• Univest Financial Corporation Reports Third Quarter Results

    Source: Nasdaq GlobeNewswire / 25 Oct 2023 15:15:01   America/Chicago

    SOUDERTON, Pa., Oct. 25, 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 September 30, 2023 was $17.0 million, or $0.58 diluted earnings per share, compared to net income of $20.8 million, or $0.71 diluted earnings per share, for the quarter ended September 30, 2022.

    Loans
    Gross loans and leases increased $112.7 million, or 1.7% (7.0% annualized), from June 30, 2023, primarily due to increases in commercial, commercial real estate, construction and residential mortgage loans. Gross loans and leases increased $451.7 million, or 7.4% (9.8% annualized), from December 31, 2022, primarily due to increases in commercial real estate, construction, residential mortgage loans and lease financings.

    Deposits and Liquidity
    Total deposits increased $451.8 million, or 7.5% (30.2% annualized), from June 30, 2023 and $525.6 million, or 8.9% (11.9% annualized), from December 31, 2022. The increase from June 30, 2023 was primarily due to seasonal increases in public funds partially offset by decreases in commercial and consumer deposits. The increase from December 31, 2022 was primarily due to increases in brokered deposits and seasonal public funds deposits partially offset by decreases in commercial and consumer deposits. Noninterest-bearing deposits represented 22.2% of total deposits at September 30, 2023, down from 26.4% at June 30, 2023. At September 30, 2023, unprotected deposits, which excludes insured accounts, internal accounts, and collateralized trust accounts, represented 20.8% of total deposits, down from 23.3% at June 30, 2023.

    As of September 30, 2023, the Corporation had cash and cash equivalents totaling $290.3 million. The Corporation and its subsidiaries had committed borrowing capacity of $3.3 billion at September 30, 2023, of which $1.7 billion was available. The Corporation and its subsidiaries also maintained unused uncommitted funding sources from correspondent banks of $369.0 million at September 30, 2023. 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availability under these uncommitted funding sources is subject to the prerogatives of the granting banks and may be withdrawn at will.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 $53.6 million for the three months ended September 30, 2023 decreased $740 thousand, or 1.4%, from the three months ended June 30, 2023, and $4.7 million, or 8.0%, from the three months ended September 30, 2022. The decrease in net interest income for both comparison periods was due to increases in the cost of funds and the average balance of interest-bearing liabilities, partially offset by an increase in the yield and average balance of interest-earning assets.

    Net interest margin, on a tax-equivalent basis, was 2.96% for the third quarter of 2023, compared to 3.14% for the second quarter of 2023 and 3.67% for the third quarter of 2022. Excess liquidity reduced net interest margin by approximately four basis points for the quarter ended September 30, 2023, and approximately one basis point for the quarter ended September 30, 2022. Excess liquidity had no impact on the quarter ended June 30, 2023.

    Noninterest Income
    Noninterest income for the quarter ended September 30, 2023 was $18.7 million, an increase of $732 thousand, or 4.1%, compared to the third quarter of 2022.

    Investment advisory commission and fee income increased $644 thousand, or 15.3%, for the quarter ended September 30, 2023, 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 $410 thousand, or 9.2%, for the quarter ended September 30, 2023, primarily due to increased revenue from commercial lines. Net gain on mortgage banking activities increased $399 thousand, or 48.8%, for the quarter ended September 30, 2023, due to increased volume.

    Bank owned life insurance ("BOLI") decreased $347 thousand, or 30.1%, for the quarter ended September 30, 2023, primarily due to a death benefit claim of $446 thousand received in the third quarter of 2022. Other income decreased $639 thousand, or 73.7%, for the quarter ended September 30, 2023, primarily due to a $412 thousand decrease in the gain on sale of Small Business Administration ("SBA") loans.

    Noninterest Expense
    Noninterest expense for the quarter ended September 30, 2023 was $49.0 million, an increase of $2.3 million, or 5.0%, compared to the third quarter of 2022.

    Salaries, benefits and commissions increased $578 thousand, or 2.0%, for the quarter ended September 30, 2023. This increase reflects our expansion into Maryland and Western Pennsylvania and annual merit increases, increases in medical claims expense and decreases in compensation capitalized driven by lower loan production, offset by decreases due to the staff reduction that was announced during the second quarter and a reduction in incentive compensation due to decreased profitability.

    Deposit insurance premiums increased $596 thousand, or 90.0%, for the quarter ended September 30, 2023, primarily driven by an increased industry-wide assessment rate and an increase in our assessment base.

    Other expense increased $1.5 million, or 26.7%, for the quarter ended September 30, 2023, primarily due to increases in retirement plan costs of $527 thousand. Other increases included $324 thousand of loan processing and workout fees. Federal Home Loan Bank letter of credit fees increased by $138 thousand due to increased public fund deposits and related collateral costs.

