SOURCE: Univest Corporation of Pennsylvania

Univest Corporation of Pennsylvania

January 27, 2010 15:46 ET

Univest Corporation of Pennsylvania - Univest National Bank and Trust Co. - Reports Fourth Quarter and Year End Earnings

SOUDERTON, PA--(Marketwire - January 27, 2010) - Univest Corporation of Pennsylvania (NASDAQ: UVSP), parent company of Univest National Bank and Trust Co. of Souderton, Pa., today announced financial results for the fourth quarter ended December 31, 2009. Univest reported net income of $1.5 million or $0.09 diluted earnings per share for the quarter ended December 31, 2009, compared to net income of $3.8 million or $0.29 diluted earnings per share for the quarter ended December 31, 2008.

For the year ended December 31, 2009, Univest reported net income of $10.8 million or $0.75 diluted earnings per share compared to net income of $20.6 million or $1.60 diluted earnings per share reported for the year ended December 31, 2008. The decrease year over year is primarily due to an increase in the provision for loan and lease losses of $12.1 million, increased FDIC insurance expense of $2.4 million, along with death benefit claims on bank owned life insurance policies in the prior year of $1.9 million.

Loans

Total loans and leases declined $25.1 million during the quarter primarily due to a decline in commercial loans and commercial real estate loans of $5.9 million, due to less credit demand and utilization of lines by businesses responding to the current economic environment, along with a decrease in lease outstandings of $5.0 million and a decline in residential mortgage loans of $13.3 million, as predominately all mortgage originations are being sold in the secondary market as a result of the low interest rate environment, in order to manage Univest's interest rate risk.

Deposits

Total non-time deposits increased $75.2 million during the quarter or 28.73% on an annualized basis. The increase consisted of an increase of $16.3 million or 28.56% annualized in demand deposits, and $58.9 million or 28.78% annualized in NOW, money market and savings accounts. These increases were offset by a decline in time deposits of $47.8 million.

Net Interest Income and Margin

Net interest income of $16.8 million in the fourth quarter of 2009 was flat with the amount from the fourth quarter of 2008. The net interest margin on a tax-equivalent basis for the fourth quarter of 2009 decreased 14 basis points to 3.69% compared to 3.83% for the fourth quarter of 2008. The decrease in the net interest margin can be attributed to increased non-accrual loans and leases as non-accrual loans and leases increased $28.5 million from December 31, 2008 to December 31, 2009. The impact to the margin of the increased non-accrual loans and leases was 10 basis points during the quarter.

Net interest income increased $1.9 million or 2.87% for the year ended December 31, 2009 compared to the year ended December 31, 2008. The net interest margin on a tax equivalent basis for the year ended December 31, 2009 increased 6 basis points to 3.79% compared to 3.73% for the prior year. The increases in net interest income and net interest margin are primarily due to increased average loan volume and declines in the cost of interest-bearing liabilities exceeding the declines in yields on total interest earning assets. Average loans increased $51.2 million or 3.65% year over year, which was driven by an increase in average commercial loans and commercial real estate loans of $65.1 million or 7.51%.

Non-Interest Income

Total non-interest income increased for the quarter ended December 31, 2009 compared to the quarter ended December 31, 2008. For the quarter ended December 31, 2009, Univest reported total non-interest income of $8.8 million compared to $5.3 million for the comparable period in the prior year. This increase is primarily due to increased mortgage banking revenue of $870 thousand for the quarter ended December 31, 2009 compared to the same period in the prior year and increased revenues from the acquisitions of Trollinger Consulting Group and Liberty Benefits, Inc. at the end of 2008. Additionally, Univest recorded other-than-temporary impairment charges on certain bank equity securities in the fourth quarter of 2009 of $761 thousand compared to charges of $323 thousand in the fourth quarter of 2008. The total remaining cost basis of Univest's bank equity securities was $2.7 million at December 31, 2009 with an aggregate fair value of $3.0 million. This impairment charge was offset by investment gains realized during the quarter of $1.0 million.

Total non-interest income increased $3.3 million or 12.41% year over year. This increase is due to increased mortgage banking revenue of $2.1 million, increased investment securities gains of $870 thousand along with increased revenues from the acquisitions of Trollinger Consulting Group and Liberty Benefits, Inc. These increases were offset by $1.9 million of revenue from death benefit claims on bank owned life insurance in the prior year and other than temporary impairment on bank equity securities of $2.2 million recorded during the year ended December 31, 2009 compared to $1.3 million recorded during the year ended December 31, 2008.

