SOURCE: Univest Corporation of Pennsylvania

Univest Corporation of Pennsylvania

April 27, 2011 14:34 ET

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

SOUDERTON, PA--(Marketwire - Apr 27, 2011) - Univest Corporation of Pennsylvania (NASDAQ: UVSP), parent company of Univest National 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 first quarter. Univest reported net income of $3.9 million or $0.23 diluted earnings per share for the quarter ended March 31, 2011, compared to $3.0 million or $0.18 diluted earnings per share for the comparable period in the prior year.

Deposits

Non-interest bearing deposits increased for the quarter by $9.2 million from December 31, 2010 as a result of successful campaigns to attract new consumer and business checking accounts. This increase was offset by a decline in NOW, money market and savings accounts of $23.2 million and time deposits of $7.0 million. At March 31, 2011, total non-time deposits increased $112.8 million or 9.88% over the comparable quarter ended March 31, 2010. The increase consisted of an increase of $33.4 million in non-interest bearing deposits and $79.4 million in NOW, money market and savings accounts. These increases were offset by a decline in time deposits of $20.2 million.

Loans

Gross loans and leases declined for the quarter by $29.0 million from December 31, 2010 primarily due to less credit demand and utilization of lines by both businesses and consumers responding to the current economic environment. Commercial loans and consumer loans declined $25.1 million and $1.9 million, respectively, during the quarter, while residential mortgage loans increased $2.9 million. Gross loans and leases increased slightly by $14.3 million compared to March 31, 2010.

Net Interest Income and Margin

Net interest income of $18.8 million increased $1.7 million, or 10.00%, in the first quarter of 2011 over the first quarter of 2010. The net interest margin on a tax-equivalent basis for the first quarter of 2011 increased 6 basis points to 4.24% from 4.18% for the fourth quarter ended December 31, 2010 and 25 basis points compared to 3.99% for the first quarter of 2010.

The increase in the net interest income and the net interest margin can be attributed to declines in the cost of interest-bearing liabilities, primarily time deposits as well as regular savings accounts and declines in the volume of Federal Home Loan Bank (FHLB) borrowings, exceeding the declines in yields on total interest-earning assets. The Corporation experienced core deposit growth in 2010 which allowed the Corporation to repay its maturing FHLB advances reducing FHLB advances from $64 million at March 31, 2010 to $5 million at December 31, 2010. FHLB advances at March 31, 2011 remained at $5 million.

Non-Interest Income

For the quarter ended March 31, 2011, Univest reported total non-interest income of $7.8 million compared to $8.2 million for the comparable period in the prior year. This 5.46% decrease is a result of the challenging economic climate and increased regulatory requirements. Service charges on deposit accounts declined by $446 thousand primarily due to the amendments to Regulation E which were implemented on August 15, 2010. Additionally, net gain on mortgage banking activities declined $485 thousand 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. These unfavorable variances were partially offset by increases in trust fee income and investment and advisory commissions and fees due to a rebounding equity market and customers increasing willingness to invest. Additionally, the first quarter of 2010 was impacted by a net loss on the ineffective portion of a fair value swap of $310 thousand which was terminated in August 2010.

Non-Interest Expense

Non-interest expense for the first quarter of 2011 decreased $333 thousand or 1.95% compared to the first quarter of 2010 as a result of a decline in salaries and benefits expenses of $828 thousand. The decline is primarily a result of higher deferred loan origination costs, lower healthcare costs and reduced pension plan expenses. 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 economic environment. These decreases were partially offset by increases in premises and equipment expense, deposit insurance premiums and interchange expenses.

Asset Quality and Provision for Loan and Lease Losses

Nonaccrual loans and leases, including nonaccrual troubled debt restructured loans, were $38.6 million at March 31, 2011 compared to $45.2 million at December 31, 2010 and $34.9 million at March 31, 2010. Accruing troubled debt restructured loans increased from $550 thousand at December 31, 2010 to $5.1 million at March 31, 2011 primarily due to the restructuring of two large real estate construction loan relationships. Nonperforming loans and leases as a percentage of total loans and leases equaled 3.07% at March 31, 2011 compared to 3.16% at December 31, 2010 and 2.58% at March 31, 2010. Other real estate owned increased from $2.4 million at December 31, 2010 to $6.1 million at March 31, 2011 and consists of five properties. Three of the five properties, which aggregate $3.0 million, are currently under agreements of sale. Net loan and lease charge-offs for the quarter were $3.2 million compared to $4.3 million for the previous three months.

