Univest Financial Corporation · NASDAQ:UVSP
Univest Financial — Investor Presentation (May 2022)
49 slides from Univest Financial's investor presentation, May 17, 2022
Slide 1: Investor Presentation May 17, 2022
Investor Presentation May 17, 2022
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 continued impact of the COVID-19 pandemic on our business. The extent of such impact will depend on future developments, w
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: 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 13 Chief Operating Officer, Univest Financial Corporation and President, Univest Bank and Trust Co. Brian J. Richardson 39 5 Senior Exe
Slide 8: Univest Primary Physical Service Area and Expansion Markets
Univest Primary Physical Service Area 8 Expansion Markets Pittsburgh, PA Maryland KEY Headquarters Financial Center Regional Center Regional Center (Deposit Taking) Insurance
Slide 9: Market Opportunity
• With Truist’s acquisitions of Susquehanna Bancshares and National Penn Bancshares, and WSFS Financial Corporation’s acquisition of Beneficial and Bryn Mawr Bank Corporation, Univest is one of the two largest community focused financial institutions remaining headquartered in the Philadelphia marke
Slide 10: Q1 YTD 2022 Results
Q1 YTD 2022 Results 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 2. Includes PA capital stock tax expense - increases efficiency ratio by approx. 175 bps 10 Earnings Loans & Deposits Key Ratios Reported Earnings: $20.3 million $0.68 per Share Core PTPP-NCO1: $21
Slide 11: Attractive Investment Opportunity
Attractive Investment Opportunity 11 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 2. Based on price of $25.48 (represents average closing price 4/28/22-5/4/22). 3. Based on analyst average consensus of $2.61 EPS for 2022 (KBW projection of $2.56, Piper Sandler p
Slide 12: Attractive Investment Opportunity (con't)
Attractive Investment Opportunity (con’t) 12 Net Interest Income Simulations 1 Flat Rate as of 3/31/2022 BS (millions) (Excludes potential benefit from excess liquidity) 197 207 217 226 235 189 Base-FLAT 100+0 200+0 300+0 400+0 -100+0 0 50 100 150 200 250 As of 3/31/2022 Flat Curve 19.4% 14.8% 10.1%
Slide 13: Balance Sheet Hedging Strategy
Balance Sheet Hedging Strategy 13 Receive Fixed Pay Float Interest Rate Swap • On May 4, 2022, we entered into a 4-year receive fixed pay float interest rate swap • Synthetically converts existing variable-rate loans to fixed-rate for the term of the swap via hedge designation • Locks in the market’
Slide 14: Our Digital Transformation Continues
Our Digital Transformation Continues 14 Exceptional people deliver a relationship- based approach that customers appreciate Strengths Larger competitors are more advanced in leveraging customer data to deliver personalized, omnichannel experiences Need a support and prioritization model that scales
Slide 15: Delivering on a customer-centric transformation
Delivering on a customer-centric transformation 15 Data modernization lays the foundation to better know customers and personalize their experiences Benefit to Customers Benefit to Univest Digital scheduler capabilities and enhanced chat enable Univest to continue delivering its human touch over dig
Slide 16: 2022 Strategy
2022 Strategy 16 Grow Fee Revenue: ■ Continue to grow non-interest income and pre-tax income in the Mortgage, Wealth Management and Insurance lines of business Improve Operating Leverage: ■ Maximize the potential of digital capabilities to create operating leverage and reduce our efficiency ratio Ba
Slide 17: Summary Financial Highlights
SUMMARY FINANCIAL HIGHLIGHTS
Slide 18: Core Pre-Tax Pre-Provision Income less Net Charge-Offs
$64,978 $68,620 $84,911 $85,340 $87,236 $21,051 2017 2018 2019 2020 2021 Q1 2022 $— $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 Core Pre-Tax Pre-Provision Income less Net Charge-Offs1 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliati
Slide 19: Tangible Book Value Per Share
