SOURCE: Univest Corporation of Pennsylvania

Univest Corporation of Pennsylvania

July 27, 2011 14:24 ET

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

SOUDERTON, PA--(Marketwire - Jul 27, 2011) - Univest Corporation of Pennsylvania (NASDAQ: UVSP), parent company of Univest Bank and Trust Co., a full-service financial institution with 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 second quarter. Univest reported net income of $4.5 million or $0.27 diluted earnings per share for the quarter ended June 30, 2011, compared to $3.7 million or $0.23 diluted earnings per share for the comparable period in the prior year. Net income for the six months ended June 30, 2011 was $8.4 million or $0.50 diluted earnings per share, compared to $6.7 million or $0.40 diluted earnings per share for the comparable period in the prior year.

Deposits
Total deposits decreased $43.9 million for the quarter and $65.0 million year to date. The decrease was primarily a result of a decline of public fund balances due to anticipated seasonal runoff of tax deposits. Total public fund balances decreased $29.9 million for the quarter and $49.2 million for the first six months.

Loans
Gross loans and leases decreased $3.4 million from March 31, 2011 and $32.5 million from December 31, 2010, primarily due to continued light credit demand and utilization of lines by businesses and consumers as a result of the prolonged challenging and uncertain economic environment.

Net Interest Income and Margin
Net interest income increased $705 thousand or 3.86% to $19.0 million in the second quarter of 2011 compared to the second quarter of 2010. The net interest margin on a tax-equivalent basis for the second quarter of 2011 remained at 4.24% from the first quarter ended March 31, 2011 and increased 13 basis points compared to 4.11% in the second quarter 2010.

Net interest income of $37.8 million for the first six months ended June 30, 2011 increased $2.4 million or 6.81% compared to the six months ended June 30, 2010. The net interest margin on a tax-equivalent basis for the six months ended June 30, 2011 increased 19 basis points to 4.24% from 4.05% for the six months ended June 30, 2010.

The increases in the net interest income and the net interest margin year to date were a result of declines in the cost of interest-bearing liabilities, primarily time deposits. The increases were also attributed to declines in the volume of Federal Home Loan Bank (FHLB) borrowings, exceeding the declines in yields on total interest-earning assets. The Corporation repaid its maturing FHLB advances in 2010 reducing FHLB advances from $54 million at June 30, 2010 to $5 million at December 31, 2010. FHLB advances at June 30, 2011 remained at $5 million.

Non-Interest Income
For the quarter ended June 30, 2011, Univest reported total non-interest income of $8.7 million compared to $8.1 million for the comparable period in the prior year. This $637 thousand or 7.90% increase was mainly attributed to a $569 thousand net gain on sales of securities primarily from the sale of mortgage-backed securities. Other factors contributing to the overall increase were an increase in insurance commissions and fee income of $176 thousand and an increase in trust fee income of $125 thousand. The increase in non-interest income was partially offset by a $456 thousand decline in service charges on deposit accounts primarily due to the amendments to Regulation E which were implemented on August 15, 2010; and a $260 thousand negative valuation adjustment for an other real estate owned commercial property based on the updated fair value. Additionally, the second quarter of 2010 was impacted by a net loss on the ineffective portion of a fair value swap of $516 thousand, which was terminated in August, 2010.

Total non-interest income for the six months ended June 30, 2011 was $16.5 million compared to $16.3 million for the six months ended June 30, 2010. The increase of $189 thousand was a result of increases from the sale of securities of $482 thousand, trust fee income of $250 thousand, investment advisory commissions and fees of $148 thousand and insurance commissions and fees of $133 thousand. The increase was offset by a decline of $902 thousand of service charges on deposit accounts, mainly due to the amendments to Regulatory E which were implemented on August 15, 2010; a decline of $632 thousand of net gain on mortgage banking activities as a result of negative fair value adjustments on the mortgage pipeline, as mortgage demand has softened due to a continued slow purchase market for housing; a net change of $254 thousand attributed to fair value write-downs on other real estate owned commercial property; and a litigation settlement in the first quarter of 2010. Additionally, the six months ended June 30, 2010 was impacted by a net loss on the ineffective portion of a fair value swap of $826 thousand, which was terminated in August, 2010.

Non-Interest Expense
Non-interest expense for the second quarter of 2011 decreased $503 thousand or 3.00% compared to the second quarter of 2010 as a result of a decline in deposit insurance premiums of $236 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 off of the average consolidated total assets less average tangible equity. Additionally, the decrease was attributed to a $524 thousand decline in marketing and advertising expenses during the quarter. These decreases for the quarter were partially offset by premises and equipment expenses and increases in salaries and benefits.

