Univest Financial Corporation Reports Second Quarter Results

Nachrichtenquelle: globenewswire
22.07.2020, 22:15  |  107   |   |   

SOUDERTON, Pa., July 22, 2020 (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, 2020 of  $2.1 million, or $0.07 diluted earnings per share, compared to net income of $16.5 million, or $0.56 diluted earnings per share, for the quarter ended June 30, 2019. Net income for the six months ended June 30, 2020 was $2.9 million, or $0.10 diluted earnings per share, compared to net income of $32.5 million, or $1.11 diluted earnings per share, for the six months ended June 30, 2019.

Pre-tax pre-provision income1 for the quarter ended June 30, 2020 was $25.6 million, an increase of $3.3 million, or 15.1%, from the second quarter of 2019. Pre-tax pre-provision income1 for the six months ended June 30, 2020 was $47.6 million, an increase of $3.2 million, or 7.1%, from the comparable period in the prior year.

During these challenging times, we continue to responsibly serve the needs of our customers while prioritizing the health and safety of our employees. For the majority of the second quarter we operated our financial centers as drive-through only where these capabilities existed. Additionally, we allowed for controlled and limited access to our financial centers to allow customers to access their safe deposit boxes and to serve customers at locations without drive-through capabilities. On June 22nd, we began the process of re-opening of financial center lobbies.  After the successful re-opening of six financial centers, we proceeded to the next stage of our re-opening plan on June 29th, by allowing for access to the lobbies of all Univest financial centers with the exception of our Souderton financial center which is being utilized by our customer support team as well as for employee training. Additional safety protocols have been put in place in accordance with orders and guidance issued by the Commonwealth of Pennsylvania and the State of New Jersey, as applicable. We enabled approximately 95% of our non-financial center personnel to work remotely and continue to encourage our employees to work remotely in accordance with recommendations from State authorities. Our employees, systems and processes have managed this unprecedented change seamlessly and with great success.

As a result of the impact of COVID-19, we have taken various actions to support our customers and the communities they live in and serve, including modifying outstanding loans and leases and waiving certain deposit service charges. As of June 30, 2020, we have modified approximately 1,420 loans and leases via principal and/or interest deferrals 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 categorized these modifications as troubled debt restructurings. These loans and leases have a combined principal balance of approximately $720 million as of June 30, 2020, which represents 16.2% of the loan portfolio, excluding PPP loans. For more information on these loans, including a breakdown of such loans by type, please see the "Loan Portfolio Overview" table within this document.

CECL
The Corporation adopted Accounting Standard Update No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“CECL”) effective January 1, 2020. During the quarter ended June 30, 2020, the Corporation recorded CECL related charges of $23.7 million of which $19.9 million (after-tax charge of $15.7 million), or $0.54 diluted earnings per share, which was attributable to changes in economic assumptions within the Corporation’s CECL model, which were predominately driven by COVID-19. During the six months ended June 30, 2020, the Corporation recorded CECL related charges of $45.6 million, of which $40.2 million (after-tax charge of $31.8 million), or $1.09 diluted earnings per share, was attributable to economic assumptions within the CECL model.  

Paycheck Protection Program
As a Small Business Administration (SBA) approved lender, the Corporation was well positioned to participate in the Paycheck Protection Program (PPP), which was enacted as a component of the CARES Act that was signed into law on March 27, 2020. Through this program, we successfully originated approximately 2,550 loans and secured funding of approximately $510 million for our customers. During the quarter we recorded income of $2.0 million within net interest income related to these loans. Additionally, during the quarter we recorded incremental capitalized compensation of $1.3 million related to origination of PPP loans. As of June 30, 2020, we have $11.0 million of net deferred fees on our balance sheet related to these loans.

Loans
Gross loans and leases, excluding PPP loans of $499.0 million, increased $4.0 million, or 0.4% (annualized), from March 31, 2020, despite a $94.5 million decrease in commercial line utilization.  During the six months ended June 30, 2020, gross loans and leases, excluding PPP loans, increased $66.0 million, or 3.0% (annualized), despite a $89.5 million decrease in commercial line utilization.  As of June 30, 2020 commercial line utilization was 29.8%.  Since June 30, 2019, gross loans and leases, excluding PPP loans, have increased $284.9 million, or 6.8%.  

Deposits
Total deposits increased $462.0 million, or 41.9% (annualized), from March 31, 2020 and $509.3 million, or 23.4% (annualized), from December 31, 2019 primarily due to increases in commercial and consumer deposits partially offset by a seasonal decrease in public funds deposits. Total deposits increased $747.2 million, or 18.1%, from June 30, 2019 primarily due to increases in commercial and consumer deposits partially offset by a decrease in public funds deposits. Deposits at June 30, 2020 were inherently elevated by the PPP loans originated during the quarter to the extent the funds were not utilized.

Net Interest Income and Margin
Net interest income of $43.5 million for the three months ended June 30, 2020 increased $1.1 million, or 2.5%, from the three months ended March 31, 2020, and $883 thousand, or 2.1%, from the three months ended June 30, 2019. Net interest income of $86.0 million for the six months ended June 30, 2020 increased $1.8 million, or 2.2%, from the six months ended June 30, 2019. The increase in net interest income for the six months ended June 30, 2020 compared to the same period of 2019 was primarily due to lower deposit and borrowing costs and growth in loans partially offset by a decrease in yield on loans.

