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

Marketwired

SOUDERTON, PA--(Marketwired - Apr 24, 2013) - Univest Corporation of Pennsylvania ("Univest") (NASDAQ: UVSP), parent company of Univest Bank and Trust Co. and its insurance, investments and equipment financing subsidiaries, today announced financial results for the first quarter ended March 31, 2013. Univest reported net income of $5.4 million or $0.32 diluted earnings per share for the quarter ended March 31, 2013, a 3% increase in net income compared to $5.3 million or $0.31 diluted earnings per share for the quarter ended March 31, 2012.

Loans
Gross loans and leases increased $5.5 million from December 31, 2012 and $27.5 million from March 31, 2012. The growth in loans from the previous consecutive quarter occurred primarily in commercial loans, while the growth from the comparable quarter in the prior year occurred mainly in residential mortgages and equipment financing. While Univest continued to see increased loan activity during 2013, overall credit demand and utilization of lines by businesses and consumers remained light as a result of the sluggish economy.

Deposits
Total deposits grew $84.6 million from March 31, 2012, primarily due to an increase in demand deposits and new customers choosing Univest. Total deposits declined $50.7 million from December 31, 2012, mainly due to a decrease in public fund deposits of $38.9 million.

Net Interest Income and Margin
Net interest income decreased $221 thousand or 1% to $17.9 million in the first quarter of 2013 compared to the first quarter of 2012. The net interest margin on a tax-equivalent basis for the first quarter of 2013 was 3.83%, compared to 3.80% during the fourth quarter of 2012 and 3.95% in the first quarter of 2012.

The declines in net interest income and net interest margin during the first quarter of 2013 from the comparable period in the prior year were primarily due to the re-investment of maturing and called investment securities into lower yielding investments as a result of the lower interest rate environment and lower rates on commercial and residential real estate loans due to re-pricing and competitive pressures. The declines in net interest income and net interest margin were partially offset by favorable re-pricing of savings accounts and certificates of deposit.  

Non-Interest Income
Non-interest income for the quarter ended March 31, 2013 was $11.5 million, an increase of $454 thousand or 4% from the comparable period in the prior year. Insurance commission and fee income was up $451 thousand, primarily a result of the acquisition of Javers Group on May 31, 2012. Investment advisory commission and fee income was up $445 thousand, primarily due to a 16.3% increase in assets under supervision. The net gain on mortgage banking activities increased $424 thousand during the first quarter of 2013 over the same period in 2012 as refinance volume continues to be strong. Partially offsetting these favorable variances were proceeds from bank owned life insurance death benefits of $989 thousand recognized during the first quarter of 2012.

Non-Interest Expense
Non-interest expense for the first quarter of 2013 was $20.2 million, an increase of $1.4 million or 7% compared to the first quarter of 2012. Commission expense increased $693 thousand in the first quarter of 2013 compared to the same period in the prior year mainly related to increased production activity and revenues generated in our mortgage banking, equipment finance, investment and insurance businesses. During the first quarter of 2013, Univest implemented a company-wide restructuring plan which reduced staffing levels by 3.4% and included the announced closure and consolidation of our Silverdale financial service center, effective May 2013, into our Hilltown and Perkasie locations. As a result, Univest recorded severance and fixed asset retirement expenses of $437 thousand and $102 thousand, respectively. The restructuring involved strategic changes to ensure we are effectively managing costs, improving efficiencies and evolving the business to meet the needs of all of our stakeholders.

Asset Quality and Provision for Loan and Lease Losses
Non-accrual loans and leases, including non-accrual troubled debt restructured loans, decreased to $28.9 million at March 31, 2013 from $32.1 million at December 31, 2012 and $36.3 million at March 31, 2012. The decrease in non-accrual loans from December 31, 2012 was mainly due to the foreclosure of commercial loans for two borrower relationships totaling $1.7 million and loan charge-offs. Net loan and lease charge-offs were $1.6 million during the first quarter of 2013, down from $3.4 million for the first quarter of 2012.

Non-accrual loans and leases as a percentage of total loans and leases (held for investment and nonaccrual loans held for sale) were 1.94% at March 31, 2013, compared to 2.17% at December 31, 2012 and 2.48% at March 31, 2012. Other real estate owned was $3.6 million at March 31, 2013, compared to $1.6 million at December 31, 2012 and $5.0 million at March 31, 2012. The year-to-date increase was primarily due to the addition of commercial properties for $1.7 million, as previously discussed. Of the other real estate owned properties held at March 31, 2013, two locations with an associated carrying balance of $2.0 million are currently under agreements of sale.