For the six months ended June 30, 2011, non-interest expenses decreased $836 thousand or 2.46% compared to the same period in the prior year. This was attributed to a decline of $663 thousand in salaries and benefits as a result of higher deferred loan origination costs partially offset by higher commissions expense, restricted stock expense and salaries and benefits expense to grow the mortgage banking business. The Corporation implemented higher deferred loan origination costs commencing during the fourth quarter of 2010 based upon an in-depth study performed which incorporated management's additional review time in connection with the loan approval process in the current environment. Additionally, the decrease was a result of a decline of $120 thousand in deposit insurance premiums and a $619 thousand decline in marketing and advertising expenses. These decreases were partially offset by an increase in premises and equipment expense.

Asset Quality and Provision for Loan and Lease Losses
Non-accrual loans and leases, including non-accrual troubled debt restructured loans, were $43.5 million at June 30, 2011 compared to $38.6 million at March 31, 2011 and $45.2 million at December 31, 2010. The increase in non-accrual loans was mainly due to the migration of one large Shared National Credit to a theatre to non-accrual status. This relationship represented $11.3 million in the aggregate of which $2.6 million was charged-off during the quarter and the remaining $8.7 million was moved to non-accrual with sufficient estimated collateral at June 30, 2011. The theatre continues to be open and operating. As a result of the $2.6 million charge-off, net loan and lease charge-offs increased from $3.2 million for the previous three months to $5.8 million at June 30, 2011. For the six months ended June 30, 2011, net loan and lease charge-offs were $9.0 million or 1.24% of average loans and leases compared to $5.4 million or 0.77% for the six months ended June 30, 2010.

Nonperforming loans and leases as a percentage of total loans and leases equaled 3.42% at June 30, 2011 compared to 3.07% at March 31, 2011 and 2.23% at June 30, 2010. Other real estate owned decreased from $6.1 million at March 31, 2011 to $5.0 million at June 30, 2011 due to the sale of one commercial property.

The provision for loan and lease losses was $5.6 million for the second quarter of 2011 compared to $5.1 million for the quarter ended March 31, 2011 and $4.9 million for the quarter ended June 30, 2010. The allowance for loan and lease losses as a percentage of total loans and leases for both the first and second quarters of 2011 was 2.27% compared to 2.01% at June 30, 2010. The allowance for loan and lease losses to nonperforming loans and leases equaled 66.26% at June 30, 2011, which declined from 74.12% at March 31, 2011. The allowance for loan and lease losses to nonperforming loans and leases was 90.08% at June 30, 2010.

Capital
Univest continues to remain well-capitalized at June 20, 2011. Univest's total risk-based capital at June 30, 2011 was 16.25%, well in excess of the regulatory minimum for well capitalized status of 10% for total risk-based capital.

Dividend
On July 1, 2011, Univest Corporation paid a quarterly cash dividend of $0.20 per share, which represented a 4.96% 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
June 30, 2011
(Dollars in thousands)
Balance Sheet (Period End) 06/30/11 03/31/11 12/31/10 09/30/10 06/30/10
Assets $ 2,058,377 $ 2,108,579 $ 2,133,893 $ 2,114,204 $ 2,088,572
Securities 418,020 445,798 467,024 420,998 434,677
Loans held for sale 2,102 1,451 4,178 3,801 2,485
Loans and leases, gross 1,438,707 1,442,137 1,471,186 1,467,382 1,449,147
Allowance for loan and lease losses 32,601 32,804 30,898 28,883 29,109
Loans and leases, net 1,406,106 1,409,333 1,440,288 1,438,499 1,420,038
Total deposits 1,621,294 1,665,225 1,686,270 1,677,641 1,609,772
Non-interest bearing deposits 277,515 280,337 271,125 272,805 255,880
NOW, Money Market and Savings 967,554 974,158 997,395 969,254 924,242
Time deposits 376,225 410,730 417,750 435,582 429,650
Borrowings 127,689 125,545 143,865 128,905 171,824
Shareholders' equity 273,022 268,673 266,224 270,773 269,524
Balance Sheet (Average) For the three months ended, For the six months ended,
06/30/11 03/31/11 12/31/10 09/30/10 06/30/10 06/30/11 06/30/10
Assets $ 2,096,173 $ 2,106,276 $ 2,125,112 $ 2,117,708 $ 2,090,930 $ 2,101,074 $ 2,064,970
Securities 439,606 444,662 449,031 431,193 442,902 442,120 426,138
Loans and leases, gross 1,451,076 1,461,037 1,461,766 1,459,820 1,425,278 1,456,029 1,423,066
Deposits 1,655,812 1,670,062 1,689,701 1,642,613 1,606,621 1,662,899 1,572,338
Shareholders' equity 272,952 268,343 271,945 271,045 269,902 270,661 269,469
Asset Quality Data (Period End)
06/30/11 03/31/11 12/31/10 09/30/10 06/30/10
Nonaccrual loans and leases, including nonaccrual troubled debt restructured loans and leases
$
43,513


