UNIVEST FINANCIAL Corp [UVSP] Filings

10-Q 1 uvsp-20230630.htm 10-Q uvsp-20230630

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, 2023


☐			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						29,471,362
(Title of Class)						(Number of shares outstanding at July 31, 2023)

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 , 2023 and December 31, 2022	2

		Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 202 3 and 2022	3

		Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 202 3 and 2022	4

		Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three and Six Months Ended June 30, 202 3 and 2022	6

		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 202 3 and 2022	8

		Notes to Condensed Consolidated Financial Statements	10

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	45

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	60

	Item 4.	Controls and Procedures	60

Part II.	Other Information

	Item 1.	Legal Proceedings	60

	Item 1A.	Risk Factors	61

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61

	Item 3.	Defaults Upon Senior Securities	61

	Item 4.	Mine Safety Disclosures	61

	Item 5.	Other Information	61

	Item 6.	Exhibits	62

Signatures			63

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, 2023		At December 31, 2022
ASSETS
Cash and due from banks	$	80,795	$	84,176
Interest-earning deposits with other banks	59,616		68,623
Cash and cash equivalents	140,411		152,799

Investment securities held-to-maturity (fair value $133,835 and $134,068 at June 30, 2023 and December 31, 2022, respectively)	153,509		154,727
Investment securities available-for-sale (amortized cost $405,808 and $402,111, net of allowance for credit losses of $1,537 and $1,140 at June 30, 2023 and December 31, 2022, respectively)	356,164		350,256
Investments in equity securities	3,443		2,579
Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost	42,811		33,841
Loans held for sale	29,526		5,037
Loans and leases held for investment	6,462,238		6,123,230
Less: Allowance for credit losses, loans and leases	(82,709)		(79,004)
Net loans and leases held for investment	6,379,529		6,044,226
Premises and equipment, net	52,058		50,939
Operating lease right-of-use assets	30,237		30,059
Goodwill	175,510		175,510
Other intangibles, net of accumulated amortization	10,923		11,384
Bank owned life insurance	129,715		120,297
Accrued interest receivable and other assets	96,314		90,362
Total assets	$	7,600,150	$	7,222,016
LIABILITIES
Noninterest-bearing deposits	$	1,582,767	$	2,047,263
Interest-bearing deposits	4,404,635		3,866,263
Total deposits	5,987,402		5,913,526
Short-term borrowings	244,666		197,141
Long-term debt	320,000		95,000
Subordinated notes	148,510		148,260
Operating lease liabilities	33,428		33,153
Accrued interest payable and other liabilities	60,922		58,436
Total liabilities	6,794,928		6,445,516
SHAREHOLDERS’ EQUITY
Common stock, $5 par value: 48,000,000 shares authorized at June 30, 2023 and December 31, 2022; 31,556,799 shares issued at June 30, 2023 and December 31, 2022; 29,471,124 and 29,271,915 shares outstanding at June 30, 2023 and December 31, 2022, respectively	157,784		157,784
Additional paid-in capital	299,212		300,808
Retained earnings	453,806		428,637
Accumulated other comprehensive loss, net of tax benefit	(61,034)		(62,104)
Treasury stock, at cost; 2,085,675 and 2,284,884 shares at June 30, 2023 and December 31, 2022, respectively	(44,546)		(48,625)
Total shareholders’ equity	805,222		776,500
Total liabilities and shareholders’ equity	$	7,600,150	$	7,222,016

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)	2023		2022		2023		2022
Interest income
Interest and fees on loans and leases	$	85,320	$	52,797	$	163,975	$	100,903
Interest and dividends on investment securities:
Taxable	3,512		2,738		7,007		5,103
Exempt from federal income taxes	14		14		29		29
Interest on deposits with other banks	512		824		991		1,181
Interest and dividends on other earning assets	781		344		1,390		699
Total interest income	90,139		56,717		173,392		107,915
Interest expense
Interest on deposits	27,467		3,586		45,803		6,477
Interest on short-term borrowings	3,249		11		5,977		13
Interest on long-term debt and subordinated notes	5,093		1,649		7,965		3,294
Total interest expense	35,809		5,246		59,745		9,784
Net interest income	54,330		51,471		113,647		98,131
Provision for credit losses	3,428		6,674		6,815		3,224
Net interest income after provision for credit losses	50,902		44,797		106,832		94,907
Noninterest income
Trust fee income	1,924		1,998		3,879		4,100
Service charges on deposit accounts	1,725		1,574		3,272		3,078
Investment advisory commission and fee income	4,708		4,812		9,460		9,964
Insurance commission and fee income	5,108		4,629		11,595		10,199
Other service fee income	3,318		3,309		6,394		6,065
Bank owned life insurance income	789		705		1,556		1,404
Net gain on sales of investment securities	—		—		—		30
Net gain on mortgage banking activities	1,039		1,230		1,664		3,159
Other income	1,222		741		1,693		1,469
Total noninterest income	19,833		18,998		39,513		39,468
Noninterest expense
Salaries, benefits and commissions	29,875		29,133		60,889		57,378
Net occupancy	2,614		2,422		5,341		5,138
Equipment	986		977		1,979		1,959
Data processing	4,137		3,708		8,166		7,275
Professional fees	1,669		2,844		3,610		4,982
Marketing and advertising	622		693		993		1,118
Deposit insurance premiums	1,116		812		2,217		1,705
Intangible expenses	253		342		506		683


