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Univest Corporation of Pennsylvania Reports Second Quarter Results

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SOUDERTON, Pa., July 25, 2018 (GLOBE NEWSWIRE) -- Univest Corporation of Pennsylvania ("Univest" or the "Corporation") (NASDAQ:UVSP), parent company of Univest Bank and Trust Co. and its insurance, investments and equipment financing subsidiaries, today announced financial results for the second quarter ended June 30, 2018. Univest reported net income of $4.4 million, or $0.15 diluted earnings per share for the quarter ended June 30, 2018, compared to net income of $11.8 million, or $0.44 diluted earnings per share, for the quarter ended June 30, 2017. Net income for the six months ended June 30, 2018 was $17.2 million, or $0.58 diluted earnings per share, compared to net income of $22.6 million, or $0.85 diluted earnings per share for the six months ended June 30, 2017.

The financial results for the three and six months ended June 30, 2018 included a charge to the provision for loan and lease losses of $12.7 million, which represented $0.34 of diluted earnings per share in each period, related to alleged fraudulent activities believed to be perpetrated by one or more employees of a borrower which was previously reported in the Corporation's Form 8-K filed with the SEC on May 31, 2018. The Bank owns a participating interest which originally totaled $13.0 million in an approximately $80.0 million commercial lending facility. The $12.7 million represents the entire principal amount owed to the Bank and this amount was fully charged-off as of June 30, 2018. 

In addition, the financial results for the three and six months ended June 30, 2018 included tax-free bank owned life insurance ("BOLI") death benefit claims of $446 thousand, which represented $0.02 diluted earnings per share in each period. The financial results for the three and six months ended June 30, 2017 included a tax-free BOLI death benefit claim of $889 thousand, which represented $0.03 diluted earnings per share in each period. The six months ended June 30, 2018 included restructuring costs related to financial center closures of $451 thousand, net of tax, or $0.02 of diluted earnings per share recognized in the first quarter of 2018. There were no restructuring costs during the six months ended June 30, 2017.

The financial results for the three and six months ended June 30, 2018 also included a reduction in the Corporation's statutory federal income tax rate from 35% to 21% effective January 1, 2018 in accordance with the Tax Cuts and Jobs Act of 2017 ("TCJA").

Loans
Gross loans and leases increased $128.5 million, or 13.9% (annualized), from March 31, 2018 and $198.3 million, or 11.0% (annualized), from December 31, 2017. The growth in loans during 2018 was primarily in commercial real estate, commercial business and residential real estate loans.

Deposits
Total deposits increased $123.5 million, or 14.1% (annualized), from March 31, 2018 and increased $65.9 million, or 3.7% (annualized), from December 31, 2017. Additionally, deposits increased $272.7 million, or 8.1% from June 30, 2017. The growth in deposits in 2018 was primarily due to increases in consumer time deposits and commercial deposits partially offset by a seasonal decline in public funds deposits. The growth in deposits compared to June 30, 2017 was primarily due to increases in consumer time, commercial and public funds deposits.

Net Interest Income and Margin
Net interest income of $76.3 million for the six months ended June 30, 2018 increased $6.7 million, or 9.6%, from the six months ended June 30, 2017. The increase in net interest income for the six months ended June 30, 2018 as compared to the same period in 2017 was primarily due to the previously described increase in loans.

Net interest margin, on a tax-equivalent basis, was 3.73% for the second quarter of 2018, compared to 3.72% for the first quarter of 2018 and 3.76% for the second quarter of 2017. The favorable impact of purchase accounting accretion was 3 basis points ($349 thousand) for the quarter ended June 30, 2018 compared to 2 basis points ($146 thousand) for the quarter ended March 31, 2018 and 8 basis points ($742 thousand) for the quarter ended June 30, 2017. Excluding the impact of purchase accounting accretion, the net interest margin, on a tax-equivalent basis, was 3.70% for the quarter ended June 30, 2018 compared to 3.70% for the quarter ended March 31, 2018 and 3.68% for the quarter ended June 30, 2017.

Net interest margin, on a tax-equivalent basis, in 2017 was calculated using a 35% federal tax rate as compared to a 21% federal tax rate for the first and second quarters of 2018. Assuming a 21% federal tax rate and excluding purchase accounting, net interest margin was 3.61% for the quarter ended June 30, 2017.

Noninterest Income
Noninterest income for the quarter ended June 30, 2018 was $15.3 million, a decrease of $695 thousand, or 4.3%, from the second quarter of 2017.  Noninterest income for the six months ended June 30, 2018 was $30.9 million, consistent with the same period in the prior year.

