• Univest Financial Corporation Reports Second Quarter Results

    Source: Nasdaq GlobeNewswire / 28 Jul 2021 16:15:02   America/New_York

    (Loan Growth (excluding PPP loans1) for last twelve months of 14.0%)

    SOUDERTON, Pa., July 28, 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 quarter ended June 30, 2021 was $20.9 million, or $0.71 diluted earnings per share, compared to net income of $2.1 million, or $0.07 diluted earnings per share, for the quarter ended June 30, 2020. Net income for the six months ended June 30, 2021 was $53.5 million, or $1.81 diluted earnings per share, compared to net income of $2.9 million, or $0.10 diluted earnings per share, for the six months ended June 30, 2020.

    Pre-tax pre-provision income1 for the quarter ended June 30, 2021 was $25.7 million, an increase of $143 thousand, or 0.6%, from the second quarter of 2020. Pre-tax pre-provision income1 for the six months ended June 30, 2021 was $54.8 million, an increase of $7.2 million, or 15.1%, from the comparable period in the prior year.

    One-Time Items
    The financial results for the three and six months ended June 30, 2021 included a tax-free bank owned life insurance ("BOLI") death benefit claim of $893 thousand, which represents $0.03 diluted earnings per share.

    Paycheck Protection Program
    On December 27, 2020, the Consolidated Appropriations Act, 2021, was signed into law, which provides new COVID-19 relief funds, additional funding under the Paycheck Protection Program (the "PPP") and the establishment of PPP Second Draw Loans. The Small Business Administration (the "SBA") announced it was taking certain steps under the PPP to further promote equitable relief for smaller businesses. Under this program, we successfully originated 1,226 PPP loans and secured funding of approximately $169.5 million for our customers.

    As of June 30, 2021, $252.8 million in PPP loan originations remain outstanding. During the quarter, we recorded income of $4.8 million within net interest income related to these loans, of which $3.7 million was the result of forgiveness and pay downs of PPP loans totaling $282.3 million. During the six months ended June 30, 2021, we recorded income of $9.3 million within net interest income related to these loans, of which $7.1 million was the result of forgiveness and pay downs of PPP loans totaling $402.0 million. As of June 30, 2021, we have $6.4 million of net deferred fees on our balance sheet, which represents approximately 35.2% of the initial deferred fee amount.

    Loans
    Gross loans and leases, excluding PPP loans1, increased $187.9 million, or 15.4% (annualized), from March 31, 2021, $251.4 million or 10.4% (annualized) from December 31, 2020 and $621.6 million, or 14.0%, from June 30, 2020 due to increases in commercial, construction, residential mortgage loans and lease financings.

    Deposits
    Total deposits increased $7.1 million, or 0.5% (annualized), from March 31, 2021 and $76.0 million, or 2.9% (annualized), from December 31, 2020 primarily due to increases in commercial and consumer deposits offset by a decrease in brokered deposits and a seasonal decrease in public funds deposits. Total deposits increased $449.4 million, or 9.2%, from June 30, 2020, primarily due to increases in commercial, consumer and public funds deposits.

    Net Interest Income and Margin
    Net interest income of $46.8 million for the three months ended June 30, 2021 increased $1.3 million, or 3.0%, from the three months ended March 31, 2021, and $3.2 million, or 7.4%, from the three months ended June 30, 2020. Net interest income of $92.2 million for the six months ended June 30, 2021 increased $6.2 million, or 7.2%, from the six months ended June 30, 2020. The increase in net interest income for the six months ended June 30, 2021 compared to the same period of 2020 was primarily due to an increase in PPP loan income of $7.2 million and lower deposit costs offset by a decrease in yield on loans and investment securities.

    Net interest margin, on a tax-equivalent basis, was 3.15% for the second quarter of 2021, compared to 3.12% for the first quarter of 2021 and 3.18% for the second quarter of 2020. Excess liquidity reduced net interest margin by approximately ten basis points for the quarter ended June 30, 2021 compared to eleven basis points for the quarter ended March 31, 2021 and sixteen basis points for the quarter ended June 30, 2020. This excess liquidity was primarily driven by strong deposit balance growth during the last fifteen months, which was partially attributable to the various stimulus initiatives associated with the COVID-19 pandemic. As PPP loans are forgiven, the associated deferred fees are recognized in earnings, thus attaining yields in excess of 2020 run rates. PPP loans had a favorable impact on net interest margin of eleven basis points for the quarter ended June 30, 2021 compared to four basis points for the quarter ended March 31, 2021 and an unfavorable impact of nine basis points for the quarter ended June 30, 2020. Excluding the impact of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was 3.14% for the quarter ended June 30, 2021 compared to 3.19% for the quarter ended March 31, 2021 and 3.43% for the quarter ended June 30, 2020.

    Noninterest Income
    Noninterest income for the quarter ended June 30, 2021 was $20.2 million, an increase of $2.2 million, or 12.4%, compared to the second quarter of 2020. Noninterest income for the six months ended June 30, 2021 was $43.5 million, an increase of $7.1 million, or 19.5%, from the comparable period in the prior year.

