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Univest Corporation of Pennsylvania – Univest Bank and Trust Co. - Reports First Quarter Earnings

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SOUDERTON, Pa., April 27, 2016 (GLOBE NEWSWIRE) -- Univest Corporation of Pennsylvania ("Univest" or "Corporation") (NASDAQ: UVSP), parent company of Univest Bank and Trust Co. ("Bank") and its insurance, investments and equipment financing subsidiaries, today announced financial results for the quarter ended March 31, 2016. Univest reported net income of $7.3 million or $0.37 diluted earnings per share for the quarter ended March 31, 2016, a 19% increase from reported net income of $6.1 million or $0.31 diluted earnings per share for the quarter ended March 31, 2015. The financial results for the quarter ended March 31, 2016 included $220 thousand of acquisition-related and integration costs associated with the pending merger with Fox Chase Bancorp, or $0.01 diluted earnings per share on a tax affected basis. Excluding these costs, net income for the quarter ended March 31, 2016, would have been $7.5 million or $0.38 diluted earnings per share. The quarter ended March 31, 2015 included $1.8 million of integration and acquisition-related costs associated with Valley Green Bank or $0.06 diluted earnings per share on a tax affected basis. Excluding these costs, net income for the quarter ended March 31, 2015 would have been $7.3 million or $0.37 diluted earnings per share.  

Loans
Gross loans and leases were $2.2 billion at March 31, 2016, an increase of $4.2 million from December 31, 2015. Consistent with prior years, sluggish economic growth led to flat funded loan growth in the first quarter, however, loan activity did increase during the quarter leading to growth in our loan pipeline. Compared to March 31, 2015, loans grew $139.4 million or 7%, primarily in commercial real estate loans and residential real estate loans. The growth in loans from March 31, 2015 resulted from new and existing customer relationships as economic conditions improved while interest rates remain at historical lows, lending team additions and market disruption created by other bank acquisitions.

Deposits
Total deposits declined $60.0 million or 3% from December 31, 2015, primarily due to a decrease in public funds. Deposits grew $79.5 million or 4% from March 31, 2015, primarily due to increases in both non-interest bearing and interest bearing demand deposits and savings deposits, partially offset by a decrease in time deposits.

Net Interest Income and Margin
Net interest income of $23.4 million for the first quarter of 2016 remained consistent with the same period in 2015. The net interest margin on a tax-equivalent basis for the first quarter of 2016 was 3.90%, compared to 3.80% for the fourth quarter of 2015 and 4.12% for the first quarter of 2015. Increases in net interest income from the comparable period in the prior year, due to loan growth, were partially offset by reductions in loan rates and a decrease in the net accretion of acquisition accounting fair value adjustments related to the Valley Green Bank acquisition (the favorable impact of the acquisition accounting adjustments was two basis points for the first quarter of 2016 compared to nine basis points for the first quarter of 2015). In addition, the subordinated debt issuance for $50 million on March 30, 2015 increased funding costs by 14 basis points in the first quarter of 2016 from the same period in 2015.

Non-Interest Income
Non-interest income for the quarter ended March 31, 2016 was $14.0 million, an increase of $525 thousand or 4% from the first quarter of 2015. Insurance commission and fee income increased $412 thousand for the quarter ended March 31, 2016, primarily due to an increase in contingent commission income and commercial premiums. Bank owned life insurance (BOLI) income increased $117 thousand or 33% mainly due to the purchase of policies totaling $8.0 million during the third quarter of 2015 and the transfer of policies totaling $9.8 million during 2015 to a higher yielding account structure. These increases were partially offset by a decrease of $94 thousand or 3% in investment advisory commission and fee income primarily resulting from the repricing of asset management fees in our municipal pension business due to competitive pressures in the second quarter of 2015.

Non-Interest Expense
Non-interest expense for the quarter ended March 31, 2016 was $26.9 million, a decrease of $472 thousand or 2%, compared to the first quarter of 2015. Non-interest expense for the first quarter of 2016 included $220 thousand of acquisition-related and integration costs associated with the pending merger with Fox Chase Bancorp. Non-interest expense for the first quarter of 2015 included $1.8 million of acquisition-related and integration costs related to the Valley Green Bank acquisition. Salaries and benefit expense increased $868 thousand for the quarter, primarily attributable to additional staff hired to support revenue generation across all business lines. This increase was partially offset by higher deferred loan origination costs.

