Univest Financial Corporation Reports Fourth Quarter and 2021 Results

1/26, 10:15 PM (Source: GlobeNewswire)

(Loan Growth of 9.4% for last twelve months (excluding PPP loans1)) 

SOUDERTON, Pa., Jan. 26, 2022 (GLOBE NEWSWIRE) -- Univest Financial Corporation (“Univest” or the "Corporation") (NASDAQ: UVSP), parent company of Univest Bank and Trust Co. (the "Bank") and its insurance, investments and equipment financing subsidiaries, today announced net income for the year ended December 31, 2021 of $91.8 million, or $3.11 diluted earnings per share, compared to net income of $46.9 million, or $1.60 diluted earnings per share, for the year ended December 31, 2020. Net income for the quarter ended December 31, 2021 was $17.4 million, or $0.59 diluted earnings per share, compared to net income of $25.9 million, or $0.88 diluted earnings per share, for the quarter ended December 31, 2020.

Pre-tax pre-provision income1 for the year ended December 31, 2021 was $104.2 million, an increase of $6.5 million, or 6.7%, from the prior year. Pre-tax pre-provision income1 for the quarter ended December 31, 2021 was $23.4 million, an increase of $456 thousand, or 2.0%, from the fourth quarter of 2020.

Acquisition
On December 1, 2021, Univest Insurance, LLC., the Bank's insurance subsidiary, completed the acquisition of the Paul I. Sheaffer Insurance Agency, a full-service firm providing insurance solutions to businesses and individuals in Central Pennsylvania.

Paycheck Protection Program
As of December 31, 2021, $31.7 million in PPP loans remain outstanding. During the fourth quarter, we recorded income of $1.6 million within net interest income related to these loans, of which $1.4 million was the result of recognition of associated net deferred loan fees upon forgiveness and pay downs of PPP loans totaling $55.4 million. During the year ended December 31, 2021, we recorded income of $15.0 million within net interest income related to these loans, of which $10.4 million was the result of recognition of associated net deferred loan fees upon forgiveness and pay downs of PPP loans totaling $630.7 million. As of December 31, 2021, we had $817 thousand of net deferred fees on our balance sheet, which represented approximately 4.5% of the initial deferred fee amount.

Loans
Gross loans and leases, excluding PPP loans1, increased $455.2 million, or 9.4%, from December 31, 2020 due to increases in commercial, construction, commercial real estate, and residential mortgage loans and lease financings. Gross loans and leases, excluding PPP loans1, increased $111.8 million, or 8.7% (annualized), from September 30, 2021 due to increases in construction, commercial real estate and commercial loans and lease financings.
  
Deposits
Total deposits increased $812.4 million, or 15.5%, from December 31, 2020, primarily due to increases in commercial, consumer and public funds deposits offset by a decrease in brokered deposits. Total deposits increased $117.0 million, or 7.9% (annualized), from September 30, 2021, primarily due to increases in commercial and consumer deposits offset by a decrease in public funds deposits.

Net Interest Income and Margin
Net interest income of $47.5 million for the three months ended December 31, 2021 increased $3.0 million, or 6.7%, from the three months ended December 31, 2020. The increase in net interest income for the three months ended December 31, 2021 compared to the same period of 2020 was primarily due to overall growth in loans, led by an increase in commercial real estate loan income of $2.2 million, and a $2.1 million decrease in the cost of interest-bearing liabilities offset by a decrease in PPP loan income of $1.6 million.

Net interest income of $188.4 million for the year ended December 31, 2021 increased $14.0 million, or 8.0%, from the prior year. The increase in net interest income for the year ended December 31, 2021 compared to 2020 was primarily due to an increase in PPP loan income of $7.0 million, an $8.2 million decrease in the cost of interest-bearing liabilities and growth in loans, primarily commercial real estate loans, partially offset by a decrease in loan yields, excluding PPP loans, and investment yields.

Net interest margin, on a tax-equivalent basis, was 2.86% for the fourth quarter of 2021, compared to 3.11% for the third quarter of 2021 and 3.02% for the fourth quarter of 2020. Excess liquidity reduced net interest margin by approximately 43 basis points for the quarter ended December 31, 2021 compared to 27 basis points for the quarter ended September 30, 2021 and 13 basis points for the quarter ended December 31, 2020. This excess liquidity was primarily driven by strong growth of deposit balances since the beginning of the COVID-19 pandemic, primarily due to the various pandemic-related stimulus initiatives. PPP loans had a favorable impact on net interest margin of eight basis points for the quarter ended December 31, 2021 compared to 20 basis points for the quarter ended September 30, 2021 and an unfavorable impact of seven basis points for the quarter ended December 31, 2020. As PPP loans are forgiven, the associated deferred fees are recognized in earnings, which occurred with greater frequency in 2021 as compared to 2020. Excluding the impact of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was 3.21% for the quarter ended December 31, 2021 compared to 3.18% for the quarter ended September 30, 2021 and 3.22% for the quarter ended December 31, 2020.