    Professional fees decreased $758 thousand, or 30.1%, for the quarter ended September 30, 2023, primarily due to consultant fees incurred in the third quarter of 2022 related to our digital transformation initiative.

    Tax Provision
    The effective income tax rate was 20.0% for the quarters ended September 30, 2023 and 2022. The effective tax rates for the three months ended September 30, 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 $40.1 million at September 30, 2023, compared to $34.5 million at June 30, 2023 and $33.0 million at September 30, 2022. On October 16, 2023, a $5.8 million loan was sold at par. This loan was classified as nonperforming at September 30, 2023.

    Net loan and lease charge-offs were $969 thousand for the three months ended September 30, 2023 compared to $512 thousand and $1.2 million for the three months ended June 30, 2023 and September 30, 2022, respectively.

    The provision for credit losses was $2.0 million for the three months ended September 30, 2023 compared to $3.4 million and $3.6 million for the three months ended June 30, 2023 and September 30, 2022, respectively. The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment was 1.28% at September 30, 2023, June 30, 2023 and September 30, 2022.

    Dividend
    On October 25, 2023, Univest declared a quarterly cash dividend of $0.21 per share to be paid on November 22, 2023 to shareholders of record as of November 8, 2023.

    Conference Call
    Univest will host a conference call to discuss third quarter 2023 results on Thursday, October 26, 2023 at 9:00 a.m. EST. Participants may preregister at https://www.netroadshow.com/events/login?show=05f2e363&confId=56351. The general public can access the call by dialing 1-833-470-1428; using Access Code 988711. A replay of the conference call will be available through November 23, 2023 by dialing 1-866-813-9403; using Access Code 428932.

    About Univest Financial Corporation
    Univest Financial Corporation (UVSP), including its wholly-owned subsidiary Univest Bank and Trust Co., Member FDIC, has approximately $7.8 billion in assets and $4.3 billion in assets under management and supervision through its Wealth Management lines of business at September 30, 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 of operations, 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 and/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 and 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 current or anticipated impact of military conflict, terrorism or other geopolitical events; (11) our ability to enter into new markets successfully and capitalize on growth opportunities and/or (12) risk factors mentioned in the reports and registration statements Univest files with the Securities and Exchange Commission.

    (UVSP - ER)


    Univest Financial Corporation
    Consolidated Selected Financial Data (Unaudited)
    September 30, 2023
    (Dollars in thousands)              
                   
    Balance Sheet (Period End) 09/30/23 06/30/23 03/31/23 12/31/22 09/30/22    
    ASSETS              
    Cash and due from banks $68,900  $80,795  $71,215  $84,176  $65,859     
    Interest-earning deposits with other banks  221,441   59,616   67,109   68,623   47,451     
    Cash and cash equivalents  290,341   140,411   138,324   152,799   113,310     
    Investment securities held-to-maturity  149,451   153,509   151,347   154,727   159,170     
    Investment securities available for sale, net of allowance for credit losses  334,538   356,164   367,656   350,256   347,479     
    Investments in equity securities  4,054   3,443   3,105   2,579   2,994     
    Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost  42,417   42,811   43,792   33,841   29,475     
    Loans held for sale  16,473   29,526   5,425   5,037   9,087     
    Loans and leases held for investment  6,574,958   6,462,238   6,239,804   6,123,230   5,849,259     
    Less: Allowance for credit losses, loans and leases  (83,837)  (82,709)  (80,034)  (79,004)  (74,929)    
    Net loans and leases held for investment  6,491,121   6,379,529   6,159,770   6,044,226   5,774,330     
    Premises and equipment, net  51,287   52,058   52,334   50,939   50,533     
    Operating lease right-of-use assets  31,053   30,237   31,663   30,059   30,654     
    Goodwill  175,510   175,510   175,510   175,510   175,510     
    Other intangibles, net of accumulated amortization  11,079   10,923   11,044   11,384   11,650     
    Bank owned life insurance  130,522   129,715   128,926   120,297   120,035     
    Accrued interest and other assets  100,220   96,314   90,095   90,362   83,170     
    Total assets $7,828,066  $7,600,150  $7,358,991  $7,222,016  $6,907,397     
                   
    LIABILITIES              
    Noninterest-bearing deposits $1,432,559  $1,582,767  $1,799,225  $2,047,263  $1,968,422     
    Interest-bearing deposits:  5,006,606   4,404,635   4,035,432   3,866,263   3,818,554     
    Total deposits  6,439,165   5,987,402   5,834,657   5,913,526   5,786,976     
    Short-term borrowings  14,676   244,666   271,881   197,141   80,711     
    Long-term debt  320,000   320,000   220,000   95,000   95,000     
    Subordinated notes  148,636   148,510   148,385   148,260   99,107     
    Operating lease liabilities  34,017   33,428   34,846   33,153   33,718     
    Accrued expenses and other liabilities  64,374   60,922   50,726   58,436   57,698     
    Total liabilities  7,020,868   6,794,928   6,560,495   6,445,516   6,153,210     
                   
