Univest Financial Corporation · NASDAQ:UVSP
Univest Financial — Investor Presentation (August 2020)
50 slides from Univest Financial's investor presentation, Aug 20, 2020
Slide 1: Investor Presentation August 2020
Investor Presentation August 2020
Slide 2: Safe Harbor Statement
Safe Harbor Statement Cautionary Note Regarding Forward‐Looking Statements The information contained in this presentation may contain forward‐looking statements. When used or incorporated by reference in disclosure documents, the words “believe,” “anticipate,” “estimate,” “expect,” “project,” “targe
Slide 3: Safe Harbor Statement (cont'd)
Safe Harbor Statement (cont’d) The COVID‐19 pandemic has caused significant economic dislocation in the United States as many state and local governments ordered non‐essential businesses to close and residents to shelter in place at home. While jurisdictions in which we operate have gradually allowe
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: 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 6: 2020 Strategy
2020 Strategy Commercial Loan Organic Growth Multi‐prong approach to deposits: Continue to take advantage of • Commercial customers market dislocation & focus on hiring commercial lenders, • Comprehensive Treasury including potential team liftouts. Management offerings • Public Funds – Municipalitie
Slide 7: Attractive Investment Opportunity
Attractive Investment Opportunity . Super‐Community Bank located in attractive Southeastern Pennsylvania market . Diversified lines of business and revenue streams (targeting 28 – 30% of total revenue for 2020) . Ability to scale and obtain operating leverage . Strong year‐to‐date 2020 earnings perf
Slide 8: COVID-19 Response
COVID-19 Response Responsibly serve the needs of our customers while prioritizing the health and safety of our employees Financial Centers Supporting Our Customers . Under quarantine environment, financial centers . Paycheck Protection Program (“PPP”) Loans operated as drive‐through only . Funded $5
Slide 9: Summary Financial Highlights
SUMMARY FINANCIAL HIGHLIGHTS
Slide 10: 1st Half 2020 Results
1st Half 2020 Results Earnings Loans & Deposits . Reported Earnings: $2.9 million . Annualized Loan Growth excl. PPP: 3.0% . $0.10 per share . Includes $89.5 million decrease in commercial line . Core Earnings(1): $32.1 million utilization . 29.8% utilization at 6/30/20 . $1.10 per share . Reported
Slide 11: Core Diluted Earnings Per Share
Core Diluted Earnings Per Share* 11.3% Core EPS annual growth from YTD 6/30/17 to YTD 6/30/20 *Calculated using "Core Net Income Allocated to Common Shares" which is a Non‐GAAP measure. Refer to appendix for reconciliation. Note: Graph begins with March 2017, representing first quarter subsequent to
Slide 12: Pre-Tax Pre-Provision Income
Pre-Tax Pre-Provision Income* 225 bp Fed rate reduction * Non‐GAAP Measure – refer to Appendix for reconciliation 12
Slide 13: Tangible Book Value Per Share
Tangible Book Value Per Share* Target 8‐10% Annual Growth(1) Benefit of 12/2017 Capital Raise = $1.21 *Calculated using "Tangible Common Equity" which is a Non‐GAAP measure. Refer to appendix for reconciliation. (1) Assumes no Wealth Management or Insurance acquisitions. 13
Slide 14: Strong ROAA & ROTE
Strong ROAA & ROTE Core ROAA* Core ROTE** *Calculated using "Core Net Income" which is a Non‐GAAP measure. Refer to **Calculated using "Core Net Income" and "Average Tangible Common Equity" appendix for reconciliation. which are Non‐GAAP measures. Refer to appendix for reconciliation. 14
Slide 15: Loan Growth by Segment
Loan Growth by Segment Loan Detail ‐ $ in thousands (excl. PPP) $4.4B $4.5B $4.5B $4.2B $4.3B $4.0B $4.1B $3.8B $3.9B $3.6B $3.7B $3.5B $3.5B $3.3B $3.3B $3.1B $3.2B *Includes Fox Chase Bank, which was acquired on July 1, 2016 15
Slide 16: Deposit Growth by Segment