    Net gain on mortgage banking activities decreased $54 thousand, or 1.5%, for the quarter and increased $3.1 million, or 50.2% for the six months ended June 30, 2021 compared to the comparable periods in the prior year. The increase for the six months ended June 30, 2021 was primarily due to an increase in volume and expansion of margins. Investment advisory commission and fee income increased $1.0 million, or 28.8%, for the quarter and $1.5 million, or 18.7%, for the six months ended June 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 $888 thousand, or 121.3%, for the quarter and $871 thousand, or 59.4%, for the six months ended June 30, 2021 primarily due to proceeds from BOLI death benefits of $893 thousand as previously discussed.

    Other service fee income increased $1.3 million, or 84.7%, for the quarter and $1.6 million, or 47.1%, for the six months ended June 30, 2021 compared to the comparable periods in the prior year. Mortgage servicing fees increased $599 thousand for the quarter and $692 thousand for the six months ended June 30, 2021 driven by an increase in retained servicing associated with elevated mortgage volume over the past fifteen months. Interchange fee income increased $494 thousand for the quarter and $672 thousand for the six months ended June 30, 2021 due to increased customer activity as the markets we operate in continue to re-open.

    Other income decreased $1.3 million, or 73.1%, for the quarter due to a decrease of $1.4 million in fees on risk participation agreements for interest rate swaps driven by a decrease in customer demand.

    Noninterest Expense
    Noninterest expense for the quarter ended June 30, 2021 was $41.3 million, an increase of $5.3 million, or 14.8%, compared to the second quarter of 2020. Noninterest expense for the six months ended June 30, 2021 was $80.8 million, an increase of $6.1 million, or 8.1%, from the comparable period in the prior year.

    Salaries, benefits and commissions increased $3.7 million, or 17.0%, for the quarter and $4.6 million, or 10.2%, for the six months ended June 30, 2021 from the comparable periods in the prior year. These increases reflect our continued investment in staff to support revenue generation across all business lines and annual merit increases. Variable compensation expenses increased $1.0 million and $1.7 million for the three and six months ended June 30, 2021, respectively, from the comparable periods in the prior year, due to increased profitability, specifically in our mortgage banking and wealth management lines of business. Additionally, capitalized compensation related to PPP origination activity was $1.2 million and $664 thousand lower in the three and six months ended June 30, 2021, respectively, from the comparable periods in the prior year.

    Data processing expenses increased $314 thousand, or 11.4%, for the quarter and $604 thousand, or 11.0%, for the six months ended June 30, 2021 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. Professional fees increased $751 thousand, or 59.4%, for the quarter and $1.2 million, or 45.8%, for the six months ended June 30, 2021, primarily attributable to increased consultant fees in support of our Diversity, Equity and Inclusion, training initiatives and treasury management product enhancements. During the first six months of 2021, we have spent $781 thousand on these initiatives and we expect to incur approximately $650 thousand of additional expenses related to these initiatives in the second half of the year. These expenses are not expected to re-occur in subsequent periods.

    Other expense increased $390 thousand, or 7.3%, for the quarter primarily attributable to an increase in interchange fee expense and travel and entertainment expenses, which are beginning to normalize as the markets we operate in continue to re-open. Other expense decreased $557 thousand, or 4.9%, for the six months ended June 30, 2021 primarily due to a $656 thousand charge related to the extinguishment of long-term debt that occurred in the first quarter of 2020.

    Asset Quality and Provision for Credit Losses
    Nonperforming assets were $38.5 million at June 30, 2021, compared to $38.2 million at March 31, 2021 and $36.0 million at June 30, 2020.

    Net loan and lease charge-offs were $243 thousand during the second quarter of 2021 compared to $3.6 million for the three months ended June 30, 2020. The reversal of provision for credit losses was $59 thousand for the second quarter of 2021, of which $2.8 million (after-tax benefit of $2.2 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 a reserve increase attributable to loan growth. The provision for credit losses was $23.7 million for the comparable period in the prior year, of which $19.9 million (after-tax charge of $15.7 million), or $0.54 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 $531 thousand for the six months ended June 30, 2021 compared to $4.1 million for the same period in the prior year. The reversal of provision for credit losses was $11.3 million for the six months ended June 30, 2021, of which $15.8 million (after-tax benefit of $12.5 million), or $0.42 diluted earnings per share, was attributable to favorable changes in economic-related assumptions within the Corporation’s CECL model partially offset by a reserve increase attributable to loan growth. The provision for credit losses was $45.6 million for the comparable period in the prior year, of which $40.2 million (after-tax charge of $31.8 million), or $1.09 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 June 30, 2021, compared to 1.32% at March 31, 2021, and 1.74% at June 30, 2020. The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment, excluding PPP loans1, was 1.41% at June 30, 2021 compared to 1.46% at March 31, 2021 and 1.94% at June 30, 2020.