Net interest margin, on a tax-equivalent basis, was 3.18% for the second quarter of 2020, compared to 3.48% for the first quarter of 2020 and 3.67% for the second quarter of 2019. Purchase accounting accretion had no impact on the quarter ended June 30, 2020 or March 31, 2020 compared to a favorable impact of one basis point for the quarter ended June 30, 2019. Excess liquidity reduced net interest margin by approximately sixteen basis points for the quarter ended June 30, 2020 compared to six basis points for the quarter ended March 31, 2020 and five basis points impact for the quarter ended June 30, 2019. This excess liquidity was primarily driven by strong deposit balance growth over the last year. PPP loans reduced net interest margin by nine basis points for the quarter ended June 30, 2020. Excluding purchase accounting accretion, the impact of excess liquidity, and the impact of PPP loans, the net interest margin, on a tax-equivalent basis, was 3.43% for the quarter ended June 30, 2020, 3.54% for the quarter ended March 31, 2020 and 3.71% for the quarter ended June 30, 2019.

Noninterest Income
Noninterest income for the quarter ended June 30, 2020 was $18.0 million, an increase of $1.6 million, or 10.1%, from the second quarter of 2019. Noninterest income for the six months ended June 30, 2020 was $36.4 million, an increase of $3.7 million, or 11.4%, from the comparable period in the prior year.

Net gain on mortgage banking activities increased $2.7 million, or 341.6%, for the quarter and $5.0 million, or 389.4%, for the six months ended June 30, 2020 compared to the comparable periods in the prior year, due to an increase in mortgage volume and expansion of margins. Net gain on sales of investment securities for the six months ended June 30, 2020 increased $752 thousand compared to the comparable period in the prior year primarily due to a $652 thousand gain on the sale of $58.3 million of agency backed mortgage backed securities in the first quarter of 2020.

Other income increased $1.1 million, or 146.1%, for the quarter and $784 thousand, or 73.8%, for the six months ended June 30, 2020 compared to the comparable period in the prior year. Fees on risk participation agreements for interest rate swaps increased $1.3 million for the quarter and $1.2 million for the six months ended June 30, 2020 compared to the comparable period in the prior year, driven by increased customer activity based on the current rate environment. Gain on sale of small business administration (SBA) loans decreased $239 thousand for the quarter and $294 thousand for the six months ended June 30, 2020 compared to the comparable period in the prior year due to decreased SBA loan sale activity.  Equity securities measured at fair value decreased $40 thousand for the quarter and $312 thousand for the six months ended June 30, 2020.

Other service fee income decreased $1.1 million, or 42.5%, for the quarter and $1.5 million, or 30.9%, for the six months ended June 30, 2020 compared to the comparable period in the prior year. Mortgage servicing rights amortization increased $484 thousand for the quarter and $814 thousand for the six months ended June 30, 2020 compared to the comparable period in the prior year driven by the decline in interest rates and their impact on prepayment activity. Additionally, a valuation allowance adjustment of $283 thousand for the quarter and $338 thousand for the six months ended June 30, 2020 was recorded against mortgage servicing right assets due to a decline in fair value.  Interchange income decreased $226 thousand for the quarter and $256 thousand for the six months ended June 30, 2020 compared to the comparable period in the prior year due to decreased customer activity.

Service charges on deposit accounts decreased $557 thousand, or 38.5%, for the quarter and $595 thousand, or 20.6%, for the six months ended June 30, 2020 compared to the comparable period in the prior year primarily due to the waiving of certain deposit service charges for customers in response to COVID-19. Investment advisory commission and fee income decreased $515 thousand, or 12.7%, for the quarter compared to the comparable period in the prior year, primarily due to a decline in the value of assets under management due to overall declines in the market, as a majority of investment advisory fees are billed based on the prior quarter-end assets under management balance.

Noninterest Expense
Noninterest expense for the quarter ended June 30, 2020 was $36.0 million, a decrease of $821 thousand, or 2.2%, compared to the second quarter of 2019. Noninterest expense for the six months ended June 30, 2020 was $74.7 million, an increase of $2.4 million, or 3.3% from the comparable period in the prior year.

Salaries, benefits and commissions decreased $352 thousand, or 1.6%, for the quarter and increased $1.9 million, or 4.4%, for the six months ended June 30, 2020 compared to the comparable period in the prior year. The increase for the six months ended June 30, 2020 was primarily 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 quarter of 2019, annual merit increases and increased variable compensation due to strong mortgage banking activity. The decrease for the quarter was the result of $1.3 million in compensation capitalized due to PPP loan originations which offset the previously discussed increases. Other expense increased $718 thousand, or 6.7%, for the six months ended June 30, 2020 due to a one-time $656 thousand charge related to the extinguishment of long-term debt in the first quarter of 2020. Marketing and advertising expense decreased $251 thousand, or 31.9%, for the quarter and decreased $389 thousand, or 29.3%, for the six months ended June 30, 2020, due to a decrease in advertising activities during the COVID-19 related stay at home orders.

Asset Quality and Provision for Credit Losses
Nonperforming assets were $36.0 million at June 30, 2020, compared to $39.3 million at December 31, 2019 and $27.1 million at June 30, 2019. The increase in nonperforming assets at June 30, 2020 compared to June 30, 2019 was primarily due to one commercial banking relationship, totaling $11.6 million as of June 30, 2020, which was placed on non-accrual status during 2019.

