UNIVEST FINANCIAL CORPORATION (All dollar amounts presented in tables are in thousands, except per share data. "BP" equates to "basis points"; "NM" equates to "not meaningful"; "-" equates to "zero" or "doesn't round to a reportable number"; and "N/A" equates to "not applicable." Certain prior period amounts have been reclassified to conform to the current-year presentation.)
Forward-Looking Statements
The information contained in this report may contain forward-looking statements. When used or incorporated by reference in disclosure documents, the words "believe" "anticipate," "estimate," "expect," "project," "target," "goal" and similar expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may include but are not limited to: statements of our goals, intentions and expectations; statements regarding our business plans, prospects, growth and operating strategies; statements regarding the quality of our loan and investment portfolios; and estimates of our risks and future costs and benefits. These forward-looking statements are based on current beliefs and expectations of our management and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to certain risks, uncertainties and assumptions, including but not limited to those set forth below: •Operating, legal and regulatory risks; •Economic, political and competitive forces; •General economic conditions, either nationally or in our market areas, that are worse than expected included as a result of employment levels and labor shortages, and the effect of inflation, a potential recession or slowed economic growth caused by supply chain disruptions or otherwise; •Legislative, regulatory and accounting changes, including increased assessments by theFederal Deposit Insurance Corporation ; •Monetary and fiscal policies of theU.S. government, including policies of theU.S. Treasury and theBoard of Governors of theFederal Reserve System ; •Demand for our financial products and services in our market area; •Major catastrophes such as earthquakes, floods or other natural or human disasters and infectious disease outbreaks, including the current coronavirus (COVID-19) pandemic, the related disruption to local, regional and global economic activity and financial markets, and the impact that any of the foregoing may have on us and our customers and other constituencies; •Inflation or volatility in interest rates that reduce our margins and yields, the fair value of financial instruments or our level of loan originations or prepayments on loans we have made and make; •Fluctuations in real estate values in our market area; •A failure to maintain adequate levels of capital and liquidity to support our operations; •The composition and credit quality of our loan and investment portfolios; •Changes in the level and direction of loan delinquencies, classified and criticized loans and charge-offs and changes in estimates of the adequacy of the allowance for credit losses; •Changes in the economic assumptions utilized to calculate the allowance for credit losses; •Our ability to access cost-effective funding; •Changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio; •Our ability to implement our business strategies; •Our ability to manage market risk, credit risk and operational risk; •Timing and amount of revenue and expenditures; •Adverse changes in the securities markets; •The impact of any military conflict, terrorist act or other geopolitical acts; •Our ability to enter new markets successfully and capitalize on growth opportunities; •Competition for loans, deposits and employees; •System failures or cyber-security breaches of our information technology infrastructure and those of our third-party service providers; •The failure to maintain current technologies and/or to successfully implement future information technology enhancements; •Our ability to retain key employees; •Other risks and uncertainties, including those occurring in theU.S. and world financial systems; and •The risk that our analysis of these risks and forces could be incorrect and/or that the strategies developed to address them could be unsuccessful. 39 -------------------------------------------------------------------------------- Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, expected or projected. These and other risk factors are more fully described in this report and in theUnivest Financial Corporation Annual Report on Form 10-K for the year endedDecember 31, 2022 under the section entitled "Item 1A - Risk Factors," and from time to time in other filings made by the Corporation with theSEC . These forward-looking statements speak only at the date of the report. The Corporation expressly disclaims any obligation to publicly release any updates or revisions to reflect any change in the Corporation's expectations with regard to any change in events, conditions or circumstances on which any such statement is based. Critical Accounting Policies Management, in order to prepare the Corporation's financial statements in conformity withU.S. generally accepted accounting principles, is required to make estimates and assumptions that affect the amounts reported in the Corporation's financial statements. There are uncertainties inherent in making these estimates and assumptions. Certain critical accounting policies could materially affect the results of operations and financial position of the Corporation should changes in circumstances require a change in related estimates or assumptions. The Corporation has identified the fair value measurement of investment securities available-for-sale and the calculation of the allowance for credit losses on loans and leases as critical accounting policies. For more information on these critical accounting policies, please refer to the Corporation's 2022 Annual Report on Form 10-K.
