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Univest Financial Corporation Reports Year End and Fourth Quarter Results

Loan Growth for 2018 of 10.7%

SOUDERTON, Pa., Jan. 23, 2019 (GLOBE NEWSWIRE) -- Univest Financial Corporation (“Univest” or the “Corporation”) (NASDAQ: UVSP), parent company of Univest Bank and Trust Co. and its insurance, investments and equipment financing subsidiaries, today announced net income of $50.5 million, or $1.72 diluted earnings per share, for the year ended December 31, 2018, compared to net income of $44.1 million, or $1.64 diluted earnings per share, for the year ended December 31, 2017. Net income for the quarter ended December 31, 2018 was $18.4 million, or $0.63 diluted earnings per share, compared to net income of $10.3 million, or $0.37 diluted earnings per share, for the quarter ended December 31, 2017.

The financial results for the quarter ended December 31, 2018 included a loan recovery of $1.8 million (after-tax recovery of $1.5 million), which represented $0.05 diluted earnings per share. This recovery relates to a loan the Corporation previously charged-off in the amount of $12.7 million (after-tax charge of $10.1 million), or $0.34 diluted earnings per share, in the second quarter of 2018 related to fraudulent activities by employees of the borrower. Total impact of this loss for the year ended December 31, 2018 was $10.9 million (after-tax charge of $8.6 million), or $0.29 diluted earnings per share.

In addition, the financial results for the year ended December 31, 2018 included tax-free bank owned life insurance ("BOLI") death benefit claims of $446 thousand during the second quarter of 2018, which represented $0.02 diluted earnings per share, offset by restructuring costs related to financial center closures of $451 thousand, net of tax, or $0.02 of diluted earnings per share, recognized in the first quarter of 2018. There were no restructuring costs during the year ended December 31, 2017.  The financial results for the quarter and year ended December 31, 2018 also included a reduction in the Corporation's statutory federal income tax rate from 35% to 21% effective January 1, 2018 in accordance with the Tax Cuts and Jobs Act of 2017 (“TCJA”).

The financial results for the quarter and year ended December 31, 2017 included a revaluation of the Corporation’s net deferred tax asset associated with the passage of the TCJA. The revaluation, which was recorded as additional income tax expense, was $1.1 million, or $0.04 of diluted earnings per share for the quarter and year ended December 31, 2017. The financial results for the year ended December 31, 2017 included a tax-free BOLI death benefit claim of $889 thousand recognized in the second quarter of 2017, which represented $0.03 diluted earnings per share. 

Loans
Gross loans and leases increased $386.5 million, or 10.7%, from December 31, 2017 and $140.4 million, or 14.5% (annualized), from September 30, 2018. The growth in loans in the fourth quarter and year ended 2018 was primarily in commercial real estate, commercial business and residential real estate loans.

Deposits
Total deposits increased $331.0 million, or 9.3%, from December 31, 2017 primarily due to increases in commercial, public funds and consumer time deposits. Total deposits increased $65.9 million, or 6.9%, from September 30, 2018 primarily due to increases in commercial and consumer deposits partially offset by a seasonal decrease in public funds deposits

Net Interest Income and Margin
Net interest income of $158.1 million for the year ended December 31, 2018 increased $14.9 million, or 10.4%, from the prior year. The increase in net interest income for the year ended December 31, 2018 compared to the prior year was primarily due to the previously described increase in loans. Net interest margin, on a tax-equivalent basis, was 3.72% for the year ended December 31, 2018 compared to 3.78% for the year ended December 31, 2017. The favorable impact of purchase accounting accretion was 2 basis points ($1.0 million) for the year ended December 31, 2018 compared to 8 basis points ($3.0 million) for the year ended December 31, 2017. Excluding the impact of purchase accounting accretion, the net interest margin, on a tax-equivalent basis, was 3.70% for both the years ended December 31, 2018 and 2017. Net interest margin, on a tax-equivalent basis, in 2017 was calculated using a 35% federal tax rate as compared to a 21% federal tax rate for 2018. Assuming a 21% federal tax rate and excluding purchase accounting, net interest margin, on a tax-equivalent basis, was 3.63% for the year ended December 31, 2017.

Net interest margin, on a tax-equivalent basis, was 3.72% for the fourth quarter of 2018, compared to 3.71% for the third quarter of 2018 and 3.76% for the fourth quarter of 2017. The favorable impact of purchase accounting accretion was 1 basis point ($200 thousand) for the quarter ended December 31, 2018 compared to 3 basis points ($343 thousand) for the quarter ended September 30, 2018 and 4 basis points ($449 thousand) for the quarter ended December 31, 2017. Excluding the impact of purchase accounting accretion, the net interest margin, on a tax-equivalent basis, was 3.71% for the quarter ended December 31, 2018 compared to 3.68% for the quarter ended September 30, 2018 and 3.72% for the quarter ended December 31, 2017. Net interest margin, on a tax-equivalent basis, assuming a 21% federal tax rate and excluding purchase accounting, was 3.64% for the quarter ended December 31, 2017.

