(Loan Growth of 9.7% for last twelve months (excluding PPP loans1))
SOUDERTON, Pa., October 27, 2021 - Univest Financial Corporation ("Univest" or the "Corporation") (NASDAQ: UVSP), parent company of Univest Bank and Trust Co. and its insurance, investments and equipment financing subsidiaries, today announced net income for the quarter ended September 30, 2021 of $20.9 million, or $0.71 diluted earnings per share, compared to net income of $18.1 million, or $0.62 diluted earnings per share, for the quarter ended September 30, 2020. Net income for the ninemonths ended September 30, 2021 was $74.4 million, or $2.52 diluted earnings per share, compared to net income of $21.0 million, or $0.72 diluted earnings per share, for the nine months ended September 30, 2020.
Pre-tax pre-provision income1 for the quarter ended September 30, 2021 was $26.0 million, a decrease of $1.1 million, or 4.2%, from the third quarter of 2020. Pre-tax pre-provision income1 for the nine months ended September 30, 2021 was $80.8 million, an increase of $6.1 million, or 8.1%, from the comparable period in the prior year.
One-Time Items
The financial results for the three and nine months ended September 30, 2021 included tax-free bank owned life insurance ("BOLI") death benefit claims of $196 thousand and $1.1 million, respectively, which represents $0.01 and $0.04 diluted earnings per share, respectively.
1 Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included at the end of this document.
Paycheck Protection Program
As of September 30, 2021, $85.6 million in PPP loan originations remain outstanding. During the quarter, we recorded income of $4.2 million within net interest income related to these loans, of which $3.7 million was the result of recognition of associated net deferred loan fees upon forgiveness and pay downs of PPP loans totaling $171.4 million. During the nine months ended September 30, 2021, we recorded income of $13.5 million within net interest income related to these loans, of which $8.6 million was the result of recognition of associated net deferred loan fees upon forgiveness and pay downs of PPP loans totaling $575.3 million. As of September 30, 2021, we had $2.4 million of net deferred fees on our balance sheet, which represented approximately 13.2% of the initial deferred fee amount.
Loans
Gross loans and leases, excluding PPP loans2, increased $92.0 million, or 7.3% (annualized), from June 30, 2021 due to increases in commercial real estate and residential mortgage loans. Gross loans and leases, excluding PPP loans, increased $343.4 million or 9.5% (annualized) from December 31, 2020 and $456.2 million, or 9.7%, from September 30, 2020 due to increases in commercial, construction, commercial real estate, and residential mortgage loans.
Deposits
Total deposits increased $619.5 million, or 46.6% (annualized), from June 30, 2021 due to increases in commercial deposits and seasonal increases in public funds deposits. Total deposits increased $695.4 million, or 17.7% (annualized), from December 31, 2020 and $726.6 million, or 13.9%, from September 30, 2020, primarily due to increases in commercial, consumer and public funds deposits offset by a decrease in brokered deposits.
Net Interest Income and Margin
Net interest income of $48.7 million for the three months ended September 30, 2021 increased $1.9 million, or 4.1%, from the three months ended June 30, 2021, and $4.8 million, or 11.0%, from the three months ended September 30, 2020. The increase in net interest income for the three months ended September 30, 2021 compared to the same period of 2020 was primarily due to an increase in PPP loan income of $1.4 million, a $1.9 million decrease in the cost of interest-bearing liabilities and growth in loans partially offset by a decrease in loans and investment yields.
Net interest income of $140.9 million for the nine months ended September 30, 2021 increased $11.0 million, or 8.5%, from the nine months ended September 30, 2020. The increase in net interest income for the nine months ended September 30, 2021 compared to the same period of 2020 was primarily due
2 Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included at the end of this document.
to an increase in PPP loan income of $8.5 million, a $6.2 million decrease in the cost of interest-bearing liabilities and growth in loans partially offset by a decrease in loan, excluding PPP, and investment yields.
Net interest margin, on a tax-equivalent basis, was 3.11% for the third quarter of 2021, compared to 3.15% for the second quarter of 2021 and 3.02% for the third quarter of 2020. Excess liquidity reduced net interest margin by approximately 27 basis points for the quarter ended September 30, 2021 compared to ten basis points for the quarter ended June 30, 2021 and 18 basis points for the quarter ended September 30, 2020. This excess liquidity was primarily driven by strong growth of deposit balances since the beginning of the COVID-19 pandemic, primarily due to the various pandemic-related stimulus initiatives. PPP loans had a favorable impact on net interest margin of 20 basis points for the quarter ended September 30, 2021 compared to 11 basis points for the quarter ended June 30, 2021 and an unfavorable impact of ten basis points for the quarter ended September 30, 2020. As PPP loans are forgiven, the associated deferred fees are recognized in earnings, which occurred with greater frequency in 2021 as compared to 2020. Excluding the impact of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was 3.18% for the quarter ended September 30, 2021 compared to 3.14% for the quarter ended June 30, 2021 and 3.30% for the quarter ended September 30, 2020.
Net interest margin, on a tax-equivalent basis, was 3.13% for the nine months ended September 20, 2021, compared to 3.21% for the nine months ended September 30, 2020. Excess liquidity reduced net interest margin by approximately 16 basis points for the nine months ended September 30, 2021 compared to 14 basis points for the nine months ended September 30, 2020. This excess liquidity was primarily driven by strong growth of deposit balances since the beginning of the COVID-19 pandemic, primarily due to the various pandemic-related stimulus initiatives. PPP loans had a favorable impact on net interest margin of 12 basis points for the nine months ended September 30, 2021 compared to an unfavorable impact of seven basis points for the nine months ended September 30, 2020. Excluding the impact of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was 3.17% for the nine months ended September 30, 2021 compared to 3.42% for the nine months ended September 30, 2020.
