Univest Financial Corporation Reports Second Quarter Results

(26.7% increase in earnings per share)

SOUDERTON, Pa., July 26, 2023 (GLOBE NEWSWIRE) -- Univest Financial Corporation (“Univest” or the "Corporation") (NASDAQ: UVSP), parent company of Univest Bank and Trust Co. (the "Bank") and its insurance, investments and equipment financing subsidiaries, announced net income for the quarter ended June 30, 2023 was $16.8 million, or $0.57 diluted earnings per share, compared to net income of $13.2 million, or $0.45 diluted earnings per share, for the quarter ended June 30, 2022.

One-Time Items
The financial results for the quarter included a $1.3 million ($1.1 million after-tax), or $0.04 diluted earnings per share, restructuring charge associated with the Corporation's financial service center optimization and expense management strategies deployed in response to macroeconomic headwinds. These strategies will result in a net reduction of three locations and a headcount rationalization, primarily concentrated within certain commercial real estate and residential mortgage lending teams. Estimated annualized cost savings from these initiatives is approximately $5.4 million. The financial results for the quarter also included a $250 thousand ($198 thousand after-tax) loss associated with the planned sale of a $19.7 million interest in a shared national credit.

Loans
Gross loans and leases increased $222.4 million, or 3.6% (14.4% annualized), from March 31, 2023 and $339.0 million, or 5.5% (11.0% annualized), from December 31, 2022. The increase in both periods was primarily due to increases in commercial real estate, construction, residential mortgage loans, and lease financings.

Deposits and Liquidity
Total deposits increased $152.7 million, or 2.6% (10.5% annualized), from March 31, 2023, primarily due to increases in brokered deposits partially offset by decreases in commercial and consumer deposits and public funds. Total deposits increased $73.9 million, or 1.2% (2.4% annualized), from December 31, 2022, primarily due to increases in public funds and brokered deposits partially offset by decreases in commercial and consumer deposits. Noninterest-bearing deposits represented 26.4% of total deposits at June 30, 2023, down from 30.8% at March 31, 2023. At June 30, 2023, unprotected deposits, which excludes insured accounts, internal accounts, and collateralized trust accounts, represented 23.3% of total deposits, down from 27.2% at March 31, 2023.

The Corporation and its subsidiaries had committed borrowing capacity of $3.2 billion at June 30, 2023, of which $2.0 billion was available. The Corporation and its subsidiaries also maintained uncommitted funding sources from correspondent banks of $410.0 million at June 30, 2023, of which $285.0 million was unused. 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 $54.3 million for the three months ended June 30, 2023 decreased   $5.0 million, or 8.4%, from the three months ended March 31, 2023, and increased $2.9 million, or 5.6%, from the three months ended June 30, 2022. The decrease in net interest income for the three months ended June 30, 2023 compared to the prior quarter was due to an increase in cost of funds, including long-term borrowings as well as the continued increase in deposit cost of funds, both of which outpaced the impact of higher asset yields and loan growth during the quarter. The increase in net interest income for the three months ended June 30, 2023 compared to the same period of 2022 was largely due to an increase in average loan balances and asset yields, offset by increases in the average balance of interest bearing liabilities and the cost of funds.

Net interest margin, on a tax-equivalent basis, was 3.14% for the second quarter of 2023, compared to 3.58% for the first quarter of 2023 and 3.19% for the second quarter of 2022. Excess liquidity reduced net interest margin by approximately 23 basis points for the quarter ended June 30, 2022.

Noninterest Income
Noninterest income for the quarter ended June 30, 2023 was $19.8 million, an increase of $835 thousand, or 4.4%, compared to the second quarter of 2022.

Insurance commission and fee income increased $479 thousand, or 10.3%, for the quarter ended June 30, 2023, primarily due to an increase in premiums for commercial lines. Other income increased $481 thousand, or 64.9%, for the quarter ended June 30, 2023, primarily due to $292 thousand of other real estate owned ("OREO") income related to a commercial real estate loan transferred to OREO during the second quarter of 2022 and an increase of $232 thousand in fees on risk participation agreements for interest rate swaps. These increases were offset by a loss of $250 thousand on the planned sale of an interest in a shared national credit, as previously discussed.

Noninterest Expense
Noninterest expense for the quarter ended June 30, 2023 was $49.8 million, an increase of $2.4 million, or 5.1%, compared to the second quarter of 2022. Excluding restructuring charges, expenses increased $1.1 million, or 2.3%.

