Univest Financial Corporation · NASDAQ:UVSP
Univest Financial — Q4 2023 Earnings Presentation
49 slides from Univest Financial's earnings presentation, Jan 25, 2024
Slide 1: Investor Presentation
Investor Presentation February 20, 2024
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 • Our ability to enter new markets successfully and capitalize on growth opportunities; • Competition for loans, deposits and employees; • System failures or cyber-security breaches of our information technology infr
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 7th Largest Diversified Financial Institution Headquartered in PA 5.8%1 Core PTPP-NCO <--5-year CAGR--> 8.0% TBV/Share 2 Conservatively Managed Organic ~25% - 30% Growth Engine Fee Income Business Revenue/Total 10.4% 5-yr CAGR 10.4% 5-yr CAGR 2nd 4th Organic Loan Growth Largest B
Slide 8: Deposits and Liquidity Highlights (As of December 31, 2023)
Deposits and Liquidity Highlights (As of December 31, 2023) Brokered deposits totaled $368 million or Uncommitted funding Committed borrowing 4.7% of total assets. sources of $369.0 capacity of $3.4 billion Additional available million ($369.0 million ($1.9 billion available1) liquidity from future
Slide 9: Deposit and Liquidity Update (As of February 16, 2024)
Deposit and Liquidity Update (As of February 16, 2024) Deposits Dollars in thousands 12/31/23 % 2/16/24 % Change % Noninterest-Bearing Deposits $ 1,468,320 23.0% $ 1,386,521 22.3% $ (81,799) (5.6)% Demand Deposits 2,973,784 46.6% 2,830,997 45.6% (142,787) (4.8)% Savings Deposits 779,885 12.2% 766,92
Slide 10: Executive Leadership Team
Executive Leadership Team Tenure (yrs) Name Age with Univest Title Jeffrey M. Schweitzer 50 16 Chairman, President and CEO, Univest Financial Corporation Michael S. Keim 56 15 Chief Operating Officer, Univest Financial Corporation and President, Univest Bank and Trust Co. Brian J. Richardson 41 7 Se
Slide 11: Univest Primary Physical Service Area
Univest Primary Physical Service Area Western PA Southeastern PA, Central PA and New Jersey Maryland KEY Headquarters Financial Center Regional Center Regional Center (Deposit Taking) Insurance 11
Slide 12: Market Opportunity
Market Opportunity • Univest is one of the two largest community focused financial institutions remaining headquartered in the Philadelphia market (WSFS being the other) • The Corporation's headquarters and main office is located in Souderton, Montgomery County, Pennsylvania, which is located in Sou
Slide 13: 2024 Strategy
2024 Strategy Balance Sheet Optimization: ■ Maintain net interest margin with peer competitive metrics ■ Execute a diversified deposit sourcing strategy ■ Manage loan growth focusing on full relationship customers and prioritizing comprehensive relationships Improve Operating Leverage: ■ Execute on
Slide 14: Attractive Investment Opportunity
Attractive Investment Opportunity Super-Community Diversified lines of Opportunity and Bank Headquartered business and revenue ability to scale and in attractive streams (i.e. Noninterest obtain operating Southeastern Income represents ~25% - leverage Pennsylvania market 30% of total revenue) Strong
Slide 15: Summary Financial Highlights
SUMMARY FINANCIAL HIGHLIGHTS
Slide 16: 2023 Results
