Univest(US:UVSP)2025-07-24 12:51Executive Summary This section provides a high-level overview of Univest Financial Corporation's key financial performance and strategic highlights for the reported period Second Quarter 2025 Performance Overview Univest Financial Corporation achieved year-over-year increases in net income and diluted earnings per share in Q2 2025, driven by higher net interest income and improved net interest margin, despite a significant increase in provision for credit losses due to a commercial loan issue Q2 2025 Key Financial Data Comparison: | Indicator | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $20.0 million | $18.1 million | | Diluted EPS | $0.69 | $0.62 | - Net income increased by 10.5% year-over-year, and diluted EPS increased by 11.3% year-over-year1 Financial Position This section details Univest Financial Corporation's balance sheet components, including loans, leases, deposits, and liquidity, reflecting the company's financial health Loans and Leases Total loans and leases slightly decreased quarter-over-quarter but increased year-over-year, influenced by reductions in commercial real estate, residential mortgages, and lease financing, offset by increases in commercial, construction, and home equity loans Total Loans and Leases Change: | Period | Change Amount | Percentage Change | | :--- | :--- | :--- | | From March 31, 2025 (QoQ) | -$31.9 million | -0.5% | | From June 30, 2024 (YoY) | +$116.3 million | +1.7% | - Quarter-over-quarter decrease primarily due to reduced commercial real estate, residential mortgages, and lease financing, while year-over-year increase primarily due to increased commercial real estate, residential mortgages, and home equity loans2 Deposits and Liquidity Total deposits decreased quarter-over-quarter due to seasonal public funds and brokered deposits, but increased year-over-year, with non-interest-bearing deposits rising and ample committed borrowing capacity maintained Total Deposits Change: | Period | Change Amount | Percentage Change | | :--- | :--- | :--- | | From March 31, 2025 (QoQ) | -$75.8 million | -1.1% | | From June 30, 2024 (YoY) | +$87.3 million | +1.3% | - As of June 30, 2025, non-interest-bearing deposits totaled $1.5 billion, representing 22.2% of total deposits, up from 21.5% on March 31, 20255 - As of June 30, 2025, the company had $3.6 billion in committed borrowing capacity, with $2.3 billion available6 Operating Results This section analyzes Univest Financial Corporation's financial performance, focusing on net interest income, noninterest income, noninterest expense, and tax provisions Net Interest Income and Net Interest Margin Net interest income significantly increased both year-over-year and quarter-over-quarter in Q2 2025, driven by higher average loan balances, improved earning asset yields, and lower funding costs, with net interest margin also improving Net Interest Income Change: | Period | Q2 2025 | Q2 2024 | Q1 2025 | | :--- | :--- | :--- | :--- | | Net Interest Income | $59.5 million | $51.0 million | $56.8 million | | YoY Growth | +16.7% | - | - | | QoQ Growth | +4.9% | - | - | Tax Equivalent Net Interest Margin: | Period | Net Interest Margin | | :--- | :--- | | Q2 2025 | 3.20% | | Q1 2025 | 3.09% | | Q2 2024 | 2.84% | Noninterest Income Noninterest income increased by 2.5% year-over-year in Q2 2025, driven by significant growth in gains on SBA loan sales and other income, and higher deposit account service charges, partially offset by a decrease in net mortgage banking income Noninterest Income Change: | Indicator | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Noninterest Income | $21.5 million | $20.98 million | +2.5% | | Other Income | +$491 thousand | - | +65.9% | | Deposit Account Service Charges | +$276 thousand | - | +13.9% | | Net