Noninterest Income
Noninterest income for the quarter ended September 30, 2021 was $20.6 million, a decrease of $1.3 million, or 5.7%, compared to the third quarter of 2020. Noninterest income for the nine months ended September 30, 2021 was $64.0 million, an increase of $5.8 million, or 10.0%, from the comparable period in the prior year.
Net gain on mortgage banking activities decreased $2.6 million, or 45.0%, for the quarter but increased $504 thousand, or 4.2%, for the nine months ended September 30, 2021 compared to the comparable
periods in the prior year. The decrease for the three months ended September 30, 2021 was primarily due to a decrease in volume and a contraction of margins. Investment advisory commission and fee income increased $791 thousand, or 19.8%, for the quarter and $2.3 million, or 19.1%, for the nine months ended September 30, 2021 compared to the comparable periods in the prior year, due to increased assets under management driven by favorable market conditions and new customer relationships. BOLI income increased $184 thousand, or 24.8%, for the quarter and $1.1 million, or 47.8%, for the nine months ended September 30, 2021 compared to the comparable periods in the prior year, primarily due to proceeds from BOLI death benefits of $893 thousand and $196 thousand received in the second and third quarter of 2021, respectively.
Other service fee income increased $483 thousand, or 23.1%, for the quarter and $2.1 million, or 37.9%, for the nine months ended September 30, 2021 compared to the comparable periods in the prior year. Interchange fee income increased $290 thousand for the quarter and $962 thousand for the nine months ended September 30, 2021 compared to the comparable periods in the prior year, due to increased customer activity. Mortgage servicing fees increased $163 thousand for the quarter and $855 thousand for the nine months ended September 30, 2021 driven by an increase in retained servicing associated with elevated mortgage volume over the past eighteen months.
Other income decreased $546 thousand, or 25.1%, for the quarter and $543 thousand, or 13.5%, for the nine months ended September 30, 2021 compared to comparable periods in the prior year. Fees on risk participation agreements for interest rate swaps decreased $1.9 million and $2.3 million during the three and nine months ended September 30, 2021, respectively, compared to comparable periods in the prior year driven by a decrease in customer demand. Gain on the sale of SBA loans increased $897 thousand and $922 thousand during the three and nine months ended September 30, 2021, respectively. This increase was reflective of the Corporation's commitment to delivering comprehensive financial solutions to small businesses and the expansion of the SBA lending team during the first half of 2021. Net gains or losses related to valuations and sales of other real estate owned increased $297 thousand for the three and nine months ended September 30, 2021 compared to comparable periods in the prior year, primarily due to a $300 thousand valuation adjustment on other real estate owned during the third quarter of 2020. Other income increased $456 thousand for the nine months ended September 30, 2021 primarily driven by a gain on the value of equity securities measured at fair value of $164 thousand compared to a loss of $321 thousand for the nine months ended September 30, 2020.
Noninterest Expense
Noninterest expense for the quarter ended September 30, 2021 was $43.2 million, an increase of $4.7 million, or 12.3%, compared to the third quarter of 2020. Noninterest expense for the nine months ended September 30, 2021 was $124.1 million, an increase of $10.8 million, or 9.5%, from the comparable period in the prior year.
Salaries, benefits and commissions increased $2.6 million, or 10.7%, for the quarter and $7.2 million, or 10.4%, for the nine months ended September 30, 2021 from the comparable periods in the prior year. These increases reflect our continued investment in revenue producing staff across all business lines and annual merit increases. Additionally, variable incentive compensation expenses increased $829 thousand and $2.6 million for the three and nine months ended September 30, 2021, respectively, from the comparable periods in the prior year, due to increased profitability.
Professional fees increased $853 thousand, or 64.6%, for the quarter and $2.0 million, or 52.2%, for the nine months ended September 30, 2021 from the comparable periods in the prior year, primarily attributable to increased consultant fees in support of our Diversity, Equity and Inclusion program, training initiatives and treasury management product enhancements. During the first nine months of 2021, we have spent $1.4 million on these initiatives and we expect to incur approximately $70 thousand of additional expenses related to these initiatives in the fourth quarter of 2021. These expenses are not expected to re-occur in subsequent periods. Data processing expenses increased $412 thousand, or 14.4%, for the quarter and $1.0 million, or 12.1%, for the nine months ended September 30, 2021 compared to the comparable periods in the prior year, primarily due to continued investments in our end-to-end loan origination solution for loans below $1.0 million, customer relationship management software, internal infrastructure improvements and outsourced data processing solutions.
Other expense increased $865 thousand, or 16.5%, for the quarter compared to the comparable period in the prior year, due to increases in professional liability insurance, bank shares tax expense, interchange fee expense and travel and entertainment expenses, which are beginning to normalize as the markets we operate in continue to remain open.
Asset Quality and Provision for Credit Losses
Nonperforming assets were $37.1 million at September 30, 2021, compared to $38.5 million at June 30, 2021 and $41.9 million at September 30, 2020.
