Univest Financial Corporation · NASDAQ:UVSP
Univest Financial — Investor Presentation (February 2023)
50 slides from Univest Financial's investor presentation, Feb 14, 2023
Slide 1: Investor Presentation February 14, 2023
Investor Presentation February 14, 2023
Slide 2: Safe Harbor Statement
Safe Harbor Statement Cautionary Note Regarding Forward-Looking Statements The information contained in this report may contain forward-looking statements. When used or incorporated by reference in disclosure documents, the words "believe," "anticipate," "estimate," "expect," "project," "target," "g
Slide 3: Safe Harbor Statement (cont'd)
Safe Harbor Statement (cont’d) Cautionary Note Regarding Forward-Looking Statements • System failures or cyber-security breaches of our information technology infrastructure and those of our third-party service providers; • The failure to maintain current technologies and/or to successfully implemen
Slide 4: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These non-GAAP measures include tangible common equity, core net interest income excludi
Slide 5: Company Overview
COMPANY OVERVIEW
Slide 6: Univest Company Overview
Univest Company Overview • Headquartered in Souderton, Pennsylvania (Montgomery County) • Bank founded in 1876, holding company formed in 1973 • Engaged in financial services business, providing full range of banking, insurance and wealth management services ◦ Comprehensive financial solutions deliv
Slide 7: UVSP by the Numbers
UVSP by the Numbers 7 7th Largest Diversified Financial Institution Headquartered in PA 10% Core EPS < 5-year CAGRs > 7.2% TBV/Share Conservatively Managed Organic Growth Engine ~25% - 30% High Margin Fee Income Business Revenue/Total 11.1% 5-yr CAGR Organic Loan Growth w/ Exceptional Asset Quality
Slide 8: Executive Leadership Team
Executive Leadership Team 8 Name Age Tenure (yrs) with Univest Title Jeffrey M. Schweitzer 49 15 President and CEO, Univest Financial Corporation Michael S. Keim 55 14 Chief Operating Officer, Univest Financial Corporation and President, Univest Bank and Trust Co. Brian J. Richardson 40 6 Senior Exe
Slide 9: Univest Primary Physical Service Area
Univest Primary Physical Service Area 9 Expansion Markets Western PA Maryland KEY Headquarters Financial Center Regional Center Regional Center (Deposit Taking) Insurance
Slide 10: Market Opportunity
• Univest is one of the two largest community focused financial institutions remaining headquartered in the Philadelphia market (WSFS being the other) • Univest Bank and Trust Co. primarily operates in thirteen counties in Pennsylvania including: Berks, Bucks, Chester, Cumberland, Dauphin, Delaware,
Slide 11: 2023 Strategy
2023 Strategy 11 Grow Fee Revenue: ■ Continue to grow non-interest income and pre-tax income in the Mortgage Banking, Wealth Management and Insurance lines of business Improve Operating Leverage: ■ Maximize the potential of digital capabilities to create operating leverage and reduce our efficiency
Slide 12: Our Digital Transformation Continues
Our Digital Transformation Continues 12 Exceptional people deliver a relationship- based approach that customers appreciate Strengths Larger competitors are more advanced in leveraging customer data to deliver personalized, omnichannel experiences Need a support and prioritization model that scales
Slide 13: Delivering on a customer-centric transformation
Delivering on a customer-centric transformation 13 Data modernization lays the foundation to better know customers and personalize their experiences Benefit to Customers Benefit to Univest Digital scheduler capabilities and enhanced chat enable Univest to continue delivering its human touch over dig
