UVSP Univest Financial Corporation

Univest Financial Corporation (“Univest” or the "Corporation") (NASDAQ: UVSP), parent company of Univest Bank and Trust Co. (the "Bank") and its insurance, investments and equipment financing subsidiaries, announced net income for the quarter ended September 30, 2023 was $17.0 million, or $0.58 diluted earnings per share, compared to net income of $20.8 million, or $0.71 diluted earnings per share, for the quarter ended September 30, 2022.

LoansGross loans and leases increased $112.7 million, or 1.7% (7.0% annualized), from June 30, 2023, primarily due to increases in commercial, commercial real estate, construction and residential mortgage loans. Gross loans and leases increased $451.7 million, or 7.4% (9.8% annualized), from December 31, 2022, primarily due to increases in commercial real estate, construction, residential mortgage loans and lease financings.

Deposits and LiquidityTotal deposits increased $451.8 million, or 7.5% (30.2% annualized), from June 30, 2023 and $525.6 million, or 8.9% (11.9% annualized), from December 31, 2022. The increase from June 30, 2023 was primarily due to seasonal increases in public funds partially offset by decreases in commercial and consumer deposits. The increase from December 31, 2022 was primarily due to increases in brokered deposits and seasonal public funds deposits partially offset by decreases in commercial and consumer deposits. Noninterest-bearing deposits represented 22.2% of total deposits at September 30, 2023, down from 26.4% at June 30, 2023. At September 30, 2023, unprotected deposits, which excludes insured accounts, internal accounts, and collateralized trust accounts, represented 20.8% of total deposits, down from 23.3% at June 30, 2023.

As of September 30, 2023, the Corporation had cash and cash equivalents totaling $290.3 million. The Corporation and its subsidiaries had committed borrowing capacity of $3.3 billion at September 30, 2023, of which $1.7 billion was available. The Corporation and its subsidiaries also maintained unused uncommitted funding sources from correspondent banks of $369.0 million at September 30, 2023. Future availability under these uncommitted funding sources is subject to the prerogatives of the granting banks and may be withdrawn at will.

Net Interest Income and MarginNet interest income of $53.6 million for the three months ended September 30, 2023 decreased $740 thousand, or 1.4%, from the three months ended June 30, 2023, and $4.7 million, or 8.0%, from the three months ended September 30, 2022. The decrease in net interest income for both comparison periods was due to increases in the cost of funds and the average balance of interest-bearing liabilities, partially offset by an increase in the yield and average balance of interest-earning assets.

Net interest margin, on a tax-equivalent basis, was 2.96% for the third quarter of 2023, compared to 3.14% for the second quarter of 2023 and 3.67% for the third quarter of 2022. Excess liquidity reduced net interest margin by approximately four basis points for the quarter ended September 30, 2023, and approximately one basis point for the quarter ended September 30, 2022. Excess liquidity had no impact on the quarter ended June 30, 2023.

Noninterest IncomeNoninterest income for the quarter ended September 30, 2023 was $18.7 million, an increase of $732 thousand, or 4.1%, compared to the third quarter of 2022.

Investment advisory commission and fee income increased $644 thousand, or 15.3%, for the quarter ended September 30, 2023, primarily due to new customer relationships and appreciation of assets under management, as a majority of investment advisory fees are billed based on the prior quarter-end assets under management balance. Insurance commission and fee income increased $410 thousand, or 9.2%, for the quarter ended September 30, 2023, primarily due to increased revenue from commercial lines. Net gain on mortgage banking activities increased $399 thousand, or 48.8%, for the quarter ended September 30, 2023, due to increased volume.

Bank owned life insurance ("BOLI") decreased $347 thousand, or 30.1%, for the quarter ended September 30, 2023, primarily due to a death benefit claim of $446 thousand received in the third quarter of 2022. Other income decreased $639 thousand, or 73.7%, for the quarter ended September 30, 2023, primarily due to a $412 thousand decrease in the gain on sale of Small Business Administration ("SBA") loans.

Noninterest ExpenseNoninterest expense for the quarter ended September 30, 2023 was $49.0 million, an increase of $2.3 million, or 5.0%, compared to the third quarter of 2022.

Salaries, benefits and commissions increased $578 thousand, or 2.0%, for the quarter ended September 30, 2023. This increase reflects our expansion into Maryland and Western Pennsylvania and annual merit increases, increases in medical claims expense and decreases in compensation capitalized driven by lower loan production, offset by decreases due to the staff reduction that was announced during the second quarter and a reduction in incentive compensation due to decreased profitability.

Deposit insurance premiums increased $596 thousand, or 90.0%, for the quarter ended September 30, 2023, primarily driven by an increased industry-wide assessment rate and an increase in our assessment base.

Other expense increased $1.5 million, or 26.7%, for the quarter ended September 30, 2023, primarily due to increases in retirement plan costs of $527 thousand. Other increases included $324 thousand of loan processing and workout fees. Federal Home Loan Bank letter of credit fees increased by $138 thousand due to increased public fund deposits and related collateral costs.

Professional fees decreased $758 thousand, or 30.1%, for the quarter ended September 30, 2023, primarily due to consultant fees incurred in the third quarter of 2022 related to our digital transformation initiative.

