Univest Financial Corporation Reports Second Quarter Results

Rhea-AI Summary

Univest Financial Corporation (NASDAQ: UVSP) reported a significant increase in net income for the second quarter of 2021, reaching $20.9 million ($0.71 per share), up from $2.1 million ($0.07 per share) in 2020. For the first half of 2021, net income totaled $53.5 million ($1.81 per share), compared to $2.9 million ($0.10 per share) the previous year. Loan growth (excluding PPP loans) was 14.0% year-over-year. The company declared a quarterly cash dividend of $0.20 per share, payable on August 25, 2021. Strong deposit and loan growth, alongside a favorable tax benefit from bank-owned life insurance, contributed to these results.

Positive

• Net income for Q2 2021 increased to $20.9 million, up from $2.1 million in Q2 2020.
• Loan growth (excluding PPP loans) was 14.0% year-over-year.
• Declaring a quarterly cash dividend of $0.20 per share.
• Pre-tax pre-provision income increased by 15.1% for the first half of 2021.
• Noninterest income increased by 19.5% year-over-year for the first half of 2021.

Negative

• Noninterest expense increased by 14.8% in Q2 2021 compared to Q2 2020.
• Gross loans and leases, excluding PPP loans, increased only by 15.4% (annualized) from the last quarter.

(Loan Growth (excluding PPP loans¹) for last twelve months of 14.0%)

SOUDERTON, Pa., July 28, 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 June 30, 2021 was $20.9 million, or $0.71 diluted earnings per share, compared to net income of $2.1 million, or $0.07 diluted earnings per share, for the quarter ended June 30, 2020. Net income for the six months ended June 30, 2021 was $53.5 million, or $1.81 diluted earnings per share, compared to net income of $2.9 million, or $0.10 diluted earnings per share, for the six months ended June 30, 2020.

Pre-tax pre-provision income¹ for the quarter ended June 30, 2021 was $25.7 million, an increase of $143 thousand, or 0.6%, from the second quarter of 2020. Pre-tax pre-provision income¹ for the six months ended June 30, 2021 was $54.8 million, an increase of $7.2 million, or 15.1%, from the comparable period in the prior year.

One-Time Items
The financial results for the three and six months ended June 30, 2021 included a tax-free bank owned life insurance ("BOLI") death benefit claim of $893 thousand, which represents $0.03 diluted earnings per share.

Paycheck Protection Program
On December 27, 2020, the Consolidated Appropriations Act, 2021, was signed into law, which provides new COVID-19 relief funds, additional funding under the Paycheck Protection Program (the "PPP") and the establishment of PPP Second Draw Loans. The Small Business Administration (the "SBA") announced it was taking certain steps under the PPP to further promote equitable relief for smaller businesses. Under this program, we successfully originated 1,226 PPP loans and secured funding of approximately $169.5 million for our customers.

As of June 30, 2021, $252.8 million in PPP loan originations remain outstanding. During the quarter, we recorded income of $4.8 million within net interest income related to these loans, of which $3.7 million was the result of forgiveness and pay downs of PPP loans totaling $282.3 million. During the six months ended June 30, 2021, we recorded income of $9.3 million within net interest income related to these loans, of which $7.1 million was the result of forgiveness and pay downs of PPP loans totaling $402.0 million. As of June 30, 2021, we have $6.4 million of net deferred fees on our balance sheet, which represents approximately 35.2% of the initial deferred fee amount.

Loans
Gross loans and leases, excluding PPP loans¹, increased $187.9 million, or 15.4% (annualized), from March 31, 2021, $251.4 million or 10.4% (annualized) from December 31, 2020 and $621.6 million, or 14.0%, from June 30, 2020 due to increases in commercial, construction, residential mortgage loans and lease financings.

Deposits
Total deposits increased $7.1 million, or 0.5% (annualized), from March 31, 2021 and $76.0 million, or 2.9% (annualized), from December 31, 2020 primarily due to increases in commercial and consumer deposits offset by a decrease in brokered deposits and a seasonal decrease in public funds deposits. Total deposits increased $449.4 million, or 9.2%, from June 30, 2020, primarily due to increases in commercial, consumer and public funds deposits.

Net Interest Income and Margin
Net interest income of $46.8 million for the three months ended June 30, 2021 increased $1.3 million, or 3.0%, from the three months ended March 31, 2021, and $3.2 million, or 7.4%, from the three months ended June 30, 2020. Net interest income of $92.2 million for the six months ended June 30, 2021 increased $6.2 million, or 7.2%, from the six months ended June 30, 2020. The increase in net interest income for the six months ended June 30, 2021 compared to the same period of 2020 was primarily due to an increase in PPP loan income of $7.2 million and lower deposit costs offset by a decrease in yield on loans and investment securities.