2023 Results Earnings Loans & Deposits Reported Earnings: $71.1 million $2.41 per Share Loan Growth: 7.3% Core PTPP-NCO1: $100.3 million Deposit Growth: 7.8% Reported ROAA: 0.94% Core PTPP-NCO ROAA1: 1.33% Reported ROATE 1: 11.45% Average Loan to Deposit Ratio: 105.2% Core PTPP-NCO ROATE 1: 16.14% K
Slide 17: Core Pre-Tax Pre-Provision Income less Net Charge-Offs
1 Core Pre-Tax Pre-Provision Income less Net Charge-Offs $120,000 $108,434 $100,321 $100,000 $87,236 $84,911 $85,340 $80,000 $68,620 $64,978 $60,000 $40,000 $20,000 $— 2017 2018 2019 2020 2021 2022 2023 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 17
Slide 18: Tangible Book Value Per Share
Tangible Book Value Per Share1 Target 8-10% Annual Growth 2 12/31/22 vs 12/31/23 2017 - 2023 CAGR = 7.6% $25.00 $30.00 $25.00 $2.41 $0.39 $22.41 $20.42 $22.41 $20.00 $(0.81) $15.00 $20.00 $20.42 $20.14 $10.00 $17.66 $5.00 $17.01 $— $15.00 $15.24 12/31/22 Earnings Buybacks, AOCI 12/31/2023 Dividends,
Slide 19: Core PTPP-NCO ROAA & ROTE
Core PTPP- NCO ROAA & ROTE Core PTPP-NCO ROAA1 Core PTPP-NCO ROTE1 2.00% 22.00% 1.90% 21.00% 1.80% 20.00% 19.54% 1.70% 19.00% 1.63% 18.53% 18.20% 1.60% 18.00% 1.56% 17.58% 1.49% 1.50% 1.51% 17.00% 1.45% 1.40% 16.00% 16.33% 1.37% 15.77% 16.14% 1.30% 1.33% 15.00% 1.20% 14.00% 1.10% 13.00% 1.00% 12.00%
Slide 20: Net Interest Income
Net Interest Income Core Net Interest Margin 4.00% $220,000 3.78% 3.80% 3.72% $210,000 3.67% 0.08% $200,000 3.60% 3.52% 0.14% $190,000 3.40% 3.37% $180,000 0.21% 3.18% 3.16% 3.20% 3.78% 0.04% $170,000 3.72% 0.12% 3.59% 3.00% $160,000 3.38% 3.16% 3.12% $150,000 2.80% 3.06% $140,000 2.60% $130,000 201
Slide 21: Efficiency Ratio
Efficiency Ratio 75.0% 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 72.5% to other banks that do not h
Slide 22: Non-Interest Income % of Total Revenue
Revenue (excluding PPP impact) Revenue Revenue by Line of Business (2023) 350,000 50% Univest Capital, Mortgage, 2.7% 300,000 14.7% Wealth, 40% 8.8% Non-Interest Income % of Total Revenue 250,000 Insurance, 30% 7.1% 200,000 $ (000) 150,000 20% 100,000 10% 50,000 — —% 17 18 19 ( 1) ( 1) ( 1) 23 20 20
Slide 23: Fee Income
Fee Income $96,000 50% $83,224 $84,000 $78,328 $77,885 $76,824 40% $72,000 $65,422 33% $60,173 32% $59,240 32% $60,000 $55,963 30% 29% 28% 28% 26% 26% $48,000 20% $36,000 $24,000 10% $12,000 $— —% 2016 2017 2018 2019 2020 2021 2022 2023 Trust / Wealth Fee Income Insurance Fee Income Mortgage Banking
Slide 24: Assets and Loans
Assets and Loans Assets Loans by Segment (excluding PPP) $9,000,000 $7,000,000 CAGR = 10.4% $6.6B $8,000,000 $7.8B $6.1B $6,000,000 $7.1B $7.2B $7,000,000 $5.3B $6.3B $5,000,000 $4.8B $6,000,000 $4.4B $5.4B $4.0B $5.0B $4,000,000 $5,000,000 $3.6B $4.6B $ (000) $4.2B $3.3B $4,000,000 $3,000,000 $3,00
Slide 25: Liabilities and Deposits
Liabilities and Deposits Liabilities Deposits $8,000,000 $7,000,000 CAGR = 10.1% $6.4B $6.9B $6.1B $7,000,000 $5.9B $6,000,000 $6.3B $6.4B $5.2B $6,000,000 $5.6B $5,000,000 $4.4B $5,000,000 $4.7B $4.4B $4,000,000 $3.9B $3.6B $ (000) $ (000) $4.0B $4,000,000 $3.7B $3.3B $3,000,000 $3,000,000 $2,000,0
Slide 26: Stable Asset Quality
