Univest Financial Corporation Reports Year and Fourth Quarter Results

Rhea-AI Summary

Univest Financial Corporation (UVSP) reported a net income of $46.9 million for 2020, down from $65.7 million in 2019. The fourth quarter saw a net income rise to $25.9 million from $15.5 million year-over-year. Total loans increased by 9.9%, while deposits surged by 20.2%. Notably, the company adopted the CECL standard, leading to a reversal of credit loss provisions amounting to $8.7 million in Q4 2020. The effective tax rate improved slightly to 17.5%. A quarterly dividend of $0.20 per share was declared, payable on February 24, 2021.

Positive

• Net income for Q4 2020 rose to $25.9 million, compared to $15.5 million in Q4 2019.
• Total loans increased by $436.2 million, or 9.9%, year-over-year.
• Total deposits grew by $882.6 million, or 20.2%, from December 31, 2019.
• Reversal of credit loss provision of $8.7 million in Q4 2020 indicates improved asset quality.
• Noninterest income surged by 24.6% to $20.1 million for Q4 2020.

Negative

• Overall net income decreased from $65.7 million in 2019 to $46.9 million in 2020.
• Net interest margin fell to 3.16% for 2020 from 3.59% in 2019, indicating decreased profitability on interest-bearing assets.
• Noninterest expenses increased by 11.4% for Q4 2020, raising concerns about cost management.

(Loan Growth (excluding PPP loans¹) for 2020 of 9.9%)

SOUDERTON, Pa., Jan. 27, 2021 (GLOBE NEWSWIRE) -- Univest Financial Corporation (“Univest” or the "Corporation") (NASDAQ: UVSP), parent company of Univest Bank and Trust Co. and its insurance, investments and equipment financing subsidiaries, today announced net income for the year ended December 31, 2020 of $46.9 million, or $1.60 diluted earnings per share, compared to net income of $65.7 million, or $2.24 diluted earnings per share, for the year ended December 31, 2019. Net income for the quarter ended December 31, 2020 was $25.9 million, or $0.88 diluted earnings per share, compared to net income of $15.5 million, or $0.53 diluted earnings per share, for the quarter ended December 31, 2019.

Pre-tax pre-provision income¹ for the year ended December 31, 2020 was $97.7 million, an increase of $9.1 million, or 10.3%, from the comparable period in the prior year. Pre-tax pre-provision income¹ for the quarter ended December 31, 2020 was $22.9 million, an increase of $1.8 million, or 8.6%, from the fourth quarter of 2019.

One-Time Items For the Quarter
The financial results for the quarter ended December 31, 2020 included a $1.4 million ($1.1 million after-tax), or $0.04 diluted earnings per share, restructuring charge associated with the Corporation's previously announced financial service center optimization plan. The financial results for the quarter ended December 31, 2020 also included a charge of $1.1 million ($877 thousand after-tax), or $0.03 diluted earnings per share, in other expense related to the extinguishment of long-term debt. During the fourth quarter of 2020, the Corporation modified the vesting criteria for outstanding performance-based restricted stock grants to better reflect the current operating environment. As a result of these modifications, a benefit of $928 thousand ($733 thousand after-tax), or $0.03 diluted earnings per share, was recognized in salaries, benefits and commissions for the quarter ended December 31, 2020.

COVID-19
As a result of the impact of COVID-19, we have taken various actions to support our customers and the communities we collectively serve, including modifying outstanding loans and leases and waiving certain deposit service charges. Loans and leases that were modified via principal and/or interest deferrals were done so 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 have not been categorized as troubled debt restructurings. These loans and leases had a combined principal balance of approximately $68.0 million as of December 31, 2020, which represents approximately 1.4% of the loan portfolio, excluding Paycheck Protection Program ("PPP") loans¹. For more information on these loans, including a breakdown of such loans by type, please see the "Loan Portfolio Overview" table within this document.

CECL
The Corporation adopted Accounting Standard Update No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“CECL”) effective January 1, 2020. During the quarter ended December 31, 2020, the Corporation reduced its allowance for credit losses resulting in a reversal of provision for credit loss expense of $8.7 million, of which $11.6 million (after-tax benefit of $9.2 million), or $0.31 diluted earnings per share, was attributable to changes in economic-related assumptions within the Corporation’s CECL model offset by a reserve increase attributable to loan growth. During the year ended December 31, 2020, the Corporation recorded CECL related charges of $40.8 million, of which $27.4 million (after-tax charge of $21.6 million), or $0.74 diluted earnings per share, was attributable to changes in economic related assumptions within the CECL model.

Loans
Gross loans and leases, excluding PPP loans¹, increased $436.2 million, or 9.9%, from December 31, 2019 primarily due to increases in commercial real estate loans. Gross loans and leases, excluding PPP loans¹, increased $112.8 million, or 9.6% (annualized), from September 30, 2020 primarily due to increases in commercial real estate loans.
  
Deposits
Total deposits increased $882.6 million, or 20.2%, from December 31, 2019 primarily due to increases in commercial, consumer and public funds deposits. Total deposits increased $31.1 million, or 2.4% (annualized), from September 30, 2020 primarily due to an increase in consumer deposits offset by a decrease in commercial deposits.