Net interest margin, on a tax-equivalent basis, was 3.06% for the year ended December 31, 2021, compared to 3.16% for the year ended December 31, 2020. Excess liquidity reduced net interest margin by approximately 23 basis points for the year ended December 31, 2021 compared to 14 basis points for the year ended December 31, 2020. This excess liquidity was primarily driven by strong growth of deposit balances since the beginning of the COVID-19 pandemic, primarily due to the various pandemic-related stimulus initiatives. PPP loans had a favorable impact on net interest margin of 11 basis points for the year ended December 31, 2021 compared to an unfavorable impact of seven basis points for the year ended December 31, 2020. Excluding the impact of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was 3.18% for the year ended December 31, 2021 compared to 3.37% for the year ended December 31, 2020.

Noninterest Income
Noninterest income for the quarter ended December 31, 2021 was $19.2 million, a decrease of $947 thousand, or 4.7%, from the comparable period in the prior year. Noninterest income for the year ended December 31, 2021 was $83.2 million, an increase of $4.9 million, or 6.3%, from the prior year.

Net gain on mortgage banking activities decreased $1.8 million, or 41.8%, for the quarter and $1.3 million, or 7.9%, for the year ended December 31, 2021 compared to the comparable periods in the prior year. The decrease for the three months and year ended December 31, 2021 was primarily due to a decrease in volume and a contraction of margins. Investment advisory commission and fee income increased $741 thousand, or 17.9%, for the quarter and $3.0 million, or 18.8%, for the year ended December 31, 2021 compared to the comparable periods in the prior year, due to increased assets under management driven by new customer relationships and favorable market conditions. BOLI income decreased $14 thousand, or 1.9%, for the quarter and increased $1.0 million, or 35.4%, for the year ended December 31, 2021 compared to the comparable periods in the prior year, primarily due to proceeds from BOLI death benefits of $893 thousand and $196 thousand received in the second and third quarters of 2021, respectively.

Other service fee income increased $667 thousand, or 31.9%, for the quarter and $2.7 million, or 36.2%, for the year ended December 31, 2021 compared to the comparable periods in the prior year. Interchange fee income increased $260 thousand for the quarter and $1.2 million for the year ended December 31, 2021 compared to the comparable periods in the prior year, due to increased customer activity. Mortgage servicing fees increased $299 thousand for the quarter and $1.2 million for the year ended December 31, 2021 compared to the comparable period in the prior year, driven by an increase in retained servicing associated with elevated mortgage volume and reduced amortization due to decreased refinance activity and lower prepayment assumptions.

Other income decreased $928 thousand, or 47.9%, for the quarter and $1.5 million, or 24.7%, for the year ended December 31, 2021 compared to comparable periods in the prior year. Fees on risk participation agreements for interest rate swaps decreased $1.2 million and $3.5 million during the quarter and year ended December 31, 2021, respectively, compared to comparable periods in the prior year driven by a decrease in customer demand. Gain on the sale of SBA loans increased $354 thousand and $1.3 million during the quarter and year ended December 31, 2021, respectively, compared to comparable periods in the prior year. This increase was reflective of the Corporation's continued commitment to delivering comprehensive financial solutions to small businesses through the expansion of the SBA lending team during the first half of 2021. Other income also increased $347 thousand driven by an increase in the fair value of equity securities during the year ended December 31, 2021 compared to the year ended December 31, 2020.

Noninterest Expense
Noninterest expense for the quarter ended December 31, 2021 was $43.3 million, an increase of $1.6 million, or 3.8%, from the comparable period in the prior year. Noninterest expense for the year ended December 31, 2021 was $167.4 million, an increase of $12.4 million, or 8.0%, from the prior year.

Salaries, benefits and commissions increased $3.8 million, or 15.9%, for the quarter and $11.0 million, or 11.8%, for the year ended December 31, 2021 compared to the comparable periods in the prior year. These increases reflect our continued investment in revenue producing staff across all business lines and annual merit increases. The Corporation modified the vesting criteria for performance-based restricted stock grants in 2020 to better reflect the operating environment, which resulted in a benefit of $928 thousand in salaries, benefits and commissions in the fourth quarter of 2020. Additionally, variable incentive compensation expenses increased $999 thousand and $3.6 million for the quarter and year ended December 31, 2021, respectively, from the comparable periods in the prior year, due to increased profitability.

Professional fees increased $314 thousand, or 21.9%, for the quarter and $2.3 million, or 44.0%, for the year ended December 31, 2021 compared to the comparable periods in the prior year, primarily attributable to increased consultant fees in support of our Diversity, Equity and Inclusion program, training initiatives and treasury management product enhancements. During 2021, we spent $1.5 million on these initiatives. These expenses are not expected to re-occur in subsequent periods. Data processing expenses increased $394 thousand, or 13.3%, for the quarter and $1.4 million, or 12.4%, for the year ended December 31, 2021 compared to the comparable periods in the prior year, primarily due to continued investments in our end-to-end loan origination solution for loans below $1.0 million, customer relationship management software, internal infrastructure improvements and outsourced data processing solutions.

Restructuring charges decreased $1.4 million for the quarter and year ended December 31, 2021 compared to the comparable periods in the prior year. These charges relate to the Corporation's financial center optimization plan announced in the fourth quarter of 2020. Other expense decreased $1.3 million, or 18.1%, for the quarter and $961 thousand, or 4.1%, for the year ended December 31, 2021 compared to the comparable periods in the prior year, primarily driven by extinguishment of long-term debt expense of $1.1 million and $1.8 million for the quarter and year ended December 31, 2020, respectively, offset primarily by increases in interchange expense driven by increased customer activity.

