Univest Financial Corporation Reports First Quarter Results
04/26/2023 - 04:15 PM
SOUDERTON, Pa., April 26, 2023 (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, announced net income for the quarter ended March 31, 2023 was $21.0 million , or $0.71 diluted earnings per share, compared to net income of $20.3 million , or $0.68 diluted earnings per share, for the quarter ended March 31, 2022.
Loans $116.6 million , or 1.9% (7.6% annualized), from December 31, 2022, primarily due to increases in commercial real estate, residential mortgage loans, and lease financings. Gross loans and leases increased $839.0 million , or 15.5% , from March 31, 2022, primarily due to increases in commercial, commercial real estate, construction, residential mortgage loans, and lease financings.
Deposits and Liquidity $78.9 million , or 1.3% (5.2% annualized), from December 31, 2022, primarily due to decreases in commercial and consumer deposits partially offset by increases in public funds and brokered deposits. Total deposits decreased $213.3 million , or 3.5% , from March 31, 2022, primarily due to decreases in commercial and consumer deposits partially offset by increases in public funds and brokered deposits. While we experienced certain expected outflows during the quarter, we saw net deposit inflows of $81.1 million during the month of March. Noninterest-bearing deposits represented 30.8% of total deposits at March 31, 2023, down from 34.6% at December 31, 2022. At March 31, 2023, uninsured deposits, adjusted to exclude internal accounts and collateralized trust and public funds deposit accounts, represented 27.2% of total deposits.
The Corporation and its subsidiaries had committed borrowing capacity of $3.1 billion at March 31, 2023, of which $1.9 billion was available. The Corporation and its subsidiaries also maintained uncommitted funding sources from correspondent banks of $410.0 million at March 31, 2023, of which $320.0 million was available. Future availability under these uncommitted funding sources is subject to the prerogatives of the granting banks and may be withdrawn at will.
Net Interest Income and Margin $59.3 million for the first quarter of 2023 increased $12.7 million , or 27.1% , from the first quarter of 2022 and decreased $2.6 million , or 4.2% , from the fourth quarter of 2022. The increase in net interest income for the first quarter of 2023 compared to the first quarter of 2022 was largely due to significant loan balance growth and an increase in asset yields, offset by increases in the average balance of borrowings and the cost of funds.
Net interest margin, on a tax-equivalent basis, was 3.58% for the first quarter of 2023, compared to 3.76% for the fourth quarter of 2022 and 2.89% for the first quarter of 2022. Excess liquidity had no impact on net interest margin for the quarter ended March 31, 2023. Excess liquidity reduced net interest margin by approximately one basis point for the quarter ended December 31, 2022 and 33 basis points for the quarter ended March 31, 2022. Excluding the impact of excess liquidity, the net interest margin, on a tax-equivalent basis, was 3.77% for the quarter ended December 31, 2022 and 3.22% for the quarter ended March 31, 2022.
Noninterest Income $19.7 million , a decrease of $790 thousand , or 3.9% , from the comparable period in the prior year.
Net gain on mortgage banking activities decreased $1.3 million , or 67.6% , for the quarter primarily due to a decrease in loan sales and a contraction of gain on sale margins due to the higher interest rate environment in 2023. Investment advisory commission and fee income decreased $400 thousand , or 7.8% , for the quarter ended March 31, 2023, primarily driven by reduced assets under management and supervision due to market volatility.
Insurance commission and fee income increased $917 thousand , or 16.5% , for the quarter ended March 31, 2023, primarily due to increases in premiums for group life and health and commercial lines and an increase in contingent commission income of $651 thousand , which was $1.8 million and $1.2 million for the quarters ended March 31, 2023 and 2022, respectively. Contingent income is largely recognized in the first quarter of the year.
Noninterest Expense $49.5 million , an increase of $4.1 million , or 9.1% , from the comparable period in the prior year.
Salaries, benefits and commissions increased $2.8 million , or 9.8% , for the quarter ended March 31, 2023. This increase reflects our expansion into Maryland and Western Pennsylvania and annual merit increases. Additionally, capitalized compensation decreased by $480 thousand due to reduced loan production.