Noninterest Income
Noninterest income for the year ended December 31, 2018 was $60.2 million, an increase of $933 thousand, or 1.6%, from the prior year. Noninterest income for the quarter ended December 31, 2018 was $14.4 million, an increase of $264 thousand, or 1.9%, from the fourth quarter of 2017.

Investment advisory commission and fee income increased $1.6 million, or 12.2%, for the year ended December 31, 2018, primarily due to new customer relationships and favorable market performance for the majority of 2018. Insurance commission and fee income increased $870 thousand, or 5.9%, for the year ended December 31, 2018, primarily due to an increase in group life and health premiums and an increase in contingent commission income of $374 thousand, which is largely recognized in the first quarter of the year. Other service fee income increased $676 thousand, or 7.8%, for the year ended December 31, 2018, primarily due to increases in debit card interchange income, mortgage servicing fees and human resource and payroll consulting services within the insurance line of business. Service charges on deposit accounts increased $150 thousand, or 2.7%, for the year ended December 31, 2018, primarily due to increased fee income on cash management accounts.

BOLI income decreased $814 thousand for the year ended December 31, 2018 primarily due to proceeds from the previously mentioned BOLI death benefits of $446 thousand in 2018 as compared to $889 thousand in 2017 and a decrease in value of our non-qualified annuity portfolio of $109 thousand in 2018 compared to an increase of $343 thousand in 2017. The value of the non-qualified annuity portfolio declined $287 thousand in the fourth quarter of 2018. The net gain on mortgage banking decreased $898 thousand, or 22.3%, for the year ended December 31, 2018, primarily due to a decrease in refinance mortgage volume, a shortage of housing supply and the Bank retaining, on balance-sheet, a higher percentage of its mortgage originations. Such on balance-sheet loans are predominantly hybrid adjustable rate mortgages. Other income decreased $484 thousand, or 64.9%, for the year ended December 31, 2018, which was primarily due to a net loss of $355 thousand related to valuations and sales of other real estate owned and sales of closed branches as compared to a net loss of $31 thousand of such assets in the prior year.

Noninterest Expense
Noninterest expense for the year ended December 31, 2018 was $137.2 million, an increase of $6.5 million, or 5.0%, from the prior year. Noninterest expense for the quarter ended December 31, 2018 was $33.4 million, a decrease of $44 thousand, or 0.1%, compared to the fourth quarter of 2017.

Salaries, benefits and commissions increased $4.6 million, or 6.1%, for the year ended December 31, 2018, primarily attributable to additional staff hired to support revenue generation across all business lines, expansion of our financial center footprint in Lancaster County and annual merit increases. Salaries, benefits and commissions increased only $236 thousand, or 1.2%, for the quarter ended December 31, 2018, as the fourth quarter included a $496 thousand reduction related to vesting of performance based restricted stock and executive bonus as certain performance metrics were not achieved for the measurement period. Data processing expense increased $514 thousand, or 6.0%, for the year ended December 31, 2018 primarily due to increased investments in customer relationship management software, internal infrastructure improvements and outsourced data processing solutions. Marketing and advertising expense increased $315 thousand for the year ended December 31, 2018 primarily related to deposit product campaigns and expenses related to rebranding our wealth management division during the fourth quarter of 2018. Other expense increased $804 thousand for the year ended December 31, 2018 primarily due to increases in Bank shares tax, loan processing expenses and increased corporate development expenses. Restructuring costs related to financial center closures and staffing rationalization were $571 thousand during the first quarter of 2018. There were no restructuring costs during the year ended December 31, 2017. Excluding restructuring costs, noninterest expense for the year increased $6.0 million, or 4.6%, from the comparable period in 2017.

Asset Quality and Provision for Loan and Lease Losses
Nonperforming assets were $28.1 million at December 31, 2018, compared to $31.0 million at September 30, 2018 and $28.6 million at December 31, 2017. During 2018, one commercial real estate loan in the amount of $12.3 million was placed on non-accrual status during the first quarter of 2018; the loan has a principal balance of $11.5 million as of December 31, 2018 due to paydowns during 2018. This increase was offset by $10.3 million in troubled debt restructured commercial real estate loans for another borrower being returned to performing status during the first quarter of 2018 as the borrower was in compliance with the modified terms of the restructuring for the required time period.

Net loan and lease recoveries were $1.9 million during the fourth quarter of 2018, which includes a $1.8 million recovery related to the previously discussed commercial loan charge-off. The provision for loan and lease losses was $103 thousand for the fourth quarter of 2018. For the year ended December 31, 2018, net loan and lease charge-offs of $12.5 million and the provision for loan and lease losses of $20.3 million include the previously discussed $10.9 million commercial loan net charge-off.