The provision for loan and lease losses was $5.1 million for the first quarter of 2011 compared to $6.3 million for the quarter ended December 31, 2010 and $4.9 million for the quarter ended March 31, 2010. As a result of the provision exceeding net charge-offs combined with the decline in outstanding loans during the quarter, the allowance for loan and lease losses as a percentage of total loans and leases increased to 2.27% at March 31, 2011 from 2.10% at December 31, 2010 and 1.90% at March 31, 2010. The allowance for loan and lease losses to nonperforming loans and leases equaled 74.12% at March 31, 2011 which increased from 66.48% at December 31, 2010. The allowance for loan and lease losses to nonperforming loans and leases was 73.45% at March 31, 2010.

Capital

Univest continues to remain well-capitalized at March 31, 2011. Univest's total risk-based capital at March 31, 2011 was 15.89%, well in excess of the regulatory minimum for well capitalized status of 10% for total risk-based capital.

Dividend

On April 1, 2011, Univest Corporation paid a quarterly cash dividend of $0.20 per share, which represented a 4.49% 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, 2011

(Dollars in thousands)
Balance Sheet
 (Period End)    03/31/11    12/31/10    09/30/10    06/30/10    03/31/10
                ----------  ----------  ----------  ----------  ----------
Assets          $2,108,579  $2,133,893  $2,114,204  $2,088,572  $2,064,822
Securities         445,798     467,024     420,998     434,677     436,368
Loans held for
 sale                1,451       4,178       3,801       2,485       1,165
Loans and
 leases, gross   1,442,137   1,471,186   1,467,382   1,449,147   1,427,805
Allowance for
 loan and lease
 losses             32,804      30,898      28,883      29,109      27,065
Loans and
 leases, net     1,409,333   1,440,288   1,438,499   1,420,038   1,400,740
Total deposits   1,665,225   1,686,270   1,677,641   1,609,772   1,572,681
Non-interest
 bearing
 deposits          280,337     271,125     272,805     255,880     246,909
NOW, Money
 Market and
 Savings           974,158     997,395     969,254     924,242     894,799
Time deposits      410,730     417,750     435,582     429,650     430,973
Borrowings         125,545     143,865     128,905     171,824     187,637
Shareholders'
 equity            268,673     266,224     270,773     269,524     267,850


Balance Sheet
 (Average)                  For the three months ended,
                ----------------------------------------------------------
                 03/31/11    12/31/10    09/30/10    06/30/10    03/31/10
                ----------  ----------  ----------  ----------  ----------
Assets          $2,106,276  $2,125,112  $2,117,708  $2,090,930  $2,038,739
Securities         444,662     449,031     431,193     442,902     409,188
Loans and
 leases, gross   1,461,037   1,461,766   1,459,820   1,425,278   1,420,830
Deposits         1,670,062   1,689,701   1,642,613   1,606,621   1,537,676
Shareholders'
 equity            268,343     271,945     271,045     269,902     269,030


Asset Quality Data
 (Period End)
                 03/31/11    12/31/10    09/30/10    06/30/10    03/31/10
                ----------  ----------  ----------  ----------  ----------
Nonaccrual
 loans and
 leases,
 including
 nonaccrual
 troubled debt
 restructured
 loans and
 leases         $   38,631  $   45,232  $   33,043  $   29,541  $   34,856
Accruing loans
 and leases 90
 days or more
 past due              516         696         899       1,276         303
Accruing
 troubled debt
 restructured
 loans and
 leases              5,111         550         813       1,499       1,691
Other real
 estate owned        6,135       2,438       1,557       1,827       2,453
Nonperforming
 assets             50,393      48,916      36,312      34,143      39,303
Allowance for
 loan and lease
 losses             32,804      30,898      28,883      29,109      27,065
Nonperforming
 loans and
 leases / Loans
 and leases           3.07%       3.16%       2.37%       2.23%       2.58%
Allowance for
 loan and lease
 losses / Loans
 and leases           2.27%       2.10%       1.97%       2.01%       1.90%
Allowance for
 loan and lease
 losses /
 Nonperforming
 loans               74.12%      66.48%      83.10%      90.08%      73.45%


                               For the three months ended,
                ----------------------------------------------------------
                 03/31/11    12/31/10    09/30/10    06/30/10    03/31/10
                ----------  ----------  ----------  ----------  ----------
Net loan and
 lease
 charge-offs    $    3,228  $    4,261  $    5,755  $    2,821  $    2,628
Net loan and
 lease
 charge-offs
 (annualized)/
 Average loans
 and leases           0.90%       1.16%       1.56%       0.79%       0.75%