Investment advisory commission and fee income increased $445 thousand, or 13.4%, for the quarter and $947 thousand, or 14.5%, for the six months ended June 30, 2018 primarily due to new customer relationships and continued favorable market performance. Insurance commission and fee income increased $562 thousand, or 7.0%, for the six months ended June 30, 2018, primarily due to an increase in contingent commission income of $377 thousand, which is largely recognized in the first quarter of the year and due to an increase in group life and health premiums.

BOLI income decreased $412 thousand for the quarter and $526 thousand for the six months ended June 30, 2018 primarily due to proceeds from the previously mentioned BOLI death benefits of $446 thousand in the second quarter of 2018 as compared to $889 thousand in the second quarter of 2017. The net gain on mortgage banking decreased $595 thousand, or 38.7%, for the quarter and $992 thousand, or 37.4%, for the six months ended June 30, 2018, primarily due to a decrease in refinance mortgage volume, a shortage of housing supply and the Bank retaining, on balance-sheet, a higher percentage of its mortgage originations. Such on balance-sheet loans are predominantly hybrid adjustable rate mortgages. Other income decreased $246 thousand, or 9.7%, for the quarter and $271 thousand, or 5.6%, for the six months ended June 30, 2018. The decrease in the six months ended June 30, 2018 is primarily due to a net loss of $300 thousand related to valuations and sales of other real estate owned and sales of closed branches as compared to a net gain of $289 thousand of such assets in the six months ended June 30, 2017. This unfavorable variance in other income was partially offset by an increase in other service fee income of $368 thousand for the six months ended June 30, 2018.

Noninterest Expense
Noninterest expense for the quarter ended June 30, 2018 was $34.3 million, an increase of $1.8 million, or 5.5%, compared to the second quarter of 2017. Noninterest expense for the six months ended June 30, 2018 was $69.5 million, an increase of $4.9 million, or 7.6% from the comparable period in the prior year.

Salaries, benefits and commissions increased $1.3 million, or 7.1%, for the quarter and $3.2 million, or 8.7%, for the six months ended June 30, 2018, primarily attributable to additional staff hired to support revenue generation across all business lines, expansion of our financial center footprint in Lancaster County and the Lehigh Valley and annual merit increases. Data processing expense increased $184 thousand for the six months ended June 30, 2018 primarily due to increased investments in customer relationship management software, internal infrastructure improvements and outsourced data processing solutions. Professional fees increased $199 thousand for the six months ended June 30, 2018 primarily due to increased consultant fees. Other expense increased $286 thousand for the quarter and $644 thousand for the six months ended June 30, 2018 primarily due to increases in Bank shares tax and employment related expense. Restructuring costs related to financial center closures and staffing rationalization were $571 thousand during the first quarter of 2018. There were no restructuring costs during the six months ended June 30, 2017. Excluding restructuring costs, noninterest expense for the six months increased $4.3 million or 6.7% from the comparable period in 2017.

Asset Quality and Provision for Loan and Lease Losses
Non-accrual loans and leases, including non-accrual troubled debt restructured loans, were $30.1 million at June 30, 2018, compared to $27.7 million at March 31, 2018 and $14.5 million at December 31, 2017. Nonperforming assets were $32.8 million at June 30, 2018, compared to $32.9 million at March 31, 2018 and $28.6 million at December 31, 2017. The increase in non-accrual loans and leases during 2018 is primarily due to one commercial real estate loan in the amount of $12.3 million being placed on non-accrual status during the first quarter of 2018. This was partially offset by troubled debt restructured commercial real estate loans for another borrower totaling $10.3 million being returned to performing status during the first quarter of 2018 as the borrower was in compliance with the modified terms of the restructuring for the required time period.

Net loan and lease charge-offs were $13.2 million during the second quarter of 2018. The provision for loan and lease losses was $15.4 million for the second quarter of 2018. Both net loan and lease charge-offs and the provision for loan and lease losses includes the previously discussed $12.7 million commercial loan charge-off. 

The allowance for loan and lease losses as a percentage of loans and leases held for investment, excluding covered loans acquired in the Fox Chase and Valley Green Bank acquisitions, which were recorded at fair value as of the acquisition date, was 0.76% at June 30, 2018, compared to 0.70% at December 31, 2017 and 0.73% at June 30, 2017.