Net loan and lease recoveries were $75 thousand during the third quarter of 2021 compared to $35 thousand for the same period in the prior year. The reversal of provision for credit losses was $182 thousand for the third quarter of 2021, of which $2.9 million (after-tax benefit of $2.3 million), or $0.08
diluted earnings per share, was attributable to favorable changes in economic-related assumptions within the Corporation's CECL model, partially offset by an increase in reserves for loans, unfunded commitments and investment securities. The provision for credit losses was $3.9 million for the comparable period in the prior year, of which $280 thousand (after-tax charge of $221 thousand), or $0.01 diluted earnings per share, was attributable to adverse changes in economic-related assumptions, which were predominately driven by COVID-19.
Net loan and lease charge-offs were $456 thousand for the nine months ended September 30, 2021 compared to $4.0 million for the same period in the prior year. The reversal of provision for credit losses was $11.5 million for the nine months ended September 30, 2021, of which $18.7 million (after-tax benefit of $14.8 million), or $0.50 diluted earnings per share, was attributable to favorable changes in economic-related assumptions within the Corporation's CECL model partially offset by an increase in reserves for loans, unfunded commitments and investment securities. The provision for credit losses was $49.5 million for the comparable period in the prior year, of which $40.5 million (after-tax charge of $32.0 million), or $1.10 diluted earnings per share, was attributable to adverse changes in economic-related assumptions.
The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment was 1.34% at September 30, 2021, compared to 1.34% at June 30, 2021, and 1.76% at September 30, 2020. The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment, excluding PPP loans3, was 1.36% at September 30, 2021 compared to 1.41% at June 30, 2021 and 1.95% at September 30, 2020.
Tax Provision
The effective income tax rate was 19.4% for the nine months ended September 30, 2021 compared to an effective income tax rate of 16.7% for the nine months ended September 30, 2020. The effective tax rate for the nine months ended September 30, 2021 and 2020 reflects the level of pre-tax income and the benefits of tax-exempt income from investments in municipal securities and loans and leases. Additionally, the effective income tax rate for the nine months ended September 30, 2021 was favorably impacted by discrete tax benefits and proceeds from BOLI death benefits. Excluding these items, the effective tax rate was 19.9% for the nine months ended September 30, 2021.
Dividend
On October 27, 2021, Univest declared a quarterly cash dividend of $0.20 per share. The dividend will be paid on November 24, 2021 to shareholders of record as of November 10, 2021.
3 Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included at the end of this document.
Conference Call
Univest will host a conference call to discuss third quarter 2021 results on Thursday, October 28, 2021 at 9:00 a.m. EST. Participants may preregister at https://dpregister.com/sreg/10160789/ee1d498407.The general public can access the call by dialing 1-888-338-6515. A replay of the conference call will be available through November 28, 2021 by dialing 1-877-344-7529; using Conference ID: 10160789.
About Univest Financial Corporation
Univest Financial Corporation (UVSP), including its wholly-owned subsidiary Univest Bank and Trust Co., Member FDIC, has approximately $7.0 billion in assets and $4.6 billion in assets under management and supervision through its Wealth Management lines of business at September 30, 2021. Headquartered in Souderton, Pa. and founded in 1876, the Corporation and its subsidiaries provide a full range of financial solutions for individuals, businesses, municipalities and nonprofit organizations primarily in the Mid-Atlantic Region. Univest delivers these services through a network of more than 50 offices and online at www.univest.net.
# # #
This press release of Univest and the reports Univest files with the Securities and Exchange Commission often contain "forward-looking statements" relating to trends or factors affecting the financial services industry and, specifically, the financial condition and results of operations, business and capital management strategies, markets and products of Univest. These forward-looking statements involve certain risks and uncertainties in that there are a number of important factors that could cause Univest's future results to differ materially from those expressed or implied by the forward-looking statements. These factors include, but are not limited to: (1) competition; (2) changes in interest rates; (3) changes in asset quality, prepayment speeds, loan sale volumes, charge-offs and credit loss provisions; (4) general economic conditions nationally and in our market; (5) economic assumptions that may impact our allowance for credit losses calculation; (6) legislative, regulatory or tax changes that may adversely affect the businesses in which Univest is engaged; (7) technological issues that may adversely affect Univest financial operations or those of our customers; (8) changes in the securities markets or (9) risk factors mentioned in the reports and registration statements Univest files with the Securities and Exchange Commission.
