Univest Financial Corporation Reports Third Quarter Results

SOUDERTON, Pa., Oct. 28, 2026 (GLOBE NEWSWIRE) -- Univest Financial Corporation (“Univest” or the "Corporation") (NASDAQ: UVSP), parent company of Univest Bank and Trust Co. (the "Bank") and its insurance, investments and equipment financing subsidiaries, announced net income for the quarter ended September 30, 2026 of $21.6 million, or $0.78 diluted earnings per share, compared to net income of $25.6 million, or $0.89 diluted earnings per share, for the quarter ended September 30, 2025, primarily due to an increase in provision for credit losses during the quarter associated with elevated charge-offs.

Loans

Gross loans and leases decreased $27.5 million, or 0.4% (1.6% annualized), from June 30, 2026. The decrease was primarily driven by a $35.3 million payoff of a shared national credit relationship and a $14.4 million charge-off associated with a $28.3 million commercial loan relationship. Gross loans and leases increased $99.6 million, or 1.4% (1.9% annualized), from December 31, 2025, and $229.0 million, or 3.4%, from September 30, 2025, primarily driven by growth in construction and commercial real estate loans. The growth from December 31, 2025 and September 30, 2025 was partially offset by a decline in residential mortgage loans, which is consistent with our strategy to focus balance sheet growth on full-relationship customers, which is intended to improve our loan-to-deposit ratio.

Deposits

Total deposits increased $421.5 million, or 6.1% (24.4% annualized), from June 30, 2026, and $267.2 million, or 3.8% (5.1% annualized), from December 31, 2025. The growth in both periods was primarily due to seasonal increases in public funds deposits and increases in commercial deposits, partially offset by decreases in consumer and brokered deposits. Total deposits increased $136.4 million, or 1.9%, from September 30, 2025, primarily due to increases in commercial, consumer and public funds deposits, partially offset by a decrease in brokered deposits.

Net Interest Income and Margin

Net interest income of $67.8 million for the third quarter of 2026 increased $6.4 million, or 10.5%, from the third quarter of 2025 and $1.5 million, or 2.3%, from the second quarter of 2026. The increase in net interest income for the third quarter of 2026 compared to the third quarter of 2025 was driven by higher average balances of loans, coupled with a reduction in our cost of funds, as lower rates paid on interest‑bearing liabilities more than offset the impact of higher average balances of these liabilities. The increase in net interest income for the third quarter of 2026 compared to the second quarter of 2026 was primarily driven by higher average balances on loans and interest-earning deposits with other banks, combined with modest increases in the yields earned on these assets. This was partially offset by an increase in our cost of funds due to the current interest rate environment, and an increase in the average balance of interest-bearing liabilities.

Net interest margin, on a tax-equivalent basis, was 3.42% for the third quarter of 2026, compared to 3.49% for the second quarter of 2026 and 3.17% for the third quarter of 2025. Excess liquidity reduced net interest margin by approximately 13 basis points for the quarter ended September 30, 2026 compared to approximately four basis points for the quarter ended June 30, 2026 and approximately 16 basis points for the quarter ended September 30, 2025. Excluding the impact of excess liquidity, the net interest margin, on a tax-equivalent basis, would have been 3.55% for the quarter ended September 30, 2026 compared to 3.53% for the second quarter of 2026 and 3.33% for the quarter ended September 30, 2025.

Noninterest Income

Noninterest income for the quarter ended September 30, 2026 was $22.3 million, an increase of $346 thousand, or 1.6%, from the comparable period in the prior year.

Investment advisory commission and fee income increased $762 thousand, or 13.4%, for the quarter ended September 30, 2026 compared to the comparable period in the prior year, driven by appreciation in assets under management and new customer relationships.

Other service fee income increased $479 thousand, or 19.8%, for the quarter ended September 30, 2026 compared to the comparable period in the prior year, primarily due to a $393 thousand increase in mortgage servicing fees. The three months ended September 30, 2026 included a $1 thousand reduction in valuation allowance recorded on mortgage servicing rights, compared to a $308 thousand increase in valuation allowance recorded in the third quarter of 2025, each of which were primarily driven by changes in interest rates during the quarter and the impact this had on prepayment speed assumptions.

BOLI income decreased $920 thousand, or 48.2%, for the quarter ended September 30, 2026 compared to the comparable period in the prior year. The financial results for the three months ended September 30, 2025 included $967 thousand in BOLI death benefit proceeds.

Noninterest Expense

Noninterest expense for the quarter ended September 30, 2026 was $54.0 million, an increase of $3.3 million, or 6.6%, from the comparable period in the prior year.

Salaries, benefits and commissions increased $2.6 million, or 8.2%, for the quarter ended September 30, 2026 compared to the comparable period in the prior year, driven by higher salary expense of $1.4 million due to annual merit increases and higher staffing levels, increased commission expense of $258 thousand, and an increase of $390 thousand in medical claims expenses.

Marketing and advertising expense increased $463 thousand, or 143.3%, for the quarter ended September 30, 2026 compared to the comparable period in the prior year. This increase was primarily 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.

Data processing increased $340 thousand, or 8.0%, for the quarter ended September 30, 2026 compared to the comparable period in the prior year primarily due to annual cost increases.

Tax Provision

The effective income tax rate was 20.2% for the quarter ended September 30, 2026, compared to an effective tax rate of 20.0% for the quarter ended September 30, 2025. The effective tax rate for the three months ended September 30, 2025 was favorably impacted by BOLI death benefit proceeds. Excluding the BOLI death benefit proceeds, the effective tax rate was 20.7% for the three months ended September 30, 2025.