Slide 14: Attractive Investment Opportunity
Attractive Investment Opportunity 14 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 2. Based on price of $28.28 (represents average closing price 2/6/23-2/10/23). 3. Based on analyst average consensus of $3.01 EPS for 2023 (KBW projection of $3.02, Piper Sandler p
Slide 15: Summary Financial Highlights
SUMMARY FINANCIAL HIGHLIGHTS
Slide 16: 2022 Results
2022 Results 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 2. Includes PA capital stock tax expense - increases efficiency ratio by approximately 170 bps 16 Earnings Loans & Deposits Key Ratios Reported Earnings: $78.1 million $2.64 per Share Core PTPP-NCO1: $108
Slide 17: Core Pre-Tax Pre-Provision Income less Net Charge-Offs
$64,978 $68,620 $84,911 $85,340 $87,236 $108,434 2017 2018 2019 2020 2021 2022 $— $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 Core Pre-Tax Pre-Provision Income less Net Charge-Offs1 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 17
Slide 18: Tangible Book Value Per Share
$14.44 $15.24 $17.01 $17.66 $20.14 $20.42 2017 2018 2019 2020 2021 2022 $— $5.00 $10.00 $15.00 $20.00 $25.00 Tangible Book Value Per Share1 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 2. Assumes no Wealth Management or Insurance acquisitions. Target 8-10% Annua
Slide 19: Core PTPP-NCO ROAA & ROTE
Core PTPP- NCO ROAA & ROTE 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 1.49% 1.45% 1.63% 1.51% 1.37% 1.56% 2017 2018 2019 2020 2021 2022 1.00% 1.10% 1.20% 1.30% 1.40% 1.50% 1.60% 1.70% 1.80% 1.90% 2.00% 19.54% 16.33% 18.20% 17.58% 15.77% 18.53% 2017 2018 2019 2
Slide 20: Net Interest Income (Slightly Asset Sensitive)
Net Interest Income (Slightly Asset Sensitive) 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 2. Pro forma tax equivalent margin calculation excludes purchase accounting accretion and is based upon a pro forma 21% tax rate for all periods presented 20 3.78% 3.72%
Slide 21: Interest Rate Sensitivity
Interest Rate Sensitivity 21 Net Interest Income Simulations Flat Rate as of 12/31/22 BS (millions) 251 252 259 237 227 Base-FLAT 100+0 200+0 -100+0 -200+0 0 50 100 150 200 250 300 As of 12/31/22 Flat Curve 3.2% 0.5% (5.4)% (9.7)% 200+0 100+0 -100+0 -200+0 (15.0)% (10.0)% (5.0)% —% 5.0% 10.0% 15.0%
Slide 22: Efficiency Ratio
62.5% 61.9% 61.4% 60.6% 60.9% 62.4% 60.8% 60.1% 60.2% 60.7% 63.2% 59.7% Reported Efficiency Ratio (Noninterest Expense/Tax Equivalent Revenue) Efficiency Ratio (Core Noninterest Expense Excluding PA Shares Tax/Core Tax Equivalent Revenue) (1),(2) 2017 2018 2019 2020 2021 2022 50.0% 52.5% 55.0% 57.5%
Slide 23: Revenue (excluding PPP impact)
Revenue (excluding PPP impact) 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 2. 2022 is a pro forma annualized figure - (YTD Q3/3x4) Revenue = Net Interest Income + Noninterest Income $ (0 00 ) N on-Interest Incom e % of Total R evenue Net Interest Income (excl P
Slide 24: Fee Income
Fee Income 24 $55,963 $59,240 $60,173 $65,422 $78,328 $83,224 $77,885 33% 29% 28% 28% 32% 32% 26% Trust / Wealth Fee Income Insurance Fee Income Mortgage Banking Service Charges on Deposit Accounts Other Service Fee Income BOLI Other % of Total Revenue 2016 2017 2018 2019 2020 2021 2022 $— $12,000 $
Slide 25: Assets and Loans
Assets and Loans Chart data as of December 31 Assets Excluding PPP Loans: 2020 = $5.9B, 2021 = $7.1B and 2022 = $7.2B $ (0 00 ) $4.2B $4.6B $5.0B $5.4B $6.3B $7.1B $7.2B Net Loans & Leases Total Investment Securities Other Assets Cash and Due From Banks 2016 2017 2018 2019 2020 2021 2022 $0 $1,000,0
