Univest(UVSP) - 2021 Q2 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements Unaudited financial statements show Univest Financial Corporation's total assets at $6.36 billion, with Q2 2021 net income at $20.9 million, primarily due to credit loss provision reversal Condensed Consolidated Balance Sheets Total assets reached $6.36 billion as of June 30, 2021, supported by increased deposits and modest loan growth, with shareholders' equity rising to $740.0 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | At June 30, 2021 | At December 31, 2020 | | :--- | :--- | :--- | | Total Assets | $6,356,305 | $6,336,496 | | Net loans and leases held for investment | $5,255,958 | $5,223,797 | | Total deposits | $5,318,704 | $5,242,715 | | Total Liabilities | $5,616,307 | $5,644,024 | | Total Shareholders' Equity | $739,998 | $692,472 | Condensed Consolidated Statements of Income Net income for Q2 2021 surged to $20.9 million, primarily due to a credit loss provision reversal, with six-month net income reaching $53.5 million Key Income Statement Data (in thousands, except per share data) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $46,757 | $43,518 | $92,171 | $85,986 | | (Reversal of provision) provision for credit losses | ($59) | $23,737 | ($11,342) | $45,580 | | Total Noninterest Income | $20,230 | $18,000 | $43,480 | $36,384 | | Total Noninterest Expense | $41,286 | $35,960 | $80,826 | $74,737 | | Net Income | $20,875 | $2,085 | $53,478 | $2,923 | | Diluted EPS | $0.71 | $0.07 | $1.81 | $0.10 | Condensed Consolidated Statements of Comprehensive Income Total comprehensive income for Q2 2021 was $21.8 million, and $56.1 million for the six-month period, driven by higher net income and unrealized gains on investments Comprehensive Income Summary (in thousands) | Metric | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net Income | $20,875 | $53,478 | | Other Comprehensive Income | $895 | $2,599 | | Total Comprehensive Income | $21,770 | $56,077 | Condensed Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity increased to $740.0 million by June 30, 2021, primarily due to net income and other comprehensive income, partially offset by dividends - Total shareholders' equity grew by $47.5 million during the first six months of 2021[18] - Key drivers of the equity increase were net income ($53.5 million) and other comprehensive income ($2.6 million), offset by cash dividends ($11.7 million)[18] Condensed Consolidated Statements of Cash Flows Net cash decreased by $16.4 million for the six months ended June 30, 2021, with $48.4 million from operations offset by cash used in investing and financing activities Six-Month Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2021 | | :--- | :--- | | Net cash provided by operating activities | $48,393 | | Net cash used in investing activities | ($37,813) | | Net cash (used in) provided by financing activities | ($26,989) | | Net (decrease) in cash and cash equivalents | ($16,409) | Notes to Condensed Consolidated Financial Statements The notes provide detailed disclosures on accounting policies, investment and loan composition, credit quality, and segment performance, including Banking, Wealth Management, and Insurance Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the significant increase in net income for Q2 and H1 2021 to credit loss provision reversal, PPP loan forgiveness, and noninterest income growth, reflecting solid financial condition - Net income for Q2 2021 was $20.9 million ($0.71/share), up from $2.1 million ($0.07/share) in Q2 2020[158] - The reversal of provision for credit losses was a key driver of profitability, contributing a pre-tax benefit of $2.8 million in Q2 2021 due to favorable economic assumptions, in stark contrast to a $23.7 million provision in Q2 2020[159][170] - Paycheck Protection Program (PPP) loans contributed significantly to net interest income, with $4.8 million recognized in Q2 2021, of which $3.7 million was from loan forgiveness and pay downs[161] - Nonperforming assets decreased to $38.5 million at June 30, 2021, from $40.5 million at December 31, 2020, indicating improved asset quality[191] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes in the Corporation's market risk were reported for Q2 2021, with further details available in the 2020 Annual Report on Form 10-K - No material changes in the Corporation's market risk were reported for the period[226] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[227] - No changes in internal control over financial reporting that could materially affect it were identified during the quarter[228] Part II. Other Information Item 1. Legal Proceedings The Corporation is subject to legal actions, but management believes any financial responsibility will not materially affect its financial position or operations - The Corporation does not expect pending legal actions to have a material adverse effect on its financial condition or operations[230] Item 1A. Risk Factors No material changes to risk factors were reported since the Corporation's Annual Report on Form 10-K for the year ended December 31, 2020 - No material changes to risk factors were reported since the last Annual Report on Form 10-K[231] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Corporation did not repurchase common stock during Q2 2021, with 679,174 shares remaining available under the existing repurchase program Issuer Purchases of Equity Securities (April 1 - June 30, 2021) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Maximum Number of Shares that May Yet Be Purchased | | :--- | :--- | :--- | :--- | | April 1 – 30, 2021 | 0 | $— | 679,174 | | May 1 – 31, 2021 | 0 | $— | 679,174 | | June 1 – 30, 2021 | 0 | $— | 679,174 | Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - There were no defaults upon senior securities during the period[235] Item 4. Mine Safety Disclosures This section is not applicable to the Corporation's operations - This section is not applicable to the Corporation[235] Item 5. Other Information No other material information was reported for the period - No other information was reported for the period[236] Item 6. Exhibits This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications and financial statements in Inline XBRL format - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and financial data in Inline XBRL format (101, 104)[239]