Net Interest Income and Margin
Net interest income of $174.4 million for the year ended December 31, 2020 increased $5.1 million, or 3.0%, from the prior year primarily due to lower deposit costs and growth in loans partially offset by a decrease in loan and investment yields. Net interest margin, on a tax-equivalent basis, was 3.16% for the year ended December 31, 2020 compared to 3.59% for the year ended December 31, 2019. Excess liquidity reduced net interest margin by approximately fourteen basis points for the year ended December 31, 2020 compared to eight basis points for the year ended December 31, 2019. This excess liquidity was primarily driven by strong deposit balance growth during 2020. PPP loans reduced net interest margin by seven basis points for the year ended December 31, 2020 compared to no impact for the year ended December 31, 2019. Excluding the impacts of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was 3.37% for the year ended December 31, 2020 compared to 3.67% for the year ended December 31, 2019. For the year ended December 31, 2020, PPP loans contributed $7.9 million to net interest income. As of December 31, 2020, $7.7 million of net deferred fees remained on the balance sheet, which represents approximately 63% of the initial deferred fee amount.

Net interest margin, on a tax-equivalent basis, was 3.02% for the fourth quarter of 2020, compared to 3.02% for the third quarter of 2020 and 3.44% for the fourth quarter of 2019. Excess liquidity reduced net interest margin by approximately thirteen basis points for the quarter ended December 31, 2020 compared to eighteen basis points for the quarter ended September 30, 2020 and twelve basis points for the quarter ended December 31, 2019. This excess liquidity was primarily driven by strong deposit balance growth in 2020. PPP loans reduced net interest margin by seven basis points for the quarter ended December 31, 2020 compared to ten basis points for the quarter ended September 30, 2020 and had no impact for the quarter ended December 31, 2019. Excluding the impacts of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was 3.22%, 3.30% and 3.56% for the quarters ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively. For the quarter ended December 31, 2020, PPP loans contributed $3.1 million to net interest income, of which $369 thousand related to forgiveness activity.

Noninterest Income
Noninterest income for the quarter ended December 31, 2020 was $20.1 million, an increase of $4.0 million, or 24.6%, from the comparable period in the prior year. Noninterest income for the year ended December 31, 2020 was $78.3 million, an increase of $12.9 million, or 19.7%, from the comparable period in the prior year.

Net gain on mortgage banking activities increased $3.3 million, or 316.5%, for the quarter and $12.5 million, or 316.7%, for the year ended December 31, 2020 from the comparable periods in the prior year, due to an increase in volume and expansion of margins.

Other income increased $923 thousand, or 91.1%, for the quarter ended December 31, 2020 and $3.3 million, or 127.3%, for the year ended December 31, 2020 from the comparable periods in the prior year. Fees on risk participation agreements for interest rate swaps increased $1.0 million for the quarter ended December 31, 2020 and $4.4 million for the year ended December 31, 2020 from the comparable periods in the prior year, driven by increased customer activity due to the current rate environment. Gain on sale of small business administration (SBA) loans decreased $482 thousand for the year ended December 31, 2020 from the prior year due to decreased SBA loan sale activity. Equity securities measured at fair value decreased $266 thousand for the year ended December 31, 2020 from the prior year.

Service charges on deposit accounts decreased $1.1 million, or 18.5%, for the year ended December 31, 2020 from the prior year due to the waiving of certain deposit service charges for customers in response to COVID-19 during the second quarter of 2020 and reduced customer activity in the third and fourth quarters of 2020.

Other service fee income decreased $1.8 million, or 19.2%, for the year ended December 31, 2020 from the prior year. Mortgage servicing right amortization increased $1.4 million for the year ended December 31, 2020 from the prior year driven by the decline in interest rates and their impact on prepayment activity. Interchange income decreased $308 thousand for the year ended December 31, 2020 from the prior year due to decreased customer transaction activity.

Noninterest Expense
Noninterest expense for the quarter ended December 31, 2020 was $41.7 million, an increase of $4.3 million, or 11.4%, from the comparable period in the prior year. Noninterest expense for the year ended December 31, 2020 was $155.0 million, an increase of $8.9 million, or 6.1% from the prior year.

Salaries, benefits and commissions increased $1.7 million, or 7.7%, for the quarter ended December 31, 2020 and increased $4.9 million, or 5.6%, for the year ended December 31, 2020 from the comparable periods in the prior year. The increases were attributable to additional staff hired, primarily during 2019, to support revenue generation across all business lines, expansion of our commercial lending groups in the first and second quarters of 2019, annual merit increases and increased variable compensation due to strong mortgage banking activity. The increases in salaries, benefits and commissions were offset by the benefit of the previously discussed performance-based restricted stock modifications and $1.3 million of incremental capitalized compensation related to origination of PPP loans. Deposit insurance premiums increased $423 thousand, or 123.7%, for the quarter and $1.8 million, or 232.2%, for the year ended December 31, 2020 from the comparable periods in the prior year primarily due to an FDIC small bank assessment credit of $1.1 million, of which $988 thousand was recognized during the third quarter of 2019 and $114 thousand was recognized during the fourth quarter of 2019, and an increased assessment base for 2020 due to asset growth. Restructuring charges increased $1.4 million for the quarter and year ended December 31, 2020 from the comparable periods in the prior year due to the impact of the financial service center optimization plan discussed previously. Other expense increased $615 thousand, or 9.6%, for the quarter and $1.3 million, or 5.7%, for the year ended December 31, 2020 from the comparable periods in the prior year primarily due to charges from the extinguishment of long-term debt discussed previously.