The provision for loan and lease losses was $2.1 million for the first quarter of 2013, compared to $4.1 million for the quarter ended March 31, 2012. The decrease in the year-to-date provision was primarily the result of migration and resolution of loans through the loan workout process and a decrease in loss factors for commercial real estate loans. The allowance for loan and lease losses as a percentage of loans and leases held for investment was 1.70% at March 31, 2013, compared to 1.67% at December 31, 2012 and 2.10% at March 31, 2012. The allowance for loan and lease losses to nonaccrual loans and leases held for investment equaled 87.31% at March 31, 2013, compared to 77.01% at December 31, 2012 and 84.36% at March 31, 2012. 

Capital
Univest continues to remain well-capitalized at March 31, 2013. Total risk-based capital at March 31, 2013 was 15.37%, well in excess of the regulatory minimum for well capitalized status of 10%.

During the quarter, Univest repurchased 61 thousand shares of common stock at a cost of $1.0 million under our Board approved stock repurchase program. Shares available for future repurchases under the plan totaled 481 thousand at March 31, 2013. Total shares outstanding at March 31, 2013 were 16,762,695.

Dividend
On February 27, 2013, Univest declared a quarterly cash dividend of $0.20 per share, payable on April 1, 2013. This represented a 4.70% annualized yield based on the closing price of Univest's stock on the date the dividend was paid.

About Univest Corporation of Pennsylvania
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 of Pennsylvania and the reports Univest Corporation of Pennsylvania 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 of Pennsylvania. These forward-looking statements involve certain risks and uncertainties. There are a number of important factors that could cause Univest Corporation of Pennsylvania'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 of Pennsylvania is engaged; (6) technological issues which may adversely affect Univest Corporation of Pennsylvania's financial operations or customers; (7) changes in the securities markets or (8) risk factors mentioned in the reports and registration statements Univest Corporation of Pennsylvania files with the Securities and Exchange Commission. Univest Corporation of Pennsylvania 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, 2013
 
(Dollars in thousands)                    
                     
Balance Sheet (Period End)   03/31/13   12/31/12   09/30/12   06/30/12   03/31/12
Assets   $ 2,263,036   $ 2,304,841   $ 2,232,081   $ 2,188,727   $ 2,192,164
Investment securities     508,751     499,579     515,256     439,092     451,433
Loans held for sale     3,606     4,530     6,146     1,333     2,535
Loans and leases held for investment, gross     1,487,375     1,481,862     1,469,511     1,465,449     1,459,830
Allowance for loan and lease losses     25,222     24,746     27,096     30,502     30,597
Loans and leases held for investment, net     1,462,153     1,457,116     1,442,415     1,434,947     1,429,233
Total deposits     1,814,610     1,865,333     1,777,930     1,743,922     1,730,030
Noninterest-bearing deposits     380,447     368,948     334,856     334,828     307,769
NOW, money market and savings     1,127,643     1,164,874     1,101,147     1,052,217     1,029,145
Time deposits     306,520     331,511     341,927     356,877     393,116
Borrowings     124,895     117,276     132,920     121,878     144,208
Shareholders' equity     284,784     284,277     281,589     277,316     275,525
                               
                               
Balance Sheet (Average)   For the three months ended,
    03/31/13   12/31/12   09/30/12   06/30/12   03/31/12
Assets   $ 2,233,147   $ 2,264,863   $ 2,214,283   $ 2,173,698   $ 2,180,451
Investment securities     497,032     499,017     474,523     450,482     457,511
Loans and leases, gross     1,484,043     1,478,156     1,465,897     1,460,275     1,457,320
Deposits     1,790,108     1,823,707     1,771,454     1,726,441     1,724,310
Shareholders' equity     285,558     286,980     280,172     277,621     275,071
                               
                               
Asset Quality Data (Period End)                              
    03/31/13   12/31/12   09/30/12   06/30/12   03/31/12
                               