Asset Quality and Provision for Credit Losses
Nonperforming assets were $34.0 million at December 31, 2021, compared to $37.1 million at September 30, 2021 and $40.5 million at December 31, 2020.

Net loan and lease recoveries were $243 thousand during the fourth quarter of 2021 compared to net loan and lease charge-offs of $618 thousand for the same period in the prior year. The provision for credit losses was $1.4 million for the fourth quarter of 2021, of which $788 thousand (after-tax expense of $623 thousand), or $0.02 diluted earnings per share, was attributable to unfavorable changes in economic-related assumptions within the Corporation’s CECL model and $1.3 million was attributable to an increase in reserves for loans. These increases were offset by a decrease of $681 thousand in reserves for unfunded commitments and investment securities. The reversal of provision for credit losses was $8.7 million for the comparable period in the prior year, due to a reserve decrease of $8.2 million related to loans and leases and $690 thousand related to unfunded commitments, offset by a reserve increase of $176 thousand related to investment securities. $11.6 million (after-tax benefit of $9.2 million), or $0.31 diluted earnings per share, of the $8.7 million reversal of provision for credit losses was attributable to changes in economic-related assumptions within the Corporation’s CECL model.

Net loan and lease charge-offs were $213 thousand for the year ended December 31, 2021 compared to $4.6 million for the same period in the prior year. The reversal of provision for credit losses was $10.1 million for the year ended December 31, 2021, of which $17.9 million (after-tax benefit of $14.2 million), or $0.48 diluted earnings per share, was attributable to favorable changes in economic-related assumptions within the Corporation’s CECL model partially offset by a $7.4 million increase in reserves for loans. The provision for credit losses was $40.8 million for the prior year due to a reserve increase of $39.4 million related to loans and leases, $786 thousand related to reserves for unfunded commitments, and $569 thousand related to investment securities. $27.4 million (after-tax charge of $21.6 million), or $0.74 diluted earnings per share, of the $40.8 million of provision for credit losses was attributable to changes in economic-related assumptions within the Corporation’s CECL model.

The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment was 1.35% at December 31, 2021, compared to 1.34% at September 30, 2021, and 1.56% at December 31, 2020. The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment, excluding PPP loans1, was 1.36% at December 31, 2021 compared to 1.36% at September 30, 2021 and 1.72% at December 31, 2020.

Tax Provision
The effective income tax rate was 19.7% for the year ended December 31, 2021 compared to an effective income tax rate of 17.5% for the year ended December 31, 2020. The effective tax rate for the year ended December 31, 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 January 26, 2022, Univest declared a quarterly cash dividend of $0.20 per share. The dividend will be paid on February 23, 2022 to shareholders of record as of February 9, 2022.

Conference Call
Univest will host a conference call to discuss fourth quarter and year end 2021 results on Thursday, January 27, 2022 at 9:00 a.m. EST. Participants may preregister at https://www.incommglobalevents.com/registration/q4inc/9616/univest-financial-corporation-to-hold-fourth-quarter-and-year-end-2021-earnings-call/. The general public can access the call by dialing 1-844-200-6205; using Access Code 454983. A replay of the conference call will be available through February 28, 2022 by dialing 1-866-813-9403; using Access Code: 298990.

1Non-GAAP metric. A reconciliation of this and other non-GAAP financial 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 $7.1 billion in assets and $4.9 billion in assets under management and supervision through its Wealth Management lines of business at December 31, 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 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 strategies 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) changes in economic conditions nationally and in our market; (5) economic assumptions that may impact our allowance for credit losses calculation; (6) legislative, regulatory or tax changes that may adversely affect businesses; (7) technological issues that may adversely affect our operations or those of our customers; (8) changes in the securities markets or (9) risk factors mentioned in the reports and registration statements Univest files with the Securities and Exchange Commission.

Additionally, it is difficult to predict the full impact of the COVID-19 pandemic on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated. 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 economic conditions worsen, loan delinquencies, problem assets, and foreclosures may increase and our allowance for credit losses may have to be increased; (3) collateral for loans, especially real estate, may decline in value; (4) the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; (5) 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; (6) our wealth management revenues may decline with continuing market turmoil; (7) 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; and (8) our cyber security risks are increased as the result of an increase in the number of employees working remotely. Univest undertakes no obligation to revise these forward-looking statements or to reflect events or circumstances after the date of this press release.

(UVSP - ER)

 
Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
December 31, 2021
(Dollars in thousands)              
               
Balance Sheet (Period End) 12/31/21 09/30/21 06/30/21 03/31/21 12/31/20    
Assets $7,122,421  $6,979,852  $6,356,305  $6,416,665  $6,336,496     
Cash and cash equivalents  890,150   902,357   203,449   187,317   219,858     
Investment securities, net of allowance for credit losses  496,989   393,377   397,426   377,506   373,176     
Loans held for sale  21,600   29,093   27,322   22,636   37,039     
Loans and leases held for investment, gross  5,310,017   5,252,045   5,327,313   5,415,006   5,306,841     
Allowance for credit losses, loans and leases  71,924   70,146   71,355   71,497   83,044     
Loans and leases held for investment, net  5,238,093   5,181,899   5,255,958   5,343,509   5,223,797     
Total deposits  6,055,124   5,938,154   5,318,704   5,311,592   5,242,715     
Noninterest-bearing deposits  2,065,423   1,861,007   1,872,031   1,857,547   1,690,663     
Interest-bearing demand, money market and savings  3,505,535   3,583,107   2,954,450   2,979,834   2,988,277     
Time deposits  484,166   494,040   492,223   474,211   563,775     
Borrowings  213,980   207,898   218,970   295,293   311,421     
Shareholders' equity  773,794   756,023   739,998   722,455   692,472     
               
