Univest Corporation of Pennsylvania - Univest Bank and Trust Co.℠ - Reports Fourth Quarter and Year End Earnings
SOUDERTON, Pa., January 25,
2011 - Univest Corporation of Pennsylvania (NASDAQ:
UVSP), parent company of Univest Bank and Trust
Co.SM, a full-service financial institution with 136
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 fourth quarter
and year ended December 31, 2011. Univest reported net income of
$5.3 million or $0.32 diluted earnings per share for the quarter
ended December 31, 2011, compared to $4.9 million or $0.30 diluted
earnings per share for the comparable period in the prior year.
For the year ended December 31, 2011, Univest reported net
income of $18.9 million or $1.13 diluted earnings per share,
compared to $15.8 million or $0.95 diluted earnings per share for
the comparable period in the prior year. The increase in net income
of $3.1 million during 2011 represents an increase of 19.84% over
2010.
Deposits
Total deposits increased $24.2 million from September 30, 2011
and $63.0 million from December 31, 2010. Core deposits increased
$48.2 million for the quarter and $72.2 million for the year ended
December 31, 2011 primarily due to new customers choosing
Univest.
Loans
Gross loans and leases increased $10.0 million from September
30, 2011 and decreased $24.8 million from December 31, 2010. While
the Corporation saw increased loan activity in the fourth quarter,
overall credit demand and utilization of lines by businesses and
consumers remains light as a result of the prolonged challenging
economic environment.
Net Interest Income and Margin
Net interest income decreased $866 thousand or 4.51% to $18.3
million in the fourth quarter of 2011 compared to the fourth
quarter of 2010. The net interest margin on a tax-equivalent basis
for the fourth quarter of 2011 was 3.96% compared to 4.15% during
the third quarter of 2011 and 4.18% in the fourth quarter of 2010.
The decrease in the net interest margin during the fourth quarter
of 2011 from the same period in the prior year was primarily due to
a 67 basis point decrease in the ratio of average interest-earning
assets to interest-bearing liabilities. Excess funds generated from
the increases in public funds deposits, calls of investment
securities and lower loan volume from continued light credit demand
were invested in interest-earning deposits as the Corporation
continues to keep the investment portfolio short. Average
interest-earning deposits increased $80.9 million comparing the
fourth quarter of 2011 from the same period in the prior year.
Net interest income of $74.7 million for the year ended December
31, 2011 increased $1.2 million or 1.64% compared to the year ended
December 31, 2010. The net interest margin on a tax-equivalent
basis for the year ended December 31, 2011 increased 4 basis points
to 4.15% from 4.11% for the prior year. The year-to-date increases
in the net interest income and the net interest margin were a
result of declines in the cost of interest-bearing liabilities,
exceeding the declines in yields on interest-earning assets. The
increases were also attributed to declines in the volume of Federal
Home Loan Bank (FHLB) borrowings. The Corporation repaid its
maturing FHLB advances in 2010 reducing average year-to-date FHLB
advances from $45.8 million for the year ended December 31, 2010 to
$5.0 million for the year ended December 31, 2011. FHLB advances at
December 31, 2011 remained at $5.0 million.
Non-Interest Income
Non-interest income for the quarter ended December 31, 2011 was
$9.0 million, a decrease of $290 thousand or 3.13% from the
comparable period in the prior year. During the fourth quarter of
2011, service charges on deposit accounts declined $319 thousand
primarily due to changes in industry practices to benefit customers
impacting non-sufficient funds and overdraft fees, which were
implemented in July 2011; trust fee income decreased $161 thousand;
and the net gain on mortgage banking activities decreased by $127
thousand. In addition, other income was down $288 thousand mainly
due to a net gain on terminated leases during the fourth quarter of
2010. These unfavorable variances were partially offset by an
increase in investment advisory commissions and fee income of $587
thousand mostly as a result of attaining several new customers.
Non-interest income for the year ended December 31, 2011 was
$34.4 million, remaining level with the prior year. Non-interest
income for 2011 included increases from trust fees of $264
thousand, investment advisory commissions and fees of $747
thousand, bank owned life insurance income of $398 thousand, and an
increase in the net gain on sales of securities of $985 thousand.
Additionally, the year ended December 31, 2010 was impacted by fair
value write-downs on the ineffective portion of a fair value swap
of $1.1 million, which was terminated in August 2010. These
favorable variances were partially offset by a decline of $1.6
million in service charges on deposit accounts due to the
amendments to Regulation E which were implemented on August 15,
2010, and a decline of $1.1 million in the net gain on mortgage
banking activities due to weaker mortgage demand in the first six
months of 2011 with significant improvement in the last six months
of 2011 due to re-financings. Other income decreased $834 thousand
primarily due to an increase in mortgage servicing right impairment
charges of $641 thousand in 2011 compared to 2010 mainly due to the
decline in interest rates which increased the projected speeds of
prepayment, and an increase in the net loss on sales and fair value
write-downs of other real estate owned properties of $421 thousand.
