Univest Financial Corporation · NASDAQ:UVSP

Univest Financial — Investor Presentation (May 2021)

51 slides from Univest Financial's investor presentation, May 24, 2021

  1. Slide 1: Investor Presentation May 24, 2021

    Investor Presentation May 24, 2021

  2. 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. The words "believe," "anticipate,“ "estimate," "expect," "project," "target," "goal" and similar expressions are intended to identify forw

  3. Slide 3: Safe Harbor Statement (cont'd)

    Safe Harbor Statement (cont’d) Cautionary Note Regarding Forward-Looking Statements 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 ju

  4. 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

  5. Slide 5: Company Overview

    COMPANY OVERVIEW *] VUNIVEST

  6. 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

  7. Slide 7: Executive Leadership Team

    Executive Leadership Team 7 Name Age Tenure (yrs.) with Univest Title Jeffrey M. Schweitzer 47 13 President and CEO, Univest Financial Corporation Michael S. Keim 53 12 President, Univest Bank and Trust Co. Brian J. Richardson 38 4 Executive Vice President, Chief Financial Officer (Former Fox Chase

  8. 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

  9. Slide 9: Univest Financial Center Locations

    Univest Financial Center Locations 9

  10. 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

  11. 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): 17.32%  Annualized Loan Growth excl. PPP: 9.9%  Annualized Deposit

  12. Slide 12: Q1 YTD 2021 Results

    Q1 YTD 2021 Results Earnings Loans & Deposits  Reported Earnings: $32.6 million  $1.11 per share  Core PTPP-NCO(1): $23.7 million  Reported ROAA: 2.07%/Core PTPP-NCO ROAA(1)(2): 1.64%  Reported ROATE: 25.19%/Core PTPP-NCO ROATE(1)(3): 18.34%  Annualized Loan Growth excl. PPP: 5.3%  Annualized

  13. 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) 

  14. 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

  15. Slide 15: Summary Financial Highlights

    SUMMARY FINANCIAL HIGHLIGHTS

  16. 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. 8

  17. Slide 17: Core Pre-Tax Pre-Provision Income less Net Charge-Offs

    Core Pre-Tax Pre-Provision Income less Net Charge-Offs* * Non-GAAP Measure – refer to Appendix for reconciliation 225 bp Fed rate reduction 17

  18. 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

  19. 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

  20. 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

  21. 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

  22. Slide 22: 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

  23. 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

  24. Slide 24: Revenue by Business Unit

    Revenue Revenue Revenue by Business Unit (Q1 2021) (1) Excludes PPP Loan impact. (2) 2021 is a pro forma annualized figure – (Q1x4). Revenue = Net Interest Income + Noninterest Income 24 Bank, 68.3% Capital, 2.7% Insurance, 7.4% Wealth, 9.9% Mortgage, 11.8%

  25. Slide 25: Assets

    Assets Chart data as of December 31 except for 2021 (3/31) 2020 and 2021 excluding PPP Loans = $5.9B 25

  26. Slide 26: Liabilities and Deposits

    Liabilities and Deposits Chart data as of December 31 except for 2021 (3/31) Liabilities Deposits 26

  27. Slide 27: Stable Asset Quality

    Stable Asset Quality Nonperforming Assets Nonaccrual Loans and Leases Chart data as of December 31 except for 2021 (3/31) Note: 2020 and 2021 ACL increase driven by CECL adoption and COVID-19 impact on related economic forecast assumptions. 27

  28. 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

  29. Slide 29: Liquidity and Capital

    LIQUIDITY AND CAPITAL *] VUNIVEST

  30. Slide 30: Liquidity and Capital

    Liquidity and Capital Liabilities & Shareholders’ Equity Borrowing Sources – as of 3/31/21 Wholesale Term Funding Maturities – as of 3/31/21 All data in millions, as of 3/31/21 30 Balance Remaining Capacity FHLB - Pittsburgh 95.0$ 1,626.7$ Federal Fund Lines (10 lenders)* - 460.0 FRB - Philadelphia

  31. Slide 31: 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 $155.3M at 3/31/21 31

  32. Slide 32: Largest Deposit Relationships

    Largest Deposit Relationships – As of 3/31/2021 32 Rank Type Balance ($000s) Weighted Average Rate 1 Public Funds 95,687 0.24% 2 Bus/Corp 55,569 0.00% 3 Bus/Corp 47,393 0.00% 4 Bus/Corp 37,089 0.12% 5 Public Funds 36,611 0.24% 6 Public Funds 35,097 0.35% 7 Public Funds 32,311 0.25% 8 Public Funds 30

  33. Slide 33: Investments

    Investments ($378 Million at 3/31/21) Investment Portfolio at 3/31/21 Investment Portfolio Details 33 Aaa 1.0 PA 8.0 Aa3 0.5 Aa3 2.9 MA 1.2 Aa2 2.0 Aa2 - TN 1.0 Aa1 1.0 A1 1.3 Total 10.2 A3 13.4 A2 1.8 A2 48.5 N/A 3.2 A1 14.0 Total 10.2 Baa2 0.5 Baa1 0.5 N/A 10.0 AAA 1.0 GO 10.2 Total 90.4 AA 6.0 RE

  34. Slide 34: Loan Portfolio Detail and Credit Overview

    LOAN PORTFOLIO DETAIL AND CREDIT OVERVIEW

  35. Slide 35: Loan & Lease Detail at 3/31/21

    Loan & Lease Detail at 3/31/21 (excl PPP) ($4.9 Billion at 3/31/21 excluding PPP) 35

  36. Slide 36: Largest Loan Exposures

    Largest Loan Exposures – As of 3/31/21 36 Rank Loan Type/Industry Risk Rating Exposure ('000s) Geography Rank Loan Type/Industry Risk Rating Exposure ('000s) Geography 1 Real Estate Development Pass 41,853$ Southeastern PA 1 Private Equity Investment Group Pass 37,117$ Southeastern PA 2 Hotels / CRE

  37. Slide 37: Loan Portfolio Overview

    Loan Portfolio Overview – As of 3/31/21 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 356,690 8.8% - 0.0% Animal Production 269,608 6.7%

  38. 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/

  39. Slide 39: 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

  40. Slide 40: Line of Business Overview

    LINE OF BUSINESS OVERVIEW V VUNIVEST

  41. Slide 41: Commercial Banking

    Commercial Banking  104 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

  42. Slide 42: Consumer Banking

    Consumer Banking  37 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 3 regional locations (Mechanicsburg/Berks

  43. Slide 43: Mortgage Banking

    Mortgage Banking  43 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

  44. Slide 44: Univest Capital, Inc.

    Univest Capital, Inc.  Equipment financing business with $163 million in lease receivables as of 3/31/21 − Average lease size $47,000, typically with four-year term  Primary industries served: health care, education/office, automotive, golf/turf, technology and energy  Manage residual risk by pri

  45. 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

  46. 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,

  47. Slide 47: Appendix (Non-GAAP Reconciliations)

    APPENDIX (Non-GAAP Reconciliations)

  48. 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

  49. Slide 49: Appendix – Non-GAAP Reconciliations (cont.)

    Appendix – Non-GAAP Reconciliations (cont.) (1) Amount does not include servicing rights 49 $s in thousands 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 2 0 Q1 2 0 2 1 4 . A

  50. 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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