$
38,631


$
45,232


$
33,043


$
29,541

Accruing loans and leases 90 days or more past due 659 516 696 899 1,276
Accruing troubled debt restructured loans and leases 5,028 5,111 550 813 1,499
Other real estate owned 4,952 6,135 2,438 1,557 1,827
Nonperforming assets 54,152 50,393 48,916 36,312 34,143
Allowance for loan and lease losses 32,601 32,804 30,898 28,883 29,109
Nonperforming loans and leases / Loans and leases 3.42 % 3.07 % 3.16 % 2.37 % 2.23 %
Allowance for loan and lease losses / Loans and leases 2.27 % 2.27 % 2.10 % 1.97 % 2.01 %
Allowance for loan and lease losses / Nonperforming loans 66.26 % 74.12 % 66.48 % 83.10 % 90.08 %
For the three months ended, For the six months ended
06/30/11 03/31/11 12/31/10 09/30/10 06/30/10 06/30/11 06/30/10
Net loan and lease charge-offs $ 5,759 $ 3,228 $ 4,261 $ 5,755 $ 2,821 $ 8,987 $ 5,449
Net loan and lease charge-offs (annualized)/Average loans and leases 1.59 % 0.90 % 1.16 % 1.56 % 0.79 % 1.24 % 0.77 %
Univest Corporation of Pennsylvania
Consolidated Selected Financial Data
June 30, 2011
(Dollars in thousands, except per share data)
For the three months ended, For the six months ended,
For the period: 06/30/11 03/31/11 12/31/10 09/30/10 06/30/10 06/30/11 06/30/10
Interest income $ 21,704 $ 21,706 $ 22,580 $ 23,060 $ 22,878 $ 43,410 $ 45,363
Interest expense 2,723 2,897 3,380 4,107 4,602 5,620 9,982
Net interest income 18,981 18,809 19,200 18,953 18,276 37,790 35,381
Provision for loan and lease losses 5,556 5,134 6,276 5,529 4,865 10,690 9,760
Net interest income after provision 13,425 13,675 12,924 13,424 13,411 27,100 25,621
Noninterest income:
Trust fee income 1,625 1,625 1,630 1,450 1,500 3,250 3,000
Service charges on deposit accounts 1,356 1,336 1,466 1,633 1,812 2,692 3,594
Investment advisory commission and fee income 1,194 1,162 1,191 1,227 1,152 2,356 2,208
Insurance commissions and fee income 2,072 2,200 1,740 1,815 1,896 4,272 4,139
Bank owned life insurance income 268 344 410 326 202 612 534
Other-than-temporary impairment (3 ) (7 ) (3 ) (12 ) (42 ) (10 ) (47 )
Net gain on sales of securities 569 - 6 339 38 569 87
Net gain (loss) on mortgage banking activities 328 (25 ) 779 1,246 475 303 935
Net loss on interest rate swap - - - (246 ) (516 ) - (826 )
Other income 1,287 1,124 2,049 1,106 1,542 2,411 2,642
Total noninterest income 8,696 7,759 9,268 8,884 8,059 16,455 16,266
Noninterest expense
Salaries and benefits 9,634 8,983 8,979 9,775 9,469 18,617 19,280
Premises and equipment 2,326 2,527 2,351 2,435 2,209 4,853 4,501
Deposit insurance premiums 427 713 712 698 663 1,140 1,260
Other expense 4,019 4,523 4,148 4,263 4,568 8,542 8,947
Total noninterest expense 16,406 16,746 16,190 17,171 16,909 33,152 33,988
Income before taxes 5,715 4,688 6,002 5,137 4,561 10,403 7,899
Applicable income taxes 1,199 826 1,093 990 831 2,025 1,199
Net income $ 4,516 $ 3,862 $ 4,909 $ 4,147 $ 3,730 $ 8,378 $ 6,700
Per Common Share Data:
Book value per share $ 16.27 $ 16.04 $ 15.99 $ 16.29 $ 16.25 $ 16.27 $ 16.25
Net income per share:
Basic $ 0.27 $ 0.23 $ 0.30 $ 0.25 $ 0.23 $ 0.50 $ 0.40
Diluted $ 0.27 $ 0.23 $ 0.30 $ 0.25 $ 0.23 $ 0.50 $ 0.40
Dividends per share $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.40 $ 0.40
Weighted average shares outstanding 16,771,969 16,712,282 16,645,115 16,621,291 16,589,657 16,742,434 16,562,712
Period end shares outstanding 16,777,379 16,745,935 16,648,303 16,626,900 16,590,710 16,777,379 16,590,710
Univest Corporation of Pennsylvania