Data processing expenses increased $462 thousand , or 13.0% , for the quarter ended March 31, 2023, primarily due to our investments in technology in recent years and general price increases incurred in the second half of 2022. Other expense increased $1.0 million , or 16.3% , for the quarter ended March 31, 2023, primarily due to increases in retirement plan costs of $407 thousand , which was primarily driven by the current interest rate environment, and Bank Shares tax expense of $110 thousand driven by year over year growth of the Bank's Shareholders' Equity.
Tax Provision 19.4% for the quarter ended March 31, 2023, compared to an effective income tax rate of 19.3% for the quarter ended March 31, 2022, which were favorably impacted by 7 and 8 basis points, respectively, of discrete tax benefits resulting from equity compensation awards vesting in the respective quarters. Additionally, the effective tax rates for the three months ended March 31, 2023 and 2022 reflected the benefits of tax-exempt income from investments in municipal securities and loans and leases.
Asset Quality and Provision for Credit Losses $32.4 million at March 31, 2023, compared to $33.5 million at December 31, 2022 and $31.4 million at March 31, 2022.
Net loan and lease charge-offs were $2.8 million during the first quarter of 2023 compared to $76 thousand for the quarter ended March 31, 2022. During the first quarter of 2023, $2.4 million of charge-offs were recorded against two existing nonaccrual commercial loans to one borrower. As of December 31, 2022, the allowance for credit losses included a $2.1 million specific reserve for this relationship.
The provision for credit losses was $3.4 million for the first quarter of 2023 compared to a reversal of provision for credit losses of $3.5 million for the quarter ended March 31, 2022. The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment was 1.28% at March 31, 2023 compared to 1.29% at December 31, 2022 and 1.26% at March 31, 2022.
Dividend $0.21 per share to be paid on May 24, 2023 to shareholders of record as of May 10, 2023.
Conference Call https://www.netroadshow.com/events/login?show=c7437c5e&confId=49225
About Univest Financial Corporation $7.4 billion in assets and $4.3 billion in assets under management and supervision through its Wealth Management lines of business at March 31, 2023. 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, prospects 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 financial condition, results, business, prospects or strategies to differ materially from those expressed or implied by the forward-looking statements. These factors include, but are not limited to: (1) competition; (2) inflation and/or changes in interest rates, which may adversely impact our margins and yields, reduce the fair value of our financial instruments, reduce our loan originations or lead to higher operating costs; (3) changes in asset quality, prepayment speeds, loan sale volumes, charge-offs and/or credit loss provisions; (4) changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio; (5) changes in economic conditions nationally and in our market; (6) economic assumptions that may impact our allowance for credit losses calculation; (7) legislative, regulatory, accounting or tax changes; (8) technological issues that may adversely affect our operations or those of our customers; (9) changes in the securities markets; (10) the continuing effects resulting from the COVID-19 pandemic on our business and results of operation; (11) the current or anticipated impact of military conflict, terrorism or other geopolitical events; (12) potential recessionary conditions and/or (13) risk factors mentioned in the reports and registration statements Univest files with the Securities and Exchange Commission.