General
The Corporation is aPennsylvania corporation, organized in 1973, and registered as a bank holding company pursuant to the Bank Holding Company Act of 1956. The Corporation owns all of the capital stock ofUnivest Bank and Trust Co. The consolidated financial statements include the accounts of the Corporation, the Bank and its subsidiaries. The Bank is engaged in domestic banking services for individuals, businesses, municipalities and non-profit organizations. Through its wholly-owned subsidiaries, the Bank provides a variety of financial services throughout its markets of operation. The Bank is the parent company ofGirard Investment Services, LLC , a full-service registered introducing broker-dealer and a licensed insurance agency,Girard Advisory Services, LLC , a registered investment advisory firm andGirard Pension Services, LLC , a registered investment advisor, which provides investment consulting and management services to municipal entities. The Bank is also the parent company ofUnivest Insurance, LLC , an independent insurance agency, andUnivest Capital, Inc. , an equipment financing business. The Corporation earns revenue primarily from the margins and fees generated from lending and depository services as well as fee-based income from trust, insurance, mortgage banking and investment services. The Corporation seeks to achieve adequate and reliable earnings through business growth while maintaining adequate levels of capital and liquidity and limiting exposure to credit and interest rate risk. Executive Overview
The Corporation's consolidated net income, earnings per share and return on average assets and average equity were as follows:
Three Months Ended
March 31, Change
(Dollars in thousands, except per share data) 2023 2022 Amount Percent
Net income $ 21,034 $ 20,317 $ 717 3.5 %
Net income per share:
Basic $ 0.72 $ 0.69 $ 0.03 4.3
Diluted 0.71 0.68 0.03 4.4
Return on average assets 1.18 % 1.17 % 1 BP 0.9
Return on average equity 10.81 % 10.64 % 17 BP 1.6
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Results of Operations Net Interest Income Net interest income is the difference between interest earned primarily on loans and leases and investment securities and interest paid on deposits, borrowings, long-term debt and subordinated notes. Net interest income is the principal source of the Corporation's revenue. Table 1 presents the Corporation's average balances, tax-equivalent interest income, interest expense, tax-equivalent yields earned on average assets, cost of average liabilities, and shareholders' equity on a tax-equivalent basis for the three months endedMarch 31, 2023 and 2022. The tax-equivalent net interest margin is tax-equivalent net interest income as a percentage of average interest-earning assets. The tax-equivalent net interest spread represents the weighted average tax-equivalent yield on interest-earning assets less the weighted average cost of interest-bearing liabilities. The effect of net interest-free funding sources represents the effect on the net interest margin of net funding provided by noninterest-earning assets, noninterest-bearing liabilities and shareholders' equity. Table 2 analyzes the changes in the tax-equivalent net interest income for the periods broken down by their rate and volume components.
Three months ended
Net interest income on a tax-equivalent basis for the three months endedMarch 31, 2023 was$59.7 million , an increase of$12.5 million , or 26.5%, compared to$47.2 million for the three months endedMarch 31, 2022 . The increase in tax-equivalent net interest income for the three months endedMarch 31, 2023 compared to the comparable period in the prior year was largely due to significant loan balance growth and an increase in asset yields, offset by increases in the average balance of borrowings and the cost of funds. The net interest margin, on a tax-equivalent basis, was 3.58% for the three months endedMarch 31, 2023 compared to 2.89% for the three months endedMarch 31, 2022 . Excess liquidity had no impact on net interest margin for the three months endedMarch 31, 2023 . Excess liquidity reduced net interest margin by approximately 33 basis points for the three months endedMarch 31, 2022 . Excluding the impact of excess liquidity, the net interest margin, on a tax-equivalent basis, was 3.22% for the three months endedMarch 31, 2022 . 41 --------------------------------------------------------------------------------