                    Univest Corporation of Pennsylvania
                   Consolidated Selected Financial Data
                              March 31, 2011

(Dollars in
 thousands,
 except per
 share data)
                                For the three months ended,
                ----------------------------------------------------------
For the period:  03/31/11    12/31/10    09/30/10    06/30/10    03/31/10
                ----------  ----------  ----------  ----------  ----------
Interest income $   21,706  $   22,580  $   23,060  $   22,878  $   22,485
Interest
 expense             2,897       3,380       4,107       4,602       5,380
                ----------  ----------  ----------  ----------  ----------
  Net interest
   income           18,809      19,200      18,953      18,276      17,105
Provision for
 loan and lease
 losses              5,134       6,276       5,529       4,865       4,895
                ----------  ----------  ----------  ----------  ----------
Net interest
 income after
 provision          13,675      12,924      13,424      13,411      12,210
Noninterest
 income:
  Trust fee income   1,625       1,630       1,450       1,500       1,500
  Service charges
   on deposit
   accounts          1,336       1,466       1,633       1,812       1,782
  Investment
   advisory
   commission and
   fee income        1,162       1,191       1,227       1,152       1,056
  Insurance
   commissions and
   fee income        2,200       1,740       1,815       1,896       2,243
  Bank owned
   life insurance
   income              344         410         326         202         332
  Other-than-
   temporary
   impairment           (7)         (3)        (12)        (42)         (5)
  Net gain on sales
   of securities         -           6         339          38          49
  Net (loss) gain on
   mortgage banking
   activities          (25)        779       1,246         475         460
  Net loss on
   interest
   rate swap             -           -        (246)       (516)       (310)
  Other income       1,124       2,049       1,106       1,542       1,100
                ----------  ----------  ----------  ----------  ----------
Total noninterest
 income              7,759       9,268       8,884       8,059       8,207
Noninterest expense
  Salaries and
   benefits          8,983       8,979       9,775       9,469       9,811
  Premises and
   equipment         2,527       2,351       2,435       2,209       2,292
  Deposit
   insurance
   premiums            713         712         698         663         597
  Other expense      4,523       4,148       4,263       4,568       4,379
                ----------  ----------  ----------  ----------  ----------
Total noninterest
 expense            16,746      16,190      17,171      16,909      17,079
                ----------  ----------  ----------  ----------  ----------
Income before
 taxes               4,688       6,002       5,137       4,561       3,338
Applicable
 income taxes          826       1,093         990         831         368
                ----------  ----------  ----------  ----------  ----------
Net income      $    3,862  $    4,909  $    4,147  $    3,730  $    2,970
                ==========  ==========  ==========  ==========  ==========

Per Common Share
 Data:
Book value per
 share          $    16.04  $    15.99  $    16.29  $    16.25  $    16.17
Net income per
 share:
  Basic         $     0.23  $     0.30  $     0.25  $     0.23  $     0.18
  Diluted       $     0.23  $     0.30  $     0.25  $     0.23  $     0.18
Dividends per
 share          $     0.20  $     0.20  $     0.20  $     0.20  $     0.20
Weighted average
 shares
 outstanding    16,712,282  16,645,115  16,621,291  16,589,657  16,535,461
Period end
 shares
 outstanding    16,745,935  16,648,303  16,626,900  16,590,710  16,561,807




                    Univest Corporation of Pennsylvania
                   Consolidated Selected Financial Data
                              March 31, 2011

                                    For the three months ended,
                          ------------------------------------------------
Profitability Ratios
 (annualized)             03/31/11  12/31/10  09/30/10  06/30/10  03/31/10
                          --------  --------  --------  --------  --------

Return on average assets      0.74%     0.92%     0.78%     0.72%     0.59%
Return on average
 shareholders' equity         5.84%     7.16%     6.07%     5.54%     4.48%
Net interest margin (FTE)     4.24%     4.18%     4.15%     4.11%     3.99%
Efficiency ratio (1)         59.90%    54.20%    58.88%    61.32%    64.33%

Capitalization Ratios

Dividends paid to net
 income                      86.30%    67.85%    80.15%    88.95%   111.55%
Shareholders' equity to
 assets (Period End)         12.74%    12.48%    12.81%    12.90%    12.97%
Tangible common equity to
 tangible assets             10.32%    10.08%    10.46%    10.51%    10.55%


