UNIVEST FINANCIAL Corp [UVSP] Filings

10-Q 1 uvsp-20240630.htm 10-Q uvsp-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2024


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

Commission File Number: 0-7617

UNIVEST FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)


Pennsylvania						23-1886144
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification No.)

14 North Main Street, Souderton, Pennsylvania 18964

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (215) 721-2400

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of class	Trading symbol	Name of exchange on which registered
Common Stock, $5 par value	UVSP	The NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Common Stock, $5 par value						29,171,025
(Title of Class)						(Number of shares outstanding at July 29, 2024)

Table of Contents

UNIVEST FINANCIAL CORPORATION AND SUBSIDIARIES

INDEX


			Page Number
Part I.	Financial Information:

	Item 1.	Financial Statements (Unaudited)

		Condensed Consolidated Balance Sheets at June 30 , 2024 and December 31, 2023	2

		Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2024 and 2023	3

		Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2024 and 2023	4

		Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three and Six Months Ended June 30, 2024 and 2023	6

		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 202 4 and 2023	8

		Notes to Condensed Consolidated Financial Statements	9

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	47

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	62

	Item 4.	Controls and Procedures	62

Part II.	Other Information

	Item 1.	Legal Proceedings	62

	Item 1A.	Risk Factors	63

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63

	Item 3.	Defaults Upon Senior Securities	63

	Item 4.	Mine Safety Disclosures	63

	Item 5.	Other Information	63

	Item 6.	Exhibits	64

Signatures			65

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

UNIVEST FINANCIAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS


	(Unaudited)
(Dollars in thousands, except share data)	At June 30, 2024		At December 31, 2023
ASSETS
Cash and due from banks	$	66,808	$	72,815
Interest-earning deposits with other banks	124,103		176,984
Cash and cash equivalents	190,911		249,799

Investment securities held-to-maturity (fair value $120,592 and $128,277 at June 30, 2024 and December 31, 2023, respectively)	140,112		145,777
Investment securities available-for-sale (amortized cost $389,791 and $395,727, net of allowance for credit losses of $781 and $731 at June 30, 2024 and December 31, 2023, respectively)	342,776		351,553
Investments in equity securities	2,995		3,293
Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost	37,438		40,499
Loans held for sale	28,176		11,637
Loans and leases held for investment	6,684,837		6,567,214
Less: Allowance for credit losses, loans and leases	(85,745)		(85,387)
Net loans and leases held for investment	6,599,092		6,481,827
Premises and equipment, net	48,174		51,441
Operating lease right-of-use assets	29,985		31,795
Goodwill	175,510		175,510
Other intangibles, net of accumulated amortization	7,701		10,950
Bank owned life insurance	137,823		131,344
Accrued interest receivable and other assets	114,753		95,203
Total assets	$	7,855,446	$	7,780,628
LIABILITIES
Noninterest-bearing deposits	$	1,397,308	$	1,468,320
Interest-bearing deposits	5,098,014		4,907,461
Total deposits	6,495,322		6,375,781
Short-term borrowings	11,781		6,306
Long-term debt	250,000		310,000
Subordinated notes	149,011		148,761
Operating lease liabilities	33,015		34,851
Accrued interest payable and other liabilities	62,180		65,721
Total liabilities	7,001,309		6,941,420
SHAREHOLDERS’ EQUITY
Common stock, $5 par value: 48,000,000 shares authorized at June 30, 2024 and December 31, 2023; 31,556,799 shares issued at June 30, 2024 and December 31, 2023; 29,190,640 and 29,511,721 shares outstanding at June 30, 2024 and December 31, 2023, respectively	157,784		157,784
Additional paid-in capital	300,166		301,066
Retained earnings	500,482		474,691
Accumulated other comprehensive loss, net of tax benefit	(54,124)		(50,646)
Treasury stock, at cost; 2,366,159 and 2,045,078 shares at June 30, 2024 and December 31, 2023, respectively	(50,171)		(43,687)
Total shareholders’ equity	854,137		839,208
Total liabilities and shareholders’ equity	$	7,855,446	$	7,780,628