Nonaccrual loans and leases, including nonaccrual troubled debt restructured                              
loans and leases and nonaccrual loans held for sale   $ 28,887   $ 32,132   $ 30,525   $ 36,762   $ 36,270
Accruing loans and leases 90 days or more past due     366     441     690     384     523
Accruing troubled debt restructured loans and leases     13,037     13,457     13,383     7,591     7,301
Other real estate owned     3,616     1,607     3,301     3,922     4,993
Nonperforming assets     45,906     47,637     47,899     48,659     49,087
Allowance for loan and lease losses     25,222     24,746     27,096     30,502     30,597
Nonaccrual loans and leases / Loans and leases held for investment and nonaccrual loans held for sale     1.94%     2.17%     2.07%     2.51%     2.48%
Nonperforming loans and leases / Loans and leases held for investment and nonaccrual loans held for sale     2.84%     3.11%     3.03%     3.05%     3.02%
Allowance for loan and lease losses / Loans and leases held for investment     1.70%     1.67%     1.84%     2.08%     2.10%
Allowance for loan and lease losses / Nonaccrual loans and leases held for investment     87.31%     77.01%     97.03%     82.97%     84.36%
Allowance for loan and lease losses / Nonperforming loans and leases held for investment     59.64%     53.76%     64.52%     68.18%     69.39%
                               
                               
    For the three months ended,
    03/31/13   12/31/12   09/30/12   06/30/12   03/31/12
Net loan and lease charge-offs   $ 1,598   $ 4,732   $ 5,616   $ 1,438   $ 3,373
Net loan and lease charge-offs (annualized)/Average loans and leases     0.44%     1.27%     1.52%     0.40%     0.93%
                               
                               
                               
Univest Corporation of Pennsylvania
Consolidated Selected Financial Data
March 31, 2013
(Dollars in thousands, except per share data)                    
    For the three months ended,
For the period:   03/31/13   12/31/12   09/30/12   06/30/12   03/31/12
Interest income   $ 19,489   $ 19,988   $ 19,977   $ 20,258   $ 20,431
Interest expense     1,546     1,838     1,958     2,111     2,267
  Net interest income     17,943     18,150     18,019     18,147     18,164
Provision for loan and lease losses     2,074     2,382     2,210     1,343     4,100
Net interest income after provision     15,869     15,768     15,809     16,804     14,064
Noninterest income:                              
  Trust fee income     1,734     1,902     1,625     1,625     1,625
  Service charges on deposit accounts     1,086     1,128     1,122     1,079     1,100
  Investment advisory commission and fee income     1,701     1,407     1,350     1,350     1,256
  Insurance commission and fee income     2,718     2,078     2,129     2,057     2,267
  Bank owned life insurance income     504     365     463     336     1,506
  Other-than-temporary impairment     -     -     (4)     (6)     (3)
  Net gain on sales of investment securities     185     14     9     24     258
  Net gain on mortgage banking activities     1,696     1,571     2,171     1,074     1,272
  Other income     1,851     1,913     1,996     461     1,740
Total noninterest income     11,475     10,378     10,861     8,000     11,021
Noninterest expense                              
  Salaries and benefits     9,860     9,121     8,944     9,100     10,141
  Commissions     2,115     2,042     1,884     1,633     1,422
  Premises and equipment     2,581     2,664     2,597     2,513     2,428
  Deposit insurance premiums     392     410     406     429     444
  Restructuring charges     539     -     -     -     -
  Other expense     4,749     5,475     5,227     4,961     4,441
Total noninterest expense     20,236     19,712     19,058     18,636     18,876
Income before taxes     7,108     6,434     7,612     6,168     6,209
Income taxes     1,710     1,358     1,842     1,405     946
Net income   $ 5,398   $ 5,076   $ 5,770   $ 4,763   $ 5,263
                               
Per Common Share Data:                              
Book value per share   $ 16.99   $ 16.95   $ 16.80   $ 16.55   $ 16.42
Net income per share:                              
  Basic   $ 0.32   $ 0.30   $ 0.34   $ 0.28   $ 0.31
  Diluted   $ 0.32   $ 0.30   $ 0.34   $ 0.28   $ 0.31
Dividends declared per share   $ 0.20   $ 0.20   $ 0.20   $ 0.20   $ 0.20
Weighted average shares outstanding    16,788,152    16,765,199    16,760,080    16,770,290    16,749,134
Period end shares outstanding    16,762,695    16,770,232    16,765,126    16,759,893    16,780,416
                               
                               
                               
Univest Corporation of Pennsylvania
Consolidated Selected Financial Data
March 31, 2013
                     
    For the three months ended,
Profitability Ratios (annualized)   03/31/13   12/31/12   09/30/12   06/30/12   03/31/12
                     
Return on average assets   0.98%   0.89%   1.04%   0.88%   0.97%
Return on average shareholders' equity   7.67%   7.04%   8.19%   6.90%   7.70%
Net interest margin (FTE)   3.83%   3.80%   3.84%   3.97%   3.95%
Efficiency ratio (1)   65.61%   65.93%   62.84%   67.59%   60.46%
                     
