, 2021, we had $2.4 million of net deferred fees on our balance sheet, which represented approximately 13.2% of the initial deferred fee amount.

Loans
Gross loans and leases, excluding PPP loans1, increased $92.0 million, or 7.3% (annualized), from June 30, 2021 due to increases in commercial real estate and residential mortgage loans. Gross loans and leases, excluding PPP loans, increased $343.4 million or 9.5% (annualized) from December 31, 2020 and $456.2 million, or 9.7%, from September 30, 2020 due to increases in commercial, construction, commercial real estate, and residential mortgage loans.

Deposits
Total deposits increased $619.5 million, or 46.6% (annualized), from June 30, 2021 due to increases in commercial deposits and seasonal increases in public funds deposits. Total deposits increased $695.4 million, or 17.7% (annualized), from December 31, 2020 and $726.6 million, or 13.9%, from September 30, 2020, primarily due to increases in commercial, consumer and public funds deposits offset by a decrease in brokered deposits.

Net Interest Income and Margin
Net interest income of $48.7 million for the three months ended September 30, 2021 increased $1.9 million, or 4.1%, from the three months ended June 30, 2021, and $4.8 million, or 11.0%, from the three months ended September 30, 2020. The increase in net interest income for the three months ended September 30, 2021 compared to the same period of 2020 was primarily due to an increase in PPP loan income of $1.4 million, a $1.9 million decrease in the cost of interest-bearing liabilities and growth in loans partially offset by a decrease in loan, excluding PPP, and investment yields.

Net interest income of $140.9 million for the nine months ended September 30, 2021 increased $11.0 million, or 8.5%, from the nine months ended September 30, 2020. The increase in net interest income for the nine months ended September 30, 2021 compared to the same period of 2020 was primarily due to an increase in PPP loan income of $8.5 million, a $6.2 million decrease in the cost of interest-bearing liabilities and growth in loans partially offset by a decrease in loans and investment yields.

Net interest margin, on a tax-equivalent basis, was 3.11% for the third quarter of 2021, compared to 3.15% for the second quarter of 2021 and 3.02% for the third quarter of 2020. Excess liquidity reduced net interest margin by approximately 27 basis points for the quarter ended September 30, 2021 compared to ten basis points for the quarter ended June 30, 2021 and 18 basis points for the quarter ended September 30, 2020. This excess liquidity was primarily driven by strong growth of deposit balances since the beginning of the COVID-19 pandemic, primarily due to the various pandemic-related stimulus initiatives. PPP loans had a favorable impact on net interest margin of 20 basis points for the quarter ended September 30, 2021 compared to 11 basis points for the quarter ended June 30, 2021 and an unfavorable impact of ten basis points for the quarter ended September 30, 2020. As PPP loans are forgiven, the associated deferred fees are recognized in earnings, which occurred with greater frequency in 2021 as compared to 2020. Excluding the impact of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was 3.18% for the quarter ended September 30, 2021 compared to 3.14% for the quarter ended June 30, 2021 and 3.30% for the quarter ended September 30, 2020.

Net interest margin, on a tax-equivalent basis, was 3.13% for the nine months ended September 20, 2021, compared to 3.21% for the nine months ended September 30, 2020. Excess liquidity reduced net interest margin by approximately 16 basis points for the nine months ended September 30, 2021 compared to 14 basis points for the nine months ended September 30, 2020. This excess liquidity was primarily driven by strong growth of deposit balances since the beginning of the COVID-19 pandemic, primarily due to the various pandemic-related stimulus initiatives. PPP loans had a favorable impact on net interest margin of 12 basis points for the nine months ended September 30, 2021 compared to an unfavorable impact of seven basis points for the nine months ended September 30, 2020. Excluding the impact of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was 3.17% for the nine months ended September 30, 2021 compared to 3.42% for the nine months ended September 30, 2020.

Noninterest Income
Noninterest income for the quarter ended September 30, 2021 was $20.6 million, a decrease of $1.3 million, or 5.7%, compared to the third quarter of 2020. Noninterest income for the nine months ended September 30, 2021 was $64.0 million, an increase of $5.8 million, or 10.0%, from the comparable period in the prior year.

Net gain on mortgage banking activities decreased $2.6 million, or 45.0%, for the quarter but increased $504 thousand, or 4.2%, for the nine months ended September 30, 2021 compared to the comparable periods in the prior year. The decrease for the three months ended September 30, 2021 was primarily due to a decrease in volume and a contraction of margins. Investment advisory commission and fee income increased $791 thousand, or 19.8%, for the quarter and $2.3 million, or 19.1%, for the nine months ended September 30, 2021 compared to the comparable periods in the prior year, due to increased assets under management driven by favorable market conditions and new customer relationships. BOLI income increased $184 thousand, or 24.8%, for the quarter and $1.1 million, or 47.8%, for the nine months ended September 30, 2021 compared to the comparable periods in the prior year, primarily due to proceeds from BOLI death benefits of $893 thousand and $196 thousand received in the second and third quarter of 2021, respectively.

Other service fee income increased $483 thousand, or 23.1%, for the quarter and $2.1 million, or 37.9%, for the nine months ended September 30, 2021 compared to the comparable periods in the prior year. Interchange fee income increased $290 thousand for the quarter and $962 thousand for the nine months ended September 30, 2021 compared to the comparable periods in the prior year, due to increased customer activity. Mortgage servicing fees increased $163 thousand for the quarter and $855 thousand for the nine months ended September 30, 2021 driven by an increase in retained servicing associated with elevated mortgage volume over the past eighteen months.

