Univest Financial Corporation Reports Third Quarter Results

Rhea-AI Summary

Univest Financial Corporation (NASDAQ: UVSP) reported net income of $20.8 million, or $0.71 diluted EPS, for Q3 2022, nearly flat from $20.9 million in Q3 2021. Total gross loans rose 13.5% from Q2 2022, driven by growth in commercial and residential loans. However, noninterest income fell 12.6% to $18.0 million, significantly impacted by a 74.7% decline in mortgage banking activities. Noninterest expense increased by 7.9% to $46.7 million, partly due to a digital transformation initiative. Share repurchases and a quarterly dividend of $0.21 per share were also announced.

Positive

• Gross loans increased by $190.6 million, or 13.5% (annualized) from Q2 2022.
• Net interest income rose to $58.3 million, up 13.2% from Q2 2022.
• Net interest margin improved to 3.67%, compared to 3.19% in Q2 2022.
• Quarterly cash dividend of $0.21 per share declared.
• Share repurchase program expanded by 1,000,000 shares.

Negative

• Noninterest income decreased by $2.6 million, or 12.6% year-over-year.
• Net gain on mortgage banking activities dropped by $2.4 million, or 74.7% year-over-year.
• Noninterest expense increased by $3.4 million, or 7.9% year-over-year.

SOUDERTON, Pa., Oct. 26, 2022 (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, announced net income for the quarter ended September 30, 2022 was $20.8 million, or $0.71 diluted earnings per share, compared to net income of $20.9 million, or $0.71 diluted earnings per share, for the quarter ended September 30, 2021.

One-Time Items
The financial results for the three and nine months ended September 30, 2022 included tax-free bank owned life insurance ("BOLI") death benefit claims of $446 thousand, which represented $0.02 diluted earnings per share for both periods.

Loans
Gross loans and leases, excluding Paycheck Protection Program ("PPP") loans¹, increased $190.6 million, or 13.5% (annualized), from June 30, 2022, $568.8 million, or 14.4% (annualized), from December 31, 2021 and $680.6 million, or 13.2%, from September 30, 2021 primarily due to increases in commercial, commercial real estate, construction, residential mortgage loans, and lease financings.

Deposits
Total deposits increased $223.9 million, or 16.1% (annualized), from June 30, 2022, primarily due to increases in public funds deposits partially offset by decreases in commercial deposits. Total deposits decreased $268.1 million, or 5.9% (annualized), from December 31, 2021, primarily due to decreases in commercial and consumer deposits. Total deposits decreased $151.2 million, or 2.5%, from September 30, 2021, primarily due to a decrease in public funds deposits.

Net Interest Income and Margin
Net interest income of $58.3 million for the three months ended September 30, 2022 increased $6.8 million, or 13.2%, from the three months ended June 30, 2022, and $9.6 million, or 19.6%, from the three months ended September 30, 2021. The increase in net interest income for the three months ended September 30, 2022 compared to the same period of 2021 and the prior quarter was largely due to significant loan growth, the rapid increase in interest rates and the asset sensitivity position of the Corporation's balance sheet.

Net interest margin, on a tax-equivalent basis, was 3.67% for the third quarter of 2022, compared to 3.19% for the second quarter of 2022 and 3.11% for the third quarter of 2021. Excess liquidity reduced net interest margin by approximately one basis point for the quarter ended September 30, 2022 compared to 23 basis points for the quarter ended June 30, 2022 and 27 basis points for the quarter ended September 30, 2021. PPP loans had no impact on net interest margin for the quarter ended September 30, 2022 compared to one basis point for the quarter ended June 30, 2022 and 20 basis points for the quarter ended September 30, 2021. Excluding the impact of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was 3.68% for the quarter ended September 30, 2022 compared to 3.41% for the quarter ended June 30, 2022 and 3.18% for the quarter ended September 30, 2021.

Noninterest Income
Noninterest income for the quarter ended September 30, 2022 was $18.0 million, a decrease of $2.6 million, or 12.6%, compared to the third quarter of 2021.

Net gain on mortgage banking activities decreased $2.4 million, or 74.7%, for the quarter ended September 30, 2022 compared to the comparable period in the prior year, primarily due to a decrease in loan sales and a contraction of margins. BOLI increased $228 thousand, or 24.6%, for the quarter compared to the comparable period in the prior year, primarily due to death benefit claims of $446 thousand in the third quarter of 2022. Investment advisory commission and fee income decreased $597 thousand, or 12.4%, for the quarter ended September 30, 2022 compared to the comparable period in the prior year, primarily due to reduced assets under management, which was driven by market performance.

Other income decreased $758 thousand, or 46.6%, for the quarter ended September 30, 2022 compared to the comparable period in the prior year. Gains on the sale of Small Business Administration loans decreased $520 thousand for the quarter due to decreased sale activity. Fees on risk participation agreements for interest rate swaps decreased $171 thousand for the quarter driven by a decrease in customer demand due to the current interest rate environment.

Insurance commission and fee income increased $605 thousand, or 15.8%, for the quarter ended September 30, 2022 compared to the comparable period in the prior year, primarily due to incremental revenue attributable to the acquisition of the Paul I. Sheaffer insurance agency in the fourth quarter of 2021.

