UNIVEST CORPORATION OF PENNSYLVANIA – UNIVEST BANK AND TRUST CO. – REPORTS THIRD QUARTER EARNINGS
SOUDERTON, Pa., October 24,
2012 - Univest Corporation of Pennsylvania (NASDAQ:
UVSP), parent company of Univest Bank and Trust Co. and its
insurance, investments and equipment financing subsidiaries, today
announced financial results for the quarter ended September 30,
2012. Univest reported net income of $5.8 million or $0.34 diluted
earnings per share for the quarter ended September 30, 2012, a 10%
increase in net income compared to $5.2 million or $0.31 diluted
earnings per share for the quarter ended September 30, 2011. Net
income for the nine months ended September 30, 2012 was $15.8
million or $0.94 diluted earnings per share, a 16% increase in net
income compared to $13.6 million or $0.81 diluted earnings per
share for the comparable period in the prior year.
Loans
Gross loans and leases increased $4.1 million from June 30, 2012,
$23.1 million from December 31, 2011 and $33.1 million from
September 30, 2011.The growth in loans occurred primarily in the
commercial and residential mortgage categories. While the
Corporation continued to see increased loan activity in the nine
months ended September 30, 2012, 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 increased $34.0 million from June 30, 2012, $28.7
million from December 31, 2011 and $52.9 million from September 30,
2011. Deposits, excluding public funds, grew $33.2 million from
December 31, 2011 and $81.8 million from September 30, 2011
primarily due to new customers choosing Univest. There was a
decline from June 30, 2012 of $18.1 million in non-public fund
deposits which was more than offset by an increase in public funds
of $52.1 million mostly due to anticipated seasonal tax
deposits.
Net Interest Income and
Margin
Net interest income decreased $597 thousand or 3% to $18.0 million
in the third quarter of 2012 compared to the third quarter of 2011.
The net interest margin on a tax-equivalent basis for the third
quarter of 2012 was 3.84%, compared to 3.97% during the second
quarter of 2012, and down from 4.15% in the third quarter of 2011.
Net interest income decreased $2.1 million or 4% to $54.3 million
for the nine months ended September 30, 2012 compared to the same
period in 2011. The net interest margin on a tax-equivalent basis
for the nine months ended September 30, 2012 was 3.92% compared to
4.21% for the nine months ended September 30, 2011.
The declines in net interest income
and the net interest margin were primarily due to the re-investment
of maturing and called investment securities with lower yielding
investments, as a result of the lower interest rate environment and
lower rates on commercial 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. During the third quarter of
2012, the Corporation increased its investments in government
agencies, treasuries and corporate bonds with longer maturity
durations as interest rate protection in the prolonged low rate
interest environment.
Non-Interest
Income
Non-interest income for the quarter ended September 30, 2012 was
$10.9 million, an increase of $1.9 million or 21% from
the comparable period in the prior year. During the third quarter
of 2012, the Corporation sold a former operations building located
in Hilltown, Pennsylvania with a book value of $702 thousand for
$2.0 million, resulting in a gain on sale of fixed assets of $1.3
million which is included in other income. The net gain on mortgage
banking activities increased $1.3 million during the third
quarter of 2012 over the same period in 2011 as re-finance
activity continues to be strong. In addition, insurance commission
and fee income was up $342 thousand mainly due to the Javers Group
acquisition on May 31, 2012. Partially offsetting these favorable
variances was an increase in the net loss on sales and write-downs
of other real estate owned of $480 thousand. The net gain on sales
of securities was $9 thousand for the third quarter of 2012
compared to $848 thousand during the third quarter of 2011.
Non-interest income for the nine
months ended September 30, 2012 was $29.9 million, an increase of
$4.5 million or 18% compared to the nine months ended September 30,
2011. The increase was primarily attributable to an increase in the
net gain on mortgage
banking activities of $3.3 million due to stronger mortgage demand
from increased re-finance activity, a $1.3 million gain on sale of
a former operations building during the third quarter of 2012 and
proceeds from bank owned life insurance death benefits of $989
thousand recognized during the first quarter of 2012. These
favorable variances were partially offset by an increase in the net
loss on sales and write-downs of other real estate owned of $965
thousand. In addition, the net gain on sales of securities was $291
thousand for the nine months ended September 30, 2012 compared to
$1.4 million for the same period in 2011.
Non-Interest
Expense
Non-interest expense for the third quarter of 2012 was $19.1
million, an increase of $1.8 million or 10% compared to the third
quarter of 2011. Salaries and benefits expense increased $940
thousand primarily due to higher commissions related to increased
mortgage banking activities, annual performance increases and
additional staff including the Javers Group acquisition.
Additionally, non-interest expense increased due to higher loan
workout, legal, employment services and equipment expenses.
Non-interest expense for the nine
months ended September 30, 2012 was $56.6 million, an increase of
$6.1 million or 12% compared to the nine months ended September 30,
2011. Salaries and benefits expense increased $4.6 million
primarily due to higher commissions related to increased mortgage
banking activities, increased employee incentives and annual
performance increases. Additionally, non-interest expense increased
due to higher loan workout, legal, employment services and
equipment expenses. The increases for the year-to-date were
partially offset by a decline in deposit insurance premiums of $303
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 $30.5 million at September
30, 2012 from $38.2 million at both December 31, 2011 and September
30, 2011. The decrease in non-accrual loans was mainly due to
loans returned to accrual of interest status, charge-offs and
pay-downs, which exceeded additions to non-accrual loans. During
the third quarter of 2012, one non-accrual troubled debt
restructured credit for $6.2 million was returned to accruing
troubled debt restructured status as the borrower made six
consecutive principal and interest payments. Net loan and lease
charge-offs were $5.6
million during the third quarter of 2012 compared to $5.2 million
for the third quarter of 2011.
Nonperforming loans and leases as a
percentage of total loans and leases (held for investment and
nonaccrual loans held for sale) were 3.03% at September 30, 2012
compared to 2.94% at December 31, 2011 and 2.96% at September 30,
2011. Other real estate owned decreased to $3.3 million, consisting
of three properties at September 30, 2012, compared to $6.6 million
at December 31, 2011 and $7.7 million at September 30, 2011. The
year-to-date decrease was primarily due to write-downs on
properties to their updated appraised values and the sale of a
commercial property, with a carrying value of $1.3 million, which
sold for $1.5 million resulting in a gain on sale of $210
thousand.
The provision for loan and lease
losses declined to $2.2 million for the third quarter of 2012
compared to $3.6 million for the quarter ended September 30, 2011.
The allowance for loan and lease losses as a percentage of loans
and leases held for investment was
1.84% at September 30, 2012 compared to 2.07% at December 31, 2011
and 2.16% at September 30, 2011. The allowance for loan and lease
losses to nonaccrual loans and leases held for investment equaled
97.03% at September 30, 2012, compared to 78.18% at December 31,
2011 and 81.20% at September 30, 2011.
Capital
Univest continues to remain well-capitalized at September 30,
2012. Univest's total risk-based capital at September 30, 2012 was
15.34%, well in excess of the regulatory minimum for well
capitalized status of 10% for total risk-based capital.
Dividend
On October 1, 2012, Univest Corporation paid a quarterly cash
dividend of $0.20 per share, which represented a 4.40%
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.