Slide 26: Liabilities and Deposits
Liabilities and Deposits Chart data as of December 31 $ (0 00 ) $3.7B $4.0B $4.4B $4.7B $5.6B $6.3B $6.4B Interest-Bearing Deposits Noninterest-Bearing Deposits Borrowings Other Liabilities 2016 2017 2018 2019 2020 2021 2022 $— $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000
Slide 27: Stable Asset Quality
Stable Asset Quality Chart data as of December 31 $ (0 00 ) A C L / non-accrual Loans and Leases Nonaccrual Loans and Leases ACL/nonaccrual loans and leases 2016 2017 2018 2019 2020 2021 2022 $— $10,000 $20,000 $30,000 $40,000 $50,000 100.0% 200.0% 300.0% 400.0% 500.0% 600.0% $ (0 00 ) N et C harge-
Slide 28: Current Expected Credit Loss (CECL)
Current Expected Credit Loss (CECL)1 28 $( 00 0) $35.3 $12.9 $36.3 $3.1 $(4.6) $83.0 $(10.5) $(0.4) $(0.2) $71.9 $4.3 $6.7 $(3.9) $79.0 2019 CECL Adoption Loan growth and changes in economic related assumptions Specific Reserves Net Charge- Offs 2020 Loan growth and changes in economic related assum
Slide 29: Liquidity and Capital
LIQUIDITY AND CAPITAL
Slide 30: Liquidity and Capital
Liquidity and Capital All data in millions, as of 12/31/22 Balance Remaining Capacity FHLB - Pittsburgh $ 220.0 $ 1,947.5 Federal Fund Lines (10 Lenders)* 60.0 350.0 FRB - Philadelphia — 98.1 Univest Financial Corp. LOC 1 — 10.0 Total $ 280.0 $ 2,405.6 *Uncommitted lines ranging from $20mm to $150mm
Slide 31: Strong Capital Ratios Provide for Operating Flexibility
Strong Capital Ratios Provide for Operating Flexibility 31 Tier 1 (Leverage) 8.84% 10.48% 10.13% 10.02% 9.08% 9.13% 9.81% 5.00% Required Capital Ratio with full Basel III phase-in Univest Financial Corp (12/31/22) 2016 2017 2018 2019 2020 2021 2022 —% 5.00% 10.00% 15.00% Tier 1 (Common/RBC) 9.42% 11
Slide 32: Largest Deposit Relationships
Largest Deposit Relationships 1 – As of 12/31/22 32 Deposits Balance Weighted Rank Type (000s) Avg Rate 1 Public Funds 187,662 4.45% 2 Bus / Corp 69,144 0.00% 3 Public Funds 54,598 3.72% 4 Public Funds 40,539 4.00% 5 Public Funds 34,661 4.50% 6 Public Funds 34,550 4.49% 7 Public Funds 34,401 4.41% 8
Slide 33: Investments
Investments Municipal Bonds Corporate Bonds (in millions) (in millions) Moody’s Rating State Moody’s Rating Aaa 1.0 PA 1.3 Aa3 1.0 Aa3 — TN 1.0 Aa2 1.5 Aa2 — Total 2.3 Aa1 — A1 — Aaa 0.5 A2 — A3 13.9 N/A 1.3 A2 25.8 Total 2.3 A1 39.0 Baa2 — S&P Rating Type Baa1 — AAA 1.0 GO 2.3 WR — AA 1.3 REV — N/A
Slide 34: Loan Portfolio Detail and Credit Overview
LOAN PORTFOLIO DETAIL AND CREDIT OVERVIEW
Slide 35: Loan & Lease Detail (excluding PPP)
Loan & Lease Detail (excluding PPP) Chart Data is as of December 31 ($6.1 billion at 12/31/22 excluding PPP) 35 1,375 1,542 1,741 2,040 2,459 2,719 3,028 823 896 938 947 893 956 1,087 175 176 216 233 243 284 382 294 342 363 374 381 410 478 30 28 33 30 27 26 28 291 322 388 439 488 541 730 163 184 186
Slide 36: Largest Loan Exposures
Largest Loan Exposures – As of 12/31/22 36 Commercial Real Estate and Residential Real Estate Secured for Business Purposes Commercial & Industrial $3,888M | Avg Loan Size $612K $1,087M | Avg Loan Size $362K Risk Exposure Risk Exposure Rank Loan Type/Industry Rating (000s) Geography Rank Loan Type/I
Slide 37: Loan Portfolio Overview
Loan Portfolio Overview – As of 12/31/22 37 Industry Description Total Outstanding Balance (excl PPP) % of Commercial Loan Portfolio CRE - Retail $ 440,112 8.8 % Animal Production 340,877 6.9 CRE - Office 292,740 5.9 CRE - Multi-family 277,157 5.6 CRE - 1-4 Family Residential Investment 266,423 5.3
Slide 38: Credit Infrastructure Approval Process