Other service fee income increased $548 thousand, or 21.3%, for the quarter ended September 30, 2022 compared to the comparable period in the prior year. Mortgage servicing fees increased $336 thousand for the quarter driven by reduced amortization as a result of a decrease in prepayment speeds.

Noninterest Expense
Noninterest expense for the quarter ended September 30, 2022 was $46.7 million, an increase of $3.4 million, or 7.9%, compared to the third quarter of 2021. The results for the three months ended September 30, 2022 included approximately $1.2 million in expenses related to our digital transformation initiative, a comprehensive digital platform which will blend our core operating systems together and allow Univest to seamlessly sell existing products and services, digitally, across an expanded footprint.

Salaries, benefits and commissions increased $2.8 million, or 10.4%, for the quarter ended September 30, 2022 compared to the comparable period in the prior year. This increase reflects the insurance acquisition in the fourth quarter of 2021, our expansion into Maryland and Western PA, and annual merit increases.

Professional fees increased $347 thousand, or 16.0%, for the quarter ended September 30, 2022 compared to the comparable period in the prior year. The increase for the three months ended September 30, 2022 was primarily due to $1.0 million in consultant fees attributable to the previously discussed digital transformation initiative, as compared to our $585 thousand investment in our Diversity, Equity and Inclusion program, training initiatives and treasury management product enhancements for the three months ended September 30, 2021.

Data processing expenses increased $627 thousand, or 19.2%, for the quarter ended September 30, 2022 compared to the comparable period in the prior year, primarily due to continued investments in technology including $180 thousand in support of the previously discussed digital transformation initiative for the respective period.

Tax Provision
The effective income tax rate was 19.7% for the nine months ended September 30, 2022, compared to an effective income tax rate of 19.4% for the nine months ended September 30, 2021. The effective tax rate for the nine months ended September 30, 2022 and 2021 reflects the benefits of tax-exempt income from investments in municipal securities and loans and leases. Additionally, the effective tax rate for the nine months ended September 30, 2022 was favorably impacted by discrete tax benefits and proceeds from BOLI death benefits. Excluding these items, the effective tax rate was 20.1% for the nine months ended September 30, 2022.

Asset Quality and Provision for Credit Losses
Nonperforming assets were $33.0 million at September 30, 2022, compared to $34.8 million at June 30, 2022 and $37.1 million at September 30, 2021.

Net loan and lease charge-offs were $1.2 million and $1.7 million for the three months ended September 30, 2022 and June 30, 2022, respectively, compared to net loan and lease recoveries of $75 thousand for the three months ended September 30, 2021. Net loan and lease charge-offs were $3.0 million and $456 thousand for the nine months ended September 30, 2022 and September 30, 2021, respectively.

The provision for credit losses was $3.6 million for the third quarter of 2022 compared to a provision for credit losses of $6.7 million for the second quarter of 2022 and a reversal of provision of $182 thousand for the third quarter of 2021. The provision for credit losses was $6.8 million for the nine months ended September 30, 2022 compared to a reversal of provision for credit losses of $11.5 million for the comparable period in the prior year. 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, 2022 compared to 1.27% at June 30, 2022 and 1.34% at September 30, 2021.

Share Repurchases
During the three months ended September 30, 2022, the Corporation repurchased 150,000 shares at an average price of $25.41, for an aggregate cost of $3.8 million. During the nine months ended September 30, 2022, the Corporation repurchased 450,000 shares at an average price of $25.29, for an aggregate cost of $11.4 million. As of September 30, 2022, the Corporation has 229,174 shares remaining to repurchase under the program that was approved on May 27, 2015. On October 26, 2022, the Corporation’s Board of Directors approved an increase of 1,000,000 in the shares available for repurchase under the Corporation’s share repurchase program.

Dividend
On October 26, 2022, Univest declared a quarterly cash dividend of $0.21 per share to be paid on November 23, 2022 to shareholders of record as of November 9, 2022.

Conference Call
Univest will host a conference call to discuss third quarter 2022 results on Thursday, October 27, 2022 at 9:00 a.m. EDT. Participants may preregister at https://www.netroadshow.com/events/login?show=7205620b&confId=42951. The general public can access the call by dialing 1-844-200-6205; using Access Code 478630. A replay of the conference call will be available through November 24, 2022 by dialing 1-866-813-9403; using Access Code: 211821.