Non-Interest Expense

Non-interest expense for the fourth quarter of 2009 increased $2.6 million, or 17.50%, primarily due to higher FDIC insurance costs, increased losses on other real estate owned, along with increased salaries and employee benefits expense. FDIC insurance costs increased $122 thousand quarter over quarter primarily due to premium increases affecting all financial institutions. During the quarter, Univest recorded $111 thousand of expense related to certain other real estate owned. Salary and employee benefits expenses increased primarily due to increased health insurance costs of $324 thousand, increased pension costs of $287 thousand, along with normal merit increases and increased headcount due to the prior year acquisitions mentioned earlier and from our mortgage banking initiative launched in the fourth quarter of 2008.

Non-interest expense for the year ended December 31, 2009 increased $8.1 million, or 14.15%, primarily due to higher FDIC insurance costs, along with increased salaries and employee benefits expense. FDIC insurance costs increased $2.4 million year over year, which includes the special assessment levied on all banks in the second quarter of 2009, which cost Univest $947 thousand. Salaries and employee benefits expense increased $5.0 million primarily due to increased pension expenses of $1.1 million, increased health insurance expenses of $611 thousand, along with normal merit increases combined with increased headcount from the prior year acquisitions along with our recent mortgage banking initiatives.

Credit Quality and Provision for Loan and Lease Losses

Nonaccrual loans and leases were $33.5 million at December 31, 2009 compared to $33.1 million at September 30, 2009 and $5.0 million at December 31, 2008. Nonperforming loans and leases as a percentage of total loans and leases equaled 2.65% at December 31, 2009 compared to 2.55% at September 30, 2009 and 0.45% at December 31, 2008. The increase from year-end is primarily due to an increase in non-accrual loans of $28.5 million and an increase in restructured loans of $3.2 million. Net loan and lease charge-offs for the year ended December 31, 2009 were $9.2 million or 0.63% of average loans and leases compared to $8.7 million or 0.62% for the year ended December 31, 2008. The provision for loan and lease losses was $7.4 million for the fourth quarter of 2009 compared to $2.4 million for the corresponding quarter in the prior year. For the year ended December 31, 2009, the provision for loan and lease losses was $20.9 million compared to $8.8 million for the prior year. The increase in the provision is due to the migration of loans to higher-risk ratings as a result of deterioration of underlying collateral and economic factors. As a result of the increased provision, the allowance for loan and lease losses as a percentage of total loans and leases increased to 1.74% at December 31, 2009 from 1.51% at September 30, 2009 and 0.90% at December 31, 2008. The allowance for loan and lease losses to nonperforming loans and leases equaled 65.54% at December 31, 2009 which increased from 59.35% at September 30, 2009. The allowance for loan and lease losses to nonperforming loans and leases was 200.15% at December 31, 2008.

Capital

Univest continues to remain well-capitalized at December 31, 2009. Univest's total risk-based capital at December 31, 2009 was 15.76%, well in excess of the regulatory minimum for well capitalized status of 10% for total risk-based capital.

Dividend

On January 4, 2010, Univest Corporation paid a quarterly cash dividend of $0.20 per share, which represented a 4.56% annualized yield based on the closing price of Univest's stock on the date the dividend was paid.

About Univest Corporation

Headquartered in Souderton, Pa., Univest Corporation of Pennsylvania (www.univest.net) and its subsidiaries serve the financial needs of residents, businesses, and nonprofit organizations in Bucks, Chester, Montgomery and Lehigh counties. Univest National Bank and Trust Co., member FDIC and Equal Housing Lender, offers customers 32 financial service centers, 12 retirement financial services centers, and 38 ATM locations throughout the region, and is the parent company of Univest Capital, Inc., a small ticket commercial finance business; Univest Insurance, Inc., an independent insurance agency headquartered in Lansdale, Pa., which serves commercial and personal customers; and Univest Investments, Inc., Member FINRA and SIPC, a full-service broker-dealer and investment advisory firm. For more information on Univest Corporation of Pennsylvania and its subsidiaries, please visit www.univest.net.