Tax Provision  
The effective income tax rate was 4.2% for the quarter ended June 30, 2018 compared to an effective income tax rate of 26.4% for the quarter ended June 30, 2017. The effective income tax rate was 14.9% for the six months ended June 30, 2018 compared to an effective income tax rate of 26.4% for the six months ended June 30, 2017. As previously discussed, the Corporation's statutory federal tax rate was reduced to 21% effective January 1, 2018 in accordance with the TCJA. The Corporation's effective income tax rate for the six months ended June 30, 2018 was favorably impacted by discrete tax benefits and proceeds from BOLI death benefits. Excluding these items, the effective tax rate was 18.2% for the six months ended June 30, 2018.

Dividend
On May 21, 2018, Univest declared a quarterly cash dividend of $0.20 per share, payable on July 2, 2018. This represented a 2.84% 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 second quarter 2018 results on Thursday, July 26, 2018 at 9:00 a.m. EDT. Participants may preregister at http://dpregister.com/10121395. The general public can access the call by dialing 1-888-338-6515. A replay of the conference call will be available through August 26, 2018 by dialing 1-877-344-7529; using Conference ID: 10121395.

About Univest Corporation of Pennsylvania
Univest Corporation of Pennsylvania (UVSP), including its wholly-owned subsidiary Univest Bank and Trust Co., has approximately $4.7 billion in assets and $3.5 billion in assets under management and supervision through its Wealth Management lines of business at June 30, 2018. 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 and Lancaster, as well as in New Jersey and 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) competitive pressures among financial institutions; (2) changes in the interest rate environment; (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 that 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 (Unaudited)  
June 30, 2018  
(Dollars in thousands)                              
                               
Balance Sheet (Period End)   06/30/18   03/31/18   12/31/17   09/30/17   06/30/17          
Assets   $ 4,749,181     $ 4,613,959     $ 4,554,862     $ 4,417,363     $ 4,453,527            
Investment securities     446,933       462,252       454,082       443,822       469,307            
Loans held for sale     1,778       687       1,642       2,228       2,259            
Loans and leases held for investment, gross     3,818,398       3,689,888       3,620,067       3,487,164       3,510,170            
Allowance for loan and lease losses     25,652       23,410       21,555       20,543       20,910            
Loans and leases held for investment, net     3,792,746       3,666,478       3,598,512       3,466,621       3,489,260            
Total deposits     3,620,786       3,497,293       3,554,919       3,518,590       3,348,080            
Noninterest-bearing deposits     1,055,479       1,002,021       1,040,026       987,881       963,790            
NOW, money market and savings     1,970,912       1,974,769       1,940,144       1,959,549       1,837,452            
Time deposits     594,395       520,503       574,749       571,160       546,838            
Borrowings     481,862       466,510       355,590       332,529       542,545            
Shareholders' equity     605,294       606,719       603,374       528,798       521,306            
                               
                               
Balance Sheet (Average)   For the three months ended,   For the six months ended,  
    06/30/18   03/31/18   12/31/17   09/30/17   06/30/17   06/30/18   06/30/17  
Assets   $ 4,682,827     $ 4,555,977     $ 4,442,743     $ 4,416,332     $ 4,333,689     $ 4,619,714     $ 4,282,343    
Investment securities     450,375       457,926       456,045       459,862       468,601       454,130       469,446    
Loans and leases, gross     3,743,195       3,634,510       3,505,260       3,467,235       3,401,325       3,689,152       3,354,361    
Deposits     3,563,956       3,484,044       3,508,676       3,480,318       3,346,409       3,524,221       3,318,502    
Shareholders' equity     611,667       605,973       554,071       527,032       517,697       608,835       513,399    
                               
                               
Asset Quality Data (Period End)                               
    06/30/18   03/31/18   12/31/17   09/30/17   06/30/17          
Nonaccrual loans and leases, including nonaccrual troubled debt restructured loans and leases   $ 30,148     $ 27,694     $ 14,517     $ 15,949     $ 20,174            
Accruing loans and leases 90 days or more past due     150       2,295       761       1,595       572            
Accruing troubled debt restructured loans and leases     790       1,032       11,435       11,468       11,470            
Total nonperforming loans and leases     31,088       31,021       26,713       29,012       32,216            
Other real estate owned     1,742       1,843       1,843       1,763       2,202            
Total nonperforming assets     32,830       32,864       28,556       30,775       34,418            
Nonaccrual loans and leases / Loans and leases held for investment     0.79 %     0.75 %     0.40 %     0.46 %     0.57 %          
Nonperforming loans and leases / Loans and leases held for investment     0.81 %     0.84 %     0.74 %     0.83 %     0.92 %          
Nonperforming assets / Total assets     0.69 %     0.71 %     0.63 %     0.70 %     0.77 %          
                               
