Univest Financial Corporation · NASDAQ:UVSP
Univest Financial — Investor Presentation (August 2023)
50 slides from Univest Financial's investor presentation, Aug 16, 2023
Slide 1: Investor Presentation August 16, 2023
Investor Presentation August 16, 2023
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 • 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 7 7th Largest Diversified Financial Institution Headquartered in PA 9.6% 1 Core PTPP-NCO2 <---5-year CAGR---> 8.0% TBV/Share Conservatively Managed Organic Growth Engine ~25% - 30% Fee Income Business Revenue/Total 11.1% 5-yr CAGR Organic Loan Growth w/ Exceptional Asset Quality
Slide 8: Deposits and Liquidity Highlights
Deposits and Liquidity Highlights (As of June 30, 2023) 8 Committed borrowing capacity of $3.2 billion ($2.0 billion available1) Estimated unprotected deposits totaled $1.4 billion3 or 23.3% of total deposits Noninterest-bearing deposits represent 26.4% of total deposits Prudently managed investment
Slide 9: Deposit and Liquidity Update
Deposit and Liquidity Update (As of August 14, 2023) 9 Deposits Dollars in thousands 6/30/23 % 8/14/23 % Change % Noninterest-Bearing Deposits $ 1,582,767 26.4% $ 1,580,672 25.7% $ (2,095) (0.1)% Demand Deposits 2,433,585 40.6% 2,591,694 42.2% 158,109 6.5% Savings Deposits 866,687 14.5% 827,120 13.5
Slide 10: Expense Management Strategies
Expense Management Strategies 10 In response to the current macroeconomic headwinds, certain expense management strategies, which are described below, were executed during the second quarter of 2023. • Estimated annual savings of ~$5.4 million. • Headcount Rationalization ◦ ~28 FTE reduction primari
Slide 11: Executive Leadership Team
Executive Leadership Team 11 Name Age Tenure (yrs) with Univest Title Jeffrey M. Schweitzer 50 15 President and CEO, Univest Financial Corporation Michael S. Keim 55 14 Chief Operating Officer, Univest Financial Corporation and President, Univest Bank and Trust Co. Brian J. Richardson 40 7 Senior Ex
Slide 12: Univest Primary Physical Service Area
Univest Primary Physical Service Area 12 Expansion Markets Western PA Maryland KEY Headquarters Financial Center Regional Center Regional Center (Deposit Taking) Insurance
Slide 13: Market Opportunity
• Univest is one of the two largest community focused financial institutions remaining headquartered in the Philadelphia market (WSFS being the other) • Univest Bank and Trust Co. primarily operates in thirteen counties in Pennsylvania including: Berks, Bucks, Chester, Cumberland, Dauphin, Delaware,
Slide 14: 2023 Strategy
2023 Strategy 14 Grow Fee Revenue: ■ Continue to grow non-interest income and pre-tax income in the Mortgage Banking, Wealth Management and Insurance lines of business Improve Operating Leverage: ■ Maximize the potential of digital capabilities to create operating leverage and reduce our efficiency
Slide 15: Attractive Investment Opportunity
Attractive Investment Opportunity 15 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 2. Based on price of $19.74 (represents average closing price 8/7/23-8/11/23). 3. Based on analyst average consensus of $2.33 EPS for 2023 (KBW projection of $2.36, Piper Sandler p
Slide 16: Summary Financial Highlights
SUMMARY FINANCIAL HIGHLIGHTS
Slide 17: YTD Q2 2023 Results
YTD Q2 2023 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 approximately 170 bps 17 Earnings Loans & Deposits Key Ratios Reported Earnings: $37.8 million $1.28 per Share Core PTPP-NCO
Slide 18: Core Pre-Tax Pre-Provision Income less Net Charge-Offs
$64,978 $68,620 $84,911 $85,340 $87,236 $108,434 $54,258 2017 2018 2019 2020 2021 2022 YTD 2023 $— $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 Core Pre-Tax Pre-Provision Income less Net Charge-Offs1 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 18
Slide 19: Tangible Book Value Per Share
$14.44 $15.24 $17.01 $17.66 $20.14 $20.42 $21.27 2017 2018 2019 2020 2021 2022 YTD 2023 $— $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. Ta
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% 1.56% 1.49% 2017 2018 2019 2020 2021 2022 YTD 2023 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% 18.53% 1
Slide 21: Net Interest Income
Net Interest Income 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 3.35% 3.78% 3.72% 3.67% 3.37% 3.18% 3.5
Slide 22: Efficiency Ratio
62.5% 61.9% 61.4% 60.6% 60.9% 62.4% 64.4% 60.8% 60.1% 60.2% 60.7% 63.2% 59.7% 60.3% Reported Efficiency Ratio (Noninterest Expense/Tax Equivalent Revenue) Efficiency Ratio (Core Noninterest Expense Excluding PA Shares Tax/Core Tax Equivalent Revenue) (1),(2) 2017 2018 2019 2020 2021 2022 YTD 2023 50
Slide 23: Revenue (excluding PPP impact)
Revenue (excluding PPP impact) 1. This is a non-GAAP financial measure. Refer to the Appendix for reconciliation. 2. 2022 is a pro forma annualized figure - (YTD Q3/3x4) Revenue = Net Interest Income + Noninterest Income $ (0 00 ) N on-Interest Incom e % of Total R evenue Net Interest Income (excl P
Slide 24: Fee Income
Fee Income 24 $55,963 $59,240 $60,173 $65,422 $78,328 $83,224 $77,885 $39,513 33% 29% 28% 28% 32% 32% 26% 26% 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 2022
