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Univest Financial Corporation Reports Year and Fourth Quarter Results

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Univest Financial Corporation
·27 min read
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(Loan Growth (excluding PPP loans1) for 2020 of 9.9%)

SOUDERTON, Pa., Jan. 27, 2021 (GLOBE NEWSWIRE) -- Univest Financial Corporation (“Univest” or the "Corporation") (NASDAQ: UVSP), parent company of Univest Bank and Trust Co. and its insurance, investments and equipment financing subsidiaries, today announced net income for the year ended December 31, 2020 of $46.9 million, or $1.60 diluted earnings per share, compared to net income of $65.7 million, or $2.24 diluted earnings per share, for the year ended December 31, 2019. Net income for the quarter ended December 31, 2020 was $25.9 million, or $0.88 diluted earnings per share, compared to net income of $15.5 million, or $0.53 diluted earnings per share, for the quarter ended December 31, 2019.

Pre-tax pre-provision income1 for the year ended December 31, 2020 was $97.7 million, an increase of $9.1 million, or 10.3%, from the comparable period in the prior year. Pre-tax pre-provision income1 for the quarter ended December 31, 2020 was $22.9 million, an increase of $1.8 million, or 8.6%, from the fourth quarter of 2019.

One-Time Items For the Quarter
The financial results for the quarter ended December 31, 2020 included a $1.4 million ($1.1 million after-tax), or $0.04 diluted earnings per share, restructuring charge associated with the Corporation's previously announced financial service center optimization plan. The financial results for the quarter ended December 31, 2020 also included a charge of $1.1 million ($877 thousand after-tax), or $0.03 diluted earnings per share, in other expense related to the extinguishment of long-term debt. During the fourth quarter of 2020, the Corporation modified the vesting criteria for outstanding performance-based restricted stock grants to better reflect the current operating environment. As a result of these modifications, a benefit of $928 thousand ($733 thousand after-tax), or $0.03 diluted earnings per share, was recognized in salaries, benefits and commissions for the quarter ended December 31, 2020.

COVID-19
As a result of the impact of COVID-19, we have taken various actions to support our customers and the communities we collectively serve, including modifying outstanding loans and leases and waiving certain deposit service charges. Loans and leases that were modified via principal and/or interest deferrals were done so 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 been categorized as troubled debt restructurings. These loans and leases had a combined principal balance of approximately $68.0 million as of December 31, 2020, which represents approximately 1.4% of the loan portfolio, excluding Paycheck Protection Program ("PPP") loans1. 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 December 31, 2020, the Corporation reduced its allowance for credit losses resulting in a reversal of provision for credit loss expense of $8.7 million, of which $11.6 million (after-tax benefit of $9.2 million), or $0.31 diluted earnings per share, was attributable to changes in economic-related assumptions within the Corporation’s CECL model offset by a reserve increase attributable to loan growth. During the year ended December 31, 2020, the Corporation recorded CECL related charges of $40.8 million, of which $27.4 million (after-tax charge of $21.6 million), or $0.74 diluted earnings per share, was attributable to changes in economic related assumptions within the CECL model.

Loans
Gross loans and leases, excluding PPP loans1, increased $436.2 million, or 9.9%, from December 31, 2019 primarily due to increases in commercial real estate loans. Gross loans and leases, excluding PPP loans1, increased $112.8 million, or 9.6% (annualized), from September 30, 2020 primarily due to increases in commercial real estate loans.

Deposits
Total deposits increased $882.6 million, or 20.2%, from December 31, 2019 primarily due to increases in commercial, consumer and public funds deposits. Total deposits increased $31.1 million, or 2.4% (annualized), from September 30, 2020 primarily due to an increase in consumer deposits offset by a decrease in commercial deposits.

Net Interest Income and Margin
Net interest income of $174.4 million for the year ended December 31, 2020 increased $5.1 million, or 3.0%, from the prior year primarily due to lower deposit costs and growth in loans partially offset by a decrease in loan and investment yields. Net interest margin, on a tax-equivalent basis, was 3.16% for the year ended December 31, 2020 compared to 3.59% for the year ended December 31, 2019. Excess liquidity reduced net interest margin by approximately fourteen basis points for the year ended December 31, 2020 compared to eight basis points for the year ended December 31, 2019. This excess liquidity was primarily driven by strong deposit balance growth during 2020. PPP loans reduced net interest margin by seven basis points for the year ended December 31, 2020 compared to no impact for the year ended December 31, 2019. Excluding the impacts of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was 3.37% for the year ended December 31, 2020 compared to 3.67% for the year ended December 31, 2019. For the year ended December 31, 2020, PPP loans contributed $7.9 million to net interest income. As of December 31, 2020, $7.7 million of net deferred fees remained on the balance sheet, which represents approximately 63% of the initial deferred fee amount.

Net interest margin, on a tax-equivalent basis, was 3.02% for the fourth quarter of 2020, compared to 3.02% for the third quarter of 2020 and 3.44% for the fourth quarter of 2019. Excess liquidity reduced net interest margin by approximately thirteen basis points for the quarter ended December 31, 2020 compared to eighteen basis points for the quarter ended September 30, 2020 and twelve basis points for the quarter ended December 31, 2019. This excess liquidity was primarily driven by strong deposit balance growth in 2020. PPP loans reduced net interest margin by seven basis points for the quarter ended December 31, 2020 compared to ten basis points for the quarter ended September 30, 2020 and had no impact for the quarter ended December 31, 2019. Excluding the impacts of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was 3.22%, 3.30% and 3.56% for the quarters ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively. For the quarter ended December 31, 2020, PPP loans contributed $3.1 million to net interest income, of which $369 thousand related to forgiveness activity.