Allowance for loan and lease losses     25,652       23,410       21,555       20,543       20,910            
Allowance for loan and lease losses / Loans and leases held for investment     0.67 %     0.63 %     0.60 %     0.59 %     0.60 %          
Allowance for loan and lease losses / Loans and leases held for investment (excluding acquired loans at period-end)     0.76 %     0.73 %     0.70 %     0.71 %     0.73 %          
Allowance for loan and lease losses / Nonaccrual loans and leases held for investment     85.09 %     84.53 %     148.48 %     128.80 %     103.65 %          
Allowance for loan and lease losses / Nonperforming loans and leases held for investment   82.51 %     75.47 %     80.69 %     70.81 %     64.91 %          
Acquired credit impaired loans   $ 998     $ 1,525     $ 1,583     $ 1,622     $ 6,485            
                               
    For the three months ended,   For the six months ended,  
    06/30/18   03/31/18   12/31/17   09/30/17   06/30/17   06/30/18   06/30/17  
Net loan and lease charge-offs   $ 13,167     $ 198     $ 980     $ 3,056     $ 1,384     $ 13,365     $ 1,800    
Net loan and lease charge-offs (annualized)/Average loans and leases     1.41 %     0.02 %     0.11 %     0.35 %     0.16 %     0.73 %     0.11 %  
                               

 

Univest Corporation of Pennsylvania  
Consolidated Selected Financial Data (Unaudited)  
June 30, 2018  
(Dollars in thousands, except per share data)                              
    For the three months ended,   For the six months ended,  
For the period:   06/30/18   03/31/18   12/31/17   09/30/17   06/30/17   06/30/18   06/30/17  
Interest income   $ 46,460   $ 43,534   $ 42,417   $ 42,172   $ 40,030   $ 89,994   $ 78,426  
Interest expense     7,470     6,262     5,711     5,285     4,730     13,732     8,843  
Net interest income     38,990     37,272     36,706     36,887     35,300     76,262     69,583  
Provision for loan and lease losses     15,409     2,053     1,992     2,689     2,766     17,462     5,211  
Net interest income after provision     23,581     35,219     34,714     34,198     32,534     58,800     64,372  
Noninterest income:                              
Trust fee income     2,044     1,996     2,208     1,924     2,016     4,040     3,923  
Service charges on deposit accounts     1,335     1,327     1,555     1,371     1,313     2,662     2,556  
Investment advisory commission and fee income     3,778     3,683     3,485     3,455     3,333     7,461     6,514  
Insurance commission and fee income     3,712     4,888     3,258     3,492     3,628     8,600     8,038  
Bank owned life insurance income     1,210     669     841     742     1,622     1,879     2,405  
Net gain on sales of investment securities     -     10     5     7     21     10     36  
Net gain on mortgage banking activities     942     716     465     908     1,537     1,658     2,650  
Other income     2,293     2,293     2,335     2,210     2,539     4,586     4,857  
Total noninterest income     15,314     15,582     14,152     14,109     16,009     30,896     30,979  
Noninterest expense:                              
Salaries, benefits and commissions     20,065     20,647     19,340     19,185     18,730     40,712     37,467  
Premises and equipment     3,600     3,780     3,636     3,542     3,715     7,380     7,373  
Data processing     2,091     2,232     2,243     2,118     2,081     4,323     4,139  
Professional fees     1,331     1,355     1,391     1,447     1,248     2,686     2,487  
Marketing and advertising     526     381     360     271     475     907     854  
Deposit insurance premiums     452     391     374     409     451     843     853  
Intangible expenses     594     612     687     690     446     1,206     1,205  
Restructuring charges     -     571     -     -     -     571     -  
Other expense     5,688     5,156     5,409     5,033     5,402     10,844     10,200  
Total noninterest expense     34,347     35,125     33,440     32,695     32,548     69,472     64,578  
Income before taxes     4,548     15,676     15,426     15,612     15,995     20,224     30,773  
Income tax expense     191     2,826     5,162     4,416     4,217     3,017     8,139  
Net income   $ 4,357   $ 12,850   $ 10,264   $ 11,196   $ 11,778   $ 17,207   $ 22,634  
Per common share data:                              
Book value per share   $ 20.58   $ 20.64   $ 20.57   $ 19.83   $ 19.55   $ 20.58   $ 19.55  
Net income per share:                              
Basic   $ 0.15   $ 0.44   $ 0.37   $ 0.42   $ 0.44   $ 0.59   $ 0.85  
Diluted   $ 0.15   $ 0.44   $ 0.37   $ 0.42   $ 0.44   $ 0.58   $ 0.85  
Dividends declared per share   $ 0.20   $ 0.20   $ 0.20   $ 0.20   $ 0.20   $ 0.40   $ 0.40  
Weighted average shares outstanding     29,403,946     29,354,887     27,481,309     26,666,460     26,661,784     29,379,552     26,646,327  
Period end shares outstanding     29,406,450     29,391,934     29,334,859     26,671,336     26,667,991     29,406,450     26,667,991  
                               

