Univest Financial Corporation

04/28/2026 | Press release | Distributed by Public on 04/28/2026 12:23

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
(All dollar amounts presented in tables are in thousands, except per share data. "BP" equates to "basis points"; "NM" equates to "not meaningful"; "-" equates to "zero" or "doesn't round to a reportable number"; and "N/A" equates to "not applicable." Certain prior period amounts have been reclassified to conform to the current-year presentation.)
Forward-Looking Statements
This report may contain forward-looking statements. When used or incorporated by reference in disclosure documents, the words "may," "will," "could," "should," "would," "believe," "anticipate," "plan," "estimate," "expect," "project," "target," and "goal," the negative of these terms and other similar expressions are intended to identify forward-looking statements, but are not the exclusive way to identify such statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may include but are not limited to: statements of goals, intentions and expectations; statements regarding business plans, prospects, growth and operating strategies; statements regarding the quality, growth and composition of loan, investment and deposit portfolios; statements regarding our financial performance, financial condition and liquidity; and estimates of our risks and future credit provision and noninterest expenses. These forward-looking statements are based on our current beliefs and expectations and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to certain risks, uncertainties and assumptions with respect to future business strategies and decisions that are subject to change, including but not limited to those set forth below:
•Operating, legal and regulatory risks;
•Economic, political and competitive forces;
•General economic conditions, either nationally or in our market areas, that are worse than expected, included as a result of employment levels and labor shortages, and the effect of a potential recession or slowed economic growth caused by supply chain disruptions or otherwise;
•Legislative, regulatory and accounting changes, including increased assessments by the Federal Deposit Insurance Corporation and changes in income tax laws and regulations;
•Monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;
•Demand for our financial products and services in our market area;
•Major catastrophes such as earthquakes, floods or other natural or human disasters and infectious disease outbreaks, the related disruption to local, regional and global economic activity and financial markets, and the impact that any of the foregoing may have on us and our customers and other constituencies;
•Inflation or volatility in interest rates that reduce our margins and yields, the fair value of financial instruments or our level of loan originations or prepayments on loans we have made and make or the sale of loans or other assets and/or lead to higher operating costs and higher costs to retain or attract deposits;
•The imposition of tariffs or other domestic or international governmental policies and any retaliatory responses;
•The impact of a potential federal government shutdown;
•Fluctuations in real estate values in our market area;
•A failure to maintain adequate levels of capital and liquidity to support our operations;
•The availability of capital;
•The composition and credit quality of our loan and investment portfolios;
•Changes in the level and direction of loan delinquencies, classified and criticized loans and charge-offs and changes in estimates of the adequacy of the allowance for credit losses;
•Changes in the economic assumptions or methodology utilized to calculate the allowance for credit losses;
•Our ability to access cost-effective funding;
•Changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio;
•Our ability to implement our business strategies;
•Our ability to manage market risk, credit risk, interest rate risk and operational risk and the effectiveness of our risk management processes and procedures;
•Timing and amount of revenue and expenditures;
•Adverse changes in the securities markets;
•The impact of any military conflict, terrorist act or other geopolitical acts;
•Our ability to enter new markets successfully and capitalize on growth opportunities;
•Competition for loans, deposits and employees;
•System failures or cyber-security breaches of our information technology infrastructure and those of our third-party service providers;
•The failure to maintain current technologies and/or to successfully implement future information technology enhancements;
•Changes in investor sentiment or consumer spending, borrowing or savings behavior;
•Our ability to attract and retain key employees;
•Other risks and uncertainties, including those occurring in the U.S. and international financial systems; and
•The risk that our analysis of these risks and forces could be incorrect and/or that the strategies developed to address them could be unsuccessful.
Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, expected or projected. These and other risk factors are more fully described in this report and in the Univest Financial Corporation Annual Report on Form 10-K for the year ended December 31, 2025 under the section entitled "Item 1A - Risk Factors," and from time to time in other filings made by the Corporation with the SEC.
These forward-looking statements speak only as of the date of the report. The Corporation expressly disclaims any obligation to publicly release any updates or revisions to reflect any change in the Corporation's expectations with regard to any change in events, conditions or circumstances on which any such statement is based, unless otherwise required by law.
Critical Accounting Policies
In order to prepare the Corporation's financial statements in conformity with U.S. generally accepted accounting principles, management is required to make estimates and assumptions that affect the amounts reported in the Corporation's financial statements. There are uncertainties inherent in making these estimates and assumptions. Certain critical accounting policies could materially affect the results of operations and financial condition of the Corporation should changes in circumstances require a change in related estimates or assumptions. The Corporation has identified the fair value measurement of investment securities available-for-sale and the calculation of the allowance for credit losses on loans and leases as critical accounting policies. For more information on these critical accounting policies, please refer to the Corporation's 2025 Annual Report on Form 10-K.
General
The Corporation is a Pennsylvania corporation, organized in 1973, and registered as a bank holding company pursuant to the Bank Holding Company Act of 1956. The Corporation owns all of the capital stock of Univest Bank and Trust Co. and is the sole member of 1876 Double Eagle, LLC. The condensed consolidated financial statements include the accounts of the Corporation and its wholly owned subsidiaries, the Bank and 1876 Double Eagle, LLC.