Table 1-Average Balances and Interest Rates-Tax-Equivalent Basis
Three Months Ended March 31,
2023 2022
Average Income/ Average Average Income/ Average
(Dollars in thousands) Balance Expense Rate Balance Expense Rate
Assets:
Interest-earning deposits with other banks
4.06 %$ 733,173 $ 357 0.20 % U.S. government obligations - - - 5,222 26 2.02 Obligations of states and political subdivisions* 2,286 17 3.02 2,332 19
3.30
Other debt and equity securities 513,594 3,495 2.76 514,574 2,339
1.84
Federal Home Loan Bank ,Federal Reserve Bank and other stock 34,742 609 7.11 27,115 355
5.31
Total interest-earning deposits, investments and other interest-earning assets 598,457 4,600 3.12 1,282,416 3,096
0.98
Commercial, financial and agricultural loans 991,876 15,538 6.35 919,957 8,162
3.60
Real estate-commercial and construction loans 3,342,199 42,421 5.15 2,904,602 25,820 3.61 Real estate-residential loans 1,408,292 15,730 4.53 1,116,356 9,882 3.59 Loans to individuals 27,254 449 6.68 25,799 238 3.74 Municipal loans and leases* 229,955 2,341 4.13 242,508 2,434 4.07 Lease financings 165,314 2,541 6.23 135,476 2,075 6.21 Gross loans and leases 6,164,890 79,020 5.20 5,344,698 48,611 3.69 Total interest-earning assets 6,763,347 83,620 5.01 6,627,114 51,707 3.16 Cash and due from banks 58,035 53,698 Allowance for credit losses, loans and leases (79,977) (72,067) Premises and equipment, net 51,583 53,948 Operating lease right-of-use assets 31,303 30,394 Other assets 394,920 354,893 Total assets$ 7,219,211 $ 7,047,980 Liabilities: Interest-bearing checking deposits$ 857,891 $ 3,164 1.50 %$ 881,462 $ 443 0.20 % Money market savings 1,489,129 11,081 3.02 1,542,581 904 0.24 Regular savings 985,716 669 0.28 1,021,550 238 0.09 Time deposits 566,308 3,422 2.45 473,589 1,306 1.12 Total time and interest-bearing deposits 3,899,044 18,336 1.91 3,919,182 2,891 0.30 Short-term borrowings 240,318 2,728 4.60 17,636 2 0.05 Long-term debt 112,222 591 2.14 95,000 317 1.35 Subordinated notes 148,319 2,281 6.24 98,911 1,328 5.45 Total borrowings 500,859 5,600 4.53 211,547 1,647 3.16 Total interest-bearing liabilities 4,399,903 23,936 2.21 4,130,729 4,538 0.45 Noninterest-bearing deposits 1,935,371 2,065,633 Operating lease liabilities 34,438 33,452 Accrued expenses and other liabilities 60,346 43,808 Total liabilities 6,430,058 6,273,622 Total interest-bearing liabilities and noninterest-bearing deposits ("Cost of Funds") 6,335,274 1.53 6,196,362 0.30 Shareholders' Equity: Common stock 157,784 157,784 Additional paid-in capital 300,293 298,975 Retained earnings and other equity 331,076 317,599 Total shareholders' equity 789,153 774,358 Total liabilities and shareholders' equity$ 7,219,211 $ 7,047,980 Net interest income$ 59,684 $ 47,169 Net interest spread 2.80 2.71 Effect of net interest-free funding sources 0.78 0.18 Net interest margin 3.58 % 2.89 % Ratio of average interest-earning assets to average interest-bearing liabilities 153.72 % 160.43 % *Obligations of states and political subdivisions and municipal loans and leases are tax-exempt earning assets. Notes: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments. Net interest income includes net deferred costs amortization of$465 thousand and$136 thousand for the three months endedMarch 31, 2023 and 2022, respectively. Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included in the average loan balances. Tax-equivalent amounts for the three months endedMarch 31, 2023 and 2022 have been calculated using the Corporation's federal applicable rate of 21%. 42 --------------------------------------------------------------------------------
Table 2-Analysis of Changes in Net Interest Income
The rate-volume variance analysis set forth in the table below compares changes
in tax-equivalent net interest income for the periods indicated by their rate
and volume components. The change in interest income/expense due to both volume
and rate has been allocated proportionately.