Noninterest Income
Noninterest income for the quarter ended December 31, 2020 was $20.1 million, an increase of $4.0 million, or 24.6%, from the comparable period in the prior year. Noninterest income for the year ended December 31, 2020 was $78.3 million, an increase of $12.9 million, or 19.7%, from the comparable period in the prior year.

Net gain on mortgage banking activities increased $3.3 million, or 316.5%, for the quarter and $12.5 million, or 316.7%, for the year ended December 31, 2020 from the comparable periods in the prior year, due to an increase in volume and expansion of margins.

Other income increased $923 thousand, or 91.1%, for the quarter ended December 31, 2020 and $3.3 million, or 127.3%, for the year ended December 31, 2020 from the comparable periods in the prior year. Fees on risk participation agreements for interest rate swaps increased $1.0 million for the quarter ended December 31, 2020 and $4.4 million for the year ended December 31, 2020 from the comparable periods in the prior year, driven by increased customer activity due to the current rate environment. Gain on sale of small business administration (SBA) loans decreased $482 thousand for the year ended December 31, 2020 from the prior year due to decreased SBA loan sale activity. Equity securities measured at fair value decreased $266 thousand for the year ended December 31, 2020 from the prior year.

Service charges on deposit accounts decreased $1.1 million, or 18.5%, for the year ended December 31, 2020 from the prior year due to the waiving of certain deposit service charges for customers in response to COVID-19 during the second quarter of 2020 and reduced customer activity in the third and fourth quarters of 2020.

Other service fee income decreased $1.8 million, or 19.2%, for the year ended December 31, 2020 from the prior year. Mortgage servicing right amortization increased $1.4 million for the year ended December 31, 2020 from the prior year driven by the decline in interest rates and their impact on prepayment activity. Interchange income decreased $308 thousand for the year ended December 31, 2020 from the prior year due to decreased customer transaction activity.

Noninterest Expense
Noninterest expense for the quarter ended December 31, 2020 was $41.7 million, an increase of $4.3 million, or 11.4%, from the comparable period in the prior year. Noninterest expense for the year ended December 31, 2020 was $155.0 million, an increase of $8.9 million, or 6.1% from the prior year.

Salaries, benefits and commissions increased $1.7 million, or 7.7%, for the quarter ended December 31, 2020 and increased $4.9 million, or 5.6%, for the year ended December 31, 2020 from the comparable periods in the prior year. The increases were 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 quarters of 2019, annual merit increases and increased variable compensation due to strong mortgage banking activity. The increases in salaries, benefits and commissions were offset by the benefit of the previously discussed performance-based restricted stock modifications and $1.3 million of incremental capitalized compensation related to origination of PPP loans. Deposit insurance premiums increased $423 thousand, or 123.7%, for the quarter and $1.8 million, or 232.2%, for the year ended December 31, 2020 from the comparable periods in the prior year primarily due to an FDIC small bank assessment credit of $1.1 million, of which $988 thousand was recognized during the third quarter of 2019 and $114 thousand was recognized during the fourth quarter of 2019, and an increased assessment base for 2020 due to asset growth. Restructuring charges increased $1.4 million for the quarter and year ended December 31, 2020 from the comparable periods in the prior year due to the impact of the financial service center optimization plan discussed previously. Other expense increased $615 thousand, or 9.6%, for the quarter and $1.3 million, or 5.7%, for the year ended December 31, 2020 from the comparable periods in the prior year primarily due to charges from the extinguishment of long-term debt discussed previously.

Asset Quality and Provision for Credit Losses
Nonperforming assets were $40.5 million at December 31, 2020, compared to $41.9 million at September 30, 2020 and $39.3 million at December 31, 2019. Other real estate owned includes a $7.1 million property, which transferred to other real estate owned during the second quarter of 2020. The property is under an agreement of sale and is expected to be sold during the first quarter of 2021.

Net loan and lease charge-offs were $618 thousand during the fourth quarter of 2020 and $4.6 million for the year ended December 31, 2020. The reversal of provision for credit losses was $8.7 million for the fourth quarter of 2020, due to a reserve decrease of $8.2 million related to loans and leases and $690 thousand related to unfunded commitments, offset by a reserve increase of $176 thousand related to investment securities. The provision for credit losses was $40.8 million for the year ended December 31, 2020, of which $39.4 million related to loans and leases, $786 thousand related to reserves for unfunded commitments, and $569 thousand related to investment securities.

Net loan and lease charge-offs were $558 thousand during the fourth quarter of 2019 and $2.6 million for the year ended December 31, 2019. The provision for loan and lease losses was $2.2 million for the fourth quarter of 2019 and $8.5 million for the year ended December 31, 2019.

The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment was 1.56% at December 31, 2020, compared to 1.76% at September 30, 2020, and 0.81% at December 31, 2019. The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment, excluding PPP loans1, was 1.72% at December 31, 2020, compared to 1.95% at September 30, 2020.

