SOURCE: Univest Corporation of Pennsylvania

Univest Corporation of Pennsylvania

October 28, 2009 15:12 ET

Univest Corporation of Pennsylvania - Univest National Bank and Trust Co. - Reports Third Quarter Earnings

SOUDERTON, PA--(Marketwire - October 28, 2009) - Univest Corporation of Pennsylvania (NASDAQ: UVSP), parent company of Univest National Bank and Trust Co. of Souderton, Pa., today announced financial results for the third quarter ended September 30, 2009. Univest reported net income of $2.8 million or $0.19 diluted earnings per share for the quarter ended September 30, 2009, compared to net income of $4.2 million or $0.33 diluted earnings per share for the quarter ended September 30, 2008.

For the nine months ended September 30, 2009, Univest reported net income of $9.3 million or $0.68 diluted earnings per share compared to net income of $16.8 million or $1.30 diluted earnings per share reported for the nine months ended September 30, 2008. The decrease year over year is primarily due to an increase in the provision for loan and lease losses of $7.1 million, increased FDIC insurance expense of $2.3 million, along with death benefit claims on bank owned life insurance policies in the prior year of $1.9 million.

During the quarter ended September 30, 2009, Univest successfully completed a follow-on public offering of 3,392,500 shares of its common stock. The net proceeds from the offering to Univest were approximately $55.6 million. Univest continues to remain well-capitalized with total risk-based capital equaling 15.47% at September 30, 2009, well in excess of the regulatory minimum for well-capitalized status.

Net Interest Income and Margin

Net interest income increased $830 thousand or 5.03% in the third quarter of 2009 from the third quarter of 2008. The result is from the growth in average interest earning assets of $69.6 million or 3.8% combined with a decrease in the cost of interest-bearing liabilities.

The net interest margin on a tax-equivalent basis for the third quarter of 2009 increased 5 basis points to 3.82% compared to 3.77% for the third quarter of 2008. The increase in the net interest margin can be attributed to increased loan volume and declines in the cost of interest-bearing liabilities exceeding the declines in yields on total interest-earning assets.

Net interest income increased $1.9 million or 3.96% for the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008. The net interest margin on a tax equivalent basis for the nine months ended September 30, 2009 increased 9 basis points to 3.82% compared to 3.73% for the comparable period in the prior year. The increases in net interest income and net interest margin are primarily due to increased loan volume and declines in the cost of interest-bearing liabilities exceeding the declines in yields on total interest earning assets. Average loans increased $68.0 million or 4.9% year over year, which was driven by an increase in average commercial loans of $92.6 million or 9.1%.

Non-Interest Income

Total non-interest income increased for the quarter ended September 30, 2009 compared to the quarter ended September 30, 2008. For the quarter ended September 30, 2009, Univest reported total non-interest income of $7.1 million compared to $5.6 million for the comparable period in the prior year. This increase is primarily due to increased mortgage banking revenue of $360 thousand for the quarter ended September 30, 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 an other-than-temporary impairment charge on certain bank equity securities in the third quarter of 2008 of $693 thousand compared to a charge of $47 thousand in the third quarter of 2009.

Total non-interest income for the nine months ended September 30, 2009 decreased slightly compared to the corresponding period in the prior year. This decline is due to $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 $1.4 million recorded during the nine months ended September 30, 2009 compared to $928 thousand recorded during the nine months ended September 30, 2008. Excluding these items, total non-interest income increased $2.2 million compared to the same period in the prior year primarily due to increased mortgage banking revenue of $1.5 million along with increased revenues from the acquisitions of Trollinger Consulting Group and Liberty Benefits, Inc.

Non-Interest Expense

Non-interest expense for the third quarter of 2009 increased $1.9 million, or 13.9%, primarily due to higher FDIC insurance costs, salaries and employee benefits expense. FDIC insurance costs increased $343 thousand quarter over quarter primarily due to premium increases affecting all financial institutions. Salary and employee benefits expenses increased primarily due to increased pension costs, normal merit increases and increased headcount due to the acquisitions of Trollinger Consulting Group and Liberty Benefits, Inc. along with increased staff from our mortgage banking initiative launched in the fourth quarter of 2008.

Non-interest expense for the nine months ended September 30, 2009 increased $5.5 million, or 13.0%, primarily due to higher FDIC insurance costs, salaries and employee benefits expense. FDIC insurance costs increased $2.3 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 $3.5 million primarily due to increased pension expenses of $822 thousand along with normal merit increases combined with increased headcount from the acquisitions completed at the end of the year along with our recent mortgage banking initiatives.

