SOURCE: Univest Corporation of Pennsylvania

Univest Corporation of Pennsylvania

April 25, 2012 12:28 ET

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

SOUDERTON, PA--(Marketwire - Apr 25, 2012) - Univest Corporation of Pennsylvania (NASDAQ: UVSP), parent company of Univest Bank and Trust Co., a full-service financial institution with more than 135 years of experience in delivering financial solutions including personal and business banking, online banking, residential mortgages, insurance products, investment and wealth advisory solutions, today announced financial results for the first quarter ended March 31, 2012. Univest reported net income of $5.3 million or $0.31 diluted earnings per share for the quarter ended March 31, 2012, a 36% increase in net income compared to $3.9 million or $0.23 diluted earnings per share for the quarter ended March 31, 2011.

Loans
Gross loans and leases increased $13.4 million from December 31, 2011 and increased $17.7 million from March 31, 2011. Commercial loans increased $7.9 million and residential mortgage loans increased $7.0 million during the quarter. While the Corporation continued to see increased loan activity in the first quarter, overall credit demand and utilization of lines by businesses and consumers remained light as a result of the prolonged challenging economic environment.

Deposits
Total deposits decreased $19.2 million from December 31, 2011 and increased $64.8 million from March 31, 2011. Core deposits, excluding public fund deposits, increased $18.2 million for the quarter and $83.7 million from March 31, 2011, primarily due to new customers choosing Univest.

Net Interest Income and Margin
Net interest income decreased $645 thousand or 3% to $18.2 million in the first quarter of 2012 compared to the first quarter of 2011. The net interest margin on a tax-equivalent basis for the first quarter of 2012 was 3.95%, flat compared to 3.96% during the fourth quarter of 2011, and down from 4.24% in the first quarter of 2011. The decline in net interest income and the net interest margin during the first quarter of 2012 from the same period in the prior year was primarily due to the re-investment of maturing and called investment securities with lower yielding investments due to the lower interest rate environment and lower rates on commercial business loans due to re-pricing and competitive pressures. The decline in net interest income and the net interest margin was partially offset by re-pricing of certificates of deposits and savings account products. The net interest margin also declined from excess cash funds invested in low rate, interest-earning deposits as credit demand remains light and the Corporation continues to keep the investment portfolio short. Average interest-earning deposits with the Federal Reserve Bank increased $50.5 million from the comparable period in the prior year.

Non-Interest Income
Non-interest income for the quarter ended March 31, 2012 was $11.0 million, an increase of $3.3 million or 42% from the comparable period in the prior year. The increase was primarily attributed to proceeds from bank owned life insurance death benefits of $989 thousand and an increase in the net gain on mortgage banking activities of $1.3 million due to stronger mortgage demand from increased re-finance activity. In addition, other income increased $616 thousand mainly due to a decrease in net loss on sales and write-downs of other real estate owned and positive valuation adjustments on mortgage servicing rights. During the first quarter of 2012, the Corporation recorded a net loss on sales and write-downs of other real estate owned of $31 thousand compared to $352 thousand for the same period in the prior year. During the first quarter of 2012, the Corporation reversed $212 thousand of negative valuation adjustments on mortgage servicing rights recorded primarily during the third quarter of 2011. In addition, the first quarter of 2012 included a net gain on sales of securities of $258 thousand. Partially offsetting these favorable variances was a decline in service charges on deposits of $236 thousand. This decline is primarily due to changes in industry practices to benefit customers impacting non-sufficient funds and overdraft fees, which were implemented in July 2011.

Non-Interest Expense
Non-interest expense for the first quarter of 2012 was $18.9 million, an increase of $2.1 million or 13% compared to the first quarter of 2011. Salaries and benefits expense increased $2.6 million primarily due to higher commissions related to increased mortgage banking activities, increased employee incentives, annual performance increases, and lower deferred loan origination costs. The increases for the quarter were partially offset by a decline in deposit insurance premiums of $269 thousand mainly due to the amended assessment calculation requirement through the FDIC rule implemented April 1, 2011. The payment was formerly based on deposits whereas the rule change now bases the payment on the average consolidated total assets less average tangible equity.