Additionally, it is difficult to predict the full impact of the COVID-19 pandemic on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and whether the continued reopening of businesses will result in a meaningful increase in economic activity. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: (1) demand for our products and services may decline; (2) if the economy is unable to remain open, and higher levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase; (3) collateral for loans, especially real estate, may decline in value; (4) our allowance for credit losses may have to be increased if economic conditions worsen or if borrowers experience financial difficulties; (5) the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; (6) a material decrease in net income or a net loss over several quarters could result in the elimination of or a decrease in the rate of our quarterly cash dividend; (7) our wealth management revenues may decline with continuing market turmoil; (8) litigation, regulatory enforcement risk and reputation risk regarding our participation in the Paycheck Protection Program and the risk that the Small Business Administration may not fund some or all PPP loan guarantees; (9) our cyber security risks are increased as the result of an increase in the number of employees working remotely; and (10) Federal Deposit Insurance Corporation premiums may increase if the agency experiences additional resolution costs. 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)
September 30, 2021
(Dollars in thousands)
Balance Sheet (Period End)
9/30/2021
6/30/2021
3/31/2021
12/31/2020
9/30/2020
Assets
$
6,979,852
$
6,356,305
$
6,416,665
$
6,336,496
$
6,382,831
Cash and cash equivalents
902,357
203,449
187,317
219,858
387,676
Investment securities, net of allowance for credit losses
393,377
397,426
377,506
373,176
368,830
Loans held for sale
29,093
27,322
22,636
37,039
14,465
Loans and leases held for investment, gross
5,252,045
5,327,313
5,415,006
5,306,841
5,211,856
Allowance for credit losses, loans and leases
70,146
71,355
71,497
83,044
91,870
Loans and leases held for investment, net
5,181,899
5,255,958
5,343,509
5,223,797
5,119,986
Total deposits
5,938,154
5,318,704
5,311,592
5,242,715
5,211,603
Noninterest-bearing deposits
1,861,007
1,872,031
1,857,547
1,690,663
1,714,505
Interest-bearing demand, money market and savings
3,583,107
2,954,450
2,979,834
2,988,277
2,940,879
Time deposits
494,040
492,223
474,211
563,775
556,219
Borrowings
207,898
218,970
295,293
311,421
416,104
Shareholders' equity
756,023
739,998
722,455
692,472
669,107
Balance Sheet (Average)
For the three months ended,
For the nine months ended,
9/30/2021
6/30/2021
3/31/2021
12/31/2020
9/30/2020
9/30/2021
9/30/2020
Assets
$
6,698,177
$
6,443,629
$
6,383,463
$
6,353,519
$
6,265,605
$
6,509,576
$
5,892,918
Investment securities, net of allowance for credit losses
395,280
385,694
374,369
369,511
385,221
385,192
412,924
Loans and leases, gross
5,320,411
5,389,110
5,325,897
5,253,720
5,070,037
5,345,119
4,766,274
Deposits
5,666,725
5,351,089
5,296,147
5,222,452
5,030,398
5,439,345
4,726,132
Shareholders' equity
746,185
728,750
699,736
676,426
661,947
725,061
665,439
Asset Quality Data (Period End)
9/30/2021
6/30/2021
3/31/2021
12/31/2020
9/30/2020
Nonaccrual loans and leases, including nonaccrual troubled debt restructured loans and leases and nonaccrual loans held for sale
$
34,528
$
37,466
$
29,996
$
31,692
$
30,019
Accruing loans and leases 90 days or more past due
2,204
750
664
1,392
3,573
Accruing troubled debt restructured loans and leases
51
52
52
53
53
Total nonperforming loans and leases
36,783
38,268
30,712
33,137
33,645
Other real estate owned
279
279
7,481
7,355
8,270
Total nonperforming assets
$
37,062
$
38,547
$
38,193
$
40,492
$
41,915
Nonaccrual loans and leases / Loans and leases held for investment and nonaccrual loans held for sale
0.66
%
0.70
%
0.55
%
0.60
%
0.58
%
Nonperforming loans and leases / Loans and leases held for investment
0.70
%
0.72
%
0.57
%
0.62
%
0.65
%
Nonperforming assets / Total assets
0.53
%
0.61
%
0.60
%
0.64
%
0.66
%
Allowance for credit losses, loans and leases
$
70,146
$
71,355
$
71,497
$
83,044
$
91,870
Allowance for credit losses, loans and leases / Loans and leases held for investment
1.34
%
1.34
%
1.32
%
1.56
%
1.76
%
Allowance for credit losses, loans and leases / Loans and leases held for investment, excluding Paycheck Protection Program loans (1)
1.36
%
1.41
%
1.46
%
1.72
%
1.95
%
Allowance for credit losses, loans and leases / Nonaccrual loans and leases held for investment
203.16
%
212.97
%
238.36
%
262.03
%
306.04
%
Allowance for credit losses, loans and leases / Nonperforming loans and leases held for investment
190.70
%
208.00
%
232.80
%
250.61
%
273.06
%
For the three months ended,
For the nine months ended,
9/30/2021
6/30/2021
3/31/2021
12/31/2020
9/30/2020
9/30/2021
9/30/2020
Net loan and lease (recoveries) charge-offs
$
(75)
$
243
$
288
$
618
$
(35)
$
456
$
4,030
Net loan and lease (recoveries) charge-offs (annualized)/Average loans and leases
(0.01
%)
0.02
%
0.02
%
0.05
%
-
%
0.01
%
0.11
%
(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, 2021
(Dollars in thousands, except per share data)
For the three months ended,
For the nine months ended,
For the period:
9/30/2021
6/30/2021
3/31/2021
12/31/2020
9/30/2020
9/30/2021
9/30/2020
Interest income
$
53,571
$
52,441
$
51,457
$
51,334
$
50,612
$
157,469
$
152,611
Interest expense
4,884
5,684
6,043
6,813
6,758
16,611
22,771
Net interest income
48,687
46,757
45,414
44,521
43,854
140,858
129,840
(Reversal of provision) provision for credit losses
(182)
(59)
(11,283)
(8,721)
3,935
(11,524)
49,515
Net interest income after provision for credit losses
48,869
46,816
56,697
53,242
39,919
152,382
80,325
Noninterest income:
Trust fee income
2,126
2,157
2,034
1,974
1,915
6,317
5,729
Service charges on deposit accounts