Slide 25: Assets and Loans
Assets and Loans Chart data as of December 31 except for 2023 (6/30) Assets Excluding PPP Loans: 2020 = $5.9B, 2021 = $7.1B and 2022 = $7.2B $ (0 00 ) $4.2B $4.6B $5.0B $5.4B $6.3B $7.1B $7.2B $7.6B Net Loans & Leases Total Investment Securities Other Assets Cash and Due From Banks 2016 2017 2018 20
Slide 26: Liabilities and Deposits
Liabilities and Deposits Chart data as of December 31 except for 2023 (6/30) $ (0 00 ) $3.7B $4.0B $4.4B $4.7B $5.6B $6.3B $6.4B $6.8B Interest-Bearing Deposits Noninterest-Bearing Deposits Borrowings Other Liabilities 2016 2017 2018 2019 2020 2021 2022 2023 $— $1,000,000 $2,000,000 $3,000,000 $4,00
Slide 27: Stable Asset Quality
Stable Asset Quality Chart data as of December 31 except for 2023 (6/30) $ (0 00 ) Nonaccrual Loans and Leases ACL/nonaccrual loans and leases 2016 2017 2018 2019 2020 2021 2022 2023 $— $10,000 $20,000 $30,000 $40,000 $50,000 0.0% 100.0% 200.0% 300.0% 400.0% 500.0% 600.0% $ (0 00 ) Nonaccrual & 90+
Slide 28: Current Expected Credit Loss (CECL)
Current Expected Credit Loss (CECL)1 28 $( 00 0) $35.3 $12.9 $36.3 $3.1 $(4.6) $83.0 $(10.5) $(0.4) $(0.2) $71.9 $4.3 $6.7 $(3.9) $79.0 $6.1 $1.0 $(3.4) $82.7 2019 CECL Adoption Loan growth and changes in economic related assumptions Specific Reserves Net Charge- Offs 2020 Loan growth and changes in
Slide 29: Liquidity and Capital
LIQUIDITY AND CAPITAL
Slide 30: Liquidity and Capital
Liquidity and Capital All data in millions, as of 6/30/23 Balance Unused FHLB - Pittsburgh* $ 422.8 $ 1,817.7 Federal Fund Lines (9 Lenders)** 125.0 285.0 FRB - Philadelphia — 137.4 Univest Financial Corp. LOC 1 — 10.0 Total $ 547.8 $ 2,250.1 *FHLB unused capacity excludes outstanding letters of cre
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% 9.81% 9.59% 5.00% Required Capital Ratio with full Basel III phase-in Univest Financial Corp (6/30/23) 2016 2017 2018 2019 2020 2021 2022 2023 —% 5.00% 10.00% 15.00% Tier 1 (Common/RBC
Slide 32: Largest Deposit Relationships
Largest Deposit Relationships 1 – As of 6/30/23 32 Deposits Balance Rank Type (000s) 1 Public Funds 75,152 2 Bus / Corp 68,340 3 Public Funds 54,237 4 Bus / Corp 51,984 5 Public Funds 43,425 6 Bus / Corp 40,772 7 Bus / Corp 40,519 8 Public Funds 35,214 9 Public Funds 34,017 10 Bus / Corp 65,432 11 P
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 16.5 Total 2.3 A1 47.5 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
Loan & Lease Detail Chart Data is as of December 31 except for 2023 (6/30) 2020 - 2022 Total Loans excludes PPP 35 1,375 1,542 1,741 2,040 2,459 2,719 3,028 3,222 823 896 938 947 893 956 1,087 1,039 175 176 216 233 243 284 382 413 294 342 363 374 381 410 478 518 30 28 33 30 27 26 28 26 291 322 388 4
Slide 36: Largest Loan Exposures
Largest Loan Exposures – As of 6/30/23 36 Commercial Real Estate and Residential Real Estate Secured for Business Purposes Commercial & Industrial $4,153M | Avg Loan Size $618K $1,039M | Avg Loan Size $343K Risk Exposure Risk Exposure Rank Loan Type/Industry Rating (000s) Geography Rank Loan Type/In
Slide 37: Loan Portfolio Overview
Loan Portfolio Overview – As of 6/30/23 37 Industry Description Total Outstanding Balance % of Commercial Loan Portfolio CRE - Retail $ 468,650 9.0 % Animal Production 350,654 6.8 CRE - Multi-family 306,508 5.9 CRE - Office 303,848 5.9 CRE - 1-4 Family Residential Investment 282,613 5.4 CRE - Indust
Slide 38: Credit Infrastructure Approval Process
Credit Infrastructure 38 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 39: Lending authority and risk oversight
• 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, using team based a
Slide 40: 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 41: Commercial Banking
Commercial Banking • 95 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, Lehi
Slide 42: Consumer Banking
Consumer Banking • 28 financial service centers located in Bucks, Lancaster, Lehigh, Montgomery, Northampton and Philadelphia counties in PA; also operating 14 retirement centers in Bucks and Montgomery counties and 11 Regional Centers (Deposit Taking) • Proactively addressed continued reduction in
Slide 43: Mortgage Banking
Mortgage Banking • 63 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 44: Univest Capital, Inc.
Univest Capital, Inc. • Equipment financing business with $237 million in lease receivables as of 6/30/23 • Average lease size $45,000 typically with four-year term • Primary industries served: health care, education/office, automotive, golf/turf, technology and energy • Manage residual risk by prim
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
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 • Agent for written premiums of $210 million as o
Slide 47: Appendix (Non-GAAP Reconciliations)
APPENDIX (Non-GAAP Reconciliations)
Slide 48: 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 2022 YTD Q2 2023 1. Tangible Common Equity Shareholders' Equity $ 603,374 $ 624,133 $ 675,122 $ 692,472 $
Slide 49: 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 49 $s in millions 2017 2018 2019 2020 2021 2022 YTD Q2 2023 5. Core Tax Eq
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