Asset Quality and Provision for Credit Losses
Nonperforming assets were $40.5 million at December 31, 2020, compared to $41.9 million at September 30, 2020 and $39.3 million at December 31, 2019. Other real estate owned includes a $7.1 million property, which transferred to other real estate owned during the second quarter of 2020. The property is under an agreement of sale and is expected to be sold during the first quarter of 2021.

Net loan and lease charge-offs were $618 thousand during the fourth quarter of 2020 and $4.6 million for the year ended December 31, 2020. The reversal of provision for credit losses was $8.7 million for the fourth quarter of 2020, due to a reserve decrease of $8.2 million related to loans and leases and $690 thousand related to unfunded commitments, offset by a reserve increase of $176 thousand related to investment securities. The provision for credit losses was $40.8 million for the year ended December 31, 2020, of which $39.4 million related to loans and leases, $786 thousand related to reserves for unfunded commitments, and $569 thousand related to investment securities.

Net loan and lease charge-offs were $558 thousand during the fourth quarter of 2019 and $2.6 million for the year ended December 31, 2019. The provision for loan and lease losses was $2.2 million for the fourth quarter of 2019 and $8.5 million for the year ended December 31, 2019.

The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment was 1.56% at December 31, 2020, compared to 1.76% at September 30, 2020, and 0.81% at December 31, 2019. The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment, excluding PPP loans¹, was 1.72% at December 31, 2020, compared to 1.95% at September 30, 2020.

Tax Provision
The effective income tax rate was 17.5% for the year ended December 31, 2020 compared to an effective income tax rate of 17.9% for the year ended December 31, 2019. The Corporation's effective income tax rate reflects the benefits of tax-exempt income from investments in municipal securities and loans and leases.

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

Conference Call
Univest will host a conference call to discuss fourth quarter and year end 2020 results on Thursday, January 28, 2021 at 9:00 a.m. EST. Participants may preregister at https://dpregister.com/sreg/10150871/e00405b3c0. The general public can access the call by dialing 1-888-338-6515. A replay of the conference call will be available through February 28, 2021 by dialing 1-877-344-7529; using Conference ID: 10150871.

