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UNIVEST FINANCIAL Corp (UVSP)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 diluted EPS was $0.69, slightly above Wall Street consensus of $0.685; “revenue” (S&P Global definition) was $75.3M versus $79.35M consensus, a miss. Net interest margin (FTE) expanded 11 bps sequentially to 3.20% on improved asset yields and reduced funding costs . Values marked with an asterisk are retrieved from S&P Global estimates data.*
  • Asset quality was impacted by a single commercial relationship placed on nonaccrual due to suspected fraud; Univest recognized a $7.3M charge-off and ended with nonperforming assets of $50.6M (0.64% of assets) .
  • Deposits fell $75.8M q/q on seasonal public funds and brokered declines, but excluding those, core deposits increased $77.5M; noninterest-bearing deposits rose to 22.2% of total .
  • 2025 guidance updated: loan growth 1–3%, net interest income growth 10–12%, provision unchanged at $12–14M, noninterest income growth 1–3%, and expense growth reduced to 2–4% (down from 4–5% intra-quarter); management characterized the aggregate impact as accretive to EPS and PPNR .
  • Capital returns: declared a $0.22 quarterly dividend and repurchased 172,757 shares at $28.45 average during Q2; management intends to remain active on buybacks (earn-back still 2–3 years) .

What Went Well and What Went Wrong

What Went Well

  • Net interest income rose 16.7% y/y to $59.5M and 4.9% q/q, with NIM (FTE) up to 3.20% (core NIM 3.24% excluding excess liquidity) .
  • Noninterest income saw positive mix in service charges (+13.9% y/y), investment advisory fees (+4.2% y/y), and SBA gains (+$0.3M y/y) .
  • Strong capital/liquidity: cash and equivalents of $160.4M; committed borrowing capacity $3.6B ($2.3B available) plus $469.0M uncommitted lines; CET1 11.19%, leverage 9.94%, total risk-based capital 14.58% .

Management quotes:

  • “We expect core NIM to contract by a few basis points in the third quarter due to the repricing of our 2020 sub-debt issuance and the seasonal build of higher cost public funds. However, we expect NII to be relatively in line with the second quarter.”
  • “Production remains strong…we’re looking for prepayment activity to slow in the second half, which should lead to growth.”
  • “We will continue to be active on buybacks…the earn-back period…is still within a two to three-year range.”

What Went Wrong

  • “Revenue” missed consensus (actual $75.3M vs $79.35M*) as mortgage banking gains fell $0.73M y/y on lower salable volume, partially offset by fee growth in other lines . Values marked with an asterisk are retrieved from S&P Global estimates data.*
  • Credit hit from suspected fraud: $23.7M relationship to nonaccrual, $7.3M charge-off; NPA rose to $50.6M; provision increased to $5.7M (vs $2.3M in Q1) .
  • Headline deposits down $75.8M q/q (seasonal public funds, brokered), though underlying core flows were positive (+$77.5M) .

Financial Results

Income Statement Highlights (actuals)

MetricQ2 2024Q1 2025Q2 2025
Net Interest Income ($USD Millions)$51.03 $56.78 $59.54
Total Noninterest Income ($USD Millions)$20.98 $22.42 $21.50
Income Before Taxes ($USD Millions)$22.59 $27.56 $25.02
Net Income ($USD Millions)$18.11 $22.40 $19.98
Diluted EPS ($USD)$0.62 $0.77 $0.69
NIM (FTE, %)2.84% 3.09% 3.20%
Efficiency Ratio (%)67.1% 61.6% 61.6%

Consensus vs Actual (S&P Global definitions)

MetricQ2 2024 EstimateQ2 2024 ActualQ1 2025 EstimateQ1 2025 ActualQ2 2025 EstimateQ2 2025 Actual
Revenue ($USD Millions)72.30*71.30*77.70*76.89*79.35*75.35*
EPS ($USD)0.5067*0.61*0.6433*0.77*0.685*0.69*

Values marked with an asterisk are retrieved from S&P Global.