Other income decreased $546 thousand, or 25.1%, for the quarter and $543 thousand, or 13.5%, for the nine months ended September 30, 2021 compared to comparable periods in the prior year. Fees on risk participation agreements for interest rate swaps decreased $1.9 million and $2.3 million during the three and nine months ended September 30, 2021, respectively, compared to comparable periods in the prior year driven by a decrease in customer demand. Gain on the sale of SBA loans increased $897 thousand and $922 thousand during the three and nine months ended September 30, 2021, respectively. This increase was reflective of the Corporation's commitment to delivering comprehensive financial solutions to small businesses and the expansion of the SBA lending team during the first half of 2021. Net gains or losses related to valuations and sales of other real estate owned increased $297 thousand for the three and nine months ended September 30, 2021 compared to comparable periods in the prior year, primarily due to a $300 thousand valuation adjustment on other real estate owned during the third quarter of 2020. Other income increased $456 thousand for the nine months ended September 30, 2021 primarily driven by a gain on the value of equity securities measured at fair value of $164 thousand compared to a loss of $321 thousand for the nine months ended September 30, 2020.

Noninterest Expense
Noninterest expense for the quarter ended September 30, 2021 was $43.2 million, an increase of $4.7 million, or 12.3%, compared to the third quarter of 2020. Noninterest expense for the nine months ended September 30, 2021 was $124.1 million, an increase of $10.8 million, or 9.5%, from the comparable period in the prior year.

Salaries, benefits and commissions increased $2.6 million, or 10.7%, for the quarter and $7.2 million, or 10.4%, for the nine months ended September 30, 2021 from the comparable periods in the prior year. These increases reflect our continued investment in revenue producing staff across all business lines and annual merit increases. Additionally, variable incentive compensation expenses increased $829 thousand and $2.6 million for the three and nine months ended September 30, 2021, respectively, from the comparable periods in the prior year, due to increased profitability.

Professional fees increased $853 thousand, or 64.6%, for the quarter and $2.0 million, or 52.2%, for the nine months ended September 30, 2021 from the comparable periods in the prior year, primarily attributable to increased consultant fees in support of our Diversity, Equity and Inclusion program, training initiatives and treasury management product enhancements. During the first nine months of 2021, we have spent $1.4 million on these initiatives and we expect to incur approximately $70 thousand of additional expenses related to these initiatives in the fourth quarter of 2021. These expenses are not expected to re-occur in subsequent periods. Data processing expenses increased $412 thousand, or 14.4%, for the quarter and $1.0 million, or 12.1%, for the nine months ended September 30, 2021 compared to the comparable periods in the prior year, primarily due to continued investments in our end-to-end loan origination solution for loans below $1.0 million, customer relationship management software, internal infrastructure improvements and outsourced data processing solutions.

Other expense increased $865 thousand, or 16.5%, for the quarter compared to the comparable period in the prior year, due to increases in professional liability insurance, bank shares tax expense, interchange fee expense and travel and entertainment expenses, which are beginning to normalize as the markets we operate in continue to remain open.

Asset Quality and Provision for Credit Losses
Nonperforming assets were $37.1 million at September 30, 2021, compared to $38.5 million at June 30, 2021 and $41.9 million at September 30, 2020.

Net loan and lease recoveries were $75 thousand during the third quarter of 2021 compared to $35 thousand for the same period in the prior year. The reversal of provision for credit losses was $182 thousand for the third quarter of 2021, of which $2.9 million (after-tax benefit of $2.3 million), or $0.08 diluted earnings per share, was attributable to favorable changes in economic-related assumptions within the Corporation’s CECL model, partially offset by an increase in reserves for loans, unfunded commitments and investment securities. The provision for credit losses was $3.9 million for the comparable period in the prior year, of which $280 thousand (after-tax charge of $221 thousand), or $0.01 diluted earnings per share, was attributable to adverse changes in economic-related assumptions, which were predominately driven by COVID-19.

Net loan and lease charge-offs were $456 thousand for the nine months ended September 30, 2021 compared to $4.0 million for the same period in the prior year. The reversal of provision for credit losses was $11.5 million for the nine months ended September 30, 2021, of which $18.7 million (after-tax benefit of $14.8 million), or $0.50 diluted earnings per share, was attributable to favorable changes in economic-related assumptions within the Corporation’s CECL model partially offset by an increase in reserves for loans, unfunded commitments and investment securities. The provision for credit losses was $49.5 million for the comparable period in the prior year, of which $40.5 million (after-tax charge of $32.0 million), or $1.10 diluted earnings per share, was attributable to adverse changes in economic-related assumptions.

The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment was 1.34% at September 30, 2021, compared to 1.34% at June 30, 2021, and 1.76% at September 30, 2020. The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment, excluding PPP loans1, was 1.36% at September 30, 2021 compared to 1.41% at June 30, 2021 and 1.95% at September 30, 2020.