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 $6.3 billion in assets and $4.1 billion in assets under management and supervision through its Wealth Management lines of business at December 31, 2020. 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 in southeastern Pennsylvania extending to the Lehigh Valley and York, as well as in New Jersey and Maryland 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, 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; (5) legislative or regulatory changes that may adversely affect the businesses in which Univest is engaged; (6) technological issues that may adversely affect Univest financial operations or customers; (7) changes in the securities markets or (8) 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 gradual 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 substantially reopen, 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) as the result of the decline in the Federal Reserve Board’s target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities; (7) a material decrease in net income or a net loss over several quarters could result in a decrease in the rate of our quarterly cash dividend; (8) our wealth management revenues may decline with continuing market turmoil; (9) 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; (10) our cyber security risks are increased as the result of an increase in the number of employees working remotely; (11) Federal Deposit Insurance Corporation premiums may increase if the agency experience additional resolution costs; and (12) 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)
December 31, 2020
(Dollars in thousands)
Balance Sheet (Period End)		12/31/20				09/30/20				06/30/20				03/31/20				12/31/19
Assets		$	6,336,496			$	6,382,831			$	6,125,312			$	5,464,768			$	5,380,924
Investment securities, net of allowance for credit losses			373,176				368,830				397,852				423,521				441,599
Loans held for sale			35,529				14,465				31,082				11,417				5,504
Loans and leases held for investment, gross			5,306,841				5,211,856				4,951,809				4,448,825				4,386,836
Allowance for credit losses, loans and leases			83,044				91,870				86,217				68,216				35,331
Loans and leases held for investment, net			5,223,797				5,119,986				4,865,592				4,380,609				4,351,505
Total deposits			5,242,715				5,211,603				4,869,329				4,407,303				4,360,075
Noninterest-bearing deposits			1,690,663				1,714,505				1,725,819				1,318,270				1,279,681
NOW, money market and savings			2,988,277				2,940,879				2,623,025				2,452,021				2,474,384
Time deposits			563,775				556,219				520,485				637,012				606,010
Borrowings			311,421				416,104				515,722				323,363				263,596
Shareholders' equity			692,472				669,107				654,873				651,551				675,122
Balance Sheet (Average)		For the three months ended,																				For the twelve months ended,
		12/31/20				09/30/20				06/30/20				03/31/20				12/31/19				12/31/20				12/31/19
Assets		$	6,353,519			$	6,265,605			$	6,000,790			$	5,409,561			$	5,400,591			$	6,006,877			$	5,224,583
Investment securities, net of allowance for credit losses			369,511				385,221				411,957				441,900				445,932				402,011				461,841
Loans and leases, gross			5,253,720				5,070,037				4,836,858				4,388,584				4,280,430				4,888,801				4,148,619
Deposits			5,222,452				5,030,398				4,794,669				4,349,984				4,374,586				4,850,890				4,186,339
Shareholders' equity			676,426				661,947				660,950				673,460				672,647				668,201				652,453
Asset Quality Data (Period End)
		12/31/20				09/30/20				06/30/20				03/31/20				12/31/19
Nonaccrual loans and leases, including nonaccrual troubled debt restructured
loans and leases		$	31,692			$	30,019			$	26,141			$	36,626			$	38,578
Accruing loans and leases 90 days or more past due			1,392				3,573				1,193				1,777				143
Accruing troubled debt restructured loans and leases			53				53				53				54				54
Total nonperforming loans and leases			33,137				33,645				27,387				38,457				38,775
Other real estate owned			7,355				8,270				8,642				516				516
Total nonperforming assets		$	40,492			$	41,915			$	36,029			$	38,973			$	39,291
Nonaccrual loans and leases / Loans and leases held for investment			0.60	%			0.58	%			0.53	%			0.82	%			0.88	%
Nonperforming loans and leases / Loans and leases held for investment			0.62	%			0.65	%			0.55	%			0.86	%			0.88	%
Nonperforming assets / Total assets			0.64	%			0.66	%			0.59	%			0.71	%			0.73	%
Allowance for credit losses, loans and leases		$	83,044			$	91,870			$	86,217			$	68,216			$	35,331
Allowance for credit losses, loans and leases / Loans and leases held for investment			1.56	%			1.76	%			1.74	%			1.53	%			0.81	%
Allowance for credit losses, loans and leases / Loans and leases held for investment, excluding Paycheck Protection Program loans (1)			1.72	%			1.95	%			1.94	%			1.53	%			0.81	%
Allowance for credit losses, loans and leases / Nonaccrual loans and leases held for investment			262.03	%			306.04	%			329.82	%			186.25	%			91.58	%
Allowance for credit losses, loans and leases / Nonperforming loans and leases held for investment			250.61	%			273.06	%			314.81	%			177.38	%			91.12	%
		For the three months ended,																				For the twelve months ended,
		12/31/20				09/30/20				06/30/20				03/31/20				12/31/19				12/31/20				12/31/19
Net loan and lease charge-offs (recoveries)		$	618			$	(35	)		$	3,576			$	489			$	558			$	4,648			$	2,551
Net loan and lease charge-offs (annualized)/Average loans and leases			0.05	%			(0.00	%)			0.30	%			0.04	%			0.05	%			0.10	%			0.06	%
(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)
December 31, 2020
(Dollars in thousands, except per share data)
		For the three months ended,																		For the twelve months ended,
For the period:		12/31/20				09/30/20			06/30/20				03/31/20				12/31/19			12/31/20			12/31/19
Interest income		$	51,334			$	50,612		$	49,980			$	52,019			$	53,369		$	203,945		$	214,093
Interest expense			6,813				6,758			6,462				9,551				10,940			29,584			44,861
Net interest income			44,521				43,854			43,518				42,468				42,429			174,361			169,232
(Reversal of Provision) provision for credit losses			(8,721	)			3,935			23,737				21,843				2,225			40,794			8,511
Net interest income after provision for credit losses			53,242				39,919			19,781				20,625				40,204			133,567			160,721
Noninterest income:
Trust fee income			1,974				1,915			1,924				1,890				1,912			7,703			7,826
Service charges on deposit accounts			1,371				1,187			890				1,397				1,551			4,845			5,946
Investment advisory commission and fee income			4,144				4,005			3,540				4,255				4,064			15,944			15,940
Insurance commission and fee income			3,512				3,776			4,067				4,732				3,609			16,087			16,571
Other service fee income			2,092				2,093			1,488				1,870				2,229			7,543			9,341
Bank owned life insurance income			733				741			732				734				741			2,940			3,179
Net gain on sales of investment securities			54				57			65				695				13			871			54
Net gain on mortgage banking activities			4,323				5,860			3,515				2,744				1,038			16,442			3,946
Other income			1,936				2,171			1,779				67				1,013			5,953			2,619
Total noninterest income			20,139				21,805			18,000				18,384				16,170			78,328			65,422
Noninterest expense:
Salaries, benefits and commissions			23,613				24,059			21,700				23,836				21,933			93,208			88,289
Net occupancy			2,697				2,609			2,478				2,574				2,534			10,358			10,221
Equipment			951				972			923				995				1,027			3,841			4,170
Data processing			2,961				2,862			2,750				2,760				2,685			11,333			10,450
Professional fees			1,436				1,321			1,264				1,317				1,475			5,338			5,563
Marketing and advertising			575				463			535				402				710			1,975			2,594
Deposit insurance premiums			765				707			615				504				342			2,591			780
Intangible expenses			282				283			321				330				374			1,216			1,595
Restructuring charges			1,439				-			-				-				-			1,439			-
Other expense			7,015				5,251			5,374				6,059				6,400			23,699			22,428
Total noninterest expense			41,734				38,527			35,960				38,777				37,480			154,998			146,090
Income before taxes			31,647				23,197			1,821				232				18,894			56,897			80,053
Income tax expense (benefit)			5,773				5,078			(264	)			(606	)			3,384			9,981			14,334
Net income		$	25,874			$	18,119		$	2,085			$	838			$	15,510		$	46,916		$	65,719
Net income per share:
Basic		$	0.88			$	0.62		$	0.07			$	0.03			$	0.53		$	1.60		$	2.24
Diluted		$	0.88			$	0.62		$	0.07			$	0.03			$	0.53		$	1.60		$	2.24
Dividends declared per share		$	-			$	0.20		$	0.20			$	0.20			$	0.20		$	0.60		$	0.80
Weighted average shares outstanding			29,274,915				29,226,627			29,187,197				29,286,200				29,327,169			29,243,773			29,299,599
Period end shares outstanding			29,295,052				29,241,302			29,201,985				29,164,782				29,334,629			29,295,052			29,334,629

Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
December 31, 2020
					For the three months ended,																				For the twelve months ended,
Profitability Ratios (annualized)					12/31/20				09/30/20				06/30/20				03/31/20				12/31/19				12/31/20				12/31/19
Return on average assets						1.62	%			1.15	%			0.14	%			0.06	%			1.14	%			0.78	%			1.26	%
Return on average assets, excluding restructuring						1.69	%			1.15	%			0.14	%			0.06	%			1.14	%			0.80	%			1.26	%
charges (1)
Return on average shareholders' equity						15.22	%			10.89	%			1.27	%			0.50	%			9.15	%			7.02	%			10.07	%
Return on average shareholders' equity, excluding						15.89	%			10.89	%			1.27	%			0.50	%			9.15	%			7.19	%			10.07	%
restructuring charges (1)
Return on average tangible common equity (1)						20.53	%			14.82	%			1.73	%			0.68	%			12.40	%			9.52	%			13.82	%
Return on average tangible common equity, excluding						21.44	%			14.82	%			1.73	%			0.68	%			12.40	%			9.76	%			13.82	%
restructuring charges (1)
Net interest margin (FTE)						3.02	%			3.02	%			3.18	%			3.48	%			3.44	%			3.16	%			3.59	%
Efficiency ratio (2)						63.8	%			58.0	%			57.7	%			62.8	%			63.0	%			60.6	%			61.4	%
Efficiency ratio, excluding restructuring charges (1) (2)						61.6	%			58.0	%			57.7	%			62.8	%			63.0	%			60.0	%			61.4	%
Capitalization Ratios
Dividends declared to net income (3)						0.0	%			32.3	%			278.7	%			699.9	%			37.8	%			37.4	%			35.7	%
Shareholders' equity to assets (Period End)						10.93	%			10.48	%			10.69	%			11.92	%			12.55	%			10.93	%			12.55	%
Tangible common equity to tangible assets (1)						8.40	%			7.96	%			8.06	%			8.99	%			9.59	%			8.40	%			9.59	%
Common equity book value per share					$	23.64			$	22.88			$	22.43			$	22.34			$	23.01			$	23.64			$	23.01
Tangible common equity book value per share (1)					$	17.66			$	16.89			$	16.41			$	16.31			$	17.01			$	17.66			$	17.01
Regulatory Capital Ratios (Period End)
Tier 1 leverage ratio						9.08	%			8.97	%			9.15	%			9.90	%			10.02	%			9.08	%			10.02	%
Common equity tier 1 risk-based capital ratio						10.77	%			10.52	%			10.73	%			10.79	%			11.03	%			10.77	%			11.03	%
Tier 1 risk-based capital ratio						10.77	%			10.52	%			10.73	%			10.79	%			11.03	%			10.77	%			11.03	%
Total risk-based capital ratio						15.31	%			15.35	%			13.72	%			13.65	%			13.78	%			15.31	%			13.78	%
(1) Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included at the end of this document.
(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	December 31, 2020							September 30, 2020
	Average			Income/		Average		Average			Income/		Average
(Dollars in thousands)	Balance			Expense		Rate		Balance			Expense		Rate
Assets:
Interest-earning deposits with other banks	$	296,258		$	82	0.11	%	$	368,181		$	100	0.11	%
U.S. government obligations		6,998			36	2.05			6,998			36	2.05
Obligations of state and political subdivisions		14,269			129	3.60			18,004			167	3.69
Other debt and equity securities		348,244			1,237	1.41			360,219			1,610	1.78
Federal Home Loan Bank, Federal Reserve Bank and other stock		29,838			438	5.84			28,651			419	5.82
Total interest-earning deposits, investments and other interest-earning assets		695,607			1,922	1.10			782,053			2,332	1.19
Commercial, financial, and agricultural loans		824,374			7,366	3.55			807,376			7,330	3.61
Paycheck Protection Program loans		497,035			3,133	2.51			500,549			2,811	2.23
Real estate—commercial and construction loans		2,518,056			24,388	3.85			2,358,971			23,547	3.97
Real estate—residential loans		1,025,818			10,345	4.01			1,009,407			10,380	4.09
Loans to individuals		27,427			289	4.19			28,663			309	4.29
Municipal loans and leases		258,627			2,776	4.27			267,364			2,839	4.22
Lease financings		102,383			1,690	6.57			97,707			1,662	6.77
Gross loans and leases		5,253,720			49,987	3.79			5,070,037			48,878	3.84
Total interest-earning assets		5,949,327			51,909	3.47			5,852,090			51,210	3.48
Cash and due from banks		53,360							56,715
Allowance for credit losses, loans and leases		(92,766	)						(87,046	)
Premises and equipment, net		55,653							55,755
Operating lease right-of-use assets		34,272							33,875
Other assets		353,673							354,216
Total assets	$	6,353,519						$	6,265,605
Liabilities:
Interest-bearing checking deposits	$	838,323		$	537	0.25	%	$	725,580		$	468	0.26	%
Money market savings		1,213,585			898	0.29			1,116,628			897	0.32
Regular savings		905,918			341	0.15			901,716			449	0.20
Time deposits		582,782			2,034	1.39			525,656			2,214	1.68
Total time and interest-bearing deposits		3,540,608			3,810	0.43			3,269,580			4,028	0.49
Short-term borrowings		15,091			2	0.05			130,359			97	0.30
