Univest Financial Corporation Reports Third Quarter Results
SOUDERTON, Pa., Oct. 23, 2024 (GLOBE NEWSWIRE) -- 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, 2024 was $18.6 million, or $0.63 diluted earnings per share, compared to net income of $17.0 million, or $0.58 diluted earnings per share, for the quarter ended September 30, 2023.
LoansGross loans and leases increased $45.9 million, or 0.7% (2.8% annualized), from June 30, 2024, primarily due to increases in commercial real estate and residential mortgage loans, partially offset by decreases in construction and commercial loans. Gross loans and leases increased $163.5 million, or 2.5% (3.3% annualized), from December 31, 2023, primarily due to increases in commercial, commercial real estate and residential mortgage loans, partially offset by a decrease in construction loans.
Deposits and LiquidityTotal deposits increased $358.8 million, or 5.5% (22.0% annualized), from June 30, 2024, primarily due to seasonal increases in public funds partially offset by decreases in commercial, consumer and brokered deposits. Total deposits increased $478.4 million, or 7.5% (10.0% annualized), from December 31, 2023, primarily due to increases in commercial, brokered, and seasonal public funds deposits. Noninterest-bearing deposits totaled $1.3 billion and represented 19.3% of total deposits at September 30, 2024, compared to $1.4 billion representing 21.5% of total deposits at June 30, 2024. Unprotected deposits, which excludes insured, internal, and collateralized deposit accounts, totaled $1.4 billion at September 30, 2024 and June 30, 2024. This represented 20.3% of total deposits at September 30, 2024, compared to 22.1% at June 30, 2024.
As of September 30, 2024, the Corporation reported on balance sheet cash and cash equivalents totaling $504.7 million. The Corporation and its subsidiaries had committed borrowing capacity of $3.6 billion at September 30, 2024, of which $1.8 billion was available. The Corporation and its subsidiaries also maintained uncommitted funding sources from correspondent banks of $468.0 million at September 30, 2024. 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availability under these uncommitted funding sources is subject to the prerogatives of the granting banks and may be withdrawn at will.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 $53.2 million for the third quarter of 2024 decreased $386 thousand, or 0.7%, from the third quarter of 2023 and increased $2.2 million, or 4.3%, from the second quarter of 2024. The decrease in net interest income for the three months ended September 30, 2024 compared to the same period in the prior year reflects the continued pressure on the cost of deposits due to the shift of balances from lower to higher cost deposit products which exceeded the increase in interest income from asset yield expansion and the increase in average interest-earning assets. However, we continue to see indicators of stabilization in cost of funds and our funding mix. The increase in net interest income for the three months ended September 30, 2024 compared to the three months ended June 30, 2024 was due to higher average balances of interest-earning assets and increased yields on these assets, partially offset by higher interest-bearing liability balances and costs.
Net interest margin, on a tax-equivalent basis, was 2.82% for the third quarter of 2024, compared to 2.84% for the second quarter of 2024 and 2.96% for the third quarter of 2023. Excess liquidity reduced net interest margin by approximately nine basis points for the quarter ended September 30, 2024 compared to approximately two basis points for the quarter ended June 30, 2024 and approximately four basis points for the quarter ended September 30, 2023. Excluding the impact of excess liquidity, the net interest margin, on a tax-equivalent basis, was 2.91% for the quarter ended September 30, 2024 compared to 2.86% for the quarter ended June 30, 2024 and 3.00% for the quarter ended September 30, 2023.
Noninterest IncomeNoninterest income for the quarter ended September 30, 2024 was $20.2 million, an increase of $1.5 million, or 7.8%, from the comparable period in the prior year.
Investment advisory commission and fee income increased $476 thousand, or 9.8%, for the quarter ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to increased assets under management and supervision driven by new business and market appreciation. Insurance commission and fee income increased $386 thousand, or 8.0%, for the quarter ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to an increase in commercial lines premiums. Other income increased $1.2 million, or 512.3%, for the quarter ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to an increase of $705 thousand in gains on the sale of Small Business Administration loans.
Other service fee income decreased $1.2 million, or 39.9%, for the quarter ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to a $785 thousand valuation allowance recorded on mortgage servicing rights driven by the increase in prepayment speed assumptions as a result of the decrease in interest rates during the quarter. Additionally, net servicing fees on sold mortgage loans decreased by $307 thousand, primarily attributable to the sale of mortgage servicing rights associated with $591.1 million of serviced loans in the first quarter of 2024 and increased amortization driven by prepayments.
Noninterest ExpenseNoninterest expense for the quarter ended September 30, 2024 was $48.6 million, a decrease of $436 thousand, or 0.9%, from the comparable period in the prior year.
Other expense decreased $808 thousand, or 11.0%, for the quarter ended September 30, 2024 primarily due to decreases in retirement plan costs, insurance expense, recruiter fees, and bank shares tax expense.
Professional fees decreased $184 thousand, or 10.4%, for the quarter ended September 30, 2024 primarily driven by a reduction in consultant fees. Deposit insurance premiums decreased $161 thousand, or 12.8%, for the quarter ended September 30, 2024 driven by an improvement in the financial ratios that contribute to our deposit insurance assessment rate.