Net interest margin, on a tax-equivalent basis, was 3.15% for the second quarter of 2021, compared to 3.12% for the first quarter of 2021 and 3.18% for the second quarter of 2020. Excess liquidity reduced net interest margin by approximately ten basis points for the quarter ended June 30, 2021 compared to eleven basis points for the quarter ended March 31, 2021 and sixteen basis points for the quarter ended June 30, 2020. This excess liquidity was primarily driven by strong deposit balance growth during the last fifteen months, which was partially attributable to the various stimulus initiatives associated with the COVID-19 pandemic. As PPP loans are forgiven, the associated deferred fees are recognized in earnings, thus attaining yields in excess of 2020 run rates. PPP loans had a favorable impact on net interest margin of eleven basis points for the quarter ended June 30, 2021 compared to four basis points for the quarter ended March 31, 2021 and an unfavorable impact of nine basis points for the quarter ended June 30, 2020. Excluding the impact of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was 3.14% for the quarter ended June 30, 2021 compared to 3.19% for the quarter ended March 31, 2021 and 3.43% for the quarter ended June 30, 2020.

Noninterest Income
Noninterest income for the quarter ended June 30, 2021 was $20.2 million, an increase of $2.2 million, or 12.4%, compared to the second quarter of 2020. Noninterest income for the six months ended June 30, 2021 was $43.5 million, an increase of $7.1 million, or 19.5%, from the comparable period in the prior year.

Net gain on mortgage banking activities decreased $54 thousand, or 1.5%, for the quarter and increased $3.1 million, or 50.2% for the six months ended June 30, 2021 compared to the comparable periods in the prior year. The increase for the six months ended June 30, 2021 was primarily due to an increase in volume and expansion of margins. Investment advisory commission and fee income increased $1.0 million, or 28.8%, for the quarter and $1.5 million, or 18.7%, for the six months ended June 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 $888 thousand, or 121.3%, for the quarter and $871 thousand, or 59.4%, for the six months ended June 30, 2021 primarily due to proceeds from BOLI death benefits of $893 thousand as previously discussed.

Other service fee income increased $1.3 million, or 84.7%, for the quarter and $1.6 million, or 47.1%, for the six months ended June 30, 2021 compared to the comparable periods in the prior year. Mortgage servicing fees increased $599 thousand for the quarter and $692 thousand for the six months ended June 30, 2021 driven by an increase in retained servicing associated with elevated mortgage volume over the past fifteen months. Interchange fee income increased $494 thousand for the quarter and $672 thousand for the six months ended June 30, 2021 due to increased customer activity as the markets we operate in continue to re-open.

Other income decreased $1.3 million, or 73.1%, for the quarter due to a decrease of $1.4 million in fees on risk participation agreements for interest rate swaps driven by a decrease in customer demand.

Noninterest Expense
Noninterest expense for the quarter ended June 30, 2021 was $41.3 million, an increase of $5.3 million, or 14.8%, compared to the second quarter of 2020. Noninterest expense for the six months ended June 30, 2021 was $80.8 million, an increase of $6.1 million, or 8.1%, from the comparable period in the prior year.

Salaries, benefits and commissions increased $3.7 million, or 17.0%, for the quarter and $4.6 million, or 10.2%, for the six months ended June 30, 2021 from the comparable periods in the prior year. These increases reflect our continued investment in staff to support revenue generation across all business lines and annual merit increases. Variable compensation expenses increased $1.0 million and $1.7 million for the three and six months ended June 30, 2021, respectively, from the comparable periods in the prior year, due to increased profitability, specifically in our mortgage banking and wealth management lines of business. Additionally, capitalized compensation related to PPP origination activity was $1.2 million and $664 thousand lower in the three and six months ended June 30, 2021, respectively, from the comparable periods in the prior year.

Data processing expenses increased $314 thousand, or 11.4%, for the quarter and $604 thousand, or 11.0%, for the six months ended June 30, 2021 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. Professional fees increased $751 thousand, or 59.4%, for the quarter and $1.2 million, or 45.8%, for the six months ended June 30, 2021, primarily attributable to increased consultant fees in support of our Diversity, Equity and Inclusion, training initiatives and treasury management product enhancements. During the first six months of 2021, we have spent $781 thousand on these initiatives and we expect to incur approximately $650 thousand of additional expenses related to these initiatives in the second half of the year. These expenses are not expected to re-occur in subsequent periods.

Other expense increased $390 thousand, or 7.3%, for the quarter primarily attributable to an increase in interchange fee expense and travel and entertainment expenses, which are beginning to normalize as the markets we operate in continue to re-open. Other expense decreased $557 thousand, or 4.9%, for the six months ended June 30, 2021 primarily due to a $656 thousand charge related to the extinguishment of long-term debt that occurred in the first quarter of 2020.

Asset Quality and Provision for Credit Losses
Nonperforming assets were $38.5 million at June 30, 2021, compared to $38.2 million at March 31, 2021 and $36.0 million at June 30, 2020.