Long-term debt		169,623			611	1.43			208,776			742	1.41
Subordinated notes		193,244			2,390	4.92			155,945			1,891	4.82
Total borrowings		377,958			3,003	3.16			495,080			2,730	2.19
Total interest-bearing liabilities		3,918,566			6,813	0.69			3,764,660			6,758	0.71
Noninterest-bearing deposits		1,681,844							1,760,818
Operating lease liabilities		37,616							37,170
Accrued expenses and other liabilities		39,067							41,010
Total liabilities		5,677,093							5,603,658
Shareholders' Equity:
Common stock		157,784							157,784
Additional paid-in capital		296,810							296,272
Retained earnings and other equity		221,832							207,891
Total shareholders' equity		676,426							661,947
Total liabilities and shareholders' equity	$	6,353,519						$	6,265,605
Net interest income				$	45,096						$	44,452
Net interest spread						2.78							2.77
Effect of net interest-free funding sources						0.24							0.25
Net interest margin						3.02	%						3.02	%
Ratio of average interest-earning assets to average interest-bearing liabilities		151.82	%						155.45	%
Note 1: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been
included in the average loan balances. Tax-equivalent amounts for the three months ended December 31, 2020 and September 30, 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 Three Months Ended December 31,
Tax Equivalent Basis					2020							2019
	Average			Income/		Average		Average			Income/		Average
(Dollars in thousands)	Balance			Expense		Rate		Balance			Expense		Rate
Assets:
Interest-earning deposits with other banks	$	296,258		$	82	0.11	%	$	205,703		$	860	1.66	%
U.S. government obligations		6,998			36	2.05			7,297			37	2.01
Obligations of state and political subdivisions		14,269			129	3.60			35,938			324	3.58
Other debt and equity securities		348,244			1,237	1.41			402,697			2,684	2.64
Federal Home Loan Bank, Federal Reserve Bank and other stock		29,838			438	5.84			30,653			514	6.65
Total interest-earning deposits, investments and other interest-earning assets		695,607			1,922	1.10			682,288			4,419	2.57
Commercial, financial, and agricultural loans		824,374			7,366	3.55			830,757			9,197	4.39
Paycheck Protection Program loans		497,035			3,133	2.51			-			-	-
Real estate—commercial and construction loans		2,518,056			24,388	3.85			2,040,442			23,526	4.57
Real estate—residential loans		1,025,818			10,345	4.01			966,370			11,566	4.75
Loans to individuals		27,427			289	4.19			31,694			458	5.73
Municipal loans and leases		258,627			2,776	4.27			325,939			3,323	4.04
Lease financings		102,383			1,690	6.57			85,228			1,528	7.11
Gross loans and leases		5,253,720			49,987	3.79			4,280,430			49,598	4.60
Total interest-earning assets		5,949,327			51,909	3.47			4,962,718			54,017	4.32
Cash and due from banks		53,360							50,794
Allowance for credit losses, loans and leases		(92,766	)						(34,392	)
Premises and equipment, net		55,653							57,043
Operating lease right-of-use assets		34,272							34,693
Other assets		353,673							329,735
Total assets	$	6,353,519						$	5,400,591
Liabilities:
Interest-bearing checking deposits	$	838,323		$	537	0.25	%	$	566,904		$	941	0.66	%
Money market savings		1,213,585			898	0.29			1,074,066			3,749	1.38
Regular savings		905,918			341	0.15			798,145			870	0.43
Time deposits		582,782			2,034	1.39			648,726			3,261	1.99
Total time and interest-bearing deposits		3,540,608			3,810	0.43			3,087,841			8,821	1.13
Short-term borrowings		15,091			2	0.05			30,404			63	0.82
Long-term debt		169,623			611	1.43			153,049			795	2.06
Subordinated notes		193,244			2,390	4.92			94,786			1,261	5.28
Total borrowings		377,958			3,003	3.16			278,239			2,119	3.02
Total interest-bearing liabilities		3,918,566			6,813	0.69			3,366,080			10,940	1.29
Noninterest-bearing deposits		1,681,844							1,286,745
Operating lease liabilities		37,616							37,867
Accrued expenses and other liabilities		39,067							37,252
Total liabilities		5,677,093							4,727,944
Shareholders' Equity:
Common stock		157,784							157,784
Additional paid-in capital		296,810							294,731
Retained earnings and other equity		221,832							220,132
Total shareholders' equity		676,426							672,647
Total liabilities and shareholders' equity	$	6,353,519						$	5,400,591
Net interest income				$	45,096						$	43,077
Net interest spread						2.78							3.03
Effect of net interest-free funding sources						0.24							0.41
Net interest margin						3.02	%						3.44	%
Ratio of average interest-earning assets to average interest-bearing liabilities		151.82	%						147.43	%
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 December 31, 2020 and 2019 have
been calculated using the Corporation’s federal applicable rate of 21.0%.