Asset Quality and Provision for Loan and Lease Losses
Non-accrual loans and leases, including non-accrual troubled debt restructured loans, were $13.5 million at March 31, 2016 compared to $14.2 million at December 31, 2015 and $18.6 million at March 31, 2015. Net loan and lease charge-offs were $1.5 million during the first quarter of 2016 compared to $802 thousand for the first quarter of 2015. Non-accrual loans and leases as a percentage of total loans and leases held for investment was 0.62% at March 31, 2016 compared to 0.65% at December 31, 2015 and 0.91% at March 31, 2015. The provision for loan and lease losses was $326 thousand for the first quarter of 2016, down from $1.1 million for the first quarter of 2015 as asset quality continues to improve; both qualitative factors and historical loss factors have improved.

The allowance for loan and lease losses as a percentage of loans and leases held for investment was 0.75% at March 31, 2016, compared to 0.81% at December 31, 2015 and 1.02% at March 31, 2015. The allowance for loan and lease losses as a percentage of loans and leases held for investment, excluding loans acquired in the Valley Green Bank acquisition which were recorded at fair value as of the acquisition date, was 0.86% at March 31, 2016, compared to 0.94% at December 31, 2015 and 1.26% at March 31, 2015. The allowance for loan and lease losses to nonaccrual loans and leases held for investment equaled 122.03% at March 31, 2016, compared to 124.29% at December 31, 2015 and 112.52% at March 31, 2015.

Capital
Univest continues to remain well-capitalized at March 31, 2016. Total risk-based capital at March 31, 2016 was 13.47%, well in excess of the regulatory minimum for well-capitalized status of 10%.

Dividend
On February 24, 2016, Univest declared a quarterly cash dividend of $0.20 per share, payable on April 1, 2016. This represented a 4.08% annualized yield based on the closing price of Univest's stock on the date the dividend was paid.

Conference Call
Univest will host a conference call to discuss first quarter results on Thursday, April 28, 2016 at 9:00 a.m. EST. Participants may preregister at http://dpregister.com/10083573. The general public can access the call by dialing 1-888-317-6016. A replay of the conference call will be available through May 28, 2016 by dialing 1-877-344-7529; using Conference ID: 10083573.

About Univest Corporation of Pennsylvania

Univest Corporation of Pennsylvania (UVSP), including its wholly-owned subsidiary, Univest Bank and Trust Co., has $2.8 billion in assets and $3.1 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 more than 50 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 financial services 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.

Univest Corporation of Pennsylvania 
Consolidated Selected Financial Data 
March 31, 2016 
(Dollars in thousands)           
            
Balance Sheet (Period End) 03/31/16 12/31/15 09/30/15 06/30/15 03/31/15 
Assets $  2,824,777  $  2,879,451  $  2,851,568  $  2,780,578  $  2,757,495  
Investment securities    329,357     370,760     374,558     374,711     380,484  
Loans held for sale    3,818     4,680     9,151     8,831     5,479  
Loans and leases held for investment, gross    2,183,256     2,179,013     2,097,807     2,107,857     2,043,840  
Allowance for loan and lease losses    16,452     17,628     18,620     19,602     20,934  
Loans and leases held for investment, net    2,166,804     2,161,385     2,079,187     2,088,255     2,022,906  
Total deposits    2,334,361     2,394,360     2,372,865     2,263,025     2,254,834  
Noninterest-bearing deposits    559,827     541,460     519,767     519,026     509,183  
NOW, money market and savings    1,391,626     1,398,494     1,361,827     1,288,318     1,293,165  
Time deposits    382,908     454,406     491,271     455,681     452,486  
Borrowings    75,265     73,588     70,531     110,480     91,423  
Shareholders' equity    367,003     361,574     359,109     356,186     360,394  
            
