Univest Corporation of Pennsylvania - Univest Bank and Trust Co. - Reports First Quarter Earnings
SOUDERTON, Pa., April 23, 2014 – 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 quarter ended March 31, 2014. Univest reported net income of $5.7 million or $0.35 diluted earnings per share for the quarter ended March 31, 2014, a 6% increase from reported net income of $5.4 million or $0.32 diluted earnings per share for the quarter ended March 31, 2013.
Gross loans and leases increased $19.0 million or 1% from December 31, 2013 and $73.1 million or 5% from March 31, 2013. The growth in loans from December 31, 2013 was primarily in commercial business loans. The growth from March 31, 2013 occurred in commercial and residential real estate loans and equipment financing as economic conditions have slowly improved. While the longer-term economic outlook remains positive, household income and spending levels continue to remain stagnant. In the short-term, we anticipate that this will restrain overall credit demand and the utilization of available credit lines by both businesses and consumers.
Total deposits declined $4.7 million from December 31, 2013 primarily due to a decrease in public funds partially offset by increases in non-interest bearing demand and savings deposits. Total deposits increased $25.2 million from March 31, 2013; the lower interest rate environment continues to result in a shift in consumer deposits from time deposits to noninterest-bearing and savings deposits.
Net Interest Income and Margin
Net interest income of $17.9 million for the first quarter of 2014 was consistent with the same period in 2013. The net interest margin on a tax-equivalent basis for the first quarter of 2014 increased 14 basis points to 3.96%, compared to 3.82% for both the fourth and first quarters of 2013. The increase in the first quarter net interest margin from the prior year was primarily attributable to the redemption of Univest’s trust preferred securities and termination of the related interest rate swap during the second quarter of 2013, maturities of higher yielding time deposits, a decline in the rate paid on time deposits and a reduction in lower yielding investment securities.
Non-interest income for the quarter ended March 31, 2014 was $12.1 million, an increase of $666 thousand or 6% from the comparable period in the prior year. Investment advisory commission and fee income increased $1.2 million for the quarter primarily due to the acquisition of Girard Partners effective January 1, 2014. Insurance commission and fee income increased $809 thousand for the quarter, primarily due to an increase in contingency revenues and the acquisition of the John T. Fretz Insurance Agency on May 1, 2013. These favorable increases were partially offset by a $1.3 million decrease in the net gain on mortgage banking activities. Higher interest rates have reduced refinance activity while the harsh winter we experienced restrained purchase activity, leading to a 79% decline in funded loan volume in the first quarter of 2014 from the comparable period in 2013.
Non-interest expense for the quarter ended March 31, 2014 was $20.9 million, an increase of $647 thousand or 3% compared to the first quarter of 2013. Intangible expenses increased $551 thousand and salaries and benefit expense increased $811 thousand primarily attributable to the Girard and Fretz acquisitions. These unfavorable variances were partially offset by a decrease in commission expense of $525 thousand mainly due to the decline in mortgage banking activity. Premises and equipment expenses increased $507 thousand mainly due to increased costs related to computer equipment and software, snow removal, a new leased office location in the Lehigh Valley and the Girard acquisition. In addition, non-interest expense during the first quarter of 2013 included restructuring charges of $539 thousand.
Asset Quality and Provision for Loan and Lease Losses
Non-accrual loans and leases, including non-accrual troubled debt restructured loans, decreased to $19.3 million at March 31, 2014, from $23.2 million at December 31, 2013 and $28.9 million at March 31, 2013. The $3.9 million decrease in non-accrual loans from December 31, 2013 was mainly due to the sale of a commercial real estate loan for $2.5 million and the payoff of another commercial real estate loan for $1.3 million. Net loan and lease charge-offs were $1.4 million during the first quarter of 2014, compared to $1.6 million for the first quarter of 2013. Non-accrual loans and leases as a percentage of total loans and leases held for investment were 1.24% at March 31, 2014 compared to 1.51% at December 31, 2013 and 1.94% at March 31, 2013.
Accruing troubled debt restructured loans decreased to $7.0 million at March 31, 2014 from $7.9 million at December 31, 2013 and $13.0 million at March 31, 2013. The decrease of $6.0 million from March 31, 2013 was primarily due to the payoff in December 2013 of a large shared national commercial real estate credit with an outstanding principal balance of $5.8 million.
The provision for loan and lease losses was $1.5 million for the first quarter of 2014, compared to $2.1 million for the first quarter of 2013. The allowance for loan and lease losses as a percentage of loans and leases held for investment was 1.57% at March 31, 2014 compared to 1.59% at December 31, 2013 and 1.70% at March 31, 2013. The allowance for loan and lease losses to nonaccrual loans and leases held for investment equaled 127.38% at March 31, 2014 compared to 105.42% at December 31, 2013 and 87.31% at March 31, 2013.
Univest continues to remain well-capitalized at December 31, 2013. Total risk-based capital at December 31, 2013 was 13.90%, well in excess of the regulatory minimum for well capitalized status of 10%.
Univest continues to remain well-capitalized at March 31, 2014. Total risk-based capital at March 31, 2014 was 13.27%, well in excess of the regulatory minimum for well-capitalized status of 10%.
Share Repurchase Plan
During the quarter, Univest repurchased 110,671 shares of common stock at a cost of $2.0 million under its 2013 Board approved share repurchase program. Shares available for future repurchases under the plan totaled 689,329 at March 31, 2014. Total shares outstanding at March 31, 2014 were 16,249,152.
On February 26, 2014, Univest declared a quarterly cash dividend of $0.20 per share, payable on April 1, 2014. This represented a 3.83% annualized yield based on the closing price of Univest’s stock on the date the dividend was paid.
About Univest Corporation of Pennsylvania
Univest Corporation of Pennsylvania (UVSP), including its wholly-owned subsidiary, Univest Bank and Trust Co., has $2.2 billion in assets and over $3.0 billion in assets under management and supervision through its Wealth Management lines of business. Headquartered in Souderton, Pa. and founded in 1876, the Corporation and its subsidiaries provide a full range of financial solutions for individuals, businesses, municipalities and nonprofit organizations in the Mid-Atlantic Region. Univest delivers these services through a network of 40 offices in southeastern Pennsylvania extending to the Lehigh Valley, Maryland and online at 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.