Mortgage Banking Income | -$729 thousand | - | -42.6% | - Other income growth primarily due to a $299 thousand increase in gains on Small Business Administration (SBA) loan sales11 Noninterest Expense Noninterest expense increased by 3.3% year-over-year in Q2 2025, primarily due to higher salaries, benefits, and commissions, attributed to increased payroll and medical claims expenses, and variable compensation growth from improved profitability Noninterest Expense Change: | Indicator | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Noninterest Expense | $50.3 million | $48.7 million | +3.3% | | Salaries, Benefits, and Commissions | +$1.3 million | - | +4.5% | Tax Provision The effective income tax rate in Q2 2025 was slightly higher than the prior year period, with both periods favorably impacted by Bank-Owned Life Insurance (BOLI) death benefit proceeds Effective Income Tax Rate: | Period | Effective Tax Rate | | :--- | :--- | | Q2 2025 | 20.1% | | Q2 2024 | 19.9% | Asset Quality This section assesses the quality of Univest Financial Corporation's assets, including nonperforming assets, loan charge-offs, and credit loss provisions Nonperforming Assets Nonperforming assets significantly increased both quarter-over-quarter and year-over-year, primarily due to a $23.7 million commercial loan being placed on nonaccrual status in Q2 2025 due to suspected fraud, resulting in a $7.3 million charge-off Total Nonperforming Assets: | Period | Amount | | :--- | :--- | | June 30, 2025 | $50.6 million | | March 31, 2025 | $34.0 million | | June 30, 2024 | $36.6 million | - A $23.7 million commercial loan was placed on nonaccrual status due to suspected fraud, resulting in a $7.3 million charge-off15 Loan and Lease Charge-offs Net loan and lease charge-offs significantly increased in Q2 2025, primarily attributed to the $7.3 million charge-off related to the aforementioned nonaccrual commercial loan Net Loan and Lease Charge-offs: | Period | Amount | | :--- | :--- | | Q2 2025 | $7.8 million | | Q1 2025 | $1.7 million | | Q2 2024 | $809 thousand | - The increase in charge-offs was primarily due to a $7.3 million charge-off related to a nonaccrual commercial loan16 Provision for Credit Losses Provision for credit losses significantly increased in Q2 2025, reflecting a deterioration in asset quality; however, the allowance for credit losses on loans and leases as a percentage of loans and leases held for investment remained stable Provision for Credit Losses: | Period | Amount | | :--- | :--- | | Q2 2025 | $5.7 million | | Q1 2025 | $2.3 million | | Q2 2024 | $707 thousand | - As of June 30, 2025, the allowance for credit losses on loans and leases was 1.28% of loans and leases held for investment, consistent with the prior two quarters17 Capital Management and Shareholder Returns This section outlines Univest Financial Corporation's strategies for capital management and shareholder returns, including dividend declarations and share repurchase programs Dividends and Share Repurchases Univest declared a quarterly cash dividend for Q2 2025 and repurchased a significant number of common shares during the period, demonstrating a commitment to shareholder returns - On July 23, 2025, Univest declared a quarterly cash dividend of $0.22 per share18 Q2 2025 Share Repurchase Details: | Indicator | Data | | :--- | :--- | | Shares Repurchased | 172,757 shares | | Average Repurchase Price | $28.45/share | | Shares Available for Repurchase (as of June 30, 2025) | 1,005,637 shares | Company Information and Forward-Looking Statements This section provides essential corporate information, conference call details, and important forward-looking statements regarding potential future risks and uncertainties Conference Call Details Univest will host a conference call