            
Balance Sheet (Average) For the three months ended, 
  03/31/16 12/31/15 09/30/15 06/30/15 03/31/15 
Assets $  2,834,557  $  2,866,848  $  2,804,578  $  2,739,968  $  2,691,513  
Investment securities     342,218     370,163     368,837     375,887     381,008  
Loans and leases, gross    2,177,091     2,132,922     2,098,007     2,067,120     2,023,835  
Deposits    2,351,816     2,393,655     2,325,049     2,242,217     2,237,830  
Shareholders' equity    364,092     360,521     357,150     359,154     362,125  
            
            
Asset Quality Data (Period End)            
  03/31/16 12/31/15 09/30/15 06/30/15 03/31/15 
Nonaccrual loans and leases, including nonaccrual troubled debt restructured           
  loans and leases and nonaccrual loans held for sale $  13,482  $  14,183  $  20,838  $  17,697  $  18,604  
Accruing loans and leases 90 days or more past due    693     379     428     287     1,063  
Accruing troubled debt restructured loans and leases    4,279     5,245     4,789     6,099     5,341  
Other real estate owned    3,073     1,276     955     955     955  
Nonperforming assets    21,527     21,083     27,010     25,038     25,963  
Allowance for loan and lease losses    16,452     17,628     18,620     19,602     20,934  
Nonaccrual loans and leases / Loans and leases held for investment and nonaccrual   0.62%  0.65%  0.99%  0.84%  0.91% 
  loans held for sale           
Nonperforming loans and leases / Loans and leases held for investment and nonaccrual   0.85%  0.91%  1.24%  1.14%  1.22% 
  loans held for sale           
Allowance for loan and lease losses / Loans and leases held for investment   0.75%  0.81%  0.89%  0.93%  1.02% 
Allowance for loan and lease losses / Loans and leases held for investment  0.86%  0.94%  1.06%  1.12%  1.26% 
  (excluding acquired loans at period-end)           
Allowance for loan and lease losses / Nonaccrual loans and leases held for investment  122.03%  124.29%  110.58%  143.11%  112.52% 
Allowance for loan and lease losses / Nonperforming loans and leases held for investment 89.15%  89.00%  84.43%  97.60%  83.71% 
Acquired credit impaired loans $  1,267  $  1,253  $  1,379  $  1,876  $  1,631  
            
            
  For the three months ended, 
  03/31/16 12/31/15 09/30/15 06/30/15 03/31/15 
Net loan and lease charge-offs $  1,502  $  1,909  $  1,652  $  2,473  $  802  
Net loan and lease charge-offs (annualized)/Average loans and leases  0.28%  0.36%  0.31%  0.48%  0.16% 
            

 

Univest Corporation of Pennsylvania 
Consolidated Selected Financial Data 
March 31, 2016 
(Dollars in thousands, except per share data)           
  For the three months ended, 
For the period: 03/31/16 12/31/15 09/30/15 06/30/15 03/31/15 
Interest income $  25,609  $  25,623  $  25,585  $  25,513  $  24,738  
Interest expense    2,211     2,278     2,220     2,133     1,434  
Net interest income    23,398     23,345     23,365     23,380     23,304  
Provision for loan and lease losses    326     917     670     1,141     1,074  
Net interest income after provision     23,072     22,428     22,695     22,239     22,230  
Noninterest income:           
Trust fee income    1,865     2,030     1,904     2,154     1,820  
Service charges on deposit accounts    998     1,059     1,069     1,039     1,063  
Investment advisory commission and fee income    2,669     2,583     2,687     2,740     2,763  
Insurance commission and fee income    4,558     3,073     3,232     3,434     4,146  
Bank owned life insurance income    470     425     306     211     353  
Net gain on sales of investment securities    44     697     296     181     91  
Net gain on mortgage banking activities    1,218     1,090     1,123     1,367     1,258  
Net gain on sales of other real estate owned    -      -      14     -      -   
Other income    2,134     2,355     2,224     2,225     1,937  
Total noninterest income    13,956     13,312     12,855     13,351     13,431  
Noninterest expense:           
Salaries and benefits    14,182     12,828     11,970     11,957     13,314  
Commissions    1,895     1,894     2,174     2,155     1,814  
Premises and equipment    3,984     3,897     3,924     3,743     4,047  
Professional fees    1,020     870     1,096     1,066     807  
Intangible expenses    770     178     710     893     786  
Acquisition-related costs    214     540     -      41     466  
Integration costs    6     6     -      110     1,374  
Restructuring charges    -      -      -      1,642     -   
Other expense    4,868     5,816     5,369     5,225     4,803  
Total noninterest expense    26,939     26,029     25,243     26,832     27,411  
Income before taxes    10,089     9,711     10,307     8,758     8,250  
Income taxes    2,800     2,553     2,779     2,292     2,134  
Net income $  7,289  $  7,158  $  7,528  $  6,466  $  6,116  
Per common share data:           
Book value per share $  18.73  $  18.51  $  18.41  $  18.21  $  18.18  
Net income per share:           
Basic $  0.37  $  0.37  $  0.39  $  0.33  $  0.31  
Diluted $  0.37  $  0.37  $  0.39  $  0.33  $  0.31  
Dividends declared per share $  0.20  $  0.20  $  0.20  $  0.20  $  0.20  
Weighted average shares outstanding    19,578,438     19,525,701     19,506,609     19,675,002     19,951,242  
Period end shares outstanding    19,592,798     19,530,930     19,502,613     19,559,941     19,820,824  
            