Regulatory Capital Ratios
  (Period End)
Tier 1 leverage ratio        11.72%    11.54%    11.51%    11.57%    11.82%
Tier 1 risk-based capital
 ratio                       14.59%    14.17%    14.14%    14.25%    14.44%
Total risk-based capital
 ratio                       15.89%    15.47%    15.45%    15.58%    15.78%



(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              2011                       2010
                    ------------------------------------------------------
                      Average   Income/ Average   Average   Income/ Average
                      Balance   Expense  Rate     Balance   Expense  Rate
                    ----------  ------- ------  ----------  ------- ------
Assets:
Interest-earning
 deposits with
 other banks        $    6,279  $     3   0.19% $   14,293  $    11   0.31%
U.S. Government
 obligations           170,658      717   1.70     114,164      742   2.64
Obligations of
 state and
 political
 subdivisions          109,026    1,721   6.40     106,634    1,739   6.61
Other debt and
 equity securities     164,978    1,529   3.76     188,390    2,019   4.35
                    ----------  -------         ----------  -------
  Total interest-
   earning deposits
   and investments     450,941    3,970   3.57     423,481    4,511   4.32
                    ----------  -------         ----------  -------

Commercial,
 financial, and
 agricultural loans    428,636    5,171   4.89     409,663    4,666   4.62
Real estate--commercial
 and construction
 loans                 558,304    7,251   5.27     524,084    7,561   5.85
Real estate--residential
 loans                 244,305    2,641   4.38     260,959    2,858   4.44
Loans to individuals    43,010      626   5.90      47,509      798   6.81
Municipal loans and
 leases                122,478    1,731   5.73      97,448    1,425   5.93
Lease financings        64,304    1,518   9.57      81,167    1,723   8.61
                    ----------  -------         ----------  -------
  Gross loans and
   leases            1,461,037   18,938   5.26   1,420,830   19,031   5.43
                    ----------  -------         ----------  -------
     Total interest-
      earning assets 1,911,978   22,908   4.86   1,844,311   23,542   5.18
                    ----------  -------         ----------  -------
Cash and due from
 banks                  36,101                      31,621
Reserve for loan
 and lease losses      (32,402)                    (26,579)
Premises and
 equipment, net         34,624                      34,859
Other assets           155,975                     154,527
                    ----------                  ----------
  Total assets      $2,106,276                  $2,038,739
                    ==========                  ==========

Liabilities:
Interest-bearing
 checking deposits  $  192,676  $    64   0.13  $  171,978  $    57   0.13
Money market
 savings               308,797      201   0.26     279,912      317   0.46
Regular savings        481,404      463   0.39     415,934      781   0.76
Time deposits          411,030    1,738   1.71     434,166    3,065   2.86
                    ----------  -------         ----------  -------
  Total time and
   interest-bearing
   deposits          1,393,907    2,466   0.72   1,301,990    4,220   1.31
                    ----------  -------         ----------  -------

Securities sold
 under agreements
 to repurchase          96,446       71   0.30      95,841      117   0.50
Other short-term
 borrowings             10,269        9   0.36      71,266      685   3.90
Long-term debt           5,000       47   3.81       5,746       47   3.32
Subordinated notes
 and capital
 securities             23,994      304   5.14      25,494      311   4.95
                    ----------  -------         ----------  -------
  Total borrowings     135,709      431   1.29     198,347    1,160   2.37
                    ----------  -------         ----------  -------
  Total interest-
   bearing
   liabilities       1,529,616    2,897   0.77   1,500,337    5,380   1.45
                    ----------  -------         ----------  -------
Demand deposits,
 non-interest
 bearing               276,155                     235,686
Accrued expenses
 and other
 liabilities            32,162                      33,686
                    ----------                  ----------
  Total liabilities  1,837,933                   1,769,709
                    ----------                  ----------

Shareholders'
 Equity
Common stock            91,332                      91,332
Additional paid-in
 capital                61,411                      61,420
Retained earnings
 and other equity      115,600                     116,278
                    ----------                  ----------
  Total shareholders'
   equity              268,343                     269,030
                    ----------                  ----------
  Total liabilities
   and shareholders'
   equity           $2,106,276                  $2,038,739
                    ==========                  ==========
Net interest income             $20,011                     $18,162
                                =======                     =======

Net interest spread                       4.09                        3.73
Effect of net
 interest-free
 funding sources                          0.15                        0.26
                                        ------                      ------
Net interest margin                       4.24%                       3.99%
                                        ======                      ======
Ratio of average
 interest-earning
 assets to average
 interest-bearing
 liabilities            125.00%                     122.93%
                    ==========                  ==========

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, 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