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| 8-K - 8-K - UNIVEST FINANCIAL Corp | uvsp-20200722.htm |
Exhibit 99.1
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CONTACT: Brian J. Richardson
UNIVEST FINANCIAL CORPORATION
Chief Financial Officer
215-721-2446, richardsonb@univest.net
FOR IMMEDIATE RELEASE
UNIVEST FINANCIAL CORPORATION REPORTS SECOND QUARTER RESULTS
SOUDERTON, Pa., July 22, 2020 - 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
1 Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included within this document.
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%2 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.
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.
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2 Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included within this document.
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) | 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | ||||||||||||||||||||||||||||||||||||
| 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, | |||||||||||||||||||||||||||||||||||||||
| 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | 6/30/2020 | 6/30/2019 | |||||||||||||||||||||||||||||||||||
| 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) | |||||||||||||||||||||||||||||||||||||||||
| 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | |||||||||||||||||||||||||||||||||||||
| 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, | ||||||||||||||||||||||||||||||||||||||||
| 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | 6/30/2020 | 6/30/2019 | |||||||||||||||||||||||||||||||||||
| 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: | 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | 6/30/2020 | 6/30/2019 | ||||||||||||||||||||||||||||||||||
| 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) | 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | 6/30/2020 | 6/30/2019 | ||||||||||||||||||||||||||||||||||
| 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 | (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 | $ | 672,647 | $ | 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 | $ | 496,235 | $ | 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 lease 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 adjustment. | |||||||||||||||||||||||||||||||||||||||||
| 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 | — | — | 16.4 | 7.9 | |||||||||||||||||||||||||||||
| CRE - Multi-family | 182.3 | 5.0 | — | — | 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.