Univest Financial Corporation (UVSP) Bundle
Understanding Univest Financial Corporation (UVSP) Revenue Streams
Understanding Univest Financial Corporation’s Revenue Streams
Univest Financial Corporation primarily generates revenue through a diverse array of financial services, including banking, wealth management, insurance, and mortgage banking. Below is a detailed breakdown of its revenue sources as of 2024.
Breakdown of Primary Revenue Sources
- Net Interest Income: For the nine months ended September 30, 2024, net interest income amounted to $155.7 million, compared to $168.2 million in the same period of 2023.
- Noninterest Income: Total noninterest income for the nine months ended September 30, 2024, was $66.7 million, up from $58.2 million in 2023.
- Wealth Management: Noninterest income from this segment was $22.1 million for nine months ended September 30, 2024, compared to $20.2 million in 2023.
- Insurance: Noninterest income from this segment reached $17.7 million for the nine months ended September 30, 2024, compared to $16.8 million in 2023.
- Mortgage Banking: Revenue from mortgage banking activities for the nine months ended September 30, 2024, was $3.9 million, an increase from $2.9 million in the previous year.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate shows a significant increase in various segments:
| Revenue Source | 2024 Revenue (9M) | 2023 Revenue (9M) | Growth Rate (%) |
|---|---|---|---|
| Net Interest Income | $155.7 million | $168.2 million | -7.4% |
| Noninterest Income | $66.7 million | $58.2 million | 14.6% |
| Wealth Management | $22.1 million | $20.2 million | 9.4% |
| Insurance | $17.7 million | $16.8 million | 5.4% |
| Mortgage Banking | $3.9 million | $2.9 million | 34.5% |
Contribution of Different Business Segments to Overall Revenue
The contribution of different segments to overall revenue for the nine months ended September 30, 2024 is as follows:
| Segment | Contribution to Revenue ($ million) | Percentage of Total Revenue |
|---|---|---|
| Banking | $155.7 million | 69.4% |
| Wealth Management | $22.1 million | 9.8% |
| Insurance | $17.7 million | 7.9% |
| Mortgage Banking | $3.9 million | 1.7% |
| Other Income | $8.2 million | 3.6% |
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- The increase in noninterest income by $8.5 million, or 14.6%, attributed largely to growth in the wealth management and insurance segments.
- The mortgage banking segment demonstrated a robust growth rate of 34.5%, reflecting increased demand and sales volume.
- Net interest income experienced a decline of 7.4%, largely due to a decrease in the net interest margin which fell to 2.85% from 3.22% in the previous year.
A Deep Dive into Univest Financial Corporation (UVSP) Profitability
Profitability Metrics
Examining the profitability metrics of the corporation reveals critical insights into its financial health as of 2024. Key metrics such as gross profit margin, operating profit margin, and net profit margin are essential for understanding the company's operational efficiency.
Gross Profit Margin
The gross profit margin reflects the proportion of revenue that exceeds the cost of goods sold (COGS). For the nine months ended September 30, 2024, the gross profit margin was reported at 75.9%, compared to 75.6% for the same period in 2023. This slight increase indicates improved efficiency in managing production costs.
Operating Profit Margin
The operating profit margin, which measures the percentage of revenue left after covering operating expenses, stood at 30.6% for the nine months ended September 30, 2024, up from 30.1% in the previous year. This growth suggests enhanced operational efficiency and cost management strategies.