The Bank is engaged in domestic banking services for individuals, businesses, municipalities and non-profit organizations. Through its wholly-owned subsidiaries, the Bank provides a variety of financial services throughout its markets of operation. The Bank is the parent company of Girard Investment Services, LLC, a full-service registered introducing broker-dealer and a licensed insurance agency, Girard Advisory Services, LLC, a registered investment advisory firm, and Girard Pension Services, LLC, a registered investment advisor, which provides investment consulting and management services to municipal entities. The Bank is also the parent company of Univest Insurance, LLC, an independent insurance agency, and Univest Capital, Inc., an equipment financing business.
The Corporation earns revenues primarily from the margins and fees generated from lending and depository services as well as fee-based income from trust, insurance, mortgage banking, treasury management and investment services. The Corporation seeks to achieve adequate and reliable earnings through business growth while maintaining adequate levels of capital and liquidity and limiting exposure to credit and interest rate risk.
Executive Overview
The Corporation's consolidated net income, earnings per share and return on average assets and average equity were as follows:
Three Months Ended
March 31, Change
(Dollars in thousands, except per share data) 2026 2025 Amount Percent
Net income $ 27,092 $ 22,395 $ 4,697 21.0 %
Net income per share:
Basic $ 0.97 $ 0.77 $ 0.20 26.0
Diluted 0.96 0.77 0.19 24.7
Return on average assets 1.33 % 1.14 % 19 BP 16.7
Return on average equity 11.57 % 10.13 % 144 BP 14.2
The financial results for the three months ended March 31, 2026 included tax-free bank owned life insurance (BOLI) death benefit proceeds of $372 thousand, which represented $0.01 diluted earnings per share. In addition, the financial results for the quarter included a $427 thousand restructuring charge ($337 thousand after-tax), or $0.01 diluted earnings per share, related to the planned closure of two underutilized facilities: a financial center and a limited purpose banking office. The financial results for the three months ended March 31, 2025 included tax-free BOLI death benefit proceeds of $1.0 million, which represented $0.04 diluted earnings per share.
Results of Operations
Net Interest Income
Net interest income is the difference between interest earned primarily on loans, leases and investment securities and interest paid on deposits, borrowings, long-term debt and subordinated notes. Net interest income is the principal source of the Corporation's revenue. Table 1 presents the Corporation's average balances, tax-equivalent interest income, interest expense, tax-equivalent yields earned on average assets, cost of average liabilities, and shareholders' equity on a tax-equivalent basis for the three months ended March 31, 2026 and 2025. The tax-equivalent net interest margin is tax-equivalent net interest income as a percentage of average interest-earning assets. The tax-equivalent net interest spread represents the weighted average tax-equivalent yield on interest-earning assets less the weighted average cost of interest-bearing liabilities. The effect of net interest-free funding sources represents the effect on the net interest margin of net funding provided by noninterest-earning assets, noninterest-bearing liabilities and shareholders' equity. Table 2 analyzes the changes in the tax-equivalent net interest income for the periods broken down by their rate and volume components.
Three months ended March 31, 2026 versus 2025
Net interest income on a tax-equivalent basis for the three months ended March 31, 2026 was $63.8 million, an increase of $6.7 million, or 11.7%, compared to $57.2 million for the three months ended March 31, 2025. The increase in tax-equivalent net interest income for the three months ended March 31, 2026 compared to the comparable period in the prior year was driven by higher average balances of loans and cash and cash equivalents, as well as a reduction in our cost of funds offset by higher average balances of interest-bearing liabilities.
The net interest margin, on a tax-equivalent basis, was 3.33% for the three months ended March 31, 2026, compared to 3.09% for the three months ended March 31, 2025. Excess liquidity reduced net interest margin by approximately 11 basis points for the three months ended March 31, 2026, and approximately three basis points for the three months ended March 31, 2025.