Credit Quality and Provision for Loan and Lease Losses

Nonaccrual loans and leases were $33.1 million at September 30, 2009 compared to $5.0 million at December 31, 2008 and $7.9 million at September 30, 2008. Nonperforming loans and leases as a percentage of total loans and leases equaled 2.55% at September 30, 2009 compared to 0.75% at June 30, 2009 and 0.45% at December 31, 2008 and 0.69% at September 30, 2008. The increase from year-end is primarily due to an increase in non-accrual loans of $28.1 million and an increase in restructured loans of $2.8 million. This increase is primarily due to two credits which went on non-accrual during the third quarter of 2009. One credit is a Shared National Credit to a continuing care retirement community in which Univest participates. The parent company of the community has come under financial difficulty and as a result, the parent company and all communities recently declared bankruptcy. The credit has $7.4 million outstanding at September 30, 2009. The second credit is for four separate facilities to a local commercial real estate developer/home builder which aggregate $16.6 million at September 30, 2009. Univest will continue to closely monitor these credits and may have to provide additional reserve in future quarters related to these credits. Net loan and lease charge-offs for the nine months ended September 30, 2009 were $4.6 million or 0.42% of average loans and leases compared to $4.5 million or 0.43% for the nine months ended September 30, 2008. The provision for loan and lease losses was $5.9 million for the third quarter of 2009 compared to $3.0 million for the corresponding quarter in the prior year. For the nine months ended September 30, 2009, the provision for loan and lease losses was $13.4 million compared to $6.3 million in 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 leases as a percentage of total loans and leases increased to 1.51% at September 30, 2009 from 1.29% at June 30, 2009 and 0.90% at December 31, 2008. The allowance for loan and leases losses to nonperforming loans and leases equaled 59.35% at September 30, 2009 which decreased from 172.30% at June 30, 2009 primarily due to the addition to non-accrual status of the two credits discussed above.

On October 1, 2009, Univest Corporation paid a quarterly cash dividend of $0.20 per share.

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
                                9/30/2009

(Dollars in thousands)

Balance Sheet
 (Period End)    09/30/09    06/30/09    03/31/09    12/31/08    09/30/08
                ----------  ----------  ----------  ----------  ----------
Assets          $2,117,849  $2,086,821  $2,065,901  $2,084,797  $2,046,390
Securities         472,491     425,774     410,357     432,266     406,965
Loans held for
 sale                1,439       1,119       5,072         544           -
Loans and
 leases, gross   1,451,128   1,464,886   1,450,420   1,449,892   1,441,899
Allowance for
 loan and lease
 losses             21,945      18,824      14,720      13,118      14,954
Loans and
 leases, net     1,429,183   1,446,062   1,435,700   1,436,774   1,426,945
Total deposits   1,536,903   1,565,076   1,573,052   1,527,328   1,507,527
Non-interest
 bearing
 deposits          226,395     222,877     218,148     221,863     226,606
NOW, Money
 Market and
 Savings           812,122     833,825     819,659     795,495     783,830
Time deposits      498,386     508,374     535,245     509,970     497,091
Borrowings         267,821     265,457     245,962     312,736     304,368
Shareholders'
 equity            268,052     208,358     206,238     203,207     204,251


Balance Sheet
 (Average)                    For the three months ended,
                ----------------------------------------------------------
                  09/30/09    06/30/09    03/31/09    12/31/08    09/30/08
                ----------  ----------  ----------  ----------  ----------
Assets          $2,098,964  $2,077,565  $2,059,965  $2,028,900  $2,020,537
Securities         447,925     413,142     419,995     403,783     412,271
Loans and
 leases, gross   1,456,446   1,471,231   1,446,095   1,437,721   1,422,774
Deposits         1,547,436   1,560,317   1,555,964   1,523,964   1,503,402
Shareholders'
 equity            240,267     208,321     204,544     205,384     205,062

Balance Sheet
 (Average)    For the nine months ended
                ----------------------
                 09/30/09    09/30/08
                ----------  ----------
Assets          $2,078,899  $2,023,725
Securities         427,123     434,544
Loans and
 leases, gross   1,457,961   1,389,965
Deposits         1,554,542   1,542,892
Shareholders'
 equity            217,841     203,662