¹Non-GAAP metric. A reconciliation of this and other non-GAAP financial 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 $6.9 billion in assets and $4.0 billion in assets under management and supervision through its Wealth Management lines of business at September 30, 2022. 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 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 results, business or strategies to differ materially from those expressed or implied by the forward-looking statements. These factors include, but are not limited to: (1) competition; (2) inflation and/or changes in interest rates, which may adversely impact our margins and yields, reduce the fair value of our financial instruments, reduce our loan originations or lead to higher operating costs; (3) changes in asset quality, prepayment speeds, loan sale volumes, charge-offs and/or credit loss provisions; (4) changes in economic conditions nationally and in our market; (5) economic assumptions that may impact our allowance for credit losses calculation; (6) legislative, regulatory or tax changes; (7) technological issues that may adversely affect our operations or those of our customers; (8) changes in the securities markets; (9) the continuing effects resulting from the COVID-19 pandemic on our business and results of operation; (10) the current or anticipated impact of military conflict, terrorism or other geopolitical events; and/or (11) 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, 2022
(Dollars in thousands)
Balance Sheet (Period End)		09/30/22				06/30/22				03/31/22				12/31/21				09/30/21
ASSETS
Cash and due from banks		$	65,859			$	59,590			$	57,307			$	49,202			$	67,517
Interest-earning deposits with other banks			47,451				35,187				716,474				840,948				834,840
Cash and cash equivalents			113,310				94,777				773,781				890,150				902,357
Investment securities held-to-maturity			159,170				159,808				166,339				176,983				112,643
Investment securities available for sale, net of allowance for credit losses			347,479				351,382				349,994				317,007				277,773
Investments in equity securities			2,994				2,934				2,569				2,999				2,961
Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost			29,475				29,116				26,330				28,186				28,679
Loans held for sale			9,087				8,352				14,521				21,600				29,093
Loans and leases held for investment			5,849,259				5,661,777				5,400,786				5,310,017				5,252,045
Less: Allowance for credit losses, loans and leases			(74,929	)			(72,011	)			(68,286	)			(71,924	)			(70,146	)
Net loans and leases held for investment			5,774,330				5,589,766				5,332,500				5,238,093				5,181,899
Premises and equipment, net			50,533				50,080				50,429				56,882				55,354
Operating lease right-of-use assets			30,654				30,929				30,498				30,407				31,570
Goodwill			175,510				175,510				175,510				175,510				172,559
Other intangibles, net of accumulated amortization			11,650				11,728				11,784				11,848				9,359
Bank owned life insurance			120,035				120,103				119,398				118,699				117,981
Accrued interest and other assets			83,170				76,328				54,087				54,057				57,624
Total assets		$	6,907,397			$	6,700,813			$	7,107,740			$	7,122,421			$	6,979,852
LIABILITIES
Noninterest-bearing deposits		$	1,968,422			$	2,062,538			$	2,136,467			$	2,065,423			$	1,861,007
Interest-bearing deposits:			3,818,554				3,500,510				3,911,465				3,989,701				4,077,147
Total deposits			5,786,976				5,563,048				6,047,932				6,055,124				5,938,154
Short-term borrowings			80,711				97,606				18,976				20,106				14,101
Long-term debt			95,000				95,000				95,000				95,000				95,000
Subordinated notes			99,107				99,030				98,952				98,874				98,797
Operating lease liabilities			33,718				33,951				33,566				33,453				34,641
Accrued expenses and other liabilities			57,698				48,253				39,459				46,070				43,136
Total liabilities			6,153,210				5,936,888				6,333,885				6,348,627				6,223,829
SHAREHOLDER'S 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			299,791				298,800				297,945				299,181				298,033
Retained earnings			410,942				396,295				389,332				375,124				363,607
Accumulated other comprehensive loss, net of tax benefit			(64,985	)			(42,781	)			(31,909	)			(16,353	)			(20,073	)
Treasury stock, at cost			(49,345	)			(46,173	)			(39,297	)			(41,942	)			(43,328	)
Total shareholders’ equity			754,187				763,925				773,855				773,794				756,023
Total liabilities and shareholders’ equity		$	6,907,397			$	6,700,813			$	7,107,740			$	7,122,421			$	6,979,852
		For the three months ended,																				For the nine months ended,
Balance Sheet (Average)		09/30/22				06/30/22				03/31/22				12/31/21				09/30/21				09/30/22			09/30/21
Assets		$	6,797,466			$	6,962,401			$	7,047,980			$	7,088,289			$	6,698,177			$	6,935,031		$	6,509,576
Investment securities, net of allowance for credit losses			517,335				515,741				522,128				469,588				395,280				518,383			385,192
Loans and leases, gross			5,752,119				5,520,580				5,344,698				5,255,279				5,320,411				5,540,624			5,345,119
Deposits			5,645,291				5,903,173				5,984,815				6,041,798				5,666,725				5,843,182			5,439,345
Shareholders' equity			773,099				771,410				774,358				762,334				746,185				772,951			725,061