1,422
1,314
1,282
1,371
1,187
4,018
3,474
Investment advisory commission and fee income
4,796
4,558
4,697
4,144
4,005
14,051
11,800
Insurance commission and fee income
3,837
3,839
4,955
3,512
3,776
12,631
12,575
Other service fee income
2,576
2,748
2,192
2,092
2,093
7,516
5,451
Bank owned life insurance income
925
1,620
717
733
741
3,262
2,207
Net gain on sales of investment securities
21
54
65
54
57
140
817
Net gain on mortgage banking activities
3,224
3,461
5,938
4,323
5,860
12,623
12,119
Other income
1,625
479
1,370
1,936
2,171
3,474
4,017
Total noninterest income
20,552
20,230
23,250
20,139
21,805
64,032
58,189
Noninterest expense:
Salaries, benefits and commissions
26,641
25,396
24,780
23,613
24,059
76,817
69,595
Net occupancy
2,525
2,656
2,739
2,697
2,609
7,920
7,661
Equipment
1,000
968
946
951
972
2,914
2,890
Data processing
3,274
3,064
3,050
2,961
2,862
9,388
8,372
Professional fees
2,174
2,015
1,748
1,436
1,321
5,937
3,902
Marketing and advertising
539
561
280
575
463
1,380
1,400
Deposit insurance premiums
765
613
636
765
707
2,014
1,826
Intangible expenses
214
249
249
282
283
712
934
Restructuring charges
-
-
-
1,439
-
-
-
Other expense
6,116
5,764
5,112
7,015
5,251
16,992
16,684
Total noninterest expense
43,248
41,286
39,540
41,734
38,527
124,074
113,264
Income before taxes
26,173
25,760
40,407
31,647
23,197
92,340
25,250
Income tax expense
5,262
4,885
7,804
5,773
5,078
17,951
4,208
Net income
$
20,911
$
20,875
$
32,603
$
25,874
$
18,119
$
74,389
$
21,042
Net income per share:
Basic
$
0.71
$
0.71
$
1.11
$
0.88
$
0.62
$
2.53
$
0.72
Diluted
$
0.71
$
0.71
$
1.11
$
0.88
$
0.62
$
2.52
$
0.72
Dividends declared per share (1)
$
0.20
$
0.20
$
0.20
$
-
$
0.20
$
0.60
$
0.60
Weighted average shares outstanding
29,420,256
29,389,525
29,327,432
29,274,915
29,226,627
29,379,774
29,233,317
Period end shares outstanding
29,438,402
29,411,731
29,379,575
29,295,052
29,241,302
29,438,402
29,241,302
(1) As announced in the September 30, 2020 Earnings Release, the Corporation changed the timing of future dividend declarations and payments.
Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
September 30, 2021
For the three months ended,
For the nine months ended,
Profitability Ratios (annualized)
9/30/2021
6/30/2021
3/31/2021
12/31/2020
9/30/2020
9/30/2021
9/30/2020
Return on average assets
1.24
%
1.30
%
2.07
%
1.62
%
1.15
%
1.53
%
0.48
%
Return on average assets, excluding restructuring charges (1)
1.24
%
1.30
%
2.07
%
1.69
%
1.15
%
1.53
%
0.48
%
Return on average shareholders' equity
11.12
%
11.49
%
18.90
%
15.22
%
10.89
%
13.72
%
4.22
%
Return on average shareholders' equity, excluding restructuring charges (1)
11.12
%
11.49
%
18.90
%
15.89
%
10.89
%
13.72
%
4.22
%
Return on average tangible common equity (1)
14.51
%
15.11
%
25.20
%
20.54
%
14.82
%
18.07
%
5.74
%
Return on average tangible common equity, excluding restructuring charges (1)
(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
September 30, 2021
June 30, 2021
Average
Income/
Average
Average
Income/
Average
(Dollars in thousands)
Balance
Expense
Rate
Balance
Expense
Rate
Assets:
Interest-earning deposits with other banks
$
530,191
$
189
0.14
%
$
215,349
$
46
0.09
%
U.S. government obligations
6,999
36
2.04
6,999
35
2.01
Obligations of state and political subdivisions
2,992
24
3.18
6,070
58
3.83
Other debt and equity securities
385,289
1,516
1.56
372,625
1,364
1.47
Federal Home Loan Bank, Federal Reserve Bank and other stock
26,713
334
4.96
25,872
360
5.58
Total interest-earning deposits, investments and other interest-earning assets
952,184
2,099
0.87
626,915
1,863
1.19
Commercial, financial, and agricultural loans
880,986
7,412
3.34
826,464
6,910
3.35
Paycheck Protection Program loans
162,611
4,162
10.15
408,928
4,778
4.69
Real estate-commercial and construction loans
2,784,398
25,634
3.65
2,701,137
24,931
3.70
Real estate-residential loans
1,100,799
10,171
3.67
1,065,065
9,836
3.70
Loans to individuals
26,048
253
3.85
25,284
251
3.98
Municipal loans and leases
247,603
2,504
4.01
251,311
2,598
4.15
Lease financings
117,966
1,856
6.24
110,921
1,819
6.58
Gross loans and leases
5,320,411
51,992
3.88
5,389,110
51,123
3.80
Total interest-earning assets
6,272,595
54,091
3.42
6,016,025
52,986
3.53
Cash and due from banks
59,642
52,948
Allowance for credit losses, loans and leases
(72,606)
(73,052)
Premises and equipment, net
55,685
55,903
Operating lease right-of-use assets
31,998
33,992
Other assets
350,863
357,813
Total assets
$
6,698,177
$
6,443,629
Liabilities:
Interest-bearing checking deposits
$
857,098
$
537
0.25
%
$
786,931
$
487
0.25
%
Money market savings
1,382,832
922
0.26
1,219,375
831
0.27
Regular savings
998,568
281
0.11
978,807
282
0.12
Time deposits
496,702
1,490
1.19
485,060
1,559
1.29
Total time and interest-bearing deposits
3,735,200
3,230
0.34
3,470,173
3,159
0.37
Short-term borrowings
15,116
2
0.05
19,109
3
0.06
Long-term debt
95,000
324
1.35
95,000
321
1.36
Subordinated notes
98,754
1,328
5.34
172,016
2,201
5.13
Total borrowings
208,870
1,654
3.14
286,125
2,525
3.54
Total interest-bearing liabilities
3,944,070
4,884
0.49
3,756,298
5,684
0.61
Noninterest-bearing deposits
1,931,525
1,880,916
Operating lease liabilities
35,094
37,426
Accrued expenses and other liabilities
41,303
40,239
Total liabilities
5,951,992
5,714,879
Shareholders' Equity:
Common stock
157,784
157,784
Additional paid-in capital
297,482
296,599
Retained earnings and other equity
290,919
274,367
Total shareholders' equity
746,185
728,750
Total liabilities and shareholders' equity
$
6,698,177
$
6,443,629
Net interest income
$
49,207
$
47,302
Net interest spread
2.93
2.92
Effect of net interest-free funding sources
0.18
0.23
Net interest margin
3.11
%
3.15
%
Ratio of average interest-earning assets to average interest-bearing liabilities
159.04
%
160.16
%
Note 1: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustment.