Asset Quality
 Data (Period
 End)
                 09/30/09    06/30/09    03/31/09    12/31/08    09/30/08
                ----------  ----------  ----------  ----------  ----------
Nonaccrual
 loans and
 leases         $   33,116  $    5,762  $    3,675  $    5,029  $    7,871
Accruing loans
 and leases 90
 days or more
 past due              644       1,839       2,109       1,145       1,578
Troubled debt
 restructured        3,216       3,324         747         380         563
Other real
 estate owned        3,330       2,812       2,824         346         346
Nonperforming
 assets             40,306      13,737       9,355       6,900      10,358
Allowance for
 loan and lease
 losses             21,945      18,824      14,720      13,118      14,954
Nonperforming
 loans and
 leases / Loans
 and leases           2.55%       0.75%       0.45%       0.45%       0.69%
Allowance for
 loan and lease
 losses / Loans
 and leases           1.51%       1.29%       1.01%       0.90%       1.04%
Allowance for
 loan and lease
 losses /
 Nonperforming
 loans               59.35%     172.30%     225.39%     200.15%     149.36%


                               For the three months ended,
                ----------------------------------------------------------
                 09/30/09    06/30/09    03/31/09    12/31/08    09/30/08
                ----------  ----------  ----------  ----------  ----------
Net loan and
 lease
 charge-offs    $    2,807  $    1,249  $      554  $    4,263  $    1,804
Net loan and
 lease
 charge-offs
 (annualized)/
 Average loans
 and leases           0.76%       0.34%       0.16%       1.18%       0.50%



               For the nine months ended
                ----------------------
                 09/30/09    09/30/08
                ----------  ----------
Net loan and
 lease
 charge-offs    $    4,610  $    4,474
Net loan and
 lease
 charge-offs
 (annualized)/
 Average loans
 and leases           0.42%       0.43%





                    Univest Corporation of Pennsylvania
                   Consolidated Selected Financial Data
                            September 30, 2009

(Dollars in thousands, except per share data)


                                For the three months ended,
                ----------------------------------------------------------
For the period:  09/30/09    06/30/09    03/31/09    12/31/08    09/30/08
                ----------  ----------  ----------  ----------  ----------
Interest income $   24,244  $   24,529  $   24,402  $   26,455  $   26,661
Interest
 expense             6,901       7,356       8,057       9,630      10,148
                ----------  ----------  ----------  ----------  ----------
  Net interest
   income           17,343      17,173      16,345      16,825      16,513
Provision for
 loan and lease
 losses              5,928       5,353       2,156       2,427       3,046
                ----------  ----------  ----------  ----------  ----------
Net interest
 income after
 provision          11,415      11,820      14,189      14,398      13,467
Noninterest
 income:
  Trust fee
   income            1,325       1,325       1,425       1,171       1,578
  Service
   charges on
   deposit
   accounts          1,745       1,692       1,613       1,723       1,719
  Investment
   advisory
   commission
   and fee
   income              876         766         760         536         581
  Insurance
   commissions
   and fee
   income            1,470       1,964       2,133       1,128       1,266
  Bank owned
   life
   insurance
   income              405         408         157          25         241
  Other-than-
   temporary
   impairment on
   securities          (47)       (223)     (1,177)       (323)       (693)
  Net gain
   (loss) on
   sales of
   securities          112         (22)         37         201           1
  Gain on
   sales of
   loans held
   for sale            401         669         261          21          26
  Other income         811       1,247         965         846         845
                ----------  ----------  ----------  ----------  ----------
Total
 noninterest
 income              7,098       7,826       6,174       5,328       5,564
Noninterest
 expense
Salaries and
 benefits            8,818       9,417       9,432       8,291       7,935
Premises and
 equipment           2,216       2,125       2,233       2,225       2,110
Deposit
 insurance
 premiums              526       1,477         583         477         183
Other expense        4,003       3,771       3,255       3,874       3,437
                ----------  ----------  ----------  ----------  ----------
Total
 noninterest
 expense            15,563      16,790      15,503      14,867      13,665
                ----------  ----------  ----------  ----------  ----------
Income before
 taxes               2,950       2,856       4,860       4,859       5,366
Applicable
 income taxes          197         187       1,024       1,054       1,176
                ----------  ----------  ----------  ----------  ----------
Net income      $    2,753  $    2,669  $    3,836  $    3,805  $    4,190
                ==========  ==========  ==========  ==========  ==========

Per Common
 Share Data:
Book value per
 share          $    16.30  $    16.00  $    15.87  $    15.71  $    15.83
Net income per
 share:
   Basic        $     0.19  $     0.21  $     0.30  $     0.30  $     0.33
   Diluted      $     0.19  $     0.21  $     0.30  $     0.29  $     0.33
Dividends per
 share          $     0.20  $     0.20  $     0.20  $     0.20  $     0.20
Weighted
 average shares
 outstanding    13,635,961  13,023,148  12,977,369  12,921,814  12,874,648
Period end
 shares
 outstanding    16,442,021  13,023,704  12,996,291  12,938,514  12,905,326