Salaries, benefits and commissions increased $742 thousand, or 2.5%, for the quarter ended June 30, 2023. This increase reflects our expansion into Maryland and Western Pennsylvania and annual merit increases offset by a reduction in incentive compensation. Data processing expenses increased $429 thousand, or 11.6%, for the quarter ended June 30, 2023, primarily due to our investments in technology in recent years and general price increases incurred in the second half of 2022. Restructuring charges increased $1.3 million, as previously discussed. Other expense increased $757 thousand, or 11.8%, for the quarter ended June 30, 2023, primarily due to increases in retirement plan costs of $410 thousand, which is driven by the current interest rate environment. Professional fees decreased $1.2 million, or 41.3%, for the quarter ended June 30, 2023, primarily due to consultant fees incurred in the second quarter of 2022 related to our digital transformation initiative.

Tax Provision
The effective income tax rate was 19.8% for the quarters ended June 30, 2023 and 2022. The effective tax rates for the three months ended June 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 $34.5 million at June 30, 2023, compared to $32.4 million at March 31, 2023 and $34.7 million at June 30, 2022. During the quarter, a $5.8 million construction loan was placed on nonaccrual status and a $2.5 million nonaccrual commercial loan was paid off. Based on the value of the underlying collateral, an individual reserve was not recorded for the $5.8 million construction loan as of June 30, 2023.

Net loan and lease charge-offs were $512 thousand for the three months ended June 30, 2023 compared to $2.8 million and $1.7 million for the three months ended March 31, 2023 and June 30, 2022, respectively.

The provision for credit losses was $3.4 million for the three months ended June 30, 2023 compared to $3.4 million and $6.7 million for the three months ended March 31, 2023 and June 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 June 30, 2023 and March 31, 2023, and 1.27% at June 30, 2022.

Dividend
On July 26, 2023, Univest declared a quarterly cash dividend of $0.21 per share to be paid on August 23, 2023 to shareholders of record as of August 9, 2023.

Conference Call
Univest will host a conference call to discuss second quarter 2023 results on Thursday, July 27, 2023 at 9:00 a.m. EST. Participants may preregister at https://conferencingportals.com/event/QPDnglhR. The general public can access the call by dialing 1-888-330-2398; using Conference ID 38917. A replay of the conference call will be available through August 26, 2023 by dialing 1-800-700-2030; using Conference ID 38917.

About Univest Financial Corporation
Univest Financial Corporation (UVSP), including its wholly-owned subsidiary Univest Bank and Trust Co., Member FDIC, has approximately $7.6 billion in assets and $4.5 billion in assets under management and supervision through its Wealth Management lines of business at June 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) potential recessionary conditions 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)
June 30, 2023
(Dollars in thousands)
Balance Sheet (Period End)		06/30/23				03/31/23				12/31/22				09/30/22				06/30/22
ASSETS
Cash and due from banks		$	80,795			$	71,215			$	84,176			$	65,859			$	59,590
Interest-earning deposits with other banks			59,616				67,109				68,623				47,451				35,187
Cash and cash equivalents			140,411				138,324				152,799				113,310				94,777
Investment securities held-to-maturity			153,509				151,347				154,727				159,170				159,808
Investment securities available for sale, net of allowance for credit losses			356,164				367,656				350,256				347,479				351,382
Investments in equity securities			3,443				3,105				2,579				2,994				2,934
Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost			42,811				43,792				33,841				29,475				29,116
Loans held for sale			29,526				5,425				5,037				9,087				8,352
Loans and leases held for investment			6,462,238				6,239,804				6,123,230				5,849,259				5,661,777
Less: Allowance for credit losses, loans and leases			(82,709	)			(80,034	)			(79,004	)			(74,929	)			(72,011	)
Net loans and leases held for investment			6,379,529				6,159,770				6,044,226				5,774,330				5,589,766
Premises and equipment, net			52,058				52,334				50,939				50,533				50,080
Operating lease right-of-use assets			30,237				31,663				30,059				30,654				30,929
Goodwill			175,510				175,510				175,510				175,510				175,510
Other intangibles, net of accumulated amortization			10,923				11,044				11,384				11,650				11,728
Bank owned life insurance			129,715				128,926				120,297				120,035				120,103
Accrued interest and other assets			96,314				90,095				90,362				83,170				76,328
Total assets		$	7,600,150			$	7,358,991			$	7,222,016			$	6,907,397			$	6,700,813
LIABILITIES
Noninterest-bearing deposits		$	1,582,767			$	1,799,225			$	2,047,263			$	1,968,422			$	2,062,538
Interest-bearing deposits:			4,404,635				4,035,432				3,866,263				3,818,554				3,500,510
Total deposits			5,987,402				5,834,657				5,913,526				5,786,976				5,563,048
Short-term borrowings			244,666				271,881				197,141				80,711				97,606
Long-term debt			320,000				220,000				95,000				95,000				95,000
Subordinated notes			148,510				148,385				148,260				99,107				99,030
Operating lease liabilities			33,428				34,846				33,153				33,718				33,951
Accrued expenses and other liabilities			60,922				50,726				58,436				57,698				48,253
Total liabilities			6,794,928				6,560,495				6,445,516				6,153,210				5,936,888
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			299,212				298,167				300,808				299,791				298,800
Retained earnings			453,806				443,493				428,637				410,942				396,295
Accumulated other comprehensive loss, net of tax benefit			(61,034	)			(55,550	)			(62,104	)			(64,985	)			(42,781	)
Treasury stock, at cost			(44,546	)			(45,398	)			(48,625	)			(49,345	)			(46,173	)
Total shareholders’ equity			805,222				798,496				776,500				754,187				763,925
Total liabilities and shareholders’ equity		$	7,600,150			$	7,358,991			$	7,222,016			$	6,907,397			$	6,700,813
		For the three months ended,																				For the six months ended,
Balance Sheet (Average)		06/30/23				03/31/23				12/31/22				09/30/22				06/30/22				06/30/23			06/30/22
Assets		$	7,440,798			$	7,219,211			$	7,019,381			$	6,797,466			$	6,962,401			$	7,330,616		$	7,004,954
Investment securities, net of allowance for credit losses			518,995				515,880				505,717				517,335				515,741				517,446			518,917
Loans and leases, gross			6,372,342				6,164,890				5,979,581				5,752,119				5,520,580				6,269,190			5,433,125
Deposits			5,844,582				5,834,415				5,837,823				5,645,291				5,903,173				5,839,526			5,943,769
Shareholders' equity			806,709				789,153				767,192				773,099				771,410				797,980			772,876