 

Univest Corporation of Pennsylvania  
Consolidated Selected Financial Data (Unaudited)  
June 30, 2018  
                                     
                                     
                                     
          For the three months ended,   For the six months ended,  
Profitability Ratios (annualized)     06/30/18   03/31/18   12/31/17   09/30/17   06/30/17   06/30/18   06/30/17  
                                     
Return on average assets       0.37 %     1.14 %     0.92 %     1.01 %     1.09 %     0.75 %     1.07 %  
Return on average assets, excluding restructuring charges (1), (2)   0.37 %     1.18 %     0.92 %     1.01 %     1.09 %     0.77 %     1.07 %  
Return on average shareholders' equity     2.86 %     8.60 %     7.35 %     8.43 %     9.13 %     5.70 %     8.89 %  
Return on average shareholders' equity, excluding restructuring charges (1), (2)   2.86 %     8.90 %     7.35 %     8.43 %     9.13 %     5.85 %     8.89 %  
Return on average tangible common equity, excluding restructuring charges (1), (2), (5)   4.04 %     12.65 %     10.89 %     12.83 %     14.06 %     8.29 %     13.77 %  
Net interest margin (FTE)       3.73 %     3.72 %     3.76 %     3.80 %     3.76 %     3.72 %     3.78 %  
Efficiency ratio (3)         62.12 %     65.41 %     63.43 %     61.94 %     60.74 %     63.74 %     61.70 %  
Efficiency ratio, excluding restructuring charges (1), (3), (4)   62.12 %     64.35 %     63.43 %     61.94 %     60.74 %     63.22 %     61.70 %  
                                     
Capitalization Ratios                                  
                                     
Dividends declared to net income       135.0 %     45.7 %     57.1 %     47.6 %     45.3 %     68.3 %     47.1 %  
Shareholders' equity to assets (Period End)     12.75 %     13.15 %     13.25 %     11.97 %     11.71 %     12.75 %     11.71 %  
Tangible common equity to tangible assets (5)     9.33 %     9.64 %     9.68 %     8.22 %     7.96 %     9.33 %     7.96 %  
Tangible book value per share (5)     $   14.51     $  14.54     $ 14.44     $  13.06     $   12.75     $ 14.51     $  12.75    
Tangible book value per share - Core (5), (6)   $   14.91     $   14.90     $   14.57     $   13.14     $   12.87     $  14.91     $  12.87    
                                     
Regulatory Capital Ratios  (Period End)                               
Tier 1 leverage ratio         10.19 %     10.47 %     10.48 %     8.74 %     8.74 %     10.19 %     8.74 %  
Common equity tier 1 risk-based capital ratio     10.89 %     11.16 %     11.11 %     9.51 %     9.21 %     10.89 %     9.21 %  
Tier 1 risk-based capital ratio       10.89 %     11.16 %     11.11 %     9.51 %     9.21 %     10.89 %     9.21 %  
Total risk-based capital ratio       13.76 %     14.04 %     14.00 %     12.47 %     12.15 %     13.76 %     12.15 %  
                                     
                                     
(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.  See below table for additional information.          
                                     
  (a) Restructuring charges $   -      $   571     $   -      $   -      $   -      $   571     $   -     
  Tax effect on restructuring charges     -          120         -          -          -          120         -     
  (b) Restructuring charges, net of tax  $   -      $   451     $   -      $   -      $   -      $   451     $   -     
                               