Three Months Ended
March 31, 2023 Versus 2022
Volume Rate
(Dollars in thousands) Change Change Total
Interest income:
Interest-earning deposits with other banks $ (639) $ 761 $ 122
U.S. government obligations (26) - (26)
Obligations of states and political subdivisions - (2) (2)
Other debt and equity securities (4) 1,160 1,156
Federal Home Loan Bank, Federal Reserve Bank and other stock 115 139 254
Interest on deposits, investments and other earning assets (554) 2,058 1,504
Commercial, financial and agricultural loans 684 6,692 7,376
Real estate-commercial and construction loans 4,332 12,269 16,601
Real estate-residential loans 2,922 2,926 5,848
Loans to individuals 14 197 211
Municipal loans and leases (128) 35 (93)
Lease financings 459 7 466
Interest and fees on loans and leases 8,283 22,126 30,409
Total interest income 7,729 24,184 31,913
Interest expense:
Interest-bearing checking deposits (12) 2,733 2,721
Money market savings (33) 10,210 10,177
Regular savings (9) 440 431
Time deposits 299 1,817 2,116
Total time and interest-bearing deposits 245 15,200 15,445
Short-term borrowings 327 2,399 2,726
Long-term debt 65 209 274
Subordinated notes 738 215 953
Interest on borrowings 1,130 2,823 3,953
Total interest expense 1,375 18,023 19,398
Net interest income $ 6,354 $ 6,161 $ 12,515
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Provision for Credit Losses
The provision for credit losses for the three months endedMarch 31, 2023 was$3.4 million compared to a reversal of provision for credit losses of$3.5 million for the three months endedMarch 31, 2022 . The following table details information pertaining to the Corporation's allowance for credit losses on loans and leases as a percentage of loans and leases held for investment at the dates indicated. (Dollars in thousands) March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 Allowance for credit losses, loans and leases$ 80,034 $ 79,004 $ 74,929$ 72,011 $ 68,286 $ 71,924 Loans and leases held for investment 6,239,804 6,123,230 5,849,259 5,661,777 5,400,786 5,310,017 Allowance for credit losses, loans and leases / loans and leases held for investment 1.28 % 1.29 % 1.28 % 1.27 % 1.26 % 1.35 % Noninterest Income The following table presents noninterest income for the three months endedMarch 31, 2023 and 2022: Three Months Ended March 31, Change (Dollars in thousands) 2023 2022 Amount Percent Trust fee income$ 1,955 $ 2,102 $ (147) (7.0 %) Service charges on deposit accounts 1,547 1,504 43 2.9 Investment advisory commission and fee income 4,752 5,152 (400) (7.8) Insurance commission and fee income 6,487 5,570 917 16.5 Other service fee income 3,076 2,756 320 11.6 Bank owned life insurance income 767 699 68 9.7 Net gain on sales of investment securities - 30 (30) N/M Net gain on mortgage banking activities 625 1,929 (1,304) (67.6) Other income 471 728 (257) (35.3) Total noninterest income$ 19,680 $ 20,470 $ (790) (3.9 %)
Three months ended
Noninterest income for the three months ended
The net gain on mortgage banking activities decreased$1.3 million , or 67.6%, for the three months endedMarch 31, 2023 from the comparable period in the prior year. The decrease for the three months endedMarch 31, 2023 was primarily due to a decrease in loan sales and a contraction of gain on sale margins due to the higher interest rate environment in 2023. Investment advisory commission and fee income decreased$400 thousand , or 7.8%, for the three months endedMarch 31, 2023 from the comparable period in the prior year, primarily driven by reduced assets under management and supervision due to market volatility. Insurance commission and fee income increased$917 thousand , or 16.5%, for the three months endedMarch 31, 2023 from the comparable period in the prior year, primarily due to increases in premiums for group life and health and commercial lines and an increase in contingent commission income of$651 thousand , which was$1.8 million and$1.2 million for the quarters endedMarch 31, 2023 and 2022, respectively. Contingent income is largely recognized in the first quarter of the year. 44 --------------------------------------------------------------------------------