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, 2021 and June 30, 2021 have been calculated using the Corporation's federal applicable rate of 21.0%.
Univest Financial Corporation
Average Balances and Interest Rates (Unaudited)
For the Three Months Ended September 30,
Tax Equivalent Basis
2021
2020
Average
Income/
Average
Average
Income/
Average
(Dollars in thousands)
Balance
Expense
Rate
Balance
Expense
Rate
Assets:
Interest-earning deposits with other banks
$
530,191
$
189
0.14
%
$
368,181
$
100
0.11
%
U.S. government obligations
6,999
36
2.04
6,998
36
2.05
Obligations of state and political subdivisions
2,992
24
3.18
18,004
167
3.69
Other debt and equity securities
385,289
1,516
1.56
360,219
1,610
1.78
Federal Home Loan Bank, Federal Reserve Bank and other stock
26,713
334
4.96
28,651
419
5.82
Total interest-earning deposits, investments and other interest-earning assets
952,184
2,099
0.87
782,053
2,332
1.19
Commercial, financial, and agricultural loans
880,986
7,412
3.34
807,376
7,330
3.61
Paycheck Protection Program loans
162,611
4,162
10.15
500,549
2,811
2.23
Real estate-commercial and construction loans
2,784,398
25,634
3.65
2,358,971
23,547
3.97
Real estate-residential loans
1,100,799
10,171
3.67
1,009,407
10,380
4.09
Loans to individuals
26,048
253
3.85
28,663
309
4.29
Municipal loans and leases
247,603
2,504
4.01
267,364
2,839
4.22
Lease financings
117,966
1,856
6.24
97,707
1,662
6.77
Gross loans and leases
5,320,411
51,992
3.88
5,070,037
48,878
3.84
Total interest-earning assets
6,272,595
54,091
3.42
5,852,090
51,210
3.48
Cash and due from banks
59,642
56,715
Allowance for credit losses, loans and leases
(72,606)
(87,046)
Premises and equipment, net
55,685
55,755
Operating lease right-of-use assets
31,998
33,875
Other assets
350,863
354,216
Total assets
$
6,698,177
$
6,265,605
Liabilities:
Interest-bearing checking deposits
$
857,098
$
537
0.25
%
$
725,580
$
468
0.26
%
Money market savings
1,382,832
922
0.26
1,116,628
897
0.32
Regular savings
998,568
281
0.11
901,716
449
0.20
Time deposits
496,702
1,490
1.19
525,656
2,214
1.68
Total time and interest-bearing deposits
3,735,200
3,230
0.34
3,269,580
4,028
0.49
Short-term borrowings
15,116
2
0.05
130,359
97
0.30
Long-term debt
95,000
324
1.35
208,776
742
1.41
Subordinated notes
98,754
1,328
5.34
155,945
1,891
4.82
Total borrowings
208,870
1,654
3.14
495,080
2,730
2.19
Total interest-bearing liabilities
3,944,070
4,884
0.49
3,764,660
6,758
0.71
Noninterest-bearing deposits
1,931,525
1,760,818
Operating lease liabilities
35,094
37,170
Accrued expenses and other liabilities
41,303
41,010
Total liabilities
5,951,992
5,603,658
Shareholders' Equity:
Common stock
157,784
157,784
Additional paid-in capital
297,482
296,272
Retained earnings and other equity
290,919
207,891
Total shareholders' equity
746,185
661,947
Total liabilities and shareholders' equity
$
6,698,177
$
6,265,605
Net interest income
$
49,207
$
44,452
Net interest spread
2.93
2.77
Effect of net interest-free funding sources
0.18
0.25
Net interest margin
3.11
%
3.02
%
Ratio of average interest-earning assets to average interest-bearing liabilities
159.04
%
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 September 30, 2021 and 2020 have been calculated using the Corporation's federal applicable rate of 21.0%.