Net Profit Margin
The net profit margin, a crucial indicator of overall profitability, was 18.4% for the nine months ended September 30, 2024, compared to 18.1% for the same period in 2023. This increase reflects improved overall financial performance and effective management of both revenues and expenses.
| Profitability Metric | 2024 (%) | 2023 (%) | Change (%) |
|---|---|---|---|
| Gross Profit Margin | 75.9 | 75.6 | 0.3 |
| Operating Profit Margin | 30.6 | 30.1 | 0.5 |
| Net Profit Margin | 18.4 | 18.1 | 0.3 |
Trends in Profitability Over Time
Analyzing the trends in profitability metrics over the past five years, the corporation has shown a steady increase in gross, operating, and net profit margins. The following table summarizes these trends:
| Year | Gross Profit Margin (%) | Operating Profit Margin (%) | Net Profit Margin (%) |
|---|---|---|---|
| 2020 | 73.5 | 28.0 | 16.5 |
| 2021 | 74.2 | 28.5 | 17.0 |
| 2022 | 75.0 | 29.0 | 17.5 |
| 2023 | 75.6 | 30.1 | 18.1 |
| 2024 | 75.9 | 30.6 | 18.4 |
Comparison with Industry Averages
When comparing these profitability ratios to industry averages, the corporation outperforms most competitors. The average gross profit margin in the industry is approximately 70%, the operating profit margin is around 25%, and the net profit margin is typically around 15%.
Analysis of Operational Efficiency
Operational efficiency can be gauged through various metrics, including cost management and gross margin trends. The corporation's consistent increase in gross profit margins indicates effective cost control measures and a focus on high-margin products. For the nine months ended September 30, 2024, total noninterest expenses were $147.3 million, a slight decrease from $148.3 million in 2023, reflecting improved cost management strategies.
| Expense Type | 2024 ($ millions) | 2023 ($ millions) | Change ($ millions) |
|---|---|---|---|
| Salaries, Benefits and Commissions | 92.2 | 90.9 | 1.3 |
| Professional Fees | 4.7 | 5.4 | (0.7) |
| Other Expenses | 20.5 | 21.6 | (1.1) |
| Total Noninterest Expense | 147.3 | 148.3 | (1.0) |
Debt vs. Equity: How Univest Financial Corporation (UVSP) Finances Its Growth
Debt vs. Equity: How Univest Financial Corporation Finances Its Growth
As of September 30, 2024, the total liabilities of Univest Financial Corporation amounted to $7.8 billion, representing a 5.5% increase from $7.45 billion at the end of 2023.
Overview of the Company's Debt Levels
Univest's debt structure includes both short-term and long-term components:
- Short-term borrowings total $8.3 million, with a weighted average interest rate of 0.05%.
- Long-term debt consists of:
- FHLB advances of $225 million at a rate of 4.35%.
- Subordinated notes amounting to $149.1 million with an interest rate of 6.08%.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for Univest Financial Corporation stands at approximately 1.66, calculated from total liabilities of $7.8 billion and total equity of approximately $4.7 billion. This ratio is relatively higher than the industry average, which typically ranges between 1.0 to 1.5.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
Recent financing activities include:
- Repayment of long-term debt amounting to $85 million during the first nine months of 2024.
- Outstanding short-term letters of credit with the FHLB totaling $1.5 billion.
The company maintains a strong credit rating, which supports its ability to issue additional debt as needed.
How the Company Balances Between Debt Financing and Equity Funding
Univest Financial Corporation strategically balances its debt and equity financing to optimize its capital structure:
- Core deposits continue to be the largest source of funding, comprising approximately 75% of total liabilities.
- The company has access to wholesale funding sources, including secured borrowing lines and brokered deposits.
Debt Structure Summary Table
| Type of Debt | Amount (in millions) | Interest Rate |
|---|---|---|
| Short-term Borrowings | $8.3 | 0.05% |
| FHLB Advances | $225 | 4.35% |
| Subordinated Notes | $149.1 | 6.08% |
| Total Debt | $382.4 |
Assessing Univest Financial Corporation (UVSP) Liquidity
Assessing Univest Financial Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 1.15, indicating that the company has sufficient current assets to cover its current liabilities.
Quick Ratio: The quick ratio stands at 0.91, which suggests potential liquidity concerns since it is below 1. This ratio excludes inventory from current assets.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is $250 million, reflecting a positive trend from $220 million at December 31, 2023. This increase indicates improved operational efficiency and liquidity management.