The allowance for loan and lease losses as a percentage of loans and leases held for investment, excluding covered loans acquired in the Fox Chase and Valley Green Bank acquisitions, which were recorded at fair value as of the acquisition date, was 0.81% at December 31, 2018, compared to 0.79% at September 30, 2018 and 0.70% at December 31, 2017.

Tax Provision  
The effective income tax rate was 16.7% for the year and 17.6% for the quarter ended December 31, 2018, respectively. The effective income tax rate was 28.7% for the year and 33.5% for the quarter ended December 31, 2017, respectively. As previously discussed, the Corporation's statutory federal tax rate was reduced to 21% effective January 1, 2018 in accordance with the TCJA. The Corporation's effective income tax rate for the year ended December 31, 2018 was favorably impacted by discrete tax benefits and proceeds from BOLI death benefits. Excluding these items, the effective tax rate was 18.3% for the year ended December 31, 2018.

Dividend
On December 3, 2018, Univest declared a quarterly cash dividend of $0.20 per share, payable on January 2, 2019. This represented a 3.65% annualized yield based on the closing price of Univest’s stock on the date the dividend was paid.

Conference Call
Univest will host a conference call to discuss fourth quarter and year end 2018 results on Thursday, January 24, 2019 at 9:00 a.m. EST. Participants may preregister at http://dpregister.com/10127550. The general public can access the call by dialing 1-888-338-6515. A replay of the conference call will be available through February 24, 2019 by dialing 1-877-344-7529; using Conference ID: 10127550.

About Univest Financial Corporation

Univest Financial Corporation (UVSP), including its wholly-owned subsidiary Univest Bank and Trust Co., Member FDIC, has approximately $5.0 billion in assets and $3.3 billion in assets under management and supervision through its Wealth Management lines of business at December 31, 2018. 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 in the Mid-Atlantic Region. Univest delivers these services through a network of more than 50 offices in southeastern Pennsylvania extending to the Lehigh Valley and Lancaster, as well as in New Jersey and Maryland and online at www.univest.net.

This press release of Univest Financial Corporation and the reports Univest Financial Corporation files with the Securities and Exchange Commission often contain "forward-looking statements" relating to present or future trends or factors affecting the financial services industry and, specifically, the financial operations, markets and products of Univest Financial Corporation. These forward-looking statements involve certain risks and uncertainties. There are a number of important factors that could cause Univest Financial Corporation’s future results to differ materially from historical performance or projected performance. These factors include, but are not limited to: (1) competitive pressures among financial institutions; (2) changes in the interest rate environment; (3) changes in prepayment speeds, loan sale volumes, charge-offs and loan loss provisions; (4) general economic conditions; (5) legislative or regulatory changes that may adversely affect the businesses in which Univest Financial Corporation is engaged; (6) technological issues that may adversely affect Univest Financial Corporation financial operations or customers; (7) changes in the securities markets or (8) risk factors mentioned in the reports and registration statements Univest Financial Corporation files with the Securities and Exchange Commission. Univest Financial Corporation undertakes no obligation to revise these forward-looking statements or to reflect events or circumstances after the date of this press release.

Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
December 31, 2018
(Dollars in thousands)                            
                             
Balance Sheet (Period End)   12/31/18   09/30/18   06/30/18   03/31/18   12/31/17        
Assets   $ 4,984,347     $ 4,801,998     $ 4,749,181     $ 4,613,959     $ 4,554,862          
Investment securities     473,306       447,339       446,933       462,252       454,082          
Loans held for sale     1,754       106       1,778       687       1,642          
Loans and leases held for investment, gross     4,006,574       3,866,169       3,818,398       3,689,888       3,620,067          
Allowance for loan and lease losses     29,364       27,371       25,652       23,410       21,555          
Loans and leases held for investment, net     3,977,210       3,838,798       3,792,746       3,666,478       3,598,512          
Total deposits     3,885,933       3,820,048       3,620,786       3,497,293       3,554,919          
Noninterest-bearing deposits     1,055,919       1,047,081       1,055,479       1,002,021       1,040,026          
NOW, money market and savings     2,159,937       2,101,484       1,970,912       1,974,769       1,940,144          
Time deposits     670,077       671,483       594,395       520,503       574,749          
Borrowings     429,672       326,709       481,862       466,510       355,590          
Shareholders' equity     624,133       614,242       605,294       606,719       603,374          
                             