Table 1-Average Balances and Interest Rates-Tax-Equivalent Basis
Three Months Ended March 31,
2026 2025
(Dollars in thousands) Average
Balance 		Income/
Expense 		Average
Rate 		Average
Balance 		Income/
Expense 		Average
Rate
Assets:
Interest-earning deposits with other banks $ 306,797 $ 2,810 3.71 % $ 119,997 $ 1,360 4.60 %
Obligations of states and political subdivisions* - - - 879 4 1.85
Other debt and equity securities 499,078 4,053 3.29 499,199 4,019 3.27
Federal Home Loan Bank, Federal Reserve Bank and other stock 37,286 704 7.66 37,561 687 7.42
Total interest-earning deposits, investments and other interest-earning assets 843,161 7,567 3.64 657,636 6,070 3.74
Commercial, financial and agricultural loans 959,673 15,331 6.48 990,860 17,020 6.97
Real estate-commercial and construction loans 3,861,156 55,796 5.86 3,704,232 52,676 5.77
Real estate-residential loans 1,710,239 21,526 5.10 1,729,146 21,542 5.05
Loans to individuals 12,396 273 8.93 19,438 393 8.20
Tax-exempt loans and leases 223,166 3,116 5.66 230,133 2,861 5.04
Lease financings 172,970 3,212 7.53 182,694 3,240 7.19
Gross loans and leases 6,939,600 99,254 5.80 6,856,503 97,732 5.78
Total interest-earning assets 7,782,761 106,821 5.57 7,514,139 103,802 5.60
Cash and due from banks 57,980 56,690
Allowance for credit losses, loans and leases (88,832) (87,822)
Premises and equipment, net 45,359 46,852
Operating lease right-of-use assets 25,414 27,761
Other assets 428,084 423,423
Total assets $ 8,250,766 $ 7,981,043
Liabilities:
Interest-bearing checking deposits $ 1,280,570 $ 7,722 2.45 % $ 1,222,012 $ 7,075 2.35 %
Money market savings 2,045,306 16,918 3.35 1,840,194 18,035 3.97
Regular savings 765,296 1,372 0.73 702,543 763 0.44
Time deposits 1,389,144 13,130 3.83 1,476,495 16,106 4.42
Total time and interest-bearing deposits 5,480,316 39,142 2.90 5,241,244 41,979 3.25
Short-term borrowings 25,578 3 0.05 6,909 14 0.82
Long-term debt 201,389 2,093 4.21 217,500 2,361 4.40
Subordinated notes 98,897 1,748 7.17 149,319 2,281 6.20
Total borrowings 325,864 3,844 4.78 373,728 4,656 5.05
Total interest-bearing liabilities 5,806,180 42,986 3.00 5,614,972 46,635 3.37
Noninterest-bearing deposits 1,411,612 1,376,409
Operating lease liabilities 28,116 30,675
Accrued expenses and other liabilities 55,349 62,176
Total liabilities 7,301,257 7,084,232
Total interest-bearing liabilities and noninterest-bearing deposits ("Cost of Funds") 7,217,792 2.42 6,991,381 2.71
Shareholders' Equity:
Common stock 157,784 157,784
Additional paid-in capital 303,413 302,653
Retained earnings and other equity 488,312 436,374
Total shareholders' equity 949,509 896,811
Total liabilities and shareholders' equity $ 8,250,766 $ 7,981,043
Net interest income $ 63,835 $ 57,167
Net interest spread 2.57 2.23
Effect of net interest-free funding sources 0.76 0.86
Net interest margin 3.33 % 3.09 %
Ratio of average interest-earning assets to average interest-bearing liabilities 134.04 % 133.82 %
*Obligations of states and political subdivisions are tax-exempt earning assets.
Notes: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
Net interest income includes net deferred costs amortization of $793 thousand and $554 thousand for the three months ended March 31, 2026 and 2025, respectively.
Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included in the average loan balances. Tax-equivalent amounts for the three months ended March 31, 2026 and 2025 have been calculated using the Corporation's federal applicable rate of 21%.
Table 2-Analysis of Changes in Net Interest Income
The rate-volume variance analysis set forth in the table below compares changes in tax-equivalent net interest income for the periods indicated by their rate and volume components. The change in interest income/expense due to both volume and rate has been allocated proportionately.
Three Months Ended
March 31, 2026 Versus 2025
(Dollars in thousands) Volume
Change 		Rate
Change 		Total
Interest income:
Interest-earning deposits with other banks $ 1,758 $ (308) $ 1,450
Obligations of states and political subdivisions (4) - (4)
Other debt and equity securities (1) 35 34
Federal Home Loan Bank, Federal Reserve Bank and other stock (5) 22 17
Interest on deposits, investments and other earning assets 1,748 (251) 1,497
Commercial, financial and agricultural loans (522) (1,167) (1,689)
Real estate-commercial and construction loans 2,281 839 3,120
Real estate-residential loans (232) 216 (16)
Loans to individuals (152) 32 (120)
Tax-exempt loans and leases (89) 344 255
Lease financings (177) 149 (28)
Interest and fees on loans and leases 1,109 413 1,522
Total interest income 2,857 162 3,019
Interest expense:
Interest-bearing checking deposits 343 304 647
Money market savings 1,878 (2,995) (1,117)
Regular savings 73 536 609
Time deposits (914) (2,062) (2,976)
Total time and interest-bearing deposits 1,380 (4,217) (2,837)
Short-term borrowings 11 (22) (11)
Long-term debt (169) (99) (268)
Subordinated notes (852) 319 (533)
Interest on borrowings (1,010) 198 (812)
Total interest expense 370 (4,019) (3,649)
Net interest income $ 2,487 $ 4,181 $ 6,668
Provision for Credit Losses
The provision for credit losses for the three months ended March 31, 2026 and 2025 was $1.3 million and $2.3 million, respectively. The following table details information pertaining to the Corporation's allowance for credit losses on loans and leases as a percentage of loans and leases held for investment at the dates indicated.
(Dollars in thousands) March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025
Allowance for credit losses, loans and leases $ 88,900 $ 88,165 $ 86,527 $ 86,989 $ 87,790
Loans and leases held for investment 6,940,212 6,914,804 6,785,482 6,801,185 6,833,037
Allowance for credit losses, loans and leases / loans and leases held for investment 1.28 % 1.28 % 1.28 % 1.28 % 1.28 %
Noninterest Income
The following table presents noninterest income for the three months ended March 31, 2026 and 2025:
Three Months Ended
March 31, Change
(Dollars in thousands) 2026 2025 Amount Percent
Trust fee income $ 2,236 $ 2,161 $ 75 3.5 %
Service charges on deposit accounts 2,279 2,194 85 3.9
Investment advisory commission and fee income 6,154 5,613 541 9.6
Insurance commission and fee income 7,423 6,889 534 7.8
Other service fee income 3,041 2,707 334 12.3
Bank owned life insurance income 1,332 1,959 (627) (32.0)
Net gain on mortgage banking activities 791 647 144 22.3
Other income 832 245 587 239.6
Total noninterest income $ 24,088 $ 22,415 $ 1,673 7.5 %
Three months ended March 31, 2026 versus 2025
Noninterest income for the three months ended March 31, 2026 was $24.1 million, an increase of $1.7 million, or 7.5%, from the three months ended March 31, 2025.
