Univest Financial Corporation · NASDAQ:UVSP
Univest Financial — Investor Presentation (August 2021)
51 slides from Univest Financial's investor presentation, Aug 3, 2021
Slide 1: Investor Presentation August 3, 2021
Investor Presentation August 3, 2021
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," "go
Slide 3: Safe Harbor Statement (cont'd)
Safe Harbor Statement (cont’d) Cautionary Note Regarding Forward-Looking Statements Given the ongoing and dynamic nature of the COVID-19 pandemic, it is difficult to predict the continuing impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments,
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”). Management uses these “non-GAAP” measures in its analysis of the Corporation’s performan
Slide 5: Company Overview
COMPANY OVERVIEW *] VUNIVEST
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: Executive Leadership Team
Executive Leadership Team 7 Name Age Tenure (yrs.) with Univest Title Jeffrey M. Schweitzer 48 13 President and CEO, Univest Financial Corporation Michael S. Keim 53 12 President, Univest Bank and Trust Co. Brian J. Richardson 38 5 Executive Vice President, Chief Financial Officer (Former Fox Chase
Slide 8: Univest Primary Physical Service Area
Univest Primary Physical Service Area Twelve counties in Southeastern and Central Pennsylvania and three counties in Southern New Jersey 8
Slide 9: Univest Financial Center and Regional Locations
Univest Financial Center and Regional Locations 9
Slide 10: Market Opportunity
Market Opportunity With BB&T Corporation’s acquisitions of Susquehanna Bancshares and National Penn Bancshares, and WSFS Financial Corporation’s acquisition of Beneficial, Univest is one of the three largest community focused financial institutions remaining headquartered in the Philadelphia marke
Slide 11: 2020 Results
2020 Results Earnings Loans & Deposits Reported Earnings: $46.9 million $1.60 per share Core PTPP-NCO(1): $85.3 million Reported ROAA: 0.78%/Core PTPP-NCO ROAA(1)(2): 1.51% Reported ROATE: 9.52%/Core PTPP-NCO ROATE(1)(3): 17.33% Annualized Loan Growth excl. PPP: 9.9% Annualized Deposit
Slide 12: Q2 YTD 2021 Results
Q2 YTD 2021 Results Earnings Loans & Deposits Reported Earnings: $53.5 million $1.81 per share Core PTPP-NCO(1): $43.5 million Reported ROAA: 1.68%/Core PTPP-NCO ROAA(1)(2): 1.47% Reported ROATE: 19.99%/Core PTPP-NCO ROATE(1)(3): 16.26% Annualized Loan Growth excl. PPP: 10.4% Annualize
Slide 13: Investment highlights
Super-Community Bank located in attractive Southeastern Pennsylvania market Diversified lines of business and revenue streams (i.e. Noninterest Income represents ~30% of total revenue) Ability to scale and obtain operating leverage Strong earnings performance: Dividend Yield of 2.95% (4)
Slide 14: 2021 Strategy
2021 Strategy Expand and Optimize the Capabilities of Univest: • Further develop digital lending and deposit solutions for small businesses and consumers Develop and execute on a Strategic Plan around Diversity, Equity, and Inclusion Grow Top Line Revenue: • Continue to identify strategies to increa
Slide 15: Summary Financial Highlights
SUMMARY FINANCIAL HIGHLIGHTS
Slide 16: Core Diluted Earnings Per Share
Core Diluted Earnings Per Share* *Calculated using "Core Net Income Allocated to Common Shares" which is a Non-GAAP measure. Refer to appendix for reconciliation. Note: Graph begins with Q1 2017, representing first quarter subsequent to Fox Chase Bank acquisition with no transaction related costs. 7
Slide 17: Core Pre-Tax Pre-Provision Income less Net Charge-Offs
$16,807 $16,488 $15,245 $16,438 $18,102 $6,344 $19,887 $24,287 $21,816 $21,135 $21,518 $20,449 $21,586 $18,690 $24,450 $20,614 $23,731 $19,753 $- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2
Slide 18: Tangible Book Value Per Share
Tangible Book Value Per Share* *Calculated using "Tangible Common Equity" which is a Non-GAAP measure. Refer to appendix for reconciliation. (1) Assumes no Wealth Management or Insurance acquisitions. Target 8-10% Annual Growth(1) Benefit of 12/2017 Capital Raise = $1.21 18 $14.44
Slide 19: Core PTPP-NCO ROAA & ROTE