Univest Financial Corporation
Consolidated Summary of Loans by Type and Asset Quality Data (Unaudited)
June 30, 2023
(Dollars in thousands)
Summary of Major Loan and Lease Categories (Period End)		06/30/23				03/31/23				12/31/22				09/30/22				06/30/22
Commercial, financial and agricultural		$	1,039,265			$	1,032,753			$	1,088,928			$	1,054,940			$	1,033,712
Real estate-commercial			3,221,993				3,128,210				3,027,955				2,936,204				2,870,286
Real estate-construction			413,404				376,569				381,811				329,915				319,449
Real estate-residential secured for business purpose			517,521				498,505				478,254				443,837				419,652
Real estate-residential secured for personal purpose			832,632				779,557				730,395				685,771				629,144
Real estate-home equity secured for personal purpose			175,090				172,073				176,699				175,843				168,536
Loans to individuals			25,544				28,656				27,873				26,679				27,061
Lease financings			236,789				223,481				211,315				196,070				193,937
Total loans and leases held for investment, net of deferred income			6,462,238				6,239,804				6,123,230				5,849,259				5,661,777
Less: Allowance for credit losses, loans and leases			(82,709	)			(80,034	)			(79,004	)			(74,929	)			(72,011	)
Net loans and leases held for investment		$	6,379,529			$	6,159,770			$	6,044,226			$	5,774,330			$	5,589,766
Asset Quality Data (Period End)		06/30/23				03/31/23				12/31/22				09/30/22				06/30/22
Nonaccrual loans and leases		$	15,087			$	11,362			$	13,353			$	13,620			$	13,355
Accruing loans and leases 90 days or more past due			55				1,996				875				416				2,784
Total nonperforming loans and leases			15,142				13,358				14,228				14,036				16,139
Other real estate owned			19,345				19,000				19,258				18,960				18,604
Total nonperforming assets		$	34,487			$	32,358			$	33,486			$	32,996			$	34,743
Nonaccrual loans and leases / Loans and leases held for investment			0.23	%			0.18	%			0.22	%			0.23	%			0.24	%
Nonperforming loans and leases / Loans and leases held for investment			0.23	%			0.21	%			0.23	%			0.24	%			0.29	%
Nonperforming assets / Total assets			0.45	%			0.44	%			0.46	%			0.48	%			0.52	%
Allowance for credit losses, loans and leases		$	82,709			$	80,034			$	79,004			$	74,929			$	72,011
Allowance for credit losses, loans and leases / Loans and leases held for investment			1.28	%			1.28	%			1.29	%			1.28	%			1.27	%
Allowance for credit losses, loans and leases / Nonaccrual loans and leases held for investment			548.21	%			704.40	%			591.66	%			550.14	%			539.21	%
Allowance for credit losses, loans and leases / Nonperforming loans and leases held for investment			546.22	%			599.15	%			555.27	%			533.83	%			446.19	%
		For the three months ended,																				For the six months ended,
		06/30/23				03/31/23				12/31/22				09/30/22				06/30/22				06/30/23				06/30/22
Net loan and lease charge-offs		$	512			$	2,842			$	908			$	1,196			$	1,715			$	3,354			$	1,791
Net loan and lease charge-offs (annualized)/Average loans and leases			0.03	%			0.19	%			0.06	%			0.08	%			0.12	%			0.11	%			0.07	%

Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
June 30, 2023
(Dollars in thousands, except per share data)
		For the three months ended,															For the six months ended,
For the period:		06/30/23			03/31/23			12/31/22			09/30/22			06/30/22			06/30/23			06/30/22
Interest income		$	90,139		$	83,253		$	77,401		$	66,877		$	56,717		$	173,392		$	107,915
Interest expense			35,809			23,936			15,485			8,627			5,246			59,745			9,784
Net interest income			54,330			59,317			61,916			58,250			51,471			113,647			98,131
Provision for credit losses			3,428			3,387			5,416			3,558			6,674			6,815			3,224
Net interest income after provision for credit losses			50,902			55,930			56,500			54,692			44,797			106,832			94,907
Noninterest income:
Trust fee income			1,924			1,955			1,808			1,835			1,998			3,879			4,100
Service charges on deposit accounts			1,725			1,547			1,575			1,522			1,574			3,272			3,078
Investment advisory commission and fee income			4,708			4,752			5,585			4,199			4,812			9,460			9,964
Insurance commission and fee income			5,108			6,487			4,424			4,442			4,629			11,595			10,199
Other service fee income			3,318			3,076			3,236			3,124			3,309			6,394			6,065
Bank owned life insurance income			789			767			1,230			1,153			705			1,556			1,404
Net gain on sales of investment securities			-			-			-			-			-			-			30
Net gain on mortgage banking activities			1,039			625			436			817			1,230			1,664			3,159
Other income			1,222			471			2,164			867			741			1,693			1,469
Total noninterest income			19,833			19,680			20,458			17,959			18,998			39,513			39,468
Noninterest expense:
Salaries, benefits and commissions			29,875			31,014			29,028			29,400			29,133			60,889			57,378
Net occupancy			2,614			2,727			2,551			2,504			2,422			5,341			5,138
Equipment			986			993			977			968			977			1,979			1,959
Data processing			4,137			4,029			4,039			3,901			3,708			8,166			7,275
Professional fees			1,669			1,941			1,829			2,521			2,844			3,610			4,982
Marketing and advertising			622			371			739			605			693			993			1,118
Deposit insurance premiums			1,116			1,101			708			662			812			2,217			1,705
Intangible expenses			253			253			301			309			342			506			683
Restructuring charges			1,330			-			184			-			-			1,330			-
Other expense			7,197			7,100			6,970			5,795			6,440			14,297			12,545
Total noninterest expense			49,799			49,529			47,326			46,665			47,371			99,328			92,783
Income before taxes			20,936			26,081			29,632			25,986			16,424			47,017			41,592
Income tax expense			4,136			5,047			5,796			5,185			3,258			9,183			8,109
Net income		$	16,800		$	21,034		$	23,836		$	20,801		$	13,166		$	37,834		$	33,483
Net income per share:
Basic		$	0.57		$	0.72		$	0.82		$	0.71		$	0.45		$	1.29		$	1.14
Diluted		$	0.57		$	0.71		$	0.81		$	0.71		$	0.45		$	1.28		$	1.13
Dividends declared per share		$	0.21		$	0.21		$	0.21		$	0.21		$	0.21		$	0.42		$	0.41
Weighted average shares outstanding			29,439,392			29,312,265			29,251,293			29,290,829			29,490,154			29,376,179			29,516,166
Period end shares outstanding			29,471,124			29,427,696			29,271,915			29,242,451			29,365,775			29,471,124			29,365,775

Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
June 30, 2023
					For the three months ended,																				For the six months ended,
Profitability Ratios (annualized)					06/30/23				03/31/23				12/31/22				09/30/22				06/30/22				06/30/23				06/30/22
Return on average assets						0.91	%			1.18	%			1.35	%			1.21	%			0.76	%			1.04	%			0.96	%
Return on average assets, excluding restructuring charges (1)						0.96	%			1.18	%			1.36	%			1.21	%			0.76	%			1.07	%			0.96	%
Return on average shareholders' equity						8.35	%			10.81	%			12.33	%			10.67	%			6.85	%			9.56	%			8.74	%
Return on average shareholders' equity, excluding restructuring charges (1)						8.88	%			10.81	%			12.40	%			10.67	%			6.85	%			9.83	%			8.74	%
Return on average tangible common equity (1)(3)						10.85	%			14.11	%			16.23	%			14.06	%			9.10	%			12.45	%			11.56	%
Return on average tangible common equity, excluding restructuring charges (1)(3)						11.52	%			14.11	%			16.33	%			14.06	%			9.10	%			12.79	%			11.56	%
Net interest margin (FTE)						3.14	%			3.58	%			3.76	%			3.67	%			3.19	%			3.35	%			3.04	%
Efficiency ratio (2)						66.7	%			62.2	%			56.9	%			60.6	%			66.6	%			64.4	%			66.8	%
Efficiency ratio, excluding restructuring charges (1)(2)						64.9	%			62.2	%			56.7	%			60.6	%			66.6	%			63.5	%			66.8	%
Capitalization Ratios
Dividends declared to net income						36.8	%			29.2	%			25.8	%			29.6	%			47.1	%			32.6	%			36.2	%
Shareholders' equity to assets (Period End)						10.59	%			10.85	%			10.75	%			10.92	%			11.40	%			10.59	%			11.40	%
Tangible common equity to tangible assets (1)						8.45	%			8.63	%			8.49	%			8.55	%			8.97	%			8.45	%			8.97	%
Common equity book value per share					$	27.32			$	27.13			$	26.53			$	25.79			$	26.01			$	27.32			$	26.01
Tangible common equity book value per share (1)					$	21.27			$	21.07			$	20.42			$	19.67			$	19.91			$	21.27			$	19.91
Regulatory Capital Ratios (Period End)
Tier 1 leverage ratio						9.59	%			9.71	%			9.81	%			9.87	%			9.45	%			9.59	%			9.45	%
Common equity tier 1 risk-based capital ratio						10.26	%			10.43	%			10.37	%			10.51	%			10.62	%			10.26	%			10.62	%
Tier 1 risk-based capital ratio						10.26	%			10.43	%			10.37	%			10.51	%			10.62	%			10.26	%			10.62	%
Total risk-based capital ratio						13.54	%			13.78	%			13.67	%			13.10	%			13.23	%			13.54	%			13.23	%
(1) Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included below.
(2) Noninterest expense to net interest income before loan loss provision plus noninterest income adjusted for tax equivalent income.
(3) Net income before amortization of intangibles to average tangible common equity.

