Univest Corporation of Pennsylvania Q1 2025 Earnings Report

Univest Corporation of Pennsylvania EPS Results

• Actual EPS: $0.77
• Consensus EPS: $0.64
• Beat/Miss: Beat by +$0.13
• One Year Ago EPS: N/A

Univest Corporation of Pennsylvania Revenue Results

• Actual Revenue: $79.20 million
• Expected Revenue: $77.65 million
• Beat/Miss: Beat by +$1.55 million
• YoY Revenue Growth: N/A

Univest Corporation of Pennsylvania Announcement Details

• Quarter: Q1 2025
• Date: 4/23/2025
• Time: After Market Closes
• Conference Call Date: Thursday, April 24, 2025
• Conference Call Time: 9:00AM ET

Univest Corporation of Pennsylvania (NASDAQ:UVSP) is a financial services holding company headquartered in Souderton, Pennsylvania. Through its principal subsidiary, Univest Bank and Trust Co., the company provides banking and related financial services to individuals, businesses, municipalities and nonprofit organizations.

Univest’s banking products and services include checking and savings accounts, consumer and commercial loans, mortgages, cash-management solutions, online and mobile banking, and treasury-management services. The company also offers wealth management, investment advisory and trust services through Univest Investments, as well as insurance products and services through its insurance operations.

Founded in 1876, Univest serves communities primarily in southeastern Pennsylvania, including the greater Philadelphia region and the Lehigh Valley. Its business is organized around community banking, wealth management and insurance, allowing the company to provide financial services to both retail and commercial customers.

Univest Corporation of Pennsylvania Q1 2025 Earnings Call Transcript

Key Takeaways

• Reported net income of $22.4 million, or $0.77 per share in Q1, marking a solid start to FY2025.
• Net interest margin expanded 21 basis points to 3.09%, with core NIM (excess liquidity excluded) at 3.12%, up 10 basis points.
• Noninterest income declined 12.4% quarter-over-quarter ($3.2 million), with core noninterest income down 3.6% after stripping nonrecurring items.
• Credit quality remains strong: nonperforming assets at 0.43% of total assets and annualized net charge-offs of 0.10%.
• Board raised the quarterly dividend by $0.01 to $0.22 and repurchased 221,760 shares, planning to maintain active buybacks.

Presentation

[Operator]

Good morning, everyone. Thank you for joining us for the Univest Financial Corporation Q1 2025 earnings call. My name is Carly, and I'll be coordinating the call today. If you'd like to register a question during the call, you can do so by pressing star followed by one on your telephone keypad, and to remove yourself from line of questioning, you'll use star followed by two. I'm now going to hand over to our host, Jeff Schweitzer, President and CEO of Univest Financial Corporation. The floor is yours.

[Jeffrey Schweitzer, President and CEO at Univest Financial Corporation]

Thank you, Carly, and good morning, and thank you to all of our listeners for joining us. Joining me on the call this morning is Mike Keim, our Chief Operating Officer and President of Univest Bank and Trust, and Brian Richardson, our Chief Financial Officer. Before we begin, I would like to remind everyone of the forward-looking statements disclaimer. Please be advised that during the course of this conference call, management may make forward-looking statements that express management's intentions, beliefs, or expectations within the meaning of the federal securities laws. Univest's actual results may differ materially from those contemplated by these forward-looking statements. I will refer you to the forward-looking cautionary statements in our earnings release and in our SEC filings. Hopefully, everyone had a chance to review our earnings release from yesterday. If not, it can be found on our website at univest.net under the Investor Relations tab.

[Jeffrey Schweitzer, President and CEO at Univest Financial Corporation]

We reported net income of $22.4 million during the Q1, or 77 cents per share. We're off to a solid start to 2025 in spite of the uncertainty in the economy with interest rates and geopolitical concerns. While loan growth was muted during the quarter, we actually saw solid production. However, we were hit with some larger payoffs, resulting in net growth of $6.5 million. With the recent uncertainty from the announcement of tariffs on April 2, we have witnessed commercial customers being more cautious, looking for more clarity on a number of items related to tariffs, taxes, interest rates, and the overall economy. While deposits decreased to $100.8 million during the quarter, this was predominantly due to the seasonal decline of public funds deposits.

[Jeffrey Schweitzer, President and CEO at Univest Financial Corporation]

We continue to see a stabilization of non-interest-bearing deposits, which, combined with discipline on loan pricing, helped our margin improve to 3.09% during the quarter from 2.88% for the Q4 of 2024. Additionally, credit quality continues to remain strong as non-performing assets to total assets increased slightly by two basis points during the quarter to 43 basis points, with net charge-offs remaining low at 10 basis points on an annualized basis. With respect to capital, yesterday the Board of Directors announced a one-cent increase in our quarterly dividend to $0.22 per share. Additionally, we repurchased 221,760 shares of stock during the quarter, and we plan on continuing to be active with stock buybacks going forward.

[Jeffrey Schweitzer, President and CEO at Univest Financial Corporation]

Before I pass it over to Brian, I would like to thank the entire Univest family for the great work they do every day and for their continued efforts serving our customers, communities, and each other. I will now turn it over to Brian for further discussion on our results.