                             
Balance Sheet (Average)   For the three months ended,   For the twelve months ended,
    12/31/18   09/30/18   06/30/18   03/31/18   12/31/17   12/31/18   12/31/17
Assets   $ 4,890,519     $ 4,817,321     $ 4,682,827     $ 4,555,977     $ 4,442,743     $ 4,737,772     $ 4,356,540  
Investment securities     464,684       453,422       450,375       457,926       456,045       456,612       463,652  
Loans and leases, gross     3,894,298       3,832,295       3,743,195       3,634,510       3,505,260       3,776,940       3,420,847  
Deposits     3,938,378       3,792,627       3,563,956       3,484,044       3,508,676       3,696,264       3,407,223  
Shareholders' equity     619,204       611,803       611,667       605,973       554,071       612,197       527,087  
                             
                             
Asset Quality Data (Period End)                             
    12/31/18   09/30/18   06/30/18   03/31/18   12/31/17        
Nonaccrual loans and leases, including nonaccrual troubled debt restructured                            
loans and leases   $ 26,208     $ 27,559     $ 30,148     $ 27,694     $ 14,517          
Accruing loans and leases 90 days or more past due     192       1,224       150       2,295       761          
Accruing troubled debt restructured loans and leases     542       766       790       1,032       11,435          
Total nonperforming loans and leases     26,942       29,549       31,088       31,021       26,713          
Other real estate owned     1,187       1,433       1,742       1,843       1,843          
Total nonperforming assets     28,129       30,982       32,830       32,864       28,556          
Nonaccrual loans and leases / Loans and leases held for investment     0.65 %     0.71 %     0.79 %     0.75 %     0.40 %        
Nonperforming loans and leases / Loans and leases held for investment     0.67 %     0.76 %     0.81 %     0.84 %     0.74 %        
Nonperforming assets / Total assets     0.56 %     0.65 %     0.69 %     0.71 %     0.63 %        
                             
Allowance for loan and lease losses     29,364       27,371       25,652       23,410       21,555          
Allowance for loan and lease losses / Loans and leases held for investment     0.73 %     0.71 %     0.67 %     0.63 %     0.60 %        
Allowance for loan and lease losses / Loans and leases held for investment     0.81 %     0.79 %     0.76 %     0.73 %     0.70 %        
(excluding acquired loans at period-end)                            
Allowance for loan and lease losses / Nonaccrual loans and leases held for investment     112.04 %     99.32 %     85.09 %     84.53 %     148.48 %        
Allowance for loan and lease losses / Nonperforming loans and leases held for investment   108.99 %     92.63 %     82.51 %     75.47 %     80.69 %        
Acquired credit impaired loans   $ 695     $ 900     $ 998     $ 1,525     $ 1,583          
                             
    For the three months ended,   For the twelve months ended,
    12/31/18   09/30/18   06/30/18   03/31/18   12/31/17   12/31/18   12/31/17
Net loan and lease (recoveries) charge-offs   $ (1,890 )   $ 1,026     $ 13,167     $ 198     $ 980     $ 12,501     $ 5,836  
Net loan and lease (recoveries) charge-offs (annualized)/Average loans and leases     (0.19 %)     0.11 %     1.41 %     0.02 %     0.11 %     0.33 %     0.17 %
                             

 