Net loan and lease charge-offs were $3.6 million during the second quarter of 2020 and $4.1 million for the six months ended June 30, 2020. The provision for credit losses was $23.7 million for the second quarter of 2020, of which $21.5 million related to loans and leases and $2.2 million related to unfunded commitments, and $45.6 million for the six months ended June 30, 2020, of which $42.0 million related to loans and leases, $3.0 million related to unfunded commitments, and $556 thousand related to investment securities. The second quarter of 2020 included a charge-off of $2.7 million and provision for credit losses of $1.3 million related to one commercial real estate loan, which was transferred to other real estate owned. As of June 30, 2020, the property was carried at $8.1 million, in other real estate owned, based on a letter of intent to sell the property. This loan was initially placed on nonaccrual during the first quarter of 2018.

Net loan and lease charge-offs were $1.1 million during the second quarter of 2019 and $1.5 million for the six months ended June 30, 2019. The provision for credit losses on loans and leases was $2.1 million for the second quarter of 2019 and $4.8 million for the six months ended June 30, 2019.

The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment, excluding PPP loans, was 1.94%1 at June 30, 2020, compared to 0.81% at December 31, 2019 and 0.78% at June 30, 2019.

Tax Provision
The effective income tax rate was (14.5)% for the quarter ended June 30, 2020, compared to an effective income tax rate of 18.2% for the quarter ended June 30, 2019. The effective income tax rate was (42.4%) for the six months ended June 30, 2020 compared to an effective income tax rate of 18.0% for the six months ended June 30, 2019. The negative effective tax rate for the quarter and six months ended June 30, 2020 reflects the benefits of tax-exempt income from investments in municipal securities and loans and leases.

Dividend
On May 18, 2020, Univest declared a quarterly cash dividend of $0.20 per share, payable on July 1, 2020. This represented a 5.23% annualized yield based on the closing price of Univest’s stock on the date the dividend was paid.

Conference Call
Univest will host a conference call to discuss second quarter 2020 results on Thursday, July 23, 2020 at 9:00 a.m. EST. Participants may preregister at http://dpregister.com/10145862. The general public can access the call by dialing 1-888-338-6515. A replay of the conference call will be available through August 23, 2020 by dialing 1-877-344-7529; using Conference ID: 10145862.

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 $6.1 billion in assets and $3.6 billion in assets under management and supervision through its Wealth Management lines of business at June 30, 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 Lancaster, 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 present or future trends or factors affecting the financial services industry and, specifically, the financial operations, markets and products of Univest. These forward-looking statements involve certain risks and uncertainties. There are a number of important factors that could cause Univest's future results to differ materially from historical performance or projected performance. These factors include, but are not limited to: (1) competitive pressures among financial institutions; (2) changes in the interest rate environment; (3) changes in asset quality, prepayment speeds, loan sale volumes, charge-offs and loan 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. 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 when and how the economy may be reopened.  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, making it difficult to grow assets and income; (2) if the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; (3) collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; (4) our allowance for loan losses may have to be increased if borrowers experience financial difficulties, which will adversely affect our net income; (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, reducing our net interest margin and spread and reducing net income; (6) 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; (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) we rely on third party vendors for certain services and the unavailability of a critical service due to the COVID-19 outbreak could have an adverse effect on us; (11); and Federal Deposit Insurance Corporation premiums may increase if the agency experience additional resolution costs. Univest undertakes no obligation to revise these forward-looking statements or to reflect events or circumstances after the date of this press release.

 



Univest Financial Corporation  
Consolidated Selected Financial Data (Unaudited)  
June 30, 2020  
(Dollars in thousands)                              
                               
Balance Sheet (Period End)   06/30/20   03/31/20   12/31/19   09/30/19   06/30/19          
Assets   $ 6,125,312     $ 5,464,768     $ 5,380,924     $ 5,353,611     $ 5,154,298            
Investment securities, net of allowance for credit losses     397,852       423,521       441,599       448,447       468,833            
Loans held for sale     31,082       11,417       5,504       2,893       1,498            
Loans and leases held for investment, gross     4,951,809       4,448,825       4,386,836       4,251,933       4,167,904            
Allowance for credit losses, loans and leases     86,217       68,216       35,331       33,662       32,600            
Loans and leases held for investment, net     4,865,592       4,380,609       4,351,505       4,218,271       4,135,304            
Total deposits     4,869,329       4,407,303       4,360,075       4,337,991       4,122,110            
Noninterest-bearing deposits     1,725,819       1,318,270       1,279,681       1,198,425       1,166,301            
NOW, money market and savings     2,623,025       2,452,021       2,474,384       2,421,466       2,246,372            
Time deposits     520,485       637,012       606,010       718,100       709,437            
Borrowings     515,722       323,363       263,596       273,855       304,241            
Shareholders' equity     654,873       651,551       675,122       664,299       651,670            
                               
