Univest Financial Corporation (NASDAQ:UVSP) Q3 2022 Earnings Conference Call October 27, 2022 9:00 AM ET Company Participants Jeff Schweitzer - President and Chief Executive Officer Mike Keim - Chief Operating Officer and President, Univest Bank & Trust Brian Richardson - Chief Financial Officer Conference Call Participants Tim Switzer - KBW Matthew Breese - Stephens Inc. Justin Crowley - Piper Sandler Operator Good morning. Thank you for attending today’s Univest Financial Corporation Third Quarter 2022 Ea ...

Financial Performance - The Corporation reported net income of $13.2 million, or $0.45 diluted earnings per share, for the three months ended June 30, 2022, a decrease of 36.9% compared to $20.9 million, or $0.71 diluted earnings per share, for the same period in 2021[153]. - For the six months ended June 30, 2022, net income was $33.5 million, or $1.13 diluted earnings per share, down 37.4% from $53.5 million, or $1.81 diluted earnings per share, in the same period of 2021[153]. - The return on average assets for the three months ended June 30, 2022, was 0.76%, down from 1.30% in the same period of 2021, representing a decline of 54 basis points[152]. - The return on average equity for the three months ended June 30, 2022, was 6.85%, a decrease of 464 basis points from 11.49% in the same period of 2021[152]. Interest Income and Margin - Net interest income on a tax-equivalent basis for the three months ended June 30, 2022, was $52.0 million, an increase of 9.9% from $47.3 million in the same period of 2021[157]. - The net interest margin, on a tax-equivalent basis, was 3.19% for the three months ended June 30, 2022, compared to 3.15% for the same period in 2021[159]. - The tax-equivalent net interest income for the six months ended June 30, 2022, was $99.1 million, reflecting a 6.3% increase from $93.2 million in the same period of 2021[158]. - Net interest income for the three months ended June 30, 2022, was $51,968 thousand, compared to $47,302 thousand for the same period in 2021, reflecting an increase of 5.63%[164]. - The net interest margin improved to 3.19% in Q2 2022, compared to 3.15% in Q2 2021, indicating a positive trend in interest income generation[164]. Credit Losses and Provisions - The provision for credit losses for the three months ended June 30, 2022, was $6.7 million, primarily due to a $5.5 million increase in reserves related to loan growth[154]. - The provision for credit losses for the six months ended June 30, 2022, was $3.2 million, primarily driven by a $6.8 million increase in reserves due to loan growth[171]. - Net loan and lease charge-offs for the three months ended June 30, 2022 were $1.7 million, compared to $243 thousand for the same period in the prior year[193]. Noninterest Income and Expenses - Noninterest income for the three months ended June 30, 2022, was $19.0 million, a decrease of $1.2 million, or 6.1%, from the same period in 2021[173]. - Noninterest income for the six months ended June 30, 2022, was $39.5 million, a decrease of $4.0 million, or 9.2%, from the same period in 2021[173]. - Noninterest expense for the three months ended June 30, 2022 was $47.4 million, an increase of $6.1 million, or 14.7%, from the same period in 2021[179]. - Salaries, benefits, and commissions increased by $3.7 million, or 14.7%, for the three months ended June 30, 2022, reflecting continued investment in revenue-producing staff[180]. - Professional fees rose by $829 thousand, or 41.1%, for the three months ended June 30, 2022, primarily due to consultant fees related to a digital transformation initiative[181]. Assets and Liabilities - Total assets increased to $6,962,401 thousand in Q2 2022, up from $6,443,629 thousand in Q2 2021, representing a growth of 8.05%[162]. - Total liabilities rose to $6,190,991 thousand in Q2 2022, compared to $5,714,879 thousand in Q2 2021, an increase of 8.32%[162]. - Total deposits decreased by $492.1 million, or 8.1%, from December 31, 2021, primarily due to a seasonal decrease in public funds deposits[203]. - Total borrowings increased by $77.7 million, or 36.3%, from