    Tax Provision
    The effective income tax rate was 19.0% for the quarter ended June 30, 2021, compared to an effective income tax rate of (14.5%) for the quarter ended June 30, 2020. The effective income tax rate was 19.2% for the six months ended June 30, 2021 compared to an effective income tax rate of (42.4%) for the six months ended June 30, 2020. The effective tax rate for the three and six months ended June 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.

    Dividend
    On July 28, 2021, Univest declared a quarterly cash dividend of $0.20 per share. The dividend will be paid on August 25, 2021 to shareholders of record as of August 11, 2021.

    Conference Call
    Univest will host a conference call to discuss second quarter 2021 results on Thursday, July 29, 2021 at 9:00 a.m. EST. Participants may preregister at https://dpregister.com/sreg/10158232/ea90430528. The general public can access the call by dialing 1-888-338-6515. A replay of the conference call will be available through August 29, 2021 by dialing 1-877-344-7529; using Conference ID: 10158232.

    1Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included within this document.

    About Univest Financial Corporation
    Univest Financial Corporation (UVSP), including its wholly-owned subsidiary Univest Bank and Trust Co., Member FDIC, has approximately $6.4 billion in assets and $4.5 billion in assets under management and supervision through its Wealth Management lines of business at June 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 in our market; (5) economic conditions nationally that may impact the assumptions used to calculate our allowance for credit losses; (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 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 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 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 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; (10) Federal Deposit Insurance Corporation premiums may increase if the agency experiences additional resolution costs; and (11) 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)
    June 30, 2021
    (Dollars in thousands)              
                   
    Balance Sheet (Period End) 06/30/21 03/31/21 12/31/20 09/30/20 06/30/20    
    Assets $6,356,305  $6,416,665  $6,336,496  $6,382,831  $6,125,312     
    Investment securities, net of allowance for credit losses  397,426   377,506   373,176   368,830   397,852     
    Loans held for sale  27,322   22,636   37,039   14,465   31,082     
    Loans and leases held for investment, gross  5,327,313   5,415,006   5,306,841   5,211,856   4,951,809     
    Allowance for credit losses, loans and leases  71,355   71,497   83,044   91,870   86,217     
    Loans and leases held for investment, net  5,255,958   5,343,509   5,223,797   5,119,986   4,865,592     
    Total deposits  5,318,704   5,311,592   5,242,715   5,211,603   4,869,329     
    Noninterest-bearing deposits  1,872,031   1,857,547   1,690,663   1,714,505   1,725,819     
    NOW, money market and savings  2,954,450   2,979,834   2,988,277   2,940,879   2,623,025     
    Time deposits  492,223   474,211   563,775   556,219   520,485     
    Borrowings  218,970   295,293   311,421   416,104   515,722     
    Shareholders' equity  739,998   722,455   692,472   669,107   654,873     
                   
                   
    Balance Sheet (Average) For the three months ended,   For the six months ended,
      06/30/21 03/31/21 12/31/20 09/30/20 06/30/20 06/30/21 06/30/20
    Assets  6,443,629  $6,383,463  $6,353,519  $6,265,605  $6,000,790   6,413,712  $5,704,527 
    Investment securities, net of allowance for credit losses  385,694   374,369   369,511   385,221   411,957   380,063   426,928 
    Loans and leases, gross  5,389,110   5,325,897   5,253,720   5,070,037   4,836,858   5,357,678   4,612,720 
    Deposits  5,351,089   5,296,147   5,222,452   5,030,398   4,794,669   5,323,770   4,572,326 
    Shareholders' equity  728,750   699,736   676,426   661,947   660,950   714,324   667,205 
                   
                   
    Asset Quality Data (Period End)               
      06/30/21 03/31/21 12/31/20 09/30/20 06/30/20    
    Nonaccrual loans and leases, including nonaccrual troubled debt restructured              
    loans and leases and nonaccrual loans held for sale $37,466  $29,996  $31,692  $30,019  $26,141     
    Accruing loans and leases 90 days or more past due  750   664   1,392   3,573   1,193     
    Accruing troubled debt restructured loans and leases  52   52   53   53   53     
    Total nonperforming loans and leases  38,268   30,712   33,137   33,645   27,387     
    Other real estate owned  279   7,481   7,355   8,270   8,642     
    Total nonperforming assets $38,547  $38,193  $40,492  $41,915  $36,029     
    Nonaccrual loans and leases / Loans and leases held for investment and nonaccrual loans held for sale  0.70%  0.55%  0.60%  0.58%  0.53%    
    Nonperforming loans and leases / Loans and leases held for investment  0.72%  0.57%  0.62%  0.65%  0.55%    
    Nonperforming assets / Total assets  0.61%  0.60%  0.64%  0.66%  0.59%    
                   
