Univest Financial Corporation Q2 FY2025 earnings call

• Net income for Q2 was $20 million or $0.69 per share. - Loan outstandings contracted but year-to-date commercial loan production was up. - Deposits had seasonal and broker deposit declines but excluding those, increased. - Reported NIM increased due to higher asset yields and lower cost of funds. - Noninterest income increased driven by investment mgmt fees, etc., offset by mortgage banking gains decline. - Noninterest expense increased due to compensation, medical costs, etc.

Net income for the second quarter was $20 million or $0.69 per share. Loan outstandings contracted by $31.9 million during the quarter, but year-to-date commercial loan production through June 30 was $507 million vs $402 million prior year. Deposits decreased $75.8 million during the quarter, predominantly due to seasonal and broker deposit declines, but excluding those, deposits increased $77.5 million. Reported NIM was 3.2% in the quarter, up 11 basis points from prior quarter. Core NIM was 3.24%, up 12 basis points. Noninterest income increased $521,000 or 2.5% compared to second quarter 2024. Noninterest expense increased $1.6 million or 3.3% compared to second quarter 2024.

• Full year loan growth expected 1%-3%, net interest income growth 10%-12% vs 2024. - Provision for credit loss guidance unchanged at $12M-$14M. - Noninterest income expected 1%-3% growth off $84.5M base. - Noninterest expense expected 2%-4% growth. - Income taxes guidance unchanged at 20%-20.5% based on current statutory rates.

• There was $7.8 million of net charge-offs predominantly related to one credit with suspected fraud, $16.4 million balance placed on nonaccrual supported by real estate collateral, no further comments at time.

Q: Could you give update for loan growth and expenses?

A: Loan growth is 1% to 3% and corresponding net interest income growth is 10% to 12% and then expenses is 2% to 4%.

Q: Talk about strategy to deploy capital, M&A, share repurchases?

A: Will continue share buybacks, M&A not immediate priority but eyes open, more interested in nonbank side currently.

Q: Hearing on deposit competition?

A: Tough environment, consumer side money market and CD rates competitive, identified campaigns and niches to grow deposits.

Q: Outlook on NIM trajectory, impact of rate cuts?

A: Core NIM expected to pull back in Q3 due to sub debt repricing and public funds, then flat/slightly up assuming stable rates, 1-2 rate cuts not overly impactful long term.

Q: Heard on $90B projects in PA, impact on footprint?

A: Supportive of investment in PA, diversified customer base may benefit, early stages of customer chatter but excited about investment.

Q: How are yields holding up, spread compression?

A: Commercial new loan yields relatively stable last quarter or 2, loan growth lack due to payoff headwinds, expansion will slow down as book reprices but not pulling back yet