    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  300,171   299,212   298,167   300,808   299,791     
    Retained earnings  464,634   453,806   443,493   428,637   410,942     
    Accumulated other comprehensive loss, net of tax benefit  (71,586)  (61,034)  (55,550)  (62,104)  (64,985)    
    Treasury stock, at cost  (43,805)  (44,546)  (45,398)  (48,625)  (49,345)    
    Total shareholders’ equity  807,198   805,222   798,496   776,500   754,187     
    Total liabilities and shareholders’ equity $7,828,066  $7,600,150  $7,358,991  $7,222,016  $6,907,397     
                   
                   
      For the three months ended, For the nine months ended,
    Balance Sheet (Average) 09/30/23 06/30/23 03/31/23 12/31/22 09/30/22 09/30/23 09/30/22
    Assets $7,693,983  $7,440,798  $7,219,211  $7,019,381  $6,797,466  $7,453,070 $6,935,031
    Investment securities, net of allowance for credit losses  506,341   518,995   515,880   505,717   517,335   513,704  518,383
    Loans and leases, gross  6,537,169   6,372,342   6,164,890   5,979,581   5,752,119   6,359,498  5,540,624
    Deposits  6,222,710   5,844,582   5,834,415   5,837,823   5,645,291   5,968,659  5,843,182
    Shareholders' equity  811,515   806,709   789,153   767,192   773,099   802,541  772,951
                   



    Univest Financial Corporation 
    Consolidated Summary of Loans by Type and Asset Quality Data (Unaudited) 
    September 30, 2023 
    (Dollars in thousands)               
                    
    Summary of Major Loan and Lease Categories (Period End) 09/30/23 06/30/23 03/31/23 12/31/22 09/30/22     
    Commercial, financial and agricultural $1,050,004  $1,039,265  $1,032,753  $1,088,928  $1,054,940      
    Real estate-commercial  3,275,140   3,221,993   3,128,210   3,027,955   2,936,204      
    Real estate-construction  427,561   413,404   376,569   381,811   329,915      
    Real estate-residential secured for business purpose  516,471   517,521   498,505   478,254   443,837      
    Real estate-residential secured for personal purpose  861,122   832,632   779,557   730,395   685,771      
    Real estate-home equity secured for personal purpose  176,855   175,090   172,073   176,699   175,843      
    Loans to individuals  27,331   25,544   28,656   27,873   26,679      
    Lease financings  240,474   236,789   223,481   211,315   196,070      
    Total loans and leases held for investment, net of deferred income  6,574,958   6,462,238   6,239,804   6,123,230   5,849,259      
    Less: Allowance for credit losses, loans and leases  (83,837)  (82,709)  (80,034)  (79,004)  (74,929)     
    Net loans and leases held for investment $6,491,121  $6,379,529  $6,159,770  $6,044,226  $5,774,330      
                    
                    
    Asset Quality Data (Period End)  09/30/23 06/30/23 03/31/23 12/31/22 09/30/22     
    Nonaccrual loans and leases, including nonaccrual loans held for sale* $18,085  $15,087  $11,362  $13,353  $13,620      
    Accruing loans and leases 90 days or more past due  2,135   55   1,996   875   416      
    Total nonperforming loans and leases  20,220   15,142   13,358   14,228   14,036      
    Other real estate owned  19,916   19,345   19,000   19,258   18,960      
    Total nonperforming assets $40,136  $34,487  $32,358  $33,486  $32,996      
    Nonaccrual loans and leases / Loans and leases held for investment  0.28%  0.23%  0.18%  0.22%  0.23%     
    Nonperforming loans and leases / Loans and leases held for investment  0.31%  0.23%  0.21%  0.23%  0.24%     
    Nonperforming assets / Total assets  0.51%  0.45%  0.44%  0.46%  0.48%     
                    
    Allowance for credit losses, loans and leases $83,837  $82,709  $80,034  $79,004  $74,929      
    Allowance for credit losses, loans and leases / Loans and leases held for investment  1.28%  1.28%  1.28%  1.29%  1.28%     
    Allowance for credit losses, loans and leases / Nonaccrual loans and leases  463.57%  548.21%  704.40%  591.66%  550.14%     
    Allowance for credit losses, loans and leases / Nonperforming loans and leases  414.62%  546.22%  599.15%  555.27%  533.83%     
    *Includes a $5.8 million loan held for sale at September 30, 2023.               
                    