Asset Quality and Provision for Loan and Lease Losses
Non-accrual loans and leases, including non-accrual troubled debt restructured loans, decreased to $36.3 million at March 31, 2012 from $38.2 million at December 31, 2011 and $38.6 million at March 31, 2011. The decrease in non-accrual loans was mainly due to charge-offs and pay-downs exceeding additions to non-accrual loans. Accruing troubled debt restructured loans increased to $7.3 million at March 31, 2012 from $3.9 million at December 31, 2011, primarily due to the restructuring of loans for three borrowers in the commercial business, commercial real estate and construction loan categories. Accruing troubled debt restructured loans were $5.1 million at March 31, 2011. Net loan and lease charge-offs were $3.4 million during the first quarter of 2012 compared to $4.3 million and $3.2 million for the fourth and first quarters of 2011, respectively.

Nonperforming loans and leases as a percentage of total loans and leases were 3.02% at March 31, 2012 compared to 2.94% at December 31, 2011 and 3.07% at March 31, 2011. Other real estate owned decreased to $5.0 million, consisting of three properties at March 31, 2012, down from $6.6 million at December 31, 2011 and $6.1 million at March 31, 2011. During the first quarter of 2012, one property with a carrying value of $1.3 million was sold for $1.5 million resulting in a gain on sale of $210 thousand.

The provision for loan and lease losses was $4.1 million for the first quarter of 2012 compared to $3.1 million for the quarter ended December 31, 2011 and $5.1 million for the quarter ended March 31, 2011. The allowance for loan and lease losses as a percentage of total loans and leases was 2.10% at March 31, 2012 compared to 2.07% at December 31, 2011 and 2.27% at March 31, 2011. The allowance for loan and lease losses to nonperforming loans and leases equaled 69.39% at March 31, 2012, compared to 70.34% at December 31, 2011 and 74.12% at March 31, 2011.

Capital
Univest continues to remain well-capitalized at March 31, 2012. Univest's total risk-based capital at March 31, 2012 was 15.76%, well in excess of the regulatory minimum for well capitalized status of 10% for total risk-based capital.