Tax Provision The effective income tax rate was 20.0% for the quarters ended September 30, 2023 and 2022. The effective tax rates for the three months ended September 30, 2023 and 2022 reflected the benefits of tax-exempt income from investments in municipal securities and loans and leases.

Asset Quality and Provision for Credit LossesNonperforming assets were $40.1 million at September 30, 2023, compared to $34.5 million at June 30, 2023 and $33.0 million at September 30, 2022. On October 16, 2023, a $5.8 million loan was sold at par. This loan was classified as nonperforming at September 30, 2023.

Net loan and lease charge-offs were $969 thousand for the three months ended September 30, 2023 compared to $512 thousand and $1.2 million for the three months ended June 30, 2023 and September 30, 2022, respectively.

The provision for credit losses was $2.0 million for the three months ended September 30, 2023 compared to $3.4 million and $3.6 million for the three months ended June 30, 2023 and September 30, 2022, respectively. The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment was 1.28% at September 30, 2023, June 30, 2023 and September 30, 2022.

DividendOn October 25, 2023, Univest declared a quarterly cash dividend of $0.21 per share to be paid on November 22, 2023 to shareholders of record as of November 8, 2023.

Conference CallUnivest will host a conference call to discuss third quarter 2023 results on Thursday, October 26, 2023 at 9:00 a.m. EST. Participants may preregister at https://www.netroadshow.com/events/login?show=05f2e363&confId=56351. The general public can access the call by dialing 1-833-470-1428; using Access Code 988711. A replay of the conference call will be available through November 23, 2023 by dialing 1-866-813-9403; using Access Code 428932.

About Univest Financial CorporationUnivest Financial Corporation (UVSP), including its wholly-owned subsidiary Univest Bank and Trust Co., Member FDIC, has approximately $7.8 billion in assets and $4.3 billion in assets under management and supervision through its Wealth Management lines of business at September 30, 2023. Headquartered in Souderton, Pa. and founded in 1876, the Corporation and its subsidiaries provide a full range of financial solutions for individuals, businesses, municipalities and nonprofit organizations primarily in the Mid-Atlantic Region. Univest delivers these services through a network of more than 50 offices and online at www.univest.net.

This press release and the reports Univest files with the Securities and Exchange Commission often contain "forward-looking statements" relating to trends or factors affecting the financial services industry and, specifically, the financial condition and results of operations, business, prospects and strategies of Univest. These forward-looking statements involve certain risks and uncertainties in that there are a number of important factors that could cause Univest's future financial condition, results of operations, business, prospects or strategies to differ materially from those expressed or implied by the forward-looking statements. These factors include, but are not limited to: (1) competition; (2) inflation and/or changes in interest rates, which may adversely impact our margins and yields, reduce the fair value of our financial instruments, reduce our loan originations and/or lead to higher operating costs; (3) changes in asset quality, prepayment speeds, loan sale volumes, charge-offs and/or credit loss provisions; (4) changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio; (5) changes in economic conditions nationally and in our market; (6) economic assumptions that may impact our allowance for credit losses calculation; (7) legislative, regulatory, accounting or tax changes; (8) technological issues that may adversely affect our operations or those of our customers; (9) changes in the securities markets; (10) the current or anticipated impact of military conflict, terrorism or other geopolitical events; (11) our ability to enter into new markets successfully and capitalize on growth opportunities and/or (12) risk factors mentioned in the reports and registration statements Univest files with the Securities and Exchange Commission.

(UVSP - ER)

Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
September 30, 2023
(Dollars in thousands)
Balance Sheet (Period End)		09/30/23				06/30/23				03/31/23				12/31/22				09/30/22
ASSETS
Cash and due from banks		$	68,900			$	80,795			$	71,215			$	84,176			$	65,859
Interest-earning deposits with other banks			221,441				59,616				67,109				68,623				47,451
Cash and cash equivalents			290,341				140,411				138,324				152,799				113,310
Investment securities held-to-maturity			149,451				153,509				151,347				154,727				159,170
Investment securities available for sale, net of allowance for credit losses			334,538				356,164				367,656				350,256				347,479
Investments in equity securities			4,054				3,443				3,105				2,579				2,994
Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost			42,417				42,811				43,792				33,841				29,475
Loans held for sale			16,473				29,526				5,425				5,037				9,087
Loans and leases held for investment			6,574,958				6,462,238				6,239,804				6,123,230				5,849,259
Less: Allowance for credit losses, loans and leases			(83,837	)			(82,709	)			(80,034	)			(79,004	)			(74,929	)
Net loans and leases held for investment			6,491,121				6,379,529				6,159,770				6,044,226				5,774,330
Premises and equipment, net			51,287				52,058				52,334				50,939				50,533
Operating lease right-of-use assets			31,053				30,237				31,663				30,059				30,654
Goodwill			175,510				175,510				175,510				175,510				175,510
Other intangibles, net of accumulated amortization			11,079				10,923				11,044				11,384				11,650
Bank owned life insurance			130,522				129,715				128,926				120,297				120,035
Accrued interest and other assets			100,220				96,314				90,095				90,362				83,170
Total assets		$	7,828,066			$	7,600,150			$	7,358,991			$	7,222,016			$	6,907,397
LIABILITIES
Noninterest-bearing deposits		$	1,432,559			$	1,582,767			$	1,799,225			$	2,047,263			$	1,968,422
Interest-bearing deposits:			5,006,606				4,404,635				4,035,432				3,866,263				3,818,554
Total deposits			6,439,165				5,987,402				5,834,657				5,913,526				5,786,976
Short-term borrowings			14,676				244,666				271,881				197,141				80,711
Long-term debt			320,000				320,000				220,000				95,000				95,000
Subordinated notes			148,636				148,510				148,385				148,260				99,107
Operating lease liabilities			34,017				33,428				34,846				33,153				33,718
Accrued expenses and other liabilities			64,374				60,922				50,726				58,436				57,698
Total liabilities			7,020,868				6,794,928				6,560,495				6,445,516				6,153,210
SHAREHOLDERS' EQUITY
Common stock, $5 par value: 48,000,000 shares authorized and 31,556,799 shares issued			157,784				157,784				157,784				157,784				157,784
Additional paid-in capital			300,171				299,212				298,167				300,808				299,791
Retained earnings			464,634				453,806				443,493				428,637				410,942
Accumulated other comprehensive loss, net of tax benefit			(71,586	)			(61,034	)			(55,550	)			(62,104	)			(64,985	)
Treasury stock, at cost			(43,805	)			(44,546	)			(45,398	)			(48,625	)			(49,345	)
Total shareholders’ equity			807,198				805,222				798,496				776,500				754,187
Total liabilities and shareholders’ equity		$	7,828,066			$	7,600,150			$	7,358,991			$	7,222,016			$	6,907,397
		For the three months ended,																				For the nine months ended,
Balance Sheet (Average)		09/30/23				06/30/23				03/31/23				12/31/22				09/30/22				09/30/23			09/30/22
Assets		$	7,693,983			$	7,440,798			$	7,219,211			$	7,019,381			$	6,797,466			$	7,453,070		$	6,935,031
Investment securities, net of allowance for credit losses			506,341				518,995				515,880				505,717				517,335				513,704			518,383
Loans and leases, gross			6,537,169				6,372,342				6,164,890				5,979,581				5,752,119				6,359,498			5,540,624
Deposits			6,222,710				5,844,582				5,834,415				5,837,823				5,645,291				5,968,659			5,843,182
Shareholders' equity			811,515				806,709				789,153				767,192				773,099				802,541			772,951

Univest Financial Corporation
Consolidated Summary of Loans by Type and Asset Quality Data (Unaudited)
September 30, 2023
(Dollars in thousands)
Summary of Major Loan and Lease Categories (Period End)		09/30/23				06/30/23				03/31/23				12/31/22				09/30/22
Commercial, financial and agricultural		$	1,050,004			$	1,039,265			$	1,032,753			$	1,088,928			$	1,054,940
Real estate-commercial			3,275,140				3,221,993				3,128,210				3,027,955				2,936,204
Real estate-construction			427,561				413,404				376,569				381,811				329,915
Real estate-residential secured for business purpose			516,471				517,521				498,505				478,254				443,837
Real estate-residential secured for personal purpose			861,122				832,632				779,557				730,395				685,771
Real estate-home equity secured for personal purpose			176,855				175,090				172,073				176,699				175,843
Loans to individuals			27,331				25,544				28,656				27,873				26,679
Lease financings			240,474				236,789				223,481				211,315				196,070
Total loans and leases held for investment, net of deferred income			6,574,958				6,462,238				6,239,804				6,123,230				5,849,259
Less: Allowance for credit losses, loans and leases			(83,837	)			(82,709	)			(80,034	)			(79,004	)			(74,929	)
Net loans and leases held for investment		$	6,491,121			$	6,379,529			$	6,159,770			$	6,044,226			$	5,774,330
Asset Quality Data (Period End)		09/30/23				06/30/23				03/31/23				12/31/22				09/30/22
Nonaccrual loans and leases, including nonaccrual loans held for sale*		$	18,085			$	15,087			$	11,362			$	13,353			$	13,620
Accruing loans and leases 90 days or more past due			2,135				55				1,996				875				416
Total nonperforming loans and leases			20,220				15,142				13,358				14,228				14,036
Other real estate owned			19,916				19,345				19,000				19,258				18,960
Total nonperforming assets		$	40,136			$	34,487			$	32,358			$	33,486			$	32,996
Nonaccrual loans and leases / Loans and leases held for investment			0.28	%			0.23	%			0.18	%			0.22	%			0.23	%
Nonperforming loans and leases / Loans and leases held for investment			0.31	%			0.23	%			0.21	%			0.23	%			0.24	%
Nonperforming assets / Total assets			0.51	%			0.45	%			0.44	%			0.46	%			0.48	%
Allowance for credit losses, loans and leases		$	83,837			$	82,709			$	80,034			$	79,004			$	74,929
Allowance for credit losses, loans and leases / Loans and leases held for investment			1.28	%			1.28	%			1.28	%			1.29	%			1.28	%
Allowance for credit losses, loans and leases / Nonaccrual loans and leases			463.57	%			548.21	%			704.40	%			591.66	%			550.14	%
Allowance for credit losses, loans and leases / Nonperforming loans and leases			414.62	%			546.22	%			599.15	%			555.27	%			533.83	%
*Includes a $5.8 million loan held for sale at September 30, 2023.
		For the three months ended,																				For the nine months ended,
		09/30/23				06/30/23				03/31/23				12/31/22				09/30/22				09/30/23				09/30/22
Net loan and lease charge-offs		$	969			$	512			$	2,842			$	908			$	1,196			$	4,323			$	2,987
Net loan and lease charge-offs (annualized)/Average loans and leases			0.06	%			0.03	%			0.19	%			0.06	%			0.08	%			0.09	%			0.07	%

Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
September 30, 2023
(Dollars in thousands, except per share data)
		For the three months ended,															For the nine months ended,
For the period:		09/30/23			06/30/23			03/31/23			12/31/22			09/30/22			09/30/23			09/30/22
Interest income		$	97,106		$	90,139		$	83,253		$	77,401		$	66,877			270,498		$	174,792
Interest expense			43,516			35,809			23,936			15,485			8,627			103,261			18,411
Net interest income			53,590			54,330			59,317			61,916			58,250			167,237			156,381
Provision for credit losses			2,024			3,428			3,387			5,416			3,558			8,839			6,782
Net interest income after provision for credit losses			51,566			50,902			55,930			56,500			54,692			158,398			149,599
Noninterest income:
Trust fee income			1,910			1,924			1,955			1,808			1,835			5,789			5,935
Service charges on deposit accounts			1,816			1,725			1,547			1,575			1,522			5,088			4,600
Investment advisory commission and fee income			4,843			4,708			4,752			5,585			4,199			14,303			14,163
Insurance commission and fee income			4,852			5,108			6,487			4,424			4,442			16,447			14,641
Other service fee income			3,020			3,318			3,076			3,236			3,124			9,414			9,189
Bank owned life insurance income			806			789			767			1,230			1,153			2,362			2,557
Net gain on sales of investment securities			-			-			-			-			-			-			30
Net gain on mortgage banking activities			1,216			1,039			625			436			817			2,880			3,976
Other income			228			1,222			471			2,164			867			1,921			2,336
Total noninterest income			18,691			19,833			19,680			20,458			17,959			58,204			57,427
Noninterest expense:
Salaries, benefits and commissions			29,978			29,875			31,014			29,028			29,400			90,867			86,778
Net occupancy			2,594			2,614			2,727			2,551			2,504			7,935			7,642
Equipment			1,087			986			993			977			968			3,066			2,927
Data processing			4,189			4,137			4,029			4,039			3,901			12,355			11,176
Professional fees			1,763			1,669			1,941			1,829			2,521			5,373			7,503
Marketing and advertising			555			622			371			739			605			1,548			1,723
Deposit insurance premiums			1,258			1,116			1,101			708			662			3,475			2,367
Intangible expenses			220			253			253			301			309			726			992
Restructuring charges			-			1,330			-			184			-			1,330			-
Other expense			7,344			7,197			7,100			6,970			5,795			21,641			18,340
Total noninterest expense			48,988			49,799			49,529			47,326			46,665			148,316			139,448
Income before taxes			21,269			20,936			26,081			29,632			25,986			68,286			67,578
Income tax expense			4,253			4,136			5,047			5,796			5,185			13,436			13,294
Net income		$	17,016		$	16,800		$	21,034		$	23,836		$	20,801		$	54,850		$	54,284
Net income per share:
Basic		$	0.58		$	0.57		$	0.72		$	0.82		$	0.71		$	1.86		$	1.85
Diluted		$	0.58		$	0.57		$	0.71		$	0.81		$	0.71		$	1.86		$	1.84
Dividends declared per share		$	0.21		$	0.21		$	0.21		$	0.21		$	0.21		$	0.63		$	0.62
Weighted average shares outstanding			29,479,066			29,439,392			29,312,265			29,251,293			29,290,829			29,410,852			29,440,228
Period end shares outstanding			29,508,128			29,471,124			29,427,696			29,271,915			29,242,451			29,508,128			29,242,451

Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
September 30, 2023
					For the three months ended,																				For the nine months ended,
Profitability Ratios (annualized)					09/30/23				06/30/23				03/31/23				12/31/22				09/30/22				09/30/23				09/30/22
Return on average assets						0.88	%			0.91	%			1.18	%			1.35	%			1.21	%			0.98	%			1.05	%
Return on average assets, excluding restructuring						0.88	%			0.96	%			1.18	%			1.36	%			1.21	%			1.00	%			1.05	%
charges (1)
Return on average shareholders' equity						8.32	%			8.35	%			10.81	%			12.33	%			10.67	%			9.14	%			9.39	%
Return on average shareholders' equity, excluding						8.32	%			8.88	%			10.81	%			12.40	%			10.67	%			9.31	%			9.39	%
restructuring charges (1)
Return on average tangible common equity (1)(3)						10.77	%			10.85	%			14.11	%			16.23	%			14.06	%			11.87	%			12.40	%
Return on average tangible common equity, excluding						10.77	%			11.52	%			14.11	%			16.33	%			14.06	%			12.10	%			12.40	%
restructuring charges (1)(3)
Net interest margin (FTE)						2.96	%			3.14	%			3.58	%			3.76	%			3.67	%			3.22	%			3.25	%
Efficiency ratio (2)						67.3	%			66.7	%			62.2	%			56.9	%			60.6	%			65.3	%			64.6	%
Efficiency ratio, excluding restructuring charges (1)(2)						67.3	%			64.9	%			62.2	%			56.7	%			60.6	%			64.7	%			64.6	%
Capitalization Ratios
Dividends declared to net income						36.4	%			36.8	%			29.2	%			25.8	%			29.6	%			33.8	%			33.6	%
Shareholders' equity to assets (Period End)						10.31	%			10.59	%			10.85	%			10.75	%			10.92	%			10.31	%			10.92	%
Tangible common equity to tangible assets (1)						8.22	%			8.45	%			8.63	%			8.49	%			8.55	%			8.22	%			8.55	%
Common equity book value per share					$	27.36			$	27.32			$	27.13			$	26.53			$	25.79			$	27.36			$	25.79
Tangible common equity book value per share (1)					$	21.32			$	21.27			$	21.07			$	20.42			$	19.67			$	21.32			$	19.67
Regulatory Capital Ratios (Period End)
Tier 1 leverage ratio						9.43	%			9.59	%			9.71	%			9.81	%			9.87	%			9.43	%			9.87	%
Common equity tier 1 risk-based capital ratio						10.32	%			10.26	%			10.43	%			10.37	%			10.51	%			10.32	%			10.51	%
Tier 1 risk-based capital ratio						10.32	%			10.26	%			10.43	%			10.37	%			10.51	%			10.32	%			10.51	%
Total risk-based capital ratio						13.58	%			13.54	%			13.78	%			13.67	%			13.10	%			13.58	%			13.10	%
(1) Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included below.
(2) Noninterest expense to net interest income before loan loss provision plus noninterest income adjusted for tax equivalent income.
(3) Net income before amortization of intangibles to average tangible common equity.

Univest Financial Corporation
Average Balances and Interest Rates (Unaudited)
				For the Three Months Ended,
Tax Equivalent Basis	September 30, 2023							June 30, 2023
	Average			Income/		Average		Average			Income/		Average
(Dollars in thousands)	Balance			Expense		Rate		Balance			Expense		Rate
Assets:
Interest-earning deposits with other banks	$	143,109		$	1,865	5.17	%	$	46,897		$	512	4.38	%
Obligations of state and political subdivisions*		2,281			16	2.78			2,284			15	2.63
Other debt and equity securities		504,060			3,540	2.79			516,711			3,512	2.73
Federal Home Loan Bank, Federal Reserve Bank and other stock		40,406			712	6.99			43,783			781	7.15
Total interest-earning deposits, investments and other interest-earning assets		689,856			6,133	3.53			609,675			4,820	3.17
Commercial, financial, and agricultural loans		995,355			17,545	6.99			1,005,499			16,919	6.75
Real estate—commercial and construction loans		3,552,709			49,548	5.53			3,445,431			45,960	5.35
Real estate—residential loans		1,543,360			18,270	4.70			1,483,478			17,216	4.65
Loans to individuals		26,538			525	7.85			26,794			479	7.17
Municipal loans and leases *		234,685			2,430	4.11			234,940			2,388	4.08
Lease financings		184,522			2,928	6.30			176,200			2,659	6.05
Gross loans and leases		6,537,169			91,246	5.54			6,372,342			85,621	5.39
Total interest-earning assets		7,227,025			97,379	5.35			6,982,017			90,441	5.20
Cash and due from banks		62,673							58,675
Allowance for credit losses, loans and leases		(83,827	)						(81,641	)
Premises and equipment, net		52,071							52,540
Operating lease right-of-use assets		31,647							31,200
Other assets		404,394							398,007
Total assets	$	7,693,983						$	7,440,798
Liabilities:
Interest-bearing checking deposits	$	1,070,063		$	6,703	2.49	%	$	1,011,889		$	5,392	2.14	%
Money market savings		1,645,210			17,850	4.30			1,460,899			14,089	3.87
Regular savings		828,672			861	0.41			888,680			845	0.38
Time deposits		1,140,622			11,668	4.06			823,665			7,141	3.48
Total time and interest-bearing deposits		4,684,567			37,082	3.14			4,185,133			27,467	2.63
Short-term borrowings		93,028			1,117	4.76			255,090			3,249	5.11
Long-term debt		320,000			3,036	3.76			301,593			2,811	3.74
Subordinated notes		148,568			2,281	6.09			148,443			2,282	6.17
Total borrowings		561,596			6,434	4.55			705,126			8,342	4.75
Total interest-bearing liabilities		5,246,163			43,516	3.29			4,890,259			35,809	2.94
Noninterest-bearing deposits		1,538,143							1,659,449
Operating lease liabilities		34,788							34,415
Accrued expenses and other liabilities		63,374							49,966
Total liabilities		6,882,468							6,634,089
Total interest-bearing liabilities and noninterest-bearing deposits ("Cost of Funds")		6,784,306				2.54			6,549,708				2.19
Shareholders' Equity:
Common stock		157,784							157,784
Additional paid-in capital		299,575							298,788
Retained earnings and other equity		354,156							350,137
Total shareholders' equity		811,515							806,709
Total liabilities and shareholders' equity	$	7,693,983						$	7,440,798
Net interest income				$	53,863						$	54,632
Net interest spread						2.06							2.26
Effect of net interest-free funding sources						0.90							0.88
Net interest margin						2.96	%						3.14	%
Ratio of average interest-earning assets to average interest-bearing liabilities		137.76	%						142.77	%
* Obligations of states and political subdivisions and municipal loans and leases are tax-exempt earning assets.
Notes: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
Net interest income includes net deferred costs amortization of $563 thousand and $668 thousand for the three months ended September 30, 2023 and June 30, 2023, respectively.
Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included in the average loan balances. Tax-equivalent amounts for the three months ended September 30, 2023 and June 30, 2023 have been calculated using the Corporation’s federal applicable rate of 21.0%.