Consolidated Selected Financial Data
June 30, 2011
For the three months ended, For the six months ended,
Profitability Ratios (annualized) 06/30/11 03/31/11 12/31/10 09/30/10 06/30/10 06/30/11 06/30/10
Return on average assets 0.86 % 0.74 % 0.92 % 0.78 % 0.72 % 0.80 % 0.65 %
Return on average shareholders' equity 6.64 % 5.84 % 7.16 % 6.07 % 5.54 % 6.24 % 5.01 %
Net interest margin (FTE) 4.24 % 4.24 % 4.18 % 4.15 % 4.11 % 4.24 % 4.05 %
Efficiency ratio (1) 56.47 % 59.90 % 54.20 % 58.88 % 61.32 % 58.15 % 62.80 %
Capitalization Ratios
Dividends paid to net income 74.27 % 86.30 % 67.85 % 80.15 % 88.95 % 79.82 % 98.97 %
Shareholders' equity to assets (Period End) 13.26 % 12.74 % 12.48 % 12.81 % 12.90 % 13.26 % 12.90 %
Tangible common equity to tangible assets 10.80 % 10.32 % 10.08 % 10.46 % 10.51 % 10.80 % 10.51 %
Regulatory Capital Ratios (Period End)
Tier 1 leverage ratio 11.87 % 11.72 % 11.54 % 11.51 % 11.57 % 11.87 % 11.57 %
Tier 1 risk-based capital ratio 14.96 % 14.59 % 14.17 % 14.14 % 14.25 % 14.96 % 14.25 %
Total risk-based capital ratio 16.25 % 15.89 % 15.47 % 15.45 % 15.58 % 16.25 % 15.58 %
(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 June 30,
Tax Equivalent Basis 2011 2010
Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
Assets:
Interest-earning deposits with other banks $ 19,401 $ 12 0.25 % $ 26,700 $ 19 0.29 %
U.S. Government obligations 153,239 639 1.67 158,505 922 2.33
Obligations of state and political subdivisions 110,187 1,712 6.23 108,820 1,803 6.65
Other debt and equity securities 176,180 1,527 3.48 175,577 1,933 4.42
Total interest-earning deposits and investments 459,007 3,890 3.40 469,602 4,677 3.99
Commercial, financial, and agricultural loans 431,427 4,947 4.60 415,943 4,892 4.72
Real estate—commercial and construction loans 541,862 7,399 5.48 523,306 7,752 5.94
Real estate—residential loans 245,996 2,757 4.50 256,296 2,785 4.36
Loans to individuals 41,924 597 5.71 46,185 599 5.20
Municipal loans and leases 128,799 1,680 5.23 104,720 1,564 5.99
Lease financings 61,068 1,667 10.96 78,828 1,742 8.86
Gross loans and leases 1,451,076 19,047 5.26 1,425,278 19,334 5.44
Total interest-earning assets 1,910,083 22,937 4.82 1,894,880 24,011 5.08
Cash and due from banks 29,706 37,510
Reserve for loan and lease losses (33,995 ) (28,864 )
Premises and equipment, net 34,302 35,002
Other assets 156,077 152,402
Total assets $ 2,096,173 $ 2,090,930
Liabilities:
Interest-bearing checking deposits $ 210,487 $ 59 0.11 $ 182,156 $ 62 0.14
Money market savings 277,420 174 0.25 293,697 277 0.38
Regular savings 481,312 374 0.31 445,781 661 0.59
Time deposits 405,829 1,683 1.66 435,969 2,588 2.38
Total time and interest-bearing deposits 1,375,048 2,290 0.67 1,357,603 3,588 1.06
Securities sold under agreements to repurchase 101,093 78 0.31 98,802 111 0.45
Other short-term borrowings 3,498 2 0.23 51,936 542 4.19
Long-term debt 5,000 47 3.77 5,717 48 3.37
Subordinated notes and capital securities 23,619 306 5.20 25,119 313 5.00
Total borrowings 133,210 433 1.30 181,574 1,014 2.24
Total interest-bearing liabilities 1,508,258 2,723 0.72 1,539,177 4,602 1.20
Demand deposits, non-interest bearing 280,764 249,018
Accrued expenses and other liabilities 34,199 32,833
Total liabilities 1,823,221 1,821,028
Shareholders' Equity
Common stock 91,332 91,332
Additional paid-in capital 61,469 61,420
Retained earnings and other equity 120,151 117,150
Total shareholders' equity 272,952 269,902