Capitalization Ratios                    
                     
Dividends declared to net income   62.21%   66.06%   58.09%   70.48%   63.63%
Shareholders' equity to assets (Period End)   12.58%   12.33%   12.62%   12.67%   12.57%
Tangible common equity to tangible assets   10.08%   9.88%   10.12%   10.11%   10.18%
                     
                     
Regulatory Capital Ratios (Period End)                    
Tier 1 leverage ratio   11.71%   11.47%   11.48%   11.57%   11.64%
Tier 1 risk-based capital ratio   14.10%   14.35%   14.07%   14.38%   14.50%
Total risk-based capital ratio   15.37%   15.62%   15.34%   15.64%   15.76%
                     
(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   2013   2012
    Average   Income/   Average   Average   Income/   Average
    Balance   Expense   Rate   Balance   Expense   Rate
Assets:                                        
Interest-earning deposits with other banks   $ 40,552     $ 35   0.35 %   $ 59,453     $ 38   0.26 %
U.S. Government obligations     174,408       477   1.11       147,146       519   1.42  
Obligations of state and political subdivisions     121,686       1,579   5.26       116,918       1,708   5.88  
Other debt and equity securities     200,938       895   1.81       193,447       1,234   2.57  
  Total interest-earning deposits and investments     537,584       2,986   2.25       516,964       3,499   2.72  
                                         
Commercial, financial, and agricultural loans     438,434       4,676   4.33       440,906       4,742   4.33  
Real estate-commercial and construction loans     544,865       6,658   4.96       534,079       6,988   5.26  
Real estate-residential loans     257,435       2,455   3.87       247,295       2,605   4.24  
Loans to individuals     42,781       596   5.65       44,497       630   5.69  
Municipal loans and leases     134,450       1,716   5.18       133,896       1,821   5.47  
Lease financings     66,078       1,557   9.56       56,647       1,372   9.74  
  Gross loans and leases     1,484,043       17,658   4.83       1,457,320       18,158   5.01  
    Total interest-earning assets     2,021,627       20,644   4.14       1,974,284       21,657   4.41  
Cash and due from banks     40,070                   34,956              
Reserve for loan and lease losses     (25,245 )                 (31,908 )            
Premises and equipment, net     33,046                   34,299              
Other assets     163,649                   168,820              
  Total assets   $ 2,233,147                 $ 2,180,451              
                                         
Liabilities:                                        
Interest-bearing checking deposits   $ 244,089     $ 36   0.06     $ 220,360     $ 57   0.10  
Money market savings     325,677       80   0.10       310,878       148   0.19  
Regular savings     534,701       76   0.06       498,572       264   0.21  
Time deposits     323,982       1,048   1.31       400,433       1,384   1.39  
  Total time and interest-bearing deposits     1,428,449       1,240   0.35       1,430,243       1,853   0.52  
                                         
Short-term borrowings     102,444       17   0.07       118,255       106   0.36  
Long-term debt     -       -   -       440       4   3.66  
Subordinated notes and capital securities     20,982       289   5.59       22,486       304   5.44  
  Total borrowings     123,426       306   1.01       141,181       414   1.18  
  Total interest-bearing liabilities     1,551,875       1,546   0.40       1,571,424       2,267   0.58  
Demand deposits, non-interest bearing     361,659                   294,067              
Accrued expenses and other liabilities     34,055                   39,889              
  Total liabilities     1,947,589                   1,905,380              
                                         
Shareholders' Equity                                        
Common stock     91,332                   91,332              
Additional paid-in capital     64,721                   61,402              
Retained earnings and other equity     129,505                   122,337              
  Total shareholders' equity     285,558                   275,071              
  Total liabilities and shareholders' equity   $ 2,233,147                 $ 2,180,451              
Net interest income           $ 19,098                 $ 19,390      
                                         
Net interest spread                 3.74                   3.83  
Effect of net interest-free funding sources                 0.09                   0.12 %
Net interest margin                 3.83 %                 3.95  
Ratio of average interest-earning assets to average interest-bearing liabilities     130.27 %                 125.64 %            
                                         
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, 2013 and 2012 have been calculated using the Corporation's federal applicable rate of 35.0%.
     
     
     
Contact:
CONTACT:
Mike Keim
UNIVEST CORPORATION OF PENNSYLVANIA
Chief Financial Officer
215-721-2511
keimm@univest.net

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