Univest Financial Corporation
Average Balances and Interest Rates (Unaudited)
				For the Three Months Ended September 30,
Tax Equivalent Basis					2023							2022
	Average			Income/		Average		Average			Income/		Average
(Dollars in thousands)	Balance			Expense		Rate		Balance			Expense		Rate
Assets:
Interest-earning deposits with other banks	$	143,109		$	1,865	5.17	%	$	49,476		$	252	2.02	%
U.S. government obligations		-			-	-			565			3	2.11
Obligations of state and political subdivisions*		2,281			16	2.78			2,308			18	3.09
Other debt and equity securities		504,060			3,540	2.79			514,462			3,010	2.32
Federal Home Loan Bank, Federal Reserve Bank and other stock		40,406			712	6.99			28,368			435	6.08
Total interest-earning deposits, investments and other interest-earning assets		689,856			6,133	3.53			595,179			3,718	2.48
Commercial, financial, and agricultural loans		995,355			17,545	6.99			981,303			12,036	4.87
Real estate—commercial and construction loans		3,552,709			49,548	5.53			3,105,821			34,100	4.36
Real estate—residential loans		1,543,360			18,270	4.70			1,256,509			12,492	3.94
Loans to individuals		26,538			525	7.85			27,197			381	5.56
Municipal loans and leases*		234,685			2,430	4.11			235,433			2,432	4.10
Lease financings		184,522			2,928	6.30			145,856			2,195	5.97
Gross loans and leases		6,537,169			91,246	5.54			5,752,119			63,636	4.39
Total interest-earning assets		7,227,025			97,379	5.35			6,347,298			67,354	4.21
Cash and due from banks		62,673							62,930
Allowance for credit losses, loans and leases		(83,827	)						(72,355	)
Premises and equipment, net		52,071							50,476
Operating lease right-of-use assets		31,647							30,740
Other assets		404,394							378,377
Total assets	$	7,693,983						$	6,797,466
Liabilities:
Interest-bearing checking deposits	$	1,070,063		$	6,703	2.49	%	$	881,395		$	1,251	0.56	%
Money market savings		1,645,210			17,850	4.30			1,246,795			3,709	1.18
Regular savings		828,672			861	0.41			1,086,191			302	0.11
Time deposits		1,140,622			11,668	4.06			416,539			1,189	1.13
Total time and interest-bearing deposits		4,684,567			37,082	3.14			3,630,920			6,451	0.70
Short-term borrowings		93,028			1,117	4.76			104,453			524	1.99
Long-term debt		320,000			3,036	3.76			95,000			324	1.35
Subordinated notes		148,568			2,281	6.09			99,065			1,328	5.32
Total borrowings		561,596			6,434	4.55			298,518			2,176	2.89
Total interest-bearing liabilities		5,246,163			43,516	3.29			3,929,438			8,627	0.87
Noninterest-bearing deposits		1,538,143							2,014,371
Operating lease liabilities		34,788							33,786
Accrued expenses and other liabilities		63,374							46,772
Total liabilities		6,882,468							6,024,367
Total interest-bearing liabilities and noninterest-bearing deposits ("Cost of Funds")		6,784,306				2.54			5,943,809				0.58
Shareholders' Equity:
Common stock		157,784							157,784
Additional paid-in capital		299,575							299,135
Retained earnings and other equity		354,156							316,180
Total shareholders' equity		811,515							773,099
Total liabilities and shareholders' equity	$	7,693,983						$	6,797,466
Net interest income				$	53,863						$	58,727
Net interest spread						2.06							3.34
Effect of net interest-free funding sources						0.90							0.33
Net interest margin						2.96	%						3.67	%
Ratio of average interest-earning assets to average interest-bearing liabilities		137.76	%						161.53	%
* Obligations of states and political subdivisions and municipal loans and leases are tax-exempt earning assets.
Notes: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
Net interest income includes net deferred costs amortization of $563 thousand and $498 thousand for the three months ended September 30, 2023 and 2022, respectively.
Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included in the average loan balances. Tax-equivalent amounts for the three months ended September 30, 2023 and 2022 have been calculated using the Corporation’s federal applicable rate of 21.0%.