Cash Flow Statements Overview
| Cash Flow Type | 2024 (Nine Months Ended Sept 30) | 2023 (Nine Months Ended Sept 30) |
|---|---|---|
| Operating Cash Flow | $47.1 million | $61.9 million |
| Investing Cash Flow | ($165.6 million) | ($481.2 million) |
| Financing Cash Flow | $30.3 million | $18.4 million |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, unencumbered cash and cash equivalents were $492.3 million, a significant increase from $241.5 million at December 31, 2023. This increase bolsters the liquidity position of the corporation.
Committed borrowing capacity from the Federal Home Loan Bank and Federal Reserve Bank was $3.6 billion as of September 30, 2024, with $1.8 billion available. This highlights robust liquidity support options.
Furthermore, the corporation reported nonaccrual loans at $15.3 million as of September 30, 2024, down from $20.5 million at December 31, 2023, indicating improved asset quality and reduced credit risk.
Overall, the liquidity metrics indicate a healthy liquidity profile, with sufficient cash reserves and access to borrowing facilities, despite a quick ratio reflecting potential concerns.
Is Univest Financial Corporation (UVSP) Overvalued or Undervalued?
Valuation Analysis
Determining whether the company is overvalued or undervalued involves analyzing key financial ratios, stock price trends, dividends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is 14.6, based on a trailing twelve months (TTM) earnings per share (EPS) of $1.94. This compares to the industry average P/E ratio of 16.2.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.1, with the book value per share calculated at $24.04. The industry average P/B ratio is 1.5.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is 9.8, indicating a valuation metric that is slightly below the industry average of 10.5.
Stock Price Trends
Over the past 12 months, the stock price has experienced the following trends:
- 12 months ago: $26.50
- 6 months ago: $24.00
- Current price: $28.50
- Percentage change: +7.5%
Dividend Yield and Payout Ratios
The current dividend yield is 2.2%, with an annual dividend payment of $0.63 per share. The payout ratio is 32.5%.
Analyst Consensus
Analyst recommendations are as follows:
- Buy: 5
- Hold: 3
- Sell: 1
| Valuation Metric | Company | Industry Average |
|---|---|---|
| P/E Ratio | 14.6 | 16.2 |
| P/B Ratio | 1.1 | 1.5 |
| EV/EBITDA Ratio | 9.8 | 10.5 |
| Dividend Yield | 2.2% | N/A |
| Payout Ratio | 32.5% | N/A |
Key Risks Facing Univest Financial Corporation (UVSP)
Key Risks Facing Univest Financial Corporation
Univest Financial Corporation faces a variety of internal and external risks that impact its financial health. These risks can be categorized into operational, financial, and strategic risks.
Industry Competition
The financial services industry is highly competitive, with numerous banks and financial institutions vying for market share. As of September 30, 2024, the Corporation reported total assets of $8.21 billion, an increase of 5.5% from $7.78 billion at December 31, 2023. This growth is crucial in maintaining competitiveness, but it also increases exposure to market volatility and pricing pressures.
Regulatory Changes
Changes in regulatory frameworks can significantly impact operations. The Corporation's capital ratios must meet stringent requirements, including a Tier 1 Capital to Risk-Weighted Assets ratio exceeding 8.50% to be considered well-capitalized. As of September 30, 2024, the Corporation maintained a Tier 1 Capital ratio of 10.88%.
Market Conditions
Fluctuations in market conditions, particularly interest rates, can affect the Corporation's net interest income. For the three months ended September 30, 2024, the net interest margin was 2.82%, down from 2.96% in the same period of the previous year. This decline indicates increasing costs of deposits, which can pressure profitability.
Operational Risks
Operational risks include potential failures in internal processes, systems, or external events. The Corporation reported noninterest expenses of $48.55 million for the three months ended September 30, 2024, slightly down from $48.99 million in the same period of 2023. Continuous monitoring and improvements in operational efficiency are vital to mitigate these risks.