                               
Balance Sheet (Average)   For the three months ended,   For the six months ended,  
    06/30/20   03/31/20   12/31/19   09/30/19   06/30/19   06/30/20   06/30/19  
Assets   $ 6,000,790     $ 5,409,561     $ 5,400,591     $ 5,317,867     $ 5,170,448     $ 5,704,527     $ 5,087,810    
Investment securities, net of allowance for credit losses     411,957       441,900       445,932       460,099       471,422       426,928       470,812    
Loans and leases, gross     4,836,858       4,388,584       4,280,430       4,170,485       4,123,069       4,612,720       4,070,508    
Deposits     4,794,669       4,349,984       4,374,586       4,288,170       4,145,411       4,572,326       4,038,897    
Shareholders' equity     660,950       673,460       672,647       659,523       645,538       667,205       638,595    
                               
                               
Asset Quality Data (Period End)                              
    06/30/20   03/31/20   12/31/19   09/30/19   06/30/19          
Nonaccrual loans and leases, including nonaccrual troubled debt restructured                              
  loans and leases   $ 26,141     $ 36,626     $ 38,578     $ 37,368     $ 25,147            
Accruing loans and leases 90 days or more past due     1,193       1,777       143       2,488       1,379            
Accruing troubled debt restructured loans and leases     53       54       54       54       55            
Total nonperforming loans and leases     27,387       38,457       38,775       39,910       26,581            
Other real estate owned     8,642       516       516       495       540            
Total nonperforming assets     36,029       38,973       39,291       40,405       27,121            
Nonaccrual loans and leases / Loans and leases held for investment     0.53 %     0.82 %     0.88 %     0.88 %     0.60 %          
Nonperforming loans and leases / Loans and leases held for investment     0.55 %     0.86 %     0.88 %     0.94 %     0.64 %          
Nonperforming assets / Total assets     0.59 %     0.71 %     0.73 %     0.75 %     0.53 %          
                               
Allowance for credit losses, loans and leases     86,217       68,216       35,331       33,662       32,600            
Allowance for credit losses, loans and leases / Loans and leases held for investment     1.74 %     1.53 %     0.81 %     0.79 %     0.78 %          
Allowance for credit losses, loans and leases / Loans and leases held for investment, excluding Paycheck Protection Program loans (1)     1.94 %     1.53 %     0.81 %     0.79 %     0.78 %          
Allowance for credit losses, loans and leases / Nonaccrual loans and leases held for investment     329.82 %     186.25 %     91.58 %     90.08 %     129.64 %          
Allowance for credit losses, loans and leases / Nonperforming loans and leases held for investment     314.81 %     177.38 %     91.12 %     84.34 %     122.64 %          
                               
    For the three months ended,   For the six months ended,  
    06/30/20   03/31/20   12/31/19   09/30/19   06/30/19   06/30/20   06/30/19  
Net loan and lease charge-offs   $ 3,576     $ 489     $ 558     $ 468     $ 1,078     $ 4,065     $ 1,525    
Net loan and lease charge-offs (annualized)/Average loans and leases     0.30 %     0.04 %     0.05 %     0.04 %     0.10 %     0.18 %     0.08 %  
                               
(1) Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included within this document.    
                               



Univest Financial Corporation  
Consolidated Selected Financial Data (Unaudited)  
June 30, 2020  
(Dollars in thousands, except per share data)                              
    For the three months ended,   For the six months ended,  
For the period:   06/30/20   03/31/20   12/31/19   09/30/19   06/30/19   06/30/20   06/30/19  
Interest income   $ 49,980     $ 52,019     $ 53,369   $ 54,300     $ 54,060   $ 101,999     $ 106,424  
Interest expense     6,462       9,551       10,940     11,655       11,425     16,013       22,266  
  Net interest income     43,518       42,468       42,429     42,645       42,635     85,986       84,158  
Provision for credit losses     23,737       21,843       2,227     1,530       2,073     45,580       4,753  
Net interest income after provision     19,781       20,625       40,202     41,115       40,562     40,406       79,405  
Noninterest income:                              
Trust fee income     1,924       1,890       1,912     1,973       2,054     3,814       3,941  
Service charges on deposit accounts     890       1,397       1,551     1,513       1,447     2,287       2,882  
Investment advisory commission and fee income     3,540       4,255       4,064     4,032       4,055     7,795       7,844  
Insurance commission and fee income     4,067       4,732       3,609     3,877       3,941     8,799       9,085  
Other service fee income     1,488       1,870       2,229     2,255       2,590     3,358       4,857  
Bank owned life insurance income     732       734       741     743       743     1,466       1,695  
Net gain on sales of investment securities     65       695       13     33       7     760       8  
Net gain on mortgage banking activities     3,515       2,744       1,038     1,629       796     6,259       1,279  
Other income     1,779       67       1,013     544       723     1,846       1,062  
Total noninterest income     18,000       18,384       16,170     16,599       16,356     36,384       32,653  
Noninterest expense:                              
Salaries, benefits and commissions     21,700       23,836       21,933     22,758       22,052     45,536       43,598  
Net occupancy     2,478       2,574       2,534     2,475       2,601     5,052       5,212  
Equipment     923       995       1,027     1,088       1,065     1,918       2,055  
Data processing     2,750       2,760       2,685     2,624       2,627     5,510       5,141  
Professional fees     1,264       1,317       1,475     1,517       1,307     2,581       2,571  
Marketing and advertising     535       402       710     558       786     937       1,326  
Deposit insurance premiums     615       504       342     (444 )     430     1,119       882  
Intangible expenses     321       330       374     378       417     651       843  
Other expense     5,374       6,059       6,398     5,316       5,496     11,433       10,715  
Total noninterest expense     35,960       38,777       37,478     36,270       36,781     74,737       72,343  
Income before taxes     1,821       232       18,894     21,444       20,137     2,053       39,715  
Income tax (benefit) expense     (264 )     (606 )     3,384     3,782       3,669     (870 )     7,168  
Net income   $ 2,085     $ 838     $ 15,510   $ 17,662     $ 16,468   $ 2,923     $ 32,547  
Net income per share:                              
Basic   $ 0.07     $ 0.03     $ 0.53   $ 0.60     $ 0.56   $ 0.10     $ 1.11  
Diluted   $ 0.07     $ 0.03     $ 0.53   $ 0.60     $ 0.56   $ 0.10     $ 1.11  
Dividends declared per share   $ 0.20     $ 0.20     $ 0.20   $ 0.20     $ 0.20   $ 0.40     $ 0.40  
Weighted average shares outstanding     29,187,197       29,286,200       29,327,169     29,305,524       29,287,754     29,236,698       29,282,575  
Period end shares outstanding     29,201,985       29,164,782       29,334,629     29,312,534       29,294,942     29,201,985       29,294,942  



Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
June 30, 2020
                                   
                                   
                                   
          For the three months ended,   For the six months ended,
Profitability Ratios (annualized)   06/30/20   03/31/20   12/31/19   09/30/19   06/30/19   06/30/20   06/30/19
                                   
Return on average assets    0.14 %     0.06 %     1.14 %     1.32 %     1.28 %     0.10 %     1.29 %
Return on average shareholders' equity    1.27 %     0.50 %     9.15 %     10.62 %     10.23 %     0.88 %     10.28 %
Return on average tangible common equity (1)   1.73 %     0.68 %     12.40 %     14.52 %     14.10 %     1.20 %     14.23 %
Net interest margin (FTE)    3.18 %     3.48 %     3.44 %     3.52 %     3.67 %     3.32 %     3.71 %
Efficiency ratio (2)    57.7 %     62.8 %     63.0 %     60.4 %     61.5 %     60.2 %     61.0 %
                                   
Capitalization Ratios                              
                                   
Dividends declared to net income    278.7 %     699.9 %     37.8 %     33.2 %     35.6 %     399.5 %     36.0 %
Shareholders' equity to assets (Period End)    10.69 %     11.92 %     12.55 %     12.41 %     12.64 %     10.69 %     12.64 %
Tangible common equity to tangible assets (1)   8.06 %     8.99 %     9.59 %     9.42 %     9.54 %     8.06 %     9.54 %
Common equity book value per share  $ 22.43     $ 22.34     $ 23.01     $ 22.66     $ 22.25     $ 22.43     $ 22.25  
Tangible common equity book value per share (1) $ 16.41     $ 16.31     $ 17.01     $ 16.64     $ 16.20     $ 16.41     $ 16.20  
                                   
Regulatory Capital Ratios (Period End)                            
Tier 1 leverage ratio    9.15 %     9.90 %     10.02 %     9.97 %     10.01 %     9.15 %     10.01 %
Common equity tier 1 risk-based capital ratio   10.73 %     10.79 %     11.03 %     11.03 %     10.99 %     10.73 %     10.99 %
Tier 1 risk-based capital ratio    10.73 %     10.79 %     11.03 %     11.03 %     10.99 %     10.73 %     10.99 %
Total risk-based capital ratio    13.72 %     13.65 %     13.78 %     13.81 %     13.79 %     13.72 %     13.79 %
                                   
(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.        
                                   
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.      
                                   
  Shareholders' equity $ 654,873     $ 651,551     $ 675,122     $ 664,299     $ 651,670     $ 654,873     $ 651,670  
  Goodwill   (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )
  Other intangibles (a)     (3,017 )     (3,333 )     (3,658 )     (4,026 )     (4,396 )     (3,017 )     (4,396 )
  Tangible common equity $ 479,297     $ 475,659     $ 498,905     $ 487,714     $ 474,715     $ 479,297     $ 474,715  
                                   
  Total assets $ 6,125,312     $ 5,464,768     $ 5,380,924     $ 5,353,611     $ 5,154,298     $ 6,125,312     $ 5,154,298  
  Goodwill   (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )
  Other intangibles (a)     (3,017 )     (3,333 )     (3,658 )     (4,026 )     (4,396 )     (3,017 )     (4,396 )
  Tangible assets $ 5,949,736     $ 5,288,876     $ 5,204,707     $ 5,177,026     $ 4,977,343     $ 5,949,736     $ 4,977,343  
                                   
  Average shareholders' equity $ 660,950     $ 673,460     $ 675,647     $ 659,523     $ 645,538     $ 667,205     $ 638,595  
  Average goodwill   (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )     (172,559 )
  Average other intangibles (a)     (3,185 )     (3,506 )     (3,853 )     (4,234 )     (4,615 )     (3,346 )     (4,821 )
  Average tangible common equity $ 485,206     $ 497,395     $ 499,235     $ 482,730     $ 468,364     $ 491,300     $ 461,215  
                                   
  Net income before taxes $ 1,821     $ 232     $ 18,894     $ 21,444     $ 20,137     $ 2,053     $ 39,715  
  Provision for credit losses     23,737       21,843       2,227       1,530       2,073       45,580       4,753  
  Pre-tax pre-provision income $ 25,558     $ 22,075     $ 21,121     $ 22,974     $ 22,210     $ 47,633     $ 44,468  
                                   