    Allowance for credit losses, loans and leases $71,355  $71,497  $83,044  $91,870  $86,217     
    Allowance for credit losses, loans and leases / Loans and leases held for investment  1.34%  1.32%  1.56%  1.76%  1.74%    
    Allowance for credit losses, loans and leases / Loans and leases held for investment, excluding Paycheck Protection Program loans (1)  1.41%  1.46%  1.72%  1.95%  1.94%    
    Allowance for credit losses, loans and leases / Nonaccrual loans and leases held for investment  212.97%  238.36%  262.03%  306.04%  329.82%    
    Allowance for credit losses, loans and leases / Nonperforming loans and leases held for investment  208.00%  232.80%  250.61%  273.06%  314.81%    
                   
      For the three months ended,   For the six months ended,
      06/30/21 03/31/21 12/31/20 09/30/20 06/30/20 06/30/21 06/30/20
    Net loan and lease charge-offs (recoveries) $243  $288  $618  $(35) $3,576  $531  $4,065 
    Net loan and lease charge-offs (annualized)/Average loans and leases  0.02%  0.02%  0.05%  (0.00%)  0.30%  0.02%  0.18%
                   
    (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)
    June 30, 2021
    (Dollars in thousands, except per share data)              
      For the three months ended, For the six months ended,
    For the period: 06/30/21 03/31/21 12/31/20 09/30/20 06/30/20 06/30/21 06/30/20
    Interest income $52,441  $51,457  $51,334  $50,612  $49,980  $103,898  $101,999 
    Interest expense  5,684   6,043   6,813   6,758   6,462   11,727   16,013 
    Net interest income  46,757   45,414   44,521   43,854   43,518   92,171   85,986 
    (Reversal of provision) provision for credit losses  (59)  (11,283)  (8,721)  3,935   23,737   (11,342)  45,580 
    Net interest income after provision for credit losses  46,816   56,697   53,242   39,919   19,781   103,513   40,406 
    Noninterest income:              
    Trust fee income  2,157   2,034   1,974   1,915   1,924   4,191   3,814 
    Service charges on deposit accounts  1,314   1,282   1,371   1,187   890   2,596   2,287 
    Investment advisory commission and fee income  4,558   4,697   4,144   4,005   3,540   9,255   7,795 
    Insurance commission and fee income  3,839   4,955   3,512   3,776   4,067   8,794   8,799 
    Other service fee income  2,748   2,192   2,092   2,093   1,488   4,940   3,358 
    Bank owned life insurance income  1,620   717   733   741   732   2,337   1,466 
    Net gain on sales of investment securities  54   65   54   57   65   119   760 
    Net gain on mortgage banking activities  3,461   5,938   4,323   5,860   3,515   9,399   6,259 
    Other income  479   1,370   1,936   2,171   1,779   1,849   1,846 
    Total noninterest income  20,230   23,250   20,139   21,805   18,000   43,480   36,384 
    Noninterest expense:              
    Salaries, benefits and commissions  25,396   24,780   23,613   24,059   21,700   50,176   45,536 
    Net occupancy  2,656   2,739   2,697   2,609   2,478   5,395   5,052 
    Equipment  968   946   951   972   923   1,914   1,918 
    Data processing  3,064   3,050   2,961   2,862   2,750   6,114   5,510 
    Professional fees  2,015   1,748   1,436   1,321   1,264   3,763   2,581 
    Marketing and advertising  561   280   575   463   535   841   937 
    Deposit insurance premiums  613   636   765   707   615   1,249   1,119 
    Intangible expenses  249   249   282   283   321   498   651 
    Restructuring charges  -   -   1,439   -   -   -   - 
    Other expense  5,764   5,112   7,015   5,251   5,374   10,876   11,433 
    Total noninterest expense  41,286   39,540   41,734   38,527   35,960   80,826   74,737 
    Income before taxes  25,760   40,407   31,647   23,197   1,821   66,167   2,053 
    Income tax expense (benefit)  4,885   7,804   5,773   5,078   (264)  12,689   (870)
    Net income $20,875  $32,603  $25,874  $18,119  $2,085  $53,478  $2,923 
    Net income per share:              
    Basic $0.71  $1.11  $0.88  $0.62  $0.07  $1.82  $0.10 
    Diluted $0.71  $1.11  $0.88  $0.62  $0.07  $1.81  $0.10 
    Dividends declared per share $0.20  $0.20  $-  $0.20  $0.20  $0.40  $0.40 
    Weighted average shares outstanding  29,389,525   29,327,432   29,274,915   29,226,627   29,187,197   29,359,198   29,236,698 
    Period end shares outstanding  29,411,731   29,379,575   29,295,052   29,241,302   29,201,985   29,411,731   29,201,985 
                   


     
    Univest Financial Corporation
    Consolidated Selected Financial Data (Unaudited)
    June 30, 2021
                   
                   
                   
      For the three months ended, For the six months ended,
    Profitability Ratios (annualized) 06/30/21 03/31/21 12/31/20 09/30/20 06/30/20 06/30/21 06/30/20
                   