Univest Financial Corporation
Average Balances and Interest Rates (Unaudited)
				For the Twelve Months Ended December 31,
Tax Equivalent Basis				2020							2019
	Average			Income/		Average		Average			Income/		Average
(Dollars in thousands)	Balance			Expense		Rate		Balance			Expense		Rate
Assets:
Interest-earning deposits with other banks	$	274,372		$	574	0.21	%	$	141,774		$	2,876	2.03	%
U.S. government obligations		7,132			145	2.03			14,665			254	1.73
Obligations of state and political subdivisions		23,065			825	3.58			50,360			1,693	3.36
Other debt and equity securities		371,814			7,697	2.07			396,816			10,406	2.62
Federal Home Loan Bank, Federal Reserve Bank and other stock		29,726			1,746	5.87			31,446			2,154	6.85
Total interest-earning deposits, investments and other interest-earning assets		706,109			10,987	1.56			635,061			17,383	2.74
Commercial, financial, and agricultural loans		817,489			30,657	3.75			815,472			40,496	4.97
Paycheck Protection Program loans		342,920			8,072	2.35			-			-	-
Real estate—commercial and construction loans		2,312,996			94,962	4.11			1,936,073			91,634	4.73
Real estate—residential loans		1,007,915			42,047	4.17			950,743			46,031	4.84
Loans to individuals		28,792			1,332	4.63			31,912			1,976	6.19
Municipal loans and leases		283,495			11,857	4.18			331,831			13,262	4.00
Lease financings		95,194			6,498	6.83			82,588			5,904	7.15
Gross loans and leases		4,888,801			195,425	4.00			4,148,619			199,303	4.80
Total interest-earning assets		5,594,910			206,412	3.69			4,783,680			216,686	4.53
Cash and due from banks		52,000							48,877
Allowance for credit losses, loans and leases		(73,459	)						(32,389	)
Premises and equipment, net		55,888							58,237
Operating lease right-of-use assets		34,277							35,712
Other assets		343,261							330,466
Total assets	$	6,006,877						$	5,224,583
Liabilities:
Interest-bearing checking deposits	$	692,049		$	2,173	0.31	%	$	500,295		$	2,790	0.56	%
Money market savings		1,113,039			5,551	0.50			995,403			15,843	1.59
Regular savings		874,366			2,057	0.24			802,865			3,660	0.46
Time deposits		572,103			9,835	1.72			677,199			13,276	1.96
Total time and interest-bearing deposits		3,251,557			19,616	0.60			2,975,762			35,569	1.20
Short-term borrowings		86,658			327	0.38			56,882			1,012	1.78
Long-term debt		189,410			2,879	1.52			156,366			3,236	2.07
Subordinated notes		134,949			6,762	5.01			94,695			5,044	5.33
Total borrowings		411,017			9,968	2.43			307,943			9,292	3.02
Total interest-bearing liabilities		3,662,574			29,584	0.81			3,283,705			44,861	1.37
Noninterest-bearing deposits		1,599,333							1,210,577
Operating lease liabilities		37,557							38,791
Accrued expenses and other liabilities		39,212							39,057
Total liabilities		5,338,676							4,572,130
Shareholders' Equity:
Common stock		157,784							157,784
Additional paid-in capital		296,023							293,784
Retained earnings and other equity		214,394							200,885
Total shareholders' equity		668,201							652,453
Total liabilities and shareholders' equity	$	6,006,877						$	5,224,583
Net interest income				$	176,828						$	171,825
Net interest spread						2.88							3.16
Effect of net interest-free funding sources						0.28							0.43
Net interest margin						3.16	%						3.59	%
Ratio of average interest-earning assets to average interest-bearing liabilities		152.76	%						145.68	%
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 twelve months ended December 31, 2020 and 2019 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 December 31, 2020
Industry Description	Total Outstanding B alance (excl PPP)			% of Commercial Loan Portfolio		PPP $ (1)			$ Balance of Modified Loans (2)			Modified Loans as a % of Portfolio (2)
CRE - Retail	$	342,910		8.6	%	$	239		$	3,950		1.2	%
Animal Production		263,623		6.6			706			40		-
CRE - 1-4 Family Residential Investment		245,022		6.2			1,282			-		-
CRE - Office		237,752		6.0			-			-		-
CRE - Multi-family		201,995		5.1			-			-		-
Real Estate Lenders, Secondary Market Financing		181,493		4.6			4,318			52		-
Hotels & Motels (Accommodation)		175,923		4.4			2,407			24,296		13.8
CRE - Industrial / Warehouse		169,015		4.3			139			-		-
Nursing and Residential Care Facilities		154,736		3.9			7,935			-		-
Specialty Trade Contractors		117,301		2.9			67,267			109		0.1
CRE - Mixed-Use - Residential		116,506		2.9			-			8,237		7.1
Professional, Scientific, and Technical Services		92,857		2.3			-			-		-
CRE - Medical Office		92,196		2.3			-			-		-
Homebuilding (tract developers, remodelers)		87,027		2.2			12,931			-		-
Merchant Wholesalers, Durable Goods		75,241		1.9			17,674			-		-
Education		68,846		1.7			72,072			2,637		3.8
Crop Production		66,998		1.7			270			-		-
Motor Vehicle and Parts Dealers		66,516		1.7			11,391			-		-
Fabricated Metal Production Manufacturing		62,077		1.6			12,760			-		-
Administrative and Support Services		59,708		1.5			28,814			100		0.2
Food Services and Drinking Places		58,067		1.5			15,971			2,893		5.0
Woods Product Manufacturing		50,079		1.3			3,886			-		-
Industries with >$50 million in outstandings	$	2,985,888		75.2	%	$	260,062		$	42,314		1.4	%
Industries with <$50 million in outstandings	$	990,450		24.8	%	$	223,711		$	18,228		1.8	%
Total Commercial Loans	$	3,976,338		100.0	%	$	483,773		$	60,542		1.5	%
Consumer Loans and Lease Financings	Total Outstanding Balance					PPP $ (1)			$ Balance of Modified Loans (2)			Modified Loans as a % of Portfolio (2)
Real Estate-Residential Secured for Personal Purpose	$	487,600				$	-		$	7,444		1.5	%
Real Estate-Home Equity Secured for Personal Purpose		166,609					-			3		-
Loans to Individuals		27,482					-			35		0.1
Lease Financings		165,039					-			-		-
Total - Consumer Loans and Lease Financings	$	846,730				$	-		$	7,482		0.9	%
Total	$	4,823,068				$	483,773		$	68,024		1.4	%
(1) Includes ($7.7) million of net deferred fees.
(2) 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 December 31, 2020.