      For the three months ended, For the nine months ended, 
      09/30/23 06/30/23 03/31/23 12/31/22 09/30/22 09/30/23 09/30/22 
    Net loan and lease charge-offs $969  $512  $2,842  $908  $1,196  $4,323  $2,987  
    Net loan and lease charge-offs (annualized)/Average loans and leases  0.06%  0.03%  0.19%  0.06%  0.08%  0.09%  0.07% 



    Univest Financial Corporation 
    Consolidated Selected Financial Data (Unaudited) 
    September 30, 2023 
    (Dollars in thousands, except per share data)               
      For the three months ended, For the nine months ended, 
    For the period: 09/30/23 06/30/23 03/31/23 12/31/22 09/30/22 09/30/23 09/30/22 
    Interest income $97,106 $90,139 $83,253 $77,401 $66,877  270,498 $174,792 
    Interest expense  43,516  35,809  23,936  15,485  8,627  103,261  18,411 
         Net interest income  53,590  54,330  59,317  61,916  58,250  167,237  156,381 
    Provision for credit losses  2,024  3,428  3,387  5,416  3,558  8,839  6,782 
    Net interest income after provision for credit losses  51,566  50,902  55,930  56,500  54,692  158,398  149,599 
    Noninterest income:               
         Trust fee income  1,910  1,924  1,955  1,808  1,835  5,789  5,935 
         Service charges on deposit accounts  1,816  1,725  1,547  1,575  1,522  5,088  4,600 
         Investment advisory commission and fee income  4,843  4,708  4,752  5,585  4,199  14,303  14,163 
         Insurance commission and fee income  4,852  5,108  6,487  4,424  4,442  16,447  14,641 
         Other service fee income  3,020  3,318  3,076  3,236  3,124  9,414  9,189 
         Bank owned life insurance income  806  789  767  1,230  1,153  2,362  2,557 
         Net gain on sales of investment securities  -  -  -  -  -  -  30 
         Net gain on mortgage banking activities  1,216  1,039  625  436  817  2,880  3,976 
         Other income  228  1,222  471  2,164  867  1,921  2,336 
    Total noninterest income  18,691  19,833  19,680  20,458  17,959  58,204  57,427 
    Noninterest expense:               
    Salaries, benefits and commissions  29,978  29,875  31,014  29,028  29,400  90,867  86,778 
    Net occupancy  2,594  2,614  2,727  2,551  2,504  7,935  7,642 
    Equipment  1,087  986  993  977  968  3,066  2,927 
    Data processing  4,189  4,137  4,029  4,039  3,901  12,355  11,176 
    Professional fees  1,763  1,669  1,941  1,829  2,521  5,373  7,503 
    Marketing and advertising  555  622  371  739  605  1,548  1,723 
    Deposit insurance premiums  1,258  1,116  1,101  708  662  3,475  2,367 
    Intangible expenses  220  253  253  301  309  726  992 
    Restructuring charges  -  1,330  -  184  -  1,330  - 
    Other expense  7,344  7,197  7,100  6,970  5,795  21,641  18,340 
    Total noninterest expense  48,988  49,799  49,529  47,326  46,665  148,316  139,448 
    Income before taxes  21,269  20,936  26,081  29,632  25,986  68,286  67,578 
    Income tax expense  4,253  4,136  5,047  5,796  5,185  13,436  13,294 
    Net income $17,016 $16,800 $21,034 $23,836 $20,801 $54,850 $54,284 
    Net income per share:               
         Basic $0.58 $0.57 $0.72 $0.82 $0.71 $1.86 $1.85 
         Diluted $0.58 $0.57 $0.71 $0.81 $0.71 $1.86 $1.84 
    Dividends declared per share $0.21 $0.21 $0.21 $0.21 $0.21 $0.63 $0.62 
    Weighted average shares outstanding  29,479,066  29,439,392  29,312,265  29,251,293  29,290,829  29,410,852  29,440,228 
    Period end shares outstanding  29,508,128  29,471,124  29,427,696  29,271,915  29,242,451  29,508,128  29,242,451 
                    



    Univest Financial Corporation
    Consolidated Selected Financial Data (Unaudited)
    September 30, 2023
                      
                      
                      
         For the three months ended, For the nine months ended,
    Profitability Ratios (annualized)  09/30/23 06/30/23 03/31/23 12/31/22 09/30/22 09/30/23 09/30/22
                      