Asset Quality

MetricQ2 2024Q1 2025Q2 2025
Nonperforming Loans & Leases ($USD Millions)$16.41 $11.45 $28.03
Nonperforming Assets ($USD Millions)$36.56 $33.96 $50.59
Net Loan & Lease Charge-offs ($USD Millions)$0.81 $1.69 $7.81
Provision for Credit Losses ($USD Millions)$0.71 $2.31 $5.69
ACL / Loans (%)1.28% 1.28% 1.28%

Balance Sheet and Funding

MetricQ2 2024Q1 2025Q2 2025
Loans & Leases HFI ($USD Billions)$6.685 $6.833 $6.801
Total Deposits ($USD Billions)$6.495 $6.659 $6.583
Noninterest-Bearing Deposits ($USD Billions)$1.397 $1.434 $1.461
Noninterest-Bearing Deposits (% of total)21.5% 21.5% 22.2%
Unprotected Deposits ($USD Billions)—$1.5 $1.5
Cash & Cash Equivalents ($USD Millions)$190.9 $169.1 $160.4

Segment-like Breakdown: Noninterest Income Components

Component ($USD Millions)Q2 2024Q1 2025Q2 2025
Trust Fee Income$2.01 $2.16 $2.15
Service Charges$1.98 $2.19 $2.26
Investment Advisory Fees$5.24 $5.61 $5.46
Insurance Commissions$5.17 $6.89 $5.26
Other Service Fee Income$3.04 $2.71 $3.15
BOLI Income$1.09 $1.96 $1.01
Net Gain on Mortgage Banking$1.71 $0.65 $0.98
Other Income$0.75 $0.25 $1.24
Total Noninterest Income$20.98 $22.42 $21.50

KPIs and Capital

KPIQ2 2024Q1 2025Q2 2025
ROA (annualized)0.94% 1.14% 1.00%
ROE (annualized)8.62% 10.13% 8.82%
ROATCE (annualized)11.01% 12.69% 11.02%
CET1 Ratio10.72% 10.97% 11.19%
Tier 1 Leverage9.74% 9.80% 9.94%
Total Risk-Based Capital14.09% 14.35% 14.58%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Loan GrowthFY 2025n/a (not disclosed in sourced docs)~1%–3%Updated
Net Interest Income GrowthFY 2025 vs FY 2024n/a~10%–12%Updated; aggregate guidance accretive to EPS/PPNR
Provision for Credit LossesFY 2025$12M–$14M$12M–$14MMaintained
Noninterest Income Growth (ex 2024 MSR gain, BOLI)FY 2025n/a~1%–3% off $84.5M baseUpdated
Noninterest Expense GrowthFY 20254%–5% (intra-quarter commentary)2%–4%Lowered
Effective Tax RateFY 202520%–20.5%20%–20.5%Maintained
DividendQuarterly$0.21 (Q4 2024)$0.22Increased in Q1; maintained in Q2

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
NIM/ALMNIM 2.88% in Q4 2024, steady improvement q/q NIM 3.20%; core NIM 3.24%; slight pullback expected in Q3 on sub-debt repricing and seasonal public funds; then flat to slightly up in stable rates Improving, near-term dip then stable
Deposit CompetitionQ4: deposit mix shifts; Q1: deposits down on seasonal, brokered replaced FHLB Competitive consumer rates; campaigns to grow deposits; Q3 public funds peak seasonality Competitive intensity remains elevated
Loan Growth & PrepaymentsQ1: production strong, loans +$6.5M q/q, +$254M y/y; early payoffs prevalent Production strong YTD ($507M); payoffs/paydowns caused q/q contraction; expecting slowdown in prepayments H2 Growth constrained by prepayments; outlook for H2 better
Capital DeploymentQ4/Q1: ongoing buybacks; dividend raised to $0.22 in Q1 Continued buyback activity; earn-back 2–3 years; M&A not priority, more interest in nonbank tuck-ins Ongoing buybacks; opportunistic nonbank M&A
Asset QualityQ4/Q1: low net charge-offs ($0.77M; $1.69M) One-off fraud-related nonaccrual; $7.3M charge-off; NPA rose to 0.64% of assets Temporary spike from specific credit; coverage and ACL steady
Fee Income MixQ4: stronger mortgage banking gains; Q1: MSR sale impacts fees Mortgage banking down y/y; treasury mgmt, advisory, SBA gains offset Mix rebalances; mortgage weaker