(UVSP - ER)
Univest Financial Corporation Consolidated Selected Financial Data (Unaudited) March 31, 2023 (Dollars in thousands) Balance Sheet (Period End) 03/31/23 12/31/22 09/30/22 06/30/22 03/31/22 ASSETS Cash and due from banks $ 71,215 $ 84,176 $ 65,859 $ 59,590 $ 57,307 Interest-earning deposits with other banks 67,109 68,623 47,451 35,187 716,474 Cash and cash equivalents 138,324 152,799 113,310 94,777 773,781 Investment securities held-to-maturity 151,347 154,727 159,170 159,808 166,339 Investment securities available for sale, net of allowance for credit losses 367,656 350,256 347,479 351,382 349,994 Investments in equity securities 3,105 2,579 2,994 2,934 2,569 Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost 43,792 33,841 29,475 29,116 26,330 Loans held for sale 5,425 5,037 9,087 8,352 14,521 Loans and leases held for investment 6,239,804 6,123,230 5,849,259 5,661,777 5,400,786 Less: Allowance for credit losses, loans and leases (80,034 ) (79,004 ) (74,929 ) (72,011 ) (68,286 ) Net loans and leases held for investment 6,159,770 - 6,044,226 5,774,330 5,589,766 5,332,500 Premises and equipment, net 52,334 50,939 50,533 50,080 50,429 Operating lease right-of-use assets 31,663 30,059 30,654 30,929 30,498 Goodwill 175,510 175,510 175,510 175,510 175,510 Other intangibles, net of accumulated amortization 11,044 11,384 11,650 11,728 11,784 Bank owned life insurance 128,926 120,297 120,035 120,103 119,398 Accrued interest and other assets 90,095 90,362 83,170 76,328 54,087 Total assets $ 7,358,991 $ 7,222,016 $ 6,907,397 $ 6,700,813 $ 7,107,740 LIABILITIES Noninterest-bearing deposits $ 1,799,225 $ 2,047,263 $ 1,968,422 $ 2,062,538 $ 2,136,467 Interest-bearing deposits: 4,035,432 3,866,263 3,818,554 3,500,510 3,911,465 Total deposits 5,834,657 5,913,526 5,786,976 5,563,048 6,047,932 Short-term borrowings 271,881 197,141 80,711 97,606 18,976 Long-term debt 220,000 95,000 95,000 95,000 95,000 Subordinated notes 148,385 148,260 99,107 99,030 98,952 Operating lease liabilities 34,846 33,153 33,718 33,951 33,566 Accrued expenses and other liabilities 50,726 58,436 57,698 48,253 39,459 Total liabilities 6,560,495 6,445,516 6,153,210 5,936,888 6,333,885 SHAREHOLDERS' EQUITY Common stock, $5 par value: 48,000,000 shares authorized and 31,556,799 shares issued 157,784 157,784 157,784 157,784 157,784 Additional paid-in capital 298,167 300,808 299,791 298,800 297,945 Retained earnings 443,493 428,637 410,942 396,295 389,332 Accumulated other comprehensive loss, net of tax benefit (55,550 ) (62,104 ) (64,985 ) (42,781 ) (31,909 ) Treasury stock, at cost (45,398 ) (48,625 ) (49,345 ) (46,173 ) (39,297 ) Total shareholders’ equity 798,496 776,500 754,187 763,925 773,855 Total liabilities and shareholders’ equity $ 7,358,991 $ 7,222,016 $ 6,907,397 $ 6,700,813 $ 7,107,740 For the three months ended, Balance Sheet (Average) 03/31/23 12/31/22 09/30/22 06/30/22 03/31/22 Assets $ 7,219,211 $ 7,019,381 $ 6,797,466 $ 6,962,401 $ 7,047,980 Investment securities, net of allowance for credit losses 515,880 505,717 517,335 515,741 522,128 Loans and leases, gross 6,164,890 5,979,581 5,752,119 5,520,580 5,344,698 Deposits 5,834,415 5,837,823 5,645,291 5,903,173 5,984,815 Shareholders' equity 789,153 767,192 773,099 771,410 774,358