    Return on average assets   0.88%  0.91%  1.18%  1.35%  1.21%  0.98%  1.05%
    Return on average assets, excluding restructuring  0.88%  0.96%  1.18%  1.36%  1.21%  1.00%  1.05%
    charges (1)                 
    Return on average shareholders' equity  8.32%  8.35%  10.81%  12.33%  10.67%  9.14%  9.39%
    Return on average shareholders' equity, excluding  8.32%  8.88%  10.81%  12.40%  10.67%  9.31%  9.39%
    restructuring charges (1)               
    Return on average tangible common equity (1)(3)  10.77%  10.85%  14.11%  16.23%  14.06%  11.87%  12.40%
    Return on average tangible common equity, excluding  10.77%  11.52%  14.11%  16.33%  14.06%  12.10%  12.40%
    restructuring charges (1)(3)               
    Net interest margin (FTE)   2.96%  3.14%  3.58%  3.76%  3.67%  3.22%  3.25%
    Efficiency ratio (2)    67.3%  66.7%  62.2%  56.9%  60.6%  65.3%  64.6%
    Efficiency ratio, excluding restructuring charges (1)(2)  67.3%  64.9%  62.2%  56.7%  60.6%  64.7%  64.6%
                      
    Capitalization Ratios                
                      
    Dividends declared to net income   36.4%  36.8%  29.2%  25.8%  29.6%  33.8%  33.6%
    Shareholders' equity to assets (Period End)  10.31%  10.59%  10.85%  10.75%  10.92%  10.31%  10.92%
    Tangible common equity to tangible assets (1)  8.22%  8.45%  8.63%  8.49%  8.55%  8.22%  8.55%
    Common equity book value per share $27.36  $27.32  $27.13  $26.53  $25.79  $27.36  $25.79 
    Tangible common equity book value per share (1) $21.32  $21.27  $21.07  $20.42  $19.67  $21.32  $19.67 
                      
    Regulatory Capital Ratios (Period End)               
    Tier 1 leverage ratio    9.43%  9.59%  9.71%  9.81%  9.87%  9.43%  9.87%
    Common equity tier 1 risk-based capital ratio  10.32%  10.26%  10.43%  10.37%  10.51%  10.32%  10.51%
    Tier 1 risk-based capital ratio   10.32%  10.26%  10.43%  10.37%  10.51%  10.32%  10.51%
    Total risk-based capital ratio   13.58%  13.54%  13.78%  13.67%  13.10%  13.58%  13.10%
                      
    (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 BasisSeptember 30, 2023 June 30, 2023 
     AverageIncome/Average AverageIncome/Average 
    (Dollars in thousands)BalanceExpenseRate BalanceExpenseRate 
    Assets:        
    Interest-earning deposits with other banks$143,109 $1,8655.17%$46,897 $5124.38%
    Obligations of state and political subdivisions* 2,281  162.78  2,284  152.63 
    Other debt and equity securities 504,060  3,5402.79  516,711  3,5122.73 
    Federal Home Loan Bank, Federal Reserve Bank and other stock 40,406  7126.99  43,783  7817.15 
    Total interest-earning deposits, investments and other interest-earning assets 689,856  6,1333.53  609,675  4,8203.17 
             
    Commercial, financial, and agricultural loans 995,355  17,5456.99  1,005,499  16,9196.75 
    Real estate—commercial and construction loans 3,552,709  49,5485.53  3,445,431  45,9605.35 
    Real estate—residential loans 1,543,360  18,2704.70  1,483,478  17,2164.65 
    Loans to individuals 26,538  5257.85  26,794  4797.17 
    Municipal loans and leases * 234,685  2,4304.11  234,940  2,3884.08 
    Lease financings 184,522  2,9286.30  176,200  2,6596.05 
         Gross loans and leases 6,537,169  91,2465.54  6,372,342  85,6215.39 
    Total interest-earning assets 7,227,025  97,3795.35  6,982,017  90,4415.20 
    Cash and due from banks 62,673     58,675    
    Allowance for credit losses, loans and leases (83,827)    (81,641)   
    Premises and equipment, net 52,071     52,540    
    Operating lease right-of-use assets 31,647     31,200    
    Other assets 404,394     398,007    
          Total assets$7,693,983    $7,440,798    
             
    Liabilities:        
    Interest-bearing checking deposits$1,070,063 $6,7032.49%$1,011,889 $5,3922.14%
    Money market savings 1,645,210  17,8504.30  1,460,899  14,0893.87 
    Regular savings 828,672  8610.41  888,680  8450.38 
    Time deposits 1,140,622  11,6684.06  823,665  7,1413.48 
         Total time and interest-bearing deposits 4,684,567  37,0823.14  4,185,133  27,4672.63 
             
    Short-term borrowings 93,028  1,1174.76  255,090  3,2495.11 
    Long-term debt 320,000  3,0363.76  301,593  2,8113.74 
    Subordinated notes 148,568  2,2816.09  148,443  2,2826.17 
         Total borrowings 561,596  6,4344.55  705,126  8,3424.75 
         Total interest-bearing liabilities 5,246,163  43,5163.29  4,890,259  35,8092.94 
    Noninterest-bearing deposits 1,538,143     1,659,449    
    Operating lease liabilities 34,788     34,415    
    Accrued expenses and other liabilities 63,374     49,966    
         Total liabilities 6,882,468     6,634,089    
    Total interest-bearing liabilities and noninterest-bearing deposits ("Cost of Funds") 6,784,306  2.54  6,549,708  2.19 
             