    Return on average assets  1.30%  2.07%  1.62%  1.15%  0.14%  1.68%  0.10%
    Return on average assets, excluding restructuring 1.30%  2.07%  1.69%  1.15%  0.14%  1.68%  0.10%
    charges (1)              
    Return on average shareholders' equity  11.49%  18.90%  15.22%  10.89%  1.27%  15.10%  0.88%
    Return on average shareholders' equity, excluding 11.49%  18.90%  15.89%  10.89%  1.27%  15.10%  0.88%
    restructuring charges (1)              
    Return on average tangible common equity (1)  15.11%  25.20%  20.54%  14.82%  1.73%  19.99%  1.20%
    Return on average tangible common equity, excluding 15.11%  25.20%  21.44%  14.82%  1.73%  19.99%  1.20%
    restructuring charges (1)              
    Net interest margin (FTE)  3.15%  3.12%  3.02%  3.02%  3.18%  3.14%  3.32%
    Efficiency ratio (2)  60.7%  57.0%  63.8%  58.0%  57.7%  58.8%  60.2%
    Efficiency ratio, excluding restructuring charges (1) (2) 60.7%  57.0%  61.6%  58.0%  57.7%  58.8%  60.2%
                   
    Capitalization Ratios              
                   
    Dividends declared to net income (3)  28.2%  18.0%  0.0%  32.3%  278.7%  22.0%  399.5%
    Shareholders' equity to assets (Period End)  11.64%  11.26%  10.93%  10.48%  10.69%  11.64%  10.69%
    Tangible common equity to tangible assets (1)  9.15%  8.77%  8.40%  7.95%  8.05%  9.15%  8.05%
    Common equity book value per share $25.16  $24.59  $23.64  $22.88  $22.43  $25.16  $22.43 
    Tangible common equity book value per share (1)$19.22  $18.64  $17.66  $16.88  $16.41  $19.22  $16.41 
                   
    Regulatory Capital Ratios (Period End)               
    Tier 1 leverage ratio  9.64%  9.45%  9.08%  8.97%  9.15%  9.64%  9.15%
    Common equity tier 1 risk-based capital ratio  11.04%  11.08%  10.76%  10.52%  10.73%  11.04%  10.73%
    Tier 1 risk-based capital ratio  11.04%  11.08%  10.76%  10.52%  10.73%  11.04%  10.73%
    Total risk-based capital ratio  13.82%  15.13%  15.31%  15.35%  13.72%  13.82%  13.72%
                   
    (1) Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included below.
    (2) Noninterest expense to net interest income before loan loss provision plus noninterest income adjusted for tax equivalent income.
    (3) 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 BasisJune 30, 2021 March 31, 2021 
     AverageIncome/Average AverageIncome/Average 
    (Dollars in thousands)BalanceExpenseRate BalanceExpenseRate 
    Assets:        
    Interest-earning deposits with other banks$215,349 $46 0.09%$237,548 $56 0.10%
    U.S. government obligations 6,999  35 2.01  6,998  36 2.09 
    Obligations of state and political subdivisions 6,070  58 3.83  11,544  105 3.69 
    Other debt and equity securities 372,625  1,364 1.47  355,827  1,267 1.44 
    Federal Home Loan Bank, Federal Reserve Bank and other stock 25,872  360 5.58  26,368  348 5.35 
    Total interest-earning deposits, investments and other interest-earning assets 626,915  1,863 1.19  638,285  1,812 1.15 
       -     
    Commercial, financial, and agricultural loans 826,464  6,910 3.35  782,208  6,798 3.52 
    Paycheck Protection Program loans 408,928  4,778 4.69  506,939  4,524 3.62 
    Real estate—commercial and construction loans 2,701,137  24,931 3.70  2,621,981  24,458 3.78 
    Real estate—residential loans 1,065,065  9,836 3.70  1,037,000  9,873 3.86 
    Loans to individuals 25,284  251 3.98  26,447  265 4.05 
    Municipal loans and leases 251,311  2,598 4.15  245,638  2,530 4.18 
    Lease financings 110,921  1,819 6.58  105,684  1,737 6.67 
    Gross loans and leases 5,389,110  51,123 3.80  5,325,897  50,185 3.82 
    Total interest-earning assets 6,016,025  52,986 3.53  5,964,182  51,997 3.54 
    Cash and due from banks 52,948     55,311    
    Allowance for credit losses, loans and leases (73,052)    (83,254)   
    Premises and equipment, net 55,903     55,826    
    Operating lease right-of-use assets 33,992     34,033    
    Other assets 357,813     357,365    
    Total assets$6,443,629    $6,383,463    
             
    Liabilities:        
    Interest-bearing checking deposits$786,931 $487 0.25%$817,940 $490 0.24%
    Money market savings 1,219,375  831 0.27  1,243,673  853 0.28 
    Regular savings 978,807  282 0.12  959,232  298 0.13 
    Time deposits 485,060  1,559 1.29  525,800  1,759 1.36 
    Total time and interest-bearing deposits 3,470,173  3,159 0.37  3,546,645  3,400 0.39 
             