               
Balance Sheet (Average) For the three months ended, For the twelve months ended,
  12/31/21 09/30/21 06/30/21 03/31/21 12/31/20 12/31/21 12/31/20
Assets $7,088,289  $6,698,177  $6,443,629  $6,383,463  $6,353,519  $6,655,443  $6,006,877 
Investment securities, net of allowance for credit losses  469,588   395,280   385,694   374,369   369,511   406,463   402,011 
Loans and leases, gross  5,255,279   5,320,411   5,389,110   5,325,897   5,253,720   5,322,475   4,888,801 
Deposits  6,041,798   5,666,725   5,351,089   5,296,147   5,222,452   5,591,195   4,850,890 
Shareholders' equity  762,334   746,185   728,750   699,736   676,426   734,456   668,201 
               
               
Asset Quality Data (Period End)               
  12/31/21 09/30/21 06/30/21 03/31/21 12/31/20    
Nonaccrual loans and leases, including nonaccrual troubled debt restructured              
loans and leases and nonaccrual loans held for sale $33,210  $34,528  $37,466  $29,996  $31,692     
Accruing loans and leases 90 days or more past due  498   2,204   750   664   1,392     
Accruing troubled debt restructured loans and leases  51   51   52   52   53     
Total nonperforming loans and leases  33,759   36,783   38,268   30,712   33,137     
Other real estate owned  279   279   279   7,481   7,355     
Total nonperforming assets $34,038  $37,062  $38,547  $38,193  $40,492     
Nonaccrual loans and leases / Loans and leases held for investment and nonaccrual loans held for sale  0.63%  0.66%  0.70%  0.55%  0.60%    
Nonperforming loans and leases / Loans and leases held for investment  0.64%  0.70%  0.72%  0.57%  0.62%    
Nonperforming assets / Total assets  0.48%  0.53%  0.61%  0.60%  0.64%    
               
Allowance for credit losses, loans and leases $71,924  $70,146  $71,355  $71,497  $83,044     
Allowance for credit losses, loans and leases / Loans and leases held for investment  1.35%  1.34%  1.34%  1.32%  1.56%    
Allowance for credit losses, loans and leases / Loans and leases held for investment, excluding Paycheck Protection Program loans (1)  1.36%  1.36%  1.41%  1.46%  1.72%    
Allowance for credit losses, loans and leases / Nonaccrual loans and leases held for investment  216.57%  203.16%  212.97%  238.36%  262.03%    
Allowance for credit losses, loans and leases / Nonperforming loans and leases held for investment  213.05%  190.70%  208.00%  232.80%  250.61%    
               
  For the three months ended, For the twelve months ended,
  12/31/21 09/30/21 06/30/21 03/31/21 12/31/20 12/31/21 12/31/20
Net loan and lease (recoveries) charge-offs $(243) $(75) $243  $288  $618  $213  $4,648 
Net loan and lease (recoveries) charge-offs (annualized)/Average loans and leases  (0.02%)  (0.01%)  0.02%  0.02%  0.05%  0.00%  0.10%
               
(1) Non-GAAP metric. A reconciliation of this and other non-GAAP financial measures is included at the end of this document. 
               