Restructuring charges	1,330		—		1,330		—
Other expense	7,197		6,440		14,297		12,545
Total noninterest expense	49,799		47,371		99,328		92,783
Income before income taxes	20,936		16,424		47,017		41,592
Income tax expense	4,136		3,258		9,183		8,109
Net income	$	16,800	$	13,166	$	37,834	$	33,483
Net income per share:
Basic	$	0.57	$	0.45	$	1.29	$	1.14
Diluted	0.57		0.45		1.28		1.13

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)	2023						2022
	Before Tax Amount		Tax Expense (Benefit)		Net of Tax Amount		Before Tax Amount		Tax Expense (Benefit)		Net of Tax Amount
Income	$	20,936	$	4,136	$	16,800	$	16,424	$	3,258	$	13,166
Other comprehensive loss:
Net unrealized losses on available-for-sale investment securities:
Net unrealized holding losses arising during the period	(3,182)		(668)		(2,514)		(15,336)		(3,220)		(12,116)
Provision for credit losses	105		22		83		417		87		330


Total net unrealized losses on available-for-sale investment securities	(3,077)		(646)		(2,431)		(14,919)		(3,133)		(11,786)
Net unrealized (losses) gains on interest rate swaps used in cash flow hedges:
Net unrealized holding (losses) gains arising during the period	(5,481)		(1,151)		(4,330)		1,626		342		1,284
Less: reclassification adjustment for net losses (gains) realized in net income (1)	1,371		288		1,083		(686)		(144)		(542)
Total net unrealized (losses) gains on interest rate swaps used in cash flow hedges	(4,110)		(863)		(3,247)		940		198		742
Defined benefit pension plans:

Amortization of net actuarial gains included in net periodic pension costs (2)	246		52		194		218		46		172



Total defined benefit pension plans	246		52		194		218		46		172
Other comprehensive loss	(6,941)		(1,457)		(5,484)		(13,761)		(2,889)		(10,872)
Total comprehensive income	$	13,995	$	2,679	$	11,316	$	2,663	$	369	$	2,294

(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)	2023						2022
	Before Tax Amount		Tax Expense (Benefit)		Net of Tax Amount		Before Tax Amount		Tax Expense (Benefit)		Net of Tax Amount
Income	$	47,017	$	9,183	$	37,834	$	41,592	$	8,109	$	33,483
Other comprehensive income (loss):
Net unrealized gains (losses) on available-for-sale investment securities:
Net unrealized holding gains (losses) arising during the period	2,211		465		1,746		(35,705)		(7,498)		(28,207)
Provision for credit losses	397		83		314		763		160		603
Less: reclassification adjustment for net gains on sales realized in net income (1)	—		—		—		(30)		(6)		(24)

Total net unrealized gains (losses) on available-for-sale investment securities	2,608		548		2,060		(34,972)		(7,344)		(27,628)
Net unrealized (losses) gains on interest rate swaps used in cash flow hedges:
Net unrealized holding (losses) gains arising during the period	(4,175)		(877)		(3,298)		1,702		358		1,344
Less: reclassification adjustment for net losses (gains) losses realized in net income (2)	2,431		511		1,920		(618)		(130)		(488)
Total net unrealized (losses) gains on interest rate swaps used in cash flow hedges	(1,744)		(366)		(1,378)		1,084		228		856
Defined benefit pension plans:

Amortization of net actuarial gains included in net periodic pension costs (3)	492		104		388		436		92		344



Total defined benefit pension plans	492		104		388		436		92		344
Other comprehensive income (loss)	1,356		286		1,070		(33,452)		(7,024)		(26,428)
Total comprehensive income	$	48,373	$	9,469	$	38,904	$	8,140	$	1,085	$	7,055

(1) Included in net gain on sales of investment securities on the condensed consolidated statements of income (before tax amount).