 

Univest Corporation of Pennsylvania 
Consolidated Selected Financial Data 
March 31, 2016 
               
               
               
     For the three months ended, 
Profitability Ratios (annualized)  03/31/16 12/31/15 09/30/15 06/30/15 03/31/15 
               
Return on average assets   1.03%  0.99%  1.06%  0.95%  0.92% 
Return on average assets, excluding integration   1.07%  1.06%  1.06%  1.12%  1.10% 
  and acquisition-related costs and restructuring charges (1)          
Return on average shareholders' equity  8.05%  7.88%  8.36%  7.22%  6.85% 
Return on average shareholders' equity, excluding 8.29%  8.42%  8.36%  8.52%  8.19% 
  integration and acquisition-related costs and           
  restructuring charges (1)            
Return on average tangible common equity, excluding 12.63%  12.92%  12.91%  13.12%  12.48% 
  integration and acquisition-related costs and           
  restructuring charges (1)            
Net interest margin (FTE)   3.90%  3.80%  3.89%  4.03%  4.12% 
Efficiency ratio (2)    69.23%  68.10%  66.96%  70.29%  71.68% 
Efficiency ratio, excluding integration and  68.67%  66.67%  66.96%  65.60%  66.87% 
  acquisition-related costs and restructuring charges (1), (2)          
               
Capitalization Ratios             
               
Dividends declared to net income   53.62%  54.08%  51.79%  60.49%  65.26% 
Shareholders' equity to assets (Period End)  12.99%  12.56%  12.59%  12.81%  13.07% 
Tangible common equity to tangible assets  8.97%  8.58%  8.56%  8.67%  8.91% 
               
               
Regulatory Capital Ratios  (Period End)            
Tier 1 leverage ratio    9.93%  9.69%  9.75%  9.89%  10.16% 
Common equity tier 1 risk-based capital ratio  10.81%  10.65%  10.85%  10.77%  11.09% 
Tier 1 risk-based capital ratio   10.81%  10.65%  10.85%  10.77%  11.09% 
Total risk-based capital ratio   13.47%  13.35%  13.69%  13.65%  14.09% 
               
               
(1) This consolidated selected financial data schedule contains supplemental financial information determined by methods other than in accordance with U.S. generally accepted accounting principles ("GAAP"). The management of Univest Corporation of Pennsylvania uses these non-GAAP measures in its analysis of the Corporation's performance. These measures should not be considered a substitute for GAAP basis measures nor should they be viewed as a substitute for operating results determined in accordance with GAAP. Management believes the presentation of the non-GAAP financial measures, which exclude the impact of the specified items, provides useful supplemental information that is essential to a proper understanding of the financial results of the Corporation. 
               
(2) Total operating expenses to net interest income before loan loss provision plus non-interest income adjusted for tax equivalent income.  
               