Noninterest Expense
The following table presents noninterest expense for the three months endedMarch 31, 2023 and 2022: Three Months Ended March 31, Change (Dollars in thousands) 2023 2022 Amount Percent
Salaries, benefits and commissions
9.8 % Net occupancy 2,727 2,716 11 0.4 Equipment 993 982 11 1.1 Data processing 4,029 3,567 462 13.0 Professional fees 1,941 2,138 (197) (9.2) Marketing and advertising 371 425 (54) (12.7) Deposit insurance premiums 1,101 893 208 23.3 Intangible expenses 253 341 (88) (25.8) Other expense 7,100 6,105 995 16.3 Total noninterest expense$ 49,529 $ 45,412 $ 4,117 9.1 %
Three months ended
Noninterest expense for the three months ended
Salaries, benefits and commissions increased$2.8 million , or 9.8%, for the three months endedMarch 31, 2023 from the comparable period in the prior year. This increase reflects our expansion intoMaryland andWestern Pennsylvania and annual merit increases. Additionally, capitalized compensation decreased by$429 thousand due to reduced loan production during the three months endedMarch 31, 2023 . Data processing expenses increased$462 thousand , or 13.0%, for the three months endedMarch 31, 2023 from the comparable period in the prior year, primarily due to our investments in technology in recent years and general price increases incurred in the second half of 2022. Other expense increased$995 thousand , or 16.3%, for the three months endedMarch 31, 2023 from the comparable period in the prior year, primarily due to increases in retirement plan costs of$407 thousand , which was primarily driven by the current interest rate environment, andBank Shares tax expense of$110 thousand driven by year over year growth of the Bank's Shareholders' Equity.
Tax Provision
The Corporation recognized a tax expense of$5.0 million and$4.9 million for the three months endedMarch 31, 2023 and 2022, respectively, resulting in an effective rate of 19.4% and 19.3%, respectively. The effective tax rates for the three months endedMarch 31, 2023 and 2022 were favorably impacted by seven and eight basis points, respectively, of discrete tax benefits resulting from equity compensation awards vesting in the respective quarters. Additionally, the effective tax rates for the three months endedMarch 31, 2023 and 2022 reflected the benefits of tax-exempt income from investments in municipal securities and loans and leases. 45 --------------------------------------------------------------------------------
Financial Condition
Assets
The following table presents assets at the dates indicated:
At December 31, Change
(Dollars in thousands) At March 31, 2023 2022 Amount Percent
Cash, interest-earning deposits and federal
funds sold $ 138,324 $ 152,799 $ (14,475) (9.5) %
Investment securities 522,108 507,562 14,546 2.9
Federal Home Loan Bank , Federal Reserve Bank
and other stock, at cost 43,792 33,841 9,951 29.4
Loans held for sale 5,425 5,037 388 7.7
Loans and leases held for investment 6,239,804 6,123,230 116,574 1.9
Allowance for credit losses, loans and leases (80,034) (79,004) (1,030) 1.3
Premises and equipment, net 52,334 50,939 1,395 2.7
Operating lease right-of-use assets 31,663 30,059 1,604 5.3
Goodwill and other intangibles, net 186,554 186,894 (340) (0.2)
Bank owned life insurance 128,926 120,297 8,629 7.2
Accrued interest receivable and other assets 90,095 90,362 (267) (0.3)
Total assets $ 7,358,991 $ 7,222,016 $ 136,975 1.9 %
Cash and Interest-Earning Deposits
Cash and interest-earning deposits decreased
Total investment securities atMarch 31, 2023 increased$14.5 million , or 2.9%, fromDecember 31, 2022 . Purchases of$19.7 million , primarily residential mortgage-backed securities, and increases in the fair value of available-for-sale investment securities of$5.7 million , were partially offset by maturities and pay-downs of$9.7 million , calls of$500 thousand , a provision for credit losses of$292 thousand , net amortization of purchased premiums and discounts of$276 thousand and sales of$10 thousand .