on July 24, 2025, to discuss Q2 2025 results, with registration and access information provided - The conference call will be held on Thursday, July 24, 2025, at 9:00 AM ET19 - The public can participate by dialing 1-833-470-1428, using access code 74784319 About Univest Financial Corporation Univest Financial Corporation is a Pennsylvania-based financial services company offering comprehensive financial solutions primarily to individuals, businesses, municipalities, and non-profit organizations in the Mid-Atlantic region Company Overview (as of June 30, 2025): | Indicator | Data | | :--- | :--- | | Total Assets | Approximately $7.9 billion | | Assets Under Management and Supervision in Wealth Management | $5.4 billion | | Headquarters | Souderton, Pennsylvania | | Founded | 1876 | Forward-Looking Statements This press release contains forward-looking statements involving risks and uncertainties that could cause Univest's future financial condition and operating results to differ materially from expectations - Forward-looking statements involve several important factors that could cause actual results to differ materially from expectations21 - Risk factors include industry competition, interest rate changes, asset quality, real estate value fluctuations, liquidity, economic conditions, regulatory and accounting changes, government policies, technological failures, and cyberattacks2122 Consolidated Selected Financial Data (Unaudited) This section presents unaudited consolidated financial data, including balance sheets, income statements, and key ratios, for Univest Financial Corporation across recent quarters Balance Sheet (Period End) This section provides detailed period-end balance sheet data for Univest Financial Corporation as of June 30, 2025, and prior quarters Consolidated Balance Sheet (Period End, in thousands): | Indicator | June 30, 2025 | March 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | $160,365 | $169,134 | $328,844 | $504,700 | $190,911 | | Loans and Leases (Held for Investment) | $6,801,185 | $6,833,037 | $6,826,583 | $6,730,734 | $6,684,837 | | Total Assets | $7,939,056 | $7,975,167 | $8,128,417 | $8,205,737 | $7,855,446 | | Total Deposits | $6,582,660 | $6,658,498 | $6,759,259 | $6,854,148 | $6,495,322 | | Total Liabilities | $7,022,323 | $7,071,695 | $7,241,116 | $7,328,666 | $7,001,309 | | Total Shareholders' Equity | $916,733 | $903,472 | $887,301 | $877,071 | $854,137 | Balance Sheet (Average) This section lists average balance sheet data for Univest Financial Corporation as of June 30, 2025, and prior quarters, used for calculating profitability ratios Consolidated Balance Sheet (Average, in thousands): | Indicator | June 30, 2025 | March 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Assets | $7,979,475 | $7,981,043 | $8,163,347 | $8,005,265 | $7,721,540 | | Loans and Leases (Gross) | $6,846,938 | $6,856,503 | $6,758,649 | $6,730,791 | $6,640,536 | | Deposits | $6,633,250 | $6,617,653 | $6,804,483 | $6,641,324 | $6,353,752 | | Shareholders' Equity | $908,536 | $896,811 | $880,237 | $864,406 | $844,572 | Summary of Major Loan and Lease Categories (Period End) This section provides a breakdown of period-end balances for Univest Financial Corporation's major loan and lease categories as of June 30, 2025, and prior quarters Major Loan and Lease Categories (Period End, in thousands): | Category | June 30, 2025 | March 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Commercial, Financial, and Agricultural | $1,052,246 | $1,034,361 | $1,037,835 | $1,044,043 | $1,055,332 | | Real Estate - Commercial | $3,485,615 | $3,546,402 | $3,530,451 | $3,442,083 | $3,373,889 | | Real Estate - Residential (Personal Use) | $984,166 | $992,767 | $994,972 | $969,562 | $952,665 | | Lease Financing | $232,441 | $235,591 | $244,661 | $249,061 | $251,514 | | Total Loans and Leases (Held for Investment) | $6,801,185 | $6,833,037 | $6,826,583 | $6,730,734 | $6,684,837 | Asset Quality Data (Period End) This section provides key asset quality metrics for Univest Financial Corporation as of June 30, 2025, and prior quarters, including nonaccrual loans and nonperforming assets Asset Quality Data (Period End, in thousands): | Indicator | June 30, 2025 | March 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Nonaccrual Loans and Leases | $27,909 | $11,126 | $12,667 | $15,319 | $16,200 | | Total Nonperforming Loans and Leases | $28,034 | $11,448 | $12,988 | $15,629 | $16,405 | | Total Nonperforming Assets | $50,585 | $33,960 | $33,205 | $36,623 | $36,561 | | Nonperforming Assets/Total Assets | 0.64% | 0.43% | 0.41% | 0.45% | 0.47% | | Allowance for Credit Losses on Loans and Leases | $86,989 | $87,790 | $87,091 | $86,041 | $85,745 | | Allowance for Credit Losses on Loans and Leases/Nonperforming Loans and Leases | 310.30% | 766.86% | 670.55% | 550.52% | 522.68% | Net Loan and Lease Charge-offs This section provides data on Univest Financial Corporation's net loan and lease charge-offs as of June 30, 2025, and prior quarters Net Loan and Lease Charge-offs (in thousands): | Period | June 30, 2025 | March 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Loan and Lease Charge-offs | $7,807 | $1,686 | $767 | $820 | $809 | | Net Loan and Lease Charge-offs (Annualized)/Average Loans and Leases | 0.46% | 0.10% | 0.05% | 0.05% | 0.05% | Income Statement This section provides detailed income statement data for Univest Financial Corporation as of June 30, 2025, and prior quarters Consolidated Income Statement (in thousands, except per share data): | Indicator | June 30, 2025 | March 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Interest Income | $105,706 | $103,416 | $107,476 | $106,438 | $99,832 | | Interest Expense | $46,165 | $46,635 | $52,004 | $53,234 | $48,805 | | Net Interest Income | $59,541 | $56,781 | $55,472 | $53,204 | $51,027 | | Provision for Credit Losses | $5,694 | $2,311 | $2,380 | $1,414 | $707 | | Total Noninterest Income | $21,501 | $22,415 | $21,330 | $20,150 | $20,980 | | Total Noninterest Expense | $50,332 | $49,328 | $50,658 | $48,552 | $48,708 | | Net Income | $19,978 | $22,395 | $18,941 | $18,578 | $18,107 | | Diluted Earnings Per Share | $0.69 | $0.77 | $0.65 | $0.63 | $0.62 | Profitability Ratios (Annualized) This section provides Univest Financial Corporation's annualized profitability ratios as of June 30, 2025, and prior quarters Profitability Ratios (Annualized): | Indicator | June 30, 2025 | March 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Return on Average Assets | 1.00% | 1.14% | 0.92% | 0.92% | 0.94% | | Return on Average Shareholders' Equity | 8.82% | 10.13% | 8.56% | 8.55% | 8.62% | | Return on Average Tangible Common Equity | 11.02% | 12.69% | 10.79% | 10.84% | 11.01% | | Net Interest Margin (FTE) | 3.20% | 3.09% | 2.88% | 2.82% | 2.84% | | Efficiency Ratio | 61.6% | 61.6% | 65.5% | 65.7% | 67.1% | Capitalization Ratios This section provides Univest Financial Corporation's capitalization ratios as of June 30, 2025, reflecting the company's capital strength Capitalization Ratios: | Indicator | June 30, 2025 | March 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Dividends Declared to Net Income Ratio | 31.8% | 27.2% | 32.2% | 33.0% | 33.9% | | Shareholders' Equity to Assets Ratio (Period End) | 11.55% | 11.33% | 10.92% | 10.69% | 10.87% | | Tangible Common Equity to Tangible Assets Ratio | 9.52% | 9.31% | 8.92% | 8.71% | 8.81% | | Common Stock Book Value Per Share | $31.82 | $31.19 | $30.55 | $30.16 | $29.26 | | Tangible Common Stock Book Value Per Share | $25.66 | $25.06 | $24.43 | $24.05 | $23.17 | Regulatory