Univest Financial Corporation
Consolidated Summary of Loans by Type and Asset Quality Data (Unaudited)
September 30, 2022
(Dollars in thousands)
Summary of Major Loan and Lease Categories (Period End)		09/30/22				06/30/22				03/31/22				12/31/21				09/30/21
Commercial, financial and agricultural		$	1,052,733			$	1,028,354			$	932,485			$	956,396			$	927,015
Paycheck Protection Program			2,207				5,358				10,298				31,748				85,601
Real estate-commercial			2,936,204				2,870,286				2,816,737				2,718,535				2,669,898
Real estate-construction			329,915				319,449				285,083				283,918				260,874
Real estate-residential secured for business purpose			443,837				419,652				412,486				409,900				412,001
Real estate-residential secured for personal purpose			685,771				629,144				568,735				540,566				535,705
Real estate-home equity secured for personal purpose			175,843				168,536				160,134				158,909				159,029
Loans to individuals			26,679				27,061				26,249				25,504				26,458
Lease financings			196,070				193,937				188,579				184,541				175,464
Total loans and leases held for investment, net of deferred income			5,849,259				5,661,777				5,400,786				5,310,017				5,252,045
Less: Allowance for credit losses, loans and leases			(74,929	)			(72,011	)			(68,286	)			(71,924	)			(70,146	)
Net loans and leases held for investment		$	5,774,330			$	5,589,766			$	5,332,500			$	5,238,093			$	5,181,899
Asset Quality Data (Period End)		09/30/22				06/30/22				03/31/22				12/31/21				09/30/21
Nonaccrual loans and leases, including nonaccrual troubled debt restructured loans and leases		$	13,620			$	13,355			$	30,876			$	33,210			$	34,528
Accruing loans and leases 90 days or more past due			416				2,784				274				498				2,204
Accruing troubled debt restructured loans and leases			50				50				51				51				51
Total nonperforming loans and leases			14,086				16,189				31,201				33,759				36,783
Other real estate owned			18,960				18,604				279				279				279
Total nonperforming assets		$	33,046			$	34,793			$	31,480			$	34,038			$	37,062
Nonaccrual loans and leases / Loans and leases held for investment			0.23	%			0.24	%			0.57	%			0.63	%			0.66	%
Nonperforming loans and leases / Loans and leases held for investment			0.24	%			0.29	%			0.58	%			0.64	%			0.70	%
Nonperforming assets / Total assets			0.48	%			0.52	%			0.44	%			0.48	%			0.53	%
Allowance for credit losses, loans and leases		$	74,929			$	72,011			$	68,286			$	71,924			$	70,146
Allowance for credit losses, loans and leases / Loans and leases held for investment			1.28	%			1.27	%			1.26	%			1.35	%			1.34	%
Allowance for credit losses, loans and leases / Loans and leases held for investment, excluding Paycheck Protection Program loans (1)			1.28	%			1.27	%			1.27	%			1.36	%			1.36	%
Allowance for credit losses, loans and leases / Nonaccrual loans and leases held for investment			550.14	%			539.21	%			221.16	%			216.57	%			203.16	%
Allowance for credit losses, loans and leases / Nonperforming loans and leases held for investment			531.94	%			444.81	%			218.86	%			213.05	%			190.70	%
		For the three months ended,																				For the nine months ended,
		09/30/22				06/30/22				03/31/22				12/31/21				09/30/21				09/30/22				09/30/21
Net loan and lease charge-offs (recoveries)		$	1,196			$	1,715			$	76			$	(243	)		$	(75	)		$	2,987			$	456
Net loan and lease charge-offs (recoveries) (annualized)/Average loans and leases			0.08	%			0.12	%			0.01	%			(0.02	%)			(0.01	%)			0.07	%			0.01	%
(1) Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included at the end of this document.

Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
September 30, 2022
(Dollars in thousands, except per share data)
		For the three months ended,																	For the nine months ended,
For the period:		09/30/22			06/30/22			03/31/22				12/31/21			09/30/21				09/30/22			09/30/21
Interest income		$	66,877		$	56,717		$	51,198			$	52,262		$	53,571			$	174,792		$	157,469
Interest expense			8,627			5,246			4,538				4,737			4,884				18,411			16,611
Net interest income			58,250			51,471			46,660				47,525			48,687				156,381			140,858
Provision (reversal of provision) for credit losses			3,558			6,674			(3,450	)			1,392			(182	)			6,782			(11,524	)
Net interest income after provision for credit losses			54,692			44,797			50,110				46,133			48,869				149,599			152,382
Noninterest income:
Trust fee income			1,835			1,998			2,102				2,086			2,126				5,935			6,317
Service charges on deposit accounts			1,522			1,574			1,504				1,486			1,422				4,600			4,018
Investment advisory commission and fee income			4,199			4,812			5,152				4,885			4,796				14,163			14,051
Insurance commission and fee income			4,442			4,629			5,570				3,726			3,837				14,641			12,631
Other service fee income			3,124			3,309			2,756				2,759			2,576				9,189			7,516
Bank owned life insurance income			1,153			705			699				719			925				2,557			3,262
Net gain on sales of investment securities			-			-			30				5			21				30			140
Net gain on mortgage banking activities			817			1,230			1,929				2,518			3,224				3,976			12,623
Other income			867			741			728				1,008			1,625				2,336			3,474
Total noninterest income			17,959			18,998			20,470				19,192			20,552				57,427			64,032
Noninterest expense:
Salaries, benefits and commissions			29,400			29,133			28,245				27,374			26,641				86,778			76,817
Net occupancy			2,504			2,422			2,716				2,477			2,525				7,642			7,920
Equipment			968			977			982				985			1,000				2,927			2,914
Data processing			3,901			3,708			3,567				3,355			3,274				11,176			9,388
Professional fees			2,521			2,844			2,138				1,750			2,174				7,503			5,937
Marketing and advertising			605			693			425				683			539				1,723			1,380
Deposit insurance premiums			662			812			893				698			765				2,367			2,014
Intangible expenses			309			342			341				267			214				992			712
Other expense			5,795			6,440			6,105				5,746			6,116				18,340			16,992
Total noninterest expense			46,665			47,371			45,412				43,335			43,248				139,448			124,074
Income before taxes			25,986			16,424			25,168				21,990			26,173				67,578			92,340
Income tax expense			5,185			3,258			4,851				4,578			5,262				13,294			17,951
Net income		$	20,801		$	13,166		$	20,317			$	17,412		$	20,911			$	54,284		$	74,389
Net income per share:
Basic		$	0.71		$	0.45		$	0.69			$	0.59		$	0.71			$	1.85		$	2.53
Diluted		$	0.71		$	0.45		$	0.68			$	0.59		$	0.71			$	1.84		$	2.52
Dividends declared per share		$	0.21		$	0.21		$	0.20			$	0.20		$	0.20			$	0.62		$	0.60
Weighted average shares outstanding			29,290,829			29,490,154			29,542,467				29,471,304			29,420,256				29,440,228			29,379,774
Period end shares outstanding			29,242,451			29,365,775			29,636,425				29,500,542			29,438,402				29,242,451			29,438,402

Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
September 30, 2022
		For the three months ended,																				For the nine months ended,
Profitability Ratios (annualized)		09/30/22				06/30/22				03/31/22				12/31/21				09/30/21				09/30/22				09/30/21
Return on average assets			1.21	%			0.76	%			1.17	%			0.97	%			1.24	%			1.05	%			1.53	%
Return on average shareholders' equity			10.67	%			6.85	%			10.64	%			9.06	%			11.12	%			9.39	%			13.72	%
Return on average tangible common equity (1)(3)			14.06	%			9.10	%			14.04	%			11.93	%			14.63	%			12.40	%			18.21	%
Net interest margin (FTE)			3.67	%			3.19	%			2.89	%			2.86	%			3.11	%			3.25	%			3.13	%
Efficiency ratio (2)			60.6	%			66.6	%			67.0	%			64.3	%			61.8	%			64.6	%			59.8	%
Capitalization Ratios
Dividends declared to net income			29.7	%			47.1	%			29.1	%			33.9	%			28.1	%			33.7	%			23.7	%
Shareholders' equity to assets (Period End)			10.92	%			11.40	%			10.89	%			10.86	%			10.83	%			10.92	%			10.83	%
Tangible common equity to tangible assets (1)			8.55	%			8.97	%			8.58	%			8.56	%			8.55	%			8.55	%			8.55	%
Common equity book value per share		$	25.79			$	26.01			$	26.11			$	26.23			$	25.68			$	25.79			$	25.68
Tangible common equity book value per share (1)		$	19.67			$	19.91			$	20.06			$	20.14			$	19.75			$	19.67			$	19.75
Regulatory Capital Ratios (Period End)
Tier 1 leverage ratio			9.87	%			9.45	%			9.35	%			9.13	%			9.53	%			9.87	%			9.53	%
Common equity tier 1 risk-based capital ratio			10.51	%			10.62	%			11.07	%			11.08	%			11.15	%			10.51	%			11.15	%
Tier 1 risk-based capital ratio			10.51	%			10.62	%			11.07	%			11.08	%			11.15	%			10.51	%			11.15	%
Total risk-based capital ratio			13.10	%			13.23	%			13.73	%			13.77	%			13.87	%			13.10	%			13.87	%
(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	September 30, 2022							June 30, 2022
	Average			Income/		Average		Average			Income/		Average
(Dollars in thousands)	Balance			Expense		Rate		Balance			Expense		Rate
Assets:
Interest-earning deposits with other banks	$	49,476		$	252	2.02	%	$	474,260		$	824	0.70	%
U.S. government obligations		565			3	2.11			2,000			11	2.21
Obligations of state and political subdivisions*		2,308			18	3.09			2,302			17	2.96
Other debt and equity securities		514,462			3,010	2.32			511,439			2,727	2.14
Federal Home Loan Bank, Federal Reserve Bank and other stock		28,368			435	6.08			26,221			344	5.26
Total interest-earning deposits, investments and other interest-earning assets		595,179			3,718	2.48			1,016,222			3,923	1.55
Commercial, financial, and agricultural loans		977,549			11,996	4.87			937,846			9,037	3.86
Paycheck Protection Program loans		3,754			40	4.23			7,644			155	8.13
Real estate—commercial and construction loans		3,105,821			34,100	4.36			3,004,509			28,527	3.81
Real estate—residential loans		1,256,509			12,492	3.94			1,166,201			10,758	3.70
Loans to individuals		27,197			381	5.56			26,782			305	4.57
Municipal loans and leases *		235,433			2,432	4.10			235,922			2,404	4.09
Lease financings		145,856			2,195	5.97			141,676			2,105	5.96
Gross loans and leases		5,752,119			63,636	4.39			5,520,580			53,291	3.87
Total interest-earning assets		6,347,298			67,354	4.21			6,536,802			57,214	3.51
Cash and due from banks		62,930							55,634
Allowance for credit losses, loans and leases		(72,355	)						(68,426	)
Premises and equipment, net		50,476							50,266
Operating lease right-of-use assets		30,740							30,222
Other assets		378,377							357,903
Total assets	$	6,797,466						$	6,962,401
Liabilities:
Interest-bearing checking deposits	$	881,395		$	1,251	0.56	%	$	851,324		$	570	0.27	%
Money market savings		1,246,795			3,709	1.18			1,405,536			1,552	0.44
Regular savings		1,086,191			302	0.11			1,070,480			237	0.09
Time deposits		416,539			1,189	1.13			452,989			1,227	1.09
Total time and interest-bearing deposits		3,630,920			6,451	0.70			3,780,329			3,586	0.38
Short-term borrowings		104,453			524	1.99			17,253			11	0.26
Long-term debt		95,000			324	1.35			95,000			321	1.36
Subordinated notes		99,065			1,328	5.32			98,988			1,328	5.38
Total borrowings		298,518			2,176	2.89			211,241			1,660	3.15
Total interest-bearing liabilities		3,929,438			8,627	0.87			3,991,570			5,246	0.53
Noninterest-bearing deposits		2,014,371							2,122,844
Operating lease liabilities		33,786							33,300
Accrued expenses and other liabilities		46,772							43,277
Total liabilities		6,024,367							6,190,991
Shareholders' Equity:
Common stock		157,784							157,784
Additional paid-in capital		299,135							298,241
Retained earnings and other equity		316,180							315,385
Total shareholders' equity		773,099							771,410
Total liabilities and shareholders' equity	$	6,797,466						$	6,962,401
Net interest income				$	58,727						$	51,968
Net interest spread						3.34							2.98
Effect of net interest-free funding sources						0.33							0.21
Net interest margin						3.67	%						3.19	%
Ratio of average interest-earning assets to average interest-bearing liabilities		161.53	%						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 of $(498) thousand and $(618) thousand for the three months ended September 30, 2022 and June 30, 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, 2022 and June 30, 2022 have been calculated using the Corporation’s federal applicable rate of 21.0%.