Univest Financial Corporation Consolidated Summary of Loans by Type and Asset Quality Data (Unaudited) March 31, 2023 (Dollars in thousands) Summary of Major Loan and Lease Categories (Period End) 03/31/23 12/31/22 09/30/22 06/30/22 03/31/22 Commercial, financial and agricultural $ 1,032,753 $ 1,088,928 $ 1,054,940 $ 1,033,712 $ 942,783 Real estate-commercial 3,128,210 3,027,955 2,936,204 2,870,286 2,816,737 Real estate-construction 376,569 381,811 329,915 319,449 285,083 Real estate-residential secured for business purpose 498,505 478,254 443,837 419,652 412,486 Real estate-residential secured for personal purpose 779,557 730,395 685,771 629,144 568,735 Real estate-home equity secured for personal purpose 172,073 176,699 175,843 168,536 160,134 Loans to individuals 28,656 27,873 26,679 27,061 26,249 Lease financings 223,481 211,315 196,070 193,937 188,579 Total loans and leases held for investment, net of deferred income 6,239,804 6,123,230 5,849,259 5,661,777 5,400,786 Less: Allowance for credit losses, loans and leases (80,034 ) (79,004 ) (74,929 ) (72,011 ) (68,286 ) Net loans and leases held for investment $ 6,159,770 $ 6,044,226 $ 5,774,330 $ 5,589,766 $ 5,332,500 Asset Quality Data (Period End) 03/31/23 12/31/22 09/30/22 06/30/22 03/31/22 Nonaccrual loans and leases $ 11,362 $ 13,353 $ 13,620 $ 13,355 $ 30,876 Accruing loans and leases 90 days or more past due 1,996 875 416 2,784 274 Total nonperforming loans and leases 13,358 14,228 14,036 16,189 31,201 Other real estate owned 19,000 19,258 18,960 18,604 279 Total nonperforming assets $ 32,358 $ 33,486 $ 32,996 $ 34,793 $ 31,480 Nonaccrual loans and leases / Loans and leases held for investment 0.18 % 0.22 % 0.23 % 0.24 % 0.57 % Nonperforming loans and leases / Loans and leases held for investment 0.21 % 0.23 % 0.24 % 0.29 % 0.58 % Nonperforming assets / Total assets 0.44 % 0.46 % 0.48 % 0.52 % 0.44 % Allowance for credit losses, loans and leases $ 80,034 $ 79,004 $ 74,929 $ 72,011 $ 68,286 Allowance for credit losses, loans and leases / Loans and leases held for investment 1.28 % 1.29 % 1.28 % 1.27 % 1.26 % Allowance for credit losses, loans and leases / Nonaccrual loans and leases held for investment 704.40 % 591.66 % 550.14 % 539.21 % 221.16 % Allowance for credit losses, loans and leases / Nonperforming loans and leases held for investment 599.15 % 555.27 % 533.83 % 446.19 % 219.22 % For the three months ended, 03/31/23 12/31/22 09/30/22 06/30/22 03/31/22 Net loan and lease charge-offs $ 2,842 $ 908 $ 1,196 $ 1,715 $ 76 Net loan and lease charge-offs (annualized)/Average loans and leases 0.19 % 0.06 % 0.08 % 0.12 % 0.01 %
Univest Financial Corporation Consolidated Selected Financial Data (Unaudited) March 31, 2023 (Dollars in thousands, except per share data) For the three months ended, For the period: 03/31/23 12/31/22 09/30/22 06/30/22 03/31/22 Interest income $ 83,253 $ 77,401 $ 66,877 $ 56,717 $ 51,198 Interest expense 23,936 15,485 8,627 5,246 4,538 Net interest income 59,317 61,916 58,250 51,471 46,660 Provison (reversal of provision) for credit losses 3,387 5,416 3,558 6,674 (3,450 ) Net interest income after provision for credit losses 55,930 56,500 54,692 44,797 50,110 Noninterest income: Trust fee income 1,955 1,808 1,835 1,998 2,102 Service charges on deposit accounts 1,547 1,575 1,522 