 
Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
December 31, 2018
(Dollars in thousands, except per share data)                            
    For the three months ended,   For the twelve months ended,
For the period:   12/31/18   09/30/18   06/30/18   03/31/18   12/31/17   12/31/18   12/31/17
Interest income   $ 51,239   $ 49,255   $ 46,460     $ 43,534   $ 42,417   $ 190,488   $ 163,015
Interest expense     9,862     8,832     7,470       6,262     5,711     32,426     19,839
Net interest income     41,377     40,423     38,990       37,272     36,706     158,062     143,176
Provision for loan and lease losses     103     2,745     15,409       2,053     1,992     20,310     9,892
Net interest income after provision     41,274     37,678     23,581       35,219     34,714     137,752     133,284
Noninterest income:                            
Trust fee income     1,882     1,960     2,044       1,996     2,208     7,882     8,055
Service charges on deposit accounts     1,516     1,454     1,335       1,327     1,555     5,632     5,482
Investment advisory commission and fee income     3,852     3,785     3,778       3,683     3,485     15,098     13,454
Insurance commission and fee income     3,415     3,643     3,712       4,888     3,258     15,658     14,788
Other service fee income     2,448     2,284     2,431       2,169     2,301     9,332     8,656
Bank owned life insurance income     430     865     1,210       669     841     3,174     3,988
Net gain on sales of investment securities     -     -     -       10     5     10     48
Net gain on mortgage banking activities     713     754     942       716     465     3,125     4,023
Other income (loss)     160     116     (138 )     124     34     262     746
Total noninterest income     14,416     14,861     15,314       15,582     14,152     60,173     59,240
Noninterest expense:                            
Salaries, benefits and commissions     19,576     20,321     20,065       20,647     19,340     80,609     75,992
Premises and equipment     3,469     3,557     3,600       3,780     3,636     14,406     14,551
Data processing     2,352     2,339     2,091       2,232     2,243     9,014     8,500
Professional fees     1,335     1,370     1,331       1,355     1,391     5,391     5,325
Marketing and advertising     432     461     526       381     360     1,800     1,485
Deposit insurance premiums     449     544     452       391     374     1,836     1,636
Intangible expenses     481     479     594       612     687     2,166     2,582
Restructuring charges     -     -     -       571     -     571     -
Other expense     5,302     5,300     5,688       5,156     5,409     21,446     20,642
Total noninterest expense     33,396     34,371     34,347       35,125     33,440     137,239     130,713
Income before taxes     22,294     18,168     4,548       15,676     15,426     60,686     61,811
Income tax expense     3,922     3,204     191       2,826     5,162     10,143     17,717
Net income   $ 18,372   $ 14,964   $ 4,357     $ 12,850   $ 10,264   $ 50,543   $ 44,094
Per common share data:                            
Book value per share   $ 21.32   $ 20.89   $ 20.58     $ 20.64   $ 20.57   $ 21.32   $ 20.57
Net income per share:                            
Basic   $ 0.63   $ 0.51   $ 0.15     $ 0.44   $ 0.37   $ 1.72   $ 1.64
Diluted   $ 0.63   $ 0.51   $ 0.15     $ 0.44   $ 0.37   $ 1.72   $ 1.64
Dividends declared per share   $ 0.20   $ 0.20   $ 0.20     $ 0.20   $ 0.20   $ 0.80   $ 0.80
Weighted average shares outstanding     29,319,664     29,402,405     29,403,946       29,354,887     27,481,309     29,370,217     26,861,863
Period end shares outstanding     29,270,852     29,407,076     29,406,450       29,391,934     29,334,859     29,270,852     29,334,859
                             

 

 
Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
December 31, 2018
                             
                             
                             
    For the three months ended,   For the twelve months ended,
Profitability Ratios (annualized) 12/31/18   09/30/18   06/30/18   03/31/18   12/31/17   12/31/18   12/31/17
                             
Return on average assets   1.49 %     1.23 %     0.37 %     1.14 %     0.92 %     1.07 %     1.01 %
Return on average assets, excluding restructuring charges (1), (2)   1.49 %     1.23 %     0.37 %     1.18 %     0.92 %     1.08 %     1.01 %
Return on average shareholders' equity   11.77 %     9.70 %     2.86 %     8.60 %     7.35 %     8.26 %     8.37 %
Return on average shareholders' equity, excluding   11.77 %     9.70 %     2.86 %     8.90 %     7.35 %     8.33 %     8.37 %
restructuring charges (1), (2)                          
Return on average tangible common equity, excluding   16.52 %     13.70 %     4.04 %     12.65 %     10.89 %     11.77 %     12.75 %
restructuring charges (1), (2), (5)                          
Net interest margin (FTE)   3.72 %     3.71 %     3.73 %     3.72 %     3.76 %     3.72 %     3.78 %
Efficiency ratio (3)   59.0 %     61.2 %     62.1 %     65.4 %     63.4 %     61.9 %     62.2 %
Efficiency ratio, excluding restructuring charges (1), (3), (4)   59.0 %     61.2 %     62.1 %     64.3 %     63.4 %     61.6 %     62.2 %
                             
Capitalization Ratios                          
                             
Dividends declared to net income   31.9 %     39.3 %     135.0 %     45.7 %     57.1 %     46.5 %     49.6 %
Shareholders' equity to assets (Period End)   12.52 %     12.79 %     12.75 %     13.15 %     13.25 %     12.52 %     13.25 %
Tangible common equity to tangible assets (5)   9.29 %     9.43 %     9.33 %     9.64 %     9.68 %     9.29 %     9.68 %
Tangible book value per share (5) $ 15.25     $ 14.83     $ 14.51     $ 14.54     $ 14.44     $ 15.25     $ 14.44  
Tangible book value per share - Core (5), (6) $ 15.63     $ 15.26     $ 14.91     $ 14.90     $ 14.57     $ 15.63     $ 14.57  
                             
Regulatory Capital Ratios  (Period End)                           
Tier 1 leverage ratio   10.13 %     10.07 %     10.19 %     10.47 %     10.48 %     10.13 %     10.48 %
Common equity tier 1 risk-based capital ratio   10.88 %     10.99 %     10.89 %     11.16 %     11.11 %     10.88 %     11.11 %
Tier 1 risk-based capital ratio   10.88 %     10.99 %     10.89 %     11.16 %     11.11 %     10.88 %     11.11 %
Total risk-based capital ratio   13.70 %     13.87 %     13.76 %     14.04 %     14.00 %     13.70 %     14.00 %
                             
                             
(1)   This consolidated selected financial data schedule contains supplemental financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”). The management of Univest Financial Corporation uses these 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 below table for additional information.
                             