Dividend
On April 2, 2012, Univest Corporation paid a quarterly cash dividend of $0.20 per share, which represented a 4.66% 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. 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
March 31, 2012
(Dollars in thousands)
Balance Sheet (Period End) 03/31/12 12/31/11 09/30/11 06/30/11 03/31/11
Assets $ 2,192,164 $ 2,206,839 $ 2,174,127 $ 2,058,377 $ 2,108,579
Securities 451,433 471,165 412,340 418,020 445,798
Loans held for sale 2,535 3,157 1,724 2,102 1,451
Loans and leases, gross 1,459,830 1,446,406 1,436,411 1,438,707 1,442,137
Allowance for loan and lease losses 30,597 29,870 31,002 32,601 32,804
Loans and leases, net 1,429,233 1,416,536 1,405,409 1,406,106 1,409,333
Total deposits 1,730,030 1,749,232 1,725,063 1,621,294 1,665,225
Non-interest bearing deposits 307,769 304,006 275,930 277,515 280,337
NOW, money market and savings 1,029,145 1,036,726 1,016,651 967,554 974,158
Time deposits 393,116 408,500 432,482 376,225 410,730
Borrowings 144,208 137,234 135,490 127,689 125,545
Shareholders' equity 275,525 272,979 275,099 273,022 268,673
Balance Sheet (Average) For the three months ended,
03/31/12 12/31/11 09/30/11 06/30/11 03/31/11
Assets $ 2,180,451 $ 2,174,857 $ 2,113,446 $ 2,096,173 $ 2,106,276
Securities 457,511 423,657 409,376 439,606 444,662
Loans and leases, gross 1,457,320 1,435,173 1,445,344 1,451,076 1,461,037
Deposits 1,724,310 1,727,861 1,672,452 1,655,812 1,670,062
Shareholders' equity 275,071 276,114 275,502 272,952 268,343
Asset Quality Data (Period End)
03/31/12 12/31/11 09/30/11 06/30/11 03/31/11
Nonaccrual loans and leases, including nonaccrual troubled debt restructured loans and leases $ 36,270 $ 38,207 $ 38,180 $ 43,513 $ 38,631
Accruing loans and leases 90 days or more past due 523 365 449 659 516
Accruing troubled debt restructured loans and leases 7,301 3,893 3,925 5,028 5,111
Other real estate owned 4,993 6,600 7,711 4,952 6,135
Nonperforming assets 49,087 49,065 50,265 54,152 50,393
Allowance for loan and lease losses 30,597 29,870 31,002 32,601 32,804
Nonperforming loans and leases / Loans and leases 3.02 % 2.94 % 2.96 % 3.42 % 3.07 %
Allowance for loan and lease losses / Loans and leases 2.10 % 2.07 % 2.16 % 2.27 % 2.27 %
Allowance for loan and lease losses / Nonperforming loans 69.39 % 70.34 % 72.85 % 66.26 % 74.12 %
For the three months ended,
03/31/12 12/31/11 09/30/11 06/30/11 03/31/11
Net loan and lease charge-offs $ 3,373 $ 4,272 $ 5,248 $ 5,759 $ 3,228
Net loan and lease charge-offs (annualized)/Average loans and leases 0.93 % 1.18 % 1.44 % 1.59 % 0.90 %
Univest Corporation of Pennsylvania
Consolidated Selected Financial Data
March 31, 2012
(Dollars in thousands, except per share data)
For the three months ended,
For the period: 03/31/12 12/31/11 09/30/11 06/30/11 03/31/11
Interest income $ 20,431 $ 20,821 $ 21,237 $ 21,704 $ 21,706
Interest expense 2,267 2,487 2,621 2,723 2,897
Net interest income 18,164 18,334 18,616 18,981 18,809
Provision for loan and lease losses 4,100 3,140 3,649 5,556 5,134
Net interest income after provision 14,064 15,194 14,967 13,425 13,675
Noninterest income:
Trust fee income 1,625 1,469 1,625 1,625 1,625
Service charges on deposit accounts 1,100 1,147 1,218 1,356 1,336
Investment advisory commission and fee income 1,256 1,778 1,239 1,194 1,162
Insurance commissions and fee income 2,267 1,674 1,787 2,072 2,200
Bank owned life insurance income 1,506 502 554 268 344
Other-than-temporary impairment (3 ) (5 ) (1 ) (3 ) (7 )
Net gain on sales of securities 258 - 848 569 -
Net gain (loss) on mortgage banking activities 1,272 652 913 328 (25 )
Other income 1,740 1,761 791 1,287 1,124
Total noninterest income 11,021 8,978 8,974 8,696 7,759
Noninterest expense
Salaries and benefits 11,563 9,725 9,888 9,634 8,983
Premises and equipment 2,428 2,544 2,387 2,326 2,527
Deposit insurance premiums 444 457 442 427 713
Other expense 4,441 4,837 4,578 4,019 4,523
Total noninterest expense 18,876 17,563 17,295 16,406 16,746
Income before taxes 6,209 6,609 6,646 5,715 4,688
Applicable income taxes 946 1,349 1,402 1,199 826
Net income $ 5,263 $ 5,260 $ 5,244 $ 4,516 $ 3,862
Per Common Share Data:
Book value per share $ 16.42 $ 16.34 $ 16.45 $ 16.27 $ 16.04
Net income per share:
Basic $ 0.31 $ 0.32 $ 0.31 $ 0.27 $ 0.23
Diluted $ 0.31 $ 0.32 $ 0.31 $ 0.27 $ 0.23
Dividends per share $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.20