1,574 1,504 Investment advisory commission and fee income 4,752 5,585 4,199 4,812 5,152 Insurance commission and fee income 6,487 4,424 4,442 4,629 5,570 Other service fee income 3,076 3,236 3,124 3,309 2,756 Bank owned life insurance income 767 1,230 1,153 705 699 Net gain on sales of investment securities - - - - 30 Net gain on mortgage banking activities 625 436 817 1,230 1,929 Other income 471 2,164 867 741 728 Total noninterest income 19,680 20,458 17,959 18,998 20,470 Noninterest expense: Salaries, benefits and commissions 31,014 29,028 29,400 29,133 28,245 Net occupancy 2,727 2,551 2,504 2,422 2,716 Equipment 993 977 968 977 982 Data processing 4,029 4,039 3,901 3,708 3,567 Professional fees 1,941 1,829 2,521 2,844 2,138 Marketing and advertising 371 739 605 693 425 Deposit insurance premiums 1,101 708 662 812 893 Intangible expenses 253 301 309 342 341 Restructuring charges - 184 - - - Other expense 7,100 6,970 5,795 6,440 6,105 Total noninterest expense 49,529 47,326 46,665 47,371 45,412 Income before taxes 26,081 29,632 25,986 16,424 25,168 Income tax expense 5,047 5,796 5,185 3,258 4,851 Net income $ 21,034 $ 23,836 $ 20,801 $ 13,166 $ 20,317 Net income per share: Basic $ 0.72 $ 0.82 $ 0.71 $ 0.45 $ 0.69 Diluted $ 0.71 $ 0.81 $ 0.71 $ 0.45 $ 0.68 Dividends declared per share $ 0.21 $ 0.21 $ 0.21 $ 0.21 $ 0.20 Weighted average shares outstanding 29,312,265 29,251,293 29,290,829 29,490,154 29,542,467 Period end shares outstanding 29,427,696 29,271,915 29,242,451 29,365,775 29,636,425
Univest Financial Corporation Consolidated Selected Financial Data (Unaudited) March 31, 2023 For the three months ended, Profitability Ratios (annualized) 03/31/23 12/31/22 09/30/22 06/30/22 03/31/22 Return on average assets 1.18 % 1.35 % 1.21 % 0.76 % 1.17 % Return on average assets, excluding restructuring charges (1) 1.18 % 1.36 % 1.21 % 0.76 % 1.17 % Return on average shareholders' equity 10.81 % 12.33 % 10.67 % 6.85 % 10.64 % Return on average shareholders' equity, excluding restructuring charges (1) 10.81 % 12.40 % 10.67 % 6.85 % 10.64 % Return on average tangible common equity (1)(3) 14.11 % 16.23 % 14.06 % 9.10 % 14.04 % Return on average tangible common equity, excluding restructuring charges (1)(3) 14.11 % 16.33 % 14.06 % 9.10 % 14.04 % Net interest margin (FTE) 3.58 % 3.76 % 3.67 % 3.19 % 2.89 % Efficiency ratio (2) 62.2 % 56.9 % 60.6 % 66.6 % 67.0 % Efficiency ratio, excluding restructuring charges (1)(2) 62.2 % 56.7 % 60.6 % 66.6 % 67.0 % Capitalization Ratios Dividends declared to net income 29.2 % 25.8 % 29.6 % 47.1 % 29.1 % Shareholders' equity to assets (Period End) 10.85 % 10.75 % 10.92 % 11.40 % 10.89 % Tangible common equity to tangible assets (1) 8.63 % 8.49 % 8.55 % 8.97 % 8.58 % Common equity book value per share $ 27.13 $ 26.53 $ 25.79 $ 26.01 $ 26.11 Tangible common equity book value per share (1) $ 21.07 $ 20.42 $ 19.67 $ 19.91 $ 20.06 Regulatory Capital Ratios (Period End) Tier 1 leverage ratio 9.71 % 9.81 % 9.87 % 9.45 % 9.35 % Common equity tier 1 risk-based capital ratio 10.43 % 10.37 % 10.51 % 10.62 % 11.07 % Tier 1 risk-based capital ratio 10.43 % 10.37 % 10.51 % 10.62 % 11.07 % Total risk-based capital ratio 13.78 % 13.67 % 13.10 % 13.23 % 13.73 %
(1) Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included below.
