Univest Corporation of Pennsylvania - Univest Bank and Trust Co.℠ - Reports Second Quarter Earnings
SOUDERTON, Pa., July 27,
2011 - Univest Corporation of Pennsylvania (listed on NASDAQ:
UVSP) parent company of Univest Bank and Trust
Co.SM, 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.