This press release of Univest Corporation and the reports Univest Corporation files with the Securities and Exchange Commission often contain "forward-looking statements" relating to present or future trends or factors affecting the banking industry and, specifically, the financial operations, markets and products of Univest Corporation. These forward-looking statements involve certain risks and uncertainties. There are a number of important factors that could cause Univest Corporation's future results to differ materially from historical performance or projected performance. These factors include, but are not limited to: (1) a significant increase in competitive pressures among financial institutions; (2) changes in the interest rate environment that may reduce net interest margins; (3) changes in prepayment speeds, loan sale volumes, charge-offs and loan loss provisions; (4) general economic conditions; (5) legislative or regulatory changes that may adversely affect the businesses in which Univest Corporation is engaged; (6) technological issues which may adversely affect Univest Corporation's financial operations or customers; (7) changes in the securities markets or (8) risk factors mentioned in the reports and registration statements Univest Corporation files with the Securities and Exchange Commission. Univest Corporation undertakes no obligation to revise these forward-looking statements or to reflect events or circumstances after the date of this press release.


                    Univest Corporation of Pennsylvania
                   Consolidated Selected Financial Data
                                12/31/2009

(Dollars in thousands)

Balance Sheet (Period End)   12/31/09    09/30/09    06/30/09
                            ----------- ----------- -----------
Assets                      $ 2,085,421 $ 2,117,849 $ 2,086,821
Securities                      420,045     472,491     425,774
Loans held for sale               1,693       1,439       1,119
Loans and leases, gross       1,425,980   1,451,128   1,464,886
Allowance for loan and
 lease losses                    24,798      21,945      18,824
Loans and leases, net         1,401,182   1,429,183   1,446,062
Total deposits                1,564,258   1,536,903   1,565,076
Non-interest bearing
 deposits                       242,691     226,395     222,877
NOW, Money Market and
 Savings                        871,025     812,122     833,825
Time deposits                   450,542     498,386     508,374
Borrowings                      214,063     267,821     265,457
Shareholders' equity            267,807     268,052     208,358



Balance Sheet (Period End)   03/31/09    12/31/08
                            ----------- -----------
Assets                      $ 2,065,901 $ 2,084,797
Securities                      410,357     432,266
Loans held for sale               5,072         544
Loans and leases, gross       1,450,420   1,449,892
Allowance for loan and
 lease losses                    14,720      13,118
Loans and leases, net         1,435,700   1,436,774
Total deposits                1,573,052   1,527,328
Non-interest bearing
 deposits                       218,148     221,863
NOW, Money Market and
 Savings                        819,659     795,495
Time deposits                   535,245     509,970
Borrowings                      245,962     312,736
Shareholders' equity            206,238     203,207



Balance Sheet (Average)         For the three months ended,
                            ----------------------------------
                             12/31/09    09/30/09    06/30/09
                            ----------  ----------  ----------
Assets                      $2,096,945  $2,098,964  $2,077,565
Securities                     454,096     447,925     413,142
Loans and leases, gross      1,438,880   1,456,446   1,471,231
Deposits                     1,553,308   1,547,436   1,560,317
Shareholders' equity           267,645     240,267     208,321



Balance Sheet (Average)          For the three          For the twelve
                                 months ended,           months ended
                            ----------------------------------------------
                             03/31/09    12/31/08    12/31/09    12/31/08
                            ----------  ----------  ----------  ----------
Assets                      $2,059,965  $2,028,900  $2,080,857  $2,025,060
Securities                     419,995     403,783     433,922     403,783
Loans and leases, gross      1,446,095   1,437,721   1,453,174   1,401,971
Deposits                     1,555,964   1,523,964   1,554,230   1,538,134
Shareholders' equity           204,544     205,384     230,395     204,095



Asset Quality Data (Period
 End)
                             12/31/09    09/30/09    06/30/09
                            ----------  ----------  ----------
Nonaccrual loans and leases $   33,498  $   33,116  $    5,762
Accruing loans and leases
 90 days or more past due          726         644       1,839
Troubled debt restructured       3,611       3,216       3,324
Other real estate owned          3,428       3,330       2,812
Nonperforming assets            41,313      40,306      13,737
Allowance for loan and
 lease losses                   24,798      21,945      18,824
Nonperforming loans and
 leases / Loans and leases        2.65%       2.55%       0.75%
Allowance for loan and
 lease losses / Loans and
 leases                           1.74%       1.51%       1.29%
Allowance for loan and
 lease losses /
 Nonperforming loans             65.54%      59.35%     172.30%