Loans and Leases
Gross loans and leases held for investment increased$116.6 million , or 1.9%, fromDecember 31, 2022 . The growth in gross loans and leases held for investment was primarily due to increases in commercial real estate, residential mortgage loans, and lease financings. Asset Quality The Bank's strategy for credit risk management focuses on having well-defined credit policies and uniform underwriting criteria and providing prompt attention to potential problem loans and leases. Performance of the loan and lease portfolio is monitored on a regular basis by Bank management and lending officers. Nonaccrual loans and leases are loans or leases for which it is probable that not all principal and interest payments due will be collectible in accordance with the original contractual terms. Factors considered by management in determining accrual status include payment status, borrower cash flows, collateral value and the probability of collecting scheduled principal and interest payments when due. AtMarch 31, 2023 , nonaccrual loans and leases were$11.4 million and had a related allowance for credit losses on loans and leases of$912 thousand . AtDecember 31, 2022 , nonaccrual loans and leases were$13.4 million and had a related allowance for credit losses on loans and leases of$2.8 million . During the first quarter of 2023,$2.4 million of charge-offs were recorded against two existing nonaccrual commercial loans to one borrower. As ofDecember 31, 2022 , the allowance for 46 -------------------------------------------------------------------------------- credit losses included a$2.1 million specific reserve for this relationship. Individual reserves have been established based on current facts and management's judgements about the ultimate outcome of these credits, including the most recent known data available on any related underlying collateral and the borrower's cash flows. The amount of individual reserve needed for these credits could change in future periods subject to changes in facts and judgements related to these credits. Net loan and lease charge-offs for the three months endedMarch 31, 2023 were$2.8 million compared to$76 thousand for the same period in the prior year. The increase in charge-offs is primarily due to the previously discussed charged-off relationship. Other real estate owned was$19.0 million atMarch 31, 2023 and$19.3 million atDecember 31, 2022 , respectively. The decrease of$258 thousand was related to the sale of a commercial real estate property, which was transferred to other real estate owned in the third quarter of 2020.
Table 3-Nonaccrual and Past Due Loans and Leases; Other Real Estate Owned; and Related Ratios
The following table details information pertaining to the Corporation's nonperforming assets at the dates indicated.
(Dollars in thousands) At March 31, 2023 At December 31, 2022 Nonaccrual loans and leases $ 11,362 $ 13,353 Accruing loans and leases, 90 days or more past due 1,996 875 Total nonperforming loans and leases $ 13,358 $ 14,228 Other real estate owned 19,000 19,258 Total nonperforming assets $ 32,358 $ 33,486 Loans and leases held for investment$ 6,239,804 $ 6,123,230 Allowance for credit losses, loans and leases 80,034 79,004
Allowance for credit losses, loans and leases / loans and leases held for investment
1.28 % 1.29 %
Nonaccrual loans and leases / loans and leases held for investment
0.18 % 0.22 %
Allowance for credit losses, loans and leases / nonaccrual
loans and leases 704.40 % 591.66 %
The following table provides additional information on the Corporation's nonaccrual loans held for investment:
At December 31,
(Dollars in thousands) At March 31, 2023 2022
Nonaccrual loans and leases $ 11,362 $ 13,353
Nonaccrual loans and leases with partial charge-offs 1,085 928
Life-to-date partial charge-offs on nonaccrual loans and leases
727 448
Specific reserves on individually analyzed loans 912 2,765
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Table 4-Loan Portfolio Overview
