Univest Financial Corporation Reports Year and Fourth Quarter Results

January 27, 2021 4:15 PM EST

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(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 QuarterThe 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-19As 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.

CECLThe 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.

LoansGross 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.    DepositsTotal 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 MarginNet 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 IncomeNoninterest 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 ExpenseNoninterest 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 LossesNonperforming 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.

DividendOn 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 CallUnivest 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 CorporationUnivest 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 BasisDecember 31, 2020 September 30, 2020 
 AverageIncome/Average AverageIncome/Average 
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate 
Assets:        
Interest-earning deposits with other banks$296,258 $820.11%$368,181 $1000.11%
U.S. government obligations 6,998  362.05  6,998  362.05 
Obligations of state and political subdivisions 14,269  1293.60  18,004  1673.69 
Other debt and equity securities 348,244  1,2371.41  360,219  1,6101.78 
Federal Home Loan Bank, Federal Reserve Bank and other stock 29,838  4385.84  28,651  4195.82 
Total interest-earning deposits, investments and other interest-earning assets 695,607  1,9221.10  782,053  2,3321.19 
         
Commercial, financial, and agricultural loans 824,374  7,3663.55  807,376  7,3303.61 
Paycheck Protection Program loans 497,035  3,1332.51  500,549  2,8112.23 
Real estate—commercial and construction loans 2,518,056  24,3883.85  2,358,971  23,5473.97 
Real estate—residential loans 1,025,818  10,3454.01  1,009,407  10,3804.09 
Loans to individuals 27,427  2894.19  28,663  3094.29 
Municipal loans and leases 258,627  2,7764.27  267,364  2,8394.22 
Lease financings 102,383  1,6906.57  97,707  1,6626.77 
Gross loans and leases 5,253,720  49,9873.79  5,070,037  48,8783.84 
Total interest-earning assets 5,949,327  51,9093.47  5,852,090  51,2103.48 
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 $5370.25%$725,580 $4680.26%
Money market savings 1,213,585  8980.29  1,116,628  8970.32 
Regular savings 905,918  3410.15  901,716  4490.20 
Time deposits 582,782  2,0341.39  525,656  2,2141.68 
Total time and interest-bearing deposits 3,540,608  3,8100.43  3,269,580  4,0280.49 
         
Short-term borrowings 15,091  20.05  130,359  970.30 
Long-term debt 169,623  6111.43  208,776  7421.41 
Subordinated notes 193,244  2,3904.92  155,945  1,8914.82 
Total borrowings 377,958  3,0033.16  495,080  2,7302.19 
Total interest-bearing liabilities 3,918,566  6,8130.69  3,764,660  6,7580.71 
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    
 AverageIncome/Average AverageIncome/Average   
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate   
Assets:          
Interest-earning deposits with other banks$296,258 $820.11%$205,703 $8601.66%  
U.S. government obligations 6,998  362.05  7,297  372.01   
Obligations of state and political subdivisions 14,269  1293.60  35,938  3243.58   
Other debt and equity securities 348,244  1,2371.41  402,697  2,6842.64   
Federal Home Loan Bank, Federal Reserve Bank and other stock 29,838  4385.84  30,653  5146.65   
Total interest-earning deposits, investments and other interest-earning assets 695,607  1,9221.10  682,288  4,4192.57   
           
Commercial, financial, and agricultural loans 824,374  7,3663.55  830,757  9,1974.39   
Paycheck Protection Program loans 497,035  3,1332.51  -  --   
Real estate—commercial and construction loans 2,518,056  24,3883.85  2,040,442  23,5264.57   
Real estate—residential loans 1,025,818  10,3454.01  966,370  11,5664.75   
Loans to individuals 27,427  2894.19  31,694  4585.73   
Municipal loans and leases 258,627  2,7764.27  325,939  3,3234.04   
Lease financings 102,383  1,6906.57  85,228  1,5287.11   
Gross loans and leases 5,253,720  49,9873.79  4,280,430  49,5984.60   
Total interest-earning assets 5,949,327  51,9093.47  4,962,718  54,0174.32   
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 $5370.25%$566,904 $9410.66%  
Money market savings 1,213,585  8980.29  1,074,066  3,7491.38   
Regular savings 905,918  3410.15  798,145  8700.43   
Time deposits 582,782  2,0341.39  648,726  3,2611.99   
Total time and interest-bearing deposits 3,540,608  3,8100.43  3,087,841  8,8211.13   
           
Short-term borrowings 15,091  20.05  30,404  630.82   
Long-term debt 169,623  6111.43  153,049  7952.06   
Subordinated notes 193,244  2,3904.92  94,786  1,2615.28   
Total borrowings 377,958  3,0033.16  278,239  2,1193.02   
Total interest-bearing liabilities 3,918,566  6,8130.69  3,366,080  10,9401.29   
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    
 AverageIncome/Average AverageIncome/Average   
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate   
Assets:          
Interest-earning deposits with other banks$274,372 $5740.21%$141,774 $2,8762.03%  
U.S. government obligations 7,132  1452.03  14,665  2541.73   
Obligations of state and political subdivisions 23,065  8253.58  50,360  1,6933.36   
Other debt and equity securities 371,814  7,6972.07  396,816  10,4062.62   
Federal Home Loan Bank, Federal Reserve Bank and other stock 29,726  1,7465.87  31,446  2,1546.85   
Total interest-earning deposits, investments and other interest-earning assets 706,109  10,9871.56  635,061  17,3832.74   
           
Commercial, financial, and agricultural loans 817,489  30,6573.75  815,472  40,4964.97   
Paycheck Protection Program loans 342,920  8,0722.35  -  --   
Real estate—commercial and construction loans 2,312,996  94,9624.11  1,936,073  91,6344.73   
Real estate—residential loans 1,007,915  42,0474.17  950,743  46,0314.84   
Loans to individuals 28,792  1,3324.63  31,912  1,9766.19   
Municipal loans and leases 283,495  11,8574.18  331,831  13,2624.00   
Lease financings 95,194  6,4986.83  82,588  5,9047.15   
Gross loans and leases 4,888,801  195,4254.00  4,148,619  199,3034.80   
Total interest-earning assets 5,594,910  206,4123.69  4,783,680  216,6864.53   
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 $2,1730.31%$500,295 $2,7900.56%  
Money market savings 1,113,039  5,5510.50  995,403  15,8431.59   
Regular savings 874,366  2,0570.24  802,865  3,6600.46   
Time deposits 572,103  9,8351.72  677,199  13,2761.96   
Total time and interest-bearing deposits 3,251,557  19,6160.60  2,975,762  35,5691.20   
           
Short-term borrowings 86,658  3270.38  56,882  1,0121.78   
Long-term debt 189,410  2,8791.52  156,366  3,2362.07   
Subordinated notes 134,949  6,7625.01  94,695  5,0445.33   
Total borrowings 411,017  9,9682.43  307,943  9,2923.02   
Total interest-bearing liabilities 3,662,574  29,5840.81  3,283,705  44,8611.37   
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 DescriptionTotal Outstanding Balance (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 $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 FinancingsTotal 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              

 

CONTACT:
Brian J. Richardson
UNIVEST FINANCIAL CORPORATION
Chief Financial Officer
215-721-2446, richardsonb@univest.net 

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Source: Univest Financial Corporation


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