Univest Financial Corporation Average Balances and Interest Rates (Unaudited) For the Three Months Ended, Tax Equivalent Basis March 31, 2023 December 31, 2022 Average Income/ Average Average Income/ Average (Dollars in thousands) Balance Expense Rate Balance Expense Rate Assets: Interest-earning deposits with other banks $ 47,835 $ 479 4.06 % $ 57,059 $ 487 3.39 % Obligations of state and political subdivisions* 2,286 17 3.02 2,266 17 2.98 Other debt and equity securities 513,594 3,495 2.76 503,451 3,316 2.61 Federal Home Loan Bank, Federal Reserve Bank and other stock 34,742 609 7.11 29,401 493 6.65 Total interest-earning deposits, investments and other interest-earning assets 598,457 4,600 3.12 592,177 4,313 2.89 Commercial, financial, and agricultural loans 991,876 15,538 6.35 1,007,121 14,471 5.70 Real estate—commercial and construction loans 3,342,199 42,421 5.15 3,223,822 39,459 4.86 Real estate—residential loans 1,408,292 15,730 4.53 1,335,220 14,340 4.26 Loans to individuals 27,254 449 6.68 26,772 401 5.94 Municipal loans and leases * 229,955 2,341 4.13 233,684 2,433 4.13 Lease financings 165,314 2,541 6.23 152,962 2,416 6.27 Gross loans and leases 6,164,890 79,020 5.20 5,979,581 73,520 4.88 Total interest-earning assets 6,763,347 83,620 5.01 6,571,758 77,833 4.70 Cash and due from banks 58,035 56,428 Allowance for credit losses, loans and leases (79,977 ) (75,390 ) Premises and equipment, net 51,583 50,803 Operating lease right-of-use assets 31,303 30,413 Other assets 394,920 385,369 Total assets $ 7,219,211 $ 7,019,381 Liabilities: Interest-bearing checking deposits $ 857,891 $ 3,164 1.50 % $ 924,012 $ 2,746 1.18 % Money market savings 1,489,129 11,081 3.02 1,365,502 7,670 2.23 Regular savings 985,716 669 0.28 1,045,261 492 0.19 Time deposits 566,308 3,422 2.45 433,010 1,586 1.45 Total time and interest-bearing deposits 3,899,044 18,336 1.91 3,767,785 12,494 1.32 Short-term borrowings 240,318 2,728 4.60 101,126 852 3.34 Long-term debt 112,222 591 2.14 95,000 324 1.35 Subordinated notes 148,319 2,281 6.24 124,250 1,815 5.80 Total borrowings 500,859 5,600 4.53 320,376 2,991 3.70 Total interest-bearing liabilities 4,399,903 23,936 2.21 4,088,161 15,485 1.50 Noninterest-bearing deposits 1,935,371 2,070,038 Operating lease liabilities 34,438 33,492 Accrued expenses and other liabilities 60,346 60,498 Total liabilities 6,430,058 6,252,189 Total interest-bearing liabilities and noninterest-bearing deposits ("Cost of Funds") 6,335,274 1.53 6,158,199 1.00 Shareholders' Equity: Common stock 157,784 157,784 Additional paid-in capital 300,293 300,121 Retained earnings and other equity 331,076 309,287 Total shareholders' equity 789,153 767,192 Total liabilities and shareholders' equity $ 7,219,211 $ 7,019,381 Net interest income $ 59,684 $ 62,348 Net interest spread 2.80 3.20 Effect of net interest-free funding sources 0.78 0.56 Net interest margin 3.58 % 3.76 % Ratio of average interest-earning assets to average interest-bearing liabilities 153.72 % 160.75 %