Tax Provision
The effective income tax rate was 19.4% for the nine months ended September 30, 2021 compared to an effective income tax rate of 16.7% for the nine months ended September 30, 2020. The effective tax rate for the nine months ended September 30, 2021 and 2020 reflects the level of pre-tax income and the benefits of tax-exempt income from investments in municipal securities and loans and leases. Additionally, the effective income tax rate for the nine months ended September 30, 2021 was favorably impacted by discrete tax benefits and proceeds from BOLI death benefits. Excluding these items, the effective tax rate was 19.9% for the nine months ended September 30, 2021.

Dividend
On October 27, 2021, Univest declared a quarterly cash dividend of $0.20 per share. The dividend will be paid on November 24, 2021 to shareholders of record as of November 10, 2021.

Conference Call
Univest will host a conference call to discuss third quarter 2021 results on Thursday, October 28, 2021 at 9:00 a.m. EST. Participants may preregister at https://dpregister.com/sreg/10160789/ee1d498407. The general public can access the call by dialing 1-888-338-6515. A replay of the conference call will be available through November 28, 2021 by dialing 1-877-344-7529; using Conference ID: 10160789.

1Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance 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 $7.0 billion in assets and $4.6 billion in assets under management and supervision through its Wealth Management lines of business at September 30, 2021. Headquartered in Souderton, Pa. and founded in 1876, the Corporation and its subsidiaries provide a full range of financial solutions for individuals, businesses, municipalities and nonprofit organizations primarily in the Mid-Atlantic Region. Univest delivers these services through a network of more than 50 offices and online at www.univest.net.

This press release of Univest 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 capital management strategies, markets and products of Univest. These forward-looking statements involve certain risks and uncertainties in that there are a number of important factors that could cause Univest's future results to differ materially from those expressed or implied by the forward-looking statements. These factors include, but are not limited to: (1) competition; (2) changes in interest rates; (3) changes in asset quality, prepayment speeds, loan sale volumes, charge-offs and credit loss provisions; (4) general 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 the businesses in which Univest is engaged; (7) technological issues that may adversely affect Univest financial operations or those of our customers; (8) changes in the securities markets or (9) risk factors mentioned in the reports and registration statements Univest files with the Securities and Exchange Commission.

Additionally, it is difficult to predict the full impact of the COVID-19 pandemic on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and whether the continued reopening of businesses will result in a meaningful increase in economic activity. 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 the economy is unable to remain open, and higher levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase; (3) collateral for loans, especially real estate, may decline in value; (4) our allowance for credit losses may have to be increased if economic conditions worsen or if borrowers experience financial difficulties; (5) the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; (6) 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; (7) our wealth management revenues may decline with continuing market turmoil; (8) litigation, regulatory enforcement risk and reputation risk regarding our participation in the Paycheck Protection Program and the risk that the Small Business Administration may not fund some or all PPP loan guarantees; (9) our cyber security risks are increased as the result of an increase in the number of employees working remotely; and (10) Federal Deposit Insurance Corporation premiums may increase if the agency experiences additional resolution costs. 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)
September 30, 2021
(Dollars in thousands)             
              
Balance Sheet (Period End)09/30/21 06/30/21 03/31/21 12/31/20 09/30/20    
Assets$6,979,852  $6,356,305  $6,416,665  $6,336,496  $6,382,831     
Cash and cash equivalents 902,357   203,449   187,317   219,858   387,676     
Investment securities, net of allowance for credit losses 393,377   397,426   377,506   373,176   368,830     
Loans held for sale 29,093   27,322   22,636   37,039   14,465     
Loans and leases held for investment, gross 5,252,045   5,327,313   5,415,006   5,306,841   5,211,856     
Allowance for credit losses, loans and leases 70,146   71,355   71,497   83,044   91,870     
Loans and leases held for investment, net 5,181,899   5,255,958   5,343,509   5,223,797   5,119,986     
Total deposits 5,938,154   5,318,704   5,311,592   5,242,715   5,211,603     
Noninterest-bearing deposits 1,861,007   1,872,031   1,857,547   1,690,663   1,714,505     
Interest-bearing demand, money market and savings 3,583,107   2,954,450   2,979,834   2,988,277   2,940,879     
Time deposits 494,040   492,223   474,211   563,775   556,219     
Borrowings 207,898   218,970   295,293   311,421   416,104     
Shareholders' equity 756,023   739,998   722,455   692,472   669,107     
              
              
Balance Sheet (Average)For the three months ended, For the nine months ended,
 09/30/21 06/30/21 03/31/21 12/31/20 09/30/20 09/30/21 09/30/20
Assets$6,698,177  $6,443,629  $6,383,463  $6,353,519  $6,265,605  $6,509,576  $5,892,918 
Investment securities, net of allowance for credit losses 395,280   385,694   374,369   369,511   385,221   385,192   412,924 
Loans and leases, gross 5,320,411   5,389,110   5,325,897   5,253,720   5,070,037   5,345,119   4,766,274 
Deposits 5,666,725   5,351,089   5,296,147   5,222,452   5,030,398   5,439,345   4,726,132 
Shareholders' equity 746,185   728,750   699,736   676,426   661,947   725,061   665,439 
              