Core PTPP- NCO ROAA & ROTE *Calculated using "Core Pre-Tax Pre- Provision Income less Net Charge-Offs" and “Average Assets excluding PPP” which are Non-GAAP measures. Refer to appendix for reconciliation. **Calculated using " Core Pre-Tax Pre- Provision Income less Net Charge-Offs " and "Average Tan
Slide 20: Loan Growth by Segment
Loan Growth by Segment *Includes Fox Chase Bank, which was acquired on July 1, 2016 Loan Detail - $ in thousands (excl. PPP) 20
Slide 21: Deposit Growth by Segment
Deposit Growth by Segment *Includes Fox Chase Bank, which was acquired on July 1, 2016 Deposit Detail - $ in thousands 21
Slide 22: Net Interest Income and Margin
3.68% 3.71% 3.74% 3.66% 3.52% 3.41% 3.48% 3.18% 3.02% 3.02% 3.11% 3.15% 3.64% 3.61% 3.62% 3.64% 3.70% 3.70% 3.71% 3.75% 3.74% 3.70% 3.65% 3.53% 3.54% 3.43% 3.30% 3.22% 3.18% 3.14% 2.40% 2.60% 2.80% 3.00% 3.20% 3.40% 3.60% 3.80% 4.00% $25,000 $30,000 $35,000 $40,000 $45,000 Q1 2017 Q2 2017 Q3 2017 Q4
Slide 23: Efficiency Ratios
Efficiency Ratios UVSP pays a Bank Share Tax rather than Bank Income Tax to the Commonwealth of Pennsylvania as a result of our type of charter. This amount is included in noninterest expense and increases our efficiency ratio by approximately 170 bps compared to other banks that do not have this ta
Slide 24: Revenue
Revenue Revenue Revenue by Business Unit (2021) (1) Excludes PPP Loan impact. (2) 2021 is a pro forma annualized figure – (Q2x2). Revenue = Net Interest Income + Noninterest Income 24 Bank, 70.5% Capital, 2.8% Insurance, 6.7% Wealth, 10.0% Mortgage, 10.0%
Slide 25: Assets
Assets Chart data as of December 31 except for 2021 (6/30) 2020 excluding PPP Loans = $5.9B and 2021 excluding PPP loans = $6.1B 25
Slide 26: Liabilities and Deposits
Liabilities and Deposits Chart data as of December 31 except for 2021 (6/30) Liabilities Deposits 26 $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 2016 2017 2018 2019 2020 2021 $ (0 00 ) DD, Noninterest-Bearing DD, Interest-Bearing Regular Savings Time Deposits
Slide 27: Stable Asset Quality
Stable Asset Quality Nonperforming Assets Nonaccrual Loans and Leases Chart data as of December 31 except for 2021 (6/30) Note: 2020 and 2021 ACL increase driven by CECL adoption and COVID-19 impact on related economic forecast assumptions. 27 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% $- $10,000 $20,000 $
Slide 28: Current Expected Credit Loss (CECL)
Current Expected Credit Loss (CECL) On January 1, 2020, the Corporation adopted Accounting Standard Update No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“CECL”). Upon adoption, the Corporation recognized: $12.9 million in
Slide 29: Liquidity and Capital
LIQUIDITY AND CAPITAL *] VUNIVEST
Slide 30: Liquidity and Capital
Liquidity and Capital Liabilities & Shareholders’ Equity Borrowing Sources – as of 6/30/21 Wholesale Term Funding Maturities – as of 6/30/21 All data in millions, as of 6/30/21 30 Period Amount 2021 - 2022 - 2023 35.2 2024 60.0 Total 95.2$ Balance Remaining Capacity FHLB - Pittsburgh 95.0$ 1,697.8$
Slide 31: Strong Capital Ratios Provide for Operating Flexibility
5.00% 7.00% 8.50% 10.50% 9.64% 11.04% 11.04% 13.82% 0.0% 5.0% 10.0% 15.0% Tier 1 (Leverage) Common Equity Tier 1 Tier 1 (Common/RBC) Total (RBC) Required Capital Ratio with full Basel III phase-in Univest Financial Corp (6/30/21) Strong Capital Ratios Provide for Operating Flexibility Univest Financ
Slide 32: Largest Deposit Relationships
Largest Deposit Relationships – As of 6/30/2021 32 Rank Type Balance (000s) Weighted Average Rate 1 Public Funds 68,051 0.16% 2 Bus/Corp 58,618 0.15% 3 Public Funds 51,665 0.24% 4 Bus/Corp 50,745 0.00% 5 Public Funds 31,336 0.25% 6 Public Funds 30,099 0.25% 7 Bus/Corp 27,329 0.00% 8 Bus/Corp 26,232
Slide 33: Investments ($397 Million at 6/30/21)
Investments ($397 Million at 6/30/21) Investment Portfolio at 6/30/21 Investment Portfolio Details 33 Aaa 1.0 PA 2.3 Aa3 0.5 Aa3 - TN 1.0 Aa2 2.0 Aa2 - Total 3.3 Aa1 1.0 A1 - A3 12.4 A2 - A2 50.0 N/A 2.3 A1 14.0 Total 3.3 Baa2 0.5 Baa1 0.5 WR 0.3 AAA 1.0 GO 3.3 N/A 10.0 AA 2.0 REV - Total 91.2 NR 0.