Note: See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

UNIVEST FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in thousands, except per share data)	2024		2023		2024		2023
Interest income
Interest and fees on loans and leases	$	94,276	$	85,320	$	186,893	$	163,975
Interest and dividends on investment securities:
Taxable	3,741		3,512		7,388		7,007
Exempt from federal income taxes	7		14		19		29
Interest on deposits with other banks	1,108		512		2,717		991
Interest and dividends on other earning assets	700		781		1,424		1,390
Total interest income	99,832		90,139		198,441		173,392
Interest expense
Interest on deposits	43,505		27,467		85,478		45,803
Interest on short-term borrowings	242		3,249		247		5,977
Interest on long-term debt and subordinated notes	5,058		5,093		10,222		7,965
Total interest expense	48,805		35,809		95,947		59,745
Net interest income	51,027		54,330		102,494		113,647
Provision for credit losses	707		3,428		2,139		6,815
Net interest income after provision for credit losses	50,320		50,902		100,355		106,832
Noninterest income
Trust fee income	2,008		1,924		4,116		3,879
Service charges on deposit accounts	1,982		1,725		3,853		3,272
Investment advisory commission and fee income	5,238		4,708		10,432		9,460
Insurance commission and fee income	5,167		5,108		12,368		11,595
Other service fee income	3,044		3,318		9,459		6,394
Bank owned life insurance income	1,086		789		1,928		1,556

Net gain on mortgage banking activities	1,710		1,039		2,649		1,664
Other income	745		1,222		1,770		1,693
Total noninterest income	20,980		19,833		46,575		39,513
Noninterest expense
Salaries, benefits and commissions	30,187		29,875		61,525		60,889
Net occupancy	2,679		2,614		5,551		5,341
Equipment	1,088		986		2,199		1,979
Data processing	4,161		4,137		8,656		8,166
Professional fees	1,466		1,669		3,154		3,610
Marketing and advertising	715		622		1,131		993
Deposit insurance premiums	1,098		1,116		2,233		2,217
Intangible expenses	188		253		375		506


Restructuring charges	—		1,330		—		1,330
Other expense	7,126		7,197		13,958		14,297
Total noninterest expense	48,708		49,799		98,782		99,328
Income before income taxes	22,592		20,936		48,148		47,017
Income tax expense	4,485		4,136		9,736		9,183
Net income	$	18,107	$	16,800	$	38,412	$	37,834
Net income per share:
Basic	$	0.62	$	0.57	$	1.31	$	1.29
Diluted	0.62		0.57		1.30		1.28

Note: See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

UNIVEST FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended June 30,
(Dollars in thousands)	2024						2023
	Before Tax Amount		Tax Expense (Benefit)		Net of Tax Amount		Before Tax Amount		Tax Expense (Benefit)		Net of Tax Amount
Income	$	22,592	$	4,485	$	18,107	$	20,936	$	4,136	$	16,800
Other comprehensive income (loss):
Net unrealized gains (losses) on available-for-sale investment securities:
Net unrealized holding gains (losses) arising during the period	148		32		116		(3,182)		(668)		(2,514)
(Reversal of provision) provision for credit losses	(36)		(8)		(28)		105		22		83


Total net unrealized gains (losses) on available-for-sale investment securities	112		24		88		(3,077)		(646)		(2,431)
Net unrealized gains (losses) on interest rate swaps used in cash flow hedges:
Net unrealized holding losses arising during the period	(1,064)		(223)		(841)		(5,481)		(1,151)		(4,330)
Less: reclassification adjustment for net losses realized in net income (1)	1,586		333		1,253		1,371		288		1,083
Total net unrealized gains (losses) on interest rate swaps used in cash flow hedges	522		110		412		(4,110)		(863)		(3,247)
Defined benefit pension plans:

Amortization of net actuarial gains included in net periodic pension costs (2)	147		31		116		246		52		194



Total defined benefit pension plans	147		31		116		246		52		194
Other comprehensive income (loss)	781		165		616		(6,941)		(1,457)		(5,484)
Total comprehensive income	$	23,373	$	4,650	$	18,723	$	13,995	$	2,679	$	11,316

(1) Included in interest expense on demand deposits on the condensed consolidated statements of income (before tax amount).

(2) These accumulated other comprehensive loss components are included in the computation of net periodic pension cost (before tax amount). See Note 8, "Retirement Plans and Other Postretirement Benefits" for additional details.

Note: See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents


	Six Months Ended June 30,
(Dollars in thousands)	2024						2023
	Before Tax Amount		Tax Expense (Benefit)		Net of Tax Amount		Before Tax Amount		Tax Expense (Benefit)		Net of Tax Amount
Income	$	48,148	$	9,736	$	38,412	$	47,017	$	9,183	$	37,834
Other comprehensive (loss) income:
Net unrealized (losses) gains on available-for-sale investment securities:
Net unrealized holding (losses) gains arising during the period	(2,841)		(596)		(2,245)		2,211		465		1,746
Provision for credit losses	50		10		40		397		83		314