Tax Provision
The effective income tax rate was 17.5% for the year ended December 31, 2020 compared to an effective income tax rate of 17.9% for the year ended December 31, 2019. The Corporation's effective income tax rate reflects the benefits of tax-exempt income from investments in municipal securities and loans and leases.

Dividend
On January 27, 2021, Univest declared a quarterly cash dividend of $0.20 per share. The dividend will be paid on February 24, 2021 to shareholders of record as of February 10, 2021.

Conference Call
Univest will host a conference call to discuss fourth quarter and year end 2020 results on Thursday, January 28, 2021 at 9:00 a.m. EST. Participants may preregister at https://dpregister.com/sreg/10150871/e00405b3c0. The general public can access the call by dialing 1-888-338-6515. A replay of the conference call will be available through February 28, 2021 by dialing 1-877-344-7529; using Conference ID: 10150871.

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

About Univest Financial Corporation
Univest Financial Corporation (UVSP), including its wholly-owned subsidiary Univest Bank and Trust Co., Member FDIC, has approximately $6.3 billion in assets and $4.1 billion in assets under management and supervision through its Wealth Management lines of business at December 31, 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 York, as well as in New Jersey and Maryland and online at www.univest.net.

This press release of Univest and the reports Univest files with the Securities and Exchange Commission often contain "forward-looking statements" relating to trends or factors affecting the financial services industry and, specifically, the financial condition and results of operations, markets and products of Univest. These forward-looking statements involve certain risks and uncertainties in that there are a number of important factors that could cause Univest's future results to differ materially from those expressed or implied by the forward-looking statements. These factors include, but are not limited to: (1) competition; (2) changes in interest rates; (3) changes in asset quality, prepayment speeds, loan sale volumes, charge-offs and credit loss provisions; (4) general economic conditions; (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.

Additionally, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and whether the gradual reopening of businesses will result in a meaningful increase in economic activity. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: (1) demand for our products and services may decline; (2) if the economy is unable to substantially reopen, and higher levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase; (3) collateral for loans, especially real estate, may decline in value; (4) our allowance for credit losses may have to be increased if borrowers experience financial difficulties; (5) the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; (6) 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; (7) 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; (8) our wealth management revenues may decline with continuing market turmoil; (9) 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; (10) our cyber security risks are increased as the result of an increase in the number of employees working remotely; (11) Federal Deposit Insurance Corporation premiums may increase if the agency experience additional resolution costs; and (12) further and sustained decline in our stock price or other triggering event could result in an impairment charge being recorded. Univest undertakes no obligation to revise these forward-looking statements or to reflect events or circumstances after the date of this press release.

(UVSP - ER)



Univest Financial Corporation

Consolidated Selected Financial Data (Unaudited)

December 31, 2020

(Dollars in thousands)

Balance Sheet (Period End)

12/31/20

09/30/20

06/30/20

03/31/20

12/31/19

Assets

$

6,336,496

$

6,382,831

$

6,125,312

$

5,464,768

$

5,380,924

Investment securities, net of allowance for credit losses

373,176

368,830

397,852

423,521

441,599

Loans held for sale

35,529

14,465

31,082

11,417

5,504

Loans and leases held for investment, gross

5,306,841

5,211,856

4,951,809

4,448,825

4,386,836

Allowance for credit losses, loans and leases

83,044

91,870

86,217

68,216

35,331

Loans and leases held for investment, net

5,223,797

5,119,986

4,865,592

4,380,609

4,351,505

Total deposits

5,242,715

5,211,603

4,869,329

4,407,303

4,360,075

Noninterest-bearing deposits

1,690,663

1,714,505

1,725,819

1,318,270

1,279,681

NOW, money market and savings

2,988,277

2,940,879

2,623,025

2,452,021

2,474,384

Time deposits

563,775

556,219

520,485

637,012

606,010

Borrowings

311,421

416,104

515,722

323,363

263,596

Shareholders' equity

692,472

669,107

654,873

651,551

675,122

Balance Sheet (Average)

For the three months ended,

For the twelve months ended,

12/31/20

09/30/20

06/30/20

03/31/20

12/31/19

12/31/20

12/31/19

Assets

$

6,353,519

$

6,265,605

$

6,000,790

$

5,409,561

$

5,400,591

$

6,006,877

$

5,224,583

Investment securities, net of allowance for credit losses

369,511

385,221

411,957

441,900

445,932

402,011

461,841

Loans and leases, gross

5,253,720

5,070,037

4,836,858

4,388,584

4,280,430

4,888,801

4,148,619

Deposits

5,222,452

5,030,398

4,794,669

4,349,984

4,374,586

4,850,890

4,186,339

Shareholders' equity

676,426

661,947

660,950

673,460

672,647

668,201

652,453

Asset Quality Data (Period End)