December 31, 2021, driven by a rise in short-term FHLB overnight borrowings[204]. Capital and Compliance - The Corporation and the Bank were in compliance with capital adequacy requirements as of June 30, 2022, maintaining capital levels above the regulatory minimums[211]. - As of June 30, 2022, the Corporation's total capital to risk-weighted assets ratio was 13.23%, compared to 13.77% at December 31, 2021[214]. - The Bank's Tier 1 capital to risk-weighted assets ratio was 11.40% as of June 30, 2022, down from 11.61% at December 31, 2021[214]. Segments Performance - The Banking segment reported pre-tax income of $16.0 million for the three months ended June 30, 2022, down from $25.7 million in the same period of 2021[207]. - The Wealth Management segment's assets under management and supervision were $4.1 billion as of June 30, 2022, down from $4.5 billion a year earlier[208]. - The Insurance segment reported pre-tax income of $724 thousand for the three months ended June 30, 2022, compared to $681 thousand in the same period of 2021[209]. Risk Management and Funding - The Corporation's liquidity management includes daily monitoring of liquidity sources and estimated funding needs[221]. - Core deposits remain the largest funding source for the Corporation, facing increased competition from various financial market participants[222]. - The Corporation utilizes a mix of short-term and long-term wholesale funding, including federal funds purchases and secured borrowing lines[223]. - Commitments to extend credit are the Bank's most significant commitment, which may not represent future cash requirements[225].

Univest Financial Corporation (NASDAQ:UVSP) Q2 2022 Earnings Conference Call July 28, 2022 9:00 AM ET Company Participants Jeff Schweitzer - President and Chief Executive Officer Mike Keim - Chief Operating Officer, and President of Univest Bank and Trust Brian Richardson - Chief Financial Officer Conference Call Participants Tim Switzer - KBW Frank Schiraldi - Piper Sandler Samuel Varga - Stephens Operator Good morning. And thank you for attending today's Univest Financial Corporation to hold Second Quarte ...

Financial Performance - The Corporation reported net income of $20.3 million for Q1 2022, a decrease of 37.7% from $32.6 million in Q1 2021[149] - Diluted earnings per share for Q1 2022 were $0.68, down from $1.11 in Q1 2021, reflecting a decline of 38.7%[149] - The return on average assets decreased to 1.17% in Q1 2022 from 2.07% in Q1 2021, a drop of 90 basis points[148] - Noninterest income decreased to $20,470 thousand for the three months ended March 31, 2022, down $2,780 thousand or 12.0% from $23,250 thousand in 2021[164] - The net gain on mortgage banking activities decreased by $4.0 million, or 67.5%, for the three months ended March 31, 2022, primarily due to a decrease in loan sales[165] - The Banking segment reported pre-tax income of $22.8 million for the three months ended March 31, 2022, down from $40.0 million in the same period of 2021[196] - The Insurance segment reported pre-tax income of $1.7 million for the three months ended March 31, 2022, compared to $1.6 million in 2021, attributed to revenue from an acquired insurance agency[198] Interest Income and Margin - Net interest income on a tax-equivalent basis increased by 2.6% to $47.2 million in Q1 2022, compared to $46.0 million in Q1 2021[153] - The net interest margin on a tax-equivalent basis was 2.89% for Q1 2022, down from 3.12% in Q1 2021, a reduction of 23 basis points[154] - Net interest income for the three months ended March 31, 2022, was $47,169 thousand, an increase of $1,215 thousand from $45,954 thousand in 2021[158] - The excess liquidity reduced the net interest margin by approximately 33 basis points in Q1 2022, compared to 11 basis points in Q1 2021[154] Assets and Liabilities - Total assets increased to $7,047,980 thousand as of March 31, 2022, compared to $6,383,463 thousand in 2021, reflecting a growth of 10.4%[156] - Total liabilities increased to $6,273,622 thousand as of March 31, 2022, compared to $5,683,727 thousand in 2021, marking a