    Shareholders' Equity:        
    Common stock 157,784     157,784    
    Additional paid-in capital 299,575     298,788    
    Retained earnings and other equity 354,156     350,137    
         Total shareholders' equity 811,515     806,709    
         Total liabilities and shareholders' equity$7,693,983    $7,440,798    
    Net interest income $53,863   $54,632  
             
    Net interest spread  2.06   2.26 
    Effect of net interest-free funding sources  0.90   0.88 
    Net interest margin  2.96%  3.14%
    Ratio of average interest-earning assets to average interest-bearing liabilities 137.76%    142.77%   
             
    * Obligations of states and political subdivisions and municipal loans and leases are tax-exempt earning assets. 
    Notes: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
                   Net interest income includes net deferred costs amortization of $563 thousand and $668 thousand for the three months ended September 30, 2023 and June 30, 2023, respectively.
                   Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included in the average loan balances. Tax-equivalent amounts for the three months ended September 30, 2023 and June 30, 2023 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  2023    2022  
     AverageIncome/Average AverageIncome/Average 
    (Dollars in thousands)BalanceExpenseRate BalanceExpenseRate 
    Assets:        
    Interest-earning deposits with other banks$143,109 $1,8655.17%$49,476 $2522.02%
    U.S. government obligations -  --  565  32.11 
    Obligations of state and political subdivisions* 2,281  162.78  2,308  183.09 
    Other debt and equity securities 504,060  3,5402.79  514,462  3,0102.32 
    Federal Home Loan Bank, Federal Reserve Bank and other stock 40,406  7126.99  28,368  4356.08 
    Total interest-earning deposits, investments and other interest-earning assets 689,856  6,1333.53  595,179  3,7182.48 
             
    Commercial, financial, and agricultural loans 995,355  17,5456.99  981,303  12,0364.87 
    Real estate—commercial and construction loans 3,552,709  49,5485.53  3,105,821  34,1004.36 
    Real estate—residential loans 1,543,360  18,2704.70  1,256,509  12,4923.94 
    Loans to individuals 26,538  5257.85  27,197  3815.56 
    Municipal loans and leases* 234,685  2,4304.11  235,433  2,4324.10 
    Lease financings 184,522  2,9286.30  145,856  2,1955.97 
         Gross loans and leases 6,537,169  91,2465.54  5,752,119  63,6364.39 
    Total interest-earning assets 7,227,025  97,3795.35  6,347,298  67,3544.21 
    Cash and due from banks 62,673     62,930    
    Allowance for credit losses, loans and leases (83,827)    (72,355)   
    Premises and equipment, net 52,071     50,476    
    Operating lease right-of-use assets 31,647     30,740    
    Other assets 404,394     378,377    
          Total assets$7,693,983    $6,797,466    
             
    Liabilities:        
    Interest-bearing checking deposits$1,070,063 $6,7032.49%$881,395 $1,2510.56%
    Money market savings 1,645,210  17,8504.30  1,246,795  3,7091.18 
    Regular savings 828,672  8610.41  1,086,191  3020.11 
    Time deposits 1,140,622  11,6684.06  416,539  1,1891.13 
         Total time and interest-bearing deposits 4,684,567  37,0823.14  3,630,920  6,4510.70 
             
    Short-term borrowings 93,028  1,1174.76  104,453  5241.99 
    Long-term debt 320,000  3,0363.76  95,000  3241.35 
    Subordinated notes 148,568  2,2816.09  99,065  1,3285.32 
         Total borrowings 561,596  6,4344.55  298,518  2,1762.89 
         Total interest-bearing liabilities 5,246,163  43,5163.29  3,929,438  8,6270.87 
    Noninterest-bearing deposits 1,538,143     2,014,371    
    Operating lease liabilities 34,788     33,786    
    Accrued expenses and other liabilities 63,374     46,772    
         Total liabilities 6,882,468     6,024,367    
    Total interest-bearing liabilities and noninterest-bearing deposits ("Cost of Funds") 6,784,306  2.54  5,943,809  0.58 
             
    Shareholders' Equity:        
    Common stock 157,784     157,784    
    Additional paid-in capital 299,575     299,135    
    Retained earnings and other equity 354,156     316,180    
         Total shareholders' equity 811,515     773,099    
         Total liabilities and shareholders' equity$7,693,983    $6,797,466    
    Net interest income $53,863   $58,727  
             