Univest Financial Corporation
Average Balances and Interest Rates (Unaudited)
				For the Three Months Ended September 30,
Tax Equivalent Basis	2022							2021
	Average			Income/		Average		Average			Income/		Average
(Dollars in thousands)	Balance			Expense		Rate		Balance			Expense		Rate
Assets:
Interest-earning deposits with other banks	$	49,476		$	252	2.02	%	$	530,191		$	189	0.14	%
U.S. government obligations		565			3	2.11			6,999			36	2.04
Obligations of state and political subdivisions*		2,308			18	3.09			2,992			24	3.18
Other debt and equity securities		514,462			3,010	2.32			385,289			1,516	1.56
Federal Home Loan Bank, Federal Reserve Bank and other stock		28,368			435	6.08			26,713			334	4.96
Total interest-earning deposits, investments and other interest-earning assets		595,179			3,718	2.48			952,184			2,099	0.87
Commercial, financial, and agricultural loans		977,549			11,996	4.87			880,986			7,412	3.34
Paycheck Protection Program loans		3,754			40	4.23			162,611			4,162	10.15
Real estate—commercial and construction loans		3,105,821			34,100	4.36			2,784,398			25,634	3.65
Real estate—residential loans		1,256,509			12,492	3.94			1,100,799			10,171	3.67
Loans to individuals		27,197			381	5.56			26,048			253	3.85
Municipal loans and leases*		235,433			2,432	4.10			247,603			2,504	4.01
Lease financings		145,856			2,195	5.97			117,966			1,856	6.24
Gross loans and leases		5,752,119			63,636	4.39			5,320,411			51,992	3.88
Total interest-earning assets		6,347,298			67,354	4.21			6,272,595			54,091	3.42
Cash and due from banks		62,930							59,642
Allowance for credit losses, loans and leases		(72,355	)						(72,606	)
Premises and equipment, net		50,476							55,685
Operating lease right-of-use assets		30,740							31,998
Other assets		378,377							350,863
Total assets	$	6,797,466						$	6,698,177
Liabilities:
Interest-bearing checking deposits	$	881,395		$	1,251	0.56	%	$	857,098		$	537	0.25	%
Money market savings		1,246,795			3,709	1.18			1,382,832			922	0.26
Regular savings		1,086,191			302	0.11			998,568			281	0.11
Time deposits		416,539			1,189	1.13			496,702			1,490	1.19
Total time and interest-bearing deposits		3,630,920			6,451	0.70			3,735,200			3,230	0.34
Short-term borrowings		104,453			524	1.99			15,116			2	0.05
Long-term debt		95,000			324	1.35			95,000			324	1.35
Subordinated notes		99,065			1,328	5.32			98,754			1,328	5.34
Total borrowings		298,518			2,176	2.89			208,870			1,654	3.14
Total interest-bearing liabilities		3,929,438			8,627	0.87			3,944,070			4,884	0.49
Noninterest-bearing deposits		2,014,371							1,931,525
Operating lease liabilities		33,786							35,094
Accrued expenses and other liabilities		46,772							41,303
Total liabilities		6,024,367							5,951,992
Shareholders' Equity:
Common stock		157,784							157,784
Additional paid-in capital		299,135							297,482
Retained earnings and other equity		316,180							290,919
Total shareholders' equity		773,099							746,185
Total liabilities and shareholders' equity	$	6,797,466						$	6,698,177
Net interest income				$	58,727						$	49,207
Net interest spread						3.34							2.93
Effect of net interest-free funding sources						0.33							0.18
Net interest margin						3.67	%						3.11	%
Ratio of average interest-earning assets to average interest-bearing liabilities		161.53	%						159.04	%
* 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) fees of $(498) thousand and $3.0 million for the three months ended September 30, 2022 and 2021, 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, 2022 and 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 Nine Months Ended September 30,
Tax Equivalent Basis	2022							2021
	Average			Income/		Average		Average			Income/		Average
(Dollars in thousands)	Balance			Expense		Rate		Balance			Expense		Rate
Assets:
Interest-earning deposits with other banks	$	416,466		$	1,433	0.46	%	$	328,768		$	291	0.12	%
U.S. government obligations		2,578			40	2.07			6,999			107	2.04
Obligations of state and political subdivisions*		2,314			54	3.12			6,838			187	3.66
Other debt and equity securities		513,491			8,076	2.10			371,355			4,147	1.49
Federal Home Loan Bank, Federal Reserve Bank and other stock		27,239			1,134	5.57			26,319			1,042	5.29
Total interest-earning deposits, investments and other interest-earning assets		962,088			10,737	1.49			740,279			5,774	1.04
Commercial, financial, and agricultural loans		939,261			28,604	4.07			830,248			21,120	3.40
Paycheck Protection Program loans		9,880			786	10.64			358,231			13,464	5.03
Real estate—commercial and construction loans		3,005,714			88,447	3.93			2,703,100			75,023	3.71
Real estate—residential loans		1,180,202			33,132	3.75			1,067,855			29,880	3.74
Loans to individuals		26,598			924	4.64			25,925			769	3.97
Municipal loans and leases*		237,928			7,270	4.09			248,191			7,632	4.11
Lease financings		141,041			6,375	6.04			111,569			5,412	6.49
Gross loans and leases		5,540,624			165,538	3.99			5,345,119			153,300	3.83
Total interest-earning assets		6,502,712			176,275	3.62			6,085,398			159,074	3.49
Cash and due from banks		57,455							55,983
Allowance for credit losses, loans and leases		(70,950	)						(76,265	)
Premises and equipment, net		51,551							55,803
Operating lease right-of-use assets		30,453							33,334
Other assets		363,810							355,323
Total assets	$	6,935,031						$	6,509,576
Liabilities:
Interest-bearing checking deposits	$	871,393		$	2,264	0.35	%	$	820,800		$	1,514	0.25	%
Money market savings		1,397,220			6,165	0.59			1,282,470			2,606	0.27
Regular savings		1,059,644			777	0.10			979,013			861	0.12
Time deposits		447,497			3,722	1.11			502,414			4,808	1.28
Total time and interest-bearing deposits		3,775,754			12,928	0.46			3,584,697			9,789	0.37
Short-term borrowings		46,765			537	1.54			17,363			7	0.05
Long-term debt		95,000			962	1.35			97,088			993	1.37
Subordinated notes		98,989			3,984	5.38			151,060			5,822	5.15
Total borrowings		240,754			5,483	3.04			265,511			6,822	3.44
Total interest-bearing liabilities		4,016,508			18,411	0.61			3,850,208			16,611	0.58
Noninterest-bearing deposits		2,067,428							1,854,648
Operating lease liabilities		33,514							36,636
Accrued expenses and other liabilities		44,630							43,023
Total liabilities		6,162,080							5,784,515
Shareholders' Equity:
Common stock		157,784							157,784
Additional paid-in capital		298,784							296,744
Retained earnings and other equity		316,383							270,533
Total shareholders' equity		772,951							725,061
Total liabilities and shareholders' equity	$	6,935,031						$	6,509,576
Net interest income				$	157,864						$	142,463
Net interest spread						3.01							2.91
Effect of net interest-free funding sources						0.24							0.22
Net interest margin						3.25	%						3.13	%
Ratio of average interest-earning assets to average interest-bearing liabilities		161.90	%						158.05	%
* 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) fees of $(1.3) million and $8.0 million for the nine months ended September 30, 2022 and 2021, 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, 2022 and 2021 have been calculated using the Corporation’s federal applicable rate of 21.0%.