Total net unrealized (losses) gains on available-for-sale investment securities	(2,791)		(586)		(2,205)		2,608		548		2,060
Net unrealized losses on interest rate swaps used in cash flow hedges:
Net unrealized holding losses arising during the period	(5,077)		(1,066)		(4,011)		(4,175)		(877)		(3,298)
Less: reclassification adjustment for net losses realized in net income (1)	3,172		666		2,506		2,431		511		1,920
Total net unrealized losses on interest rate swaps used in cash flow hedges	(1,905)		(400)		(1,505)		(1,744)		(366)		(1,378)
Defined benefit pension plans:

Amortization of net actuarial gains included in net periodic pension costs (2)	294		62		232		492		104		388



Total defined benefit pension plans	294		62		232		492		104		388
Other comprehensive (loss) income	(4,402)		(924)		(3,478)		1,356		286		1,070
Total comprehensive income	$	43,746	$	8,812	$	34,934	$	48,373	$	9,469	$	38,904

(1) Included in interest expense on demand deposits on the condensed consolidated statements of income (before tax amount).

Note: See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

UNIVEST FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


(Dollars in thousands, except per share data)	Common Shares Outstanding	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total
Three Months Ended June 30, 2024
Balance at March 31, 2024	29,337,919	$	157,784	$	298,914	$	488,790	$	(54,740)	$	(47,079)	$	843,669
Net income	—	—		—		18,107		—		—		18,107
Other comprehensive income, net of income tax	—	—		—		—		616		—		616
Cash dividends declared ($0.21 per share)	—	—		—		(6,143)		—		—		(6,143)
Stock-based compensation	—	—		1,378		(272)		—		—		1,106
Stock issued under dividend reinvestment and employee stock purchase plans	27,321	—		17		—		—		603		620
Vesting of restricted stock units, net of shares withheld to cover taxes	4,208	—		(111)		—		—		88		(23)

Exercise of stock options	12,000	—		(32)		—		—		255		223

Purchases of treasury stock	(190,808)	—		—		—		—		(4,038)		(4,038)
Balance at June 30, 2024	29,190,640	$	157,784	$	300,166	$	500,482	$	(54,124)	$	(50,171)	$	854,137


(Dollars in thousands, except per share data)	Common Shares Outstanding	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total
Three Months Ended June 30, 2023
Balance at March 31, 2023	29,427,696	$	157,784	$	298,167	$	443,493	$	(55,550)	$	(45,398)	$	798,496
Net income	—	—		—		16,800		—		—		16,800
Other comprehensive loss, net of income tax benefit	—	—		—		—		(5,484)		—		(5,484)
Cash dividends declared ($0.21 per share)	—	—		—		(6,180)		—		—		(6,180)
Stock-based compensation	—	—		1,234		(307)		—		—		927
Stock issued under dividend reinvestment and employee stock purchase plans	36,292	—		(48)		—		—		695		647
Vesting of restricted stock units, net of shares withheld to cover taxes	5,093	—		(137)		—		—		113		(24)

Exercise of stock options	2,043	—		(4)		—		—		44		40


Balance at June 30, 2023	29,471,124	$	157,784	$	299,212	$	453,806	$	(61,034)	$	(44,546)	$	805,222


(Dollars in thousands, except per share data)	Common Shares Outstanding	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total
Six Months Ended June 30, 2024
Balance at December 31, 2023	29,511,721	$	157,784	$	301,066	$	474,691	$	(50,646)	$	(43,687)	$	839,208
Net income	—	—		—		38,412		—		—		38,412
Other comprehensive loss, net of income tax benefit	—	—		—		—		(3,478)		—		(3,478)
Cash dividends declared ($0.42 per share)	—	—		—		(12,332)		—		—		(12,332)
Stock-based compensation	—	—		2,348		(289)		—		—		2,059
Stock issued under dividend reinvestment and employee stock purchase plans	59,227	—		12		—		—		1,256		1,268
Vesting of restricted stock units, net of shares withheld to cover taxes	107,377	—		(3,212)		—		—		2,355		(857)

Exercise of stock options	19,788	—		(48)		—		—		421		373

Purchases of treasury stock	(507,473)	—		—		—		—		(10,516)		(10,516)
Balance at June 30, 2024	29,190,640	$	157,784	$	300,166	$	500,482	$	(54,124)	$	(50,171)	$	854,137

Table of Contents


(Dollars in thousands, except per share data)	Common Shares Outstanding	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Treasury Stock		Total
Six Months Ended June 30, 2023
Balance at December 31, 2022	29,271,915	$	157,784	$	300,808	$	428,637	$	(62,104)	$	(48,625)	$	776,500
Net income	—	—		—		37,834		—		—		37,834
Other comprehensive income, net of income tax	—	—		—		—		1,070		—		1,070
Cash dividends declared ($0.42 per share)	—	—		—		(12,331)		—		—		(12,331)
Stock-based compensation	—	—		2,291		(334)		—		—		1,957
Stock issued under dividend reinvestment and employee stock purchase plans	61,636	—		(19)		—		—		1,328		1,309
Vesting of restricted stock units, net of shares withheld to cover taxes	131,363	—		(3,850)		—		—		2,619		(1,231)