Capital Ratios (Period End) This section provides Univest Financial Corporation's period-end regulatory capital ratios as of June 30, 2025, and prior quarters Regulatory Capital Ratios (Period End): | Indicator | June 30, 2025 | March 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Tier 1 Leverage Ratio | 9.94% | 9.80% | 9.51% | 9.53% | 9.74% | | Common Equity Tier 1 Risk-Based Capital Ratio | 11.19% | 10.97% | 10.85% | 10.88% | 10.72% | | Tier 1 Risk-Based Capital Ratio | 11.19% | 10.97% | 10.85% | 10.88% | 10.72% | | Total Risk-Based Capital Ratio | 14.58% | 14.35% | 14.19% | 14.27% | 14.09% | Average Balances and Interest Rates (Tax Equivalent Basis) - Q2 2025 vs Q1 2025 This section details Univest Financial Corporation's average balances, income/expense, and average rates for interest-earning assets and interest-bearing liabilities on a tax-equivalent basis for Q2 2025 and Q1 2025 Average Balances and Interest Rates (Tax Equivalent Basis, in thousands): | Indicator | June 30, 2025 (Average Balance) | June 30, 2025 (Income/Expense) | June 30, 2025 (Average Rate) | March 31, 2025 (Average Balance) | March 31, 2025 (Income/Expense) | March 31, 2025 (Average Rate) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Interest-Earning Assets | $7,512,254 | $106,122 | 5.67% | $7,514,139 | $103,802 | 5.60% | | Total Interest-Bearing Liabilities | $5,568,354 | $46,165 | 3.33% | $5,614,972 | $46,635 | 3.37% | | Net Interest Income | - | $59,957 | - | - | $57,167 | - | | Net Interest Margin | - | - | 3.20% | - | - | 3.09% | Average Balances and Interest Rates (Tax Equivalent Basis) - Q2 2025 vs Q2 2024 This section details Univest Financial Corporation's average balances, income/expense, and average rates for interest-earning assets and interest-bearing liabilities on a tax-equivalent basis for Q2 2025 and Q2 2024 Average Balances and Interest Rates (Tax Equivalent Basis, in thousands): | Indicator | June 30, 2025 (Average Balance) | June 30, 2025 (Income/Expense) | June 30, 2025 (Average Rate) | June 30, 2024 (Average Balance) | June 30, 2024 (Income/Expense) | June 30, 2024 (Average Rate) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Interest-Earning Assets | $7,512,254 | $106,122 | 5.67% | $7,255,508 | $100,116 | 5.55% | | Total Interest-Bearing Liabilities | $5,568,354 | $46,165 | 3.33% | $5,397,431 | $48,805 | 3.64% | | Net Interest Income | - | $59,957 | - | - | $51,311 | - | | Net Interest Margin | - | - | 3.20% | - | - | 2.84% | Average Balances and Interest Rates (Tax Equivalent Basis) - YTD Q2 2025 vs YTD Q2 2024 This section details Univest Financial Corporation's year-to-date average balances, income/expense, and average rates for interest-earning assets and interest-bearing liabilities on a tax-equivalent basis for Q2 2025 and Q2 2024 Average Balances and Interest Rates (Tax Equivalent Basis, in thousands): | Indicator | June 30, 2025 (Average Balance) | June 30, 2025 (Income/Expense) | June 30, 2025 (Average Rate) | June 30, 2024 (Average Balance) | June 30, 2024 (Income/Expense) | June 30, 2024 (Average Rate) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Interest-Earning Assets | $7,513,191 | $209,924 | 5.63% | $7,246,908 | $199,008 | 5.52% | | Total Interest-Bearing Liabilities | $5,591,534 | $92,800 | 3.35% | $5,371,827 | $95,947 | 3.59% | | Net Interest Income | - | $117,124 | - | - | $103,061 | - | | Net Interest Margin | - | - | 3.14% | - | - | 2.86% | Loan Portfolio Overview (Unaudited) This section provides an unaudited overview of Univest Financial Corporation's loan portfolio, detailing commercial loans by industry and consumer loans and lease financings Commercial Loan Portfolio by Industry This section provides detailed data on Univest Financial Corporation's commercial loan portfolio by industry as of June 