  Loans and leases held for investment, gross $ 4,951,809     $ 4,448,825     $ 4,386,836     $ 4,251,933     $ 4,167,904     $ 4,951,809     $ 4,167,904  
  Paycheck Protection Program ("PPP") loans   498,978       -       -       -       -       498,978       -  
  Gross loans and leases excluding PPP loans $ 4,452,831     $ 4,448,825     $ 4,386,836     $ 4,251,933     $ 4,167,904     $ 4,452,831     $ 4,167,904  
                                   
  (a) Amount does not include servicing rights                          



Univest Financial Corporation  
Average Balances and Interest Rates (Unaudited)  
    For the Three Months Ended,      
Tax Equivalent Basis June 30, 2020   March 31, 2020  
  Average Income/ Average   Average Income/ Average  
(Dollars in thousands) Balance Expense Rate   Balance Expense Rate  
Assets:                
Interest-earning deposits with other banks $ 313,668   $ 67 0.09 % $ 118,108   $ 325 1.11 %
U.S. government obligations   7,236     36 2.00     7,298     37 2.04  
Obligations of state and political subdivisions   26,546     240 3.64     33,595     289 3.46  
Other debt and equity securities   378,175     2,182 2.32     401,007     2,668 2.68  
Federal Home Loan Bank, Federal Reserve Bank and other stock   28,977     362 5.02     31,450     527 6.74  
Total interest-earning deposits, investments and other interest-earning assets   754,602     2,887 1.54     591,458     3,846 2.62  
                 
Commercial, financial, and agricultural loans   816,976     7,330 3.61     821,267     8,631 4.23  
Paycheck Protection Program loans   370,669     2,128 2.31     -     - -  
Real estate—commercial and construction loans   2,232,827     23,110 4.16     2,139,369     23,917 4.50  
Real estate—residential loans   1,004,671     10,270 4.11     991,550     11,052 4.48  
Loans to individuals   29,079     327 4.52     30,016     407 5.45  
Municipal loans and leases   291,433     2,977 4.11     317,006     3,265 4.14  
Lease financings   91,203     1,592 7.02     89,376     1,554 6.99  
  Gross loans and leases   4,836,858     47,734 3.97     4,388,584     48,826 4.47  
Total interest-earning assets   5,591,460     50,621 3.64     4,980,042     52,672 4.25  
Cash and due from banks   46,970           50,891        
Reserve for credit losses, loans and leases   (69,292 )         (44,372 )      
Premises and equipment, net   55,750           56,399        
Operating lease right-of-use assets   34,419           34,545        
Other assets   341,483           332,056        
  Total assets $ 6,000,790         $ 5,409,561        
                 
Liabilities:                
Interest-bearing checking deposits $ 617,927   $ 372 0.24 % $ 584,391   $ 796 0.55 %
Money market savings   1,063,463     853 0.32     1,057,336     2,903 1.10  
Regular savings   872,422     475 0.22     816,760     792 0.39  
Time deposits   577,462     2,672 1.86     602,903     2,915 1.94  
  Total time and interest-bearing deposits   3,131,274     4,372 0.56     3,061,390     7,406 0.97  
                 
Short-term borrowings   161,365     122 0.30     40,126     106 1.06  
Long-term debt   210,040     762 1.46     169,205     764 1.82  
Subordinated notes   94,890     1,206 5.11     94,847     1,275 5.41  
  Total borrowings   466,295     2,090 1.80     304,178     2,145 2.84  
  Total interest-bearing liabilities   3,597,569     6,462 0.72     3,365,568     9,551 1.14  
Noninterest-bearing deposits   1,663,395           1,288,594        
Operating lease liabilities   37,680           37,766        
Accrued expenses and other liabilities   41,196           44,173        
  Total liabilities   5,339,840           4,736,101        
                 
Shareholders' Equity:                
Common stock   157,784           157,784        
Additional paid-in capital   295,681           295,318        
Retained earnings and other equity   207,485           220,358        
  Total shareholders' equity   660,950           673,460        
  Total liabilities and shareholders' equity $ 6,000,790         $ 5,409,561        
Net interest income   $ 44,159       $ 43,121    
                 
Net interest spread     2.92       3.11  
Effect of net interest-free funding sources     0.26       0.37  
Net interest margin     3.18 %     3.48 %
Ratio of average interest-earning assets to average interest-bearing liabilities   155.42 %         147.97 %      
                 
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, 2020 and March 31, 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 June 30,      
Tax Equivalent Basis   2020       2019    
  Average Income/ Average   Average Income/ Average  
(Dollars in thousands) Balance Expense Rate   Balance Expense Rate  
Assets:                
Interest-earning deposits with other banks $ 313,668   $ 67 0.09 % $ 102,623   $ 569 2.22 %
U.S. government obligations   7,236     36 2.00     17,315     73 1.69  
Obligations of state and political subdivisions   26,546     240 3.64     59,267     507 3.43  
Other debt and equity securities   378,175     2,182 2.32     394,840     2,572 2.61  
Federal Home Loan Bank, Federal Reserve Bank and other stock   28,977     362 5.02     31,938     535 6.72  
Total interest-earning deposits, investments and other interest-earning assets   754,602     2,887 1.54     605,983     4,256 2.82  
                 
