UNIVEST FINANCIAL Corp Q1 FY2025 earnings call

• Jeff noted a solid start in 2025 despite economic uncertainty; loan growth muted but solid production hit by larger payoffs. Deposits down due to seasonal public funds decline. Margin improved to 3.09%. Credit quality strong, non-performing assets to total assets 43 basis points (up 2 basis points), net charge-offs 10 basis points annualized. Dividend increased to $0.22 per share, repurchased 221,760 shares, plan to continue buybacks.
• Brian discussed NIM expansion (21 basis points to 3.09%), core NIM up 10 basis points. Provision for credit losses, coverage ratio, non-interest income changes, noninterest expense decrease.

Net income was $22.4 million or $0.77 per share. NIM increased to 3.09% from 2.88% in Q4 2024; core NIM (excluding excess liquidity) was 3.12%, up 10 basis points. Provision for credit losses was $2.3 million; coverage ratio was 1.28%. Net charge-offs totaled $1.7 million or 10 basis points annualized. Non-interest income decreased $3.2 million (12.4%) vs Q1 2024, excluding certain items it decreased $797k (3.6%); contingent income in insurance down $700k. Noninterest expense decreased $746k (1.5%) vs Q1 2024. Loan net growth was $6.5 million. Deposits decreased $100.8 million, predominantly due to seasonal public funds decline.

• Fee income guidance is 4%-6% for the year, holding steady with mortgage banking potentially impacting. Loan-to-deposit ratio target towards 95%-100%, process to ratchet down over time. Capital return: continue stock buybacks, decision based on earnings, loan growth, regulatory capital ratios.

• Uncertainty in economy with interest rates and geopolitical concerns. Commercial customers cautious due to tariffs, taxes, interest rates.

Q: Frank Schiraldi asked about fee income growth expectations, drivers, loan-to-deposit ratio, and capital return.

A: Brian Richardson responded that fee income guidance is 4%-6% for the year, holding steady with mortgage banking potentially impacting. On loan-to-deposit ratio, they target towards 95%-100% and will ratchet it down over time. Regarding capital return, they plan to continue stock buybacks with decisions based on earnings, loan growth, and regulatory capital ratios.