12/31/20

09/30/20

06/30/20

03/31/20

12/31/19

Nonaccrual loans and leases, including nonaccrual troubled debt restructured

loans and leases

$

31,692

$

30,019

$

26,141

$

36,626

$

38,578

Accruing loans and leases 90 days or more past due

1,392

3,573

1,193

1,777

143

Accruing troubled debt restructured loans and leases

53

53

53

54

54

Total nonperforming loans and leases

33,137

33,645

27,387

38,457

38,775

Other real estate owned

7,355

8,270

8,642

516

516

Total nonperforming assets

$

40,492

$

41,915

$

36,029

$

38,973

$

39,291

Nonaccrual loans and leases / Loans and leases held for investment

0.60

%

0.58

%

0.53

%

0.82

%

0.88

%

Nonperforming loans and leases / Loans and leases held for investment

0.62

%

0.65

%

0.55

%

0.86

%

0.88

%

Nonperforming assets / Total assets

0.64

%

0.66

%

0.59

%

0.71

%

0.73

%

Allowance for credit losses, loans and leases

$

83,044

$

91,870

$

86,217

$

68,216

$

35,331

Allowance for credit losses, loans and leases / Loans and leases held for investment

1.56

%

1.76

%

1.74

%

1.53

%

0.81

%

Allowance for credit losses, loans and leases / Loans and leases held for investment, excluding Paycheck Protection Program loans (1)

1.72

%

1.95

%

1.94

%

1.53

%

0.81

%

Allowance for credit losses, loans and leases / Nonaccrual loans and leases held for investment

262.03

%

306.04

%

329.82

%

186.25

%

91.58

%

Allowance for credit losses, loans and leases / Nonperforming loans and leases held for investment

250.61

%

273.06

%

314.81

%

177.38

%

91.12

%

For the three months ended,

For the twelve months ended,

12/31/20

09/30/20

06/30/20

03/31/20

12/31/19

12/31/20

12/31/19

Net loan and lease charge-offs (recoveries)

$

618

$

(35

)

$

3,576

$

489

$

558

$

4,648

$

2,551

Net loan and lease charge-offs (annualized)/Average loans and leases

0.05

%

(0.00

%)

0.30

%

0.04

%

0.05

%

0.10

%

0.06

%

(1) Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included at the end of this document.



Univest Financial Corporation

Consolidated Selected Financial Data (Unaudited)

December 31, 2020

(Dollars in thousands, except per share data)

For the three months ended,

For the twelve months ended,

For the period:

12/31/20

09/30/20

06/30/20

03/31/20

12/31/19

12/31/20

12/31/19

Interest income

$

51,334

$

50,612

$

49,980

$

52,019

$

53,369

$

203,945

$

214,093

Interest expense

6,813

6,758

6,462

9,551

10,940

29,584

44,861

Net interest income

44,521

43,854

43,518

42,468

42,429

174,361

169,232

(Reversal of Provision) provision for credit losses

(8,721

)

3,935

23,737

21,843

2,225

40,794

8,511

Net interest income after provision for credit losses

53,242

39,919

19,781

20,625

40,204

133,567

160,721

Noninterest income:

Trust fee income

1,974

1,915

1,924

1,890

1,912

7,703

7,826

Service charges on deposit accounts

1,371

1,187

890

1,397

1,551

4,845

5,946

Investment advisory commission and fee income

4,144

4,005

3,540

4,255

4,064

15,944

15,940

Insurance commission and fee income

3,512

3,776

4,067

4,732

3,609

16,087

16,571

Other service fee income

2,092

2,093

1,488

1,870

2,229

7,543

9,341

Bank owned life insurance income

733

741

732

734

741

2,940

3,179

Net gain on sales of investment securities

54

57

65

695

13

871

54

Net gain on mortgage banking activities

4,323

5,860

3,515

2,744

1,038

16,442

3,946

Other income

1,936

2,171

1,779

67

1,013

5,953

2,619

Total noninterest income

20,139

21,805

18,000

18,384

16,170

78,328

65,422

Noninterest expense:

Salaries, benefits and commissions

23,613

24,059

21,700

23,836

21,933

93,208

88,289

Net occupancy

2,697

2,609

2,478

2,574

2,534

10,358

10,221

Equipment

951

972

923

995

1,027

3,841

4,170

Data processing

2,961

2,862

2,750

2,760

2,685

11,333

10,450

Professional fees

1,436

1,321

1,264

1,317

1,475

5,338

5,563

Marketing and advertising

575

463

535

402

710

1,975

2,594

Deposit insurance premiums

765

707

615

504

342

2,591

780

Intangible expenses

282

283

321

330

374

1,216

1,595

Restructuring charges

1,439

-

-

-

-

1,439

-

Other expense

7,015

5,251

5,374

6,059

6,400

23,699

22,428

Total noninterest expense

41,734

38,527

35,960

38,777

37,480

154,998

146,090

Income before taxes

31,647

23,197

1,821

232

18,894

56,897

80,053

Income tax expense (benefit)

5,773

5,078

(264

)

(606

)

3,384

9,981

14,334

Net income

$

25,874

$

18,119

$

2,085

$

838

$

15,510

$

46,916

$

65,719

Net income per share:

Basic

$

0.88

$

0.62

$

0.07

$

0.03

$

0.53

$

1.60

$

2.24

Diluted

$

0.88

$

0.62

$

0.07

$

0.03

$

0.53

$

1.60

$

2.24

Dividends declared per share

$

-

$

0.20

$

0.20

$

0.20

$

0.20

$

0.60

$

0.80

Weighted average shares outstanding

29,274,915

29,226,627

29,187,197

29,286,200

29,327,169

29,243,773

29,299,599

Period end shares outstanding

29,295,052

29,241,302

29,201,985

29,164,782

29,334,629

29,295,052

29,334,629



Univest Financial Corporation

Consolidated Selected Financial Data (Unaudited)