Univest Financial Corporation
Average Balances and Interest Rates (Unaudited)
				For the Nine Months Ended September 30,
Tax Equivalent Basis					2023							2022
	Average			Income/		Average		Average			Income/		Average
(Dollars in thousands)	Balance			Expense		Rate		Balance			Expense		Rate
Assets:
Interest-earning deposits with other banks	$	79,630		$	2,856	4.80	%	$	416,466		$	1,433	0.46	%
U.S. government obligations		-			-	-			2,578			40	2.07
Obligations of state and political subdivisions*		2,284			48	2.81			2,314			54	3.12
Other debt and equity securities		511,420			10,547	2.76			513,491			8,076	2.10
Federal Home Loan Bank, Federal Reserve Bank and other stock		39,664			2,102	7.09			27,239			1,134	5.57
Total interest-earning deposits, investments and other interest-earning assets		632,998			15,553	3.29			962,088			10,737	1.49
Commercial, financial, and agricultural loans		997,590			50,002	6.70			949,141			29,390	4.14
Real estate—commercial and construction loans		3,447,551			137,929	5.35			3,005,714			88,447	3.93
Real estate—residential loans		1,478,871			51,216	4.63			1,180,202			33,132	3.75
Loans to individuals		26,859			1,453	7.23			26,598			924	4.64
Municipal loans and leases*		233,211			7,159	4.10			237,928			7,270	4.09
Lease financings		175,416			8,128	6.20			141,041			6,375	6.04
Gross loans and leases		6,359,498			255,887	5.38			5,540,624			165,538	3.99
Total interest-earning assets		6,992,496			271,440	5.19			6,502,712			176,275	3.62
Cash and due from banks		59,811							57,455
Allowance for credit losses, loans and leases		(81,829	)						(70,950	)
Premises and equipment, net		52,067							51,551
Operating lease right-of-use assets		31,384							30,453
Other assets		399,141							363,810
Total assets	$	7,453,070						$	6,935,031
Liabilities:
Interest-bearing checking deposits	$	980,725		$	15,259	2.08	%	$	871,393		$	2,264	0.35	%
Money market savings		1,532,318			43,020	3.75			1,397,220			6,165	0.59
Regular savings		900,448			2,375	0.35			1,059,644			777	0.10
Time deposits		845,635			22,231	3.51			447,497			3,722	1.11
Total time and interest-bearing deposits		4,259,126			82,885	2.60			3,775,754			12,928	0.46
Short-term borrowings		195,606			7,094	4.85			46,765			537	1.54
Long-term debt		245,366			6,438	3.51			95,000			962	1.35
Subordinated notes		148,444			6,844	6.16			98,989			3,984	5.38
Total borrowings		589,416			20,376	4.62			240,754			5,483	3.04
Total interest-bearing liabilities		4,848,542			103,261	2.85			4,016,508			18,411	0.61
Noninterest-bearing deposits		1,709,533							2,067,428
Operating lease liabilities		34,548							33,514
Accrued expenses and other liabilities		57,906							44,630
Total liabilities		6,650,529							6,162,080
Total interest-bearing liabilities and noninterest-bearing deposits ("Cost of Funds")		6,558,075				2.11			6,083,936				0.40
Shareholders' Equity:
Common stock		157,784							157,784
Additional paid-in capital		299,550							298,784
Retained earnings and other equity		345,207							316,383
Total shareholders' equity		802,541							772,951
Total liabilities and shareholders' equity	$	7,453,070						$	6,935,031
Net interest income				$	168,179						$	157,864
Net interest spread						2.34							3.01
Effect of net interest-free funding sources						0.88							0.24
Net interest margin						3.22	%						3.25	%
Ratio of average interest-earning assets to average interest-bearing liabilities		144.22	%						161.90	%
* Obligations of states and political subdivisions and municipal loans and leases are tax-exempt earning assets.
Notes: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
Net interest income includes net deferred costs amortization of $1.7 million and $1.3 million for the nine months ended September 30, 2023 and 2022, respectively.
Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included in the average loan balances. Tax-equivalent amounts for the nine months ended September 30, 2023 and 2022 have been calculated using the Corporation’s federal applicable rate of 21.0%.