  (a) Restructuring charges $ -     $ -     $ -     $ 571     $ -     $ 571     $ -  
  Tax effect on restructuring charges   -       -       -       120       -       120       -  
  (b) Restructuring charges, net of tax $ -     $ -     $ -     $ 451     $ -     $ 451     $ -  
                             
                             
(2)   Net income in this ratio excludes restructuring charges, net of tax. See (1)(b) above.                    
(3)   Noninterest expense to net interest income before loan loss provision plus noninterest income adjusted for tax equivalent income.            
(4)   Noninterest expense in this ratio excludes restructuring charges. See (1)(a) above.                    
(5)   Tangible equity represents total shareholders' equity less goodwill and other intangible assets, but includes servicing rights which were $6,768 at December 31, 2018, $6,715 at September 30, 2018, $6,650 at June 30, 2018, $6,605 at March 31, 2018 and $6,573 at December 31, 2017.
(6)   Tangible equity as defined in (5), excluding the impact of accumulated other comprehensive (loss) income on available-for-sale investment securities, net (($11,221) at December 31, 2018, ($12,873) at September 30, 2018, ($11,987) at June 30, 2018, ($10,477) at March 31, 2018 and ($4,061) at December 31, 2017), divided by total shares outstanding.
                             

 

   
Univest Financial Corporation  
Average Balances and Interest Rates (Unaudited)  
   For the Three Months Ended,   
Tax Equivalent Basis December 31, 2018   September 30, 2018  
  Average Income/ Average   Average Income/ Average  
(Dollars in thousands) Balance Expense Rate   Balance Expense Rate  
Assets:                
Interest-earning deposits with other banks $ 89,784   $ 480 2.12 % $ 80,678   $ 398 1.96 %
U.S. government obligations   22,307     89 1.58     22,331     90 1.60  
Obligations of state and political subdivisions   65,134     553 3.37     68,703     581 3.36  
Other debt and equity securities   377,243     2,494 2.62     362,388     2,258 2.47  
Federal funds sold and other earning assets   30,175     468 6.15     31,107     484 6.17  
Total interest-earning deposits, investments, federal funds sold and other earning assets   584,643     4,084 2.77     565,207     3,811 2.68  
                 
Commercial, financial, and agricultural loans   782,666     10,322 5.23     796,593     10,184 5.07  
Real estate—commercial and construction loans   1,766,543     21,309 4.79     1,729,538     20,527 4.71  
Real estate—residential loans   910,620     11,102 4.84     880,589     10,447 4.71  
Loans to individuals   31,902     511 6.35     32,057     499 6.18  
Municipal loans and leases   323,904     3,160 3.87     316,149     3,037 3.81  
Lease financings   78,663     1,407 7.10     77,369     1,409 7.23  
Gross loans and leases   3,894,298     47,811 4.87     3,832,295     46,103 4.77  
Total interest-earning assets   4,478,941     51,895 4.60     4,397,502     49,914 4.50  
Cash and due from banks   47,429           48,737        
Reserve for loan and lease losses   (28,499 )         (26,099 )      
Premises and equipment, net   60,448           60,622        
Other assets   332,200           336,559        
Total assets $ 4,890,519         $ 4,817,321        
                 
Liabilities:                
Interest-bearing checking deposits $ 491,749   $ 708 0.57 % $ 465,992   $ 541 0.46 %
Money market savings   889,165     3,372 1.50     813,769     2,664 1.30  
Regular savings   768,825     637 0.33     787,383     581 0.29  
Time deposits   676,256     2,958 1.74     633,552     2,492 1.56  
Total time and interest-bearing deposits   2,825,995     7,675 1.08     2,700,696     6,278 0.92  
                 
Short-term borrowings   56,215     233 1.64     129,365     584 1.79  
Long-term debt   140,597     694 1.96     148,323     709 1.90  
Subordinated notes   94,542     1,260 5.29     94,480     1,261 5.30  
Total borrowings   291,354     2,187 2.98     372,168     2,554 2.72  
Total interest-bearing liabilities   3,117,349     9,862 1.26     3,072,864     8,832 1.14  
Noninterest-bearing deposits   1,112,383           1,091,931        
Accrued expenses and other liabilities   41,583           40,723        
Total liabilities   4,271,315           4,205,518        
                 
Shareholders' Equity:                
Common stock   157,784           157,784        
Additional paid-in capital   292,342           291,499        
Retained earnings and other equity   169,078           162,520        
Total shareholders' equity   619,204           611,803        
Total liabilities and shareholders' equity $ 4,890,519         $ 4,817,321        
Net interest income   $ 42,033       $ 41,082    
                 
Net interest spread     3.34       3.36  
Effect of net interest-free funding sources     0.38       0.35  
Net interest margin     3.72 %     3.71 %
Ratio of average interest-earning assets to average interest-bearing liabilities   143.68 %         143.11 %      
                 
Note 1:  In the above schedule, the interest income and net interest income analysis contains tax-equivalent financial information  
       and measures determined by methods other than in accordance with U.S. GAAP. This financial information and measures  
       should not be considered a substitute for GAAP basis financial information and measures. Management believes the presentation  
       of the non-GAAP financial information and measures provide useful information that is essential to a proper understanding of  
       the financial results of the Corporation.  
                 