    Short-term borrowings 19,109  3 0.06  17,894  2 0.05 
    Long-term debt 95,000  321 1.36  101,333  348 1.39 
    Subordinated notes 172,016  2,201 5.13  183,340  2,293 5.07 
    Total borrowings 286,125  2,525 3.54  302,567  2,643 3.54 
    Total interest-bearing liabilities 3,756,298  5,684 0.61  3,849,212  6,043 0.64 
    Noninterest-bearing deposits 1,880,916     1,749,502    
    Operating lease liabilities 37,426     37,415    
    Accrued expenses and other liabilities 40,239     47,598    
    Total liabilities 5,714,879     5,683,727    
             
    Shareholders' Equity:        
    Common stock 157,784     157,784    
    Additional paid-in capital 296,599     296,136    
    Retained earnings and other equity 274,367     245,816    
    Total shareholders' equity 728,750     699,736    
    Total liabilities and shareholders' equity$6,443,629    $6,383,463    
    Net interest income $47,302    $45,954   
             
    Net interest spread  2.92   2.90 
    Effect of net interest-free funding sources  0.23   0.22 
    Net interest margin  3.15%  3.12%
    Ratio of average interest-earning assets to average interest-bearing liabilities 160.16%    154.95%   
             
    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 June 30, 2021 and March 31, 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 June 30,   
    Tax Equivalent Basis2021
     2020
     
     AverageIncome/Average AverageIncome/Average 
    (Dollars in thousands)BalanceExpenseRate BalanceExpenseRate 
    Assets:        
    Interest-earning deposits with other banks$215,349 $46 0.09%$313,668 $67 0.09%
    U.S. government obligations 6,999  35 2.01  7,236  36 2.00 
    Obligations of state and political subdivisions 6,070  58 3.83  26,546  240 3.64 
    Other debt and equity securities 372,625  1,364 1.47  378,175  2,182 2.32 
    Federal Home Loan Bank, Federal Reserve Bank and other stock 25,872  360 5.58  28,977  362 5.02 
    Total interest-earning deposits, investments and other interest-earning assets 626,915  1,863 1.19  754,602  2,887 1.54 
             
    Commercial, financial, and agricultural loans 826,464  6,910 3.35  816,976  7,330 3.61 
    Paycheck Protection Program loans 408,928  4,778 4.69  370,669  2,128 2.31 
    Real estate—commercial and construction loans 2,701,137  24,931 3.70  2,232,827  23,110 4.16 
    Real estate—residential loans 1,065,065  9,836 3.70  1,004,671  10,270 4.11 
    Loans to individuals 25,284  251 3.98  29,079  327 4.52 
    Municipal loans and leases 251,311  2,598 4.15  291,433  2,977 4.11 
    Lease financings 110,921  1,819 6.58  91,203  1,592 7.02 
    Gross loans and leases 5,389,110  51,123 3.80  4,836,858  47,734 3.97 
    Total interest-earning assets 6,016,025  52,986 3.53  5,591,460  50,621 3.64 
    Cash and due from banks 52,948     46,970    
    Allowance for credit losses, loans and leases (73,052)    (69,292)   
    Premises and equipment, net 55,903     55,750    
    Operating lease right-of-use assets 33,992     34,419    
    Other assets 357,813     341,483    
    Total assets$6,443,629    $6,000,790    
             
    Liabilities:        
    Interest-bearing checking deposits$786,931 $487 0.25%$617,927 $372 0.24%
    Money market savings 1,219,375  831 0.27  1,063,463  853 0.32 
    Regular savings 978,807  282 0.12  872,422  475 0.22 
    Time deposits 485,060  1,559 1.29  577,462  2,672 1.86 
    Total time and interest-bearing deposits 3,470,173  3,159 0.37  3,131,274  4,372 0.56 
             
    Short-term borrowings 19,109  3 0.06  161,365  122 0.30 
    Long-term debt 95,000  321 1.36  210,040  762 1.46 
    Subordinated notes 172,016  2,201 5.13  94,890  1,206 5.11 
    Total borrowings 286,125  2,525 3.54  466,295  2,090 1.80 
    Total interest-bearing liabilities 3,756,298  5,684 0.61  3,597,569  6,462 0.72 
    Noninterest-bearing deposits 1,880,916     1,663,395    
    Operating lease liabilities 37,426     37,680    
    Accrued expenses and other liabilities 40,239     41,196    
    Total liabilities 5,714,879     5,339,840    
             
    Shareholders' Equity:        
    Common stock 157,784     157,784    
    Additional paid-in capital 296,599     295,681    
    Retained earnings and other equity 274,367     207,485    
    Total shareholders' equity 728,750     660,950    
    Total liabilities and shareholders' equity$6,443,629    $6,000,790    
    Net interest income $47,302    $44,159   
             
    Net interest spread  2.92   2.92 
    Effect of net interest-free funding sources  0.23   0.26 
    Net interest margin  3.15%  3.18%
    Ratio of average interest-earning assets to average interest-bearing liabilities 160.16%    155.42%   
             
    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 June 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 Six Months Ended , 
    Tax Equivalent Basis2021
     2020
     
