Univest Corporation of Pennsylvania Q1 Earnings Call Highlights

Key Points

• Strong Q1 results: Univest reported net income of $27.1 million (EPS $0.96), a 24.7% YoY EPS increase, with return on average assets of 1.33% and improved efficiency alongside a lower loan‑to‑deposit ratio.
• Capital returns prioritized: The board raised the quarterly dividend 4.5% to $0.23 and repurchased 351,138 shares, with management signaling continued buybacks while monitoring CET1 (~11.3%) and remaining open to opportunistic M&A.
• Margin and outlook uplift: Reported NIM rose 23 bps to 3.33% (core 3.44%), prompting an updated net interest income growth outlook of 5–7% for 2026 and a maintained loan growth target of ~2–3%, while credit metrics stayed strong (NPLs ~0.25%, ACL 1.28%).

Univest Corporation of Pennsylvania NASDAQ: UVSP opened 2026 with what executives described as a strong first quarter, driven by higher earnings, margin expansion and continued progress on efficiency and balance sheet priorities.

Chairman, President and CEO Jeff Schweitzer said the company reported first-quarter net income of $27.1 million, or $0.96 per share, representing a 24.7% increase in earnings per share compared to the first quarter of 2025. He added that return on average assets improved to 1.33% for the quarter.

Schweitzer also highlighted efforts to lower the loan-to-deposit ratio and improve operating leverage. He said the company’s average loan-to-deposit ratio was 280 basis points lower than the first quarter of 2025, while the efficiency ratio declined 190 basis points year over year, which he tied to benefits from recent technology investments.

Dividend increase and buybacks

Management emphasized capital return actions taken during the quarter. Schweitzer said the board increased the quarterly dividend by 4.5% to $0.23 per share and that the company repurchased 351,138 shares during the quarter.

In response to a question about the pace of repurchases, Schweitzer said he did not anticipate pulling back on buybacks in the near term. CFO Brian Richardson added that the company closely monitors common equity tier 1 (CET1) capital and indicated management intends to manage that level lower through buybacks. Richardson said CET1 started the year at 11.22% and ended the first quarter at 11.32%, and that the company does not expect that increase to continue.

Schweitzer also said the company continues to keep “dry powder” available for potential opportunities across bank, wealth and insurance M&A, but that the “best use” of capital currently appears to be share repurchases. He said Univest is open to “opportunistic strategic” M&A and is looking at opportunities more than it had in recent years, while remaining “heavier in the buyback arena” for now.

Margin expansion and updated net interest income outlook

Richardson said Univest posted “solid” net interest margin (NIM) expansion in the quarter. Reported NIM increased 23 basis points to 3.33%. He added that core NIM, which excludes excess liquidity, was 3.44% and increased seven basis points from the fourth quarter.

On the outlook, Richardson said the company updated its full-year net interest income growth expectation to a range of 5% to 7%, citing first-quarter performance and “continued margin momentum.” He said the effective tax rate is expected to remain in the 20% to 21% range.

Asked about how many Federal Reserve rate cuts were embedded in expectations, management said initial guidance assumed two cuts, but that moving to fewer—or even none—would not meaningfully change the company’s guidance range. Management said the first couple of rate cuts are not expected to be “overly impactful” to net interest income or margin in the near term due to repricing timing dynamics.

Loan growth, pricing and competitive conditions

On loan growth, management maintained its outlook for approximately 2% to 3% growth for 2026. During the Q&A, Chief Operating Officer and President of Univest Bank and Trust Mike Keim said the loan pipeline was “solid for the second quarter” and noted that the company has started to see a “normalization” in prepayment activity.

Keim said the company recorded $23 million of net commercial growth in the first quarter despite making fewer commitments than in the prior year period. He also said Univest typically sees its best loan growth in the second and fourth quarters and did not see anything that would change that expectation.

Competitive pressure was a recurring theme. Keim said competition has increased “especially on the CRE side,” while noting that construction lending margins remain strong. He added that competition has also intensified on permanent takeout loans and strong C&I credits, though he said the company is still able to operate in targeted niches with “strong pricing.” Management said new commercial loan rates in the first quarter were consistent with the fourth quarter, “in that kind of mid-6% range.”

Credit quality and fee income trends

Richardson said credit quality “remained strong” in the first quarter and that the company recorded a provision for credit losses of $1.3 million. As of March 31, non-performing loans and leases were approximately 0.25% of total loans, while the allowance for credit losses remained steady at 1.28% of loans held for investment. Net charge-offs totaled $1.3 million, or seven basis points annualized.

In response to a question about potential pressure points among borrowers, management said it was not seeing concerning trends in the portfolio. Management pointed to monitoring the impact of higher fuel and energy costs and, given the company’s “large ag book,” potential impacts tied to fertilizer costs. Management said some shipping and distribution customers have been able to add surcharges, and that many agricultural clients had purchased fertilizer in advance, making it more of a “next year consideration.”

On revenue diversification, Richardson said non-interest income increased $1.7 million, or 7.5%, compared to the first quarter of 2025. Excluding BOLI death benefits, he said non-interest income increased $2.3 million, or 11%, driven by strength in investment advisory, insurance and servicing-related fee income, as well as higher risk participation and swap-related fee income. Mortgage banking revenue increased modestly from the prior period, reflecting higher saleable volume.

Non-interest expense rose $3.3 million, or 6.8%, year over year. Richardson said that included $427,000 of restructuring charges and a $753,000 increase in medical claims expense tied to the company’s self-funded medical plan, which he said can create volatility based on the timing and size of claims. Excluding restructuring charges and the increase in medical costs, expenses rose $2.2 million, or 4.4%, which Richardson said was in line with prior guidance.

For full-year 2026, Richardson said management is maintaining its outlook for:

• Loan growth of approximately 2% to 3%
• Provisioning of $11 million to $13 million
• Non-interest income growth of approximately 6% to 8% (excluding BOLI death benefits)
• Non-interest expense growth of 3% to 5%

In the Q&A, management also provided context on funding and liquidity. On deposit costs, management said the company is approaching an “equilibrium” in a stable rate environment, noting the overall book cost of funds was down 10 basis points on a spot basis from Dec. 31 to March 31, with some ongoing CD repricing. Management said efforts to grow deposits and reduce the loan-to-deposit ratio can put pressure on cost of funds, contributing to expectations for relative stability rather than further material declines.

Regarding cash and excess liquidity, management attributed the quarter’s decline to typical seasonality tied to the runoff of public funds and deployment into loans. Management said it expects runoff to continue into the second quarter, with a typical trough at the end of the second quarter tied to Pennsylvania tax collection cycles, followed by rebuilding later in the year.

About Univest Corporation of Pennsylvania NASDAQ: UVSP

Univest Corporation of Pennsylvania is a financial holding company headquartered in Souderton, Pennsylvania, operating through its primary subsidiary, Univest Bank and Trust Co The company offers a comprehensive range of banking services, including commercial and consumer lending, deposit products, mortgage banking, treasury and payment solutions, and wealth management services. Through its community banking model, Univest serves individuals, small to middle-market businesses, and nonprofit and public institutions.

Founded in 1893 as Souderton Industrial Savings Association, Univest has grown through a combination of organic expansion and targeted acquisitions.

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