Asset Quality and Provision for Credit Losses

Nonperforming assets totaled $51.4 million at September 30, 2026, $63.0 million at June 30, 2026, and $52.1 million at September 30, 2025. During the quarter, an existing nonaccrual commercial loan relationship totaling $28.3 million incurred charge-offs of $14.4 million. This relationship had a specific reserve of $9.8 million, and the remaining carrying value was supported by a letter of intent to sell the business.

Net loan and lease charge-offs were $17.6 million for the three months ended September 30, 2026 compared to $1.9 million and $480 thousand for the three months ended June 30, 2026 and September 30, 2025, respectively. The increase in charge-offs for the quarter compared to the prior periods was primarily due to the previously discussed $14.4 million charge-off. Additionally, a separate $6.9 million commercial loan relationship incurred a $2.7 million charge-off and the remaining balance was subsequently paid in full in the third quarter.

The provision for credit losses was $9.0 million for the three months ended September 30, 2026 compared to $2.7 million and $517 thousand for the three months ended June 30, 2026 and September 30, 2025, respectively, primarily due to net charge-off activity during the quarter.

Dividend and Share Repurchases

On October 28, 2026, Univest declared a quarterly cash dividend of $0.23 per share to be paid on November 25, 2026 to shareholders of record as of November 11, 2026. During the quarter ended September 30, 2026, the Corporation repurchased 301,127 shares of common stock at an average price of $42.50 per share. Including brokerage fees and excise tax, the average cost per share was $42.96. As of September 30, 2026, 1,193,133 shares are available for repurchase under the Corporation's share repurchase plan.

Conference Call

Univest will host a conference call to discuss third quarter 2026 results on Thursday, October 29, 2026 at 9:00 a.m. EDT. Participants may preregister at https://registrations.events/direct/Q4I37740VIPBmQSGdfZvAKstK. The general public can access the call by dialing 1-800-715-9871; referencing Conference ID 37740 or "Univest Financial Corporation Third Quarter 2026 Earnings Call" to the operator. A replay of the conference call will be available through November 5, 2026 using the following link: https://registrations.events/direct/Q4I37740VIPBmQSGdfZvAKstK.

About Univest Financial Corporation

Univest Financial Corporation (UVSP), including its wholly-owned subsidiary Univest Bank and Trust Co., Member FDIC, has approximately $8.6 billion in assets and $6.2 billion in assets under management and supervision through its Wealth Management lines of business at September 30, 2026. Headquartered in Souderton, Pa. and founded in 1876, the Corporation and its subsidiaries provide a full range of financial solutions for individuals, businesses, municipalities and nonprofit organizations primarily in the Mid-Atlantic Region. Univest delivers these services through a network of more than 50 offices and online at www.univest.net.

This press release and the reports Univest files with the Securities and Exchange Commission often contain "forward-looking statements" relating to trends or factors affecting the financial services industry and, specifically, the financial condition and results of operations, business, prospects and strategies of Univest.

These forward-looking statements involve certain risks and uncertainties and are subject to change based on various factors, many of which are beyond our control. There are a number of important factors that could cause Univest's future financial condition, results of operations, business, prospects or strategies to differ materially from those expressed or implied by the forward-looking statements. These factors include, but are not limited to: (1) competition and demand for financial services in our market area; (2) inflation and/or changes in interest rates, which may adversely impact our margins and yields, reduce the fair value of our financial instruments, reduce our loan originations and/or lead to higher operating costs and higher costs we pay to retain and attract deposits; (3) changes in asset quality, prepayment speeds, loan sale volumes, charge-offs and/or credit loss provisions; (4) fluctuations in real estate values and both residential and commercial real estate market conditions; (5) changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio; (6) our ability to access cost-effective funding; (7) changes in economic conditions nationally and in our market, including potential recessionary conditions and the levels of unemployment in our market area; (8) changes in the economic assumptions or methodology used to calculate our allowance for credit losses; (9) legislative, regulatory, accounting or tax changes; (10) monetary and fiscal policies of the U.S. government, including the policies of the Board of Governors of the Federal Reserve System; (11) the effectiveness of our risk management processes and procedures; (12) the ability to maintain and increase market share and control expenses; (13) the imposition of tariffs or other domestic or international governmental policies, trade restrictions and retaliatory measures impacting our borrowers and the broader economy; (14) the impact of a potential government shutdown, debt ceiling impasses or fiscal uncertainty; (15) the failure to maintain current technologies and to successfully implement future information technology enhancements and the operational risks associated with the adoption of artificial intelligence and other emerging technologies; (16) risks associated with cybersecurity threats, data breaches, ransomware attacks, or other failures in our operational or security systems and infrastructure, including the risks arising from our dependence on third-party service providers and vendors; (17) changes in the securities markets; (18) the current or anticipated impact of military conflict, terrorism or other geopolitical events; (19) the ability to attract, develop and retain qualified personnel in a competitive labor market; (20) our ability to enter into new markets successfully and capitalize on growth opportunities; (21) changes in investor sentiment or consumer spending or savings behavior; and/or (22) risk factors mentioned in the reports and registration statements Univest files with the Securities and Exchange Commission.

In addition, we set forth certain risks in our reports filed with the U.S. Securities and Exchange Commission, including, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K that we will file hereafter, which could cause actual results to differ from those projected. We undertake no obligation to update such forward-looking statements except as required by law.

(UVSP - ER)