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

Marketwired

SOUDERTON, PA--(Marketwire -04/25/12)- Univest Corporation of Pennsylvania (UVSP - News), 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)/Averag
 e 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
                                               -----------------------------
                                                 Average   Income/  Average
                                                 Balance   Expense    Rate
                                               ---------- --------- -------
Assets:
Interest-earning deposits with other banks     $   59,453 $      38    0.26%
U.S. Government obligations                       147,146       519    1.42
Obligations of state and political
 subdivisions                                     116,918     1,708    5.88
Other debt and equity securities                  193,447     1,234    2.57
                                               ---------- ---------
  Total interest-earning deposits and
   investments                                    516,964     3,499    2.72
                                               ---------- ---------

Commercial, financial, and agricultural loans     440,906     4,742    4.33
Real estate-commercial and construction loans     534,079     6,988    5.26
Real estate-residential loans                     247,295     2,605    4.24
Loans to individuals                               44,497       630    5.69
Municipal loans and leases                        133,896     1,821    5.47
Lease financings                                   56,647     1,372    9.74
                                               ---------- ---------
  Gross loans and leases                        1,457,320    18,158    5.01
                                               ---------- ---------
    Total interest-earning assets               1,974,284    21,657    4.41
                                               ---------- ---------
Cash and due from banks                            34,956
Reserve for loan and lease losses                 (31,908)
Premises and equipment, net                        34,299
Other assets                                      168,820
                                               ----------
  Total assets                                 $2,180,451
                                               ==========

Liabilities:
Interest-bearing checking deposits             $  220,360 $      57    0.10
Money market savings                              310,878       148    0.19
Regular savings                                   498,572       264    0.21
Time deposits                                     400,433     1,384    1.39
                                               ---------- ---------
  Total time and interest-bearing deposits      1,430,243     1,853    0.52
                                               ---------- ---------

Securities sold under agreements to repurchase    113,695        53    0.19
Other short-term borrowings                         4,560        53    4.67
Long-term debt                                        440         4    3.66
Subordinated notes and capital securities          22,486       304    5.44
                                               ---------- ---------
  Total borrowings                                141,181       414    1.18
                                               ---------- ---------
  Total interest-bearing liabilities            1,571,424     2,267    0.58
                                               ---------- ---------
Demand deposits, non-interest bearing             294,067
Accrued expenses and other liabilities             39,889
                                               ----------
  Total liabilities                             1,905,380
                                               ----------

Shareholders' Equity
Common stock                                       91,332
Additional paid-in capital                         61,402
Retained earnings and other equity                122,337
                                               ----------
  Total shareholders' equity                      275,071
                                               ----------
  Total liabilities and shareholders' equity   $2,180,451
                                               ==========
Net interest income                                       $  19,390
                                                          =========

Net interest spread                                                    3.83
Effect of net interest-free funding sources                            0.12
                                                                    -------
Net interest margin                                                    3.95%
                                                                    =======
Ratio of average interest-earning assets to
 average interest-bearing liabilities              125.64%
                                               ==========



                                                For the Three Months Ended
                                                      March 31,
                                              ----------------------------
Tax Equivalent Basis                                        2011
                                              ----------------------------
                                                Average   Income/  Average
                                                Balance   Expense    Rate
                                              ---------- --------- -------
Assets:
Interest-earning deposits with other banks    $    6,279 $       3    0.19%
U.S. Government obligations                      170,658       717    1.70
Obligations of state and political
 subdivisions                                    109,026     1,721    6.40
Other debt and equity securities                 164,978     1,529    3.76
                                              ---------- ---------
  Total interest-earning deposits and
   investments                                   450,941     3,970    3.57
                                              ---------- ---------

Commercial, financial, and agricultural loans    428,636     5,171    4.89
Real estate-commercial and construction loans    558,304     7,251    5.27
Real estate-residential loans                    244,305     2,641    4.38
Loans to individuals                              43,010       626    5.90
Municipal loans and leases                       122,857     1,754    5.79
Lease financings                                  63,925     1,495    9.48
                                              ---------- ---------
  Gross loans and leases                       1,461,037    18,938    5.26
                                              ---------- ---------
    Total interest-earning assets              1,911,978    22,908    4.86
                                              ---------- ---------
Cash and due from banks                           36,101
Reserve for loan and lease losses                (32,402)
Premises and equipment, net                       34,624
Other assets                                     155,975
                                              ----------
  Total assets                                $2,106,276
                                              ==========

Liabilities:
Interest-bearing checking deposits            $  192,676 $      64    0.13
Money market savings                             308,797       201    0.26
Regular savings                                  481,404       463    0.39
Time deposits                                    411,030     1,738    1.71
                                              ---------- ---------
  Total time and interest-bearing deposits     1,393,907     2,466    0.72
                                              ---------- ---------

Securities sold under agreements to repurchase    96,446        71    0.30
Other short-term borrowings                       10,269         9    0.36
Long-term debt                                     5,000        47    3.81
Subordinated notes and capital securities         23,994       304    5.14
                                              ---------- ---------
  Total borrowings                               135,709       431    1.29
                                              ---------- ---------
  Total interest-bearing liabilities           1,529,616     2,897    0.77
                                              ---------- ---------
Demand deposits, non-interest bearing            276,155
Accrued expenses and other liabilities            32,162
                                              ----------
  Total liabilities                            1,837,933
                                              ----------

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

Net interest spread                                                   4.09
Effect of net interest-free funding sources                           0.15
                                                                   -------
Net interest margin                                                   4.24%
                                                                   =======
Ratio of average interest-earning assets to
 average interest-bearing liabilities             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:
CONTACT:
Jeff Schweitzer
UNIVEST CORPORATION OF PENNSYLVANIA
Chief Financial Officer
215-721-2458
schweitzerj@univest.net

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