Slide 34: Loan Portfolio Detail and Credit Overview
LOAN PORTFOLIO DETAIL AND CREDIT OVERVIEW
Slide 35: Loan & Lease Detail at 6/30/21
Loan & Lease Detail at 6/30/21 (excl PPP) ($5.1 Billion at 6/30/21 excluding PPP) 35
Slide 36: Largest Loan Exposures
Largest Loan Exposures – As of 6/30/21 36 Rank Loan Type/Industry Risk Rating Exposure ('000s) Geography Rank Loan Type/Industry Risk Rating Exposure ('000s) Geography 1 Real Estate Development Pass 41,466$ Southeastern PA 1 Securities-Backed Line of Credit Pass 40,000$ Central PA 2 Hotels / CRE - R
Slide 37: Loan Portfolio Overview
Loan Portfolio Overview – As of 6/30/21 37 (Dollars in thousands) Industry Description Total Outstanding Balance (excl PPP) % of Commercial Loan Portfolio $ Balance Of Modified Loans (1) Modified Loans as a % of Portfolio (excl PPP) (1) CRE - Retail 365,096 8.7% - 0.0% Animal Production 281,368 6.7%
Slide 38: Credit Infrastructure
Credit Infrastructure Experienced credit team Conservative credit culture Centralized credit approval process Low levels of authority in the field Rigorous underwriting and disciplined committee approval required Approval Process Risk Management Process Owns Borrower Relationship Business/
Slide 39: Limited single signature lending authority. Joint signature up to $5.0MM, then management level
Limited single signature lending authority. Joint signature up to $5.0MM, then management level loan committee for the largest exposures. Itemized report of all approvals to weekly Officer Loan Committee. Robust independent loan review process. Quarterly review cycle. Credit Officer involvem
Slide 40: Line of Business Overview
LINE OF BUSINESS OVERVIEW V VUNIVEST
Slide 41: Commercial Banking
Tax-Exempt 5% C&I 20% Commercial Real Estate 75% *includes $407.7 million of Residential Real Estate secured for Business Purposes Commercial Banking 103 lenders, relationship managers and portfolio managers operating in two divisions established by geography (serving clients primarily in Pennsylv
Slide 42: Consumer Banking
Consumer Banking 33 financial service centers located in Bucks, Chester, Lancaster, Lehigh, Montgomery, Northampton, Philadelphia, Dauphin and York counties in PA and Ocean City, NJ; also operating 14 retirement centers in Bucks and Montgomery counties and 4 regional locations (Mechanicsburg/Berks
Slide 43: Mortgage Banking
Mortgage Banking 45 Home Loan Consultants operating in Bank’s core footprint Primarily agency lender: FNMA, FHLMC, FHA, VA and USDA FNMA and FHLMC eligible loans sold servicing retained Received approval as a GNMA issuer in 2018 FHA, VA and USDA loans currently sold to correspondents servi
Slide 44: Univest Capital, Inc.
Univest Capital, Inc. Equipment financing business with $172 million in lease receivables as of 6/30/21 − Average lease size $49,000, 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. Last acquisition was Sterner Insurance in 2014,
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 servicing rights This presentation includes 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
Slide 49: Appendix – Non-GAAP Reconciliations (cont.)
Appendix – Non-GAAP Reconciliations (cont.) (1) Amount does not include servicing rights 49 $s in thousands Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 4. Average Tangible Common Equity Average Shareh
Slide 50: Appendix – Non-GAAP Reconciliations (cont.)
Appendix – Non-GAAP Reconciliations (cont.) *Based upon a pro forma 21% tax rate for all periods presented. 50 $s in thous ands Q1 2 0 1 7 Q2 2 0 1 7 Q3 2 0 1 7 Q4 2 0 1 7 Q1 2 0 1 8 Q2 2 0 1 8 Q3 2 0 1 8 Q4 2 0 1 8 Q1 2 0 1 9 Q2 2 0 1 9 Q3 2 0 1 9 Q4 2 0 1 9 Q1 2 0 2 0 Q2 2 0 2 0 Q3 2 0 2 0 Q4 2 0
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