Net loan and lease charge-offs were $243 thousand during the second quarter of 2021 compared to $3.6 million for the three months ended June 30, 2020. The reversal of provision for credit losses was $59 thousand for the second quarter of 2021, of which $2.8 million (after-tax benefit of $2.2 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 a reserve increase attributable to loan growth. The provision for credit losses was $23.7 million for the comparable period in the prior year, of which $19.9 million (after-tax charge of $15.7 million), or $0.54 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 $531 thousand for the six months ended June 30, 2021 compared to $4.1 million for the same period in the prior year. The reversal of provision for credit losses was $11.3 million for the six months ended June 30, 2021, of which $15.8 million (after-tax benefit of $12.5 million), or $0.42 diluted earnings per share, was attributable to favorable changes in economic-related assumptions within the Corporation’s CECL model partially offset by a reserve increase attributable to loan growth. The provision for credit losses was $45.6 million for the comparable period in the prior year, of which $40.2 million (after-tax charge of $31.8 million), or $1.09 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 June 30, 2021, compared to 1.32% at March 31, 2021, and 1.74% at June 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 1.41% at June 30, 2021 compared to 1.46% at March 31, 2021 and 1.94% at June 30, 2020.

Tax Provision
The effective income tax rate was 19.0% for the quarter ended June 30, 2021, compared to an effective income tax rate of (14.5%) for the quarter ended June 30, 2020. The effective income tax rate was 19.2% for the six months ended June 30, 2021 compared to an effective income tax rate of (42.4%) for the six months ended June 30, 2020. The effective tax rate for the three and six months ended June 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.

Dividend
On July 28, 2021, Univest declared a quarterly cash dividend of $0.20 per share. The dividend will be paid on August 25, 2021 to shareholders of record as of August 11, 2021.

Conference Call
Univest will host a conference call to discuss second quarter 2021 results on Thursday, July 29, 2021 at 9:00 a.m. EST. Participants may preregister at https://dpregister.com/sreg/10158232/ea90430528. The general public can access the call by dialing 1-888-338-6515. A replay of the conference call will be available through August 29, 2021 by dialing 1-877-344-7529; using Conference ID: 10158232.