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

(3) 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.

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, 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
Three Months Ended June 30, 2022
Balance at March 31, 2022	29,636,425	$	157,784	$	297,945	$	389,332	$	(31,909)	$	(39,297)	$	773,855
Net income	—	—		—		13,166		—		—		13,166
Other comprehensive loss, net of income tax benefit	—	—		—		—		(10,872)		—		(10,872)
Cash dividends declared ($0.21 per share)	—	—		—		(6,200)		—		—		(6,200)
Stock-based compensation	—	—		936		(3)		—		—		933
Stock issued under dividend reinvestment and employee stock purchase plans	25,774	—		45		—		—		607		652
Vesting of restricted stock units, net of shares withheld to cover taxes	3,576	—		(126)		—		—		88		(38)

Exercise of stock options	—	—		—		—		—		(1)		(1)

Purchases of treasury stock	(300,000)	—		—		—		—		(7,570)		(7,570)
Balance at June 30, 2022	29,365,775	$	157,784	$	298,800	$	396,295	$	(42,781)	$	(46,173)	$	763,925


(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


(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, 2022
Balance at December 31, 2021	29,500,542	$	157,784	$	299,181	$	375,124	$	(16,353)	$	(41,942)	$	773,794
Net income	—	—		—		33,483		—		—		33,483
Other comprehensive loss, net of income tax benefit	—	—		—		—		(26,428)		—		(26,428)
Cash dividends declared ($0.41 per share)	—	—		—		(12,105)		—		—		(12,105)
Stock-based compensation	—	—		2,009		(207)		—		—		1,802
Stock issued under dividend reinvestment and employee stock purchase plans	47,617	—		104		—		—		1,171		1,275
Vesting of restricted stock units, net of shares withheld to cover taxes	91,835	—		(2,544)		—		—		1,643		(901)

Exercise of stock options	25,781	—		50		—		—		525		575

Purchases of treasury stock	(300,000)	—		—		—		—		(7,570)		(7,570)
Balance at June 30, 2022	29,365,775	$	157,784	$	298,800	$	396,295	$	(42,781)	$	(46,173)	$	763,925

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

UNIVEST FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(Dollars in thousands)	2023		2022
Cash flows from operating activities:
Net income	$	37,834	$	33,483
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	6,815		3,224
Depreciation of premises and equipment	2,450		2,193
Net amortization of investment securities premiums and discounts	569		837
Net gain on sales of investment securities	—		(30)
Net gain on mortgage banking activities	(1,664)		(3,159)



Bank owned life insurance income	(1,556)		(1,404)
Stock-based compensation	2,115		1,949
Intangible expenses	506		683
Other adjustments to reconcile net income to cash used in operating activities	(945)		(1,922)

Originations of loans held for sale	(87,921)		(138,112)
Proceeds from the sale of loans held for sale	84,694		154,671
Contributions to pension and other postretirement benefit plans	(85)		(126)
(Increase) decrease in accrued interest receivable and other assets	(6,601)		3,854
Increase in accrued interest payable and other liabilities	3,852		3,592
Net cash provided by operating activities	40,063		59,733
Cash flows from investing activities:

Proceeds from sale of premises and equipment	693		6,844
Purchases of premises and equipment	(4,274)		(2,090)
Proceeds from maturities, calls and principal repayments of securities held-to-maturity	7,266		20,705
Proceeds from maturities, calls and principal repayments of securities available-for-sale	15,260		17,417
Proceeds from sales of securities available-for-sale	—		1,530
Purchases of investment securities held-to-maturity	(6,252)		(3,936)
Purchases of investment securities available-for-sale	(19,348)		(89,494)
Proceeds from sales of money market mutual funds	242		3,496
Purchases of money market mutual funds	(1,220)		(3,628)
Net increase in other investments	(8,970)		(930)
Proceeds from sale of loans originally held-for-investment	175		—

Net increase in loans and leases	(361,702)		(371,495)
Proceeds from sales of other real estate owned	260		—

Purchases of bank owned life insurance	(7,862)		—

UNIVEST FINANCIAL Corp [UVSP] Filings
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]