December 31, 2020

For the three months ended,

For the twelve months ended,

Profitability Ratios (annualized)

12/31/20

09/30/20

06/30/20

03/31/20

12/31/19

12/31/20

12/31/19

Return on average assets

1.62

%

1.15

%

0.14

%

0.06

%

1.14

%

0.78

%

1.26

%

Return on average assets, excluding restructuring

1.69

%

1.15

%

0.14

%

0.06

%

1.14

%

0.80

%

1.26

%

charges (1)

Return on average shareholders' equity

15.22

%

10.89

%

1.27

%

0.50

%

9.15

%

7.02

%

10.07

%

Return on average shareholders' equity, excluding

15.89

%

10.89

%

1.27

%

0.50

%

9.15

%

7.19

%

10.07

%

restructuring charges (1)

Return on average tangible common equity (1)

20.53

%

14.82

%

1.73

%

0.68

%

12.40

%

9.52

%

13.82

%

Return on average tangible common equity, excluding

21.44

%

14.82

%

1.73

%

0.68

%

12.40

%

9.76

%

13.82

%

restructuring charges (1)

Net interest margin (FTE)

3.02

%

3.02

%

3.18

%

3.48

%

3.44

%

3.16

%

3.59

%

Efficiency ratio (2)

63.8

%

58.0

%

57.7

%

62.8

%

63.0

%

60.6

%

61.4

%

Efficiency ratio, excluding restructuring charges (1) (2)

61.6

%

58.0

%

57.7

%

62.8

%

63.0

%

60.0

%

61.4

%

Capitalization Ratios

Dividends declared to net income (3)

0.0

%

32.3

%

278.7

%

699.9

%

37.8

%

37.4

%

35.7

%

Shareholders' equity to assets (Period End)

10.93

%

10.48

%

10.69

%

11.92

%

12.55

%

10.93

%

12.55

%

Tangible common equity to tangible assets (1)

8.40

%

7.96

%

8.06

%

8.99

%

9.59

%

8.40

%

9.59

%

Common equity book value per share

$

23.64

$

22.88

$

22.43

$

22.34

$

23.01

$

23.64

$

23.01

Tangible common equity book value per share (1)

$

17.66

$

16.89

$

16.41

$

16.31

$

17.01

$

17.66

$

17.01

Regulatory Capital Ratios (Period End)

Tier 1 leverage ratio

9.08

%

8.97

%

9.15

%

9.90

%

10.02

%

9.08

%

10.02

%

Common equity tier 1 risk-based capital ratio

10.77

%

10.52

%

10.73

%

10.79

%

11.03

%

10.77

%

11.03

%

Tier 1 risk-based capital ratio

10.77

%

10.52

%

10.73

%

10.79

%

11.03

%

10.77

%

11.03

%

Total risk-based capital ratio

15.31

%

15.35

%

13.72

%

13.65

%

13.78

%

15.31

%

13.78

%

(1) Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included at the end of this document.

(2) Noninterest expense to net interest income before loan loss provision plus noninterest income adjusted for tax equivalent income.

(3) As announced in the September 30, 2020 Earnings Release, the Corporation changed the timing of future dividend declarations and payments.



Univest Financial Corporation

Average Balances and Interest Rates (Unaudited)

For the Three Months Ended,

Tax Equivalent Basis

December 31, 2020

September 30, 2020

Average

Income/

Average

Average

Income/

Average

(Dollars in thousands)

Balance

Expense

Rate

Balance

Expense

Rate

Assets:

Interest-earning deposits with other banks

$

296,258

$

82

0.11

%

$

368,181

$

100

0.11

%

U.S. government obligations

6,998

36

2.05

6,998

36

2.05

Obligations of state and political subdivisions

14,269

129

3.60

18,004

167

3.69

Other debt and equity securities

348,244

1,237

1.41

360,219

1,610

1.78

Federal Home Loan Bank, Federal Reserve Bank and other stock

29,838

438

5.84

28,651

419

5.82

Total interest-earning deposits, investments and other interest-earning assets

695,607

1,922

1.10

782,053

2,332

1.19

Commercial, financial, and agricultural loans

824,374

7,366

3.55

807,376

7,330

3.61

Paycheck Protection Program loans

497,035

3,133

2.51

500,549

2,811

2.23

Real estate—commercial and construction loans

2,518,056

24,388

3.85

2,358,971

23,547

3.97

Real estate—residential loans

1,025,818

10,345

4.01

1,009,407

10,380

4.09

Loans to individuals

27,427

289

4.19

28,663

309

4.29

Municipal loans and leases

258,627

2,776

4.27

267,364

2,839

4.22

Lease financings

102,383

1,690

6.57

97,707

1,662

6.77

Gross loans and leases

5,253,720

49,987

3.79

5,070,037

48,878

3.84

Total interest-earning assets

5,949,327

51,909

3.47

5,852,090

51,210

3.48

Cash and due from banks

53,360

56,715

Allowance for credit losses, loans and leases

(92,766

)