              
Asset Quality Data (Period End)              
 09/30/21 06/30/21 03/31/21 12/31/20 09/30/20    
Nonaccrual loans and leases, including nonaccrual troubled debt restructured loans and leases and nonaccrual loans held for sale$34,528  $37,466  $29,996  $31,692  $30,019     
Accruing loans and leases 90 days or more past due 2,204   750   664   1,392   3,573     
Accruing troubled debt restructured loans and leases 51   52   52   53   53     
Total nonperforming loans and leases 36,783   38,268   30,712   33,137   33,645     
Other real estate owned 279   279   7,481   7,355   8,270     
Total nonperforming assets$37,062  $38,547  $38,193  $40,492  $41,915     
Nonaccrual loans and leases / Loans and leases held for investment and nonaccrual loans held for sale 0.66%  0.70%  0.55%  0.60%  0.58%    
Nonperforming loans and leases / Loans and leases held for investment 0.70%  0.72%  0.57%  0.62%  0.65%    
Nonperforming assets / Total assets 0.53%  0.61%  0.60%  0.64%  0.66%    
              
Allowance for credit losses, loans and leases$70,146  $71,355  $71,497  $83,044  $91,870     
Allowance for credit losses, loans and leases / Loans and leases held for investment 1.34%  1.34%  1.32%  1.56%  1.76%    
Allowance for credit losses, loans and leases / Loans and leases held for investment, excluding Paycheck Protection Program loans (1) 1.36%  1.41%  1.46%  1.72%  1.95%    
Allowance for credit losses, loans and leases / Nonaccrual loans and leases held for investment 203.16%  212.97%  238.36%  262.03%  306.04%    
Allowance for credit losses, loans and leases / Nonperforming loans and leases held for investment 190.70%  208.00%  232.80%  250.61%  273.06%    
              
 For the three months ended, For the nine months ended,
 09/30/21 06/30/21 03/31/21 12/31/20 09/30/20 09/30/21 09/30/20
Net loan and lease (recoveries) charge-offs$(75) $243  $288  $618  $(35) $456  $4,030 
Net loan and lease (recoveries) charge-offs (annualized)/Average loans and leases (0.01%)  0.02%  0.02%  0.05%  (0.00%)  0.01%  0.11%
              
(1) Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included at the end of this document. 
              


Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
September 30, 2021
(Dollars in thousands, except per share data)             
 For the three months ended,
 For the nine months ended,
For the period:09/30/21 06/30/21 03/31/21 12/31/20 09/30/20
 09/30/21 09/30/20
Interest income$53,571  $52,441  $51,457  $51,334  $50,612  $157,469  $152,611 
Interest expense 4,884   5,684   6,043   6,813   6,758   16,611   22,771 
Net interest income 48,687   46,757   45,414   44,521   43,854   140,858   129,840 
(Reversal of provision) provision for credit losses (182)  (59)  (11,283)  (8,721)  3,935   (11,524)  49,515 
Net interest income after provision for credit losses 48,869   46,816   56,697   53,242   39,919   152,382   80,325 
Noninterest income:               
Trust fee income 2,126   2,157   2,034   1,974   1,915   6,317   5,729 
Service charges on deposit accounts 1,422   1,314   1,282   1,371   1,187   4,018   3,474 
Investment advisory commission and fee income 4,796   4,558   4,697   4,144   4,005   14,051   11,800 
Insurance commission and fee income 3,837   3,839   4,955   3,512   3,776   12,631   12,575 
Other service fee income 2,576   2,748   2,192   2,092   2,093   7,516   5,451 
Bank owned life insurance income 925   1,620   717   733   741   3,262   2,207 
Net gain on sales of investment securities 21   54   65   54   57   140   817 
Net gain on mortgage banking activities 3,224   3,461   5,938   4,323   5,860   12,623   12,119 
Other income 1,625   479   1,370   1,936   2,171   3,474   4,017 
Total noninterest income 20,552   20,230   23,250   20,139   21,805   64,032   58,189 
Noninterest expense:               
Salaries, benefits and commissions 26,641   25,396   24,780   23,613   24,059   76,817   69,595 
Net occupancy 2,525   2,656   2,739   2,697   2,609   7,920   7,661 
Equipment 1,000   968   946   951   972   2,914   2,890 
Data processing 3,274   3,064   3,050   2,961   2,862   9,388   8,372 
Professional fees 2,174   2,015   1,748   1,436   1,321   5,937   3,902 
Marketing and advertising 539   561   280   575   463   1,380   1,400 
Deposit insurance premiums 765   613   636   765   707   2,014   1,826 
Intangible expenses 214   249   249   282   283   712   934 
Restructuring charges -   -   -   1,439   -   -   - 
Other expense 6,116   5,764   5,112   7,015   5,251   16,992   16,684 
Total noninterest expense 43,248   41,286   39,540   41,734   38,527   124,074   113,264 
Income before taxes 26,173   25,760   40,407   31,647   23,197   92,340   25,250 
Income tax expense 5,262   4,885   7,804   5,773   5,078   17,951   4,208 
Net income$20,911  $20,875  $32,603  $25,874  $18,119  $74,389  $21,042 
Net income per share:               
Basic$0.71  $0.71  $1.11  $0.88  $0.62  $2.53  $0.72 
Diluted$0.71  $0.71  $1.11  $0.88  $0.62  $2.52  $0.72 
Dividends declared per share$0.20  $0.20  $0.20  $-  $0.20  $0.60  $0.60 
Weighted average shares outstanding 29,420,256   29,389,525   29,327,432   29,274,915   29,226,627   29,379,774   29,233,317 
Period end shares outstanding 29,438,402   29,411,731   29,379,575   29,295,052   29,241,302   29,438,402   29,241,302 
                


Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
September 30, 2021
              
              
 For the three months ended, For the nine months ended,
Profitability Ratios (annualized)09/30/21 06/30/21 03/31/21 12/31/20 09/30/20 09/30/21 09/30/20
              
Return on average assets 1.24%  1.30%  2.07%  1.62%  1.15%  1.53%  0.48%
Return on average assets, excluding restructuring charges (1) 1.24%  1.30%  2.07%  1.69%  1.15%  1.53%  0.48%
Return on average shareholders' equity 11.12%  11.49%  18.90%  15.22%  10.89%  13.72%  4.22%
Return on average shareholders' equity, excluding restructuring charges (1) 11.12%  11.49%  18.90%  15.89%  10.89%  13.72%  4.22%
Return on average tangible common equity (1) 14.51%  15.11%  25.20%  20.54%  14.82%  18.07%  5.74%
Return on average tangible common equity, excluding restructuring charges (1) 14.51%  15.11%  25.20%  21.44%  14.82%  18.07%  5.74%
Net interest margin (FTE) 3.11%  3.15%  3.12%  3.02%  3.02%  3.13%  3.21%
Efficiency ratio (2) 61.8%  60.7%  57.0%  63.8%  58.0%  59.8%  59.5%
Efficiency ratio, excluding restructuring charges (1) (2) 61.8%  60.7%  57.0%  61.6%  58.0%  59.8%  59.5%
              
Capitalization Ratios             
              
Dividends declared to net income (3) 28.1%  28.2%  18.0%  0.0%  32.3%  23.7%  83.3%
Shareholders' equity to assets (Period End) 10.83%  11.64%  11.26%  10.93%  10.48%  10.83%  10.48%
Tangible common equity to tangible assets (1) 8.55%  9.15%  8.77%  8.40%  7.95%  8.55%  7.96%
Common equity book value per share$25.68  $25.16  $24.59  $23.64  $22.88  $25.68  $22.88 
Tangible common equity book value per share (1)$19.75  $19.22  $18.64  $17.66  $16.88  $19.75  $16.89 
              
Regulatory Capital Ratios (Period End)              
Tier 1 leverage ratio 9.53%  9.64%  9.45%  9.08%  8.97%  9.53%  8.97%
Common equity tier 1 risk-based capital ratio 11.15%  11.04%  11.08%  10.76%  10.52%  11.15%  10.52%
Tier 1 risk-based capital ratio 11.15%  11.04%  11.08%  10.76%  10.52%  11.15%  10.52%
Total risk-based capital ratio 13.87%  13.82%  15.13%  15.31%  15.35%  13.87%  15.35%
              
(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) As announced in the September 30, 2020 Earnings Release, the Corporation changed the timing of future dividend declarations and payments.    
              


Univest Financial Corporation
Average Balances and Interest Rates (Unaudited)
  For the Three Months Ended, 
Tax Equivalent BasisSeptember 30, 2021 June 30, 2021 
 AverageIncome/Average AverageIncome/Average 
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate 
Assets:        
Interest-earning deposits with other banks$530,191 $189 0.14%$215,349 $46 0.09%
U.S. government obligations 6,999  36 2.04  6,999  35 2.01 
Obligations of state and political subdivisions 2,992  24 3.18  6,070  58 3.83 
Other debt and equity securities 385,289  1,516 1.56  372,625  1,364 1.47 
Federal Home Loan Bank, Federal Reserve Bank and other stock 26,713  334 4.96  25,872  360 5.58 
Total interest-earning deposits, investments and other interest-earning assets 952,184  2,099 0.87  626,915  1,863 1.19 
         
Commercial, financial, and agricultural loans 880,986  7,412 3.34  826,464  6,910 3.35 
Paycheck Protection Program loans 162,611  4,162 10.15  408,928  4,778 4.69 
Real estate—commercial and construction loans 2,784,398  25,634 3.65  2,701,137  24,931 3.70 
Real estate—residential loans 1,100,799  10,171 3.67  1,065,065  9,836 3.70 
Loans to individuals 26,048  253 3.85  25,284  251 3.98 
Municipal loans and leases 247,603  2,504 4.01  251,311  2,598 4.15 
Lease financings 117,966  1,856 6.24  110,921  1,819 6.58 
Gross loans and leases 5,320,411  51,992 3.88  5,389,110  51,123 3.80 
Total interest-earning assets 6,272,595  54,091 3.42  6,016,025  52,986 3.53 
Cash and due from banks 59,642     52,948    
Allowance for credit losses, loans and leases (72,606)    (73,052)   
Premises and equipment, net 55,685     55,903    
Operating lease right-of-use assets 31,998     33,992    
Other assets 350,863     357,813    
Total assets$6,698,177    $6,443,629    
         
Liabilities:        
Interest-bearing checking deposits$857,098 $537 0.25%$786,931 $487 0.25%
Money market savings 1,382,832  922 0.26  1,219,375  831 0.27 
Regular savings 998,568  281 0.11  978,807  282 0.12 
Time deposits 496,702  1,490 1.19  485,060  1,559 1.29 
Total time and interest-bearing deposits 3,735,200  3,230 0.34  3,470,173  3,159 0.37 
         
