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UF

UNIVEST FINANCIAL Corp (UVSP)·Q4 2024 Earnings Summary

Executive Summary

  • UVSP delivered net income of $18.9M and diluted EPS of $0.65, up 18.2% YoY, with NIM (FTE) improving to 2.88% and core NIM excluding excess liquidity at 3.02% .
  • Noninterest income grew 14.6% YoY to $21.3M, driven by wealth management, mortgage banking, and service fees; efficiency ratio improved to 65.5% (vs 68.3% in Q4’23) .
  • Deposits fell $94.9M QoQ on seasonal public fund outflows and intentional brokered runoff, partially offset by $104.1M growth in commercial/consumer deposits; noninterest-bearing deposits rose to 20.9% of total .
  • Management initiated 2025 guidance: loan growth 3–5%, NII growth 5–7%, provision $12–14M, noninterest income +4–6%, noninterest expense +4–5%, ETR ~20–20.5%; buybacks remain an active capital deployment priority .
  • Potential stock catalysts: improving NIM trajectory, fee income momentum, active repurchases (139,492 shares in Q4 at ~$29.64), and stable credit metrics (NPA/TA down to 0.41%) .

What Went Well and What Went Wrong

What Went Well

  • Core NIM expansion: reported NIM rose 6 bps QoQ to 2.88%; core NIM excluding excess liquidity increased 11 bps to 3.02% (management: “continued NIM stabilization”) .
  • Fee-income strength: noninterest income +14.6% YoY; investment advisory +19.6%, mortgage banking +63.2%, service fees benefited from MSR valuation allowance reversal tied to slower prepayments .
  • Credit quality remained solid: NPA/TA declined 4 bps QoQ and 11 bps YoY to 0.41%; net charge-offs were minimal (0.05% annualized) .
  • CEO tone: “diversified business model continues to serve us well,” highlighting fee businesses growth and planned continued activity in buybacks .

What Went Wrong

  • Deposit decline QoQ: total deposits down $94.9M on seasonal public fund outflows ($185.6M) and brokered deposit reduction ($13.4M), partly offset by $104.1M growth in core deposits; management expects further seasonal outflows in Q1 .
  • Noninterest expense rose 3.3% YoY to $50.7M, mainly from higher incentive compensation amid improved profitability .
  • Excess liquidity tempered reported NIM by ~14 bps (vs ~9 bps in Q3), indicating some drag from elevated liquidity positioning .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Net Interest Income ($USD Millions)$52.760 $51.027 $53.204 $55.472
Total Noninterest Income ($USD Millions)$18.620 $20.980 $20.150 $21.330
Net Income ($USD Millions)$16.254 $18.107 $18.578 $18.941
Diluted EPS ($USD)$0.55 $0.62 $0.63 $0.65
Net Interest Margin (FTE, %)2.84% 2.84% 2.82% 2.88%
Efficiency Ratio (%)68.3% 67.1% 65.7% 65.5%
Return on Average Assets (%)0.82% 0.94% 0.92% 0.92%

Segment (Noninterest Income Mix – Q4 2024)

CategoryAmount ($USD Millions)
Investment Advisory Commission & Fees$5.457
Insurance Commission & Fees$4.743
Service Charges on Deposit Accounts$2.192
Trust Fee Income$2.265
Other Service Fee Income$3.473
Net Gain on Mortgage Banking Activities$1.320
BOLI Income$1.012
Other Income$0.868
Total Noninterest Income$21.330

KPIs and Balance Sheet

KPIQ4 2023Q2 2024Q3 2024Q4 2024
Gross Loans & Leases (Period End, $USD Millions)$6,567.214 $6,684.837 $6,730.734 $6,826.583
Total Deposits (Period End, $USD Millions)$6,375.781 $6,495.322 $6,854.148 $6,759.259
Cash & Equivalents (Period End, $USD Millions)$249.799 $190.911 $504.700 $328.844
Nonperforming Assets ($USD Millions)$40.093 $36.561 $36.623 $33.205
NPA / Total Assets (%)0.52% 0.47% 0.45% 0.41%
NPL / Loans (%)0.32% 0.25% 0.23% 0.19%
ACL / Loans (%)1.30% 1.28% 1.28% 1.28%
Net Charge-Offs ($USD Thousands)$1,074 $809 $820 $767
NCOs (Annualized) / Avg Loans (%)0.06% 0.05% 0.05% 0.05%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Loan GrowthFY 2025None provided ~3%–5% Initiated
Net Interest Income GrowthFY 2025None provided ~5%–7% (assumes 0–2 cuts of 25 bps; ALM neutral) Initiated
Provision for Credit LossesFY 2025None provided ~$12M–$14M Initiated
Noninterest Income GrowthFY 2025None provided ~4%–6% off $84.5M base (ex $3.4M MSR sale and $225k BOLI death benefit) Initiated
Noninterest Expense GrowthFY 2025None provided ~4%–5% Initiated
Effective Tax RateFY 2025None provided ~20%–20.5% Initiated
DividendQ1 2025Prior cadence $0.21/qtr Declared $0.21 payable Feb 19, 2025 Maintained
Share RepurchasesFY 2025Active, opportunistic Continue deploying excess capital; Q4 buyback 139,492 shares; 1,400,154 shares remaining Maintained/extended