Management Commentary

  • CEO: “Overall, year-to-date commercial loan production through June 30…was $507 million…however…early payoffs and paydowns [have] resulted in a contraction in loan outstandings year to date.”
  • CFO: “Core NIM of 3.24%…we expect core NIM to contract by a few basis points in the third quarter…However, we expect NII to be relatively in line with the second quarter.”
  • CFO: “For the full year, we expect loan growth of approximately 1% to 3%, and…net interest income growth of 10% to 12% compared to 2024…Provision…remains unchanged at $12 million to $14 million…noninterest income growth of approximately 1% to 3%…expenses…2% to 4%…aggregate impact…is accretive to both EPS and PPNR.”
  • CEO: “We will continue to be active on buybacks…earn-back…is still…within a two to three-year range.”
  • Credit update: “A $23.7 million commercial loan relationship was placed on nonaccrual…a $7.3 million charge-off was recognized…remaining $16.4 million carrying value is supported by…real estate collateral.”

Q&A Highlights

  • Guidance clarity: Loan growth 1–3%, NII up 10–12%, expense growth trimmed to 2–4% (from 4–5%), provision unchanged, tax rate unchanged .
  • Deposits: Competitive consumer pricing persists; targeted campaigns; public funds seasonality peaks in Q3 .
  • NIM trajectory: Slight Q3 pullback from sub-debt repricing and public funds, then flat to slightly up under stable rates; limited sensitivity to one or two Fed cuts due to ALM neutrality .
  • Capital deployment: Continued buybacks despite higher share price; nonbank M&A more likely than bank deals; opportunistic stance .
  • Loan yields and pipeline: New commercial loan yields relatively stable; pipeline solid; growth constrained by payoffs .

Estimates Context

  • Q2 2025: EPS $0.69 vs $0.685 consensus (beat); S&P “revenue” $75.35M vs $79.35M consensus (miss). EPS beat driven by NIM expansion and lower cost of funds; revenue miss aligns with softer mortgage banking gains despite fee growth elsewhere. Values retrieved from S&P Global.*
  • Sequential context: Q1 2025 EPS $0.77 vs $0.643 consensus (beat); “revenue” $76.89M vs $77.70M (slight miss). Values retrieved from S&P Global.*
  • Year-ago context: Q2 2024 EPS $0.61 vs $0.507 consensus (beat); “revenue” $71.30M vs $72.30M (miss). Values retrieved from S&P Global.*
  • Implications: Street models should reflect stronger NII run-rate and NIM improvements, offset by higher provision from the specific credit event and mixed mortgage banking trends; 2025 expense growth trimmed to 2–4% supports PPNR/EPS trajectory .

Key Takeaways for Investors

  • Core banking momentum: Net interest income and NIM are trending positively; management guides NII up 10–12% for 2025, even with a seasonal Q3 NIM dip .
  • One-off credit event: Elevated Q2 charge-offs tied to suspected fraud; ACL coverage remains steady (1.28% of loans). Monitor remediation and recoveries against collateral .
  • Deposit quality improving: Underlying core deposit growth (+$77.5M) and higher NIB mix (22.2%) should support funding costs into H2 .
  • Operating leverage: Expense growth trimmed to 2–4% for 2025, aiding PPNR and EPS; efficiency ratio steady at ~61.6% .
  • Capital return: $0.22 dividend and continued buybacks with 2–3 year earn-back; CET1 11.19% and total RBC 14.58% provide flexibility .
  • Near-term watch items: Q3 NIM pullback from sub-debt repricing and public funds seasonality; mortgage banking activity; trajectory of prepayments/paydowns .
  • Medium-term thesis: Fee diversification (treasury management, advisory, SBA), stable loan yields, and disciplined expenses underpin earnings durability; Street may need to raise NII assumptions while keeping provision elevated for event-driven risks .

Values marked with an asterisk in the estimates section are retrieved from S&P Global.