                                     
(2 ) Net income in this ratio excludes restructuring charges, net of tax. See (1)(b) above.                      
(3 ) Noninterest expense to net interest income before loan loss provision plus noninterest income adjusted for tax equivalent income.              
(4 ) Noninterest expense in this ratio excludes restructuring charges. See (1)(a) above.                      
(5 ) Tangible equity represents total shareholders' equity less goodwill and other intangible assets, but includes servicing rights which were $6,650 at June 30, 2018, $6,605 at March 31, 2018, $6,573 at December 31, 2017, $6,556 at September 30, 2017 and $6,548 at June 30, 2017.          
(6 ) Tangible equity as defined in (5), excluding the impact of accumulated other comprehensive (loss) income on available-for-sale investment securities, net (($11,987) at June 30, 2018, ($10,477) at March 31, 2018, ($4,061) at December 31, 2017, ($2,364) at September 30, 2017 and ($3,028) at June 30, 2017), divided by total shares outstanding.        
N/M  Not meaningful                                
                                     

 

Univest Corporation of Pennsylvania    
Average Balances and Interest Rates (Unaudited)    
  For the Three Months Ended,
   
Tax Equivalent Basis June 30, 2018   March 31, 2018    
  Average Income/ Average   Average Income/ Average    
(Dollars in thousands) Balance Expense Rate   Balance Expense Rate    
Assets:                  
Interest-earning deposits with other banks $   37,254   $   148   1.59 % $   19,184   $   76   1.61 %  
U.S. government obligations     23,183       91   1.57       23,921       94   1.59    
Obligations of state and political subdivisions     71,092       603   3.40       74,554       593   3.23    
Other debt and equity securities     356,100       2,177   2.45       359,451       2,095   2.36    
Federal funds sold and other earning assets     32,788       509   6.23       29,057       504   7.03    
Total interest-earning deposits, investments, federal funds sold and other earning assets     520,417       3,528   2.72       506,167       3,362   2.69    
                   
Commercial, financial, and agricultural loans     810,610       9,750   4.82       782,200       8,900   4.61    
Real estate—commercial and construction loans     1,661,198       19,044   4.60       1,600,394       17,618   4.46    
Real estate—residential loans     853,769       10,046   4.72       837,495       9,675   4.69    
Loans to individuals     28,985       444   6.14       27,960       413   5.99    
Municipal loans and leases     313,181       2,961   3.79       311,752       2,892   3.76    
Lease financings     75,452       1,353   7.19       74,709       1,344   7.30    
Gross loans and leases     3,743,195       43,598   4.67       3,634,510       40,842   4.56    
Total interest-earning assets     4,263,612       47,126   4.43       4,140,677       44,204   4.33    
Cash and due from banks     45,158             42,506          
Reserve for loan and lease losses     (23,914 )           (22,022 )        
Premises and equipment, net     61,234             61,738          
Other assets     336,737             333,078          
Total assets $   4,682,827         $   4,555,977          
                   
Liabilities:                  
Interest-bearing checking deposits $   463,156   $   383   0.33   $   425,027   $   292   0.28    
Money market savings     694,734       1,758   1.01       658,367       1,343   0.83    
Regular savings     803,586       582   0.29       834,375       557   0.27    
Time deposits     553,579       1,819   1.32       541,478       1,499   1.12    
Total time and interest-bearing deposits     2,515,055       4,542   0.72       2,459,247       3,691   0.61    
                   
Short-term borrowings     217,327       958   1.77       175,824       645   1.49    
Long-term debt     155,628       709   1.83       155,765       665   1.73    
Subordinated notes     94,420       1,261   5.36       94,359       1,261   5.42    
Total borrowings     467,375       2,928   2.51       425,948       2,571   2.45    
Total interest-bearing liabilities     2,982,430       7,470   1.00       2,885,195       6,262   0.88    
Noninterest-bearing deposits     1,048,901             1,024,797          
Accrued expenses and other liabilities     39,829             40,012          
Total liabilities     4,071,160             3,950,004          
                   
Shareholders' Equity:                  
Common stock     157,784             157,784          
Additional paid-in capital     290,517             290,209          
Retained earnings and other equity     163,366             157,980          
Total shareholders' equity     611,667             605,973          
Total liabilities and shareholders' equity $   4,682,827         $   4,555,977          
Net interest income   $   39,656       $   37,942      
                   
Net interest spread       3.43         3.45    
Effect of net interest-free funding sources       0.30         0.27    
Net interest margin       3.73 %     3.72 %  
                 
Ratio of average interest-earning assets to average interest-bearing liabilities    142.96 %         143.51 %        


Note 1:    In the above schedule, the interest income and net interest income analysis contains tax-equivalent financial information
  and measures determined by methods other than in accordance with U.S. GAAP. This financial information and measures
  should not be considered a substitute for GAAP basis financial information and measures. Management believes the presentation
  of the non-GAAP financial information and measures provide useful information that is essential to a proper understanding of 
  the financial results of the Corporation.
   
