UNIVEST FINANCIAL Corp (UVSP) stock intrinsic value fair value estimate & owner earnings analysis

Univest Financial is a community bank holding company founded in 1876 and based in Souderton, Pennsylvania. At June 30, 2026 it had about $8.2 billion of assets, $7.04 billion of loans and $6.93 billion of deposits. 27 of its 38 financial centers are in Montgomery, Bucks, Lancaster and Philadelphia counties, with the rest in New Jersey and Maryland. Besides lending it runs Girard wealth management, the Univest Insurance agency and Univest Capital equipment finance. Fee income was $88 million in 2025, against $240 million of net interest income. How we measured earnings. Owner earnings start from operating cash flow. We then strip out swings in mortgage loans held for sale and other timing items, and subtract stock compensation and maintenance capital spending. For a lender we also subtract the provision for credit losses. The cash cost of bad loans is recorded outside operating cash flow, so adding the provision back would make loan losses disappear. On that basis owner earnings per share were $2.21 in 2019, $1.13 in 2020 (pandemic reserve build), $2.95 in 2021 (reserve release), then $2.41, $2.22, $2.49 and $2.91 in 2025. We use 2019-2025 as the earnings window. It covers a credit scare, a reserve release, the 2023 margin squeeze when deposit costs jumped, and the recovery. The median year is about $71 million, or roughly $2.54 per share on today's 28.0 million diluted shares. The share count is about 5% lower than in 2024 because of buybacks. We leave out 2016-2018: 2016 absorbed the Fox Chase acquisition and 2017 the tax-law revaluation. Recent results. Owner earnings per share grew 16.5% in 2025. First-half 2026 net income was $50.0 million, up from $42.4 million a year earlier. The second-quarter net interest margin reached 3.49%, up from 3.20% a year earlier, as rates paid on deposits fell. Loan-loss provisions were only $4.0 million for the half. Our base case's first year is $2.90 per share. That is 14% above the median year and below last year's 16.5% growth. We held it there for two reasons. Provisions this low are well under a normal through-cycle cost, which we put at about 0.35% of loans, or roughly $25 million a year. And credit is softening: nonperforming assets rose to $63.0 million at June 30 from $37.8 million at year-end 2025, and the second quarter included a $5.2 million write-down on a foreclosed property. Growth credited. Univest has grown loans and deposits organically for decades, paid for out of retained earnings, through both the 2008-2010 and 2020 downturns. Assets went from $5.4 billion at end-2019 to $8.4 billion at end-2025. We credit 2% a year in the base case and 4% in the bull case, both below that record. We also charge for the capital that growth needs: each year an amount equal to the growth rate times tangible book value is held back before any cash counts as the owners'. We credit no share gains, new markets or margin expansion. After year ten we credit no further growth. The deposit franchise and fee businesses, which have been running for 150 years, are assumed to keep earning at the year-ten level and no more. Debt. For a bank, deposits and borrowings are the raw material of the business, and the interest paid on them is already deducted in owner earnings. So no debt is subtracted separately, including the $50 million of subordinated notes issued in 2025. In every case the business value and the shareholders' value are the same figure. Leverage is charged instead through the credit cycle in the bear case. Bear case, $31.50 per share. Margins slip back to their 2023 level, about $2.34 per share in year one. Then a credit cycle like 2008-2010 hits in years two through four. Loan losses plus reserve building total about $327 million before tax, roughly 4.6% of today's loans. That is in line with what commercial-real-estate-heavy community banks lost in that cycle. Against it, the bank earns about $115 million a year before provisions. The result is a loss of about $1.27 per share in year two, roughly break-even in year three and $1.64 in year four. Earnings then settle at a permanently lower $2.20 per share with no growth. The loan book has the concentrations that would feel such a cycle: retail property ($438 million), animal agriculture ($429 million), multifamily ($384 million), hotels ($259 million) and offices ($245 million). Common equity tier 1 capital is 11.2% and tangible book value is $28.16 per share, so losses of this size would be absorbed by earnings and capital without issuing new shares. The bear value sits slightly above tangible book because the deposit base (21% non-interest-bearing) and about $88 million a year of fee income keep earning through a downturn. Base case, $50.90 per share. Owner earnings of $2.90 per share in year one grow 2% a year, with the capital for that growth retained. Earnings are then held level after year ten. Bull case, $62.60 per share. The current margin holds. Year one is $3.30 per share, which is the first-half 2026 pace with provisions brought up to a normal level. Earnings grow 4% a year for ten years, again with the capital retained, and are then held level. Margin-of-safety price. We are fairly confident in the earnings level. Owner earnings were positive in every year of the past decade, and the low point was $1.13 during the 2020 reserve build. The biggest uncertainty is whether the 3.49% margin lasts. If it fades back to 2023 levels, owner earnings fall to about $2.30 per share and the shares are worth roughly $40 on base-case growth. The worst plausible event is a regional credit downturn deeper than 2008-2010, with losses of 7-8% of loans. That would push tangible book into the low $20s per share and would likely pause dividends and buybacks. The business would still survive it: it has no controlling owner, no dependence on a single customer and a diversified commercial book. Over the holding period, the bank pays $0.92 a year in dividends and keeps buying back stock. The margin-of-safety price is $29. That is about tangible book value, mostly loans and securities. At that price, normalized owner earnings of $2.90 are a 10% yield and the dividend is about 3.2%. If the base case plays out over about three years, the base case implies a return including dividends close to 23% a year. If the bear credit cycle arrives instead, the price is still covered by tangible capital that even that cycle does not use up. What would make this wrong: a faster fall in loan yields than in deposit costs, credit losses beyond the bear case concentrated in office, hotel or agricultural loans, or deposit flight in a regional-bank scare like March 2023. Changes since our previous analysis. The previous figures were produced on a different basis and are not comparable. Since then the business has shown a wider margin and higher earnings in the first half of 2026, offset by rising nonperforming assets. Note: capital spending for 2016-2019 is reported net of property sales; later years use gross purchases.