Weighted average shares outstanding 16,749,134 16,716,160 16,770,741 16,771,969 16,712,282
Period end shares outstanding 16,780,416 16,702,376 16,727,099 16,777,379 16,745,935
Univest Corporation of Pennsylvania
Consolidated Selected Financial Data
March 31, 2012
For the three months ended,
Profitability Ratios (annualized) 03/31/12 12/31/11 09/30/11 06/30/11 03/31/11
Return on average assets 0.97 % 0.96 % 0.98 % 0.86 % 0.74 %
Return on average shareholders' equity 7.70 % 7.56 % 7.55 % 6.64 % 5.84 %
Net interest margin (FTE) 3.95 % 3.96 % 4.15 % 4.24 % 4.24 %
Efficiency ratio (1) 60.46 % 60.87 % 59.35 % 56.47 % 59.90 %
Capitalization Ratios
Dividends paid to net income 63.63 % 63.48 % 64.00 % 74.27 % 86.30 %
Shareholders' equity to assets (Period End) 12.57 % 12.37 % 12.65 % 13.26 % 12.74 %
Tangible common equity to tangible assets 10.18 % 10.00 % 10.34 % 10.80 % 10.32 %
Regulatory Capital Ratios (Period End)
Tier 1 leverage ratio 11.64 % 11.53 % 11.84 % 11.87 % 11.72 %
Tier 1 risk-based capital ratio 14.50 % 14.29 % 14.73 % 14.96 % 14.59 %
Total risk-based capital ratio 15.76 % 15.56 % 16.00 % 16.25 % 15.89 %
(1) Total operating expenses to net interest income before loan loss provision plus non-interest income adjusted for tax equivalent income.
Distribution of Assets, Liabilities and Shareholders' Equity: Interest Rates and Interest Differential
For the Three Months Ended March 31,
Tax Equivalent Basis 2012 2011
Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
Assets:
Interest-earning deposits with other banks $ 59,453 $ 38 0.26 % $ 6,279 $ 3 0.19 %
U.S. Government obligations 147,146 519 1.42 170,658 717 1.70
Obligations of state and political subdivisions 116,918 1,708 5.88 109,026 1,721 6.40
Other debt and equity securities 193,447 1,234 2.57 164,978 1,529 3.76
Total interest-earning deposits and investments 516,964 3,499 2.72 450,941 3,970 3.57
Commercial, financial, and agricultural loans 440,906 4,742 4.33 428,636 5,171 4.89
Real estate-commercial and construction loans 534,079 6,988 5.26 558,304 7,251 5.27
Real estate-residential loans 247,295 2,605 4.24 244,305 2,641 4.38
Loans to individuals 44,497 630 5.69 43,010 626 5.90
Municipal loans and leases 133,896 1,821 5.47 122,857 1,754 5.79
Lease financings 56,647 1,372 9.74 63,925 1,495 9.48
Gross loans and leases 1,457,320 18,158 5.01 1,461,037 18,938 5.26
Total interest-earning assets 1,974,284 21,657 4.41 1,911,978 22,908 4.86
Cash and due from banks 34,956 36,101
Reserve for loan and lease losses (31,908 ) (32,402 )
Premises and equipment, net 34,299 34,624
Other assets 168,820 155,975
Total assets $ 2,180,451 $ 2,106,276
Liabilities:
Interest-bearing checking deposits $ 220,360 $ 57 0.10 $ 192,676 $ 64 0.13
Money market savings 310,878 148 0.19 308,797 201 0.26
Regular savings 498,572 264 0.21 481,404 463 0.39
Time deposits 400,433 1,384 1.39 411,030 1,738 1.71
Total time and interest-bearing deposits 1,430,243 1,853 0.52 1,393,907 2,466 0.72
Securities sold under agreements to repurchase 113,695 53 0.19 96,446 71 0.30
Other short-term borrowings 4,560 53 4.67 10,269 9 0.36
Long-term debt 440 4 3.66 5,000 47 3.81
Subordinated notes and capital securities 22,486 304 5.44 23,994 304 5.14
Total borrowings 141,181 414 1.18 135,709 431 1.29
Total interest-bearing liabilities 1,571,424 2,267 0.58 1,529,616 2,897 0.77
Demand deposits, non-interest bearing 294,067 276,155
Accrued expenses and other liabilities 39,889 32,162
Total liabilities 1,905,380 1,837,933
Shareholders' Equity
Common stock 91,332 91,332
Additional paid-in capital 61,402 61,411
Retained earnings and other equity 122,337 115,600
Total shareholders' equity 275,071 268,343
Total liabilities and shareholders' equity $ 2,180,451 $ 2,106,276
Net interest income $ 19,390 $ 20,011
Net interest spread 3.83 4.09
Effect of net interest-free funding sources 0.12 0.15
Net interest margin 3.95 % 4.24 %
Ratio of average interest-earning assets to average interest-bearing liabilities 125.64 % 125.00 %
Notes: For rate calculation purposes, average loan and lease categories include unearned discount.
Nonaccrual loans and leases have been included in the average loan and lease balances.
Loans held for sale have been included in the average loan balances.
Tax-equivalent amounts for the three months ended March 31, 2012 and 2011 have been calculated using the Corporation's federal applicable rate of 35.0%.
N/M - Not meaningful

Contact Information

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