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 $6.4 billion in assets and $4.5 billion in assets under management and supervision through its Wealth Management lines of business at June 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 in our market; (5) economic conditions nationally that may impact the assumptions used to calculate our allowance for credit losses; (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 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 outbreak 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 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; (10) Federal Deposit Insurance Corporation premiums may increase if the agency experiences additional resolution costs; and (11) further and sustained decline in our stock price or other triggering event could result in an impairment charge being recorded. 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)
June 30, 2021
(Dollars in thousands)
Balance Sheet (Period End)		06/30/21				03/31/21				12/31/20				09/30/20				06/30/20
Assets		$	6,356,305			$	6,416,665			$	6,336,496			$	6,382,831			$	6,125,312
Investment securities, net of allowance for credit losses			397,426				377,506				373,176				368,830				397,852
Loans held for sale			27,322				22,636				37,039				14,465				31,082
Loans and leases held for investment, gross			5,327,313				5,415,006				5,306,841				5,211,856				4,951,809
Allowance for credit losses, loans and leases			71,355				71,497				83,044				91,870				86,217
Loans and leases held for investment, net			5,255,958				5,343,509				5,223,797				5,119,986				4,865,592
Total deposits			5,318,704				5,311,592				5,242,715				5,211,603				4,869,329
Noninterest-bearing deposits			1,872,031				1,857,547				1,690,663				1,714,505				1,725,819
NOW, money market and savings			2,954,450				2,979,834				2,988,277				2,940,879				2,623,025
Time deposits			492,223				474,211				563,775				556,219				520,485
Borrowings			218,970				295,293				311,421				416,104				515,722
Shareholders' equity			739,998				722,455				692,472				669,107				654,873
Balance Sheet (Average)		For the three months ended,																				For the six months ended,
		06/30/21				03/31/21				12/31/20				09/30/20				06/30/20				06/30/21				06/30/20
Assets			6,443,629			$	6,383,463			$	6,353,519			$	6,265,605			$	6,000,790				6,413,712			$	5,704,527
Investment securities, net of allowance for credit losses			385,694				374,369				369,511				385,221				411,957				380,063				426,928
Loans and leases, gross			5,389,110				5,325,897				5,253,720				5,070,037				4,836,858				5,357,678				4,612,720
Deposits			5,351,089				5,296,147				5,222,452				5,030,398				4,794,669				5,323,770				4,572,326
Shareholders' equity			728,750				699,736				676,426				661,947				660,950				714,324				667,205
Asset Quality Data (Period End)
		06/30/21				03/31/21				12/31/20				09/30/20				06/30/20
Nonaccrual loans and leases, including nonaccrual troubled debt restructured
loans and leases and nonaccrual loans held for sale		$	37,466			$	29,996			$	31,692			$	30,019			$	26,141
Accruing loans and leases 90 days or more past due			750				664				1,392				3,573				1,193
Accruing troubled debt restructured loans and leases			52				52				53				53				53
Total nonperforming loans and leases			38,268				30,712				33,137				33,645				27,387
Other real estate owned			279				7,481				7,355				8,270				8,642
Total nonperforming assets		$	38,547			$	38,193			$	40,492			$	41,915			$	36,029
Nonaccrual loans and leases / Loans and leases held for investment and nonaccrual loans held for sale			0.70	%			0.55	%			0.60	%			0.58	%			0.53	%
Nonperforming loans and leases / Loans and leases held for investment			0.72	%			0.57	%			0.62	%			0.65	%			0.55	%
Nonperforming assets / Total assets			0.61	%			0.60	%			0.64	%			0.66	%			0.59	%
Allowance for credit losses, loans and leases		$	71,355			$	71,497			$	83,044			$	91,870			$	86,217
Allowance for credit losses, loans and leases / Loans and leases held for investment			1.34	%			1.32	%			1.56	%			1.76	%			1.74	%
Allowance for credit losses, loans and leases / Loans and leases held for investment, excluding Paycheck Protection Program loans (1)			1.41	%			1.46	%			1.72	%			1.95	%			1.94	%
Allowance for credit losses, loans and leases / Nonaccrual loans and leases held for investment			212.97	%			238.36	%			262.03	%			306.04	%			329.82	%
Allowance for credit losses, loans and leases / Nonperforming loans and leases held for investment			208.00	%			232.80	%			250.61	%			273.06	%			314.81	%
		For the three months ended,																				For the six months ended,
		06/30/21				03/31/21				12/31/20				09/30/20				06/30/20				06/30/21				06/30/20
Net loan and lease charge-offs (recoveries)		$	243			$	288			$	618			$	(35	)		$	3,576			$	531			$	4,065
Net loan and lease charge-offs (annualized)/Average loans and leases			0.02	%			0.02	%			0.05	%			(0.00	%)			0.30	%			0.02	%			0.18	%
(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)
June 30, 2021
(Dollars in thousands, except per share data)
		For the three months ended,																				For the six months ended,
For the period:		06/30/21				03/31/21				12/31/20				09/30/20				06/30/20				06/30/21				06/30/20
Interest income		$	52,441			$	51,457			$	51,334			$	50,612			$	49,980			$	103,898			$	101,999
Interest expense			5,684				6,043				6,813				6,758				6,462				11,727				16,013
Net interest income			46,757				45,414				44,521				43,854				43,518				92,171				85,986
(Reversal of provision) provision for credit losses			(59	)			(11,283	)			(8,721	)			3,935				23,737				(11,342	)			45,580
Net interest income after provision for credit losses			46,816				56,697				53,242				39,919				19,781				103,513				40,406
Noninterest income:
Trust fee income			2,157				2,034				1,974				1,915				1,924				4,191				3,814
Service charges on deposit accounts			1,314				1,282				1,371				1,187				890				2,596				2,287
Investment advisory commission and fee income			4,558				4,697				4,144				4,005				3,540				9,255				7,795
Insurance commission and fee income			3,839				4,955				3,512				3,776				4,067				8,794				8,799
Other service fee income			2,748				2,192				2,092				2,093				1,488				4,940				3,358
Bank owned life insurance income			1,620				717				733				741				732				2,337				1,466
Net gain on sales of investment securities			54				65				54				57				65				119				760
Net gain on mortgage banking activities			3,461				5,938				4,323				5,860				3,515				9,399				6,259
Other income			479				1,370				1,936				2,171				1,779				1,849				1,846
Total noninterest income			20,230				23,250				20,139				21,805				18,000				43,480				36,384
Noninterest expense:
Salaries, benefits and commissions			25,396				24,780				23,613				24,059				21,700				50,176				45,536
Net occupancy			2,656				2,739				2,697				2,609				2,478				5,395				5,052
Equipment			968				946				951				972				923				1,914				1,918
Data processing			3,064				3,050				2,961				2,862				2,750				6,114				5,510
Professional fees			2,015				1,748				1,436				1,321				1,264				3,763				2,581
Marketing and advertising			561				280				575				463				535				841				937
Deposit insurance premiums			613				636				765				707				615				1,249				1,119
Intangible expenses			249				249				282				283				321				498				651
Restructuring charges			-				-				1,439				-				-				-				-
Other expense			5,764				5,112				7,015				5,251				5,374				10,876				11,433
Total noninterest expense			41,286				39,540				41,734				38,527				35,960				80,826				74,737
Income before taxes			25,760				40,407				31,647				23,197				1,821				66,167				2,053
Income tax expense (benefit)			4,885				7,804				5,773				5,078				(264	)			12,689				(870	)
Net income		$	20,875			$	32,603			$	25,874			$	18,119			$	2,085			$	53,478			$	2,923
Net income per share:
Basic		$	0.71			$	1.11			$	0.88			$	0.62			$	0.07			$	1.82			$	0.10
Diluted		$	0.71			$	1.11			$	0.88			$	0.62			$	0.07			$	1.81			$	0.10
Dividends declared per share		$	0.20			$	0.20			$	-			$	0.20			$	0.20			$	0.40			$	0.40
Weighted average shares outstanding			29,389,525				29,327,432				29,274,915				29,226,627				29,187,197				29,359,198				29,236,698
Period end shares outstanding			29,411,731				29,379,575				29,295,052				29,241,302				29,201,985				29,411,731				29,201,985

Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
June 30, 2021
		For the three months ended,																				For the six months ended,
Profitability Ratios (annualized)		06/30/21				03/31/21				12/31/20				09/30/20				06/30/20				06/30/21				06/30/20
Return on average assets			1.30	%			2.07	%			1.62	%			1.15	%			0.14	%			1.68	%			0.10	%
Return on average assets, excluding restructuring			1.30	%			2.07	%			1.69	%			1.15	%			0.14	%			1.68	%			0.10	%
charges (1)
Return on average shareholders' equity			11.49	%			18.90	%			15.22	%			10.89	%			1.27	%			15.10	%			0.88	%
Return on average shareholders' equity, excluding			11.49	%			18.90	%			15.89	%			10.89	%			1.27	%			15.10	%			0.88	%
restructuring charges (1)
Return on average tangible common equity (1)			15.11	%			25.20	%			20.54	%			14.82	%			1.73	%			19.99	%			1.20	%
Return on average tangible common equity, excluding			15.11	%			25.20	%			21.44	%			14.82	%			1.73	%			19.99	%			1.20	%
restructuring charges (1)
Net interest margin (FTE)			3.15	%			3.12	%			3.02	%			3.02	%			3.18	%			3.14	%			3.32	%
Efficiency ratio (2)			60.7	%			57.0	%			63.8	%			58.0	%			57.7	%			58.8	%			60.2	%
Efficiency ratio, excluding restructuring charges (1) (2)			60.7	%			57.0	%			61.6	%			58.0	%			57.7	%			58.8	%			60.2	%
Capitalization Ratios
Dividends declared to net income (3)			28.2	%			18.0	%			0.0	%			32.3	%			278.7	%			22.0	%			399.5	%
Shareholders' equity to assets (Period End)			11.64	%			11.26	%			10.93	%			10.48	%			10.69	%			11.64	%			10.69	%
Tangible common equity to tangible assets (1)			9.15	%			8.77	%			8.40	%			7.95	%			8.05	%			9.15	%			8.05	%
Common equity book value per share		$	25.16			$	24.59			$	23.64			$	22.88			$	22.43			$	25.16			$	22.43
Tangible common equity book value per share (1)		$	19.22			$	18.64			$	17.66			$	16.88			$	16.41			$	19.22			$	16.41
Regulatory Capital Ratios (Period End)
Tier 1 leverage ratio			9.64	%			9.45	%			9.08	%			8.97	%			9.15	%			9.64	%			9.15	%
Common equity tier 1 risk-based capital ratio			11.04	%			11.08	%			10.76	%			10.52	%			10.73	%			11.04	%			10.73	%
Tier 1 risk-based capital ratio			11.04	%			11.08	%			10.76	%			10.52	%			10.73	%			11.04	%			10.73	%
Total risk-based capital ratio			13.82	%			15.13	%			15.31	%			15.35	%			13.72	%			13.82	%			13.72	%
(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 Basis	June 30, 2021								March 31, 2021
	Average			Income/			Average		Average			Income/			Average
(Dollars in thousands)	Balance			Expense			Rate		Balance			Expense			Rate
Assets:
Interest-earning deposits with other banks	$	215,349		$	46		0.09	%	$	237,548		$	56		0.10	%
U.S. government obligations		6,999			35		2.01			6,998			36		2.09
Obligations of state and political subdivisions		6,070			58		3.83			11,544			105		3.69
Other debt and equity securities		372,625			1,364		1.47			355,827			1,267		1.44
Federal Home Loan Bank, Federal Reserve Bank and other stock		25,872			360		5.58			26,368			348		5.35
Total interest-earning deposits, investments and other interest-earning assets		626,915			1,863		1.19			638,285			1,812		1.15
							-
Commercial, financial, and agricultural loans		826,464			6,910		3.35			782,208			6,798		3.52
Paycheck Protection Program loans		408,928			4,778		4.69			506,939			4,524		3.62
Real estate—commercial and construction loans		2,701,137			24,931		3.70			2,621,981			24,458		3.78
Real estate—residential loans		1,065,065			9,836		3.70			1,037,000			9,873		3.86
Loans to individuals		25,284			251		3.98			26,447			265		4.05
Municipal loans and leases		251,311			2,598		4.15			245,638			2,530		4.18
Lease financings		110,921			1,819		6.58			105,684			1,737		6.67
Gross loans and leases		5,389,110			51,123		3.80			5,325,897			50,185		3.82
Total interest-earning assets		6,016,025			52,986		3.53			5,964,182			51,997		3.54
Cash and due from banks		52,948								55,311
Allowance for credit losses, loans and leases		(73,052	)							(83,254	)
Premises and equipment, net		55,903								55,826
Operating lease right-of-use assets		33,992								34,033
Other assets		357,813								357,365
Total assets	$	6,443,629							$	6,383,463
Liabilities:
Interest-bearing checking deposits	$	786,931		$	487		0.25	%	$	817,940		$	490		0.24	%
Money market savings		1,219,375			831		0.27			1,243,673			853		0.28
Regular savings		978,807			282		0.12			959,232			298		0.13
Time deposits		485,060			1,559		1.29			525,800			1,759		1.36
Total time and interest-bearing deposits		3,470,173			3,159		0.37			3,546,645			3,400		0.39
Short-term borrowings		19,109			3		0.06			17,894			2		0.05
Long-term debt		95,000			321		1.36			101,333			348		1.39
Subordinated notes		172,016			2,201		5.13			183,340			2,293		5.07
Total borrowings		286,125			2,525		3.54			302,567			2,643		3.54
Total interest-bearing liabilities		3,756,298			5,684		0.61			3,849,212			6,043		0.64
Noninterest-bearing deposits		1,880,916								1,749,502
Operating lease liabilities		37,426								37,415
Accrued expenses and other liabilities		40,239								47,598
Total liabilities		5,714,879								5,683,727
Shareholders' Equity:
Common stock		157,784								157,784
Additional paid-in capital		296,599								296,136
Retained earnings and other equity		274,367								245,816
Total shareholders' equity		728,750								699,736
Total liabilities and shareholders' equity	$	6,443,629							$	6,383,463
Net interest income				$	47,302							$	45,954
Net interest spread							2.92								2.90
Effect of net interest-free funding sources							0.23								0.22
Net interest margin							3.15	%							3.12	%
Ratio of average interest-earning assets to average interest-bearing liabilities		160.16	%							154.95	%
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 June 30, 2021 and March 31, 2021 have
been calculated using the Corporation’s federal applicable rate of 21.0%.