Asset Quality Data (Period
 End)
                             03/31/09    12/31/08
                            ----------  ----------
Nonaccrual loans and leases $    3,675  $    5,029
Accruing loans and leases
 90 days or more past due        2,109       1,145
Troubled debt restructured         747         380
Other real estate owned          2,824         346
Nonperforming assets             9,355       6,900
Allowance for loan and
 lease losses                   14,720      13,118
Nonperforming loans and
 leases / Loans and leases        0.45%       0.45%
Allowance for loan and
 lease losses / Loans and
 leases                           1.01%       0.90%
Allowance for loan and
 lease losses /
 Nonperforming loans            225.39%     200.15%



                                For the three months ended,
                            ----------------------------------
                             12/31/09    09/30/09    06/30/09
                            ----------  ----------  ----------
Net loan and lease
 charge-offs                $    4,595  $    2,807  $    1,249
Net loan and lease
 charge-offs
 (annualized)/Average loans
 and leases                       1.27%       0.76%       0.34%



                                For the three           For the twelve
                                months ended,            months ended
                            ----------------------------------------------
                             03/31/09    12/31/08    12/31/09    12/31/08
                            ----------  ----------  ----------  ----------
Net loan and lease
 charge-offs                $      554  $    4,263  $    9,205  $    8,737
Net loan and lease
 charge-offs
 (annualized)/Average loans
 and leases                       0.16%       1.18%       0.63%       0.62%





                    Univest Corporation of Pennsylvania
                   Consolidated Selected Financial Data
                            December 31, 2009

(Dollars in thousands,
 except per share data)

                               For the three months ended,
                            ----------------------------------
For the period:              12/31/09    09/30/09    06/30/09
                            ----------  ----------  ----------
Interest income             $   23,184  $   24,244  $   24,529
Interest expense                 6,409       6,901       7,356
                            ----------  ----------  ----------
   Net interest income          16,775      17,343      17,173
Provision for loan and
 lease losses                    7,449       5,928       5,353
                            ----------  ----------  ----------
Net interest income after
 provision                       9,326      11,415      11,820
Noninterest income:
   Trust fee income              1,461       1,325       1,325
   Service charges on
    deposit accounts             1,986       1,745       1,692
   Investment advisory
    commission and fee income    1,025         876         766
   Insurance commissions
    and fee income               1,514       1,470       1,964
   Bank owned life
    insurance income               351         405         408
   Other-than-temporary
    impairment                    (761)        (47)       (223)
   Net gain (loss) on
    sales of securities          1,023         112         (22)
   Gain on sales of loans
    held for sale                  891         401         669
   Other income                  1,329         811       1,247
                            ----------  ----------  ----------
Total noninterest income         8,819       7,098       7,826
Noninterest expense
Salaries and benefits            9,755       8,818       9,417
Premises and equipment           2,138       2,216       2,125
Deposit insurance premiums         599         526       1,477
Other expense                    4,976       4,003       3,771
                            ----------  ----------  ----------
Total noninterest expense       17,468      15,563      16,790
                            ----------  ----------  ----------
Income before taxes                677       2,950       2,856
Applicable income taxes           (845)        197         187
                            ----------  ----------  ----------
Net income                  $    1,522  $    2,753  $    2,669
                            ==========  ==========  ==========

Per Common Share Data:
Book value per share        $    16.27  $    16.30  $    16.00
Net income per share:
   Basic                    $     0.09  $     0.19  $     0.21
   Diluted                  $     0.09  $     0.19  $     0.21
Dividends per share         $     0.20  $     0.20  $     0.20
Weighted average shares
 outstanding                16,464,824  13,635,961  13,023,148
Period end shares
 outstanding                16,465,083  16,442,021  13,023,704