Other income increased $587 thousand, or 239.6%, for the three months ended March 31, 2026 from the comparable period in the prior year. Fees on risk participation agreements for interest rate swaps increased $219 thousand due to increased demand. Additionally, income on other real estate owned for the three months ended March 31, 2025 included a one-time expense of $254 thousand related to building repairs.
Investment advisory commission and fee income increased $541 thousand, or 9.6%, for the three months ended March 31, 2026 from the comparable period in the prior year, driven by appreciation in assets under management and new customer relationships.
Insurance commission and fee income increased $534 thousand, or 7.8%, for the three months ended March 31, 2026 from the comparable period in the prior year, primarily due to an increase of $342 thousand in premiums on commercial lines. Additionally, contingent income increased $194 thousand for the quarter, from $1.6 million for the three months ended March 31, 2025 to $1.8 million for the three months ended March 31, 2026. Contingent income is largely recognized in the first quarter of each year.
Other service fee income increased $334 thousand, or 12.3%, for the three months ended March 31, 2026 from the comparable period in the prior year. This was driven by a $284 thousand decrease in the valuation allowance on servicing rights in the first quarter of 2026 compared to a $19 thousand increase in the first quarter of 2025.
Net gain on mortgage banking activities increased $144 thousand, or 22.3%, for the three months ended March 31, 2026 from the comparable period in the prior year, primarily due to increased salable volume.
Bank owned life insurance income ("BOLI") decreased $627 thousand, or 32.0%, for the three months ended March 31, 2026 from the comparable period in the prior year. The financial results for the three months ended March 31, 2026 included $372 thousand in BOLI death benefit proceeds compared to $1.0 million for the three months ended March 31, 2025.
Noninterest Expense
The following table presents noninterest expense for the three months ended March 31, 2026 and 2025:
Three Months Ended
March 31, Change
(Dollars in thousands) 2026 2025 Amount Percent
Salaries, benefits and commissions $ 33,459 $ 30,826 $ 2,633 8.5 %
Net occupancy 2,998 2,853 145 5.1
Equipment 1,079 1,122 (43) (3.8)
Data processing 4,480 4,364 116 2.7
Professional fees 1,677 1,797 (120) (6.7)
Marketing and advertising 634 353 281 79.6
Deposit insurance premiums 1,170 1,151 19 1.7
Intangible expenses 93 130 (37) (28.5)
Restructuring charges 427 - 427 N/M
Other expense 6,652 6,732 (80) (1.2)
Total noninterest expense $ 52,669 $ 49,328 $ 3,341 6.8 %
Three months ended March 31, 2026 versus 2025
Noninterest expense for the three months ended March 31, 2026 was $52.7 million, an increase of $3.3 million, or 6.8%, from the three months ended March 31, 2025.
Salaries, benefits and commissions increased $2.6 million, or 8.5%, for the three months ended March 31, 2026 from the comparable period in the prior year, primarily driven by higher salary expense of $1.3 million. Additionally, medical claims expense increased by $753 thousand, or 48.8%. The Corporation maintains a self-insured medical plan and is responsible for claim costs up to the stop loss limit. This results in expense volatility based on the timing and magnitude of claims.
Restructuring charges increased $427 thousand for the three months ended March 31, 2026 from the comparable period in the prior year related to the planned closure of two underutilized facilities: a financial center and a limited purpose banking office.
Marketing and advertising expense increased $281 thousand, or 79.6%, for the three months ended March 31, 2026 from the comparable period in the prior year. This increase was partially driven by the inclusion of certain sponsorship activities that were historically reported in Other Expense and the Corporation's entry into a sponsorship agreement with a local university, enhancing community engagement and visibility.
Professional fees decreased $120 thousand, or 6.7%, for the three months ended March 31, 2026 from the comparable period in the prior year, primarily due to reduced consultant fees.
Tax Provision
The Corporation recognized a tax expense of $6.4 million and $5.2 million for the three months ended March 31, 2026 and 2025, respectively, resulting in effective rates of 19.1% and 18.7% for the respective periods. The discrete tax effect of vested equity compensation awards favorably impacted the first quarters of 2026 and 2025 by 132 and 71 basis points, respectively. Additionally, the effective tax rates for the three months ended March 31, 2026 and 2025 were favorably impacted by 21 and 73 basis points, respectively, from the proceeds of BOLI death benefit proceeds. Excluding the discrete impact of vested equity compensation awards and BOLI death benefit proceeds, the effective tax rate was 20.6% for the three months ended March 31, 2026 compared to 20.2% for the three months ended March 31, 2025.