Note 2:  For rate calculation purposes, average loan and lease categories include deferred fees and costs, purchase accounting  
       adjustments and unearned discount.  
       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 December 31, 2018 and September 30, 2018 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 December 31,
 
Tax Equivalent Basis 2018    2017   
  Average Income/ Average   Average Income/ Average  
(Dollars in thousands) Balance Expense Rate   Balance Expense Rate  
Assets:                
Interest-earning deposits with other banks $ 89,784   $ 480 2.12 % $ 33,557   $ 92 1.09 %
U.S. government obligations   22,307     89 1.58     24,039     94 1.55  
Obligations of state and political subdivisions   65,134     553 3.37     79,708     844 4.20  
Other debt and equity securities   377,243     2,494 2.62     352,298     1,873 2.11  
Federal funds sold and other earning assets   30,175     468 6.15     27,719     371 5.31  
Total interest-earning deposits, investments, federal funds sold and other earning assets   584,643     4,084 2.77     517,321     3,274 2.51  
                 
Commercial, financial, and agricultural loans   782,666     10,322 5.23     752,750     8,608 4.54  
Real estate—commercial and construction loans   1,766,543     21,309 4.79     1,566,944     17,798 4.51  
Real estate—residential loans   910,620     11,102 4.84     802,013     9,097 4.50  
Loans to individuals   31,902     511 6.35     27,299     414 6.02  
Municipal loans and leases   323,904     3,160 3.87     285,821     3,343 4.64  
Lease financings   78,663     1,407 7.10     70,433     1,303 7.34  
Gross loans and leases   3,894,298     47,811 4.87     3,505,260     40,563 4.59  
Total interest-earning assets   4,478,941     51,895 4.60     4,022,581     43,837 4.32  
Cash and due from banks   47,429           44,922        
Reserve for loan and lease losses   (28,499 )         (20,734 )      
Premises and equipment, net   60,448           63,119        
Other assets   332,200           332,855        
Total assets $ 4,890,519         $ 4,442,743        
                 
Liabilities:                
Interest-bearing checking deposits $ 491,749   $ 708 0.57 % $ 439,397   $ 172 0.16 %
Money market savings   889,165     3,372 1.50     649,861     1,213 0.74  
Regular savings   768,825     637 0.33     841,223     648 0.31  
Time deposits   676,256     2,958 1.74     567,982     1,524 1.06  
Total time and interest-bearing deposits   2,825,995     7,675 1.08     2,498,463     3,557 0.56  
                 
Short-term borrowings   56,215     233 1.64     61,524     148 0.95  
Long-term debt   140,597     694 1.96     188,466     745 1.57  
Subordinated notes   94,542     1,260 5.29     94,298     1,261 5.31  
Total borrowings   291,354     2,187 2.98     344,288     2,154 2.48  
Total interest-bearing liabilities   3,117,349     9,862 1.26     2,842,751     5,711 0.80  
Noninterest-bearing deposits   1,112,383           1,010,213        
Accrued expenses and other liabilities   41,583           35,708        
Total liabilities   4,271,315           3,888,672        
                 
Shareholders' Equity:                
Common stock   157,784           148,546        
Additional paid-in capital   292,342           249,778        
Retained earnings and other equity   169,078           155,747        
Total shareholders' equity   619,204           554,071        
Total liabilities and shareholders' equity $ 4,890,519         $ 4,442,743        
Net interest income   $ 42,033       $ 38,126    
                 
Net interest spread     3.34       3.52  
Effect of net interest-free funding sources     0.38       0.24  
Net interest margin     3.72 %     3.76 %
Ratio of average interest-earning assets to average interest-bearing liabilities   143.68 %         141.50 %      
                 
Note 1:  In the above schedule, the interest income and net interest income analysis contains tax-equivalent financial information  
       and measures determined by methods other than in accordance with U.S. GAAP. This financial information and measures  
       should not be considered a substitute for GAAP basis financial information and measures. Management believes the presentation  
       of the non-GAAP financial information and measures provide useful information that is essential to a proper understanding of  
       the financial results of the Corporation.  
                 
