Univest(US:UVSP)2023-05-02 19:42Financial Performance - The Corporation's net income for the three months ended March 31, 2023, was $21,034,000, representing a 3.5% increase from $20,317,000 in the same period of 2022[147]. - Basic earnings per share increased to $0.72, up 4.3% from $0.69 in the prior year, while diluted earnings per share rose to $0.71, a 4.4% increase from $0.68[147]. - The Corporation's return on average assets was 1.18% for Q1 2023, slightly up from 1.17% in Q1 2022, while return on average equity increased to 10.81% from 10.64%[147]. - Noninterest income decreased to $19.68 million in Q1 2023, down by $790 thousand or 3.9% from $20.47 million in Q1 2022[161]. - Total noninterest expense increased by $4.1 million, or 9.1%, to $49.5 million for the three months ended March 31, 2023[165]. Net Interest Income and Margin - Net interest income on a tax-equivalent basis for Q1 2023 was $59.7 million, a 26.5% increase from $47.2 million in Q1 2022, driven by loan balance growth and higher asset yields[149]. - The tax-equivalent net interest margin improved to 3.58% in Q1 2023, compared to 2.89% in Q1 2022, with excess liquidity having no impact on the margin for the current period[150]. - Net interest income for the three months ended March 31, 2023, was $59.68 million, up from $47.17 million in the same period of 2022, representing a year-over-year increase of 26.5%[156]. - The net interest margin improved to 3.58% in Q1 2023, compared to 2.89% in Q1 2022, reflecting better asset yield management[152]. - Total interest-earning assets amounted to $6.76 billion in Q1 2023, with a net interest spread of 2.80%, up from 2.71% in the previous year[152]. Credit Losses and Provisions - The provision for credit losses was $3.4 million for Q1 2023, compared to a reversal of $3.5 million in Q1 2022, indicating a shift towards increased credit loss provisions[158]. - The allowance for credit losses as a percentage of loans and leases held for investment was 1.28% as of March 31, 2023, slightly down from 1.29% at the end of 2022[158]. - Net loan and lease charge-offs for the three months ended March 31, 2023, were $2.8 million compared to $76 thousand for the same period in the prior year[178]. Assets and Liabilities - Total assets increased to $7.22 billion as of March 31, 2023, compared to $7.05 billion in the previous year, reflecting a growth of approximately 2.5%[152]. - Total liabilities increased to $6.43 billion as of March 31, 2023, compared to $6.27 billion in the previous year, marking a growth of approximately 2.6%[152]. - Total deposits decreased by $78.9 million, or 1.3%, from December 31, 2022, primarily due to decreases in commercial and consumer deposits[188]. - Total borrowings increased by $199.9 million, or 45.4%, from December 31, 2022, driven by increases in short-term FHLB overnight borrowings and federal funds purchased[189]. Business Strategy and Risks - The Corporation aims to achieve reliable earnings through business growth while maintaining adequate capital and liquidity levels[146]. - The Corporation is exposed to various risks, including economic conditions, regulatory changes, and competition for loans and deposits[140]. - The management has identified critical accounting policies that could materially affect financial results, particularly regarding fair value measurement and credit loss allowances[143]. - The Corporation's business strategy includes expanding its market presence and enhancing its service offerings through subsidiaries[145]. Segment Performance - The Banking segment reported pre-tax income of $25.7 million for the three months ended March 31, 2023, compared to $22.8 million for the same period in 2022[194]. - The Wealth Management segment's pre-tax income decreased to $825 thousand for the three months ended March 31, 2023, down from $2.4 million in 2022, attributed to reduced assets under management[195]. - The Insurance segment reported pre-tax income of $2.7 million for the three months ended March 31, 2023, an increase from $1.7 million in 2022, driven by higher premiums[196]. Capital and Liquidity - The Corporation's total capital to risk-weighted assets ratio was 13.78% as of March 31, 2023, exceeding the required minimum of 8.00%[200]. - The Corporation and the Bank were in compliance with all capital adequacy requirements as of March 31, 2023, with the Bank categorized as "well capitalized"[200]. - The Corporation's cash and cash equivalents were $138.3 million as of March 31, 2023[208]. - Securities classified as available-for-sale totaled $367.7 million at March 31, 2023, providing additional liquidity sources[208]. - The Corporation had committed borrowing capacity of $3.1 billion from the Federal Home Loan Bank and Federal Reserve Bank, with $1.9 billion available as of March 31, 2023[208]. Funding Sources - Core deposits remain the largest funding source, generated from individuals, businesses, municipalities, and non-profits in primary service areas[209]. - The Corporation utilizes a mix of short-term and long-term wholesale funding, including federal funds purchases and secured borrowing lines[210]. - The most significant cash requirements are for repaying certificates of deposit and long-term borrowings[211]. - Commitments to extend credit are the Corporation's most significant commitment, often expiring without being drawn upon[212]. - No material changes in the Corporation's market risk occurred during the period ended March 31, 2023[213].