Univest Financial Corporation
Loan Portfolio Overview (Unaudited)
September 30, 2023
(Dollars in thousands)
Industry Description	Total Outstanding Balance			% of Commercial Loan Portfolio
CRE - Retail	$	466,862		8.9	%
Animal Production		359,814		6.8
CRE - Multi-family		304,289		5.8
CRE - Office		301,949		5.7
CRE - 1-4 Family Residential Investment		282,333		5.4
CRE - Industrial / Warehouse		244,107		4.6
Hotels & Motels (Accommodation)		190,698		3.6
Nursing and Residential Care Facilities		173,781		3.3
Specialty Trade Contractors		164,837		3.1
Education		157,875		3.0
Homebuilding (tract developers, remodelers)		153,490		2.9
Motor Vehicle and Parts Dealers		134,118		2.5
Merchant Wholesalers, Durable Goods		125,105		2.4
CRE - Mixed-Use - Residential		109,187		2.1
Crop Production		101,973		1.9
Repair and Maintenance		94,011		1.8
Private Equity & Special Purpose Entities (except 52592)		86,549		1.6
Administrative and Support Services		86,053		1.6
Rental and Leasing Services		82,213		1.6
Wood Product Manufacturing		81,813		1.6
Real Estate Lenders, Secondary Market Financing		79,310		1.5
CRE - Mixed-Use - Commercial		75,797		1.4
Religious Organizations, Advocacy Groups		73,665		1.4
Fabricated Metal Product Manufacturing		71,827		1.4
Personal and Laundry Services		71,060		1.3
Amusement, Gambling, and Recreation Industries		70,759		1.3
Merchant Wholesalers, Nondurable Goods		69,919		1.3
Miniwarehouse / Self-Storage		65,069		1.2
Food Services and Drinking Places		63,662		1.2
Food Manufacturing		59,897		1.1
Truck Transportation		55,250		1.0
Industries with >$50 million in outstandings	$	4,457,272		84.6	%
Industries with <$50 million in outstandings	$	811,904		15.4	%
Total Commercial Loans	$	5,269,176		100.0	%
Consumer Loans and Lease Financings	Total Outstanding Balance
Real Estate-Residential Secured for Personal Purpose	$	861,122
Real Estate-Home Equity Secured for Personal Purpose		176,855
Loans to Individuals		27,331
Lease Financings		240,474
Total - Consumer Loans and Lease Financings	$	1,305,782
Total	$	6,574,958

Univest Financial Corporation
Non-GAAP Reconciliation
September 30, 2023
Non-GAAP to GAAP Reconciliation
Management uses non-GAAP measures in its analysis of the Corporation's performance. These measures should not be considered a substitute for GAAP basis measures nor should they be viewed as a substitute for operating results determined in accordance with GAAP. Management believes the presentation of the non-GAAP financial measures, which exclude the impact of the specified items, provides useful supplemental information that is essential to a proper understanding of the financial results of the Corporation. See the table below for additional information on non-GAAP measures used throughout this earnings release.
				As of or for the three months ended,																				As of or for the nine months ended,
(Dollars in thousands)				09/30/23				06/30/23				03/31/23				12/31/22				09/30/22				09/30/23				09/30/22
Restructuring charges (a)				$	-			$	1,330			$	-			$	184			$	-			$	1,330			$	-
Tax effect of restructuring charges					-				(279	)			-				(39	)			-				(279	)			-
Restructuring charges, net of tax				$	-			$	1,051			$	-			$	145			$	-			$	1,051			$	-
Net income				$	17,016			$	16,800			$	21,034			$	23,836			$	20,801			$	54,850			$	54,284
Amortization of intangibles, net of tax					174				200				200				238				244				574				784
Net income before amortization of intangibles				$	17,190			$	17,000			$	21,234			$	24,074			$	21,045			$	55,424			$	55,068
Shareholders' equity				$	807,198			$	805,222			$	798,496			$	776,500			$	754,187			$	807,198			$	754,187
Goodwill					(175,510	)			(175,510	)			(175,510	)			(175,510	)			(175,510	)			(175,510	)			(175,510	)
Other intangibles (b)					(2,558	)			(2,767	)			(3,054	)			(3,251	)			(3,485	)			(2,558	)			(3,485	)
Tangible common equity				$	629,130			$	626,945			$	619,932			$	597,739			$	575,192			$	629,130			$	575,192
Total assets				$	7,828,066			$	7,600,150			$	7,358,991			$	7,222,016			$	6,907,397			$	7,828,066			$	6,907,397
Goodwill					(175,510	)			(175,510	)			(175,510	)			(175,510	)			(175,510	)			(175,510	)			(175,510	)
Other intangibles (b)					(2,558	)			(2,767	)			(3,054	)			(3,251	)			(3,485	)			(2,558	)			(3,485	)
Tangible assets				$	7,649,998			$	7,421,873			$	7,180,427			$	7,043,255			$	6,728,402			$	7,649,998			$	6,728,402
Average shareholders' equity				$	811,515			$	806,709			$	789,153			$	767,192			$	773,099			$	802,541			$	772,951
Average goodwill					(175,510	)			(175,510	)			(175,510	)			(175,510	)			(175,510	)			(175,510	)			(175,510	)
Average other intangibles (b)					(2,680	)			(2,924	)			(3,137	)			(3,355	)			(3,550	)			(2,913	)			(3,808	)
Average tangible common equity				$	633,325			$	628,275			$	610,506			$	588,327			$	594,039			$	624,118			$	593,633
(a) Associated with branch optimization and headcount rationlization expense management strategies
(b) Amount does not include mortgage servicing rights

 

 

CONTACT: 
Brian J. Richardson
UNIVEST FINANCIAL CORPORATION
Chief Financial Officer
215-721-2446, richardsonb@univest.net