$14.44 $15.24 $17.01 $17.66 $20.14 $20.06 2017 2018 2019 2020 2021 Q1 2022 $— $5.00 $10.00 $15.00 $20.00 $25.00 Tangible Book Value Per Share1 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 2. Assumes no Wealth Management or Insurance acquisitions. Target 8-10% An
Slide 20: Core PTPP-NCO ROAA & ROTE
Core PTPP- NCO ROAA & ROTE 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 1.49% 1.45% 1.63% 1.51% 1.37% 1.21% 2017 2018 2019 2020 2021 Q1 2022 1.00% 1.10% 1.20% 1.30% 1.40% 1.50% 1.60% 1.70% 1.80% 1.90% 2.00% 19.54% 16.33% 18.20% 17.58% 15.77% 14.59% 2017 2018 201
Slide 21: Net Interest Income (Asset Sensitive)
Net Interest Income (Asset Sensitive) 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 2. Pro forma tax equivalent margin calculation excludes purchase accounting accretion and is based upon a pro forma 21% tax rate for all periods presented 21 3.78% 3.72% 3.67% 3.3
Slide 22: Efficiency Ratio
64.6% 62.9% 62.3% 61.3% 61.6% 67.6% 62.5% 61.9% 61.4% 60.6% 60.9% 67.0% 62.5% 61.8% 61.8% 62.4% 65.0% 67.5% 60.8% 60.1% 60.2% 60.7% 63.2% 65.8% Financial Statement Efficiency Ratio (Noninterest Expense/Total Revenue As Reported) Reported Efficiency Ratio (Noninterest Expense/Tax Equivalent Revenue)
Slide 23: Revenue (excluding PPP impact)
Revenue (excluding PPP impact) 1. 2022 is a pro forma annualized figure - (Q1x4) Revenue = Net Interest Income + Noninterest Income $ (0 00 ) N on-Interest Incom e % of Total R evenue Net Interest Income (excl PPP) Non-Interest Income Non-Interest Income % of Total revenue 2016 2017 2018 2019 2020 2
Slide 24: Fee Income
Fee Income 24 $55,963 $59,240 $60,173 $65,422 $78,328 $83,224 $20,470 33% 29% 28% 28% 32% 32% 31% Trust / Wealth Fee Income Insurance Fee Income Mortgage Banking Service Charges on Deposit Accounts Other Service Fee Income BOLI Other % of Total Revenue 2016 2017 2018 2019 2020 2021 Q1 2022 $— $12,00
Slide 25: Assets and Loans
Assets and Loans Chart data as of December 31 except for 2022 (3/31) Assets Excluding PPP Loans: 2020 = $5.9B, 2021 = $7.1B and 2022 = $7.1B $ (0 00 ) $4.2B $4.6B $5.0B $5.4B $6.3B $7.1B $7.1B Net Loans & Leases Total Investment Securities Other Assets Cash and Due From Banks 2016 2017 2018 2019 202
Slide 26: Liabilities and Deposits
Liabilities and Deposits Chart data as of December 31 except for 2022 (3/31) $ (0 00 ) $3.7B $4.0B $4.4 $4.7B $5.6B $6.3B $6.3B Interest-Bearing Deposits Noninterest-Bearing Deposits Borrowings Other Liabilities 2016 2017 2018 2019 2020 2021 2022 $— $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000
Slide 27: Stable Asset Quality
Stable Asset Quality Chart data as of December 31 except for 2022 (3/31) ACL increase, from 2020 onward, driven by CECL adoption and punitive impact of economic related assumptions. $ (0 00 ) A C L / non-accrual Loans and Leases Nonaccrual Loans and Leases ACL/nonaccrual loans and leases 2016 2017 2
Slide 28: Current Expected Credit Loss (CECL)
Current Expected Credit Loss (CECL)1 28 $( 00 0) $35.3 $12.9 $26.6 $14.4 $(1.6) $(4.6) $83.0 $(18.3) $8.0 $(0.6) $(0.2) $71.9 $(5.8) $1.3 $1.0 $(0.1) $68.3 2019 CECL Adoption Impact of Economic Related Assumptions Impact related to Loan Growth, etc. Specific Reserves Net Charge- Offs 2020 Impact of
Slide 29: Liquidity and Capital
LIQUIDITY AND CAPITAL
Slide 30: Liquidity and Capital
Liquidity and Capital All data in millions, as of 3/31/22 Balance Remaining Capacity FHLB - Pittsburgh $ 95.0 $ 1,819.9 Federal Fund Lines (10 Lenders)* — 400.0 FRB - Philadelphia — 74.5 Univest Financial Corp. LOC 1 — 10.0 Total $ 95.0 $ 2,304.4 *Uncommitted lines ranging from $15mm to $100mm Perio
Slide 31: Strong Capital Ratios Provide for Operating Flexibility
Strong Capital Ratios Provide for Operating Flexibility 31 Tier 1 (Leverage) 8.84% 10.48% 10.13% 10.02% 9.08% 9.13% 9.35% 5.00% Required Capital Ratio with full Basel III phase-in Univest Financial Corp (3/31/22) 2016 2017 2018 2019 2020 2021 2022 —% 5.00% 10.00% 15.00% Tier 1 (Common/RBC) 9.42% 11.
