Univest Financial Corporation Q4 FY2025 earnings call

• Strong fourth quarter net income: $22.7 million or $0.79 per share, 21.5% increase vs Q4 2024, record EPS for the year at $3.13.
• Loan production: Solid throughout 2025, with Q4 loan growth of $129.3 million; early payoffs/paydowns impacted first 3 quarters but eased in Q4.
• NIM: Reported NIM 3.10% in Q4, down 7 basis points from Q3; core NIM 3.37%, up 4 basis points from Q3.
• Loan and deposit activity: Loans grew $129.3 million in Q4 (7.6% annualized), deposits decreased $130.8 million in Q4 (primarily public funds decrease), full-year deposits grew $328.1 million (4.9%).
• Provision for credit losses: $3.1 million in Q4, coverage ratio 1.28%, net charge-offs $1.1 million (7 basis points annualized).
• Noninterest expense: Increased $2.1 million (4.1%) in Q4, $5 million (2.5%) full year 2025.
• Share repurchases: Repurchased ~480,000 shares in Q4, 1.1 million in 2025, with $10-12 million per quarter target for 2026.

No specific product segment breakdown provided. Net income for Q4 2025 was $22.7 million or $0.79 per share, a 21.5% increase compared to Q4 2024. Loan outstandings grew by $129.3 million in Q4. Reported NIM was 3.10% in Q4, down 7 basis points from Q3, while core NIM was 3.37%, up 4 basis points. Loans grew by $129.3 million in Q4 (7.6% annualized) and $88.2 million for the full year 2025 (1.3% growth). Deposits decreased by $130.8 million in Q4, primarily due to public funds decrease, but grew by $328.1 million for the full year 2025 (4.9% growth). Provision for credit losses was $3.1 million in Q4, coverage ratio 1.28%, net charge-offs $1.1 million (7 basis points annualized). Noninterest expense increased $2.1 million (4.1%) in Q4 and $5 million (2.5%) for the full year 2025. Share repurchases: ~480,000 shares in Q4, 1.1 million for 2025, with $10-12 million target per quarter for 2026.

• 2026 loan growth: Approximately 2%-3%, modest NIM expansion, resulting in net interest income growth 4%-6% (assuming two 25 basis point rate decreases).
• Provision for credit losses: Range of $11 million-$13 million.
• Noninterest income: Growth of approximately 5%-7% off 2025 base of $85.7 million (excluding BOLI debt benefits).
• Noninterest expense: Growth of approximately 3%-5%.
• Effective tax rate: Range of 20%-21% based on current statutory rates.

Q: Near term seasonality for deposits in Q1, impact to excess cash, and plans to deploy excess cash?

A: Brian Richardson said public funds outflow expected $100 million-$150 million per quarter in Q1 and Q2, significant portion of excess liquidity to be deployed over that time.

Q: NIM trajectory over 2026, impact of one more rate cut?

A: Brian Richardson said compared to Q4, expected to be relatively in line to slightly up over full year, flat to slightly up through quarters in 2026, with core basis having volatility due to excess liquidity seasonality.

Q: Deposit competition, customer reaction, ability to keep lowering deposits?

A: Mike Keim said competition remains, in some regards increased slightly; successful in CD retention, working on mix including municipal deposits and operating accounts.

Q: Review of ag farmland portfolio, underwriting, credit performance?

A: Mike Keim said ag book is smaller family farms, diversified, conservative underwriting, diversified business underlining loans.

Q: Margin, incremental loan yields?

A: Brian Richardson said on commercial side, new loan rates saw compression in line with Fed action, 40-50 basis points down, but not true spread compression.

Q: Loan growth into 2026, payoff and prepayment activity?

A: Mike Keim said elevated prepayment activity in first 3 quarters of 2025 slowed in Q4, anticipating more Q4-like prepayment environment going forward, commercial book to grow, residential mortgage side to decline.

Q: Expense side, starting point for Q1?

A: Brian Richardson said variable comp in Q4 was an increase of roughly $1.3 million, expecting to be relatively down slightly from Q4 as a starting point.

Q: Buyback pace tied to balance sheet movements?

A: Brian Richardson said buyback activity tied to not meaningfully growing regulatory capital ratio, combination of earnings and balance sheet growth drive toggle of repurchase activity.

Q: Provision level for 2026 vs Q4?

A: Brian Richardson said provision guide for 2026 expected to be in range of $11 million-$13 million, with charge-offs expected to be more normalized in 12-13 basis point range coupled with growth.

Q: Deposit pipeline, commercial outreach initiatives?

A: Mike Keim said working with commercial lending team, small business initiative, title company, labor union, law firm initiatives, and municipal banking initiatives to improve deposit mix and operating accounts.