    Net interest spread  2.06   3.34 
    Effect of net interest-free funding sources  0.90   0.33 
    Net interest margin  2.96%  3.67%
    Ratio of average interest-earning assets to average interest-bearing liabilities 137.76%    161.53%   
             
    * 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 $563 thousand and $498 thousand for the three months ended September 30, 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 September 30, 2023 and 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 Nine Months Ended September 30,  
    Tax Equivalent Basis  2023    2022  
     AverageIncome/Average AverageIncome/Average 
    (Dollars in thousands)BalanceExpenseRate BalanceExpenseRate 
    Assets:        
    Interest-earning deposits with other banks$79,630 $2,8564.80%$416,466 $1,4330.46%
    U.S. government obligations -  --  2,578  402.07 
    Obligations of state and political subdivisions* 2,284  482.81  2,314  543.12 
    Other debt and equity securities 511,420  10,5472.76  513,491  8,0762.10 
    Federal Home Loan Bank, Federal Reserve Bank and other stock 39,664  2,1027.09  27,239  1,1345.57 
    Total interest-earning deposits, investments and other interest-earning assets 632,998  15,5533.29  962,088  10,7371.49 
             
    Commercial, financial, and agricultural loans 997,590  50,0026.70  949,141  29,3904.14 
    Real estate—commercial and construction loans 3,447,551  137,9295.35  3,005,714  88,4473.93 
    Real estate—residential loans 1,478,871  51,2164.63  1,180,202  33,1323.75 
    Loans to individuals 26,859  1,4537.23  26,598  9244.64 
    Municipal loans and leases* 233,211  7,1594.10  237,928  7,2704.09 
    Lease financings 175,416  8,1286.20  141,041  6,3756.04 
         Gross loans and leases 6,359,498  255,8875.38  5,540,624  165,5383.99 
    Total interest-earning assets 6,992,496  271,4405.19  6,502,712  176,2753.62 
    Cash and due from banks 59,811     57,455    
    Allowance for credit losses, loans and leases (81,829)    (70,950)   
    Premises and equipment, net 52,067     51,551    
    Operating lease right-of-use assets 31,384     30,453    
    Other assets 399,141     363,810    
          Total assets$7,453,070    $6,935,031    
             
    Liabilities:        
    Interest-bearing checking deposits$980,725 $15,2592.08%$871,393 $2,2640.35%
    Money market savings 1,532,318  43,0203.75  1,397,220  6,1650.59 
    Regular savings 900,448  2,3750.35  1,059,644  7770.10 
    Time deposits 845,635  22,2313.51  447,497  3,7221.11 
         Total time and interest-bearing deposits 4,259,126  82,8852.60  3,775,754  12,9280.46 
             
    Short-term borrowings 195,606  7,0944.85  46,765  5371.54 
    Long-term debt 245,366  6,4383.51  95,000  9621.35 
    Subordinated notes 148,444  6,8446.16  98,989  3,9845.38 
         Total borrowings 589,416  20,3764.62  240,754  5,4833.04 
         Total interest-bearing liabilities 4,848,542  103,2612.85  4,016,508  18,4110.61 
    Noninterest-bearing deposits 1,709,533     2,067,428    
    Operating lease liabilities 34,548     33,514    
    Accrued expenses and other liabilities 57,906     44,630    
         Total liabilities 6,650,529     6,162,080    
    Total interest-bearing liabilities and noninterest-bearing deposits ("Cost of Funds") 6,558,075  2.11  6,083,936  0.40 
             
    Shareholders' Equity:        
    Common stock 157,784     157,784    
    Additional paid-in capital 299,550     298,784    
    Retained earnings and other equity 345,207     316,383    
         Total shareholders' equity 802,541     772,951    
         Total liabilities and shareholders' equity$7,453,070    $6,935,031    
    Net interest income $168,179   $157,864  
             
    Net interest spread  2.34   3.01 
    Effect of net interest-free funding sources  0.88   0.24 
    Net interest margin  3.22%  3.25%
    Ratio of average interest-earning assets to average interest-bearing liabilities 144.22%    161.90%   
             
    * 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 amortization of $1.7 million and $1.3 million for the nine months ended September 30, 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 nine months ended September 30, 2023 and 2022 have been calculated using the Corporation’s federal applicable rate of 21.0%. 
             