Univest Financial Corporation
Loan Portfolio Overview (Unaudited)
September 30, 2022
(Dollars in thousands)
Industry Description		Total Outstanding Balance (excl PPP)		% of Commercial Loan Portfolio
CRE - Retail	$	378,087		7.9	%
Animal Production		332,130		7.0
CRE - Multi-family		263,698		5.5
CRE - 1-4 Family Residential Investment		249,149		5.2
CRE - Office		201,659		4.2
CRE - Industrial / Warehouse		185,952		3.9
Hotels & Motels (Accommodation)		170,627		3.6
Nursing and Residential Care Facilities		168,576		3.5
Education		155,122		3.3
Specialty Trade Contractors		147,227		3.1
Homebuilding (tract developers, remodelers)		133,902		2.8
Motor Vehicle and Parts Dealers		113,639		2.4
Merchant Wholesalers, Durable Goods		108,825		2.3
CRE - Medical Office		105,744		2.2
CRE - Mixed-Use - Residential		105,702		2.2
Crop Production		91,597		1.9
CRE - Mixed-Use - Commercial		85,172		1.8
Food Manufacturing		84,131		1.8
Wood Product Manufacturing		75,768		1.6
Rental and Leasing Services		74,514		1.6
Administrative and Support Services		73,558		1.5
Religious Organizations, Advocacy Groups		73,091		1.5
Merchant Wholesalers, Nondurable Goods		70,679		1.5
Food Services and Drinking Places		70,498		1.5
Personal and Laundry Services		60,651		1.3
Fabricated Metal Product Manufacturing		56,640		1.2
Repair and Maintenance		56,623		1.2
Miniwarehouse / Self-Storage		56,279		1.2
Truck Transportation		50,969		1.1
Industries with >$50 million in outstandings	$	3,800,209		79.8	%
Industries with <$50 million in outstandings	$	962,480		20.2	%
Total Commercial Loans	$	4,762,689		100.0	%
Consumer Loans and Lease Financings		Total Outstanding Balance
Real Estate-Residential Secured for Personal Purpose	$	685,771
Real Estate-Home Equity Secured for Personal Purpose		175,843
Loans to Individuals		26,679
Lease Financings		196,070
Total - Consumer Loans and Lease Financings	$	1,084,363
Total	$	5,847,052