Salaries, benefits and commissions increased $724 thousand, or 2.4%, for the quarter ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to increases in salary expense and an increase in incentive compensation due to increased profitability, partially offset by an increase in compensation capitalized driven by higher loan production.
Tax Provision The effective income tax rate was 20.6% for the quarter ended September 30, 2024, compared to an effective tax rate of 20.0% for the quarter ended September 30, 2023. The effective tax rates for the three months ended September 30, 2024 and 2023 reflected the benefits of tax-exempt income from investments in municipal securities and loans and leases. The increase in effective tax rate in the quarter was primarily due to increases in state tax rates.
Asset Quality and Provision for Credit LossesNonperforming assets totaled $36.6 million at September 30, 2024 and June 30, 2024, and $40.1 million at September 30, 2023.
Net loan and lease charge-offs were $820 thousand for the three months ended September 30, 2024 compared to $809 thousand and $969 thousand for the three months ended June 30, 2024 and September 30, 2023, respectively.
The provision for credit losses was $1.4 million for the three months ended September 30, 2024 compared to $707 thousand and $2.0 million for the three months ended June 30, 2024 and September 30, 2023, 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, 2024, June 30, 2024 and September 30, 2023.
Dividend and Share RepurchasesOn October 23, 2024, Univest declared a quarterly cash dividend of $0.21 per share to be paid on November 20, 2024 to shareholders of record as of November 6, 2024. During the quarter ended September 30, 2024, the Corporation repurchased 156,728 shares of common stock at an average price of $26.47 per share. Including brokerage fees and excise tax, the average price per share was $26.76. As of September 30, 2024, 539,646 shares are available for repurchase under the Share Repurchase Plan. On October 23, 2024, the Corporation's Board of Directors approved an increase of 1,000,000 shares available for repurchase under the Corporation's share repurchase program.
Conference CallUnivest will host a conference call to discuss third quarter 2024 results on Thursday, October 24, 2024 at 9:00 a.m. EST. Participants may preregister at https://www.netroadshow.com/events/login?show=27c257f2&confId=71976. The general public can access the call by dialing 1-833-470-1428; using Access Code 752766. A replay of the conference call will be available through December 24, 2024 by dialing 1-866-813-9403; using Access Code 807549.
About Univest Financial CorporationUnivest Financial Corporation (UVSP), including its wholly-owned subsidiary Univest Bank and Trust Co., Member FDIC, has approximately $8.2 billion in assets and $5.3 billion in assets under management and supervision through its Wealth Management lines of business at September 30, 2024. 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 and demand for financial services in our market area; (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 and higher costs we pay to retain and attract deposits; (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) our ability to access cost-effective funding; (6) changes in economic conditions nationally and in our market, including potential recessionary conditions and the levels of unemployment in our market area; (7) economic assumptions or changes in our methodology, either of which may impact our allowance for credit losses calculation; (8) legislative, regulatory, accounting or tax changes; (9) monetary and fiscal policies of the U.S. government, including the policies of the Board of Governors of the Federal Reserve System; (10) technological issues that may adversely affect our operations or those of our customers; (11) a failure or breach in our operational or security systems or infrastructure, including cyberattacks; (12) changes in the securities markets; (13) the current or anticipated impact of military conflict, terrorism or other geopolitical events; (14) our ability to enter into new markets successfully and capitalize on growth opportunities and/or (15) 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, 2024
(Dollars in thousands)
Balance Sheet (Period End)
09/30/24
06/30/24
03/31/24
12/31/23
09/30/23
ASSETS
Cash and due from banks
$
78,346
$
66,808
$
49,318
$
72,815
$
68,900
Interest-earning deposits with other banks
426,354
124,103
152,288
176,984
221,441
Cash and cash equivalents
504,700
190,911
201,606
249,799
290,341
Investment securities held-to-maturity
137,681
140,112
143,474
145,777
149,451
Investment securities available for sale, net of allowance for credit losses
354,100
342,776
350,819
351,553
334,538
Investments in equity securities
2,406
2,995
3,355
3,293
4,054
Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost
40,235
37,438
37,394
40,499
