SOUDERTON, PA — Univest Financial Corp. (NASDAQ: UVSP) reported a 15% increase in second-quarter profit as loan growth and lower funding costs widened its net interest margin, though nonperforming assets rose after a $28.6 million commercial loan relationship moved to nonaccrual status.
The parent of Univest Bank and Trust Co. recorded net income of $23 million, or 82 cents per diluted share, for the quarter ended June 30. That compared with $20 million, or 69 cents per share, a year earlier.
Results included a $5.2 million pretax valuation charge, equal to $4.1 million after taxes or 15 cents per diluted share, tied to an other real estate owned property. The company also received $708,000 in tax-free bank-owned life insurance death benefits, adding about 3 cents per diluted share.
Net interest income increased 11.3% from a year earlier to $66.2 million as average loan balances rose and lower rates on interest-bearing liabilities reduced funding costs.
The tax-equivalent net interest margin widened to 3.49% from 3.20% a year earlier and 3.33% in the first quarter. Excluding excess liquidity, the margin would have been 3.53%.
Gross loans and leases increased $240.8 million, or 3.5%, from June 2025, led by commercial, construction and commercial real estate lending.
Loans rose $101.7 million from March 31, representing a 6% annualized growth rate. Univest stated that residential mortgage balances declined as it prioritized lending to customers with broader banking relationships.
Deposits increased $350.3 million, or 5.3%, from a year earlier and rose $119.2 million during the quarter.
Noninterest-bearing deposits totaled $1.5 billion, representing 21.1% of total deposits. Unprotected deposits rose to $1.7 billion, or 24.6% of the total, from 23.7% at the end of March.
The company held $195.3 million in cash and cash equivalents and had $2.4 billion available under $3.7 billion of committed borrowing capacity as of June 30.
Asset-quality measures weakened during the quarter. Nonperforming assets increased to $63 million from $41.2 million at March 31 and $50.6 million a year earlier.
A $28.6 million commercial loan relationship was placed on nonaccrual status, prompting Univest to establish a $9.8 million specific reserve.
The provision for credit losses increased to $2.7 million from $1.3 million in the first quarter but declined from $5.7 million a year earlier.
Net loan and lease charge-offs totaled $1.9 million, compared with $1.3 million in the preceding quarter and $7.8 million in the prior-year period. The allowance for credit losses remained at 1.28% of loans and leases held for investment.
Noninterest income declined 15.8% to $18.1 million, primarily reflecting the real estate valuation charge.
Investment advisory commissions and fees rose 10.7%, supported by higher assets under management and new client relationships. Mortgage banking gains increased 37.2% as salable loan volume and margins improved.
Noninterest expenses rose 5.5% to $53.1 million. Salaries, benefits and commissions increased $1.7 million, driven by merit increases and higher medical claims.
Marketing and advertising costs nearly doubled, reflecting a reclassification of sponsorship expenses and a new agreement with a local university. Professional fees rose 27.1%, primarily because of higher marketing consulting costs.
Univest repurchased 425,539 shares during the quarter at an average market price of $38.71. The average cost, including fees and excise tax, was $39.13 per share.
The company had authorization to repurchase an additional 1.49 million shares as of June 30.
Univest’s board declared a quarterly dividend of 23 cents per share, payable Aug. 19 to shareholders of record Aug. 5.
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