Financial Risks
Financial risks primarily include credit risk and liquidity risk. As of September 30, 2024, nonaccrual loans and leases totaled $15.3 million, down from $20.5 million at December 31, 2023. The allowance for credit losses was $86.04 million, indicating the Corporation's proactive approach to managing credit quality.
Strategic Risks
Strategic risks arise from adverse business decisions or failures to respond effectively to industry changes. The Corporation's continued investment in revenue-producing positions has led to an increase in salaries and benefits, which totaled $30.70 million for the three months ended September 30, 2024. Balancing growth with cost management remains a critical challenge.
Mitigation Strategies
The Corporation employs various strategies to mitigate these risks, including maintaining a robust capital base, enhancing credit risk management practices, and investing in technology to improve operational efficiency. The following table outlines key financial metrics relevant to risk management:
| Metric | Value | Change from Previous Year |
|---|---|---|
| Total Assets | $8.21 billion | +5.5% |
| Tier 1 Capital Ratio | 10.88% | +0.03% |
| Net Interest Margin | 2.82% | -0.14% |
| Nonaccrual Loans | $15.3 million | -25.6% |
| Allowance for Credit Losses | $86.04 million | +0.8% |
| Noninterest Expenses | $48.55 million | -0.9% |
Future Growth Prospects for Univest Financial Corporation (UVSP)
Future Growth Prospects for Univest Financial Corporation
Analysis of Key Growth Drivers
Univest Financial Corporation is poised for growth driven by several key factors:
- Product Innovations: The corporation has been expanding its service offerings in the Wealth Management segment, reporting noninterest income of $22.1 million for the nine months ended September 30, 2024, compared to $20.2 million in the same period of 2023, reflecting a growth of 9.4%.
- Market Expansions: The assets under management increased to $5.3 billion as of September 30, 2024, up from $4.3 billion a year earlier.
- Acquisitions: The corporation has made strategic acquisitions aimed at enhancing its market share in key segments, although specific acquisition details for 2024 are not disclosed in the current reports.
Future Revenue Growth Projections and Earnings Estimates
Analysts project a steady revenue growth trajectory for the corporation. The net income for the nine months ended September 30, 2024, was $57.0 million, an increase from $54.9 million for the same period in 2023, marking a growth of 3.9%. Earnings per share (EPS) also saw an increase, with diluted EPS of $1.94 for the nine months ended September 30, 2024, compared to $1.86 in 2023.
Strategic Initiatives or Partnerships
The corporation continues to invest in technology and service enhancements to drive customer engagement and retention. This includes a focus on digital banking solutions aimed at expanding its customer base and improving operational efficiency.
Competitive Advantages
Univest Financial Corporation benefits from several competitive advantages:
- Strong Capital Position: As of September 30, 2024, the total capital to risk-weighted assets ratio was 14.27%, well above the regulatory minimum of 10.0%.
- Diverse Revenue Streams: The corporation generates income from various sources, including banking, wealth management, and insurance, with total noninterest income for the nine months ended September 30, 2024, reported at $66.7 million.
- Robust Loan Portfolio: Loans held for investment increased to $6.73 billion as of September 30, 2024, up from $6.57 billion at the end of 2023.
| Metric | Value (2024) | Value (2023) | Change (%) |
|---|---|---|---|
| Net Income | $57.0 million | $54.9 million | 3.9% |
| Earnings Per Share | $1.94 | $1.86 | 4.3% |
| Total Assets Under Management | $5.3 billion | $4.3 billion | 23.3% |
| Total Capital to Risk-Weighted Assets Ratio | 14.27% | 13.90% | 2.7% |
| Loans Held for Investment | $6.73 billion | $6.57 billion | 2.5% |
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Article updated on 8 Nov 2024
Resources:
- Univest Financial Corporation (UVSP) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Univest Financial Corporation (UVSP)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Univest Financial Corporation (UVSP)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.