Note 2: For rate calculation purposes, average loan and lease categories include deferred fees and costs, purchase accounting 
  adjustments and 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 June 30, 2018 and March 31, 2018 have been calculated 
  using the Corporation's federal applicable rate of 21.0%.


Univest Corporation of Pennsylvania    
Average Balances and Interest Rates (Unaudited)    
    For the Three Months Ended June 30,        
Tax Equivalent Basis  2018     2017     
  Average Income/ Average   Average Income/ Average    
(Dollars in thousands) Balance Expense Rate   Balance Expense Rate    
Assets:                  
Interest-earning deposits with other banks $ 37,254   $ 148 1.59 % $ 17,951   $ 39 0.87 %  
U.S. government obligations   23,183     91 1.57     33,453     113 1.35    
Obligations of state and political subdivisions   71,092     603 3.40     83,356     886 4.26    
Other debt and equity securities   356,100     2,177 2.45     351,792     1,720 1.96    
Federal funds sold and other earning assets   32,788     509 6.23     29,860     396 5.32    
Total interest-earning deposits, investments, federal funds sold and other earning assets   520,417     3,528 2.72     516,412     3,154 2.45    
                   
Commercial, financial, and agricultural loans   810,610     9,750 4.82     761,544     8,172 4.30    
Real estate—commercial and construction loans   1,661,198     19,044 4.60     1,501,258     16,629 4.44    
Real estate—residential loans   853,769     10,046 4.72     750,149     8,479 4.53    
Loans to individuals   28,985     444 6.14     27,850     406 5.85    
Municipal loans and leases   313,181     2,961 3.79     283,129     3,185 4.51    
Lease financings   75,452     1,353 7.19     77,395     1,416 7.34    
Gross loans and leases   3,743,195     43,598 4.67     3,401,325     38,287 4.51    
Total interest-earning assets   4,263,612     47,126 4.43     3,917,737     41,441 4.24    
Cash and due from banks   45,158           43,804          
Reserve for loan and lease losses   (23,914 )         (20,474 )        
Premises and equipment, net   61,234           65,690          
Other assets   336,737           326,932          
Total assets $ 4,682,827         $ 4,333,689          
                   
Liabilities:                  
Interest-bearing checking deposits $ 463,156   $ 383 0.33 % $ 445,830   $ 118 0.11 %  
Money market savings   694,734     1,758 1.01     560,350     694 0.50    
Regular savings   803,586     582 0.29     835,495     446 0.21    
Time deposits   553,579     1,819 1.32     547,115     1,203 0.88    
Total time and interest-bearing deposits   2,515,055     4,542 0.72     2,388,790     2,461 0.41    
                   
Short-term borrowings   217,327     958 1.77     139,146     325 0.94    
Long-term debt   155,628     709 1.83     200,207     683 1.37    
Subordinated notes   94,420     1,261 5.36     94,176     1,261 5.37    
Total borrowings   467,375     2,928 2.51     433,529     2,269 2.10    
Total interest-bearing liabilities   2,982,430     7,470 1.00     2,822,319     4,730 0.67    
Noninterest-bearing deposits   1,048,901           957,619          
Accrued expenses and other liabilities   39,829           36,054          
Total liabilities   4,071,160           3,815,992          
                   
Shareholders' Equity:                  
Common stock   157,784           144,559          
Additional paid-in capital   290,517           230,683          
Retained earnings and other equity   163,366           142,455          
Total shareholders' equity   611,667           517,697          
Total liabilities and shareholders' equity $ 4,682,827         $ 4,333,689          
Net interest income   $ 39,656       $ 36,711      
                   
Net interest spread     3.43       3.57    
Effect of net interest-free funding sources     0.30       0.19    
Net interest margin     3.73 %   3.76 %  
                 
Ratio of average interest-earning assets to average interest-bearing liabilities   142.96 %         138.81 %        


Note 1:    In the above schedule, the interest income and net interest income analysis contains tax-equivalent financial information
  and measures determined by methods other than in accordance with U.S. GAAP. This financial information and measures
  should not be considered a substitute for GAAP basis financial information and measures. Management believes the presentation
  of the non-GAAP financial information and measures provide useful information that is essential to a proper understanding of
  the financial results of the Corporation.
   
Note 2: For rate calculation purposes, average loan and lease categories include deferred fees and costs, purchase accounting
  adjustments and 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 June 30, 2018 and 2017 have been calculated
  using the Corporation's federal applicable rate of 21.0% and 35.0%, respectively.