growth of 10.4%[156] - Total outstanding commercial loans as of March 31, 2022, amounted to $4,446,791 thousand, with a loan portfolio concentration of 78.6% in industries with over $50 million in outstandings[187] - Total liabilities as of March 31, 2022, were $6,333,885 thousand, a decrease of $14,742 thousand, or 0.2%, from December 31, 2021[190] Equity and Retained Earnings - Shareholders' equity reached $774,358 thousand, up from $699,736 thousand in the previous year, indicating a growth of 10.7%[156] - Retained earnings increased by $14.2 million to $389,332 thousand as of March 31, 2022, primarily due to net income of $20.3 million[194] Credit Losses and Asset Quality - The Corporation recorded a reversal of provision for credit losses of $3.5 million in Q1 2022, compared to $11.3 million in Q1 2021[150] - The provision for credit losses was a reversal of $3.5 million for the three months ended March 31, 2022, compared to a reversal of $11.3 million in 2021[162] - Nonaccrual loans and leases decreased to $30.9 million from $33.3 million at December 31, 2021, indicating improved asset quality[181] - The allowance for credit losses on loans and leases was $68.3 million, representing 1.26% of loans and leases held for investment[186] Expenses - Noninterest expense for the three months ended March 31, 2022, was $45.4 million, an increase of $5.9 million, or 14.9%, from the same period in 2021[169] - Salaries, benefits, and commissions increased by $3.5 million, or 14.0%, reflecting investments in revenue-producing staff and new hires in the Mortgage Banking line[170] - Data processing expenses rose by $517 thousand, or 17.0%, due to investments in loan origination solutions and digital transformation initiatives[171] Capital Adequacy - The Corporation maintained compliance with capital adequacy requirements, with Tier 1 Capital to Risk Weighted Assets exceeding 8.50% as of March 31, 2022[200] - As of March 31, 2022, the Corporation's total capital to risk-weighted assets ratio was 13.73%, compared to 13.77% at December 31, 2021[203] - The Bank's Tier 1 capital to risk-weighted assets ratio was 10.76% as of March 31, 2022, down from 10.65% at December 31, 2021[203] - The Corporation's Tier 1 common capital to risk-weighted assets ratio was 11.07% as of March 31, 2022, unchanged from the previous quarter[203] - The Corporation's Tier 1 capital to average assets ratio was 9.35% as of March 31, 2022, compared to 9.13% at December 31, 2021[203] - The Bank was categorized as "well capitalized" under the regulatory framework for prompt corrective action as of March 31, 2022[203] Risk Management - The Corporation's ability to manage market risk, credit risk, and operational risk remains a critical focus amid ongoing economic uncertainties[140] - The Corporation's wealth management revenues may decline with market turmoil, indicating potential risks to future earnings[147] - The Corporation manages liquidity risk by monitoring liquidity sources and funding needs daily, with a contingency funding plan in place[210] - No material changes in the Corporation's market risk occurred during the current period[215] Funding Sources - Core deposits remain the largest funding source for the Corporation, facing increased competition from various financial market participants[211] - The Corporation utilizes a mix of short-term and long-term wholesale funding, including federal funds purchases and secured borrowing lines[212] - Commitments to extend credit are the Bank's most significant commitment, which may not represent future cash requirements[214]

Univest Financial Corporation (NASDAQ:UVSP) Q1 2022 Results Conference Call April 28, 2022 9:00 AM ET Company Participants Jeff Schweitzer - President and CEO Mike Keim - COO and President of Univest Bank and Trust Brian Richardson - CFO Conference Call Participants Frank Schiraldi - Piper Sandler Tim Switzer - KBW Brody Preston - Stephens Chris Reynolds - Neuberger Berman Jeff Schweitzer Good morning, and thank you to all of our listeners for joining us. Joining me on the call this morning is Mike Keim, ou ...