The following table provides summarized detail related to outstanding commercial loan balances, excluding PPP loans, segmented by industry description as ofMarch 31, 2023 : (Dollars in thousands) March 31, 2023 Total Outstanding % of Commercial Loan Industry Description Balance Portfolio CRE - Retail$ 443,932 8.8 % Animal Production 341,832 6.8 CRE - Office 308,583 6.1 CRE - Multi-family 294,816 5.8 CRE - 1-4 Family Residential Investment 269,295 5.3 Hotels & Motels (Accommodation) 207,019 4.1 CRE - Industrial / Warehouse 199,372 4.0 Nursing and Residential Care Facilities 165,160 3.3 Homebuilding (tract developers, remodelers) 156,753 3.1 Education 155,441 3.1 Specialty Trade Contractors 149,939 3.0 Merchant Wholesalers, Durable Goods 128,837 2.6 Motor Vehicle and Parts Dealers 123,448 2.5 CRE - Mixed-Use - Residential 111,124 2.2 Crop Production 93,487 1.9 Administrative and Support Services 85,589 1.7 Rental and Leasing Services 79,800 1.6 Wood Product Manufacturing 78,939 1.6 CRE - Mixed-Use - Commercial 78,628 1.6 Real Estate Lenders, Secondary Market Financing 76,798 1.5 Religious Organizations, Advocacy Groups 74,590 1.5 Fabricated Metal Product Manufacturing 70,896 1.4 Merchant Wholesalers, Nondurable Goods 68,129 1.3 Food Services and Drinking Places 66,605 1.3 Food Manufacturing 66,425 1.3 Personal and Laundry Services 64,434 1.3 Amusement, Gambling, and Recreation Industries 61,295 1.2 Repair and Maintenance 56,749 1.1 Miniwarehouse / Self-Storage 56,336 1.1
Private Equity & Special Purpose Entities (excluding Trusts, Estates and Agency Accounts)
54,918 1.1
Truck Transportation 52,263 1.0
Industries with >$50 million in outstandings $ 4,241,432 84.2 %
Industries with <$50 million in outstandings $ 794,605 15.8 %
Total Commercial Loans $ 5,036,037 100.0 %
Total Outstanding
Consumer Loans and Lease Financings Balance
Real Estate-Residential Secured for Personal Purpose $
779,557
Real Estate-Home Equity Secured for Personal Purpose 172,073 Loans to Individuals 28,656 Lease Financings 223,481 Total Consumer Loans and Lease Financings$ 1,203,767 Total$ 6,239,804
Goodwill and other intangible assets have been recorded on the books of the Corporation in connection with acquisitions. The Corporation has core deposit and customer-related intangibles, which are not deemed to have an indefinite life and therefore will continue to be amortized over their useful life using the present value of projected cash flows. The amortization of core deposit and customer-related intangibles was$229 thousand and$307 thousand for the three months endedMarch 31, 2023 and 2022, respectively. See Note 5 to the Condensed Unaudited Consolidated Financial Statements, "Goodwill and Other Intangible Assets," for a summary of intangible assets atMarch 31, 2023 andDecember 31, 2022 . 48 -------------------------------------------------------------------------------- The Corporation also has goodwill with a net carrying value of$175.5 million atMarch 31, 2023 andDecember 31, 2022 , which is deemed to be an indefinite intangible asset and is not amortized. The Corporation completes a goodwill impairment analysis on an annual basis, or more often if events and circumstances indicate that there may be impairment. The Corporation also completes an impairment test for other identifiable intangible assets on an annual basis or more often if events and circumstances indicate there may be impairment. There was no impairment of goodwill or identifiable intangibles during the three months endedMarch 31, 2023 or 2022. There can be no assurance that future impairment assessments or tests will not result in a charge to earnings.
Bank Owned Life Insurance
The Bank purchases bank owned life insurance to protect itself against the loss of key employees due to death and to offset or finance the Corporation's future costs and obligations to employees under its benefits plans. Bank owned life insurance increased$8.6 million , or 7.2%, fromDecember 31, 2022 , primarily due to$7.9 million of policies purchased during the first quarter of 2023.
Liabilities
The following table presents liabilities at the dates indicated:
At December 31, Change
(Dollars in thousands) At March 31, 2023 2022 Amount Percent
Deposits $ 5,834,657 $ 5,913,526 $ (78,869) (1.3 %)
Short-term borrowings 271,881 197,141 74,740 37.9
Long-term debt 220,000 95,000 125,000 131.6
Subordinated notes 148,385 148,260 125 0.1
Operating lease liabilities 34,846 33,153 1,693 5.1
Accrued interest payable and other
liabilities 50,726 58,436 (7,710) (13.2)
Total liabilities $ 6,560,495 $ 6,445,516 $ 114,979 1.8 %
Deposits
Total deposits decreased
Borrowings
Total borrowings increased$199.9 million , or 45.4%, fromDecember 31, 2022 , due to increases of$38.7 million in short-term FHLB overnight borrowings,$30.0 million in federal funds purchased and$6.0 million in short-term customer repurchase agreements. The funds were used to fund loan growth, purchase investment securities and to maintain liquidity.
Other Liabilities
Other liabilities decreased$7.7 million , or 13.2%, fromDecember 31, 2022 , due to the payment in the first quarter of$7.7 million in annual incentive payments that were previously accrued. 49
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