                                For the three          For the twelve
                                months ended,           months ended
                            ----------------------------------------------
For the period:              03/31/09    12/31/08    12/31/09    12/31/08
                            ----------  ----------  ----------  ----------
Interest income             $   24,402  $   26,455  $   96,359  $  108,057
Interest expense                 8,057       9,630      28,723      42,310
                            ----------  ----------  ----------  ----------
   Net interest income          16,345      16,825      67,636      65,747
Provision for loan and
 lease losses                    2,156       2,427      20,886       8,769
                            ----------  ----------  ----------  ----------
Net interest income after
 provision                      14,189      14,398      46,750      56,978
Noninterest income:
   Trust fee income              1,425       1,171       5,536       6,004
   Service charges on
    deposit accounts             1,613       1,723       7,036       6,808
   Investment advisory
    commission and fee income      760         536       3,427       2,374
   Insurance commissions
    and fee income               2,133       1,128       7,081       5,723
   Bank owned life
    insurance income               157          25       1,321       2,791
   Other-than-temporary
    impairment                  (1,177)       (323)     (2,208)     (1,251)
   Net gain (loss) on
    sales of securities             37         201       1,150         280
   Gain on sales of loans
    held for sale                  261          21       2,222          81
   Other income                    965         846       4,352       3,805
                            ----------  ----------  ----------  ----------
Total noninterest income         6,174       5,328      29,917      26,615
Noninterest expense
Salaries and benefits            9,432       8,291      37,422      32,413
Premises and equipment           2,233       2,225       8,712       8,477
Deposit insurance premiums         583         477       3,185         768
Other expense                    3,255       3,874      16,005      15,567
                            ----------  ----------  ----------  ----------
Total noninterest expense       15,503      14,867      65,324      57,225
                            ----------  ----------  ----------  ----------
Income before taxes              4,860       4,859      11,343      26,368
Applicable income taxes          1,024       1,054         563       5,778
                            ----------  ----------  ----------  ----------
Net income                  $    3,836  $    3,805  $   10,780  $   20,590
                            ==========  ==========  ==========  ==========

Per Common Share Data:
Book value per share        $    15.87  $    15.71  $    16.27  $    15.71
Net income per share:
   Basic                    $     0.30  $     0.30  $     0.75  $     1.60
   Diluted                  $     0.30  $     0.29  $     0.75  $     1.60
Dividends per share         $     0.20  $     0.20  $     0.80  $     0.80
Weighted average shares
 outstanding                12,977,369  12,921,814  14,347,104  12,872,899
Period end shares
 outstanding                12,996,291  12,938,514  16,465,083  12,938,514





                    Univest Corporation of Pennsylvania
                    Consolidated Selected Financial Data
                                 12/31/09

                                                               For the
                                                               twelve
                           For the three months ended,       months ended
                    --------------------------------------  --------------
Profitability Ratios 12/31/ 09/30/  06/30/  03/31/  12/31/  12/31/  12/31/
 (annualized)          09     09      09      09      08      09      08
                    ------  ------  ------  ------  ------  ------  ------

Return on average
 assets               0.29%   0.52%   0.52%   0.76%   0.75%   0.52%   1.02%
Return on average
 shareholders'
 equity               2.26%   4.55%   5.14%   7.61%   7.37%   4.68%  10.09%
Net interest margin
 (FTE)                3.69%   3.82%   3.87%   3.76%   3.83%   3.79%   3.73%
Efficiency ratio (1) 65.28%  60.58%  63.96%  65.70%  64.32%  63.88%  58.78%

Capitalization
 Ratios

Dividends paid to
 net income         216.43% 119.47%  97.60%  67.75%  67.94% 109.37%  50.03%
Shareholders'
 equity to assets
 (Period End)        12.84%  12.66%   9.98%   9.98%   9.75%  12.84%   9.75%
Tangible common
 equity to tangible
 assets              10.44%  10.28%   7.49%   7.47%   7.25%  10.44%   7.25%


Regulatory Capital
 Ratios (Period End)
Tier 1 leverage
 ratio               11.46%  11.51%   8.86%   8.89%   8.94%  11.46%   8.94%
Tier 1 risk-based
 capital ratio       14.41%  14.12%  10.65%  10.72%  10.65%  14.41%  10.65%
Total risk-based
 capital ratio       15.76%  15.47%  11.89%  11.74%  11.60%  15.76%  11.60%



(1) Total operating expenses to net interest income before loan loss
    provision plus non-interest income adjusted for tax equivalent income.

Contact Information

  • CONTACT:
    Jeff Schweitzer
    UNIVEST CORPORATION OF PENNSYLVANIA
    Chief Financial Officer
    215-721-2458
    schweitzerj@univest.net