Univest Financial Corporation
Average Balances and Interest Rates (Unaudited)
				For the Three Months Ended,
Tax Equivalent Basis	June 30, 2023							March 31, 2023
	Average			Income/		Average		Average			Income/		Average
(Dollars in thousands)	Balance			Expense		Rate		Balance			Expense		Rate
Assets:
Interest-earning deposits with other banks	$	46,897		$	512	4.38	%	$	47,835		$	479	4.06	%
Obligations of state and political subdivisions*		2,284			15	2.63			2,286			17	3.02
Other debt and equity securities		516,711			3,512	2.73			513,594			3,495	2.76
Federal Home Loan Bank, Federal Reserve Bank and other stock		43,783			781	7.15			34,742			609	7.11
Total interest-earning deposits, investments and other interest-earning assets		609,675			4,820	3.17			598,457			4,600	3.12
Commercial, financial, and agricultural loans		1,005,499			16,919	6.75			991,876			15,538	6.35
Real estate—commercial and construction loans		3,445,431			45,960	5.35			3,342,199			42,421	5.15
Real estate—residential loans		1,483,478			17,216	4.65			1,408,292			15,730	4.53
Loans to individuals		26,794			479	7.17			27,254			449	6.68
Municipal loans and leases *		234,940			2,388	4.08			229,955			2,341	4.13
Lease financings		176,200			2,659	6.05			165,314			2,541	6.23
Gross loans and leases		6,372,342			85,621	5.39			6,164,890			79,020	5.20
Total interest-earning assets		6,982,017			90,441	5.20			6,763,347			83,620	5.01
Cash and due from banks		58,675							58,035
Allowance for credit losses, loans and leases		(81,641	)						(79,977	)
Premises and equipment, net		52,540							51,583
Operating lease right-of-use assets		31,200							31,303
Other assets		398,007							394,920
Total assets	$	7,440,798						$	7,219,211
Liabilities:
Interest-bearing checking deposits	$	1,011,889		$	5,392	2.14	%	$	857,891		$	3,164	1.50	%
Money market savings		1,460,899			14,089	3.87			1,489,129			11,081	3.02
Regular savings		888,680			845	0.38			985,716			669	0.28
Time deposits		823,665			7,141	3.48			566,308			3,422	2.45
Total time and interest-bearing deposits		4,185,133			27,467	2.63			3,899,044			18,336	1.91
Short-term borrowings		255,090			3,249	5.11			240,318			2,728	4.60
Long-term debt		301,593			2,811	3.74			112,222			591	2.14
Subordinated notes		148,443			2,282	6.17			148,319			2,281	6.24
Total borrowings		705,126			8,342	4.75			500,859			5,600	4.53
Total interest-bearing liabilities		4,890,259			35,809	2.94			4,399,903			23,936	2.21
Noninterest-bearing deposits		1,659,449							1,935,371
Operating lease liabilities		34,415							34,438
Accrued expenses and other liabilities		49,966							60,346
Total liabilities		6,634,089							6,430,058
Total interest-bearing liabilities and noninterest-bearing deposits ("Cost of Funds")		6,549,708				2.19			6,335,274				1.53
Shareholders' Equity:
Common stock		157,784							157,784
Additional paid-in capital		298,788							300,293
Retained earnings and other equity		350,137							331,076
Total shareholders' equity		806,709							789,153
Total liabilities and shareholders' equity	$	7,440,798						$	7,219,211
Net interest income				$	54,632						$	59,684
Net interest spread						2.26							2.80
Effect of net interest-free funding sources						0.88							0.78
Net interest margin						3.14	%						3.58	%
Ratio of average interest-earning assets to average interest-bearing liabilities		142.77	%						153.72	%
* 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 $668 thousand and $465 thousand for the three months ended June 30, 2023 and March 31, 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 June 30, 2023 and March 31, 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 June 30,
Tax Equivalent Basis					2023							2022
	Average			Income/		Average		Average			Income/		Average
(Dollars in thousands)	Balance			Expense		Rate		Balance			Expense		Rate
Assets:
Interest-earning deposits with other banks	$	46,897		$	512	4.38	%	$	474,260		$	824	0.70	%
U.S. government obligations		-			-	-			2,000			11	2.21
Obligations of state and political subdivisions*		2,284			15	2.63			2,302			17	2.96
Other debt and equity securities		516,711			3,512	2.73			511,439			2,727	2.14
Federal Home Loan Bank, Federal Reserve Bank and other stock		43,783			781	7.15			26,221			344	5.26
Total interest-earning deposits, investments and other interest-earning assets		609,675			4,820	3.17			1,016,222			3,923	1.55
Commercial, financial, and agricultural loans		1,005,499			16,919	6.75			945,490			9,192	3.90
Real estate—commercial and construction loans		3,445,431			45,960	5.35			3,004,509			28,527	3.81
Real estate—residential loans		1,483,478			17,216	4.65			1,166,201			10,758	3.70
Loans to individuals		26,794			479	7.17			26,782			305	4.57
Municipal loans and leases*		234,940			2,388	4.08			235,922			2,404	4.09
Lease financings		176,200			2,659	6.05			141,676			2,105	5.96
Gross loans and leases		6,372,342			85,621	5.39			5,520,580			53,291	3.87
Total interest-earning assets		6,982,017			90,441	5.20			6,536,802			57,214	3.51
Cash and due from banks		58,675							55,634
Allowance for credit losses, loans and leases		(81,641	)						(68,426	)
Premises and equipment, net		52,540							50,266
Operating lease right-of-use assets		31,200							30,222
Other assets		398,007							357,903
Total assets	$	7,440,798						$	6,962,401
Liabilities:
Interest-bearing checking deposits	$	1,011,889		$	5,392	2.14	%	$	851,324		$	570	0.27	%
Money market savings		1,460,899			14,089	3.87			1,405,536			1,552	0.44
Regular savings		888,680			845	0.38			1,070,480			237	0.09
Time deposits		823,665			7,141	3.48			452,989			1,227	1.09
Total time and interest-bearing deposits		4,185,133			27,467	2.63			3,780,329			3,586	0.38
Short-term borrowings		255,090			3,249	5.11			17,253			11	0.26
Long-term debt		301,593			2,811	3.74			95,000			321	1.36
Subordinated notes		148,443			2,282	6.17			98,988			1,328	5.38
Total borrowings		705,126			8,342	4.75			211,241			1,660	3.15
Total interest-bearing liabilities		4,890,259			35,809	2.94			3,991,570			5,246	0.53
Noninterest-bearing deposits		1,659,449							2,122,844
Operating lease liabilities		34,415							33,300
Accrued expenses and other liabilities		49,966							43,277
Total liabilities		6,634,089							6,190,991
Total interest-bearing liabilities and noninterest-bearing deposits ("Cost of Funds")		6,549,708				2.19			6,114,414				0.34
Shareholders' Equity:
Common stock		157,784							157,784
Additional paid-in capital		298,788							298,241
Retained earnings and other equity		350,137							315,385
Total shareholders' equity		806,709							771,410
Total liabilities and shareholders' equity	$	7,440,798						$	6,962,401
Net interest income				$	54,632						$	51,968
Net interest spread						2.26							2.98
Effect of net interest-free funding sources						0.88							0.21
Net interest margin						3.14	%						3.19	%
Ratio of average interest-earning assets to average interest-bearing liabilities		142.77	%						163.77	%
* 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 $668 thousand and $618 thousand for the three months ended June 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 June 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 Six Months Ended June 30,
Tax Equivalent Basis					2023							2022
	Average			Income/		Average		Average			Income/		Average
(Dollars in thousands)	Balance			Expense		Rate		Balance			Expense		Rate
Assets:
Interest-earning deposits with other banks	$	47,364		$	991	4.22	%	$	603,002		$	1,181	0.39	%
U.S. government obligations		-			-	-			3,602			37	2.07
Obligations of state and political subdivisions*		2,285			32	2.82			2,317			36	3.13
Other debt and equity securities		515,161			7,007	2.74			512,998			5,066	1.99
Federal Home Loan Bank, Federal Reserve Bank and other stock		39,287			1,390	7.13			26,665			699	5.29
Total interest-earning deposits, investments and other interest-earning assets		604,097			9,420	3.14			1,148,584			7,019	1.23
Commercial, financial, and agricultural loans		998,726			32,457	6.55			932,795			17,354	3.75
Real estate—commercial and construction loans		3,394,100			88,381	5.25			2,954,831			54,347	3.71
Real estate—residential loans		1,446,093			32,946	4.59			1,141,416			20,640	3.65
Loans to individuals		27,023			928	6.93			26,293			543	4.16
Municipal loans and leases*		232,461			4,729	4.10			239,197			4,838	4.08
Lease financings		170,787			5,200	6.14			138,593			4,180	6.08
Gross loans and leases		6,269,190			164,641	5.30			5,433,125			101,902	3.78
Total interest-earning assets		6,873,287			174,061	5.11			6,581,709			108,921	3.34
Cash and due from banks		58,356							54,671
Allowance for credit losses, loans and leases		(80,813	)						(70,237	)
Premises and equipment, net		52,064							52,097
Operating lease right-of-use assets		31,251							30,308
Other assets		396,471							356,406
Total assets	$	7,330,616						$	7,004,954
Liabilities:
Interest-bearing checking deposits	$	935,316		$	8,556	1.84	%	$	866,310		$	1,013	0.24	%
Money market savings		1,474,936			25,170	3.44			1,473,680			2,456	0.34
Regular savings		936,930			1,514	0.33			1,046,150			475	0.09
Time deposits		695,697			10,563	3.06			463,232			2,533	1.10
Total time and interest-bearing deposits		4,042,879			45,803	2.28			3,849,372			6,477	0.34
Short-term borrowings		247,745			5,977	4.87			17,443			13	0.15
Long-term debt		207,431			3,402	3.31			95,000			638	1.35
Subordinated notes		148,381			4,563	6.20			98,950			2,656	5.41
Total borrowings		603,557			13,942	4.66			211,393			3,307	3.15
Total interest-bearing liabilities		4,646,436			59,745	2.59			4,060,765			9,784	0.49
Noninterest-bearing deposits		1,796,647							2,094,397
Operating lease liabilities		34,427							33,375
Accrued expenses and other liabilities		55,126							43,541
Total liabilities		6,532,636							6,232,078
Total interest-bearing liabilities and noninterest-bearing deposits ("Cost of Funds")		6,443,083				1.87			6,155,162				0.32
Shareholders' Equity:
Common stock		157,784							157,784
Additional paid-in capital		299,537							298,606
Retained earnings and other equity		340,659							316,486
Total shareholders' equity		797,980							772,876
Total liabilities and shareholders' equity	$	7,330,616						$	7,004,954
Net interest income				$	114,316						$	99,137
Net interest spread						2.52							2.85
Effect of net interest-free funding sources						0.83							0.19
Net interest margin						3.35	%						3.04	%
Ratio of average interest-earning assets to average interest-bearing liabilities		147.93	%						162.08	%
* 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 $1.1 million and $754 thousand for the six months ended June 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 six months ended June 30, 2023 and 2022 have been calculated using the Corporation’s federal applicable rate of 21.0%.