Deposit Growth by Segment Deposit Detail ‐ $ in thousands $4.9B $4.3B $4.4B $4.4B $4.1B $4.0B $3.8B $3.9B $3.6B $3.5B $3.5B $3.5B $3.4B $3.3B $3.3B $3.1B $3.2B *Includes Fox Chase Bank, which was acquired on July 1, 2016 16
Slide 17: Net Interest Income and Core Net Interest Margin
Net Interest Income (Asset Sensitive) Core Net Interest Margin*(1) Excludes Purchase Accounting *Proforma tax equivalent margin calculation excludes purchase accounting accretion and is based upon a proforma 21% tax rate for all periods presented (1) Calculated using “Core Net Interest Income exclud
Slide 18: 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 19: Revenue
Revenue Revenue = Net Interest Income + Non‐Interest Income Revenue Revenue by Business Unit (year‐to‐date 6/30/20) *2020 is an annualized figure –(Q1+Q2). Excludes PPP Loan impact 19
Slide 20: Assets
Assets $6.1B $5.4B $5.0B $4.6B $4.2B Chart data as of December 31 except for 2020 (6/30). 2020 excluding PPP Loans = $5.6B 20
Slide 21: Liabilities and Deposits
Liabilities and Deposits Liabilities Deposits Chart data as of December 31 except for 2020 (6/30) 21
Slide 22: Stable Asset Quality
Stable Asset Quality Nonperforming Assets Nonaccrual Loans and Leases Chart data as of December 31 except for 2020 (6/30) Note: 2020 includes a $2.7 million charge off related to a $8.1 million loan that was transferred to OREO during Q2 2020. Valuation based on a letter of intent to sell the proper
Slide 23: Current Expected Credit Loss (CECL) Implementation
Current Expected Credit Loss (CECL) Implementation . 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: . $
Slide 24: Liquidity and Capital
LIQUIDITY AND CAPITAL VUNIVEST
Slide 25: Liquidity and Capital
Liquidity and Capital Liabilities & Shareholders’ Equity Borrowing Sources –as of 6/30/20 Remaining Balance Capacity FHLB ‐ Pittsburgh$ 200.0 $ 1,460.0 Federal Fund Lines (10 lenders)* ‐ 504.0 FRB ‐ Philadelphia ‐ 74.3 Univest Financial Corp. LOC ‐ 10.0 Total$ 200.0 $ 2,048.3 * Uncommitted lines ran
Slide 26: Strong Capital Ratios Provide for Operating Flexibility
Strong Capital Ratios Provide for Operating Flexibility Univest Financial Corporation (Parent) Univest Bank & Trust Co. (Bank) Cash Position of $73.0M at 6/30/20 26
Slide 27: Largest Deposit Relationships
Largest Deposit Relationships – As of 6/30/2020 Deposits (excluding Brokered Deposits) Rank Type Balance (000s) Weighted Average Rate 1 Bus/Commercial 126,259 0.00% 2 Bus/Commercial 114,672 0.18% 3 Bus/Commercial 76,627 0.00% 4 Public Funds 71,564 0.24% 5 Bus/Commercial 38,427 0.01% 6 Public Funds 2
Slide 28: Investments
Investments Investment Portfolio at 6/30/20 Investment Portfolio Details Municipal Bonds Corporate Bonds (in millions) (in millions) Moody's Rating State Moody's Rating Aaa$ 2 PA$ 16 Aa3$ 1 Aa3 4 CT 1 Aa2 1 Aa2 2 MA 1 Aa1 1 A1 1 NJ 1 A3 33 A2 2 TN 1 A2 40 NR* 11 TX 1 A1 5 $ 21 $ 21 Baa2 1 Baa1 1 S&P
Slide 29: Loan Portfolio Detail and Credit Overview
LOAN PORTFOLIO DETAIL AND CREDIT OVERVIEW
Slide 30: Loans
Loans Loan & Lease Detail at 6/30/2020 (excluding PPP) CRE Portfolio at 6/30/2020 Excludes PPP Loans ($4.5 Billion at 6/30/20 excluding PPP) 30
Slide 31: Largest Loan Exposures
Largest Loan Exposures – As of 6/30/20 Commercial Real Estate and Residential Real Estate Secured for Business Purposes Commercial & Industrial $2,599 MM | Avg Loan Size $472k $823 MM | Avg Loan Size $174k Risk Exposure Risk Exposure Rank Loan Type/Industry Rating ('000s) Geography Rank Loan Type/In
Slide 32: Loan Portfolio Overview
Loan Portfolio Overview – As of 6/30/20 Total Outstanding Balance (excl PPP), $ in % of Commercial Loan PPP $ (1), % of Portfolio with PPP $ Balance of Modified Modified Loans as a % of Industry Description millions Portfolio $ in millions Loans (2) Loans, $ in millions Portfolio(3) CRE ‐ Retail $26
Slide 33: Modification Update