Univest Financial Corporation
Non-GAAP Reconciliation
September 30, 2022
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)		09/30/22				06/30/22				03/31/22				12/31/21				09/30/21				09/30/22				09/30/21
Net income		$	20,801			$	13,166			$	20,317			$	17,412			$	20,911			$	54,284			$	74,389
Amortization of intangibles, net of tax			244				270				269				211				169				784				562
Net income before amortization of intangibles		$	21,045			$	13,436			$	20,586			$	17,623			$	21,080			$	55,068			$	74,951
Shareholders' equity		$	754,187			$	763,925			$	773,855			$	773,794			$	756,023			$	754,187			$	756,023
Goodwill			(175,510	)			(175,510	)			(175,510	)			(175,510	)			(172,559	)			(175,510	)			(172,559	)
Other intangibles (a)			(3,485	)			(3,678	)			(3,936	)			(4,210	)			(1,922	)			(3,485	)			(1,922	)
Tangible common equity		$	575,192			$	584,737			$	594,409			$	594,074			$	581,542			$	575,192			$	581,542
Total assets		$	6,907,397			$	6,700,813			$	7,107,740			$	7,122,421			$	6,979,852			$	6,907,397			$	6,979,852
Goodwill			(175,510	)			(175,510	)			(175,510	)			(175,510	)			(172,559	)			(175,510	)			(172,559	)
Other intangibles (a)			(3,485	)			(3,678	)			(3,936	)			(4,210	)			(1,922	)			(3,485	)			(1,922	)
Tangible assets		$	6,728,402			$	6,521,625			$	6,928,294			$	6,942,701			$	6,805,371			$	6,728,402			$	6,805,371
Average shareholders' equity		$	773,099			$	771,410			$	774,358			$	762,334			$	746,185			$	772,951			$	725,061
Average goodwill			(175,510	)			(175,510	)			(175,510	)			(173,553	)			(172,559	)			(175,510	)			(172,559	)
Average other intangibles (a)			(3,550	)			(3,791	)			(4,090	)			(2,696	)			(1,983	)			(3,808	)			(2,217	)
Average tangible common equity		$	594,039			$	592,109			$	594,758			$	586,085			$	571,643			$	593,633			$	550,285
Loans and leases held for investment, gross		$	5,849,259			$	5,661,777			$	5,400,786			$	5,310,017			$	5,252,045			$	5,849,259			$	5,252,045
Paycheck Protection Program ("PPP") loans			(2,207	)			(5,358	)			(10,298	)			(31,748	)			(85,601	)			(2,207	)			(85,601	)
Gross loans and leases excluding PPP loans		$	5,847,052			$	5,656,419			$	5,390,488			$	5,278,269			$	5,166,444			$	5,847,052			$	5,166,444
(a) Amount does not include mortgage servicing rights

 

FAQ

What were Univest Financial's earnings for Q3 2022?

Univest Financial reported net income of $20.8 million, or $0.71 diluted EPS, for Q3 2022.

How did gross loans change for Univest Financial in Q3 2022?

Gross loans increased by $190.6 million, or 13.5% annualized, from Q2 2022.

What was the status of Univest Financial's net interest margin in Q3 2022?

The net interest margin improved to 3.67% in Q3 2022, up from 3.19% in Q2 2022.

Did Univest Financial declare a dividend in October 2022?

Yes, Univest declared a quarterly cash dividend of $0.21 per share, payable on November 23, 2022.

How much did Univest Financial's noninterest income drop in Q3 2022?

Noninterest income decreased by $2.6 million, or 12.6%, compared to Q3 2021.