Note 2: For rate calculation purposes, average loan and lease categories include deferred fees and costs, purchase accounting  
      adjustments and unearned discount.  
      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 December 31, 2018 and 2017 have been calculated  
      using the Corporation’s federal applicable rate of 21.0% and 35.0%, respectively.  
                 

 

   
Univest Financial Corporation  
Average Balances and Interest Rates (Unaudited)  
   For the Twelve Months Ended December 31,   
Tax Equivalent Basis 2018    2017   
  Average Income/ Average   Average Income/ Average  
(Dollars in thousands) Balance Expense Rate   Balance Expense Rate  
Assets:                
Interest-earning deposits with other banks $ 56,984   $ 1,101 1.93 % $ 26,128   $ 280 1.07 %
U.S. government obligations   22,930     364 1.59     30,638     423 1.38  
Obligations of state and political subdivisions   69,842     2,330 3.34     82,487     3,498 4.24  
Other debt and equity securities   363,840     9,024 2.48     350,527     6,920 1.97  
Federal funds sold and other earning assets   30,786     1,965 6.38     27,893     1,500 5.38  
Total interest-earning deposits, investments, federal funds sold and other earning assets   544,382     14,784 2.72     517,673     12,621 2.44  
                 
Commercial, financial, and agricultural loans   793,028     39,156 4.94     749,563     33,278 4.44  
Real estate—commercial and construction loans   1,689,983     78,498 4.64     1,519,883     68,166 4.48  
Real estate—residential loans   870,846     41,270 4.74     765,493     34,563 4.52  
Loans to individuals   30,242     1,866 6.17     28,050     1,636 5.83  
Municipal loans and leases   316,280     12,049 3.81     282,475     12,856 4.55  
Lease financings   76,561     5,514 7.20     75,383     5,533 7.34  
Gross loans and leases   3,776,940     178,353 4.72     3,420,847     156,032 4.56  
Total interest-earning assets   4,321,322     193,137 4.47     3,938,520     168,653 4.28  
Cash and due from banks   45,979           44,424        
Reserve for loan and lease losses   (25,154 )         (20,219 )      
Premises and equipment, net   61,006           64,583        
Other assets   334,619           329,232        
Total assets $ 4,737,772         $ 4,356,540        
                 
Liabilities:                
Interest-bearing checking deposits $ 461,676   $ 1,924 0.42 % $ 437,678   $ 527 0.12 %
Money market savings   764,777     9,137 1.19     582,703     3,390 0.58  
Regular savings   798,332     2,357 0.30     847,510     2,089 0.25  
Time deposits   601,674     8,768 1.46     566,079     5,271 0.93  
Total time and interest-bearing deposits   2,626,459     22,186 0.84     2,433,970     11,277 0.46  
                 
Short-term borrowings   144,312     2,420 1.68     105,552     904 0.86  
Long-term debt   150,032     2,777 1.85     186,109     2,621 1.41  
Subordinated notes   94,451     5,043 5.34     94,208     5,037 5.35  
Total borrowings   388,795     10,240 2.63     385,869     8,562 2.22  
Total interest-bearing liabilities   3,015,254     32,426 1.08     2,819,839     19,839 0.70  
Noninterest-bearing deposits   1,069,805           973,253        
Accrued expenses and other liabilities   40,516           36,361        
Total liabilities   4,125,575           3,829,453        
                 
Shareholders' Equity:                
Common stock   157,784           145,564        
Additional paid-in capital   291,148           235,578        
Retained earnings and other equity   163,265           145,945        
Total shareholders' equity   612,197           527,087        
Total liabilities and shareholders' equity $ 4,737,772         $ 4,356,540        
Net interest income   $ 160,711       $ 148,814    
                 
Net interest spread     3.39       3.58  
Effect of net interest-free funding sources     0.33       0.20  
Net interest margin     3.72 %     3.78 %
Ratio of average interest-earning assets to average interest-bearing liabilities   143.32 %         139.67 %      
                 
Note 1:  In the above schedule, the interest income and net interest income analysis contains tax-equivalent financial information
 
       and measures determined by methods other than in accordance with U.S. GAAP. This financial information and measures  
       should not be considered a substitute for GAAP basis financial information and measures. Management believes the presentation  
       of the non-GAAP financial information and measures provide useful information that is essential to a proper understanding of  
       the financial results of the Corporation.
 
                 
Note 2: For rate calculation purposes, average loan and lease categories include deferred fees and costs, purchase accounting
 
      adjustments and unearned discount.
 
      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 twelve months ended December 31, 2018 and 2017 have been calculated
 
      using the Corporation’s federal applicable rate of 21.0% and 35.0%, respectively.
 
                 
CONTACT:
                    Roger Deacon
                    UNIVEST FINANCIAL CORPORATION
                    Chief Financial Officer
                    215-721-2455, DeaconR@univest.net 

Univest Corporation

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