42,417
Loans held for sale
17,131
28,176
13,188
11,637
16,473
Loans and leases held for investment
6,730,734
6,684,837
6,579,086
6,567,214
6,574,958
Less: Allowance for credit losses, loans and leases
(86,041
)
(85,745
)
(85,632
)
(85,387
)
(83,837
)
Net loans and leases held for investment
6,644,693
6,599,092
6,493,454
6,481,827
6,491,121
Premises and equipment, net
47,411
48,174
48,739
51,441
51,287
Operating lease right-of-use assets
29,260
29,985
30,702
31,795
31,053
Goodwill
175,510
175,510
175,510
175,510
175,510
Other intangibles, net of accumulated amortization
7,158
7,701
7,473
10,950
11,079
Bank owned life insurance
138,744
137,823
137,896
131,344
130,522
Accrued interest and other assets
106,708
114,753
102,958
95,203
100,220
Total assets
$
8,205,737
$
7,855,446
$
7,746,568
$
7,780,628
$
7,828,066
LIABILITIES
Noninterest-bearing deposits
$
1,323,953
$
1,397,308
$
1,401,806
$
1,468,320
$
1,432,559
Interest-bearing deposits:
5,530,195
5,098,014
5,003,552
4,907,461
5,006,606
Total deposits
6,854,148
6,495,322
6,405,358
6,375,781
6,439,165
Short-term borrowings
8,256
11,781
4,816
6,306
14,676
Long-term debt
225,000
250,000
250,000
310,000
320,000
Subordinated notes
149,136
149,011
148,886
148,761
148,636
Operating lease liabilities
32,246
33,015
33,744
34,851
34,017
Accrued expenses and other liabilities
59,880
62,180
60,095
65,721
64,374
Total liabilities
7,328,666
7,001,309
6,902,899
6,941,420
7,020,868
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
301,262
300,166
298,914
301,066
300,171
Retained earnings
512,938
500,482
488,790
474,691
464,634
Accumulated other comprehensive loss, net of tax benefit
(41,623
)
(54,124
)
(54,740
)
(50,646
)
(71,586
)
Treasury stock, at cost
(53,290
)
(50,171
)
(47,079
)
(43,687
)
(43,805
)
Total shareholders' equity
877,071
854,137
843,669
839,208
807,198
Total liabilities and shareholders' equity
$
8,205,737
$
7,855,446
$
7,746,568
$
7,780,628
$
7,828,066
For the three months ended,
For the nine months ended,
Balance Sheet (Average)
09/30/24
06/30/24
03/31/24
12/31/23
09/30/23
09/30/24
09/30/23
Assets
$
8,005,265
$
7,721,540
$
7,696,575
$
7,865,634
$
7,693,983
$
7,808,514
$
7,453,070
Investment securities, net of allowance for credit losses
493,334
493,140
500,983
489,587
506,341
495,810
513,704
Loans and leases, gross
6,730,791
6,640,536
6,577,365
6,594,233
6,537,169
6,649,860
6,359,498
Deposits
6,641,324
6,353,752
6,303,854
6,470,141
6,222,710
6,433,737
5,968,659
Shareholders' equity
864,406
844,572
842,546
814,941
811,515
850,559
802,541
Univest Financial Corporation
Consolidated Summary of Loans by Type and Asset Quality Data (Unaudited)
September 30, 2024
(Dollars in thousands)
Summary of Major Loan and Lease Categories (Period End)
09/30/24
06/30/24
03/31/24
12/31/23
09/30/23
Commercial, financial and agricultural
$
1,044,043
$
1,055,332
$
1,014,568
$
989,723
$
1,050,004
Real estate-commercial
3,442,083
3,373,889
3,283,729
3,302,798
3,275,140
Real estate-construction
285,616
313,229
379,995
394,462
427,561
Real estate-residential secured for business purpose
530,674
532,628
524,196
517,002
516,471
Real estate-residential secured for personal purpose
969,562
952,665
922,412
909,015
861,122
Real estate-home equity secured for personal purpose
182,901
179,150
177,446
179,282
176,855
Loans to individuals
26,794
26,430
27,200
27,749
27,331
Lease financings
249,061
251,514
249,540
247,183
240,474
Total loans and leases held for investment, net of deferred income
6,730,734
6,684,837
6,579,086
6,567,214
6,574,958
Less: Allowance for credit losses, loans and leases
(86,041
)
(85,745
)
(85,632
)
(85,387
)
(83,837
)
Net loans and leases held for investment
$
6,644,693
$
6,599,092
$
6,493,454
$
6,481,827
$
6,491,121
Asset Quality Data (Period End)
09/30/24
06/30/24
03/31/24
12/31/23
09/30/23
Nonaccrual loans and leases, including nonaccrual loans held for sale*
$
15,319
$
16,200
$
20,363
$
20,527
$
18,085
Accruing loans and leases 90 days or more past due
310
205
268
534
2,135
Total nonperforming loans and leases
15,629
16,405
20,631
21,061
20,220
Other real estate owned
20,915
20,007
19,220
19,032
19,916
Repossessed assets
79
149
167
-
-
Total nonperforming assets
$
36,623
$
36,561
$
40,018
$
40,093
$
40,136
Nonaccrual loans and leases / Loans and leases held for investment
0.23
%
0.24
%
0.31
%
0.31
%
0.28
%
Nonperforming loans and leases / Loans and leases held for investment
0.23
%
0.25
%
0.31
%
0.32
%
0.31
%
Nonperforming assets / Total assets
0.45
%
0.47
%
0.52
%
0.52
%
0.51
%
Allowance for credit losses, loans and leases
$
86,041
$
85,745
$
85,632
$
85,387
$
83,837
Allowance for credit losses, loans and leases / Loans and leases held for investment
1.28
%
1.28
%
1.30
%
1.30
%
1.28
%
Allowance for credit losses, loans and leases / Nonaccrual loans and leases
561.66
%
529.29
%
420.53
%
415.97
%
463.57
%
Allowance for credit losses, loans and leases / Nonperforming loans and leases
550.52
%
522.68
%
415.06
