Univest Financial Corporation

Thank you for standing by. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to the Univest Financial Corporation first quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, Simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I will now turn the call over to Jeff Schweizer, Chairman, President, and CEO of Univest Financial Corporation. Please go ahead.

Thank you, Rebecca, and good morning and thank you to all of our listeners for joining us. Joining me on the call this morning is Mike Keim, our Chief Operating Officer and President of Univest Bank and Trust, and Brian Richardson, our Chief Financial Officer. Before we begin, I would like to remind everyone of the forward-looking statements disclaimer. Please be advised that during the course of this conference call, management may make forward-looking statements that express management's intentions, beliefs, or expectations within the meaning of the federal securities laws. Univest's actual results may differ materially from those contemplated by these forward-looking statements. I will refer you to the forward-looking cautionary statements in our earnings release and in our SEC filings. Hopefully everyone had a chance to review our earnings release from yesterday. If not, it can be found on our website at univest.net under the Investor Relations tab. We had a strong start to the year as we reported net income for the first quarter of $27.1 million or 96 cents per share, which was a 24.7% increase compared to earnings per share in Q1 of 2025. Results were solid across our lines of business resulting in our ROAA improving to 1.33% for the quarter. Additionally, We continue to execute on our initiatives to lower our loan-to-deposit ratio, which on average was 280 basis points lower than Q1 of 2025, and our efficiency ratio, which declined 190 basis points from Q1 of 2025, showing improved operating leverage as we continue to see results from our investments in technology over the past few years. for the quarter also resulted in our rewarding our shareholders by increasing our quarterly dividend 4.5% to 23 cents per share and buying back 351,138 shares of our stock during the quarter. Before I pass it over to Brian, I would like to thank the entire Univest family for the great work they do every day and for their continued efforts serving our customers, communities, and each other. I will now turn it over to Brian for further discussion on our results.

Thank you, Jeff, and thank you to everyone for joining us this morning. I would like to start by touching on four items from the earnings release. First, we saw a solid NIM expansion during the quarter, with reported NIM increasing 23 basis points to 3.33%. Additionally, core NIM, which includes excess liquidity of 3.44%, increased seven basis points compared to the fourth quarter. Second, during the quarter, credit quality remained strong, and we recorded a provision for credit losses of $1.3 million. At March 31st, non-performing loans and leases represented approximately 0.25% of total loans, and our allowance for credit losses remained steady at 1.28% of loans held for investments. Net charge-offs for the quarter totaled $1.3 million, or seven basis points annualized. Third, non-interest income increased $1.7 million, or 7.5%, compared to the first quarter of 2025. When excluding bully death benefits, non-interest income increased $2.3 million, or 11%, compared to the first quarter of 2025. This growth was driven by continued strength in investment advisory, insurance, and service related fee income, as well as increased risk participation and swap related fee income. Mortgage banking revenue increased modestly from the prior period, reflecting higher saleable volume during the quarter. Fourth, non-interest expense increased $3.3 million, or 6.8%, compared to the first quarter of 2025. This included $427,000 of restructuring charges and an increase of $753,000, or 48.8%, in medical claims expense. The corporation maintains a self-funded or 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. Excluding the restructuring charges and increased medical costs, expenses increased $2.2 million or 4.4% compared to the first quarter of 2025, which is in line with the guidance that I had provided on January's call. Turning briefly to our outlook for the remainder of 2026, based on the first quarter performance and current assumptions, we are maintaining our outlook for loan growth of approximately 2% to 3%, provisioning of $11 to $13 million, non-interest expense growth of approximately 6% to 8%, excluding boldly death benefits, and non-interest expense growth of 3% to 5%. We are updating our full-year net interest income growth outlook to the range of 5% to 7%, reflecting the strength of the first quarter results continued with margin momentum. Our effective tax rate is expected to remain in the 20% to 21% range. That concludes my prepared remarks. Rebecca, would you please begin the question and answer session?