Univest Financial Corporation (NASDAQ:UVSP) Q1 2023 Earnings Conference Call April 29, 2023 9:00 AM ET Company Participants Jeff Schweitzer - President & CEO Mike Keim - COO & President, Univest Bank & Trust Brian Richardson - CFO Conference Call Participants Frank Schiraldi - ABC Matthew Breese - Stephens Jeff Schweitzer Good morning, and thank you to all of our listeners for joining us today. Joining me on the call this morning is Mike Keim, our Chief Operating Officer and President of Univest Bank and Tr ...

Financial Performance - Interest income for 2022 was $252,193,000, an increase from $209,731,000 in 2021, representing a growth of approximately 20.2%[144] - Net interest income after provision for credit losses for 2022 was $206,099,000, compared to $198,515,000 in 2021, reflecting an increase of about 3.0%[144] - Noninterest income decreased to $77,885,000 in 2022 from $83,224,000 in 2021, a decline of approximately 6.0%[144] - The net income for 2022 was $78,120,000, a decrease from $91,801,000 in 2021, representing a decline of approximately 14.9%[144] - Diluted earnings per share for 2022 were $2.64, down from $3.11 in 2021, reflecting a decline of 14.7%[147] - Total comprehensive income for 2022 was $39,298,000, down from $121,661,000 in 2021, reflecting a decrease of 67.7%[263] Credit Losses and Provisions - The provision for credit losses in 2022 was $12,198,000, a reversal from a provision of $(10,132,000) in 2021, indicating a significant change in credit loss expectations[144] - The allowance for credit losses on loans and leases was $79.0 million as of December 31, 2022, representing 1.29% of loans and leases held for investment[163] - The company experienced a net loan and lease charge-off of $3.9 million for the year ended December 31, 2022, an increase from $213 thousand in 2021[162] - Total net charge-offs for 2022 were $3.9 million, representing 0.07% of average loans, compared to $213,000 in 2021[202] Assets and Liabilities - Total assets at year-end 2022 were $7,222,016,000, slightly up from $7,122,421,000 in 2021, marking an increase of about 1.4%[144] - Total assets increased to $7,222.0 million as of December 31, 2022, compared to $7,122.4 million in 2021, marking a growth of approximately 1.4%[259] - Total deposits decreased to $5,913.5 million in 2022 from $6,055.1 million in 2021, a decline of about 2.3%[259] - Total borrowings increased by $226.4 million from December 31, 2021, driven by a $125.0 million increase in short-term FHLB overnight borrowings[210] Operational Efficiency - The efficiency ratio for 2022 was 62.4%, compared to 60.9% in 2021, indicating a decrease in operational efficiency[144] - The return on average assets for 2022 was 1.12%, down from 1.38% in 2021, reflecting a decline in profitability[144] - The Corporation's Tier 1 risk-based capital ratio was 10.37% as of December 31, 2022, down from 11.08% in 2021, while the total risk-based capital ratio decreased to 13.67% from 13.77%[220] Noninterest Expenses - Noninterest expense for the year ended December 31, 2022 was $186.8 million, an increase of $19.4 million, or 11.6%, compared to 2021[174] - Salaries, benefits, and commissions increased by $11.6 million, or 11.1%, reflecting expansion efforts and annual merit increases[174] - Other expenses increased by $2.6 million, or 11.3%, driven by higher travel and entertainment expenses[177] Digital Transformation and Investments - The development of a comprehensive digital platform incurred expenses of $3.8 million, or $0.10 diluted earnings per share, in 2022[148] - Data processing expense rose by $2.5 million, or 19.4%, due to investments in technology and support for a digital transformation initiative[175] - Professional fees increased by $1.6 million, or 21.4%, primarily for consulting fees related to the digital transformation initiative[176] Market and Economic Conditions - The Corporation anticipates a greater amount of liabilities repricing than assets in the next twelve months, indicating potential interest rate risk[226] - A simulation indicated that a +200 basis points rate shock could increase net interest income by $7.93 million (3.16%) over the next 12 months[230] - The Corporation's loan portfolio is managed with strict adherence to underwriting standards, focusing on borrower capacity and collateral sufficiency[231] Shareholder Equity and Dividends - Shareholders' equity increased by $2.7 million to $776.5 million, primarily due to an increase in retained earnings of $53.5 million[214] - Cash dividends declared increased to $0.83 per share in 2022 from $0.80 per share in 2021, totaling $24.40 million[269] Asset Quality - Nonaccrual loans and leases decreased to $13.4 million in 2022 from $33.3 million in 2021, indicating improved asset quality[195] - The ratio of allowance for credit losses to nonaccrual loans and leases was 591.66%, indicating strong coverage for potential losses[199] Revenue Recognition and Accounting Policies - The Corporation's revenue consists of net interest income and noninterest income, recognized when obligations under contracts with customers are satisfied[328] - The Corporation recognizes all derivative financial instruments at fair value, with changes in fair value recorded in income or other comprehensive income depending on the nature of the hedge[317][318]

Univest Financial Corporation (NASDAQ:UVSP) Q4 2022 Earnings Conference Call January 26, 2023 9:00 AM ET Company Participants Jeff Schweitzer - President and CEO Mike Keim - COO and President, Univest Bank & Trust Brian Richardson - CFO Conference Call Participants Tim Switzer - KBW Operator Hello, everybody, and welcome to Univest Financial Corporation to hold Fourth Quarter 2022 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Jeff Schweitzer, President and CEO. Pleas ...

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]