Univest Financial Corporation 
Consolidated Selected Financial Data (Unaudited) 
December 31, 2021 
(Dollars in thousands, except per share data)               
  For the three months ended, For the twelve months ended, 
For the period: 12/31/21 09/30/21 06/30/21 03/31/21 12/31/20 12/31/21 12/31/20 
Interest income $52,262 $53,571  $52,441  $51,457  $51,334  $209,731  $203,945 
Interest expense  4,737  4,884   5,684   6,043   6,813   21,348   29,584 
Net interest income  47,525  48,687   46,757   45,414   44,521   188,383   174,361 
Provision (reversal of provision) for credit losses  1,392  (182)  (59)  (11,283)  (8,721)  (10,132)  40,794 
Net interest income after provision for credit losses  46,133  48,869   46,816   56,697   53,242   198,515   133,567 
Noninterest income:               
Trust fee income  2,086  2,126   2,157   2,034   1,974   8,403   7,703 
Service charges on deposit accounts  1,486  1,422   1,314   1,282   1,371   5,504   4,845 
Investment advisory commission and fee income  4,885  4,796   4,558   4,697   4,144   18,936   15,944 
Insurance commission and fee income  3,726  3,837   3,839   4,955   3,512   16,357   16,087 
Other service fee income  2,759  2,576   2,748   2,192   2,092   10,275   7,543 
Bank owned life insurance income  719  925   1,620   717   733   3,981   2,940 
Net gain on sales of investment securities  5  21   54   65   54   145   871 
Net gain on mortgage banking activities  2,518  3,224   3,461   5,938   4,323   15,141   16,442 
Other income  1,008  1,625   479   1,370   1,936   4,482   5,953 
Total noninterest income  19,192  20,552   20,230   23,250   20,139   83,224   78,328 
Noninterest expense:               
Salaries, benefits and commissions  27,374  26,641   25,396   24,780   23,613   104,191   93,208 
Net occupancy  2,477  2,525   2,656   2,739   2,697   10,397   10,358 
Equipment  985  1,000   968   946   951   3,899   3,841 
Data processing  3,355  3,274   3,064   3,050   2,961   12,743   11,333 
Professional fees  1,750  2,174   2,015   1,748   1,436   7,687   5,338 
Marketing and advertising  683  539   561   280   575   2,063   1,975 
Deposit insurance premiums  698  765   613   636   765   2,712   2,591 
Intangible expenses  267  214   249   249   282   979   1,216 
Restructuring charges  -  -   -   -   1,439   -   1,439 
Other expense  5,746  6,116   5,764   5,112   7,015   22,738   23,699 
Total noninterest expense  43,335  43,248   41,286   39,540   41,734   167,409   154,998 
Income before taxes  21,990  26,173   25,760   40,407   31,647   114,330   56,897 
Income tax expense  4,578  5,262   4,885   7,804   5,773   22,529   9,981 
Net income $17,412 $20,911  $20,875  $32,603  $25,874  $91,801  $46,916 
Net income per share:               
Basic $0.59 $0.71  $0.71  $1.11  $0.88  $3.12  $1.60 
Diluted $0.59 $0.71  $0.71  $1.11  $0.88  $3.11  $1.60 
Dividends declared per share $0.20 $0.20  $0.20  $0.20  $-  $0.80  $0.60 
Weighted average shares outstanding  29,471,304  29,420,256   29,389,525   29,327,432   29,274,915   29,402,845   29,243,773 
Period end shares outstanding  29,500,542  29,438,402   29,411,731   29,379,575   29,295,052   29,500,542   29,295,052 
                


Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
December 31, 2021
               
  For the three months ended, For the twelve months ended,
Profitability Ratios (annualized) 12/31/21 09/30/21 06/30/21 03/31/21 12/31/20 12/31/21 12/31/20
               
Return on average assets  0.97%  1.24%  1.30%  2.07%  1.62%  1.38%  0.78%
Return on average assets, excluding restructuring 0.97%  1.24%  1.30%  2.07%  1.69%  1.38%  0.80%
charges (1)              
Return on average shareholders' equity  9.06%  11.12%  11.49%  18.90%  15.22%  12.50%  7.02%
Return on average shareholders' equity, excluding 9.06%  11.12%  11.49%  18.90%  15.89%  12.50%  7.19%
restructuring charges (1)              
Return on average tangible common equity (1)  11.79%  14.51%  15.11%  25.20%  20.54%  16.41%  9.52%
Return on average tangible common equity, excluding 11.79%  14.51%  15.11%  25.20%  21.44%  16.41%  9.76%
restructuring charges (1)              
Net interest margin (FTE)  2.86%  3.11%  3.15%  3.12%  3.02%  3.06%  3.16%
Efficiency ratio (2)  64.3%  61.8%  60.7%  57.0%  63.8%  60.9%  60.6%
Efficiency ratio, excluding restructuring charges (1) (2) 64.3%  61.8%  60.7%  57.0%  61.6%  60.9%  60.0%
               
Capitalization Ratios              
               
Dividends declared to net income (3)  33.9%  28.1%  28.2%  18.0%  0.0%  25.6%  37.4%
Shareholders' equity to assets (Period End)  10.86%  10.83%  11.64%  11.26%  10.93%  10.86%  10.93%
Tangible common equity to tangible assets (1)  8.56%  8.55%  9.15%  8.77%  8.40%  8.56%  8.40%
Common equity book value per share $26.23  $25.68  $25.16  $24.59  $23.64  $26.23  $23.64 
Tangible common equity book value per share (1)$20.14  $19.75  $19.22  $18.64  $17.66  $20.14  $17.66 
               
Regulatory Capital Ratios (Period End)               
Tier 1 leverage ratio  9.13%  9.53%  9.64%  9.45%  9.08%  9.13%  9.08%
Common equity tier 1 risk-based capital ratio  11.08%  11.15%  11.04%  11.08%  10.76%  11.08%  10.76%
Tier 1 risk-based capital ratio  11.08%  11.15%  11.04%  11.08%  10.76%  11.08%  10.76%
Total risk-based capital ratio  13.77%  13.87%  13.82%  15.13%  15.31%  13.77%  15.31%
               
(1) Non-GAAP metric. A reconciliation of this and other non-GAAP financial 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 BasisDecember 31, 2021 September 30, 2021 
 AverageIncome/Average AverageIncome/Average 
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate 
Assets:        
Interest-earning deposits with other banks$914,287 $3700.16%$530,191 $1890.14%
U.S. government obligations 6,999  372.10  6,999  362.04 
Obligations of state and political subdivisions 2,334  193.23  2,992  243.18 
Other debt and equity securities 460,255  1,8451.59  385,289  1,5161.56 
Federal Home Loan Bank, Federal Reserve Bank and other stock 28,402  3755.24  26,713  3344.96 
Total interest-earning deposits, investments and other interest-earning assets 1,412,277  2,6460.74  952,184  2,0990.87 
         
