Univest Financial Corporation · NASDAQ:UVSP
Univest Financial — Investor Presentation (November 2021)
49 slides from Univest Financial's investor presentation, Nov 4, 2021
Slide 1: Investor Presentation November 4, 2021
Investor Presentation November 4, 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 full impact of the COVID-19 pandemic on our business. The extent of such impact will depend on future developments, which
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
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 14 President and CEO, Univest Financial Corporation Michael S. Keim 54 12 President, Univest Bank and Trust Co. Brian J. Richardson 38 5 Executive Vice President, Chief Financial Officer (Former Fox Chase D
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 8
Slide 9: Univest Financial Center and Regional Locations
Univest Financial Center and Regional Locations 9 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: Q3 YTD 2021 Results
Q3 YTD 2021 Results Earnings Loans & Deposits • Reported Earnings: $74.4 million ◦ $2.52 per share • Core PTPP-NCO(1): $65.2 million • Reported ROAA: 1.53%/Core PTPP-NCO ROAA(1)(2): 1.42% • Reported ROATE: 18.07%/Core PTPP-NCO ROATE(1)(3): 15.84% • Annualized Loan Growth excl. PPP: 9.5% • Annualized
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 2.78% (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 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 $21,697 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 Q3 20
Slide 17: Tangible Book Value Per Share
$12.38 $12.75 $13.06 $14.54 $14.51 $14.83 $15.25 $15.72 $16.20 $16.64 $17.01 $16.31 $16.41 $16.88 $17.66 $18.64 $19.22 $19.75 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 Q3 2021 $— $5.00 $10.00 $15.00
Slide 18: 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 19: 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) $3.1B $3.2B $3.3B $3.3B $3.5B $3.5B $3.6B $3.7B $3.8B $3.9B $4.0B $4.1B $4.2B $4.3B $4.4B $4.4B $4.5B $4.7B $4.8B $4.9B $5.1B $5.2B Commercial, financial and agricultural Comm
Slide 20: Deposit Growth by Segment
$3.1B $3.2B $3.3B $3.4B $3.3B $3.5B $3.6B $3.5B $3.6B $3.8B $3.9B $4.0B $4.1B $4.3B $4.4B $4.4B $4.9B $5.2B $5.2B $5.3B $5.3B $5.9B DD, Noninterest-Bearing DD, Interest-Bearing Regular Savings Time Deposits Q2 2016 Proforma* Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4
Slide 21: Net Interest Income (Asset Sensitive)
Net Interest Income (Asset Sensitive) *Pro forma tax equivalent margin calculation excludes purchase accounting accretion and is based upon a pro forma 21% tax rate for all periods presented 1. Calculated using “Core Net Interest Income excluding PPP” which is a Non-GAAP measure. Refer to appendix f
Slide 22: Efficiency Ratios
Financial Statement Efficiency Ratio (Noninterest Expense/Total Revenue As Reported) Reported Efficiency Ratio (Noninterest Expense/Tax Equivalent Revenue) Core Tax Adjusted Efficiency Ratio (Core Noninterest Expense/Core Tax Equivalent Revenue)*,** Efficiency Ratio (Core Noninterest Expense Excludi
Slide 23: Revenue by Business Unit
Revenue Revenue Revenue by Business Unit (2021) (1) (1) Excludes PPP Loan impact. (2) 2021 is a pro forma annualized figure – (Q3 YTD/3x4). Revenue = Net Interest Income + Noninterest Income Bank, 69.4% Capital, 3.1% Insurance, 6.8% Wealth, 10.7% Mortgage, 10.0% $ (0 00 ) N on-Interest Incom e % of
Slide 24: Assets
Assets Chart data as of December 31 except for 2021 (9/30) 2020 excluding PPP Loans = $5.9B and 2021 excluding PPP loans = $6.9B $ (0 00 ) $4.2B $4.6B $5.0B $5.4B $6.3B $7.0B Net Loans & Leases Total Investment Securities Other Assets Cash and Due From Banks 2016 2017 2018 2019 2020 2021 — 1,000,000
Slide 25: Liabilities and Deposits
Liabilities and Deposits Chart data as of December 31 except for 2021 (9/30) Liabilities Deposits $ (0 00 ) Interest-Bearing Deposits Noninterest-Bearing Deposits Borrowings Other Liabilities 2016 2017 2018 2019 2020 2021 $— $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,00
Slide 26: Stable Asset Quality