 

Univest Corporation of Pennsylvania  
  Distribution of Assets, Liabilities and Shareholders' Equity: Interest Rates and Interest Differential   
  For the Three Months Ended March 31,    
Tax Equivalent Basis  2016     2015    
 AverageIncome/Average AverageIncome/Average  
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate  
Assets:         
Interest-earning deposits with other banks$19,619 $28   0.57%$  9,135 $  5   0.22% 
U.S. government obligations   82,488    250   1.22    139,965    379   1.10  
Obligations of state and political subdivisions   101,061    1,129   4.49    104,620    1,322   5.12  
Other debt and equity securities   158,669    1,024   2.60    136,423    655   1.95  
Federal funds sold   5,940    7   0.47    6,591    2   0.12  
Total interest-earning deposits and investments    367,777    2,438   2.67    396,734    2,363   2.42  
                  
Commercial, financial, and agricultural loans   411,999    4,014   3.92    422,817    4,249   4.08  
Real estate—commercial and construction loans   887,118    9,919   4.50    821,902    9,631   4.75  
Real estate—residential loans   541,976    5,976   4.43    473,142    5,384   4.61  
Loans to individuals   29,478    399   5.44    30,622    407   5.39  
Municipal loans and leases   231,498    2,625   4.56    203,999    2,437   4.84  
Lease financings   75,022    1,542   8.27    71,353    1,583   9.00  
Gross loans and leases   2,177,091    24,475   4.52    2,023,835    23,691   4.75  
Total interest-earning assets   2,544,868    26,913   4.25    2,420,569    26,054   4.37  
Cash and due from banks   31,665       30,203     
Reserve for loan and lease losses   (17,771)      (21,088)    
Premises and equipment, net   42,873       40,568     
Other assets   232,922       221,261     
Total assets$  2,834,557    $  2,691,513     
                  
Liabilities:                 
Interest-bearing checking deposits$402,160 $84   0.08 $  345,884 $  46   0.05  
Money market savings   361,788    340   0.38    375,521    280   0.30  
Regular savings   626,894    174   0.11    563,037    122   0.09  
Time deposits   418,547    935   0.90    461,374    969   0.85  
Total time and interest-bearing deposits   1,809,389    1,533   0.34    1,745,816    1,417   0.33  
          
Short-term borrowings   27,388    3   0.04    46,837    10   0.09  
Subordinated notes (1)   49,394    675   5.50    1,096    7   2.59  
Total borrowings   76,782    678   3.55    47,933    17   0.14  
Total interest-bearing liabilities   1,886,171    2,211   0.47    1,793,749    1,434   0.32  
Noninterest-bearing deposits   542,427       492,014     
Accrued expenses and other liabilities   41,867       43,625     
Total liabilities   2,470,465       2,329,388     
          
Shareholders' Equity:         
Common stock   110,271       110,271     
Additional paid-in capital   120,824       120,159     
Retained earnings and other equity   132,997       131,695     
Total shareholders' equity   364,092       362,125     
Total liabilities and shareholders' equity$  2,834,557    $  2,691,513     
Net interest income $  24,702    $  24,620    
          
Net interest spread    3.78     4.05  
Effect of net interest-free funding sources    0.12     0.07  
Net interest margin    3.90%      4.12% 
Ratio of average interest-earning assets to average interest-bearing liabilities  134.92%    134.94%    
          
(1)  The interest rate on subordinated notes is calculated on a 30/360 day basis at a rate of 5.10%. The balance is net of debt issuance  
  costs which are amortized to interest expense.  
          
Notes: For rate calculation purposes, average loan and lease categories include unearned discount.  
Nonaccrual loans and leases have been included in the average loan and lease balances.  
Loans held for sale have been included in the average loan balances.  
Tax-equivalent amounts for the three months ended March 31, 2016 and 2015 have been calculated  
using the Corporation's federal applicable rate of 35.0%.  
          


CONTACT: Mike Keim Chief Financial Officer, Univest Corporation of Pennsylvania President and Chief Financial Officer, Univest Bank and Trust Co. 215-721-2511, keimm@univest.net

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