Slide 32: Largest Deposit Relationships
Largest Deposit Relationships 1 – As of 3/31/2022 32 Deposits Balance Weighted Rank Type (000s) Avg Rate 1 Bus/Corp 206,215 0.16% 2 Public Funds 129,525 0.49% 3 Bus/Corp 108,781 0.00% 4 Public Funds 66,630 0.13% 5 Public Funds 42,468 0.50% 6 Public Funds 36,759 0.23% 7 Public Funds 35,900 0.49% 8 Pu
Slide 33: Investments
Investments Municipal Bonds Corporate Bonds (in millions) (in millions) Moody’s Rating State Moody’s Rating Aaa 1.0 PA 1.3 Aa3 1.0 Aa3 — TN 1.0 Aa2 1.5 Aa2 — Total 2.3 Aa1 — A1 — Aaa 0.5 A2 — A3 13.9 N/A 1.3 A2 36.3 Total 2.3 A1 28.5 Baa2 — S&P Rating Type Baa1 — AAA 1.0 GO 2.3 WR — AA 1.3 REV — N/A
Slide 34: Loan Portfolio Detail and Credit Overview
LOAN PORTFOLIO DETAIL AND CREDIT OVERVIEW
Slide 35: Loan & Lease Detail (excluding PPP)
Loan & Lease Detail (excluding PPP) Chart Data is as of December 31 except for 2022 (3/31) ($5.4 billion at 3/31/22 excluding PPP) 35 1,375 1,542 1,741 2,040 2,459 2,719 2,817 823 896 938 947 893 956 932 175 176 216 233 243 284 285 294 342 363 374 381 410 412 30 28 33 30 27 26 26 291 322 388 439 488
Slide 36: Largest Loan Exposures
Largest Loan Exposures – As of 3/31/22 36 Commercial Real Estate and Residential Real Estate Secured for Business Purposes Commercial & Industrial $3,514M | Avg Loan Size $552K $932M | Avg Loan Size $199K Risk Exposure Risk Exposure Rank Loan Type/Industry Rating (000s) Geography Rank Loan Type/Indu
Slide 37: Credit Infrastructure Approval Process
Credit Infrastructure 37 Approval Process Credit / Risk Owns Borrower Risk Risk Assessment/Analysis Portfolio Risk Assessment Credit Risk Structure Underwriting Process Approval Sign-Off Independent Loan Review Line of Business Owns Borrower Relationship Business/Industry Expertise or Analysis Trans
Slide 38: Lending authority and risk management
• 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, using team based audits with risk based scope. •
Slide 39: Line of Business Overview
GUNIVEST Capi BANK AND TRUST CO. AUNIVEST WEALTH DIVISION Member FDIC LINE OF BUSINESS OVERVIEW alk WW y GUNIVEST UNIVEST HOME LOANS
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 • 28 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 9 Regional Centers (Deposit Taking) • Pro
Slide 42: Mortgage Banking
Mortgage Banking • 49 Loan Officers predominately operating in Bank’s core footprint • Primarily agency lender: FNMA, FHLMC, FHA, VA and USDA ◦ FNMA and FHLMC eligible loans sold with servicing retained ◦ GNMA issuer ◦ FHA, VA and USDA loans currently sold primarily to correspondents with servicing
Slide 43: Univest Capital, Inc.
Univest Capital, Inc. • Equipment financing business with $189 million in lease receivables as of 3/31/22 • Average lease size $36,000, 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 ◦ On December 1, 2021, Univest acquired certain a
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 mortgage servicing rights 2. Based upon a pro forma 21% tax rate for all periods presented. $s in millions 2017 2018 2019 2020 2021 Q1 YTD 2022 1. Tangible Common Equity Shareholders' Equity $ 603,374 $ 624,133 $ 675,122 $ 692,472 $ 773,
Slide 48: Appendix – Non-GAAP Reconciliations (cont.)
Appendix – Non-GAAP Reconciliations (cont.) 1. Based upon a pro forma 21% tax rate for all periods presented. 2. Excess liquidity is defined by Management as Interest Earning Deposits with Other Banks greater than $40 million 48 $s in millions 2017 2018 2019 2020 2021 Q1 YTD 2022 5. Core Tax Equival
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