Economic Conditions - The unemployment rate decreased from 7.70% at December 31, 2020, to 6.29% at December 31, 2021, suggesting an improvement in the labor market conditions[139]. - The Corporation's economic forecast for GDP rates showed a slight decrease from 2.29% in 2020 to 2.13% in 2021, indicating a modest economic growth outlook[139]. - The House Price Index (HPI) increased by 3.04% in 2021, a significant improvement compared to a decrease of (0.16)% in 2020, reflecting a positive trend in the housing market[139]. - The Corporation's sensitivity analysis indicates that a 100 basis point increase in unemployment rates could increase the ACL by $10,643,000, highlighting the impact of economic factors on credit loss estimates[141]. Credit Losses and Allowance - The Corporation's Allowance for Credit Losses (ACL) on loans and leases decreased from $83,044,000 at December 31, 2020, to $71,924,000 at December 31, 2021, reflecting a provision attributed to economic conditions of $(18,339,000)[138]. - The provision attributed to other impacts in the ACL calculation was $7,432,000, indicating adjustments made for factors beyond economic conditions[138]. - The allowance for credit losses on loans and leases was $71.9 million, representing 1.35% of loans and leases held for investment, down from 1.56% in 2020[206]. - The allowance for credit losses to nonaccrual loans and leases ratio was 216.57%, down from 262.03% in 2020[206]. - The reversal of provision for credit losses for the year ended December 31, 2021 was $10.1 million, compared to provisions of $40.8 million and $8.5 million for 2020 and 2019, respectively[168]. Financial Performance - The Corporation reported net income of $91.8 million for 2021, a 95.7% increase from $46.9 million in 2020, with diluted earnings per share rising to $3.11 from $1.60[145]. - Net interest income after provision for credit losses increased to $198.5 million in 2021, compared to $133.6 million in 2020, reflecting a significant recovery in financial performance[144]. - The average return on average assets improved to 1.38% in 2021 from 0.78% in 2020, indicating enhanced asset utilization[145]. - Noninterest income rose to $83.2 million in 2021, up from $78.3 million in 2020, reflecting growth in service fees and other income sources[144]. - Total comprehensive income for 2021 was $121,661,000, compared to $56,072,000 in 2020, indicating a significant increase of 116.5%[274]. Asset and Liability Management - The Corporation's total assets increased to $7.1 billion in 2021, up from $6.3 billion in 2020, demonstrating growth in the balance sheet[144]. - Cash and cash equivalents at year-end 2021 were $890.2 million, a significant increase from $219.9 million in 2020, indicating strong liquidity[144]. - Total liabilities as of December 31, 2021 were $5,920,987 thousand, with total shareholders' equity of $734,456 thousand[158]. - The total shareholders' equity increased by $81.3 million, or 11.7%, from December 31, 2020, reaching $773.8 million[221]. - The Corporation's Tier 1 risk-based capital ratio improved to 11.08% in 2021 from 10.76% in 2020, while the total risk-based capital ratio decreased to 13.77% from 15.31%[227]. Loan and Deposit Growth - Total deposits increased by $812.4 million, or 15.5%, from December 31, 2020, primarily due to increases in commercial, consumer, and public fund deposits[216]. - The total average deposits for 2021 were $5,591.2 million, compared to $4,850.9 million in 2020[217]. - Noninterest-bearing deposits increased to $1,891,330 thousand in 2021, contributing to the overall deposit growth[158]. - The total outstanding balance of commercial loans, excluding PPP loans, was $4.37 billion, with 80.7% concentrated in industries with over $50 million in outstandings[209]. Operational Efficiency - The efficiency ratio improved slightly to 60.9% in 2021 from 60.6% in 2020, suggesting better cost management relative to revenue[145]. - Noninterest expense for the year ended December 31, 2021 was $167.4 million, an increase of $12.4 million, or 8.0%, compared to 2020[181]. - Salaries, benefits, and commissions increased by $11.0 million, or 11.8%, for the year ended December 31, 2021, reflecting continued investment in revenue-producing staff[182]. - Professional fees rose by $2.3 million, or 44.0%, primarily due to consulting fees for Diversity, Equity, and Inclusion programs[183]. Strategic Acquisitions - The acquisition of Paul I. Sheaffer Insurance Agency was completed for $3.8 million in cash, with potential additional payments of up to $1.9 million based on EBITDA performance over three years[153][154]. - The company made a net cash payment of $3.820 million due to acquisitions in 2021, marking a strategic move towards growth through acquisitions[279]. Risk Management - The Corporation's strategy for credit risk management includes well-defined credit policies and regular monitoring of loan performance[201]. - Management utilizes a discounted cash flow (DCF) model to calculate the present value of expected cash flows for pools of loans and leases, incorporating factors such as probability of default and loss given default[312][316]. - A loan or lease is considered impaired when it is probable that the Bank will be unable to collect future payments, with an impairment analysis performed quarterly[328].