Financial Condition
Assets
The following table presents assets at the dates indicated:
At March 31, 2026 At December 31, 2025 Change
(Dollars in thousands) Amount Percent
Cash, interest-earning deposits and federal funds sold $ 222,357 $ 553,712 $ (331,355) (59.8) %
Investment securities 501,416 496,289 5,127 1.0
Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost 35,511 37,808 (2,297) (6.1)
Loans held for sale 14,371 15,288 (917) (6.0)
Loans and leases held for investment 6,940,212 6,914,804 25,408 0.4
Allowance for credit losses, loans and leases (88,900) (88,165) (735) 0.8
Premises and equipment, net 44,774 45,554 (780) (1.7)
Operating lease right-of-use assets 25,032 25,795 (763) (3.0)
Goodwill and other intangibles, net 183,093 182,838 255 0.1
Bank owned life insurance 142,141 140,001 2,140 1.5
Accrued interest receivable and other assets 121,575 112,973 8,602 7.6
Total assets $ 8,141,582 $ 8,436,897 $ (295,315) (3.5) %
Cash and Interest-Earning Deposits
Cash and interest-earning deposits decreased $331.4 million, or 59.8%, from December 31, 2025, primarily due to a decrease in interest-earning deposits at the Federal Reserve Bank of $332.1 million due to seasonal decreases in public funds, reflecting decreases in deposits and long-term debt.
Investment Securities
Total investment securities at March 31, 2026 increased $5.1 million, or 1.0%, from December 31, 2025 as purchases of $29.5 million, which were primarily residential mortgage-backed securities, were offset by maturities and pay-downs of $20.1 million, sales of $2.3 million, decreases in the fair value of available-for-sale investment securities of $1.2 million, calls of $500 thousand, net amortization of purchased premiums and discounts of $216 thousand and a provision for credit losses of $19 thousand.
Loans and Leases
Gross loans and leases held for investment increased $25.4 million, or 0.4%, from December 31, 2025. The increase in gross loans and leases held for investment was primarily due to increases in commercial and commercial real estate loans, partially offset by decreases in construction and residential mortgage loans. For more information on the composition of the commercial loan portfolio, see "Table 4 - Loan Portfolio Overview."
Asset Quality
The Bank's strategy for credit risk management focuses on having well-defined credit policies and uniform underwriting criteria and providing prompt attention to potential problem loans and leases. Performance of the loan and lease portfolio is monitored on a regular basis by Bank management and lending officers.
Nonaccrual loans and leases are loans or leases for which it is probable that not all principal and interest payments due will be collectible in accordance with the original contractual terms. Factors considered by management in determining accrual status include payment status, borrower cash flows, collateral value and the probability of collecting scheduled principal and interest payments when due.
At March 31, 2026, nonaccrual loans and leases were $13.3 million and had a related allowance for credit losses on loans and leases of $3.1 million. At December 31, 2025, nonaccrual loans and leases were $13.7 million and had a related allowance for credit losses on loans and leases of $3.0 million. During the first quarter of 2026, a $3.9 million commercial real estate loan
and a $1.0 million residential real estate loan secured for business purpose million were placed on nonaccrual status. Subsequent to their nonaccrual designation, these loans incurred charge-offs totaling $652 thousand and were transferred to held-for-sale status. Individual reserves have been established based on current facts and management's judgments about the ultimate outcome of these credits, including the most recent known data available on any related underlying collateral and the borrower's cash flows. The amount of individual reserve needed for these credits could change in future periods subject to changes in facts and judgments related to these credits.
Net loan and lease charge-offs for the three months ended March 31, 2026 were $1.3 million compared to $1.7 million for the same period in the prior year.
Other real estate owned (OREO) was $24.1 million at March 31, 2026, compared to $23.9 million at December 31, 2025. Repossessed assets were $124 thousand and $65 thousand at March 31, 2026 and December 31, 2025, respectively. During the three months ended March 31, 2026, repossessed assets totaling $78 thousand were acquired and repossessed assets totaling $19 thousand were written down.
Table 3-Nonaccrual and Past Due Loans and Leases; Other Real Estate Owned; Repossessed Assets; and Related Ratios
The following table details information pertaining to the Corporation's nonperforming assets at the dates indicated.