The first quarter of 2010 also included proceeds from a litigation
settlement.
Non-Interest Expense
Non-interest expense for the fourth quarter of 2011 was $17.6
million, an increase of $1.4 million or 8.48% compared to the
fourth quarter of 2010. Salaries and benefits expense increased by
$746 thousand primarily due to higher commissions, employee
incentives, special awards for employees up through senior vice
president, and lower deferred loan origination costs partially
offset by lower restricted stock expense. Other expenses increased
$689 thousand primarily due to loan workout, legal and other real
estate owned expenses. The increases for the quarter were partially
offset by a decline in deposit insurance premiums of $255 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.
For the year ended December 31, 2011, non-interest expense was
$68.0 million, an increase of $661 thousand or 0.98% compared to
the same period in the prior year. This was attributed to an
increase of $196 thousand in salaries and benefits mainly as a
result of higher commissions, employee incentives, special awards
for employees up through senior vice president and annual
performance increases. Salaries and benefits expense also increased
as Univest continued to grow the mortgage banking business. These
increases were partially offset by higher deferred loan origination
costs. 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. In addition, non-interest expense included
increases in premises and equipment expenses of $497 thousand and
increases in loan workout, legal and other real estate owned
expenses. These unfavorable variances were partially offset by a
decline of $558 thousand in marketing and advertising expenses and
a decline of $631 thousand in deposit insurance premiums mainly due
to the amended assessment calculation requirement through the
FDIC.
Asset Quality and Provision for Loan and Lease
Losses
Non-accrual loans and leases, including non-accrual troubled
debt restructured loans, was $38.2 million, remaining level with
September 30, 2011 and down from $45.2 million at December 31,
2010. During the year ended December 31, 2011, charge-offs,
foreclosures and pay-downs exceeded the additions to non-accrual
loans. Net loan and lease charge-offs were $4.3 million during the
fourth quarter of 2011 compared to $5.2 million for the third
quarter of 2011 and $4.3 million for the fourth quarter of 2010.
For the year ended December 31, 2011, net loan and lease
charge-offs were $18.5 million or 1.28% of average loans and leases
compared to $15.5 million or 1.07% for the year ended December 31,
2010.
Nonperforming loans and leases as a percentage of total loans
and leases equaled 2.94% at December 31, 2011 compared to 2.96% at
September 30, 2011 and 3.16% at December 31, 2010. Other real
estate owned decreased from $7.7 million at September 30, 2011 to
$6.6 million at December 31, 2011 and was $2.4 million at December
31, 2010. During the fourth quarter of 2011, three properties were
sold with proceeds received totaling $1.1 million. As of December
31, 2011, a total of four properties remain in other real estate
owned.
The provision for loan and lease losses declined to $3.1 million
for the fourth quarter of 2011 from $3.6 million for the quarter
ended September 30, 2011 and $6.3 million for the quarter ended
December 31, 2010. The provision for loan and lease losses for the
year ended December 31, 2011 was $17.5 million, a reduction of $4.1
million compared to $21.6 million for the year ended December 31,
2010. The decrease in the year-to-date provision was primarily the
result of migration and resolution of loans through the loan
workout process, lower loan volume and a decrease in historical
loss factors. The allowance for loan and lease losses as a
percentage of total loans and leases was 2.07% at December 31, 2011
compared to 2.16% at September 30, 2011 and 2.10% at December 31,
2010. The allowance for loan and lease losses to nonperforming
loans and leases equaled 70.34% at December 31, 2011, compared to
72.85% at September 30, 2011 and 66.48% at December 31, 2010.
Capital
Univest continues to remain well-capitalized at December 31,
2011. Univest's total risk-based capital at December 31, 2011 was
15.56%, well in excess of the regulatory minimum for well
capitalized status of 10% for total risk-based capital.
During the quarter, Univest deployed $285 thousand of capital to
repurchase 20,629 shares of common stock through the stock
repurchase program. Maximum shares available for future repurchases
through the plan at December 31, 2011 was 566,745. Total shares
outstanding at December 31, 2011 were 16,702,376.
Dividend
On January 3, 2012, Univest Corporation paid a quarterly cash
dividend of $0.20 per share, which represented a 5.32% 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.