Financial Data and Key Metrics Changes - The company reported net income of $17.4 million for Q4 2021, or $0.59 per share, and a total net income of $91.8 million for the year, or $3.11 per share [3] - Loan growth was solid at $111.8 million, or 8.7% annualized during the quarter, contributing to a total growth of $455.2 million, or 9.4% for 2021, excluding PPP loans [4] - The reported margin was 2.86%, down 25 basis points compared to Q3, while the net interest margin (NIM) was negatively impacted by 43 basis points due to excess liquidity [6][7] Business Line Data and Key Metrics Changes - Noninterest income increased by $4.9 million, or 6.3% in 2021 compared to 2020, representing 31% of total revenue [10] - Noninterest expenses rose by $12.4 million, or 8% for the full year compared to 2020, with salaries, benefits, and commissions increasing by $11 million, or 11.8% [11] Market Data and Key Metrics Changes - The company experienced a significant increase in average excess liquidity, averaging $874 million for the quarter, compared to $490 million in Q3 [7] - The allowance for credit loss coverage ratio, excluding PPP loans, was 1.36% as of December 31, consistent with September 30 [9] Company Strategy and Development Direction - The company completed the acquisition of the Paul I. Sheaffer Insurance Agency to bolster its fee income business and expand into the Lancaster market [5] - For 2022, the company expects loan growth of approximately 8% to 9% excluding PPP loans, with net interest income growth projected at 8% to 10% [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining loan growth despite competitive pressures, attributing success to the strength of their team [20] - The company anticipates that the provision for credit losses will be driven by changes in economic forecasts and performance of the portfolio, estimating a provision of approximately $6 to $8 million for 2022 [13] Other Important Information - The company expects noninterest income growth of approximately 1% to 3% off a base of $82.1 million for 2022, translating to a compound annual growth rate of approximately 8% to 9% from 2019 to 2022 [14] - Noninterest expenses are expected to grow approximately 6% to 8% in 2022, with an effective tax rate projected at 19% to 20% [14] Q&A Session Summary Question: How should the company think about the split of the 6% to 8% expense growth? - The company indicated that the high single-digit range assumption for salary benefits and commission growth year-over-year is a significant driver, along with high single-digit to low double-digit growth in data processing expenses [18] Question: What is the outlook for loan growth in the competitive landscape? - Management noted that while the marketplace remains competitive, they are comfortable with their growth guidance and will continue to expand their team [20] Question: What type of betas is the company assuming for deposit rates? - The company expects low betas for the first couple of rate increases, estimating a range of 20% to 30% based on current excess liquidity [24] Question: What are the expectations for mortgage banking fee income? - The company anticipates a pullback of 25% to 30% in mortgage banking fee income due to tightening margins, while expecting growth in investment advisory and insurance sectors [35]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Table of Contents Washington, D.C. 20549 Form 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2021 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________ to __________ Commission File Number: 0-7617 UNIVEST FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) (State ...