Short-term borrowings 15,116  2 0.05  19,109  3 0.06 
Long-term debt 95,000  324 1.35  95,000  321 1.36 
Subordinated notes 98,754  1,328 5.34  172,016  2,201 5.13 
Total borrowings 208,870  1,654 3.14  286,125  2,525 3.54 
Total interest-bearing liabilities 3,944,070  4,884 0.49  3,756,298  5,684 0.61 
Noninterest-bearing deposits 1,931,525     1,880,916    
Operating lease liabilities 35,094     37,426    
Accrued expenses and other liabilities 41,303     40,239    
Total liabilities 5,951,992     5,714,879    
         
Shareholders' Equity:        
Common stock 157,784     157,784    
Additional paid-in capital 297,482     296,599    
Retained earnings and other equity 290,919     274,367    
Total shareholders' equity 746,185     728,750    
Total liabilities and shareholders' equity$6,698,177    $6,443,629    
Net interest income $49,207    $47,302   
         
Net interest spread  2.93   2.92 
Effect of net interest-free funding sources  0.18   0.23 
Net interest margin  3.11%  3.15%
Ratio of average interest-earning assets to average interest-bearing liabilities 159.04%    160.16%   
         
Note 1: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been  
included in the average loan balances. Tax-equivalent amounts for the three months ended September 30, 2021 and June 30, 2021 have
been calculated using the Corporation’s federal applicable rate of 21.0%.     
         


Univest Financial Corporation
Average Balances and Interest Rates (Unaudited)
  For the Three Months Ended September 30, 
Tax Equivalent Basis  2021   2020 
 AverageIncome/Average AverageIncome/Average 
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate 
Assets:        
Interest-earning deposits with other banks$530,191 $189 0.14%$368,181 $100 0.11%
U.S. government obligations 6,999  36 2.04  6,998  36 2.05 
Obligations of state and political subdivisions 2,992  24 3.18  18,004  167 3.69 
Other debt and equity securities 385,289  1,516 1.56  360,219  1,610 1.78 
Federal Home Loan Bank, Federal Reserve Bank and other stock 26,713  334 4.96  28,651  419 5.82 
Total interest-earning deposits, investments and other interest-earning assets 952,184  2,099 0.87  782,053  2,332 1.19 
         
Commercial, financial, and agricultural loans 880,986  7,412 3.34  807,376  7,330 3.61 
Paycheck Protection Program loans 162,611  4,162 10.15  500,549  2,811 2.23 
Real estate—commercial and construction loans 2,784,398  25,634 3.65  2,358,971  23,547 3.97 
Real estate—residential loans 1,100,799  10,171 3.67  1,009,407  10,380 4.09 
Loans to individuals 26,048  253 3.85  28,663  309 4.29 
Municipal loans and leases 247,603  2,504 4.01  267,364  2,839 4.22 
Lease financings 117,966  1,856 6.24  97,707  1,662 6.77 
Gross loans and leases 5,320,411  51,992 3.88  5,070,037  48,878 3.84 
Total interest-earning assets 6,272,595  54,091 3.42  5,852,090  51,210 3.48 
Cash and due from banks 59,642     56,715    
Allowance for credit losses, loans and leases (72,606)    (87,046)   
Premises and equipment, net 55,685     55,755    
Operating lease right-of-use assets 31,998     33,875    
Other assets 350,863     354,216    
Total assets$6,698,177    $6,265,605    
         
Liabilities:        
Interest-bearing checking deposits$857,098 $537 0.25%$725,580 $468 0.26%
Money market savings 1,382,832  922 0.26  1,116,628  897 0.32 
Regular savings 998,568  281 0.11  901,716  449 0.20 
Time deposits 496,702  1,490 1.19  525,656  2,214 1.68 
Total time and interest-bearing deposits 3,735,200  3,230 0.34  3,269,580  4,028 0.49 
         
Short-term borrowings 15,116  2 0.05  130,359  97 0.30 
Long-term debt 95,000  324 1.35  208,776  742 1.41 
Subordinated notes 98,754  1,328 5.34  155,945  1,891 4.82 
Total borrowings 208,870  1,654 3.14  495,080  2,730 2.19 
Total interest-bearing liabilities 3,944,070  4,884 0.49  3,764,660  6,758 0.71 
Noninterest-bearing deposits 1,931,525     1,760,818    
Operating lease liabilities 35,094     37,170    
Accrued expenses and other liabilities 41,303     41,010    
Total liabilities 5,951,992     5,603,658    
         
Shareholders' Equity:        
Common stock 157,784     157,784    
Additional paid-in capital 297,482     296,272    
Retained earnings and other equity 290,919     207,891    
Total shareholders' equity 746,185     661,947    
Total liabilities and shareholders' equity$6,698,177    $6,265,605    
Net interest income $49,207    $44,452   
         
Net interest spread  2.93   2.77 
Effect of net interest-free funding sources  0.18   0.25 
Net interest margin  3.11%  3.02%
Ratio of average interest-earning assets to average interest-bearing liabilities 159.04%    155.45%   
         
Note 1: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been 
included in the average loan balances. Tax-equivalent amounts for the three months ended September 30, 2021 and 2020 have 
been calculated using the Corporation’s federal applicable rate of 21.0%.     
         


