Univest(US:UVSP)2020-11-02 20:00Financial Performance - The Corporation reported net income of $18.1 million for the three months ended September 30, 2020, a 2.6% increase from $17.7 million in the same period of 2019[210] - For the nine months ended September 30, 2020, net income was $21.0 million, a significant decrease of 58.1% compared to $50.2 million for the same period in 2019[210] - The Corporation's diluted earnings per share for the three months ended September 30, 2020, was $0.62, compared to $0.60 for the same period in 2019, reflecting a 3.3% increase[210] - Noninterest income for the three months ended September 30, 2020 was $21.8 million, an increase of $5.2 million, or 31.4%, from the three months ended September 30, 2019[227] - Total noninterest income for the nine months ended September 30, 2020 was $58.2 million, an increase of $8.9 million, or 18.1%, from the nine months ended September 30, 2019[227] Interest Income and Expenses - Net interest income on a tax-equivalent basis for the three months ended September 30, 2020, was $44.5 million, reflecting a 2.7% increase from $43.3 million in the same period of 2019[215] - Interest income for the three months ended September 30, 2020 was $51.2 million, a decrease of $3.7 million, or 6.8%, from the same period in the prior year[222] - Interest expense for the three months ended September 30, 2020 was $6.8 million, a decrease of $4.9 million, or 42.0%, from the same period in 2019[223] Credit Losses and Provisions - The provision for credit losses for the three months ended September 30, 2020, was $3.9 million, with $5.6 million related to loans and leases[212] - The allowance for credit losses on loans and leases increased by $12.9 million upon the adoption of CECL effective January 1, 2020[211] - The Corporation recorded CECL-related charges of $49.5 million for the nine months ended September 30, 2020, primarily due to changes in economic assumptions driven by COVID-19[212] - Provision for credit losses for the three months ended September 30, 2020 was $3.9 million compared to $1.5 million for the same period in the prior year[224] - Net loan and lease charge-offs for the nine months ended September 30, 2020 were $4.0 million compared to $2.0 million for the same period in the prior year[224] Assets and Liabilities - Total assets increased to $6,265,605 thousand in Q3 2020, up from $5,317,867 thousand in Q3 2019, representing a growth of 17.8%[218] - Total liabilities rose to $5,603,658 thousand in Q3 2020, compared to $4,658,344 thousand in Q3 2019, an increase of 20.3%[218] - Total deposits increased by $851.5 million, or 19.5%, from December 31, 2019, primarily due to increases in commercial and consumer deposits[255] - Total borrowings rose by $152.5 million, or 57.9%, from December 31, 2019, with long-term borrowings increasing by $54.9 million[256] Loan and Lease Growth - The Corporation originated approximately 2,570 loans totaling around $511 million through the PPP, generating $4.7 million in interest income[213] - Gross loans and leases reached $5,070,037 thousand in Q3 2020, compared to $4,170,485 thousand in Q3 2019, marking an increase of 21.5%[218] - Paycheck Protection Program loans amounted to $500,549 thousand in Q3 2020, contributing $2,811 thousand in income[218] - Gross loans and leases held for investment increased by $825.0 million, or 18.8%, from December 31, 2019, driven by PPP loans outstanding of $501.6 million[240] Capital Adequacy - The Corporation maintained compliance with capital adequacy requirements, with Tier 1 Capital to Risk Weighted Assets exceeding 8.50% as of September 30, 2020[264] - As of September 30, 2020, the Corporation's total capital to risk-weighted assets ratio was 15.35%, significantly above the required 8.00%[266] - The Bank's total capital to risk-weighted assets ratio was 11.94%, also exceeding the required 8.00%[266] - The Corporation's Tier 1 capital to risk-weighted assets ratio was 10.52%, surpassing the minimum requirement of 6.00%[266] Market Risk and Economic Conditions - No material changes in the Corporation's market risk were reported during the current period[288] - The effective tax rate for the nine months ended September 30, 2020 was 16.7%, reflecting the benefits of tax-exempt income from investments[236] Segment Performance - The Banking segment reported pre-tax income of $22.7 million for the three months ended September 30, 2020, compared to $19.9 million for the same period in 2019[260] - The Wealth Management segment's assets under management and supervision were $3.6 billion as of September 30, 2020, a decrease of $44.1 million from December 31, 2019[261] - The Insurance segment reported pre-tax income of $822 thousand for the three months ended September 30, 2020, compared to $853 thousand for the same period in 2019[262] Regulatory Changes and Programs - The Paycheck Protection Program Lending Facility was created to facilitate lending to small businesses, with a credit extension rate of 35 basis points[285] - The Paycheck Protection Program and Health Care Enhancement Act allocated an additional $310 billion, increasing total funding to $659 billion[286] - The Paycheck Protection Program Flexibility Act extended the loan forgiveness period to 24 weeks or until December 31, 2020[287] - The required payroll cost spending for loan forgiveness was reduced from 75% to 60%[287] - The loan maturity period was extended from two years to five years under the PPP Flexibility Act[287]