Financial Data and Key Metrics Changes - The company reported net income of $20.9 million for Q3 2021, equating to $0.71 per share, reflecting strong loan production despite customer payoffs [7] - Net loan growth was $92 million or 7.3% annualized during the quarter, with total growth over the past 12 months reaching $456 million or 9.7%, excluding PPP loans [7] - The reported margin was 3.1%, down 4 basis points from the previous quarter, while the net interest margin (NIM) was negatively impacted by 27 basis points due to excess liquidity [9][10] - The allowance for credit loss coverage ratio, excluding PPP loans, was 1.36% at September 30, down from 1.41% at June 30 and 1.95% at September 30, 2020 [12] Business Line Data and Key Metrics Changes - Investment advisory income increased by 19.8% during the quarter and 19.1% for the first nine months compared to the same period last year [8] - Noninterest expense rose by $4.7 million or 12.3% for the quarter and $10.8 million or 9.5% for the first nine months compared to 2020 [13] Market Data and Key Metrics Changes - Public funds increased by approximately $350 million year-over-year, attributed to excess liquidity in the marketplace from various stimulus initiatives [21] - The company experienced net recoveries of $75,000 during the quarter, with net charge-offs for the first nine months totaling $456,000 or 1 basis point on an annualized basis [12] Company Strategy and Development Direction - The company is focused on aggressive hiring of revenue-producing talent across various lines of business, including commercial and wealth management [32][33] - The company expects to finish the year with net interest income growth on the higher end of the previously guided range of 2% to 4%, and noninterest income growth is now expected to be 4% to 5% for the year [17] Management's Comments on Operating Environment and Future Outlook - Management noted that the success of customers in terms of payoffs is a significant factor moderating net loan growth, but new loan production remains strong [35] - The company anticipates that excess liquidity levels will decrease as loan growth continues and expects a seasonal decline in public funds [21] Other Important Information - The company has incurred $1.4 million in expenses related to various initiatives, including DE&I and treasury management enhancements, with an expectation that these costs will not continue into 2022 [16][28] Q&A Session Summary Question: Was the surge in deposits this quarter stronger than normal seasonality? - Management confirmed that the growth in public funds was outsized compared to prior years, driven by excess liquidity from stimulus initiatives, and expects a decline in the first and second quarters of next year [21][22] Question: What are the main drivers behind the core NIM expansion? - Management indicated a reduction in deposit costs and the redemption of subordinated debt contributed to the NIM expansion [23] Question: What is the current competitive landscape for loans? - Management acknowledged aggressive competition but emphasized their ability to maintain appropriate pricing levels due to a strong team and sourcing capabilities [24] Question: How much of the training initiative costs occurred this quarter? - Management clarified that about $500,000 was related to various initiatives this quarter, and they do not expect these costs to repeat in 2022 [27][28] Question: What is the size of the loan pipeline and expected growth? - Management reported a strong loan pipeline, with new loan production remaining robust, although customer payoffs are moderating net loan growth [34][35] Question: How are gain on sale margins holding up for the mortgage pipeline? - Management expects gain on sale margins to remain consistent with Q3 levels, with seasonal impacts anticipated due to rising rates [36]

Part I. Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited financial statements show Univest Financial Corporation's total assets at $6.36 billion, with Q2 2021 net income at $20.9 million, primarily due to credit loss provision reversal [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets reached $6.36 billion as of June 30, 2021, supported by increased deposits and modest loan growth, with shareholders' equity rising to $740.0 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | At June 30, 2021 | At December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$6,356,305** | **$6,336,496** | | Net loans and leases held for investment | $5,255,958 | $5,223,797 | | Total deposits | $5,318,704 | $5,242,715 | | **Total Liabilities** | **$5,616,307** | **$5,644,024** | | **Total Shareholders' Equity** | **$739,998** | **$692,472** | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Net income for Q2 2021 surged to $20.9 million, primarily due to a credit loss provision reversal, with six-month net income reaching $53.5 million Key Income Statement Data (in thousands, except per share data) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $46,757 | $43,518 | $92,171 | $85,986 | | (Reversal of provision) provision for credit losses | ($59) | $23,737 | ($11,342) | $45,580 | | Total Noninterest Income | $20,230 | $18,000 | $43,480 | $36,384 | | Total Noninterest Expense | $41,286 | $35,960 | $80,826 | $74,737 | | **Net Income** | **$20,875** | **$2,085** | **$53,478** | **$2,923** | | **Diluted EPS** | **$0.71** | **$0.07** | **$1.81** | **$0.10** | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Total