30, 2025 Commercial Loan Portfolio by Industry (in thousands, as of June 30, 2025): | Industry Description | Total Outstanding Balance | % of Commercial Loan Portfolio | | :--- | :--- | :--- | | Commercial Real Estate - Retail | $453,445 | 8.4% | | Animal Production | $401,946 | 7.5% | | Commercial Real Estate - Multifamily | $360,345 | 6.7% | | Commercial Real Estate - 1-4 Family Residential Investment | $279,322 | 5.2% | | Commercial Real Estate - Office | $262,374 | 4.9% | | Hotels and Motels (Accommodation) | $222,878 | 4.1% | | Commercial Real Estate - Industrial/Warehouse | $222,234 | 4.1% | | Professional Trade Contractors | $197,138 | 3.7% | | Nursing and Residential Care Facilities | $167,978 | 3.1% | | Home Building (Lot Developers, Remodelers) | $154,166 | 2.9% | | Durable Goods Wholesalers | $140,876 | 2.6% | | Repair and Maintenance | $135,318 | 2.5% | | Motor Vehicle and Parts Dealers | $132,852 | 2.5% | | Crop Production | $113,684 | 2.1% | | Commercial Real Estate - Mixed Use - Residential | $113,422 | 2.1% | | Wood Product Manufacturing | $99,041 | 1.8% | | Food Services and Drinking Places | $88,822 | 1.7% | | Real Estate Lenders, Secondary Market Financing | $87,750 | 1.6% | | Administrative and Support Services | $86,092 | 1.6% | | Professional, Scientific, and Technical Services | $85,567 | 1.6% | | Nondurable Goods Wholesalers | $81,836 | 1.5% | | Private Equity and Special Purpose Entities (Excluding 52592) | $76,957 | 1.4% | | Commercial Real Estate - Mixed Use - Commercial | $76,067 | 1.4% | | Fabricated Metal Product Manufacturing | $72,635 | 1.4% | | Amusement, Gambling, and Recreation Industries | $69,971 | 1.3% | | Educational Services | $65,839 | 1.2% | | Religious Organizations, Grantmaking, Civic, Professional, and Similar Organizations | $65,568 | 1.2% | | Personal and Laundry Services | $63,886 | 1.2% | | Mini-Warehouses/Self-Storage | $63,531 | 1.2% | | Food Manufacturing | $53,682 | 1.0% | | Industries with Balances Over $50 Million | $4,495,222 | 83.6% | | Industries with Balances Under $50 Million | $880,273 | 16.4% | | Total Commercial Loans | $5,375,495 | 100.0% | Consumer Loans and Lease Financings This section provides detailed data on Univest Financial Corporation's consumer loans and lease financings as of June 30, 2025 Consumer Loans and Lease Financings (in thousands, as of June 30, 2025): | Category | Total Outstanding Balance | | :--- | :--- | | Real Estate - Residential (Personal Use) | $984,166 | | Real Estate - Home Equity (Personal Use) | $195,014 | | Personal Loans | $14,069 | | Lease Financing | $232,441 | | Total Consumer Loans and Lease Financings | $1,425,690 | | Total | $6,801,185 | Non-GAAP Reconciliation This section reconciles non-GAAP financial measures used by management to their most directly comparable GAAP financial measures, providing clarity on performance analysis Reconciliation of Non-GAAP Measures This section provides a reconciliation of non-GAAP financial measures used by management to analyze company performance to their GAAP-basis counterparts, including net income excluding intangible asset amortization, tangible common equity, and tangible assets - Management uses non-GAAP measures to analyze company performance, which should not be considered substitutes for GAAP-basis measures49 Reconciliation of Non-GAAP Measures (in thousands): | Indicator | June 30, 2025 | March 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Income Excluding Intangible Asset Amortization | $20,081 | $22,498 | $19,063 | $18,708 | $18,256 | | Tangible Common Equity | $739,183 | $725,858 | $709,528 | $699,414 | $676,470 | | Tangible Assets | $7,761,506 | $7,797,553 | $7,950,644 | $8,028,080 | $7,677,779 | | Average Tangible Common Equity | $730,958 | $719,139 | $702,581 | $686,810 | $666,840 |