Stable Asset Quality Nonperforming Assets Nonaccrual Loans & Leases $50,000 2.50% $50,000 2.25% 600.0% $40,000 2.00% $40,000 500.0% 1.75% $30,000 1.50% 400.0% 1.25% $30,000 $ (000) $ (000) $20,000 1.00% 300.0% 0.75% $20,000 $10,000 0.50% 200.0% 0.25% $10,000 $— —% 100.0% (0.25)% 2016 2017 2018 2019
Slide 27: Current Expected Credit Loss (CECL)
1 Current Expected Credit Loss (CECL) $100.0 $4.4 $3.1 $7.4 $36.3 $85.4 $83.0 $6.7 $79.0 $(5.4) $(4.6) $4.3 $75.0 $71.9 $(3.9) $(10.5) $(0.4) $(0.2) $(000) $50.0 $12.9 $35.3 $25.0 $— 2019 CECL Loan growth Specific Net 2020 Loan growth Specific Net 2021 Loan growth Specific Net 2022 Loan growth Speci
Slide 28: Liquidity and Capital
LIQUIDITY AND CAPITAL
Slide 29: Liquidity and Capital
Liquidity and Capital Liabilities & Shareholders’ Equity Borrowing Sources – as of 12/31/23 Other Borrowings, 4.1% Balance Unused Subordinated debt, 1.9% FHLB - Pittsburgh* $ 310.0 $ 1,749.1 Other Liabilities, 1.3% Federal Fund Lines (9 Lenders)** — 369.0 Brokered FRB - Philadelphia — 183.3 Sharehol
Slide 30: Strong Capital Ratios Provide for Operating Flexibility
Strong Capital Ratios Provide for Operating Flexibility Tier 1 (Leverage) Tier 1 (Common/RBC) Tier 1 and Common Equity Tier 1 Capital 15.00% 15.00% Ratios are the same. 11.11% 10.88% 11.03% 10.76% 11.08% 10.48% 10.13% 10.02% 10.37% 10.58% 9.81% 9.36% 9.42% 10.00% 8.84% 9.08% 9.13% 10.00% 8.50% 5.00%
Slide 31: Largest Deposit Relationships – As of 12/31/23
1 Largest Deposit Relationships – As of 12/31/23 Deposits Balance Rank Type (000s) 1 Public Funds 216,644 2 Bus / Corp 84,834 3 Bus / Corp 66,785 4 Bus / Corp 58,260 5 Public Funds 53,901 6 Public Funds 46,035 7 Public Funds 44,623 8 Public Funds 43,838 9 Public Funds 42,565 10 Public Funds 42,452 1
Slide 32: Investments
Investments Investment Portfolio Investment Portfolio Details Corporate Other Bonds 16.5% Municipal Corporate Bonds 0.7% (in millions) Bonds 0.5% Moody’s Rating Aa3 1.0 Aa2 1.5 Aa1 — Aaa 0.5 A3 15.4 A2 20.5 $501 A1 42.5 Million Baa2 — at 12/31/23 Baa1 — WR — N/A 10.0 Total 91.4 MBS/ CMO 82.4% 32
Slide 33: Loan Portfolio Detail and Credit Overview
LOAN PORTFOLIO DETAIL AND CREDIT OVERVIEW
Slide 34: Loan & Lease Detail
Loan & Lease Detail 2016 1,375 823 175 294 30 291 163135 2017 1,542 896 176 342 28 322 184 130 2018 1,741 938 216 363 33 388 186 142 2019 2,040 947 233 374 30 439 174 149 2020 2,459 893 243 381 27 488 167 165 2021 2,719 956 284 410 26 541 159 185 2022 3,028 1,087 382 478 28 730 177 211 2023 3,303 99
Slide 35: Largest Loan Exposures – As of 12/31/23
Largest Loan Exposures – As of 12/31/23 Commercial Real Estate and Residential Real Estate Secured for Business Purposes Commercial & Industrial $4,214M | Avg Loan Size $607K $990M | Avg Loan Size $328K Risk Exposure Risk Exposure Rank Loan Type/Industry Rating (000s) Geography Rank Loan Type/Indust
Slide 36: Loan Portfolio Overview – As of 12/31/23
Loan Portfolio Overview – As of 12/31/23 % of Commercial Industry Description Total Outstanding Balance Loan Portfolio CRE - Retail $ 469,890 9.0 % Animal Production 361,597 6.9 CRE - Multi-family 320,176 6.2 CRE - Office 299,718 5.8 CRE - 1-4 Family Residential Investment 285,559 5.5 CRE - Industri
Slide 37: Credit Infrastructure
Credit Infrastructure Approval Process Significant Centralized Management Experienced Conservative credit oversight via credit team credit culture underwriting committee process approvals for $10 million or greater Line of Business Credit / Risk Owns Borrower Relationship Owns Borrower Risk Risk Ass