Commercial, financial, and agricultural loans   816,976     7,330 3.61     820,009     10,589 5.18  
Paycheck Protection Program loans   370,669     2,128 2.31          
Real estate—commercial and construction loans   2,232,827     23,110 4.16     1,912,248     23,110 4.85  
Real estate—residential loans   1,004,671     10,270 4.11     941,712     11,483 4.89  
Loans to individuals   29,079     327 4.52     31,939     510 6.40  
Municipal loans and leases   291,433     2,977 4.11     335,399     3,305 3.95  
Lease financings   91,203     1,592 7.02     81,762     1,459 7.16  
  Gross loans and leases   4,836,858     47,734 3.97     4,123,069     50,456 4.91  
Total interest-earning assets   5,591,460     50,621 3.64     4,729,052     54,712 4.64  
Cash and due from banks   46,970           46,868        
Reserve for credit losses, loans and leases   (69,292 )         (31,847 )      
Premises and equipment, net   55,750           58,873        
Operating lease right-of-use assets   34,419           35,821        
Other assets   341,483           331,681        
  Total assets $ 6,000,790         $ 5,170,448        
                 
Liabilities:                
Interest-bearing checking deposits $ 617,927   $ 372 0.24 % $ 457,231   $ 457 0.40 %
Money market savings   1,063,463     853 0.32     982,440     4,234 1.73  
Regular savings   872,422     475 0.22     818,523     1,013 0.50  
Time deposits   577,462     2,672 1.86     688,897     3,407 1.98  
  Total time and interest-bearing deposits   3,131,274     4,372 0.56     2,947,091     9,111 1.24  
                 
Short-term borrowings   161,365     122 0.30     48,312     217 1.80  
Long-term debt   210,040     762 1.46     159,572     836 2.10  
Subordinated notes   94,890     1,206 5.11     94,663     1,261 5.34  
  Total borrowings   466,295     2,090 1.80     302,547     2,314 3.07  
  Total interest-bearing liabilities   3,597,569     6,462 0.72     3,249,638     11,425 1.41  
Noninterest-bearing deposits   1,663,395           1,198,320        
Operating lease liabilities   37,680           38,873        
Accrued expenses and other liabilities   41,196           38,079        
  Total liabilities   5,339,840           4,524,910        
                 
Shareholders' Equity:                
Common stock   157,784           157,784        
Additional paid-in capital   295,681           293,496        
Retained earnings and other equity   207,485           194,258        
  Total shareholders' equity   660,950           645,538        
  Total liabilities and shareholders' equity $ 6,000,790         $ 5,170,448        
Net interest income   $ 44,159       $ 43,287    
                 
Net interest spread     2.92       3.23  
Effect of net interest-free funding sources     0.26       0.44  
Net interest margin     3.18 %     3.67 %
Ratio of average interest-earning assets to average interest-bearing liabilities   155.42 %         145.53 %      
                 
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, 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 Six Months Ended June 30,    
Tax Equivalent Basis   2020       2019    
  Average Income/ Average   Average Income/ Average  
(Dollars in thousands) Balance Expense Rate   Balance Expense Rate  
Assets:                
Interest-earning deposits with other banks $ 215,888   $ 392 0.37 % $ 72,760   $ 838 2.32 %
U.S. government obligations   7,267     73 2.02     18,669     155 1.67  
Obligations of state and political subdivisions   30,070     529 3.54     61,703     1,053 3.44  
Other debt and equity securities   389,591     4,850 2.50     390,440     5,203 2.69  
Federal Home Loan Bank, Federal Reserve Bank and other stock   30,214     889 5.92     32,148     1,121 7.03  
Total interest-earning deposits, investments and other interest-earning assets   673,030     6,733 2.01     575,720     8,370 2.93  
                 
Commercial, financial, and agricultural loans   819,121     15,961 3.92     815,565     21,347 5.28  
Paycheck Protection Program loans   185,334     2,128 2.31          
Real estate—commercial and construction loans   2,186,098     47,027 4.33     1,867,510     44,669 4.82  
Real estate—residential loans   998,111     21,322 4.30     940,015     22,895 4.91  
Loans to individuals   29,548     734 5.00     32,230     1,028 6.43  
Municipal loans and leases   304,219     6,242 4.13     333,858     6,526 3.94  
Lease financings   90,289     3,146 7.01     81,330     2,894 7.18  
Gross loans and leases   4,612,720     96,560 4.21     4,070,508     99,359 4.92  
Total interest-earning assets   5,285,750     103,293 3.93     4,646,228     107,729 4.68  
Cash and due from banks   48,931           45,797        
Reserve for credit losses, loans and leases   (56,832 )         (30,984 )      
Premises and equipment, net   56,074           59,025        
Operating lease right-of-use assets   34,482           36,472        
Other assets   336,122           331,272        
Total assets $ 5,704,527         $ 5,087,810        
                 
Liabilities:                
Interest-bearing checking deposits $ 601,159   $ 1,168 0.39 % $ 468,019   $ 1,171 0.50 %
Money market savings   1,060,399     3,756 0.71     950,641     7,982 1.69  
Regular savings   844,591     1,267 0.30     803,859     1,827 0.46  
Time deposits   590,183     5,587 1.90     672,193     6,334 1.90  
  Total time and interest-bearing deposits   3,096,332     11,778 0.76     2,894,712     17,314 1.21  
                 