Univest Financial Corporation
Loan Portfolio Overview (Unaudited)
June 30, 2023
(Dollars in thousands)
Industry Description	Total Outstanding Balance			% of Commercial Loan Portfolio
CRE - Retail	$	468,650		9.0	%
Animal Production		350,654		6.8
CRE - Multi-family		306,508		5.9
CRE - Office		303,848		5.9
CRE - 1-4 Family Residential Investment		282,613		5.4
CRE - Industrial / Warehouse		226,781		4.4
Hotels & Motels (Accommodation)		191,824		3.7
Nursing and Residential Care Facilities		174,408		3.4
Specialty Trade Contractors		170,316		3.3
Education		155,108		3.0
Homebuilding (tract developers, remodelers)		151,225		2.9
Merchant Wholesalers, Durable Goods		132,533		2.6
Motor Vehicle and Parts Dealers		120,027		2.3
CRE - Mixed-Use - Residential		110,604		2.1
Crop Production		98,772		1.9
Administrative and Support Services		88,027		1.7
Rental and Leasing Services		86,872		1.7
Wood Product Manufacturing		81,867		1.6
Repair and Maintenance		81,038		1.6
Real Estate Lenders, Secondary Market Financing		79,265		1.5
CRE - Mixed-Use - Commercial		77,981		1.5
Religious Organizations, Advocacy Groups		74,106		1.4
Amusement, Gambling, and Recreation Industries		71,243		1.4
Fabricated Metal Product Manufacturing		70,147		1.4
Merchant Wholesalers, Nondurable Goods		68,736		1.3
Personal and Laundry Services		67,717		1.3
Miniwarehouse / Self-Storage		63,917		1.2
Food Services and Drinking Places		63,769		1.2
Private Equity & Special Purpose Entities (except 52592)		61,598		1.2
Food Manufacturing		57,748		1.1
Truck Transportation		54,135		1.0
Industries with >$50 million in outstandings	$	4,392,037		84.6	%
Industries with <$50 million in outstandings	$	800,146		15.4	%
Total Commercial Loans	$	5,192,183		100.0	%
Consumer Loans and Lease Financings	Total Outstanding Balance
Real Estate-Residential Secured for Personal Purpose	$	832,632
Real Estate-Home Equity Secured for Personal Purpose		175,090
Loans to Individuals		25,544
Lease Financings		236,789
Total - Consumer Loans and Lease Financings	$	1,270,055
Total	$	6,462,238