Credit Infrastructure 38 Approval Process Credit / Risk Owns Borrower Risk Risk Assessment/Analysis Portfolio Risk Assessment Credit Risk Structure Underwriting Process Approval Sign-Off Independent Loan Review Line of Business Owns Borrower Relationship Business/Industry Expertise or Analysis Trans
Slide 39: Credit risk management and lending authority
• Limited single signature lending authority. Joint signature up to $5.0MM, then management level loan committee for the largest exposures. ◦ Itemized report of all closed loans of $500K or more reported weekly to Officers Loan Committee. • Robust independent loan review process, using team based au
Slide 40: Line of Business Overview
GUNIVEST Capi BANK AND TRUST CO. AUNIVEST WEALTH DIVISION Member FDIC LINE OF BUSINESS OVERVIEW alk WW y GUNIVEST UNIVEST HOME LOANS
Slide 41: Commercial Banking
Commercial Banking • 109 lenders, relationship managers and portfolio managers operating in two divisions established by geography (serving clients primarily in Pennsylvania, New Jersey, Delaware and Maryland) ◦ East Penn and New Jersey: Bucks, Montgomery, Chester, Delaware, Berks, Philadelphia, Leh
Slide 42: Consumer Banking
Consumer Banking • 28 financial service centers located in Bucks, Lancaster, Lehigh, Montgomery, Northampton and Philadelphia counties in PA; also operating 14 retirement centers in Bucks and Montgomery counties and 9 Regional Centers (Deposit Taking) • Proactively addressed continued reduction in t
Slide 43: Mortgage Banking
Mortgage Banking • 51 Loan Officers predominately operating in Bank’s core footprint • Primarily agency lender: FNMA, FHLMC, FHA, VA and USDA ◦ FNMA and FHLMC eligible loans sold with servicing retained ◦ GNMA issuer ◦ FHA, VA and USDA loans currently sold primarily to correspondents with servicing
Slide 44: Univest Capital, Inc.
Univest Capital, Inc. • Equipment financing business with $211 million in lease receivables as of 12/31/22 • Average lease size $41,000 typically with four-year term • Primary industries served: health care, education/office, automotive, golf/turf, technology and energy • Manage residual risk by pri
Slide 45: Wealth Management
Wealth Management • Comprehensive wealth management platform including broker / dealer, municipal pension services, registered investment advisor, retirement plan services and trust • The wealth management division operates under the Girard brand (i.e. Girard Advisory Services, LLC, Girard Benefits
Slide 46: Insurance
Insurance • Independent insurance agency with more than 60 carrier relationships • Full service agency providing commercial and personal lines, employee benefits and HR consulting solutions • Built via a series of eight acquisitions beginning in 2000 ◦ On December 1, 2021, Univest acquired certain a
Slide 47: Appendix (Non-GAAP Reconciliations)
APPENDIX (Non-GAAP Reconciliations)
Slide 48: Appendix – Non-GAAP Reconciliations
Appendix – Non-GAAP Reconciliations 1. Amount does not include mortgage servicing rights 2. Based upon a pro forma 21% tax rate for all periods presented. $s in millions 2017 2018 2019 2020 2021 2022 1. Tangible Common Equity Shareholders' Equity $ 603,374 $ 624,133 $ 675,122 $ 692,472 $ 773,794 $ 7
Slide 49: Appendix – Non-GAAP Reconciliations (cont.)
Appendix – Non-GAAP Reconciliations (cont.) 1. Based upon a pro forma 21% tax rate for all periods presented. 2. Excess liquidity is defined by Management as Interest Earning Deposits with Other Banks greater than $40 million 49 $s in millions 2017 2018 2019 2020 2021 2022 5. Core Tax Equivalent Rev
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