Univest Financial Corporation
Average Balances and Interest Rates (Unaudited)
 For the Nine Months Ended September 30, 
Tax Equivalent Basis  2021   2020 
 AverageIncome/Average AverageIncome/Average 
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate 
Assets:        
Interest-earning deposits with other banks$328,768 $291 0.12%$267,023 $492 0.25%
U.S. government obligations 6,999  107 2.04  7,176  109 2.03 
Obligations of state and political subdivisions 6,838  187 3.66  26,019  696 3.57 
Other debt and equity securities 371,355  4,147 1.49  379,729  6,460 2.27 
Federal Home Loan Bank, Federal Reserve Bank and other stock 26,319  1,042 5.29  29,689  1,308 5.88 
Total interest-earning deposits, investments and other interest-earning assets 740,279  5,774 1.04  709,636  9,065 1.71 
         
Commercial, financial, and agricultural loans 830,248  21,120 3.40  815,178  23,291 3.82 
Paycheck Protection Program loans 358,231  13,464 5.03  291,173  4,939 2.27 
Real estate—commercial and construction loans 2,703,100  75,023 3.71  2,244,143  70,574 4.20 
Real estate—residential loans 1,067,855  29,880 3.74  1,001,904  31,702 4.23 
Loans to individuals 25,925  769 3.97  29,251  1,043 4.76 
Municipal loans and leases 248,191  7,632 4.11  291,845  9,081 4.16 
Lease financings 111,569  5,412 6.49  92,780  4,808 6.92 
Gross loans and leases 5,345,119  153,300 3.83  4,766,274  145,438 4.08 
Total interest-earning assets 6,085,398  159,074 3.49  5,475,910  154,503 3.77 
Cash and due from banks 55,983     51,544    
Allowance for credit losses, loans and leases (76,265)    (66,977)   
Premises and equipment, net 55,803     55,967    
Operating lease right-of-use assets 33,334     34,278    
Other assets 355,323     342,196    
Total assets$6,509,576    $5,892,918    
         
Liabilities:        
Interest-bearing checking deposits$820,800 $1,514 0.25%$642,935 $1,636 0.34%
Money market savings 1,282,470  2,606 0.27  1,079,279  4,653 0.58 
Regular savings 979,013  861 0.12  863,772  1,716 0.27 
Time deposits 502,414  4,808 1.28  568,517  7,801 1.83 
Total time and interest-bearing deposits 3,584,697  9,789 0.37  3,154,503  15,806 0.67 
         
Short-term borrowings 17,363  7 0.05  110,689  325 0.39 
Long-term debt 97,088  993 1.37  196,053  2,268 1.55 
Subordinated notes 151,060  5,822 5.15  115,376  4,372 5.06 
Total borrowings 265,511  6,822 3.44  422,118  6,965 2.20 
Total interest-bearing liabilities 3,850,208  16,611 0.58  3,576,621  22,771 0.85 
Noninterest-bearing deposits 1,854,648     1,571,629    
Operating lease liabilities 36,636     37,538    
Accrued expenses and other liabilities 43,023     41,691    
Total liabilities 5,784,515     5,227,479    
         
Shareholders' Equity:        
Common stock 157,784     157,784    
Additional paid-in capital 296,744     295,759    
Retained earnings and other equity 270,533     211,896    
Total shareholders' equity 725,061     665,439    
Total liabilities and shareholders' equity$6,509,576    $5,892,918    
Net interest income $142,463    $131,732   
         
Net interest spread  2.91   2.92 
Effect of net interest-free funding sources  0.22   0.29 
Net interest margin  3.13%  3.21%
Ratio of average interest-earning assets to average interest-bearing liabilities 158.05%    153.10%   
         
Note 1: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been 
included in the average loan balances. Tax-equivalent amounts for the nine months ended September 30, 2021 and 2020 have 
been calculated using the Corporation’s federal applicable rate of 21.0%.     
         


Univest Financial Corporation 
Loan Portfolio Overview (Unaudited) 
  
         
(Dollars in thousands)As of September 30, 2021 
Industry DescriptionTotal Outstanding Balance (excl PPP) % of Commercial Loan Portfolio $ Balance of Modified Loans (1) Modified Loans as a % of Portfolio (1) 
CRE - Retail 365,379 8.6% - -%
Animal Production 291,723 6.8  - - 
CRE - 1-4 Family Residential Investment 255,116 6.0  - - 
CRE - Office 240,011 5.6  - - 
CRE - Multi-family 206,667 4.8  - - 
CRE - Industrial / Warehouse 180,421 4.2  - - 
Nursing and Residential Care Facilities 171,482 4.0  - - 
Hotels & Motels (Accommodation) 170,042 4.0  10,613 6.2 
Education 156,395 3.7  - - 
Specialty Trade Contractors 122,222 2.9  - - 
CRE - Mixed-Use - Residential 120,873 2.8  - - 
CRE - Medical Office 103,553 2.4  - - 
Real Estate Lenders, Secondary Market Financing 98,983 2.3  - - 
Homebuilding (tract developers, remodelers) 92,782 2.2  - - 
Merchant Wholesalers, Durable Goods 87,849 2.1  - - 
Crop Production 75,439 1.8  - - 
Private Equity & Special Purpose Entities 74,026 1.7  - - 
Rental and Leasing Services 70,499 1.7  - - 
Motor Vehicle and Parts Dealers 66,880 1.6  - - 
Food Manufacturing 65,857 1.5  - - 
Wood Product Manufacturing 64,403 1.5  - - 
Fabricated Metal Product Manufacturing 60,991 1.4  - - 
Merchant Wholesalers, Nondurable Goods 60,276 1.4  - - 
Food Services and Drinking Places 57,794 1.3  - - 
Administrative and Support Services 53,430 1.3  104 0.2 
Miniwarehouse / Self-Storage 52,815 1.2  - - 
Industries with >$50 million in outstandings$3,365,908 78.8%$10,717 0.3%
Industries with <$50 million in outstandings$903,880 21.2%$6,878 0.8%
Total Commercial Loans$4,269,788 100.0%$17,595 0.4%
         