(Dollars in thousands) At March 31, 2026 At December 31, 2025
Nonaccrual loans and leases held for investment $ 13,289 $ 13,743
Accruing loans and leases, 90 days or more past due 3,750 89
Total nonperforming loans and leases $ 17,039 $ 13,832
Other real estate owned 24,073 23,926
Repossessed assets 124 65
Total nonperforming assets $ 41,236 $ 37,823
Loans and leases held for investment $ 6,940,212 $ 6,914,804
Allowance for credit losses, loans and leases 88,900 88,165
Nonaccrual loans and leases with partial charge-offs 1,532 1,532
Reserves on individually analyzed loans 3,135 3,022
Allowance for credit losses, loans and leases / loans and leases held for investment 1.28 % 1.28 %
Nonaccrual loans and leases / loans and leases (held for investment) 0.19 % 0.20 %
Allowance for credit losses, loans and leases / nonaccrual loans and leases 668.97 % 641.53 %
Table 4-Loan Portfolio Overview
The following table provides summarized detail related to outstanding commercial loan balances segmented by industry description as of March 31, 2026:
(Dollars in thousands) At March 31, 2026
Industry Description Total Outstanding Balance % of Commercial Loan Portfolio
Animal Production $ 432,795 7.8 %
CRE - Retail 428,107 7.7
CRE - Multi-family 389,616 7.0
CRE - 1-4 Family Residential Investment 276,464 5.0
Hotels & Motels (Accommodation) 268,311 4.8
CRE - Office 255,519 4.6
CRE - Industrial / Warehouse 221,472 4.0
Specialty Trade Contractors 212,762 3.8
Nursing and Residential Care Facilities 163,252 2.9
Homebuilding (tract developers, remodelers) 149,383 2.7
Crop Production 136,365 2.5
Merchant Wholesalers, Durable Goods 132,459 2.4
Repair and Maintenance 128,533 2.3
CRE - Mixed-Use - Commercial 120,441 2.2
Motor Vehicle and Parts Dealers 119,414 2.2
CRE - Mixed-Use - Residential 109,227 2.0
Nondepository Credit Intermediation and Related Activities (except 5221) 104,189 1.9
Wood Product Manufacturing 103,621 1.9
Administrative and Support Services 97,371 1.8
Food Services and Drinking Places 90,711 1.6
Professional, Scientific, and Technical Services 90,018 1.6
Education 82,622 1.5
Merchant Wholesalers, Nondurable Goods 81,088 1.5
Fabricated Metal Product Manufacturing 78,283 1.4
Amusement, Gambling, and Recreation Industries 75,792 1.4
Personal and Laundry Services 64,254 1.2
Food Manufacturing 63,358 1.1
Miniwarehouse / Self-Storage 63,051 1.1
Religious Organizations, Advocacy Groups 62,815 1.1
Private Equity & Special Purpose Entities (except 52592) 56,916 1.0
Machinery Manufacturing 56,210 1.0
Industries with >$50 million in outstandings $ 4,714,419 84.9 %
Industries with <$50 million in outstandings $ 837,309 15.1 %
Total Commercial Loans $ 5,551,728 100.0 %
Consumer Loans and Lease Financings Total Outstanding Balance
Real Estate-Residential Secured for Personal Purpose $ 942,054
Real Estate-Home Equity Secured for Personal Purpose 201,244
Loans to Individuals 12,319
Lease Financings 232,867
Total Consumer Loans and Lease Financings $ 1,388,484
Total $ 6,940,212
Goodwill and Other Intangible Assets
Goodwill and other intangible assets have been recorded on the books of the Corporation in connection with acquisitions. The Corporation has core deposit and customer-related intangibles, which are not deemed to have an indefinite life and therefore will continue to be amortized over their useful life using the present value of projected cash flows. The amortization of core deposit and customer-related intangibles was $93 thousand and $130 thousand for the three months ended March 31, 2026 and 2025, respectively. See Note 5 to the Condensed Unaudited Consolidated Financial Statements, "Goodwill and Other Intangible Assets," for a summary of intangible assets at March 31, 2026 and December 31, 2025.
The Corporation also has goodwill with a net carrying value of $175.5 million at March 31, 2026 and December 31, 2025, which is deemed to be an indefinite intangible asset and is not amortized. The Corporation completes a goodwill impairment analysis on an annual basis, or more often if events and circumstances indicate that there may be impairment. The Corporation also completes an impairment test for other identifiable intangible assets on an annual basis or more often if events and circumstances indicate there may be impairment. There was no impairment of goodwill or identifiable intangibles during the three months ended March 31, 2026 or 2025. There can be no assurance that future impairment assessments or tests will not result in a charge to earnings.
Liabilities
The following table presents liabilities at the dates indicated:
(Dollars in thousands) At March 31, 2026 At December 31, 2025 Change
Amount Percent
Deposits $ 6,813,763 $ 7,087,313 $ (273,550) (3.9 %)
Short-term borrowings 26,156 24,411 1,745 7.1
Long-term debt 175,000 200,000 (25,000) (12.5)
Subordinated notes 98,908 98,867 41 -
Operating lease liabilities 27,699 28,531 (832) (2.9)
Accrued interest payable and other liabilities 48,106 54,457 (6,351) (11.7)
Total liabilities $ 7,189,632 $ 7,493,579 $ (303,947) (4.1 %)
Deposits
Total deposits decreased $273.6 million, or 3.9%, from December 31, 2025 due to decreases in commercial, consumer, brokered deposits, and public funds, primarily reflecting seasonal public funds runoff during the quarter. At March 31, 2026, noninterest bearing deposits totaling $1.5 billion represented 21.7% of total deposits compared to $1.4 billion representing 20.2% of total deposits at December 31, 2025. At March 31, 2026 and December 31, 2025, unprotected deposits, which excludes insured, internal, and collateralized deposit accounts, totaled $1.6 billion, which represented 23.7% and 23.2% of total deposits for the respective periods.
Borrowings
Total borrowings decreased $23.2 million, or 7.2%, from December 31, 2025, primarily due to maturities of long-term FHLB advances totaling $50.0 million, offset by a $25.0 million long-term FHLB advance, partially offset by a $1.7 million increase in customer repurchase agreements.
Other Liabilities
Other liabilities decreased $6.4 million, or 11.7%, from December 31, 2025, primarily due to the payment of previously accrued annual incentive compensation.