Univest Financial Corporation
Non-GAAP Reconciliation
June 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 six months ended,
(Dollars in thousands)				06/30/23				03/31/23				12/31/22				09/30/22				06/30/22				06/30/23				06/30/22
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				$	16,800			$	21,034			$	23,836			$	20,801			$	13,166			$	37,834			$	33,483
Amortization of intangibles, net of tax					200				200				238				244				270				400				540
Net income before amortization of intangibles				$	17,000			$	21,234			$	24,074			$	21,045			$	13,436			$	38,234			$	34,023
Shareholders' equity				$	805,222			$	798,496			$	776,500			$	754,187			$	763,925			$	805,222			$	763,925
Goodwill					(175,510	)			(175,510	)			(175,510	)			(175,510	)			(175,510	)			(175,510	)			(175,510	)
Other intangibles (b)					(2,767	)			(3,054	)			(3,251	)			(3,485	)			(3,678	)			(2,767	)			(3,678	)
Tangible common equity				$	626,945			$	619,932			$	597,739			$	575,192			$	584,737			$	626,945			$	584,737
Total assets				$	7,600,150			$	7,358,991			$	7,222,016			$	6,907,397			$	6,700,813			$	7,600,150			$	6,700,813
Goodwill					(175,510	)			(175,510	)			(175,510	)			(175,510	)			(175,510	)			(175,510	)			(175,510	)
Other intangibles (b)					(2,767	)			(3,054	)			(3,251	)			(3,485	)			(3,678	)			(2,767	)			(3,678	)
Tangible assets				$	7,421,873			$	7,180,427			$	7,043,255			$	6,728,402			$	6,521,625			$	7,421,873			$	6,521,625
Average shareholders' equity				$	806,709			$	789,153			$	767,192			$	773,099			$	771,410			$	797,980			$	772,876
Average goodwill					(175,510	)			(175,510	)			(175,510	)			(175,510	)			(175,510	)			(175,510	)			(175,510	)
Average other intangibles (b)					(2,924	)			(3,137	)			(3,355	)			(3,550	)			(3,791	)			(3,030	)			(3,940	)
Average tangible common equity				$	628,275			$	610,506			$	588,327			$	594,039			$	592,109			$	619,440			$	593,426
(a) Associated with branch optimization and headcount rationlization expense management strategies
(b) Amount does not include mortgage servicing rights