Commercial, financial, and agricultural loans 869,471  7,0223.20  880,986  7,4123.34 
Paycheck Protection Program loans 53,745  1,56811.57  162,611  4,16210.15 
Real estate—commercial and construction loans 2,826,720  26,6693.74  2,784,398  25,6343.65 
Real estate—residential loans 1,107,911  10,1653.64  1,100,799  10,1713.67 
Loans to individuals 26,462  2493.73  26,048  2533.85 
Municipal loans and leases 245,038  2,5154.07  247,603  2,5044.01 
Lease financings 125,932  1,9516.15  117,966  1,8566.24 
Gross loans and leases 5,255,279  50,1393.79  5,320,411  51,9923.88 
Total interest-earning assets 6,667,556  52,7853.14  6,272,595  54,0913.42 
Cash and due from banks 54,958     59,642    
Allowance for credit losses, loans and leases (71,020)    (72,606)   
Premises and equipment, net 56,087     55,685    
Operating lease right-of-use assets 31,048     31,998    
Other assets 349,660     350,863    
Total assets$7,088,289    $6,698,177    
         
Liabilities:        
Interest-bearing checking deposits$939,478 $4930.21%$857,098 $5370.25%
Money market savings 1,616,890  9680.24  1,382,832  9220.26 
Regular savings 997,814  2530.10  998,568  2810.11 
Time deposits 487,434  1,3701.12  496,702  1,4901.19 
Total time and interest-bearing deposits 4,041,616  3,0840.30  3,735,200  3,2300.34 
         
Short-term borrowings 14,144  10.03  15,116  20.05 
Long-term debt 95,000  3251.36  95,000  3241.35 
Subordinated notes 98,833  1,3275.33  98,754  1,3285.34 
Total borrowings 207,977  1,6533.15  208,870  1,6543.14 
Total interest-bearing liabilities 4,249,593  4,7370.44  3,944,070  4,8840.49 
Noninterest-bearing deposits 2,000,182     1,931,525    
Operating lease liabilities 34,114     35,094    
Accrued expenses and other liabilities 42,066     41,303    
Total liabilities 6,325,955     5,951,992    
         
Shareholders' Equity:        
Common stock 157,784     157,784    
Additional paid-in capital 298,508     297,482    
Retained earnings and other equity 306,042     290,919    
Total shareholders' equity 762,334     746,185    
Total liabilities and shareholders' equity$7,088,289    $6,698,177    
Net interest income $48,048   $49,207  
         
Net interest spread  2.70   2.93 
Effect of net interest-free funding sources  0.16   0.18 
Net interest margin  2.86%  3.11%
Ratio of average interest-earning assets to average interest-bearing liabilities 156.90%    159.04%   
         
Note 1: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been 
included in the average loan balances. Tax-equivalent amounts for the three months ended December 31, 2021 and September 30, 2021 have
been calculated using the Corporation’s federal applicable rate of 21.0%. 
         


Univest Financial Corporation 
Average Balances and Interest Rates (Unaudited) 
  For the Three Months Ended December 31,   
Tax Equivalent Basis 2021   2020  
 AverageIncome/Average AverageIncome/Average 
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate 
Assets:        
Interest-earning deposits with other banks$914,287 $3700.16%$296,258 $820.11%
U.S. government obligations 6,999  372.10  6,998  362.05 
Obligations of state and political subdivisions 2,334  193.23  14,269  1293.60 
Other debt and equity securities 460,255  1,8451.59  348,244  1,2371.41 
Federal Home Loan Bank, Federal Reserve Bank and other stock 28,402  3755.24  29,838  4385.84 
Total interest-earning deposits, investments and other interest-earning assets 1,412,277  2,6460.74  695,607  1,9221.10 
         
Commercial, financial, and agricultural loans 869,471  7,0223.20  824,374  7,3663.55 
Paycheck Protection Program loans 53,745  1,56811.57  497,035  3,1332.51 
Real estate—commercial and construction loans 2,826,720  26,6693.74  2,518,056  24,3883.85 
Real estate—residential loans 1,107,911  10,1653.64  1,025,818  10,3454.01 
Loans to individuals 26,462  2493.73  27,427  2894.19 
Municipal loans and leases 245,038  2,5154.07  258,627  2,7764.27 
Lease financings 125,932  1,9516.15  102,383  1,6906.57 
Gross loans and leases 5,255,279  50,1393.79  5,253,720  49,9873.79 
Total interest-earning assets 6,667,556  52,7853.14  5,949,327  51,9093.47 
Cash and due from banks 54,958     53,360    
Allowance for credit losses, loans and leases (71,020)    (92,766)   
Premises and equipment, net 56,087     55,653    
Operating lease right-of-use assets 31,048     34,272    
Other assets 349,660     353,673    
Total assets$7,088,289    $6,353,519    
         
Liabilities:        
Interest-bearing checking deposits$939,478 $4930.21%$838,323 $5370.25%
Money market savings 1,616,890  9680.24  1,213,585  8980.29 
Regular savings 997,814  2530.10  905,918  3410.15 
Time deposits 487,434  1,3701.12  582,782  2,0341.39 
Total time and interest-bearing deposits 4,041,616  3,0840.30  3,540,608  3,8100.43 
         