     AverageIncome/Average AverageIncome/Average 
    (Dollars in thousands)BalanceExpenseRate BalanceExpenseRate 
    Assets:        
    Interest-earning deposits with other banks$226,387 $102 0.09%$215,888 $392 0.37%
    U.S. government obligations 6,999  71 2.05  7,267  73 2.02 
    Obligations of state and political subdivisions 8,792  163 3.74  30,070  529 3.54 
    Other debt and equity securities 364,272  2,631 1.46  389,591  4,850 2.50 
    Federal Home Loan Bank, Federal Reserve Bank and other stock 26,119  708 5.47  30,214  889 5.92 
    Total interest-earning deposits, investments and other interest-earning assets 632,569  3,675 1.17  673,030  6,733 2.01 
             
    Commercial, financial, and agricultural loans 804,458  13,708 3.44  819,121  15,961 3.92 
    Paycheck Protection Program loans 457,663  9,302 4.10  185,334  2,128 2.31 
    Real estate—commercial and construction loans 2,661,778  49,389 3.74  2,186,098  47,027 4.33 
    Real estate—residential loans 1,051,110  19,709 3.78  998,111  21,322 4.30 
    Loans to individuals 25,862  516 4.02  29,548  734 5.00 
    Municipal loans and leases 248,490  5,128 4.16  304,219  6,242 4.13 
    Lease financings 108,317  3,556 6.62  90,289  3,146 7.01 
    Gross loans and leases 5,357,678  101,308 3.81  4,612,720  96,560 4.21 
    Total interest-earning assets 5,990,247  104,983 3.53  5,285,750  103,293 3.93 
    Cash and due from banks 54,123     48,931    
    Allowance for credit losses, loans and leases (78,125)    (56,832)   
    Premises and equipment, net 55,865     56,074    
    Operating lease right-of-use assets 34,013     34,482    
    Other assets 357,589     336,122    
    Total assets$6,413,712    $5,704,527    
             
    Liabilities:        
    Interest-bearing checking deposits$802,350 $977 0.25%$601,159 $1,168 0.39%
    Money market savings 1,231,457  1,684 0.28  1,060,399  3,756 0.71 
    Regular savings 969,073  580 0.12  844,591  1,267 0.30 
    Time deposits 505,318  3,318 1.32  590,183  5,587 1.90 
    Total time and interest-bearing deposits 3,508,198  6,559 0.38  3,096,332  11,778 0.76 
             
    Short-term borrowings 18,506  5 0.05  100,745  228 0.46 
    Long-term debt 98,149  669 1.37  189,623  1,526 1.62 
    Subordinated notes 177,647  4,494 5.10  94,868  2,481 5.26 
    Total borrowings 294,302  5,168 3.54  385,236  4,235 2.21 
    Total interest-bearing liabilities 3,802,500  11,727 0.62  3,481,568  16,013 0.92 
    Noninterest-bearing deposits 1,815,572     1,475,994    
    Operating lease liabilities 37,419     37,724    
    Accrued expenses and other liabilities 43,897     42,036    
    Total liabilities 5,699,388     5,037,322    
             
    Shareholders' Equity:        
    Common stock 157,784     157,784    
    Additional paid-in capital 296,369     295,500    
    Retained earnings and other equity 260,171     213,921    
    Total shareholders' equity 714,324     667,205    
    Total liabilities and shareholders' equity$6,413,712    $5,704,527    
    Net interest income $93,256    $87,280   
             
    Net interest spread  2.91   3.01 
    Effect of net interest-free funding sources  0.23   0.31 
    Net interest margin  3.14%  3.32%
    Ratio of average interest-earning assets to average interest-bearing liabilities 157.53%    151.82%   
             
    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 six months ended June 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 June 30, 2021 
    Industry DescriptionTotal Outstanding
    Balance (excl PPP)
     % of
    Commercial
    Loan Portfolio
     $ Balance of
    Modified Loans (1)
     Modified Loans
    as a % of
    Portfolio (1)
     
    CRE - Retail 365,096 8.7% - -%
    Animal Production 281,368 6.7  - - 
    CRE - 1-4 Family Residential Investment 250,694 6.0  605 0.2 
    CRE - Office 249,692 5.9  - - 
    CRE - Industrial / Warehouse 217,874 5.2  - - 
    CRE - Multi-family 206,766 4.9  - - 
    Hotels & Motels (Accommodation) 170,730 4.1  26,036 15.2 
    Nursing and Residential Care Facilities 158,292 3.8  - - 
    Education 152,983 3.6  - - 
    CRE - Mixed-Use - Residential 122,489 2.9  3,268 2.7 
    Specialty Trade Contractors 121,303 2.9  36 - 
    Real Estate Lenders, Secondary Market Financing 103,796 2.5  - - 
    CRE - Medical Office 96,075 2.3  - - 
    Homebuilding (tract developers, remodelers) 89,915 2.1  - - 
    Private Equity & Special Purpose Entities 87,111 2.1  - - 
    Merchant Wholesalers, Durable Goods 78,944 1.9  - - 
    Crop Production 72,558 1.7  - - 
    Motor Vehicle and Parts Dealers 67,371 1.6  - - 
    Rental and Leasing Services 63,142 1.5  - - 
    Wood Product Manufacturing 63,095 1.5  - - 
    Fabricated Metal Product Manufacturing 59,398 1.4  - - 
    Merchant Wholesalers, Nondurable Goods 53,783 1.3  - - 
    Food Services and Drinking Places 51,356 1.2  3,233 6.3 
    Administrative and Support Services 50,296 1.1  101 0.2 
    Industries with >$50 million in outstandings$3,234,127 76.9%$33,279 1.0%
    Industries with <$50 million in outstandings$969,606 23.1%$18,272 1.9%
    Total Commercial Loans$4,203,733 100.0%$51,551 1.2%
             
