Univest Corporation Of Pennsylvania - Univest Bank and Trust Co.SM - Reports Second Quarter Earnings
SOUDERTON, Pa., July 28, 2010 – Univest Corporation of Pennsylvania (NASDAQ: UVSP), a locally-owned, full-service financial institution with 134 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 $3.7 million or $0.23 diluted earnings per share for the quarter ended June 30, 2010, compared to $3.0 million or $0.18 diluted earnings per share in the previous quarter ended March 31, 2010 and $2.7 million or $0.21 diluted earnings per share for the comparable period in the prior year. Net income for the six months ended June 30, 2010 was $6.7 million or $0.40 diluted earnings per share, compared to $6.5 million or $0.50 diluted earnings per share for the comparable period in the prior year.
Deposits
Total non-time deposits increased $38.4 million during the quarter and have increased $66.4 million year to date. The increase during the second quarter consisted of increases of $9.0 million in non-interest bearing deposits and $29.4 million in NOW, money market and savings accounts. Time deposits remained relatively flat, declining slightly by $1.3 million during the second quarter.
Loans
Gross loans and leases increased by $21.3 million during the quarter. While overall loan demand remains light primarily due to less credit demand and utilization of lines by businesses responding to the current economic environment, there continues to be opportunities due to disruption in Univest's local markets.
Net Interest Income and Margin
Net interest income increased $1.1 million or 6.42% to $18.3 million in the second quarter of 2010 compared to the second quarter of 2009. The net interest margin on a tax-equivalent basis for the second quarter of 2010 increased 12 basis points to 4.11% from 3.99% for the first quarter ended March 31, 2010, and 24 basis points compared to 3.87% for the second quarter of 2009.
Net interest income of $35.4 million increased $1.9 million or 5.56% compared to the six months ended June 30, 2009. The net interest margin on a tax-equivalent basis for the six months ended June 30, 2010 increased 23 basis points to 4.05% from 3.82% for the six months ended June 30, 2009.
The increase in the net interest income and the net interest margin for the quarter and year to date can be attributed to declines in the cost of interest-bearing liabilities, primarily time deposits and Federal Home Loan Bank (FHLB) borrowings, exceeding the declines in yields on total interest-earning assets. The Corporation has continued to experience core deposit growth which has allowed the Corporation to continue to repay its maturing FHLB advances reducing FHLB advances from $92 million at December 31, 2009 to $54 million at June 30, 2010. All but $5 million of the Corporation's FHLB advances are scheduled to mature in 2010.
Non-Interest Income
Total non-interest income increased 2.98% for the quarter ended June 30, 2010 compared to the quarter ended June 30, 2009. For the quarter ended June 30, 2010, Univest reported total non-interest income of $8.1 million compared to $7.8 million for the comparable period in the prior year. Non-interest income during the quarter ended June 30, 2010 was negatively impacted by $516 thousand related to a fair value write-down on the ineffective portion of a fair value swap, due to the decline in interest rates during the quarter, compared to income of $285 thousand in the second quarter of 2009 related to the swap. Additionally, the second quarter of 2009 was impacted by $223 thousand of other than temporary impairments on the Corporation's bank equity portfolio. For the quarter ended June 30, 2010, other than temporary impairments declined to $42 thousand. Excluding these non-cash items, total non-interest income increased 10.99% or $853 thousand compared to the second quarter ended June 30, 2009. This is attributed to increased trust fee income, service charges on deposits due to the growth in deposits and strong investment advisory commission and fee income.
Total non-interest income for the six months ended June 30, 2010 increased $2.3 million compared to the six months ended June 30, 2009, due to increased income from trust fees, service charges on deposit accounts, investment advisory commissions and fees and insurance commissions and fees offset by fair value write-downs on the ineffective portion of a fair value swap for the six months ended June 30, 2010 of $826 thousand compared to income related to this swap of $281 thousand recorded in the comparable period in the prior year. Additionally, the six months ended June 30, 2009 was impacted by $1.4 million of other than temporary impairments on bank equity securities compared to $47 thousand of other than temporary impairments recorded in the six months ended June 30, 2010. Excluding these non-cash write-downs and impairments, non-interest income increased $2.0 million or 13.36% for the six months ended June 30, 2010 compared to 2009.
Non-Interest Expense
Non-interest expense for the second quarter of 2010 increased slightly compared to the second quarter of 2009 by $119 thousand. The second quarter of 2009 was impacted by the FDIC special assessment which impacted all banks and cost Univest $947 thousand. Excluding this charge, non-interest expense increased $1.1 million or 6.73% compared to the second quarter in the prior year primarily due to increased FDIC insurance expense of $133 thousand and increased advertising and marketing expenses of $600 thousand to support a major brand campaign to position the Corporation to take advantage of the disruption in its local markets.
For the six months ended June 30, 2010, non-interest expenses increased $1.7 million or 5.25% compared to the same period in the prior year. Excluding the FDIC special assessment discussed previously, non-interest expenses for the six months ended June 30, 2010 increased $2.6 million or 8.43% primarily due to increased FDIC insurance expense of $147 thousand, increased advertising and marketing expenses of $1.1 million for the brand campaign discussed earlier, and increased salaries and benefits expenses of $431 thousand due to investments in personnel to grow the Corporation's mortgage banking and commercial lending capabilities. Other increases occurred as a result of increased audit expense and legal fees for nonperforming loan activity.
Asset Quality and Provision for Loan and Lease Losses
Nonaccrual loans and leases decreased $5.3 million during the second quarter and were $29.5 million at June 30, 2010 compared to $34.9 million at March 31, 2010 and $5.8 million at June 30, 2009. Nonperforming loans and leases as a percentage of total loans and leases equaled 2.23% at June 30, 2010 down from 2.58% at March 31, 2010. The provision for loan and lease losses was $4.9 million for both the second and first quarters of 2010 compared to $5.4 million for the quarter ended June 30, 2009. The allowance for loan and lease losses as a percentage of total loans and leases increased to 2.01% at June 30, 2010 from 1.90% at March 31, 2010 as the provision for loan and lease losses exceeded net-charge-offs by $2.0 million. The allowance for loan and lease losses was 1.29% at June 30, 2009. The allowance for loan and lease losses to nonperforming loans and leases equaled 90.08% at June 30, 2010, which increased from 73.45% at March 31, 2010, due to the decrease in nonperforming loans and leases. The allowance for loan and lease losses to nonperforming loans and leases was 172.30% at June 30, 2009.
Capital
Univest continues to remain well-capitalized at June 30, 2010. Univest's total risk-based capital at June 30, 2010 was 15.58%, well in excess of the regulatory minimum for well capitalized status of 10% for total risk-based capital.
Dividend
On July 1, 2010, Univest Corporation paid a quarterly cash dividend of $0.20 per share, which represented a 4.66% 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. Univest Bank and Trust Co.SM, member FDIC and Equal Housing Lender, offers customers 32 financial service centers, 12 retirement financial services centers, and 39 ATM locations throughout the region, and is the parent company of Univest Capital, Inc., a small ticket commercial finance business; Univest Insurance, Inc., an independent insurance agency headquartered in Lansdale, Pa., which serves commercial and personal customers; and Univest Investments, Inc., Member FINRA and SIPC, a full-service broker-dealer and investment advisory firm. 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.