Univest Financial Corporation
Average Balances and Interest Rates (Unaudited)
				For the Three Months Ended June 30,
Tax Equivalent Basis	2021								2020
	Average			Income/			Average		Average			Income/			Average
(Dollars in thousands)	Balance			Expense			Rate		Balance			Expense			Rate
Assets:
Interest-earning deposits with other banks	$	215,349		$	46		0.09	%	$	313,668		$	67		0.09	%
U.S. government obligations		6,999			35		2.01			7,236			36		2.00
Obligations of state and political subdivisions		6,070			58		3.83			26,546			240		3.64
Other debt and equity securities		372,625			1,364		1.47			378,175			2,182		2.32
Federal Home Loan Bank, Federal Reserve Bank and other stock		25,872			360		5.58			28,977			362		5.02
Total interest-earning deposits, investments and other interest-earning assets		626,915			1,863		1.19			754,602			2,887		1.54
Commercial, financial, and agricultural loans		826,464			6,910		3.35			816,976			7,330		3.61
Paycheck Protection Program loans		408,928			4,778		4.69			370,669			2,128		2.31
Real estate—commercial and construction loans		2,701,137			24,931		3.70			2,232,827			23,110		4.16
Real estate—residential loans		1,065,065			9,836		3.70			1,004,671			10,270		4.11
Loans to individuals		25,284			251		3.98			29,079			327		4.52
Municipal loans and leases		251,311			2,598		4.15			291,433			2,977		4.11
Lease financings		110,921			1,819		6.58			91,203			1,592		7.02
Gross loans and leases		5,389,110			51,123		3.80			4,836,858			47,734		3.97
Total interest-earning assets		6,016,025			52,986		3.53			5,591,460			50,621		3.64
Cash and due from banks		52,948								46,970
Allowance for credit losses, loans and leases		(73,052	)							(69,292	)
Premises and equipment, net		55,903								55,750
Operating lease right-of-use assets		33,992								34,419
Other assets		357,813								341,483
Total assets	$	6,443,629							$	6,000,790
Liabilities:
Interest-bearing checking deposits	$	786,931		$	487		0.25	%	$	617,927		$	372		0.24	%
Money market savings		1,219,375			831		0.27			1,063,463			853		0.32
Regular savings		978,807			282		0.12			872,422			475		0.22
Time deposits		485,060			1,559		1.29			577,462			2,672		1.86
Total time and interest-bearing deposits		3,470,173			3,159		0.37			3,131,274			4,372		0.56
Short-term borrowings		19,109			3		0.06			161,365			122		0.30
Long-term debt		95,000			321		1.36			210,040			762		1.46
Subordinated notes		172,016			2,201		5.13			94,890			1,206		5.11
Total borrowings		286,125			2,525		3.54			466,295			2,090		1.80
Total interest-bearing liabilities		3,756,298			5,684		0.61			3,597,569			6,462		0.72
Noninterest-bearing deposits		1,880,916								1,663,395
Operating lease liabilities		37,426								37,680
Accrued expenses and other liabilities		40,239								41,196
Total liabilities		5,714,879								5,339,840
Shareholders' Equity:
Common stock		157,784								157,784
Additional paid-in capital		296,599								295,681
Retained earnings and other equity		274,367								207,485
Total shareholders' equity		728,750								660,950
Total liabilities and shareholders' equity	$	6,443,629							$	6,000,790
Net interest income				$	47,302							$	44,159
Net interest spread							2.92								2.92
Effect of net interest-free funding sources							0.23								0.26
Net interest margin							3.15	%							3.18	%
Ratio of average interest-earning assets to average interest-bearing liabilities		160.16	%							155.42	%
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 June 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 Six Months Ended ,
Tax Equivalent Basis	2021								2020
	Average			Income/			Average		Average			Income/			Average
(Dollars in thousands)	Balance			Expense			Rate		Balance			Expense			Rate
Assets:
Interest-earning deposits with other banks	$	226,387		$	102		0.09	%	$	215,888		$	392		0.37	%
U.S. government obligations		6,999			71		2.05			7,267			73		2.02
Obligations of state and political subdivisions		8,792			163		3.74			30,070			529		3.54
Other debt and equity securities		364,272			2,631		1.46			389,591			4,850		2.50
Federal Home Loan Bank, Federal Reserve Bank and other stock		26,119			708		5.47			30,214			889		5.92
Total interest-earning deposits, investments and other interest-earning assets		632,569			3,675		1.17			673,030			6,733		2.01
Commercial, financial, and agricultural loans		804,458			13,708		3.44			819,121			15,961		3.92
Paycheck Protection Program loans		457,663			9,302		4.10			185,334			2,128		2.31
Real estate—commercial and construction loans		2,661,778			49,389		3.74			2,186,098			47,027		4.33
Real estate—residential loans		1,051,110			19,709		3.78			998,111			21,322		4.30