Univest Financial Corporation
Average Balances and Interest Rates (Unaudited)
For the Nine Months Ended September 30,
Tax Equivalent Basis
2021
2020
Average
Income/
Average
Average
Income/
Average
(Dollars in thousands)
Balance
Expense
Rate
Balance
Expense
Rate
Assets:
Interest-earning deposits with other banks
$
328,768
$
291
0.12
%
$
267,023
$
492
0.25
%
U.S. government obligations
6,999
107
2.04
7,176
109
2.03
Obligations of state and political subdivisions
6,838
187
3.66
26,019
696
3.57
Other debt and equity securities
371,355
4,147
1.49
379,729
6,460
2.27
Federal Home Loan Bank, Federal Reserve Bank and other stock
26,319
1,042
5.29
29,689
1,308
5.88
Total interest-earning deposits, investments and other interest-earning assets
740,279
5,774
1.04
709,636
9,065
1.71
Commercial, financial, and agricultural loans
830,248
21,120
3.40
815,178
23,291
3.82
Paycheck Protection Program loans
358,231
13,464
5.03
291,173
4,939
2.27
Real estate-commercial and construction loans
2,703,100
75,023
3.71
2,244,143
70,574
4.20
Real estate-residential loans
1,067,855
29,880
3.74
1,001,904
31,702
4.23
Loans to individuals
25,925
769
3.97
29,251
1,043
4.76
Municipal loans and leases
248,191
7,632
4.11
291,845
9,081
4.16
Lease financings
111,569
5,412
6.49
92,780
4,808
6.92
Gross loans and leases
5,345,119
153,300
3.83
4,766,274
145,438
4.08
Total interest-earning assets
6,085,398
159,074
3.49
5,475,910
154,503
3.77
Cash and due from banks
55,983
51,544
Allowance for credit losses, loans and leases
(76,265)
(66,977)
Premises and equipment, net
55,803
55,967
Operating lease right-of-use assets
33,334
34,278
Other assets
355,323
342,196
Total assets
$
6,509,576
$
5,892,918
Liabilities:
Interest-bearing checking deposits
$
820,800
$
1,514
0.25
%
$
642,935
$
1,636
0.34
%
Money market savings
1,282,470
2,606
0.27
1,079,279
4,653
0.58
Regular savings
979,013
861
0.12
863,772
1,716
0.27
Time deposits
502,414
4,808
1.28
568,517
7,801
1.83
Total time and interest-bearing deposits
3,584,697
9,789
0.37
3,154,503
15,806
0.67
Short-term borrowings
17,363
7
0.05
110,689
325
0.39
Long-term debt
97,088
993
1.37
196,053
2,268
1.55
Subordinated notes
151,060
5,822
5.15
115,376
4,372
5.06
Total borrowings
265,511
6,822
3.44
422,118
6,965
2.20
Total interest-bearing liabilities
3,850,208
16,611
0.58
3,576,621
22,771
0.85
Noninterest-bearing deposits
1,854,648
1,571,629
Operating lease liabilities
36,636
37,538
Accrued expenses and other liabilities
43,023
41,691
Total liabilities
5,784,515
5,227,479
Shareholders' Equity:
Common stock
157,784
157,784
Additional paid-in capital
296,744
295,759
Retained earnings and other equity
270,533
211,896
Total shareholders' equity
725,061
665,439
Total liabilities and shareholders' equity
$
6,509,576
$
5,892,918
Net interest income
$
142,463
$
131,732
Net interest spread
2.91
2.92
Effect of net interest-free funding sources
0.22
0.29
Net interest margin
3.13
%
3.21
%
Ratio of average interest-earning assets to average interest-bearing liabilities
158.05
%
153.10
%
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 nine months ended September 30, 2021 and 2020 have been calculated using the Corporation's federal applicable rate of 21.0%.
Univest Financial Corporation
Loan Portfolio Overview (Unaudited)
(Dollars in thousands)
As of September 30, 2021
Industry Description
Total Outstanding Balance (excl PPP)
% of Commercial Loan Portfolio
$ Balance of Modified Loans (1)
Modified Loans as a % of Portfolio (excl PPP) (1)
CRE - Retail
$
365,379
8.6
%
$
-
-
%
Animal Production
291,723
6.8
-
-
CRE - 1-4 Family Residential Investment
255,116
6.0
-
-
CRE - Office
240,011
5.6
-
-
CRE - Multi-family
206,667
4.8
-
-
CRE - Industrial / Warehouse
180,421
4.2
-
-
Nursing and Residential Care Facilities
171,482
4.0
-
-
Hotels & Motels (Accommodation)
170,042
4.0
10,613
6.2
Education
156,395
3.7
-
-
Specialty Trade Contractors
122,222
2.9
-
-
CRE - Mixed-Use - Residential
120,873
2.8
-
-
CRE - Medical Office
103,553
2.4
-
-
Real Estate Lenders, Secondary Market Financing
98,983
2.3
-
-
Homebuilding (tract developers, remodelers)
92,782
2.2
-
-
Merchant Wholesalers, Durable Goods
87,849
2.1
-
-
Crop Production
75,439
1.8
-
-
Private Equity & Special Purpose Entities
74,026
1.7
-
-
Rental and Leasing Services
70,499
1.7
-
-
Motor Vehicle and Parts Dealers
66,880
1.6
-
-
Food Manufacturing
65,857
1.5
-
-
Wood Product Manufacturing
64,403
1.5
-
-
Fabricated Metal Product Manufacturing
60,991
1.4
-
-
Merchant Wholesalers, Nondurable Goods
60,276
1.4
-
-
Food Services and Drinking Places
57,794
1.3
-
-
Administrative and Support Services
53,430
1.3
104
0.2
Miniwarehouse/Self-Storage
52,815
1.2
-
-
Industries with >$50 million in outstandings
$
3,365,908
78.8
%
$
10,717
0.3
%
Industries with <$50 million in outstandings
$
903,880
21.2
%
$
6,878
0.8
%
Total Commercial Loans
$
4,269,788
100.0
%
$
17,595
0.4
%
Consumer Loans and Lease Financings
Total Outstanding Balance
$ Balance of Modified Loans (1)
Modified Loans as a % of Portfolio (excl PPP) (1)
Real Estate-Residential Secured for Personal Purpose
$
535,705
$
337
0.1
%
Real Estate-Home Equity Secured for Personal Purpose
159,029
-
-
Loans to Individuals
26,458
15
0.1
Lease Financings
175,464
107
0.1
Total Consumer Loans and Lease Financings
$
896,656
$
459
0.1
%
Total
$
5,166,444
$
18,054
0.3
%
(1) Loan modifications referenced above were made in accordance with Section 4013 of the CARES Act, the Consolidated Appropriations Act, 2021 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 September 30, 2021.