    Univest Financial Corporation 
    Loan Portfolio Overview (Unaudited) 
    September 30, 2023 
          
    (Dollars in thousands)     
    Industry DescriptionTotal Outstanding Balance  % of Commercial Loan Portfolio  
    CRE - Retail$466,862 8.9% 
    Animal Production 359,814 6.8  
    CRE - Multi-family 304,289 5.8  
    CRE - Office 301,949 5.7  
    CRE - 1-4 Family Residential Investment 282,333 5.4  
    CRE - Industrial / Warehouse 244,107 4.6  
    Hotels & Motels (Accommodation) 190,698 3.6  
    Nursing and Residential Care Facilities 173,781 3.3  
    Specialty Trade Contractors 164,837 3.1  
    Education 157,875 3.0  
    Homebuilding (tract developers, remodelers) 153,490 2.9  
    Motor Vehicle and Parts Dealers 134,118 2.5  
    Merchant Wholesalers, Durable Goods 125,105 2.4  
    CRE - Mixed-Use - Residential 109,187 2.1  
    Crop Production 101,973 1.9  
    Repair and Maintenance 94,011 1.8  
    Private Equity & Special Purpose Entities (except 52592) 86,549 1.6  
    Administrative and Support Services 86,053 1.6  
    Rental and Leasing Services 82,213 1.6  
    Wood Product Manufacturing 81,813 1.6  
    Real Estate Lenders, Secondary Market Financing 79,310 1.5  
    CRE - Mixed-Use - Commercial 75,797 1.4  
    Religious Organizations, Advocacy Groups 73,665 1.4  
    Fabricated Metal Product Manufacturing 71,827 1.4  
    Personal and Laundry Services 71,060 1.3  
    Amusement, Gambling, and Recreation Industries 70,759 1.3  
    Merchant Wholesalers, Nondurable Goods 69,919 1.3  
    Miniwarehouse / Self-Storage 65,069 1.2  
    Food Services and Drinking Places 63,662 1.2  
    Food Manufacturing 59,897 1.1  
    Truck Transportation 55,250 1.0  
    Industries with >$50 million in outstandings$4,457,272 84.6% 
    Industries with <$50 million in outstandings$811,904 15.4% 
    Total Commercial Loans$5,269,176 100.0% 
          
          
    Consumer Loans and Lease FinancingsTotal Outstanding Balance    
    Real Estate-Residential Secured for Personal Purpose$861,122    
    Real Estate-Home Equity Secured for Personal Purpose 176,855    
    Loans to Individuals 27,331    
    Lease Financings 240,474    
    Total - Consumer Loans and Lease Financings$1,305,782    
          
    Total$6,574,958    
          



    Univest Financial Corporation
    Non-GAAP Reconciliation
    September 30, 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, As of or for the nine months ended, 
    (Dollars in thousands)09/30/23 06/30/23 03/31/23 12/31/22 09/30/22 09/30/23 09/30/22 
    Restructuring charges (a)  $-  $1,330  $-  $184  $-  $1,330  $-  
    Tax effect of restructuring charges   -   (279)  -   (39)  -   (279)  -  
    Restructuring charges, net of tax  $-  $1,051  $-  $145  $-  $1,051  $-  
                      
    Net income$17,016  $16,800  $21,034  $23,836  $20,801  $54,850  $54,284  
    Amortization of intangibles, net of tax 174   200   200   238   244   574   784  
    Net income before amortization of intangibles$17,190  $17,000  $21,234  $24,074  $21,045  $55,424  $55,068  
                      
    Shareholders' equity$807,198  $805,222  $798,496  $776,500  $754,187  $807,198  $754,187  
    Goodwill (175,510)  (175,510)  (175,510)  (175,510)  (175,510)  (175,510)  (175,510) 
    Other intangibles (b)  (2,558)  (2,767)  (3,054)  (3,251)  (3,485)  (2,558)  (3,485) 
    Tangible common equity$629,130  $626,945  $619,932  $597,739  $575,192  $629,130  $575,192  
                      
    Total assets$7,828,066  $7,600,150  $7,358,991  $7,222,016  $6,907,397  $7,828,066  $6,907,397  
    Goodwill (175,510)  (175,510)  (175,510)  (175,510)  (175,510)  (175,510)  (175,510) 
    Other intangibles (b)  (2,558)  (2,767)  (3,054)  (3,251)  (3,485)  (2,558)  (3,485) 
    Tangible assets$7,649,998  $7,421,873  $7,180,427  $7,043,255  $6,728,402  $7,649,998  $6,728,402  
                      
    Average shareholders' equity$811,515  $806,709  $789,153  $767,192  $773,099  $802,541  $772,951  
    Average goodwill (175,510)  (175,510)  (175,510)  (175,510)  (175,510)  (175,510)  (175,510) 
    Average other intangibles (b)  (2,680)  (2,924)  (3,137)  (3,355)  (3,550)  (2,913)  (3,808) 
    Average tangible common equity$633,325  $628,275  $610,506  $588,327  $594,039  $624,118  $593,633  
                      
                      
    (a) Associated with branch optimization and headcount rationlization expense management strategies       
    (b) Amount does not include mortgage servicing rights       
                      

     



     


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

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