Univest Corporation of Pennsylvania Q2 Earnings Call Highlights

Key Points

• Univest posted solid Q2 2026 operating results with net income of $23 million, or $0.82 per share, and EPS up 18.8% year over year. Management said the quarter was weighed down by a $5.2 million OREO valuation adjustment, but core performance remained strong.
• Net interest income and margin improved as higher loan balances, better asset yields and lower funding costs drove gains. Net interest income rose 11.3% from a year ago, and management expects full-year net interest income growth of 8% to 10%.
• Credit quality and capital management were key focus areas after a $28.6 million loan went non-accrual and charge-offs rose, while the company also booked a specific reserve and the OREO write-down. Univest continued share repurchases and said it remains open to M&A while balancing capital against growth opportunities.

Univest Corporation of Pennsylvania NASDAQ: UVSP reported second-quarter 2026 net income of $23 million, or $0.82 per share, during its earnings call, with Chairman, President and CEO Jeff Schweitzer saying earnings per share rose 18.8% from the second quarter of 2025.

Schweitzer said the quarter was affected by a $5.2 million valuation adjustment on an OREO property following an updated appraisal, which reduced earnings by $0.15 per share. Excluding that item, he described the company’s core operating results as strong.

“We had a solid second quarter,” Schweitzer said, citing loan growth of $101.7 million, or 6% annualized, and deposit growth of $119.2 million, or 7.2% annualized. He also said the company continued efforts to reduce its loan-to-deposit ratio, which was 180 basis points lower on average year to date than through the first six months of 2025.

Net Interest Income and Margin Improve

Chief Financial Officer Brian Richardson said net interest income increased $2.9 million, or 4.5%, from the first quarter and rose $6.7 million, or 11.3%, from the year-earlier quarter. He attributed the increase to growth in average loan balances, improved asset yields and a lower overall cost of funds.

Reported net interest margin expanded 16 basis points from the first quarter to 3.49%, while core net interest margin, excluding excess liquidity, increased nine basis points to 3.53%.

Richardson said management now expects full-year net interest income growth of 8% to 10%, reflecting first-half performance and continued margin stability. In response to an analyst question, he said Univest models its balance sheet as “fairly neutral” to rate changes, whether up or down, and expects core NIM to remain around the 3.50% range over the next several quarters, plus or minus about five basis points, assuming no major changes.

Credit Items Weigh on Results

Credit quality was a major focus of the call. Richardson said the company recorded the $5.2 million pre-tax valuation adjustment on a real estate owned property, reducing after-tax earnings by $4.1 million, or $0.15 per diluted share.

He said the property is a roughly 165,000-square-foot lab and office building in the Princeton market. Significant repairs were completed from the first quarter into the second quarter of last year, after which the property was marketed. Richardson said an updated appraisal reflected pressure from market comparisons for both sales and rental rates.

The quarter also included a commercial loan relationship totaling $28.6 million being placed on non-accrual status, along with a $9.8 million specific reserve. Net charge-offs were $1.9 million, or 11 basis points annualized, while the allowance for credit losses coverage ratio remained stable at 1.28% of total loans held for investment.

Mike Keim, chief operating officer and president of Univest Bank and Trust, said the non-accrual credit is a C&I loan tied to an operating business that manufactures and distributes discretionary items. He said the business is seasonal, with its strongest period late in the third quarter into the fourth quarter. Keim said the company is reviewing updated financials and assessing whether a sale of the company or parts of the company could be the best resolution.

Fee Income Trends and 2026 Outlook

Non-interest income totaled $18.1 million, down $3.4 million from the second quarter of 2025, primarily due to the OREO valuation adjustment. Richardson said underlying fee income trends remained solid when excluding that item.

• Investment advisory commission and fee income increased $583,000, or 10.7%, from the prior year, driven by asset appreciation and new customer relationships.
• Net gains on mortgage banking activities rose $365,000, or 37.2%, due to higher saleable volume and improved margins.
• The company recognized $708,000 of tax-free bank-owned life insurance death benefit proceeds during the quarter.

Richardson said Univest maintained its full-year outlook for loan growth of approximately 2% to 3%, non-interest income growth of approximately 6% to 8% excluding BOLI death benefits and REO valuation adjustments, non-interest expense growth of 3% to 5%, and provisioning of $11 million to $13 million. He cautioned that provisioning remains event-driven and could be affected by the resolution of the $28.6 million non-accrual loan, other charge-offs, loan growth and economic conditions. The effective tax rate is expected to remain in the 20% to 21% range.

Competition, Deposits and Capital Actions

Asked about loan growth and market competition, Keim said Univest is seeing increased pricing competition “across the board” in its markets, with narrowing spreads as lenders compete for asset growth. He said the company has shifted more toward construction-oriented financing and away from longer-term commercial real estate because management believes the product offers wider margins and fee income opportunities.

On deposits, Keim said pipelines remain strong, supported by CD offerings, a union deposit initiative, seasonal public funds growth in the third quarter and efforts involving title companies and law firms. Richardson said there is limited opportunity to reduce deposit costs further in a stable rate environment, with just over $300 million of CDs maturing in the third quarter and current offering rates at or slightly above those levels.

Schweitzer said Univest repurchased 425,539 shares during the quarter and 776,677 shares year to date. He said the company expects to remain active with buybacks while balancing capital use against potential M&A opportunities and balance sheet growth. Richardson added that management is not looking to materially grow capital ratios from where they began the year.

Schweitzer also said Univest remains open to M&A conversations in banking, wealth and insurance, though he noted that any transaction depends on whether a business is actually for sale and whether the parties can agree on terms.

“We’ve had a strong start to the year through the first six months,” Schweitzer said in closing, adding that the company plans to continue executing its strategic plans over the remainder of 2026.

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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