(87,046

)

Premises and equipment, net

55,653

55,755

Operating lease right-of-use assets

34,272

33,875

Other assets

353,673

354,216

Total assets

$

6,353,519

$

6,265,605

Liabilities:

Interest-bearing checking deposits

$

838,323

$

537

0.25

%

$

725,580

$

468

0.26

%

Money market savings

1,213,585

898

0.29

1,116,628

897

0.32

Regular savings

905,918

341

0.15

901,716

449

0.20

Time deposits

582,782

2,034

1.39

525,656

2,214

1.68

Total time and interest-bearing deposits

3,540,608

3,810

0.43

3,269,580

4,028

0.49

Short-term borrowings

15,091

2

0.05

130,359

97

0.30

Long-term debt

169,623

611

1.43

208,776

742

1.41

Subordinated notes

193,244

2,390

4.92

155,945

1,891

4.82

Total borrowings

377,958

3,003

3.16

495,080

2,730

2.19

Total interest-bearing liabilities

3,918,566

6,813

0.69

3,764,660

6,758

0.71

Noninterest-bearing deposits

1,681,844

1,760,818

Operating lease liabilities

37,616

37,170

Accrued expenses and other liabilities

39,067

41,010

Total liabilities

5,677,093

5,603,658

Shareholders' Equity:

Common stock

157,784

157,784

Additional paid-in capital

296,810

296,272

Retained earnings and other equity

221,832

207,891

Total shareholders' equity

676,426

661,947

Total liabilities and shareholders' equity

$

6,353,519

$

6,265,605

Net interest income

$

45,096

$

44,452

Net interest spread

2.78

2.77

Effect of net interest-free funding sources

0.24

0.25

Net interest margin

3.02

%

3.02

%

Ratio of average interest-earning assets to average interest-bearing liabilities

151.82

%

155.45

%

Note 1: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.

Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been

included in the average loan balances. Tax-equivalent amounts for the three months ended December 31, 2020 and September 30, 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 December 31,

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

$

296,258

$

82

0.11

%

$

205,703

$

860

1.66

%

U.S. government obligations

6,998

36

2.05

7,297

37

2.01

Obligations of state and political subdivisions

14,269

129

3.60

35,938

324

3.58

Other debt and equity securities

348,244

1,237

1.41

402,697

2,684

2.64

Federal Home Loan Bank, Federal Reserve Bank and other stock

29,838

438

5.84

30,653

514

6.65

Total interest-earning deposits, investments and other interest-earning assets

695,607

1,922

1.10

682,288

4,419

2.57

Commercial, financial, and agricultural loans

824,374

7,366

3.55

830,757

9,197

4.39

Paycheck Protection Program loans

497,035

3,133

2.51

-

-

-

Real estate—commercial and construction loans

2,518,056

24,388

3.85

2,040,442

23,526

4.57

Real estate—residential loans

1,025,818

10,345

4.01

966,370

11,566

4.75

Loans to individuals

27,427

289

4.19

31,694

458

5.73

Municipal loans and leases

258,627

2,776

4.27

325,939

3,323

4.04

Lease financings

102,383

1,690

6.57

85,228

1,528

7.11

Gross loans and leases

5,253,720

49,987

3.79

4,280,430

49,598

4.60

Total interest-earning assets

5,949,327

51,909

3.47

4,962,718

54,017

4.32

Cash and due from banks

53,360

50,794

Allowance for credit losses, loans and leases

(92,766

)

(34,392

)

Premises and equipment, net

55,653

57,043

Operating lease right-of-use assets

34,272

34,693

Other assets

353,673

329,735

Total assets

$

6,353,519

$

5,400,591

Liabilities:

Interest-bearing checking deposits

$

838,323

$

537

0.25

%

$

566,904

$

941

0.66

%

Money market savings

1,213,585

898

0.29

1,074,066

3,749

1.38

Regular savings

905,918

341

0.15

798,145

870

0.43

Time deposits

582,782

2,034

1.39

648,726

3,261

1.99

Total time and interest-bearing deposits

3,540,608

3,810

0.43

3,087,841

8,821

1.13

Short-term borrowings

15,091

2

0.05

30,404

63

0.82

Long-term debt

169,623

611

1.43

153,049

795

2.06

Subordinated notes

193,244

2,390

4.92

94,786

1,261

5.28

Total borrowings

377,958

3,003

3.16

278,239

2,119

3.02

Total interest-bearing liabilities

3,918,566

6,813

0.69

3,366,080

10,940

1.29

Noninterest-bearing deposits

1,681,844

1,286,745

Operating lease liabilities

37,616

37,867

Accrued expenses and other liabilities

39,067

37,252

Total liabilities

5,677,093

4,727,944

Shareholders' Equity:

Common stock

157,784

157,784

Additional paid-in capital

296,810

294,731

Retained earnings and other equity

221,832

220,132

Total shareholders' equity

676,426

672,647

Total liabilities and shareholders' equity

$

6,353,519

$

5,400,591

Net interest income

$

45,096

$

43,077

Net interest spread

2.78

3.03

Effect of net interest-free funding sources

0.24

0.41

Net interest margin

3.02

%

3.44

%

Ratio of average interest-earning assets to average interest-bearing liabilities

151.82

%

147.43

%

Note 1: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.

Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been

included in the average loan balances. Tax-equivalent amounts for the three months ended December 31, 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 Twelve Months Ended December 31,

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

$

274,372

$

574

0.21

%

$

141,774

$

2,876

2.03

%

U.S. government obligations

7,132

145

2.03

14,665

254

1.73

Obligations of state and political subdivisions

23,065

825

3.58

50,360

1,693

3.36

Other debt and equity securities

371,814

7,697

2.07

396,816

10,406

2.62

Federal Home Loan Bank, Federal Reserve Bank and other stock

29,726

1,746

5.87

31,446

2,154

6.85

Total interest-earning deposits, investments and other interest-earning assets

706,109

10,987

1.56

635,061

17,383

2.74

Commercial, financial, and agricultural loans

817,489

30,657

3.75

815,472

40,496

4.97

Paycheck Protection Program loans

342,920

8,072

2.35

-

-

-

Real estate—commercial and construction loans

2,312,996

94,962

4.11

1,936,073

91,634

4.73

Real estate—residential loans

1,007,915

42,047

4.17

950,743

46,031

4.84

Loans to individuals

28,792

1,332

4.63

31,912

1,976

6.19

Municipal loans and leases

283,495

11,857

4.18

331,831

13,262

4.00

Lease financings

95,194

6,498

6.83

82,588

5,904

7.15

Gross loans and leases

4,888,801

195,425

4.00

4,148,619

199,303

4.80

Total interest-earning assets

5,594,910

206,412

3.69

4,783,680

216,686

4.53

Cash and due from banks

52,000

48,877

Allowance for credit losses, loans and leases

(73,459

)

(32,389

)

Premises and equipment, net

55,888

58,237

Operating lease right-of-use assets

34,277

35,712

Other assets

343,261

330,466

Total assets

$

6,006,877

$

5,224,583

Liabilities:

Interest-bearing checking deposits

$

692,049

$

2,173

0.31

%

$

500,295

$

2,790

0.56

%

Money market savings

1,113,039

5,551

0.50

995,403

15,843

1.59

Regular savings

874,366

2,057

0.24

802,865

3,660

0.46

Time deposits

572,103

9,835

1.72

677,199

13,276

1.96

Total time and interest-bearing deposits

3,251,557

19,616

0.60

2,975,762

35,569

1.20

Short-term borrowings

86,658

327

0.38

56,882

1,012

1.78

Long-term debt

189,410

2,879

1.52

156,366

3,236

2.07

Subordinated notes

134,949

6,762

5.01

94,695

5,044

5.33

Total borrowings

411,017

9,968

2.43

307,943

9,292

3.02

Total interest-bearing liabilities

3,662,574

29,584

0.81

3,283,705

44,861

1.37

Noninterest-bearing deposits

1,599,333

1,210,577

Operating lease liabilities

37,557

38,791

Accrued expenses and other liabilities

39,212

39,057

Total liabilities

5,338,676

4,572,130

Shareholders' Equity:

Common stock

157,784

157,784

Additional paid-in capital

296,023

293,784

Retained earnings and other equity

214,394

200,885

Total shareholders' equity

668,201

652,453

Total liabilities and shareholders' equity

$

6,006,877

$

5,224,583

Net interest income

$

176,828

$

171,825

Net interest spread

2.88

3.16

Effect of net interest-free funding sources

0.28

0.43

Net interest margin

3.16

%

3.59

%

Ratio of average interest-earning assets to average interest-bearing liabilities

152.76

%

145.68

%

Note 1: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.

Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been

included in the average loan balances. Tax-equivalent amounts for the twelve months ended December 31, 2020 and 2019 have

been calculated using the Corporation’s federal applicable rate of 21.0%.



Univest Financial Corporation

Loan Portfolio Overview (Unaudited)

(Dollars in thousands)

As of December 31, 2020

Industry Description

Total Outstanding B
alance (excl PPP)

% of Commercial
Loan Portfolio

PPP $ (1)

$ Balance of Modified
Loans (2)

Modified Loans
as a % of
Portfolio (2)

CRE - Retail

$

342,910

8.6

%

$

239

$

3,950

1.2

%

Animal Production

263,623

6.6

706

40

-

CRE - 1-4 Family Residential Investment

245,022

6.2

1,282

-

-

CRE - Office

237,752

6.0

-

-

-

CRE - Multi-family

201,995

5.1

-

-

-

Real Estate Lenders, Secondary Market Financing

181,493

4.6

4,318

52

-

Hotels & Motels (Accommodation)

175,923

4.4

2,407

24,296

13.8

CRE - Industrial / Warehouse

169,015

4.3

139

-

-

Nursing and Residential Care Facilities

154,736

3.9

7,935

-

-

Specialty Trade Contractors

117,301

2.9

67,267

109

0.1

CRE - Mixed-Use - Residential

116,506

2.9

-

8,237

7.1

Professional, Scientific, and Technical Services

92,857

2.3

-

-

-

CRE - Medical Office

92,196

2.3

-

-

-

Homebuilding (tract developers, remodelers)