comprehensive income for Q2 2021 was $21.8 million, and $56.1 million for the six-month period, driven by higher net income and unrealized gains on investments Comprehensive Income Summary (in thousands) | Metric | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net Income | $20,875 | $53,478 | | Other Comprehensive Income | $895 | $2,599 | | **Total Comprehensive Income** | **$21,770** | **$56,077** | [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' equity increased to $740.0 million by June 30, 2021, primarily due to net income and other comprehensive income, partially offset by dividends - Total shareholders' equity grew by **$47.5 million** during the first six months of 2021[18](index=18&type=chunk) - Key drivers of the equity increase were net income (**$53.5 million**) and other comprehensive income (**$2.6 million**), offset by cash dividends (**$11.7 million**)[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash decreased by $16.4 million for the six months ended June 30, 2021, with $48.4 million from operations offset by cash used in investing and financing activities Six-Month Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2021 | | :--- | :--- | | Net cash provided by operating activities | $48,393 | | Net cash used in investing activities | ($37,813) | | Net cash (used in) provided by financing activities | ($26,989) | | **Net (decrease) in cash and cash equivalents** | **($16,409)** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies, investment and loan composition, credit quality, and segment performance, including Banking, Wealth Management, and Insurance [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the significant increase in net income for Q2 and H1 2021 to credit loss provision reversal, PPP loan forgiveness, and noninterest income growth, reflecting solid financial condition - Net income for Q2 2021 was **$20.9 million** (**$0.71/share**), up from **$2.1 million** (**$0.07/share**) in Q2 2020[158](index=158&type=chunk) - The reversal of provision for credit losses was a key driver of profitability, contributing a pre-tax benefit of **$2.8 million** in Q2 2021 due to favorable economic assumptions, in stark contrast to a **$23.7 million** provision in Q2 2020[159](index=159&type=chunk)[170](index=170&type=chunk) - Paycheck Protection Program (PPP) loans contributed significantly to net interest income, with **$4.8 million** recognized in Q2 2021, of which **$3.7 million** was from loan forgiveness and pay downs[161](index=161&type=chunk) - Nonperforming assets decreased to **$38.5 million** at June 30, 2021, from **$40.5 million** at December 31, 2020, indicating improved asset quality[191](index=191&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in the Corporation's market risk were reported for Q2 2021, with further details available in the 2020 Annual Report on Form 10-K - No material changes in the Corporation's market risk were reported for the period[226](index=226&type=chunk) [Item 4. Controls and Procedures](index=65&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[227](index=227&type=chunk) - No changes in internal control over financial reporting that could materially affect it were identified during the quarter[228](index=228&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=65&type=section&id=Item%201.%20Legal%20Proceedings) The Corporation is subject to legal actions, but management believes any financial responsibility will not materially affect its financial position or operations - The Corporation does not expect pending legal actions to have a material adverse effect on its financial condition or operations[230](index=230&type=chunk) [Item 1A. Risk Factors](index=66&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported since the Corporation's Annual Report on Form 10-K for the year ended December 31, 2020 - No material changes to risk factors were reported since the last Annual Report on Form 10-K[231](index=231&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=66&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Corporation did not repurchase common stock during Q2 2021, with 679,174 shares remaining available under the existing repurchase program Issuer Purchases of Equity Securities (April 1 - June 30, 2021) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Maximum Number of Shares that May Yet Be Purchased | | :--- | :--- | :--- | :--- | | April 1 – 30, 2021 | 0 | $— | 679,174 | | May 1 – 31, 2021 | 0 | $— | 679,174 | | June 1 – 30, 2021 | 0 | $— | 679,174 | [Item 3. Defaults Upon Senior Securities](index=66&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - There were no defaults upon senior securities during the period[235](index=235&type=chunk) [Item 4. Mine Safety Disclosures](index=66&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the Corporation's operations - This section is not applicable to the Corporation[235](index=235&type=chunk) [Item 5. Other Information](index=66&type=section&id=Item%205.%20Other%20Information) No other material information was reported for the period - No other information was reported for the period[236](index=236&type=chunk) [Item 6. Exhibits](index=67&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications and financial statements in Inline XBRL format - Exhibits filed include CEO and CFO certifications (**31.1, 31.2, 32.1, 32.2**) and financial data in Inline XBRL format (**101, 104**)[239](index=239&type=chunk)