Univest(US:UVSP)2022-08-02 17:33Financial 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].