Univest(US:UVSP)2022-05-03 15:55Financial 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]