* Obligations of states and political subdivisions and municipal loans and leases are tax-exempt earning assets. Notes: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments. Net interest income includes net deferred costs amortization of $465 thousand and $516 thousand for the three months ended March 31, 2023 and December 31, 2022, respectively. 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 March 31, 2023 and December 31, 2022 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 March 31, Tax Equivalent Basis 2023 2022 Average Income/ Average Average Income/ Average (Dollars in thousands) Balance Expense Rate Balance Expense Rate Assets: Interest-earning deposits with other banks $ 47,835 $ 479 4.06 % $ 733,173 $ 357 0.20 % U.S. government obligations - - - 5,222 26 2.02 Obligations of state and political subdivisions* 2,286 17 3.02 2,332 19 3.30 Other debt and equity securities 513,594 3,495 2.76 514,574 2,339 1.84 Federal Home Loan Bank, Federal Reserve Bank and other stock 34,742 609 7.11 27,115 355 5.31 Total interest-earning deposits, investments and other interest-earning assets 598,457 4,600 3.12 1,282,416 3,096 0.98 Commercial, financial, and agricultural loans 991,876 15,538 6.35 919,957 8,162 3.60 Real estate—commercial and construction loans 3,342,199 42,421 5.15 2,904,602 25,820 3.61 Real estate—residential loans 1,408,292 15,730 4.53 1,116,356 9,882 3.59 Loans to individuals 27,254 449 6.68 25,799 238 3.74 Municipal loans and leases* 229,955 2,341 4.13 242,508 2,434 4.07 Lease financings 165,314 2,541 6.23 135,476 2,075 6.21 Gross loans and leases 6,164,890 79,020 5.20 5,344,698 48,611 3.69 Total interest-earning assets 6,763,347 83,620 5.01 6,627,114 51,707 3.16 Cash and due from banks 58,035 53,698 Allowance for credit losses, loans and leases (79,977 ) (72,067 ) Premises and equipment, net 51,583 53,948 Operating lease right-of-use assets 31,303 30,394 Other assets 394,920 354,893 Total assets $ 7,219,211 $ 7,047,980 Liabilities: Interest-bearing checking deposits $ 857,891 $ 3,164 1.50 % $ 881,462 $ 443 0.20 % Money market savings 1,489,129 11,081 3.02 1,542,581 904 0.24 Regular savings 985,716 669 0.28 1,021,550 238 0.09 Time deposits 566,308 3,422 2.45 473,589 1,306 1.12 Total time and interest-bearing deposits 3,899,044 18,336 1.91 3,919,182 2,891 0.30 Short-term borrowings 240,318 2,728 4.60 17,636 2 0.05 Long-term debt 112,222 591 2.14 95,000 317 1.35 Subordinated notes 148,319 2,281 6.24 98,911 1,328 5.45 Total borrowings 500,859 5,600 4.53 211,547 1,647 3.16 Total interest-bearing liabilities 4,399,903 23,936 2.21 4,130,729 4,538 0.45 Noninterest-bearing deposits 1,935,371 2,065,633 Operating lease liabilities 34,438 33,452 Accrued expenses and other liabilities 60,346 43,808 Total liabilities 6,430,058 6,273,622 Total interest-bearing liabilities and noninterest-bearing deposits ("Cost of Funds") 6,335,274 1.53 6,196,362 0.30 Shareholders' Equity: Common stock 157,784 157,784 Additional paid-in capital 300,293 298,975 Retained earnings and other equity 331,076 317,599 Total shareholders' equity 789,153 774,358 Total liabilities and shareholders' equity $ 7,219,211 $ 7,047,980 Net interest income $ 59,684 $ 47,169 Net interest spread 2.80 2.71 Effect of net interest-free funding sources 0.78 0.18 Net interest margin 3.58 % 2.89 % Ratio of average interest-earning assets to average interest-bearing liabilities 153.72 % 160.43 %
* Obligations of states and political subdivisions and municipal loans and leases are tax-exempt earning assets. Notes: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments. Net interest income includes net deferred costs amortization of $465 thousand and $136 thousand for the three months ended March 31, 2023 and 2022, respectively. 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 March 31, 2023 and 2022 have been calculated using the Corporation’s federal applicable rate of 21.0% .