Univest Corporation of Pennsylvania    
Average Balances and Interest Rates (Unaudited)    
    For the Six Months Ended June 30,      
Tax Equivalent Basis  2018     2017     
  Average Income/ Average   Average Income/ Average    
(Dollars in thousands) Balance Expense Rate   Balance Expense Rate    
Assets:                  
Interest-earning deposits with other banks $ 28,269   $ 224 1.60 % $ 13,297   $ 55 0.83 %  
U.S. government obligations   23,550     185 1.58     33,744     219 1.31    
Obligations of state and political subdivisions   72,814     1,196 3.31     84,598     1,808 4.31    
Other debt and equity securities   357,766     4,272 2.41     351,104     3,302 1.90    
Federal funds sold and other earning assets   30,933     1,013 6.60     27,896     754 5.45    
Total interest-earning deposits, investments, federal funds sold and other earning assets   513,332     6,890 2.71     510,639     6,138 2.42    
                   
Commercial, financial, and agricultural loans   796,483     18,650 4.72     741,409     16,013 4.36    
Real estate—commercial and construction loans   1,630,964     36,662 4.53     1,480,757     32,369 4.41    
Real estate—residential loans   845,677     19,721 4.70     744,213     16,715 4.53    
Loans to individuals   28,475     857 6.07     28,707     806 5.66    
Municipal loans and leases   312,470     5,853 3.78     281,264     6,305 4.52    
Lease financings   75,083     2,697 7.24     78,011     2,899 7.49    
Gross loans and leases   3,689,152     84,440 4.62     3,354,361     75,107 4.52    
Total interest-earning assets   4,202,484     91,330 4.38     3,865,000     81,245 4.24    
Cash and due from banks   43,839           42,878          
Reserve for loan and lease losses   (22,973 )         (19,344 )        
Premises and equipment, net   61,485           65,102          
Other assets   334,879           328,707          
Total assets $ 4,619,714         $ 4,282,343          
                   
Liabilities:                  
Interest-bearing checking deposits $ 444,197   $ 675 0.31   $ 436,155   $ 223 0.10    
Money market savings   676,651     3,101 0.92     546,083     1,257 0.46    
Regular savings   818,895     1,139 0.28     821,725     795 0.20    
Time deposits   547,562     3,318 1.22     569,341     2,377 0.84    
Total time and interest-bearing deposits   2,487,305     8,233 0.67     2,373,304     4,652 0.40    
                   
Short-term borrowings   196,690     1,603 1.64     144,620     587 0.82    
Long-term debt   155,697     1,374 1.78     174,263     1,082 1.25    
Subordinated notes   94,390     2,522 5.39     94,146     2,522 5.40    
Total borrowings   446,777     5,499 2.48     413,029     4,191 2.05    
Total interest-bearing liabilities   2,934,082     13,732 0.94     2,786,333     8,843 0.64    
Noninterest-bearing deposits   1,036,916           945,198          
Accrued expenses and other liabilities   39,881           37,413          
Total liabilities   4,010,879           3,768,944          
                   
Shareholders' Equity:                  
Common stock   157,784           144,559          
Additional paid-in capital   290,363           230,395          
Retained earnings and other equity   160,688           138,445          
Total shareholders' equity   608,835           513,399          
Total liabilities and shareholders' equity $ 4,619,714         $ 4,282,343          
Net interest income   $ 77,598       $ 72,402      
                   
Net interest spread     3.44       3.60    
Effect of net interest-free funding sources     0.28       0.18    
Net interest margin     3.72 %     3.78 %  
                   
Ratio of average interest-earning assets to average interest-bearing liabilities   143.23 %         138.71 %        


Note 1:      In the above schedule, the interest income and net interest income analysis contains tax-equivalent financial information
  and measures determined by methods other than in accordance with U.S. GAAP. This financial information and measures
  should not be considered a substitute for GAAP basis financial information and measures. Management believes the presentation
  of the non-GAAP financial information and measures provide useful information that is essential to a proper understanding of
  the financial results of the Corporation.
   
Note 2: For rate calculation purposes, average loan and lease categories include deferred fees and costs, purchase accounting
  adjustments and 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 six months ended June 30, 2018 and 2017 have been calculated
  using the Corporation's federal applicable rate of 21.0% and 35.0%, respectively.

CONTACT:     
Roger Deacon 
UNIVEST CORPORATION OF PENNSYLVANIA
Chief Financial Officer
215-721-2455, DeaconR@univest.net      

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