Univest Financial Corporation
Non-GAAP Reconciliation
December 31, 2020
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 twelve months ended,
				12/31/20				09/30/20				06/30/20				03/31/20				12/31/19				12/31/20				12/31/19
Restructuring charges (a)				$	1,439			$	-			$	-			$	-			$	-			$	1,439			$	-
Tax effect of restructuring charges					(302	)			-				-				-				-				(302	)			-
Restructuring charges, net of tax				$	1,137			$	-			$	-			$	-			$	-			$	1,137			$	-
Shareholders' equity				$	692,472			$	669,107			$	654,873			$	651,551			$	675,122			$	692,472			$	675,122
Goodwill					(172,559	)			(172,559	)			(172,559	)			(172,559	)			(172,559	)			(172,559	)			(172,559	)
Other intangibles (b)					(2,458	)			(2,736	)			(3,017	)			(3,333	)			(3,658	)			(2,458	)			(3,658	)
Tangible common equity				$	517,455			$	493,812			$	479,297			$	475,659			$	498,905			$	517,455			$	498,905
Total assets				$	6,336,496			$	6,382,831			$	6,125,312			$	5,464,768			$	5,380,924			$	6,336,496			$	5,380,924
Goodwill					(172,559	)			(172,559	)			(172,559	)			(172,559	)			(172,559	)			(172,559	)			(172,559	)
Other intangibles (b)					(2,458	)			(2,736	)			(3,017	)			(3,333	)			(3,658	)			(2,458	)			(3,658	)
Tangible assets				$	6,161,479			$	6,207,536			$	5,949,736			$	5,288,876			$	5,204,707			$	6,161,479			$	5,204,707
Average shareholders' equity				$	676,426			$	661,947			$	660,950			$	673,460			$	672,647			$	668,201			$	652,453
Average goodwill					(172,559	)			(172,559	)			(172,559	)			(172,559	)			(172,559	)			(172,559	)			(172,559	)
Average other intangibles (b)					(2,606	)			(2,889	)			(3,185	)			(3,506	)			(3,853	)			(3,045	)			(4,430	)
Average tangible common equity				$	501,261			$	486,499			$	485,206			$	497,395			$	496,235			$	492,597			$	475,464
Net income before taxes				$	31,647			$	23,197			$	1,821			$	232			$	18,894			$	56,897			$	80,053
Provision for credit losses					(8,721	)			3,935				23,737				21,843				2,225				40,794				8,511
Pre-tax pre-provision income				$	22,926			$	27,132			$	25,558			$	22,075			$	21,119			$	97,691			$	88,564
Loans and leases held for investment, gross				$	5,306,841			$	5,211,856			$	4,951,809			$	4,448,825			$	4,386,836			$	5,306,841			$	4,386,836
Paycheck Protection Program ("PPP") loans					(483,773	)			(501,580	)			(498,978	)			-				-				(483,773	)			-
Gross loans and leases excluding PPP loans				$	4,823,068			$	4,710,276			$	4,452,831			$	4,448,825			$	4,386,836			$	4,823,068			$	4,386,836
(a) Associated with financial center optimization plan
(b) Amount does not include servicing rights

 

FAQ

What was Univest's net income for the year ended December 31, 2020?

Univest reported a net income of $46.9 million for the year ended December 31, 2020.

How did Univest perform in Q4 2020 compared to Q4 2019?

In Q4 2020, Univest's net income rose to $25.9 million, compared to $15.5 million in Q4 2019.

What percentage did Univest's total loans increase in 2020?

Total loans increased by 9.9% in 2020.

What is Univest's dividend declaration for Q1 2021?

Univest declared a quarterly cash dividend of $0.20 per share, payable on February 24, 2021.

What was the effective tax rate for Univest in 2020?

The effective income tax rate for the year ended December 31, 2020 was 17.5%.