Modification Update – As of 8/14/20 ($ in millions) Modified Loans as a % Balance of Modified Loans Modified Loans ‐ Completed Modified Loans ‐ Entered a Modification Modified Loans ‐ of 6/30/2020 Portfolio Industry Description (Pandemic to Date) Initial Deferral Period Second Deferral Period Extens
Slide 34: Credit Infrastructure
Credit Infrastructure Approval Process . Experienced credit team . Conservative credit culture . Centralized credit approval process . Low levels of authority in the field . Rigorous underwriting and disciplined committee approval required Risk Management Process Line of Business Credit/Risk Owns Bo
Slide 35: Credit Overview
Credit Overview . Limited single signature lending authority. Joint signature up to $5.0 MM, 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
Slide 36: Business Overview
BUSINESS OVERVIEW VUNIVEST
Slide 37: Univest Primary Physical Service Area
Univest Primary Physical Service Area Twelve counties in Southeastern and Central Pennsylvania and three counties in Southern New Jersey 37
Slide 38: Univest Financial Center Locations
Univest Financial Center Locations 38
Slide 39: 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 40: Executive Leadership Team
Executive Leadership Team Tenure (yrs.) Name Age Title with Univest Jeffrey M. Schweitzer 47 12 President and CEO, Univest Financial Corporation Michael S. Keim 52 11 President, Univest Bank and Trust Co. Brian J. Richardson 37 4 Executive Vice President, Chief Financial Officer (Former Fox Chase Di
Slide 41: Commercial Banking
Commercial Banking Commercial Banking Commercial Loan Detail as of 6/30/20 . 90 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,
Slide 42: Consumer Banking
Consumer Banking . 39 financial service centers located in Bucks, Chester, Lancaster, Lehigh, Montgomery, Northampton and Philadelphia counties in PA and Ocean City, NJ; also operating 14 retirement centers in Bucks and Montgomery counties . Proactively addressed continued reduction in transactional
Slide 43: Mortgage Banking
Mortgage Banking Mortgage Banking Residential Mortgage Originations . 34 Home Loan Consultants operating in Bank’s core footprint . Centralized processing, closing and underwriting . Primarily agency lender: FNMA, FHLMC, FHA, VA and USDA . FNMA and FHLMC eligible loans sold servicing retained . Rece
Slide 44: Univest Capital, Inc.
Univest Capital, Inc. Univest Capital Lease Financing . Equipment financing business with $154 million in lease receivables as of 6/30/20 − Average lease size $42,000, typically with four year term . Primary industries served: health care, education/office, automotive, golf/turf, technology and ener
Slide 45: Wealth Management
Wealth Management Wealth Management Assets Under Management . Comprehensive wealth management platform including broker / dealer, municipal pension services, registered investment advisor, retirement plan services and trust . Effective 1/1/19, the wealth management division was rebranded as Girard (
Slide 46: Insurance
Insurance Insurance Agent Written Premiums . 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 acquisitio
Slide 47: Appendix (Non-GAAP Reconciliations)
APPENDIX (Non‐GAAP Reconciliations)
Slide 48: Appendix – Non-GAAP Reconciliations
Appendix – Non-GAAP Reconciliations 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‐GAAP measures in its analysis of the Corpora
Slide 49: Appendix – Non-GAAP Reconciliations (cont.)
Appendix – Non-GAAP Reconciliations (cont.) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 $s in thousands 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 5. Core Net Interest Income excluding PPP Net Interest Income$ 34,283 $ 35,300 $ 36,887 $ 36,705 $ 37,272 $ 38,990 $ 40,423 $ 41
Slide 50: Univest
VUNIVEST BANKING | INSURANCE | INVESTMENTS univest.net
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