         
Consumer Loans and Lease FinancingsTotal Outstanding Balance   $ Balance of Modified Loans (1) Modified Loans as a % of Portfolio (1) 
Real Estate-Residential Secured for Personal Purpose 535,705    337 0.1%
Real Estate-Home Equity Secured for Personal Purpose 159,029    - - 
Loans to Individuals 26,458    15 0.1 
Lease Financings 175,464    107 0.1 
Total - Consumer Loans and Lease Financings$896,656   $459 0.1%
         
Total$5,166,444   $18,054 0.3%
         
(1) Loan modifications referenced above were made in accordance with Section 4013 of the CARES Act, the Consolidated Appropriations Act, 2021 and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus and therefore were not classified as TDRs as of September 30, 2021.        
         


Univest Financial Corporation
Non-GAAP Reconciliation
September 30, 2021
 
 
Non-GAAP to GAAP Reconciliation
Management uses non-GAAP measures in its analysis of the Corporation's performance. These measures should not be considered a substitute for GAAP basis measures nor should they be viewed as a substitute for operating results determined in accordance with GAAP. Management believes the presentation of the non-GAAP financial measures, which exclude the impact of the specified items, provides useful supplemental information that is essential to a proper understanding of the financial results of the Corporation. See the table below for additional information on non-GAAP measures used throughout this earnings release.
              
 As of or for the three months ended, As of or for the nine months ended,
 09/30/21 06/30/21 03/31/21 12/31/20 09/30/20 09/30/21 09/30/20
Restructuring charges (a)$-  $-  $-  $1,439  $-  $-  $- 
Tax effect of restructuring charges -   -   -   (302)  -   -   - 
Restructuring charges, net of tax$-  $-  $-  $1,137  $-  $-  $- 
              
Shareholders' equity$756,023  $739,998  $722,455  $692,472  $669,107  $756,023  $669,107 
Goodwill (172,559)  (172,559)  (172,559)  (172,559)  (172,559)  (172,559)  (172,559)
Other intangibles (b) (1,922)  (2,073)  (2,326)  (2,580)  (2,866)  (1,922)  (2,866)
Tangible common equity$581,542  $565,366  $547,570  $517,333  $493,682  $581,542  $493,682 
              
Total assets$6,979,852  $6,356,305  $6,416,665  $6,336,496  $6,382,831  $6,979,852  $6,382,831 
Goodwill (172,559)  (172,559)  (172,559)  (172,559)  (172,559)  (172,559)  (172,559)
Other intangibles (b) (1,922)  (2,073)  (2,326)  (2,580)  (2,866)  (1,922)  (2,866)
Tangible assets$6,805,371  $6,181,673  $6,241,780  $6,161,357  $6,207,406  $6,805,371  $6,207,406 
              
Average shareholders' equity$746,185  $728,750  $699,736  $676,426  $661,947  $725,061  $665,439 
Average goodwill (172,559)  (172,559)  (172,559)  (172,559)  (172,559)  (172,559)  (172,559)
Average other intangibles (b) (1,983)  (2,209)  (2,464)  (2,734)  (3,019)  (2,217)  (3,332)
Average tangible common equity$571,643  $553,982  $524,713  $501,133  $486,369  $550,285  $489,548 
              
Net income before taxes$26,173  $25,760  $40,407  $31,647  $23,197  $92,340  $25,250 
Provision for credit losses (182)  (59)  (11,283)  (8,721)  3,935   (11,524)  49,515 
Pre-tax pre-provision income$25,991  $25,701  $29,124  $22,926  $27,132  $80,816  $74,765 
              
Loans and leases held for investment, gross$5,252,045  $5,327,313  $5,415,006  $5,306,841  $5,211,856  $5,252,045  $5,211,856 
Paycheck Protection Program ("PPP") loans (85,601)  (252,849)  (528,452)  (483,773)  (501,580)  (85,601)  (501,580)
Gross loans and leases excluding PPP loans$5,166,444  $5,074,464  $4,886,554  $4,823,068  $4,710,276  $5,166,444  $4,710,276 
              
Allowance for credit losses, loans and leases$70,146  $71,355  $71,497  $83,044  $91,870  $70,146  $91,870 
Gross loans and leases excluding PPP loans 5,166,444   5,074,464   4,886,554   4,823,068   4,710,276   5,166,444   4,710,276 
Allowance for credit losses, loans and leases as a percentage of gross loans and leases excluding PPP loans 1.36%  1.41%  1.46%  1.72%  1.95%  1.36%  1.95%
              
(a) Associated with financial center optimization plan             
(b) Amount does not include mortgage servicing rights            
              

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

Primary Logo

Related Links: 
Author:
Copyright GlobeNewswire, Inc. 2016. All rights reserved.
You can register yourself on the website to receive press releases directly via e-mail to your own e-mail account.