Shareholders' Equity
The following table presents total shareholders' equity at the dates indicated:
(Dollars in thousands) At March 31, 2026 At December 31, 2025 Change
Amount Percent
Common stock $ 157,784 $ 157,784 $ - - %
Additional paid-in capital 301,154 304,021 (2,867) (0.9)
Retained earnings 611,771 591,202 20,569 3.5
Accumulated other comprehensive loss (25,951) (25,467) (484) 1.9
Treasury stock (92,808) (84,222) (8,586) 10.2
Total shareholders' equity $ 951,950 $ 943,318 $ 8,632 0.9 %
Total shareholders' equity increased $8.6 million, or 0.9%, from December 31, 2025. Retained earnings at March 31, 2026 increased by $20.6 million primarily due to net income of $27.1 million offset by $6.2 million in cash dividends paid during the
three months ended March 31, 2026. Accumulated other comprehensive loss increased by $484 thousand, which was primarily attributable to decreases in the fair value of available-for-sale investment securities of $1.2 million, net of tax. Treasury stock increased $8.6 million from December 31, 2025, related to repurchases of 351,138 shares at a cost of $11.9 million, offset by $3.3 million of stock issued under the dividend reinvestment and employee stock purchase plans and stock-based incentive plan activity.
Discussion of Segments
The Corporation has three operating segments: Banking, Wealth Management and Insurance. Detailed segment information appears in Note 13, "Segment Reporting" included in the Notes to the Condensed Unaudited Consolidated Financial Statements under Item 1 of this Quarterly Report on Form 10-Q.
The Banking segment reported pre-tax income of $29.1 million and $26.1 million for the three months ended March 31, 2026 and 2025, respectively. See the section of this Management's Discussion and Analysis under the headings "Results of Operations" and "Financial Condition" for a discussion of key items impacting the Banking Segment.
The Wealth Management segment reported pre-tax income of $2.5 million and $2.0 million for the three months ended March 31, 2026 and 2025, respectively, which included noninterest income of $8.5 million and $7.8 million for the three months ended March 31, 2026 and 2025, respectively. The increase in pre-tax income and noninterest income for the three months ended March 31, 2026 was driven by appreciation in assets under management compared to the previous year and new customer relationships. Assets under management and supervision were $5.8 billion as of March 31, 2026, $5.9 billion as of December 31, 2025, $5.2 billion as of March 31, 2025 and $5.2 billion as of December 31, 2024.
The Insurance segment reported pre-tax income of $3.0 million and $2.4 million for the three months ended March 31, 2026 and 2025, respectively, which included noninterest income of $7.4 million and $6.9 million for the three months ended March 31, 2026 and 2025, respectively. The increase in pre-tax income and noninterest income for the three months ended March 31, 2026 was primarily due to an increase of $342 thousand in premiums on commercial lines. Additionally, contingent income increased $194 thousand for the quarter, from $1.6 million for the three months ended March 31, 2025 to $1.8 million for the three months ended March 31, 2026. Contingent income is largely recognized in the first quarter of the year.
Capital Adequacy
Quantitative measures established by regulation to ensure capital adequacy require the Corporation and the Bank to maintain minimum capital amounts and ratios as set forth in the following table. To comply with the regulatory definition of well capitalized, a depository institution must maintain minimum capital amounts and ratios as set forth in the following table.
Under current rules, in order to avoid limitations on capital distributions (including dividend payments and certain discretionary bonus payments to executive officers), a banking organization must hold a capital conservation buffer comprised of common equity Tier 1 capital above its minimum risk-based capital requirements in an amount greater than 2.50% of total risk-weighted assets. The Corporation's and Bank's intent is to maintain capital levels in excess of the capital conservation buffer, which requires Tier 1 Capital to Risk Weighted Assets to exceed 8.50% and Total Capital to Risk Weighted Assets to exceed 10.50%. The Corporation and the Bank were in compliance with these requirements at March 31, 2026.
Table 5-Regulatory Capital
The Corporation's and Bank's actual and required capital ratios as of March 31, 2026 and December 31, 2025 under regulatory capital rules were as follows.
Actual For Capital Adequacy
Purposes 		To Be Well-Capitalized
Under Prompt
Corrective Action
Provisions
(Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio
At March 31, 2026
Total Capital (to Risk-Weighted Assets):
Corporation $ 994,721 13.95 % $ 570,249 8.00 % $ 712,812 10.00 %
Bank 856,639 12.08 567,264 8.00 709,080 10.00
Tier 1 Capital (to Risk-Weighted Assets):
Corporation 806,670 11.32 427,687 6.00 570,249 8.00
Bank 767,957 10.83 425,448 6.00 567,264 8.00
Tier 1 Common Capital (to Risk-Weighted Assets):
Corporation 806,670 11.32 320,765 4.50 463,328 6.50
Bank 767,957 10.83 319,086 4.50 460,902 6.50
Tier 1 Capital (to Average Assets):
Corporation 806,670 9.95 324,208 4.00 405,260 5.00
Bank 767,957 9.51 322,886 4.00 403,607 5.00
At December 31, 2025
Total Capital (to Risk-Weighted Assets):
Corporation $ 985,345 13.86 % $ 568,568 8.00 % $ 710,709 10.00 %
Bank 846,416 11.97 565,684 8.00 707,106 10.00
Tier 1 Capital (to Risk-Weighted Assets):
Corporation 797,595 11.22 426,426 6.00 568,568 8.00
Bank 757,978 10.72 424,263 6.00 565,684 8.00
Tier 1 Common Capital (to Risk-Weighted Assets):
Corporation 797,595 11.22 319,819 4.50 461,961 6.50
Bank 757,978 10.72 318,197 4.50 459,619 6.50
Tier 1 Capital (to Average Assets):
Corporation 797,595 9.51 335,451 4.00 419,314 5.00
Bank 757,978 9.07 334,260 4.00 417,825 5.00
At March 31, 2026 and December 31, 2025, the Corporation and the Bank continued to meet all capital adequacy requirements to which they are subject. At March 31, 2026, the Bank was categorized as "well capitalized" under the regulatory framework for prompt corrective action. There are no conditions or events that management believes have changed the Bank's category subsequent to March 31, 2026.