Univest Financial Corporation
Non-GAAP Reconciliation
September 30, 2021
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)
9/30/2021
6/30/2021
3/31/2021
12/31/2020
9/30/2020
9/30/2021
9/30/2020
Restructuring charges (a)
$
-
$
-
$
-
$
1,439
$
-
$
-
$
-
Tax effect of restructuring charges
-
-
-
(302)
-
-
-
Restructuring charges, net of tax
$
-
$
-
$
-
$
1,137
$
-
$
-
$
-
Shareholders' equity
$
756,023
$
739,998
$
722,455
$
692,472
$
669,107
$
756,023
$
669,107
Goodwill
(172,559)
(172,559)
(172,559)
(172,559)
(172,559)
(172,559)
(172,559)
Other intangibles (b)
(1,922)
(2,073)
(2,326)
(2,580)
(2,866)
(1,922)
(2,866)
Tangible common equity
$
581,542
$
565,366
$
547,570
$
517,333
$
493,682
$
581,542
$
493,682
Total assets
$
6,979,852
$
6,356,305
$
6,416,665
$
6,336,496
$
6,382,831
$
6,979,852
$
6,382,831
Goodwill
(172,559)
(172,559)
(172,559)
(172,559)
(172,559)
(172,559)
(172,559)
Other intangibles (b)
(1,922)
(2,073)
(2,326)
(2,580)
(2,866)
(1,922)
(2,866)
Tangible assets
$
6,805,371
$
6,181,673
$
6,241,780
$
6,161,357
$
6,207,406
$
6,805,371
$
6,207,406
Average shareholders' equity
$
746,185
$
728,750
$
699,736
$
676,426
$
661,947
$
725,061
$
665,439
Average goodwill
(172,559)
(172,559)
(172,559)
(172,559)
(172,559)
(172,559)
(172,559)
Average other intangibles (b)
(1,983)
(2,209)
(2,464)
(2,734)
(3,019)
(2,217)
(3,332)
Average tangible common equity
$
571,643
$
553,982
$
524,713
$
501,133
$
486,369
$
550,285
$
489,548
Net income before taxes
$
26,173
$
25,760
$
40,407
$
31,647
$
23,197
$
92,340
$
25,250
Provision for credit losses
(182)
(59)
(11,283)
(8,721)
3,935
(11,524)
49,515
Pre-tax pre-provision income
$
25,991
$
25,701
$
29,124
$
22,926
$
27,132
$
80,816
$
74,765
Loans and leases held for investment, gross
$
5,252,045
$
5,327,313
$
5,415,006
$
5,306,841
$
5,211,856
$
5,252,045
$
5,211,856
Paycheck Protection Program ("PPP") loans
(85,601)
(252,849)
(528,452)
(483,773)
(501,580)
(85,601)
(501,580)
Gross loans and leases, excluding PPP loans
$
5,166,444
$
5,074,464
$
4,886,554
$
4,823,068
$
4,710,276
$
5,166,444
$
4,710,276
Allowance for credit losses, loans and leases
$
70,146
$
71,355
$
71,497
$
83,044
$
91,870
$
70,146
$
91,870
Gross loans and leases, excluding PPP loans
5,166,444
5,074,464
4,886,554
4,823,068
4,710,276
5,166,444
4,710,276
Allowance for credit losses, loans and leases as a percentage of gross loans and leases excluding PPP loans
1.36
%
1.41
%
1.46
%
1.72
%
1.95
%
1.36
%
1.95
%
(a) Associated with financial center optimization plan
(b) Amount does not include mortgage servicing rights
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Univest Corporation of Pennsylvania published this content on 28 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 October 2021 13:52:22 UTC.
Univest Financial Corporation is a bank holding company for Univest Bank and Trust Co. (the Bank). The Bank is a state-chartered bank and trust company. The Company has three segments: Banking, Wealth Management and Insurance. Banking segment provides financial services to individuals, businesses, municipalities and non-profit organizations. These services include a full range of banking services, such as deposit taking, loan origination and servicing, mortgage banking, other general banking services, and equipment lease financing. Wealth Management segment offers investment advisory, financial planning, trust and brokerage services. The segment serves a diverse client base of private families and individuals, municipal pension plans, retirement plans, trusts and guardianships. Insurance segment includes a full-service insurance brokerage agency offering commercial property and casualty insurance, employee benefit solutions, personal insurance lines and human resources consulting.