(Dollars in thousands, except per share data)

                  For the nine months
                        ended
                ----------------------
For the period:  09/30/09    09/30/08
                ----------  ----------
Interest income $   73,175  $   81,602
Interest
 expense            22,314      32,680
                ----------  ----------
  Net interest
   income           50,861      48,922
Provision for
 loan and lease
 losses             13,437       6,342
                ----------  ----------
Net interest
 income after
 provision          37,424      42,580
Noninterest
 income:
  Trust fee
   income            4,075       4,833
  Service
   charges on
   deposit
   accounts          5,050       5,085
  Investment
   advisory
   commission
   and fee
   income            2,402       1,838
  Insurance
   commissions
   and fee
   income            5,567       4,595
  Bank owned
   life
   insurance
   income              970       2,766
  Other-than-
   temporary
   impairment on
   securities       (1,447)       (928)
  Net gain
   (loss) on
   sales of
   securities          127          79
  Gain on
   sales of
   loans held
   for sale          1,331          61
  Other income       3,023       2,958
                ----------  ----------
Total
 noninterest
 income             21,098      21,287
Noninterest
 expense
Salaries and
 benefits           27,667      24,122
Premises and
 equipment           6,574       6,252
Deposit
 insurance
 premiums            2,586         291
Other expense       11,029      11,693
                ----------  ----------
Total
 noninterest
 expense            47,856      42,358
                ----------  ----------
Income before
 taxes              10,666      21,509
Applicable
 income taxes        1,408       4,724
                ----------  ----------
Net income      $    9,258  $   16,785
                ==========  ==========

Per Common
 Share Data:
Book value per
 share          $    16.30  $    15.83
Net income per
 share:
   Basic        $     0.68  $     1.31
   Diluted      $     0.68  $     1.30
Dividends per
 share          $     0.60  $     0.60
Weighted
 average shares
 outstanding    14,873,152  12,856,462
Period end
 shares
 outstanding    16,442,021  12,905,326





                    Univest Corporation of Pennsylvania
                   Consolidated Selected Financial Data
                                  9/30/09


                                  For the three months ended,
                     -----------------------------------------------------
                     09/30/09   06/30/09   03/31/09   12/31/08   09/30/08
                     ---------  ---------  ---------  ---------  ---------
Profitability Ratios
 (annualized)
Return on average
 assets                   0.52%      0.52%      0.76%      0.75%      0.82%
Return on average
 shareholders'
 equity                   4.55%      5.14%      7.61%      7.37%      8.13%
Net interest margin
 (FTE)                    3.82%      3.87%      3.76%      3.83%      3.77%
Efficiency ratio (1)     60.58%     63.96%     65.70%     64.32%     59.17%


Capitalization
 Ratios
Dividends paid to
 net income             119.47%     97.60%     67.75%     67.94%     61.50%
Shareholders' equity
 to assets (Period
 End)                    12.66%      9.98%      9.98%      9.75%      9.98%
Tangible common
 equity to tangible
 assets                  10.28%      7.49%      7.47%      7.25%      7.87%


Regulatory Capital
 Ratios  (Period
 End)
Tier 1 leverage
 ratio                   11.51%      8.86%      8.89%      8.94%      9.29%
Tier 1 risk-based
 capital ratio           14.12%     10.65%     10.72%     10.65%     11.22%
Risk-based capital
 ratio                   15.47%     11.89%     11.74%     11.60%     12.30%



                         Year to date
                     --------------------
                     09/30/09   09/30/08
                     ---------  ---------
Profitability Ratios
 (annualized)
Return on average
 assets                   0.60%      1.11%
Return on average
 shareholders'
 equity                   5.68%     11.01%
Net interest margin
 (FTE)                    3.82%      3.73%
Efficiency ratio (1)     63.35%     57.06%


Capitalization
 Ratios
Dividends paid to
 net income              91.74%     45.96%
Shareholders' equity
 to assets (Period
 End)                    12.66%      9.98%
Tangible common
 equity to tangible
 assets                  10.28%      7.87%


Regulatory Capital
 Ratios  (Period
 End)
Tier 1 leverage
 ratio                   11.51%      9.29%
Tier 1 risk-based
 capital ratio           14.12%     11.22%
Risk-based capital
 ratio                   15.47%     12.30%


(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