Univest Financial Corporation Loan Portfolio Overview (Unaudited) March 31, 2023 (Dollars in thousands) Industry Description Total Outstanding Balance % of Commercial Loan Portfolio CRE - Retail 443,932 8.8 % Animal Production 341,832 6.8 CRE - Office 308,583 6.1 CRE - Multi-family 294,816 5.8 CRE - 1-4 Family Residential Investment 269,295 5.3 Hotels & Motels (Accommodation) 207,019 4.1 CRE - Industrial / Warehouse 199,372 4.0 Nursing and Residential Care Facilities 165,160 3.3 Homebuilding (tract developers, remodelers) 156,753 3.1 Education 155,441 3.1 Specialty Trade Contractors 149,939 3.0 Merchant Wholesalers, Durable Goods 128,837 2.6 Motor Vehicle and Parts Dealers 123,448 2.5 CRE - Mixed-Use - Residential 111,124 2.2 Crop Production 93,487 1.9 Administrative and Support Services 85,589 1.7 Rental and Leasing Services 79,800 1.6 Wood Product Manufacturing 78,939 1.6 CRE - Mixed-Use - Commercial 78,628 1.6 Real Estate Lenders, Secondary Market Financing 76,798 1.5 Religious Organizations, Advocacy Groups 74,590 1.5 Fabricated Metal Product Manufacturing 70,896 1.4 Merchant Wholesalers, Nondurable Goods 68,129 1.3 Food Services and Drinking Places 66,605 1.3 Food Manufacturing 66,425 1.3 Personal and Laundry Services 64,434 1.3 Amusement, Gambling, and Recreation Industries 61,295 1.2 Repair and Maintenance 56,749 1.1 Miniwarehouse / Self-Storage 56,336 1.1 Private Equity & Special Purpose Entities (excluding Trusts, Estates and Agency Accounts) 54,918 1.1 Truck Transportation 52,263 1.0 Industries with >$50 million in outstandings $ 4,241,432 84.2 % Industries with <$50 million in outstandings $ 794,605 15.8 % Total Commercial Loans $ 5,036,037 100.0 % Consumer Loans and Lease Financings Total Outstanding Balance Real Estate-Residential Secured for Personal Purpose $ 779,557 Real Estate-Home Equity Secured for Personal Purpose 172,073 Loans to Individuals 28,656 Lease Financings 223,481 Total - Consumer Loans and Lease Financings $ 1,203,767 Total $ 6,239,462
Univest Financial Corporation March 31, 2023
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, (Dollars in thousands) 03/31/23 12/31/22 09/30/22 06/30/22 03/31/22 Restructuring charges (a) $ - $ 184 $ - $ - $ - Tax effect of restructuring charges - (39 ) - - - Restructuring charges, net of tax $ - $ 145 $ - $ - $ - Net income $ 21,034 $ 23,836 $ 20,801 $ 13,166 $ 20,317 Amortization of intangibles, net of tax 200 238 244 270 269 Net income before amortization of intangibles $ 21,234 $ 24,074 $ 21,045 $ 13,436 $ 20,586 Shareholders' equity $ 798,496 $ 776,500 $ 754,187 $ 763,925 $ 773,855 Goodwill (175,510 ) (175,510 ) (175,510 ) (175,510 ) (175,510 ) Other intangibles (b) (3,054 ) (3,251 ) (3,485 ) (3,678 ) (3,936 ) Tangible common equity $ 619,932 $ 597,739 $ 575,192 $ 584,737 $ 594,409 Total assets $ 7,358,991 $ 7,222,016 $ 6,907,397 $ 6,700,813 $ 7,107,740 Goodwill (175,510 ) (175,510 ) (175,510 ) (175,510 ) (175,510 ) Other intangibles (b) (3,054 ) (3,251 ) (3,485 ) (3,678 ) (3,936 ) Tangible assets $ 7,180,427 $ 7,043,255 $ 6,728,402 $ 6,521,625 $ 6,928,294 Average shareholders' equity $ 789,153 $ 767,192 $ 773,099 $ 771,410 $ 774,358 Average goodwill (175,510 ) (175,510 ) (175,510 ) (175,510 ) (175,510 ) Average other intangibles (b) (3,137 ) (3,355 ) (3,550 ) (3,791 ) (4,090 ) Average tangible common equity $ 610,506 $ 588,327 $ 594,039 $ 592,109 $ 594,758
(a) Associated with the consolidation of 2 financial centers