Short-term borrowings   100,745     228 0.46     82,796     855 2.08  
Long-term debt   189,623     1,526 1.62     152,475     1,575 2.08  
Subordinated notes   94,868     2,481 5.26     94,633     2,522 5.37  
Total borrowings   385,236     4,235 2.21     329,904     4,952 3.03  
Total interest-bearing liabilities   3,481,568     16,013 0.92     3,224,616     22,266 1.39  
Noninterest-bearing deposits   1,475,994           1,144,185        
Operating lease liabilities   37,724           39,478        
Accrued expenses and other liabilities   42,036           40,936        
Total liabilities   5,037,322           4,449,215        
                 
Shareholders' Equity:                
Common stock   157,784           157,784        
Additional paid-in capital   295,500           293,123        
Retained earnings and other equity   213,921           187,688        
Total shareholders' equity   667,205           638,595        
Total liabilities and shareholders' equity $ 5,704,527         $ 5,087,810        
Net interest income   $ 87,280       $ 85,463    
                 
Net interest spread     3.01       3.29  
Effect of net interest-free funding sources     0.31       0.42  
Net interest margin     3.32 %     3.71 %
Ratio of average interest-earning assets to average interest-bearing liabilities   151.82 %         144.09 %      
                 
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, 2020 and 2019 have  
             been calculated using the Corporation’s federal applicable rate of 21.0%.          



Univest Financial Corporation  
Loan Portfolio Overview  
                         
(Dollars in millions)                        
Industry Description Total Outstanding
Balance (excl PPP)
  % of
Commercial
Loan Portfolio
  PPP $ (1)   % of Portfolio
with PPP
Loans (2)
  $ Balance of
Modified Loans
(3)
  Modified
Loans as a % of
Portfolio (3)
 
CRE - Retail $ 260.7   7.1 % $ 0.2   - % $ 124.7   47.8 %
Animal Production   240.3   6.6     0.7   2.1     20.7   8.6  
CRE - 1-4 Family Residential Investment   238.7   6.5     1.3   0.2     26.9   11.3  
CRE - Office   208.0   5.7     -   0.0     16.4   7.9  
CRE - Multi-family   182.3   5.0     -   0.0     11.8   6.5  
Hotels & Motels (Accommodation)   171.7   4.7     2.4   50.4     146.6   85.4  
Nursing and Residential Care Facilities   155.4   4.3     7.9   27.4     -   -  
CRE - Industrial / Warehouse   125.4   3.5     0.1   4.8     26.3   21.0  
Real Estate Lenders, Secondary Market Financing   116.9   3.2     4.3   18.6     -   -  
Specialty Trade Contractors   114.7   3.2     66.9   15.3     6.0   5.3  
CRE - Mixed-Use - Residential   107.2   3.0     -   -     34.5   32.1  
Professional, Scientific, and Technical Services   100.4   2.8     70.1   30.4     11.6   11.6  
Homebuilding (tract developers, remodelers)   91.1   2.5     15.0   6.7     3.3   3.7  
Education   89.9   2.5     15.6   39.8     6.7   7.4  
Merchant Wholesalers, Durable Goods   71.7   2.0     20.7   21.0     9.7   13.5  
Fabricated Metal Product Manufacturing   68.4   1.9     12.9   3.7     6.1   8.9  
Crop Production   61.9   1.7     0.3   0.6     3.2   5.2  
Food Services and Drinking Places   61.1   1.7     15.9   25.5     33.9   55.5  
CRE - Medical Office   59.8   1.6     -   -     14.7   24.7  
Administrative and Support Services   54.4   1.5     28.8   33.0     1.6   2.9  
Motor Vehicle and Parts Dealers   51.8   1.4     11.6   5.5     18.0   34.8  
Food Manufacturing   51.0   1.4     3.0   1.4     17.5   34.4  
Total Commercial Loans >$50M $ 2,682.8   73.8 % $ 277.7   11.6 % $ 540.2   20.1 %
Industries with <$50 million in outstandings $ 951.0   26.2 % $ 221.3   19.2 % $ 126.2   13.3 %
Total Commercial Loans $ 3,633.8   100.0 % $ 499.0   13.6 % $ 666.4   18.3 %
                         
                         
Consumer Loans and Lease Financings Total Outstanding Balance       PPP $ (1)       $ Balance of Modified Loans (3)   Modified Loans as a % of Portfolio (3)  
Real Estate-Residential Secured for Personal Purpose $ 462.5       $ -       $ 35.5   7.7 %
Real Estate-Home Equity Secured for Personal Purpose   173.1         -         4.1   2.4  
Loans to Individuals   29.2         -         0.5   1.7  
Lease Financings   154.2         -         13.6   8.8  
Total - Consumer Loans and Lease Financings $ 819.0       $ -       $ 53.7   6.6 %
                         
Total $ 4,452.8       $ 499.0       $ 720.1   16.2 %
                         
(1) Includes ($11.0) million of net deferred fees.                        
(2) Represents weighted average percent of the portfolio which received a PPP loan.                  
(3) 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.

 

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

Univest Financial Corporation Aktie jetzt ab 0€ handeln - auf Smartbroker.de



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