Stable Asset Quality Nonperforming Assets Nonaccrual Loans and Leases Chart data as of December 31 except for 2021 (9/30) Note: 2020 and 2021 ACL increase driven by CECL adoption and COVID-19 impact on related economic forecast assumptions. $ (0 00 ) A C L / non-accrual Loans and Leases Nonaccrual L
Slide 27: 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 28: Liquidity and Capital
LIQUIDITY AND CAPITAL
Slide 29: Liquidity and Capital
Liquidity and Capital Liabilities & Shareholders’ Equity Borrowing Sources – as of 9/30/21 Wholesale Term Funding Maturities – as of 9/30/21 All data in millions, as of 9/30/21 Business Deposits, $2,456, 35.2%Consumer Deposits, $2,319, 33.2% Public Funds Deposits, $1,126, 16.1% Brokered Deposits, $3
Slide 30: Strong Capital Ratios Provide for Operating Flexibility
9.53% 11.15% 11.15% 13.87% 5.00% 7.00% 8.50% 10.50% Required Capital Ratio with full Basel III phase-in Univest Financial Corp (9/30/21) Tier 1 (Leverage) Common Equity Tier 1 Tier 1 (Common/RBC) Total ((RBC) —% 2.50% 5.00% 7.50% 10.00% 12.50% 15.00% Strong Capital Ratios Provide for Operating Flexi
Slide 31: Largest Deposit Relationships
Largest Deposit Relationships (1) – As of 9/30/2021 31 Deposits Balance Weighted Rank Type (000s) Avg Rate 1 Public Funds 193,850 0.25 % 2 Bus/Corp 164,504 0.20 % 3 Public Funds 80,432 0.24 % 4 Public Funds 68,077 0.16 % 5 Public Funds 52,848 0.25 % 6 Public Funds 51,023 0.19 % 7 Public Funds 42,989
Slide 32: Investment Portfolio at 9/30/2021
MBS/CMO, 73.8% US Agencies, 1.8% Money Market, 0.5% Equities, 0.2% Corporate Bonds, 23.1% Municipal Bonds, 0.6% Investments ($393 Million at 9/30/21) Investment Portfolio at 9/30/2021 Investment Portfolio Details Municipal Bonds Corporate Bonds (in millions) (in millions) Moody’s Rating State Moody’
Slide 33: Loan Portfolio Detail and Credit Overview
LOAN PORTFOLIO DETAIL AND CREDIT OVERVIEW
Slide 34: Loan & Lease Detail at 9/30/21
Commercial, financial and agricultural, 17.1% Commercial Real Estate, 61.6% RE Construction, 4.8% Real Estate - Residential, 12.8% Loans to Individuals, 0.5% Lease Financings, 3.2% Loan & Lease Detail at 9/30/21 (excl PPP) ($5.2 billion at 9/30/21 excluding PPP) 34
Slide 35: Largest Loan Exposures
Largest Loan Exposures – As of 9/30/21 35 Commercial Real Estate and Residential Real Estate Secured for Business Purposes Commercial & Industrial $3,343M | Avg Loan Size $542K $927M | Avg Loan Size $200K Risk Exposure Risk Exposure Rank Loan Type/Industry Rating (000s) Geography Rank Loan Type/Indu
Slide 36: Loan Portfolio Overview
Loan Portfolio Overview – As of 9/30/21 36 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 $ 365,379 8.6 % $ — — % Animal Production 291,723 6.8 — — CRE - 1-4 Famil
Slide 37: 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 38: Credit Approval and Risk Management Practices
• 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 39: Line of Business Overview
LINE OF BUSINESS OVERVIEW
Slide 40: Commercial Banking
Commercial Banking • 106 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 41: 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 42: Mortgage Banking
Mortgage Banking • 47 Home Loan Consultants predominately 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 corres
Slide 43: Univest Capital, Inc.
Univest Capital, Inc. • Equipment financing business with $175 million in lease receivables as of 9/30/21 ◦ Average lease size $32,000, typically with four-year term • Primary industries served: health care, education/office, automotive, golf/turf, technology and energy • Manage residual risk by pri
Slide 44: 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 45: 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 46: Appendix (Non-GAAP Reconciliations)
APPENDIX (Non-GAAP Reconciliations)
Slide 47: 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 48: Appendix – Non-GAAP Reconciliations (cont.)
Appendix – Non-GAAP Reconciliations (cont.) *Based upon a pro forma 21% tax rate for all periods presented. 48 $s in millions Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 5. Core Tax Equivalent Revenue Total Revenue $ 49.3 $ 51.3 $
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