Short-term borrowings 14,144  10.03  15,091  20.05 
Long-term debt 95,000  3251.36  169,623  6111.43 
Subordinated notes 98,833  1,3275.33  193,244  2,3904.92 
Total borrowings 207,977  1,6533.15  377,958  3,0033.16 
Total interest-bearing liabilities 4,249,593  4,7370.44  3,918,566  6,8130.69 
Noninterest-bearing deposits 2,000,182     1,681,844    
Operating lease liabilities 34,114     37,616    
Accrued expenses and other liabilities 42,066     39,067    
Total liabilities 6,325,955     5,677,093    
         
Shareholders' Equity:        
Common stock 157,784     157,784    
Additional paid-in capital 298,508     296,810    
Retained earnings and other equity 306,042     221,832    
Total shareholders' equity 762,334     676,426    
Total liabilities and shareholders' equity$7,088,289    $6,353,519    
Net interest income $48,048   $45,096  
         
Net interest spread  2.70   2.78 
Effect of net interest-free funding sources  0.16   0.24 
Net interest margin  2.86%  3.02%
Ratio of average interest-earning assets to average interest-bearing liabilities 156.90%    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 three months ended December 31, 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 Twelve Months Ended December 31, 
Tax Equivalent Basis  2021    2020  
 AverageIncome/Average AverageIncome/Average 
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate 
Assets:        
Interest-earning deposits with other banks$476,351 $6610.14%$274,372 $5740.21%
U.S. government obligations 6,999  1442.06  7,132  1452.03 
Obligations of state and political subdivisions 5,702  2063.61  23,065  8253.58 
Other debt and equity securities 393,762  5,9921.52  371,814  7,6972.07 
Federal Home Loan Bank, Federal Reserve Bank and other stock 26,844  1,4175.28  29,726  1,7465.87 
Total interest-earning deposits, investments and other interest-earning assets 909,658  8,4200.93  706,109  10,9871.56 
         
Commercial, financial, and agricultural loans 840,133  28,1423.35  817,489  30,6573.75 
Paycheck Protection Program loans 281,484  15,0325.34  342,920  8,0722.35 
Real estate—commercial and construction loans 2,734,259  101,6923.72  2,312,996  94,9624.11 
Real estate—residential loans 1,077,952  40,0453.71  1,007,915  42,0474.17 
Loans to individuals 26,062  1,0183.91  28,792  1,3324.63 
Municipal loans and leases 247,396  10,1474.10  283,495  11,8574.18 
Lease financings 115,189  7,3636.39  95,194  6,4986.83 
Gross loans and leases 5,322,475  203,4393.82  4,888,801  195,4254.00 
Total interest-earning assets 6,232,133  211,8593.40  5,594,910  206,4123.69 
Cash and due from banks 55,724     52,000    
Allowance for credit losses, loans and leases (74,943)    (73,459)   
Premises and equipment, net 55,875     55,888    
Operating lease right-of-use assets 32,758     34,277    
Other assets 353,896     343,261    
Total assets$6,655,443    $6,006,877    
         
Liabilities:        
Interest-bearing checking deposits$850,713 $2,0070.24%$692,049 $2,1730.31%
Money market savings 1,366,762  3,5740.26  1,113,039  5,5510.50 
Regular savings 983,752  1,1140.11  874,366  2,0570.24 
Time deposits 498,638  6,1781.24  572,103  9,8351.72 
Total time and interest-bearing deposits 3,699,865  12,8730.35  3,251,557  19,6160.60 
         
Short-term borrowings 16,552  80.05  86,658  3270.38 
Long-term debt 96,562  1,3181.36  189,410  2,8791.52 
Subordinated notes 137,896  7,1495.18  134,949  6,7625.01 
Total borrowings 251,010  8,4753.38  411,017  9,9682.43 
Total interest-bearing liabilities 3,950,875  21,3480.54  3,662,574  29,5840.81 
Noninterest-bearing deposits 1,891,330     1,599,333    
Operating lease liabilities 36,001     37,557    
Accrued expenses and other liabilities 42,781     39,212    
Total liabilities 5,920,987     5,338,676    
         
Shareholders' Equity:        
Common stock 157,784     157,784    
Additional paid-in capital 297,189     296,023    
Retained earnings and other equity 279,483     214,394    
Total shareholders' equity 734,456     668,201    
Total liabilities and shareholders' equity$6,655,443    $6,006,877    
Net interest income $190,511   $176,828  
         
Net interest spread  2.86   2.88 
Effect of net interest-free funding sources  0.20   0.28 
Net interest margin  3.06%  3.16%
Ratio of average interest-earning assets to average interest-bearing liabilities 157.74%    152.76%   
         