Slide 38: Credit Overview
Credit Overview • Limited single signature lending authority. Joint signature up to $10.0MM, 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, us
Slide 39: Line of Business Overview
BANK AND TRUST CO. Member FDIC GUNIVEST Guard LINE OF BUSINESS OVERVIEW amok WW g VUNIVEST UNIVES T HOME LOANS
Slide 40: Commercial Banking
Commercial Banking Commercial Banking Commercial Loan Detail as of 12/31/23 • As of 1/31/24, 88 lenders, relationship managers and portfolio managers operating in four divisions established by geography: ◦ East Penn and New Jersey: Bucks, Montgomery, Tax-Exempt, 3.4% Chester, Delaware, Berks, Philad
Slide 41: Consumer Banking
Consumer Banking • 27 financial service centers located in Bucks, Lancaster, Lehigh, Montgomery, Northampton and Philadelphia counties in PA; also operating 10 retirement centers in Bucks and Montgomery counties and 12 Regional Centers (Deposit Taking) • Proactively addressed continued reduction in
Slide 42: Mortgage Banking
Mortgage Banking Mortgage Banking Residential Mortgage Originations • As of 1/31/24, 54 Loan Officers predominately $800,000 $9,000 operating in Bank’s core footprint • Primarily agency lender: FNMA, FHLMC, FHA, $700,000 $8,500 VA and USDA ◦ FNMA and FHLMC eligible loans sold with $600,000 $8,000 se
Slide 43: Univest Capital, Inc.
Univest Capital, Inc. Univest Capital Lease Financing • Equipment financing business with 280,000 10.00% $247 million in lease receivables as of 9.00% 12/31/23 240,000 8.00% • Average lease size $47,000 200,000 7.00% typically with four-year term 6.00% 160,000 • Primary industries served: health car
Slide 44: Wealth Management
Wealth Management Wealth Management Assets Under Management • Comprehensive wealth management platform 5,000,000 including broker / dealer, municipal pension services, registered investment advisor, 4,500,000 retirement plan services and trust 4,000,000 • The wealth management division operates unde
Slide 45: Insurance
Insurance Insurance Agent Written Premiums • Independent insurance agency with more 250,000 than 60 carrier relationships 225,000 • Full service agency providing commercial 200,000 and personal lines, employee benefits and HR consulting solutions 175,000 • Built via a series of eight acquisitions 15
Slide 46: Appendix (Non-GAAP Reconciliations)
APPENDIX (Non-GAAP Reconciliations)
Slide 47: Appendix – Non-GAAP Reconciliations
Appendix – Non-GAAP Reconciliations $s in millions 2017 2018 2019 2020 2021 2022 2023 1. Tangible Common Equity Shareholders' Equity $ 603,374 $ 624,133 $ 675,122 $ 692,472 $ 773,794 $ 776,500 $ 839,208 Less: Goodwill 172,559 172,559 172,559 172,559 175,510 175,510 175,510 1 Less: Other Intangibles
Slide 48: Appendix – Non-GAAP Reconciliations (cont.)
Appendix – Non-GAAP Reconciliations (cont.) $s in millions 2017 2018 2019 2020 2021 2022 2023 5. Core Tax Equivalent Revenue Total Revenue $ 202,416 $ 218,235 $ 234,654 $ 252,689 $ 271,607 $ 296,182 $ 296,821 Plus: Tax Equivalent Adjustment 6,697 3,493 3,439 3,248 3,186 2,922 2,046 Tax Equivalent Re
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