87,027

2.2

12,931

-

-

Merchant Wholesalers, Durable Goods

75,241

1.9

17,674

-

-

Education

68,846

1.7

72,072

2,637

3.8

Crop Production

66,998

1.7

270

-

-

Motor Vehicle and Parts Dealers

66,516

1.7

11,391

-

-

Fabricated Metal Production Manufacturing

62,077

1.6

12,760

-

-

Administrative and Support Services

59,708

1.5

28,814

100

0.2

Food Services and Drinking Places

58,067

1.5

15,971

2,893

5.0

Woods Product Manufacturing

50,079

1.3

3,886

-

-

Industries with >$50 million in outstandings

$

2,985,888

75.2

%

$

260,062

$

42,314

1.4

%

Industries with <$50 million in outstandings

$

990,450

24.8

%

$

223,711

$

18,228

1.8

%

Total Commercial Loans

$

3,976,338

100.0

%

$

483,773

$

60,542

1.5

%

Consumer Loans and Lease Financings

Total Outstanding Balance

PPP $ (1)

$ Balance of Modified Loans (2)

Modified Loans
as a % of
Portfolio (2)

Real Estate-Residential Secured for Personal Purpose

$

487,600

$

-

$

7,444

1.5

%

Real Estate-Home Equity Secured for Personal Purpose

166,609

-

3

-

Loans to Individuals

27,482

-

35

0.1

Lease Financings

165,039

-

-

-

Total - Consumer Loans and Lease Financings

$

846,730

$

-

$

7,482

0.9

%

Total

$

4,823,068

$

483,773

$

68,024

1.4

%

(1) Includes ($7.7) million of net deferred fees.

(2) Loan modifications referenced above were made in accordance with Section 4013 of the CARES Act and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus and therefore were not classified as TDRs as of December 31, 2020.



Univest Financial Corporation

Non-GAAP Reconciliation

December 31, 2020

Non-GAAP to GAAP Reconciliation

Management uses non-GAAP measures in its analysis of the Corporation's performance. These measures should not be considered a substitute for GAAP basis measures nor should they be viewed as a substitute for operating results determined in accordance with GAAP. Management believes the presentation of the non-GAAP financial measures, which exclude the impact of the specified items, provides useful supplemental information that is essential to a proper understanding of the financial results of the Corporation. See the table below for additional information on non-GAAP measures used throughout this earnings release.

For the three months ended,

For the twelve months ended,

12/31/20

09/30/20

06/30/20

03/31/20

12/31/19

12/31/20

12/31/19

Restructuring charges (a)

$

1,439

$

-

$

-

$

-

$

-

$

1,439

$

-

Tax effect of restructuring charges

(302

)

-

-

-

-

(302

)

-

Restructuring charges, net of tax

$

1,137

$

-

$

-

$

-

$

-

$

1,137

$

-

Shareholders' equity

$

692,472

$

669,107

$

654,873

$

651,551

$

675,122

$

692,472

$

675,122

Goodwill

(172,559

)

(172,559

)

(172,559

)

(172,559

)

(172,559

)

(172,559

)

(172,559

)

Other intangibles (b)

(2,458

)

(2,736

)

(3,017

)

(3,333

)

(3,658

)

(2,458

)

(3,658

)

Tangible common equity

$

517,455

$

493,812

$

479,297

$

475,659

$

498,905

$

517,455

$

498,905

Total assets

$

6,336,496

$

6,382,831

$

6,125,312

$

5,464,768

$

5,380,924

$

6,336,496

$

5,380,924

Goodwill

(172,559

)

(172,559

)

(172,559

)

(172,559

)

(172,559

)

(172,559

)

(172,559

)

Other intangibles (b)

(2,458

)

(2,736

)

(3,017

)

(3,333

)

(3,658

)

(2,458

)

(3,658

)

Tangible assets

$

6,161,479

$

6,207,536

$

5,949,736

$

5,288,876

$

5,204,707

$

6,161,479

$

5,204,707

Average shareholders' equity

$

676,426

$

661,947

$

660,950

$

673,460

$

672,647

$

668,201

$

652,453

Average goodwill

(172,559

)

(172,559

)

(172,559

)

(172,559

)

(172,559

)

(172,559

)

(172,559

)

Average other intangibles (b)

(2,606

)

(2,889

)

(3,185

)

(3,506

)

(3,853

)

(3,045

)

(4,430

)

Average tangible common equity

$

501,261

$

486,499

$

485,206

$

497,395

$

496,235

$

492,597

$

475,464

Net income before taxes

$

31,647

$

23,197

$

1,821

$

232

$

18,894

$

56,897

$

80,053

Provision for credit losses

(8,721

)

3,935

23,737

21,843

2,225

40,794

8,511

Pre-tax pre-provision income

$

22,926

$

27,132

$

25,558

$

22,075

$

21,119

$

97,691

$

88,564

Loans and leases held for investment, gross

$

5,306,841

$

5,211,856

$

4,951,809

$

4,448,825

$

4,386,836

$

5,306,841

$

4,386,836

Paycheck Protection Program ("PPP") loans

(483,773

)

(501,580

)

(498,978

)

-

-

(483,773

)

-

Gross loans and leases excluding PPP loans

$

4,823,068

$

4,710,276

$

4,452,831

$

4,448,825

$

4,386,836

$

4,823,068

$

4,386,836

(a) Associated with financial center optimization plan

(b) Amount does not include servicing rights

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