[Brian Richardson, CFO at Univest Financial Corporation]

Thank you, Jeff, and I would also like to thank everyone for joining us today. I would like to start by touching on four items from the earnings release. First, as Jeff mentioned, we saw solid NIM expansion during the quarter, with reported NIM increasing 21 basis points to 3.09%. Additionally, core NIM, which excludes excess liquidity, of 3.12%, increased 10 basis points compared to the Q4. Second, during the quarter, we recorded a provision for credit losses of $2.3 million. Our coverage ratio was 1.28% at March 31, which was consistent with December 31. Net charge-offs for the quarter totaled $1.7 million or 10 basis points annualized. Third, non-interest income decreased $3.2 million or 12.4% compared to the Q1 of 2024.

[Brian Richardson, CFO at Univest Financial Corporation]

Excluding the non-recurring $3.4 million gain on sale of MSRs in the Q1 of 2024 and the $1 million BOLI death benefit in the current quarter, non-interest income decreased $797,000 or 3.6%. Contingent income in the insurance line of business decreased $700,000 compared to the Q1 of 2024. As a reminder, contingent income totaled $2.3 million in the Q1 of 2024, which was an all-time record for our insurance business. Fourth, non-interest expense decreased $746,000 or 1.5% compared to the Q1 of 2024, as we continue to prioritize prudent expense management. As it relates to the 2025 guidance, when excluding the $1 million BOLI death benefit recorded in the quarter, there are no changes to the information I provided on last quarter's call. That concludes my prepared remarks. We will be happy to answer any questions. Carly, would you please begin the question-and-answer session?

[Operator]

Of course. Thank you very much. We've now opened the lines for Q&A. If you'd like to ask a question, please press star followed by one on your telephone keypad now, and to remove yourself from line of questioning, you'll be star followed by two. As a reminder, to raise a question, you'll be star followed by one. Our first question comes from Frank Schiraldi of Piper Sandler. Frank, your line is now open.

[Frank Schiraldi, Managing Director and Senior Equity Research Analyst at Piper Sandler]

Good morning. I thought, Brian, correct me if I'm wrong, and maybe I missed it, but in terms of the fee income growth expectations, I thought it was mid-single digits for the year. If that's the case, can you just maybe talk about kind of drivers to get there?

[Brian Richardson, CFO at Univest Financial Corporation]

Sure, Frank. Yeah, four to six was our guidance range when we kind of came into the year and continued to hold that steady. Of course, we'll see what occurs on the mortgage banking side, which will provide potential opportunity and lift there or something that we'll continue to keep an eye on. You will have inherently, when you look at the year-over-year current growth, when you back out the contingent income and the noise that that put into the Q1, we would again expect to fall into that low single-digit % range.

[Frank Schiraldi, Managing Director and Senior Equity Research Analyst at Piper Sandler]

Okay. And then just on the loan-to-deposit ratio, there's some seasonality there on the public funds and the deposits. I think, if you correct me if I'm wrong, you guys continue to target like a 95-105% ratio. I guess, where do you see that trending to? If you can just remind us the cadence of kind of those balances, public funds through the year.

[Brian Richardson, CFO at Univest Financial Corporation]

Yeah, Frank, so I'll start out there, and we could elaborate as necessary or appropriate. On a longer term, we look to head towards 95-100. That said, we realize that's going to be a process for us to navigate there, so we look to continually and methodically kind of ratchet that down over time, knowing that there's cyclicality and seasonality with public funds and how that presents at each quarter end from a loan-to-deposit ratio perspective.

[Jeffrey Schweitzer, President and CEO at Univest Financial Corporation]

Yeah, we'll hit a low point by June 30 on public funds, and then they'll start to build in the second half of the year again.

[Frank Schiraldi, Managing Director and Senior Equity Research Analyst at Piper Sandler]

Okay, great. Lastly, you mentioned capital return. I just wondered if you could maybe size the potential for buybacks here in terms of payout ratio going forward. Thanks.

[Brian Richardson, CFO at Univest Financial Corporation]

Sorry, payout ratio as it relates to buyback. I mean, I think the volume that you saw in the Q1, just from an overall dollar perspective, if you looked at it from that perspective, is something that we would continue to kind of target something in that general range. Again, that's a decision that we make, though, on a quarterly basis as we look forward to projections of earnings and loan growth and projections of our regulatory capital ratio such that we're looking to deploy any excess capital that would be generated while not overreacting in any specific quarter for any kind of short-term lifts. We are looking over the longer-term time horizon called the next 9-12 months of where we would expect capital to land. That is kind of the process that we go through.

[Frank Schiraldi, Managing Director and Senior Equity Research Analyst at Piper Sandler]

Okay. All right, great. Thanks for the color.

[Jeffrey Schweitzer, President and CEO at Univest Financial Corporation]

Thank you, Frank.

[Operator]

Thank you very much. As a reminder, to raise a question, please press star followed by one on your telephone keypad. Our next question comes from Emily of KPW. Emily, your line is now open. Emily, just confirming your line is now open. It appears we are not able to get any connection from Emily's line, and we currently have no further questions, so I would like to hand back to Jeff Schweitzer for any further remarks.

[Jeffrey Schweitzer, President and CEO at Univest Financial Corporation]

All right, thank you, Carly, and thank you, everyone, for participating on the call today. As we noted, we had a very solid Q1. While there is a lot of uncertainty in the environment, we are very well poised to navigate through anything that is thrown at us. We look forward to talking to everybody who participates later today for our shareholders' meeting and then at the end of the Q2. Have a great day.

[Operator]

As we conclude today's call, we'd like to thank everyone for joining. You may disconnect your line.

Participants

Executives

• Brian Richardson, CFO
• Jeffrey Schweitzer, President and CEO

Analysts

• Frank Schiraldi, Managing Director and Senior Equity Research Analyst at Piper Sandler