Asset/Liability Management
The primary functions of Asset/Liability Management are to minimize interest rate risk and to ensure adequate earnings, capital and liquidity while maintaining an appropriate balance of interest-earning assets and interest-bearing liabilities. Management's objective with regard to interest rate risk is to understand the Corporation's sensitivity to changes in interest rates and develop and implement strategies to minimize volatility while maximizing net interest income.
The Corporation uses gap analysis and earnings at risk simulation modeling to quantify exposure to interest rate risk. The Corporation uses the gap analysis to identify and monitor long-term rate exposure and uses a risk simulation model to measure short-term rate exposure. The Corporation runs various earnings simulation scenarios to quantify the impact of declining or rising interest rates on net interest income over a one- and two-year horizon. The simulations use expected cash flows and repricing characteristics for all financial instruments at a point in time and incorporate company-developed, market-based
assumptions regarding growth, pricing, and optionality such as prepayment speeds. As interest rates increase, fixed-rate assets tend to decrease in value; conversely, as interest rates decline, fixed-rate assets tend to increase in value.
Liquidity
The Corporation, in its role as a financial intermediary, is exposed to certain liquidity risks. Liquidity refers to the Corporation's ability to ensure that sufficient cash flows and liquid assets are available to satisfy demand for loans, deposit withdrawals, repayment of borrowings, certificates of deposit at maturity, operating expenses and capital expenditures. The Corporation manages liquidity risk by measuring and monitoring liquidity sources and estimated funding needs on a daily basis. The Corporation has a contingency funding plan in place to address liquidity needs in the event of an institution-specific or a systemic financial crisis.
The Corporation and its subsidiaries maintain ample ability to meet the liquidity needs of its customers. Our most liquid assets, unencumbered cash and cash equivalents, were $220.7 million and $549.2 million at March 31, 2026 and December 31, 2025, respectively. Unencumbered securities classified as available-for-sale, which provide additional sources of liquidity, totaled $40.2 million and $37.3 million at March 31, 2026 and December 31, 2025, respectively. Further, the Corporation and its subsidiaries had committed borrowing capacity from the Federal Home Loan Bank, Federal Reserve Bank and a correspondent bank of $3.7 billion and $3.8 billion at March 31, 2026 and December 31, 2025, respectively, of which $2.4 billion and $2.3 billion was available as of March 31, 2026 and December 31, 2025, respectively. The Corporation and its subsidiaries also maintained uncommitted funding sources from correspondent banks of $472.0 million and $457.0 million at March 31, 2026 and December 31, 2025, respectively. Future availability under these uncommitted funding sources is subject to the prerogatives of the granting banks and may be withdrawn at will.
Sources of Funds
Non-brokered deposits continue to be the largest significant funding source for the Corporation. These deposits are primarily generated from individuals, businesses, public funds and non-profit customers located in our primary service areas. The Corporation faces increased competition for these deposits from a large array of financial market participants, including banks, credit unions, savings institutions, mutual funds, security dealers and others.
As part of its diversified funding strategy, the Corporation also utilizes a mix of short-term and long-term wholesale funding providers. Wholesale funding includes federal funds purchases from correspondent banks, secured borrowing lines from the Federal Home Loan Bank of Pittsburgh and the Federal Reserve Bank of Philadelphia, and brokered deposits and other similar sources.
Cash Requirements
The Corporation has cash requirements for various financial obligations, including contractual obligations and commitments that require cash payments. The most significant contractual obligations, in both the under and over one-year time period, are for the Bank to repay certificates of deposit and short- and long-term borrowings. Certificates of deposit due within one year of March 31, 2026 totaled $1.0 billion. If these deposits do not remain with the Bank, the Bank will be required to seek other sources of funds, which may be expensive to obtain. The Bank anticipates meeting these obligations by utilizing on-balance sheet liquidity and continuing to provide convenient depository and cash management services through its financial center network, thereby replacing these contractual obligations with similar funding sources at rates that are competitive in our market. The Bank will also use borrowings and brokered deposits to meet its obligations.
Commitments to extend credit are the Bank's most significant commitment in both the under and over one-year time periods. These commitments do not necessarily represent future cash requirements in that these commitments often expire without being drawn upon.
Recent Accounting Pronouncements
For information regarding recent accounting pronouncements, refer to Note 1 to the Condensed Consolidated Financial Statements, "Summary of Significant Accounting Policies."
Univest Financial Corporation published this content on April 28, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on April 28, 2026 at 18:24 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]