             
    Consumer Loans and Lease FinancingsTotal Outstanding
    Balance
       $ Balance of
    Modified Loans (1)
     Modified Loans
    as a % of
    Portfolio (1)
     
    Real Estate-Residential Secured for Personal Purpose 513,330    2,429 0.5%
    Real Estate-Home Equity Secured for Personal Purpose 160,018    - - 
    Loans to Individuals 25,845    - - 
    Lease Financings 171,538    215 0.1 
    Total - Consumer Loans and Lease Financings$870,731   $2,644 0.3%
             
    Total$5,074,464   $54,195 1.1%
             
    (1) 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 June 30, 2021.
             


     
    Univest Financial Corporation
    Non-GAAP Reconciliation
    June 30, 2021
                  
     
     
    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 six months ended,
     06/30/21 03/31/21 12/31/20 09/30/20 06/30/20 06/30/21 06/30/20
    Restructuring charges (a)$-  $-  $1,439  $-  $-  $-  $- 
    Tax effect of restructuring charges -   -   (302)  -   -   -   - 
    Restructuring charges, net of tax$-  $-  $1,137  $-  $-  $-  $- 
                  
    Shareholders' equity$739,998  $722,455  $692,472  $669,107  $654,873  $739,998  $654,873 
    Goodwill (172,559)  (172,559)  (172,559)  (172,559)  (172,559)  (172,559)  (172,559)
    Other intangibles (b) (2,073)  (2,326)  (2,580)  (2,866)  (3,147)  (2,073)  (3,147)
    Tangible common equity$565,366  $547,570  $517,333  $493,682  $479,167  $565,366  $479,167 
                  
    Total assets$6,356,305  $6,416,665  $6,336,496  $6,382,831  $6,125,312  $6,356,305  $6,125,312 
    Goodwill (172,559)  (172,559)  (172,559)  (172,559)  (172,559)  (172,559)  (172,559)
    Other intangibles (b) (2,073)  (2,326)  (2,580)  (2,866)  (3,147)  (2,073)  (3,147)
    Tangible assets$6,181,673  $6,241,780  $6,161,357  $6,207,406  $5,949,606  $6,181,673  $5,949,606 
                  
    Average shareholders' equity$728,750  $699,736  $676,426  $661,947  $660,950  $714,324  $667,205 
    Average goodwill (172,559)  (172,559)  (172,559)  (172,559)  (172,559)  (172,559)  (172,559)
    Average other intangibles (b) (2,209)  (2,464)  (2,734)  (3,019)  (3,321)  (2,336)  (3,490)
    Average tangible common equity$553,982  $524,713  $501,133  $486,369  $485,070  $539,429  $491,156 
                  
    Net income before taxes$25,760  $40,407  $31,647  $23,197  $1,821  $66,167  $2,053 
    Provision for credit losses (59)  (11,283)  (8,721)  3,935   23,737   (11,342)  45,580 
    Pre-tax pre-provision income$25,701  $29,124  $22,926  $27,132  $25,558  $54,825  $47,633 
                  
    Loans and leases held for investment, gross$5,327,313  $5,415,006  $5,306,841  $5,211,856  $4,951,809  $5,327,313  $4,951,809 
    Paycheck Protection Program ("PPP") loans (252,849)  (528,452)  (483,773)  (501,580)  (498,978)  (252,849)  (498,978)
    Gross loans and leases excluding PPP loans$5,074,464  $4,886,554  $4,823,068  $4,710,276  $4,452,831  $5,074,464  $4,452,831 
                  
    Allowance for credit losses, loans and leases$71,355  $71,497  $83,044  $91,870  $86,217  $71,355  $86,217 
    Gross loans and leases excluding PPP loans 5,074,464   4,886,554   4,823,068   4,710,276   4,452,831   5,074,464   4,452,831 
    Allowance for credit losses, loans and leases as a percentage of gross loans and leases excluding PPP loans 1.41%  1.46%  1.72%  1.95%  1.94%  1.41%  1.94%
                  
    (a) Associated with financial center optimization plan
    (b) Amount does not include mortgage servicing rights
                  


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

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