Loans to individuals		25,862			516		4.02			29,548			734		5.00
Municipal loans and leases		248,490			5,128		4.16			304,219			6,242		4.13
Lease financings		108,317			3,556		6.62			90,289			3,146		7.01
Gross loans and leases		5,357,678			101,308		3.81			4,612,720			96,560		4.21
Total interest-earning assets		5,990,247			104,983		3.53			5,285,750			103,293		3.93
Cash and due from banks		54,123								48,931
Allowance for credit losses, loans and leases		(78,125	)							(56,832	)
Premises and equipment, net		55,865								56,074
Operating lease right-of-use assets		34,013								34,482
Other assets		357,589								336,122
Total assets	$	6,413,712							$	5,704,527
Liabilities:
Interest-bearing checking deposits	$	802,350		$	977		0.25	%	$	601,159		$	1,168		0.39	%
Money market savings		1,231,457			1,684		0.28			1,060,399			3,756		0.71
Regular savings		969,073			580		0.12			844,591			1,267		0.30
Time deposits		505,318			3,318		1.32			590,183			5,587		1.90
Total time and interest-bearing deposits		3,508,198			6,559		0.38			3,096,332			11,778		0.76
Short-term borrowings		18,506			5		0.05			100,745			228		0.46
Long-term debt		98,149			669		1.37			189,623			1,526		1.62
Subordinated notes		177,647			4,494		5.10			94,868			2,481		5.26
Total borrowings		294,302			5,168		3.54			385,236			4,235		2.21
Total interest-bearing liabilities		3,802,500			11,727		0.62			3,481,568			16,013		0.92
Noninterest-bearing deposits		1,815,572								1,475,994
Operating lease liabilities		37,419								37,724
Accrued expenses and other liabilities		43,897								42,036
Total liabilities		5,699,388								5,037,322
Shareholders' Equity:
Common stock		157,784								157,784
Additional paid-in capital		296,369								295,500
Retained earnings and other equity		260,171								213,921
Total shareholders' equity		714,324								667,205
Total liabilities and shareholders' equity	$	6,413,712							$	5,704,527
Net interest income				$	93,256							$	87,280
Net interest spread							2.91								3.01
Effect of net interest-free funding sources							0.23								0.31
Net interest margin							3.14	%							3.32	%
Ratio of average interest-earning assets to average interest-bearing liabilities		157.53	%							151.82	%
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 six months ended June 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 June 30, 2021
Industry Description	Total Outstanding Balance (excl PPP)			% of Commercial Loan Portfolio		$ Balance of Modified Loans (1)			Modified Loans as a % of Portfolio (1)
CRE - Retail		365,096		8.7	%		-		-	%
Animal Production		281,368		6.7			-		-
CRE - 1-4 Family Residential Investment		250,694		6.0			605		0.2
CRE - Office		249,692		5.9			-		-
CRE - Industrial / Warehouse		217,874		5.2			-		-
CRE - Multi-family		206,766		4.9			-		-
Hotels & Motels (Accommodation)		170,730		4.1			26,036		15.2
Nursing and Residential Care Facilities		158,292		3.8			-		-
Education		152,983		3.6			-		-
CRE - Mixed-Use - Residential		122,489		2.9			3,268		2.7
Specialty Trade Contractors		121,303		2.9			36		-
Real Estate Lenders, Secondary Market Financing		103,796		2.5			-		-
CRE - Medical Office		96,075		2.3			-		-
Homebuilding (tract developers, remodelers)		89,915		2.1			-		-
Private Equity & Special Purpose Entities		87,111		2.1			-		-
Merchant Wholesalers, Durable Goods		78,944		1.9			-		-
Crop Production		72,558		1.7			-		-
Motor Vehicle and Parts Dealers		67,371		1.6			-		-
Rental and Leasing Services		63,142		1.5			-		-
Wood Product Manufacturing		63,095		1.5			-		-
Fabricated Metal Product Manufacturing		59,398		1.4			-		-
Merchant Wholesalers, Nondurable Goods		53,783		1.3			-		-
Food Services and Drinking Places		51,356		1.2			3,233		6.3
Administrative and Support Services		50,296		1.1			101		0.2
Industries with >$50 million in outstandings	$	3,234,127		76.9	%	$	33,279		1.0	%
Industries with <$50 million in outstandings	$	969,606		23.1	%	$	18,272		1.9	%
Total Commercial Loans	$	4,203,733		100.0	%	$	51,551		1.2	%
Consumer Loans and Lease Financings	Total Outstanding Balance					$ Balance of Modified Loans (1)			Modified Loans as a % of Portfolio (1)
Real Estate-Residential Secured for Personal Purpose		513,330					2,429		0.5	%
Real Estate-Home Equity Secured for Personal Purpose		160,018					-		-
Loans to Individuals		25,845					-		-
Lease Financings		171,538					215		0.1
Total - Consumer Loans and Lease Financings	$	870,731				$	2,644		0.3	%
Total	$	5,074,464				$	54,195		1.1	%
(1) Loan modifications referenced above were made in accordance with Section 4013 of the CARES Act and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus and therefore were not classified as TDRs as of June 30, 2021.