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024 and Q3 2024)Current Period (Q4 2024)Trend
NIM stabilizationQ2/Q3: NIM near trough; signs of stabilization (2.84% in Q2, 2.82% in Q3) Reported NIM 2.88%; core NIM 3.02% excluding excess liquidity Improving
Deposit mix & seasonalityQ2: growth in commercial/consumer; Q3: surge in public funds; noninterest-bearing % dipped to 19.3% Q4 QoQ decline on public funds/brokered; core deposits +$104.1M; noninterest-bearing % up to 20.9%; expect Q1 seasonal outflows Mixed near-term; improving composition
Fee income momentumQ2: mortgage banking strength; advisory growth Advisory +19.6%; mortgage banking +63.2%; service fees benefited from MSR allowance reversal Positive
Credit qualityQ2/Q3: NPA ~0.47%/0.45%; low NCOs NPA/TA down to 0.41%; NCOs 0.05% annualized Stable/Improving
Capital returnsQ2/Q3: ongoing buybacks Q4 buybacks; plan to continue opportunistically without building regulatory capital Ongoing
Macro/tariffs/policyNot emphasized in press releasesCustomers optimistic heading into 2025; potential M&A appetite; limited direct international exposure Cautiously optimistic

Management Commentary

  • CEO: “Our diversified business model continues to serve us well as our noninterest income was up $2.7 million or 14.6%… credit quality continues to remain strong… plan on continuing to be active with stock buybacks” .
  • CFO: “Reported NIM of 2.88% increased 6 bps… core NIM… 3.02% increased 11 bps… loans grew $95.8 million… noninterest-bearing deposits represented 20.9% of total deposits” .
  • CFO on guidance: “For 2025, we expect loan growth of approximately 3% to 5% with modest NIM expansion resulting in net interest income growth of approximately 5% to 7%… provision… ~$12 to $14 million… noninterest income growth of ~4% to 6%… noninterest expense growth ~4% to 5%… ETR ~20%–20.5%” .

Q&A Highlights

  • Guidance drivers: Management framed ranges around current environment and strategic priorities; upside/downside from various macro/micro variables .
  • Macro and tariffs: Customer base “optimistic” for 2025; limited international exposure; possible pickup in M&A appetite .
  • Deposits: Q4 decline from ~$200M reduction in public funds/brokered; +$104M growth in core deposits; anticipate $50–$100M/month public funds seasonal outflow in Q1; trough typically end of Q2 .
  • Loan growth cadence: Historically stronger in Q2/Q4; guidance not heavily backloaded; growth to be managed alongside deposits to keep loan-to-deposit ratio in check .
  • NII sensitivity: ALM neutrality reduces impact of modest Fed cuts; steeper curve would be incremental upside beyond 5–7% NII guide .
  • Buybacks: Continue deploying excess capital; opportunistic when valuation dislocations occur; guardrail to avoid building regulatory capital .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 EPS and revenue were unavailable due to SPGI request limits; therefore, comparison to Street estimates cannot be provided at this time [functions.GetEstimates error].
  • Given unavailable consensus, investors should anchor on company-reported results and 2025 guidance ranges to recalibrate models .

Key Takeaways for Investors

  • NIM inflecting: reported 2.88% and core 3.02% suggests stabilization with potential 2025 expansion; a steeper curve could provide upside to NII guide .
  • Fee-income breadth adds resilience: advisory, mortgage banking, and service fees drove double-digit noninterest income growth, diversifying earnings drivers .
  • Deposit dynamics manageable: seasonal public fund outflows expected in Q1; stronger noninterest-bearing mix (20.9%) and core deposit growth support funding and margin trajectory .
  • Credit metrics solid: lower NPA/TA (0.41%) and muted NCOs (0.05%) underpin the provision outlook ($12–$14M) and capital flexibility .
  • 2025 playbook: target 3–5% loan growth, 5–7% NII growth, fee income +4–6%, opex +4–5%, ETR ~20–20.5%; model sensitivity limited to modest rate cuts given ALM neutrality .
  • Capital return: continued buybacks (802,535 shares in 2024; 1.4M authorization remaining) and quarterly dividend of $0.21 indicate balanced capital deployment .
  • Trading setup: near-term stock narrative likely driven by NIM/fee momentum and buyback cadence versus seasonal deposit headwinds; watch yield curve steepening as an upside catalyst .