Total liabilities and shareholders' equity $ 2,096,173 $ 2,090,930
Net interest income $ 20,214 $ 19,409
Net interest spread 4.10 3.88
Effect of net interest-free funding sources 0.14 0.23
Net interest margin 4.24 % 4.11 %
Ratio of average interest-earning assets to average interest-bearing liabilities 126.64 % 123.11 %
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 June 30, 2011 and 2010 have been calculated using the Corporation's federal applicable rate of 35.0%.
Distribution of Assets, Liabilities and Shareholders' Equity: Interest Rates and Interest Differential
For the Six Months Ended June 30,
Tax Equivalent Basis 2011 2010
Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
Assets:
Interest-earning deposits with other banks $ 12,876 $ 15 0.23 % $ 20,531 $ 30 0.29 %
U.S. Government obligations 161,900 1,356 1.69 136,457 1,663 2.46
Obligations of state and political subdivisions 109,610 3,433 6.32 107,733 3,543 6.63
Other debt and equity securities 170,610 3,056 3.61 181,948 3,953 4.38
Total interest-earning deposits and investments 454,996 7,860 3.48 446,669 9,189 4.15
Commercial, financial, and agricultural loans 430,039 10,118 4.74 412,820 9,557 4.67
Real estate—commercial and construction loans 550,038 14,650 5.37 523,693 15,314 5.90
Real estate—residential loans 245,155 5,398 4.44 258,615 5,643 4.40
Loans to individuals 42,464 1,223 5.81 46,843 1,397 6.01
Municipal loans and leases 125,656 3,411 5.47 101,104 2,989 5.96
Lease financings 62,677 3,185 10.25 79,991 3,465 8.74
Gross loans and leases 1,456,029 37,985 5.26 1,423,066 38,365 5.44
Total interest-earning assets 1,911,025 45,845 4.84 1,869,735 47,554 5.13
Cash and due from banks 32,886 34,582
Reserve for loan and lease losses (33,203 ) (27,728 )
Premises and equipment, net 34,462 34,931
Other assets 155,904 153,450
Total assets $ 2,101,074 $ 2,064,970
Liabilities:
Interest-bearing checking deposits $ 201,630 $ 123 0.12 $ 177,095 $ 119 0.14
Money market savings 293,022 375 0.26 286,843 593 0.42
Regular savings 481,358 837 0.35 430,940 1,442 0.67
Time deposits 408,416 3,421 1.69 435,072 5,654 2.62
Total time and interest-bearing deposits 1,384,426 4,756 0.69 1,329,950 7,808 1.18
Securities sold under agreements to repurchase 98,782 149 0.30 97,330 228 0.47
Other short-term borrowings 6,865 11 0.32 61,547 1,227 4.02
Long-term debt 5,000 94 3.79 5,732 94 3.31
Subordinated notes and capital securities 23,805 610 5.17 25,305 625 4.98
Total borrowings 134,452 864 1.30 189,914 2,174 2.31
Total interest-bearing liabilities 1,518,878 5,620 0.75 1,519,864 9,982 1.32
Demand deposits, non-interest bearing 278,473 242,388
Accrued expenses and other liabilities 33,062 33,249
Total liabilities 1,830,413 1,795,501
Shareholders' Equity
Common stock 91,332 91,332
Additional paid-in capital 61,441 61,420
Retained earnings and other equity 117,888 116,717
Total shareholders' equity 270,661 269,469
Total liabilities and shareholders' equity $ 2,101,074 $ 2,064,970
Net interest income $ 40,225 $ 37,572
Net interest spread 4.09 3.81
Effect of net interest-free funding sources 0.15 0.24
Net interest margin 4.24 % 4.05 %
Ratio of average interest-earning assets to average interest-bearing liabilities 125.82 % 123.02 %
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 six months ended June 30, 2011 and 2010 have been calculated using the Corporation's federal applicable rate of 35.0%.

Contact Information

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