Univest Financial Corporation
Non-GAAP Reconciliation
June 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.
	For the three months ended,																				For the six months ended,
	06/30/21				03/31/21				12/31/20				09/30/20				06/30/20				06/30/21				06/30/20
Restructuring charges (a)	$	-			$	-			$	1,439			$	-			$	-			$	-			$	-
Tax effect of restructuring charges		-				-				(302	)			-				-				-				-
Restructuring charges, net of tax	$	-			$	-			$	1,137			$	-			$	-			$	-			$	-
Shareholders' equity	$	739,998			$	722,455			$	692,472			$	669,107			$	654,873			$	739,998			$	654,873
Goodwill		(172,559	)			(172,559	)			(172,559	)			(172,559	)			(172,559	)			(172,559	)			(172,559	)
Other intangibles (b)		(2,073	)			(2,326	)			(2,580	)			(2,866	)			(3,147	)			(2,073	)			(3,147	)
Tangible common equity	$	565,366			$	547,570			$	517,333			$	493,682			$	479,167			$	565,366			$	479,167
Total assets	$	6,356,305			$	6,416,665			$	6,336,496			$	6,382,831			$	6,125,312			$	6,356,305			$	6,125,312
Goodwill		(172,559	)			(172,559	)			(172,559	)			(172,559	)			(172,559	)			(172,559	)			(172,559	)
Other intangibles (b)		(2,073	)			(2,326	)			(2,580	)			(2,866	)			(3,147	)			(2,073	)			(3,147	)
Tangible assets	$	6,181,673			$	6,241,780			$	6,161,357			$	6,207,406			$	5,949,606			$	6,181,673			$	5,949,606
Average shareholders' equity	$	728,750			$	699,736			$	676,426			$	661,947			$	660,950			$	714,324			$	667,205
Average goodwill		(172,559	)			(172,559	)			(172,559	)			(172,559	)			(172,559	)			(172,559	)			(172,559	)
Average other intangibles (b)		(2,209	)			(2,464	)			(2,734	)			(3,019	)			(3,321	)			(2,336	)			(3,490	)
Average tangible common equity	$	553,982			$	524,713			$	501,133			$	486,369			$	485,070			$	539,429			$	491,156
Net income before taxes	$	25,760			$	40,407			$	31,647			$	23,197			$	1,821			$	66,167			$	2,053
Provision for credit losses		(59	)			(11,283	)			(8,721	)			3,935				23,737				(11,342	)			45,580
Pre-tax pre-provision income	$	25,701			$	29,124			$	22,926			$	27,132			$	25,558			$	54,825			$	47,633
Loans and leases held for investment, gross	$	5,327,313			$	5,415,006			$	5,306,841			$	5,211,856			$	4,951,809			$	5,327,313			$	4,951,809
Paycheck Protection Program ("PPP") loans		(252,849	)			(528,452	)			(483,773	)			(501,580	)			(498,978	)			(252,849	)			(498,978	)
Gross loans and leases excluding PPP loans	$	5,074,464			$	4,886,554			$	4,823,068			$	4,710,276			$	4,452,831			$	5,074,464			$	4,452,831
Allowance for credit losses, loans and leases	$	71,355			$	71,497			$	83,044			$	91,870			$	86,217			$	71,355			$	86,217
Gross loans and leases excluding PPP loans		5,074,464				4,886,554				4,823,068				4,710,276				4,452,831				5,074,464				4,452,831
Allowance for credit losses, loans and leases as a percentage of gross loans and leases excluding PPP loans		1.41	%			1.46	%			1.72	%			1.95	%			1.94	%			1.41	%			1.94	%
(a) Associated with financial center optimization plan
(b) Amount does not include mortgage servicing rights

FAQ

What were Univest Financial's Q2 2021 earnings per share for UVSP?

Univest Financial Corporation reported $0.71 diluted earnings per share for Q2 2021.

How much did Univest Financial grow its loans excluding PPP loans?

Loans excluding PPP loans increased by 14.0% year-over-year.

What was the net income for Univest Financial for the first half of 2021?

Net income for the first half of 2021 was $53.5 million.

When will the dividend be paid by Univest Financial?

The dividend will be paid on August 25, 2021, to shareholders of record as of August 11, 2021.

What is the impact of PPP loans on Univest Financial's income?

Univest reported $9.3 million in net interest income related to PPP loans for the first half of 2021.