Note 1: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been 
included in the average loan balances. Tax-equivalent amounts for the twelve months ended December 31, 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 December 31, 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 350,373 8.0% $- -%
Animal Production 304,487 7.0   - - 
CRE - 1-4 Family Residential Investment 255,397 5.8   - - 
CRE - Office 235,078 5.4   - - 
CRE - Multi-family 222,488 5.1   - - 
Nursing and Residential Care Facilities 169,708 3.9   - - 
Hotels & Motels (Accommodation) 169,397 3.9   1,437 0.8 
CRE - Industrial / Warehouse 169,329 3.9   - - 
Education 162,776 3.7   - - 
Specialty Trade Contractors 130,418 3.0   - - 
CRE - Mixed-Use - Residential 121,019 2.8   3,405 2.8 
Merchant Wholesalers, Durable Goods 110,675 2.5   - - 
CRE - Medical Office 106,348 2.4   - - 
Homebuilding (tract developers, remodelers) 93,469 2.1   - - 
Real Estate Lenders, Secondary Market Financing 87,389 2.0   - - 
Crop Production 81,704 1.9   - - 
Motor Vehicle and Parts Dealers 78,292 1.8   - - 
Food Manufacturing 75,587 1.7   - - 
Wood Product Manufacturing 70,769 1.6   - - 
Rental and Leasing Services 69,048 1.6   - - 
Administrative and Support Services 66,529 1.5   - - 
Personal and Laundry Services 62,051 1.4   - - 
Food Services and Drinking Places 59,636 1.4   - - 
Fabricated Metal Product Manufacturing 58,924 1.3   - - 
Merchant Wholesalers, Nondurable Goods 57,114 1.3   - - 
Repair and Maintenance 53,820 1.2   - - 
Miniwarehouse / Self-Storage 51,987 1.2   - - 
Religious Organizations, Advocacy Groups 50,432 1.2   - - 
Industries with >$50 million in outstandings$ 3,524,244 80.7% $ 4,842 0.1%
Industries with <$50 million in outstandings$844,505 19.3% $981 0.1%
Total Commercial Loans$ 4,368,749 100.0% $ 5,823 0.1%
         
         
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 540,566    338 0.1%
Real Estate-Home Equity Secured for Personal Purpose 158,909    - - 
Loans to Individuals 25,504    14 0.1 
Lease Financings 184,541    33 - 
Total - Consumer Loans and Lease Financings$909,520   $385 -%
         
Total$ 5,278,269   $ 6,208 0.1%
         
(1) Loan modifications referenced above were made in accordance with Section 4013 of the CARES Act, the Consolidated Appropriations Act, 2021 and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus and therefore were not classified as TDRs as of December 31, 2021.
         


Univest Financial Corporation
Non-GAAP Reconciliation
December 31, 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.
               
  As of or for the three months ended, As of or for the twelve months ended,
  12/31/21 09/30/21 06/30/21 03/31/21 12/31/20 12/31/21 12/31/20
Restructuring charges (a) $-  $-  $-  $-  $1,439  $-  $1,439 
Tax effect of restructuring charges -   -   -   -   (302)  -   (302)
Restructuring charges, net of tax $-  $-  $-  $-  $1,137  $-  $1,137 
               
Shareholders' equity$773,794  $756,023  $739,998  $722,455  $692,472  $773,794  $692,472 
Goodwill (175,510)  (172,559)  (172,559)  (172,559)  (172,559)  (175,510)  (172,559)
Other intangibles (b)  (4,210)  (1,922)  (2,073)  (2,326)  (2,580)  (4,210)  (2,580)
Tangible common equity$594,074  $581,542  $565,366  $547,570  $517,333  $594,074  $517,333 
               
Total assets$7,122,421  $6,979,852  $6,356,305  $6,416,665  $6,336,496  $7,122,421  $6,336,496 
Goodwill (175,510)  (172,559)  (172,559)  (172,559)  (172,559)  (175,510)  (172,559)
Other intangibles (b)  (4,210)  (1,922)  (2,073)  (2,326)  (2,580)  (4,210)  (2,580)
Tangible assets$6,942,701  $6,805,371  $6,181,673  $6,241,780  $6,161,357  $6,942,701  $6,161,357 
               
Average shareholders' equity$762,334  $746,185  $728,750  $699,736  $676,426  $734,456  $668,201 
Average goodwill (173,553)  (172,559)  (172,559)  (172,559)  (172,559)  (172,810)  (172,559)
Average other intangibles (b)  (2,696)  (1,983)  (2,209)  (2,464)  (2,734)  (2,338)  (3,181)
Average tangible common equity$586,085  $571,643  $553,982  $524,713  $501,133  $559,308  $492,461 
               
Net income before taxes$21,990  $26,173  $25,760  $40,407  $31,647  $114,330  $56,897 
Provision for credit losses  1,392   (182)  (59)  (11,283)  (8,721)  (10,132)  40,794 
Pre-tax pre-provision income$23,382  $25,991  $25,701  $29,124  $22,926  $104,198  $97,691 
               
Loans and leases held for investment, gross$5,310,017  $5,252,045  $5,327,313  $5,415,006  $5,306,841  $5,310,017  $5,306,841 
Paycheck Protection Program ("PPP") loans (31,748)  (85,601)  (252,849)  (528,452)  (483,773)  (31,748)  (483,773)
Gross loans and leases excluding PPP loans$5,278,269  $5,166,444  $5,074,464  $4,886,554  $4,823,068  $5,278,269  $4,823,068 
               
Allowance for credit losses, loans and leases$71,924  $70,146  $71,355  $71,497  $83,044  $71,924  $83,044 
Gross loans and leases excluding PPP loans 5,278,269   5,166,444   5,074,464   4,886,554   4,823,068   5,278,269   4,823,068 
Allowance for credit losses, loans and leases as a percentage of gross loans and leases excluding PPP loans 1.36%  1.36%  1.41%  1.46%  1.72%  1.36%  1.72%
               
(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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