Exercise of stock options	6,210	—		(18)		—		—		132		114


Balance at June 30, 2023	29,471,124	$	157,784	$	299,212	$	453,806	$	(61,034)	$	(44,546)	$	805,222

Note: See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

UNIVEST FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(Dollars in thousands)	2024		2023
Cash flows from operating activities:
Net income	$	38,412	$	37,834
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	2,139		6,815
Depreciation of premises and equipment	2,718		2,450
Net amortization of investment securities premiums and discounts	521		569
Amortization, fair market value adjustments and capitalization of servicing rights	2,899		3

Net gain on mortgage banking activities	(2,649)		(1,664)



Bank owned life insurance income	(1,928)		(1,556)
Stock-based compensation	2,231		2,115
Intangible expenses	375		506
Other adjustments to reconcile net income to cash used in operating activities	(1,107)		(948)

Originations of loans held for sale	(138,398)		(87,921)
Proceeds from the sale of loans held for sale	124,758		84,694
Contributions to pension and other postretirement benefit plans	(126)		(85)
Increase in accrued interest receivable and other assets	(18,716)		(6,601)
(Decrease) increase in accrued interest payable and other liabilities	(2,972)		3,852
Net cash provided by operating activities	8,157		40,063
Cash flows from investing activities:

Proceeds from sale of premises and equipment	2,445		693
Purchases of premises and equipment	(1,852)		(4,274)
Proceeds from maturities, calls and principal repayments of securities held-to-maturity	6,583		7,266
Proceeds from maturities, calls and principal repayments of securities available-for-sale	32,931		15,260

Purchases of investment securities held-to-maturity	(1,100)		(6,252)
Purchases of investment securities available-for-sale	(27,351)		(19,348)
Proceeds from sales of money market mutual funds	2,103		242
Purchases of money market mutual funds	(1,847)		(1,220)
Net decrease (increase) in other investments	3,061		(8,970)
Proceeds from sale of loans originally held-for-investment	—		175

Net increase in loans and leases	(119,483)		(361,702)
Proceeds from sales of other real estate owned	—		260

Purchases of bank owned life insurance	(5,710)		(7,862)
Proceeds from bank owned life insurance	1,159		—
Net cash used in investing activities	(109,061)		(385,732)
Cash flows from financing activities:
Net increase in deposits	119,529		73,863
Net increase in short-term borrowings	5,475		47,525
Proceeds from issuance of long-term debt	—		250,000
Repayment of long-term debt	(60,000)		(

UNIVEST FINANCIAL Corp [UVSP] Filings
10-Q	[2024-07-30]
10-Q	[2024-04-30]
10-K	[2024-02-26]
10-Q	[2023-11-01]
10-Q	[2023-08-01]
10-Q	[2023-05-02]
10-K	[2023-02-24]
10-Q	[2022-10-28]
10-Q	[2022-08-02]
10-Q	[2022-05-03]
10-K	[2022-02-25]
10-Q	[2021-11-02]
10-Q	[2021-08-02]
10-Q	[2021-05-03]
10-K	[2021-02-26]
10-Q	[2020-11-02]
10-Q	[2020-07-24]
10-Q	[2020-05-04]
10-K	[2020-02-28]
10-Q	[2019-11-01]
10-Q	[2019-08-02]
10-Q	[2019-05-03]
10-K	[2019-02-28]
10-Q	[2018-11-02]
10-Q	[2018-08-03]
10-Q	[2018-05-04]
10-K	[2018-03-01]
10-Q	[2017-11-03]
10-Q	[2017-08-04]
10-Q	[2017-05-03]
10-K	[2017-03-03]
10-Q	[2016-11-08]
10-Q	[2016-08-08]
10-Q	[2016-05-10]
10-K	[2016-03-04]
10-Q	[2015-11-06]
10-Q	[2015-08-07]
10-Q	[2015-05-08]
10-K	[2015-03-09]
10-Q	[2014-11-07]
10-Q	[2014-08-08]
10-Q	[2014-05-09]
10-K	[2014-03-04]
10-Q	[2013-11-08]
10-Q	[2013-08-08]
10-Q	[2013-05-09]
10-K	[2013-03-04]
10-Q	[2012-11-08]
10-Q	[2012-08-08]
10-Q	[2012-05-09]
10-K	[2012-03-02]