Univest Corporation of Pennsylvania -- Univest Ban

SOUDERTON, PA--(Marketwired - Apr 24, 2013) - 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 first quarter ended March 31, 2013. Univest reported net income of $5.4 million or $0.32 diluted earnings per share for the quarter ended March 31, 2013, a 3% increase in net income compared to $5.3 million or $0.31 diluted earnings per share for the quarter ended March 31, 2012.

Loans Gross loans and leases increased $5.5 million from December 31, 2012 and $27.5 million from March 31, 2012. The growth in loans from the previous consecutive quarter occurred primarily in commercial loans, while the growth from the comparable quarter in the prior year occurred mainly in residential mortgages and equipment financing. While Univest continued to see increased loan activity during 2013, overall credit demand and utilization of lines by businesses and consumers remained light as a result of the sluggish economy.

Deposits Total deposits grew $84.6 million from March 31, 2012, primarily due to an increase in demand deposits and new customers choosing Univest. Total deposits declined $50.7 million from December 31, 2012, mainly due to a decrease in public fund deposits of $38.9 million.

Net Interest Income and Margin Net interest income decreased $221 thousand or 1% to $17.9 million in the first quarter of 2013 compared to the first quarter of 2012. The net interest margin on a tax-equivalent basis for the first quarter of 2013 was 3.83%, compared to 3.80% during the fourth quarter of 2012 and 3.95% in the first quarter of 2012.

The declines in net interest income and net interest margin during the first quarter of 2013 from the comparable period in the prior year were primarily due to the re-investment of maturing and called investment securities into lower yielding investments as a result of the lower interest rate environment and lower rates on commercial and residential real estate loans due to re-pricing and competitive pressures. The declines in net interest income and net interest margin were partially offset by favorable re-pricing of savings accounts and certificates of deposit.  

Non-Interest Income Non-interest income for the quarter ended March 31, 2013 was $11.5 million, an increase of $454 thousand or 4% from the comparable period in the prior year. Insurance commission and fee income was up $451 thousand, primarily a result of the acquisition of Javers Group on May 31, 2012. Investment advisory commission and fee income was up $445 thousand, primarily due to a 16.3% increase in assets under supervision. The net gain on mortgage banking activities increased $424 thousand during the first quarter of 2013 over the same period in 2012 as refinance volume continues to be strong. Partially offsetting these favorable variances were proceeds from bank owned life insurance death benefits of $989 thousand recognized during the first quarter of 2012.

Non-Interest Expense Non-interest expense for the first quarter of 2013 was $20.2 million, an increase of $1.4 million or 7% compared to the first quarter of 2012. Commission expense increased $693 thousand in the first quarter of 2013 compared to the same period in the prior year mainly related to increased production activity and revenues generated in our mortgage banking, equipment finance, investment and insurance businesses. During the first quarter of 2013, Univest implemented a company-wide restructuring plan which reduced staffing levels by 3.4% and included the announced closure and consolidation of our Silverdale financial service center, effective May 2013, into our Hilltown and Perkasie locations. As a result, Univest recorded severance and fixed asset retirement expenses of $437 thousand and $102 thousand, respectively. The restructuring involved strategic changes to ensure we are effectively managing costs, improving efficiencies and evolving the business to meet the needs of all of our stakeholders.

Asset Quality and Provision for Loan and Lease Losses Non-accrual loans and leases, including non-accrual troubled debt restructured loans, decreased to $28.9 million at March 31, 2013 from $32.1 million at December 31, 2012 and $36.3 million at March 31, 2012. The decrease in non-accrual loans from December 31, 2012 was mainly due to the foreclosure of commercial loans for two borrower relationships totaling $1.7 million and loan charge-offs. Net loan and lease charge-offs were $1.6 million during the first quarter of 2013, down from $3.4 million for the first quarter of 2012.

Non-accrual loans and leases as a percentage of total loans and leases (held for investment and nonaccrual loans held for sale) were 1.94% at March 31, 2013, compared to 2.17% at December 31, 2012 and 2.48% at March 31, 2012. Other real estate owned was $3.6 million at March 31, 2013, compared to $1.6 million at December 31, 2012 and $5.0 million at March 31, 2012. The year-to-date increase was primarily due to the addition of commercial properties for $1.7 million, as previously discussed. Of the other real estate owned properties held at March 31, 2013, two locations with an associated carrying balance of $2.0 million are currently under agreements of sale.

The provision for loan and lease losses was $2.1 million for the first quarter of 2013, compared to $4.1 million for the quarter ended March 31, 2012. The decrease in the year-to-date provision was primarily the result of migration and resolution of loans through the loan workout process and a decrease in loss factors for commercial real estate loans. The allowance for loan and lease losses as a percentage of loans and leases held for investment was 1.70% at March 31, 2013, compared to 1.67% at December 31, 2012 and 2.10% at March 31, 2012. The allowance for loan and lease losses to nonaccrual loans and leases held for investment equaled 87.31% at March 31, 2013, compared to 77.01% at December 31, 2012 and 84.36% at March 31, 2012. 

Capital Univest continues to remain well-capitalized at March 31, 2013. Total risk-based capital at March 31, 2013 was 15.37%, well in excess of the regulatory minimum for well capitalized status of 10%.

During the quarter, Univest repurchased 61 thousand shares of common stock at a cost of $1.0 million under our Board approved stock repurchase program. Shares available for future repurchases under the plan totaled 481 thousand at March 31, 2013. Total shares outstanding at March 31, 2013 were 16,762,695.

Dividend On February 27, 2013, Univest declared a quarterly cash dividend of $0.20 per share, payable on April 1, 2013. This represented a 4.70% annualized yield based on the closing price of Univest's stock on the date the dividend was paid.

About Univest Corporation of Pennsylvania 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 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.

Univest Corporation of Pennsylvania
Consolidated Selected Financial Data
March 31, 2013
(Dollars in thousands)
Balance Sheet (Period End)		03/31/13			12/31/12			09/30/12			06/30/12			03/31/12
Assets		$	2,263,036		$	2,304,841		$	2,232,081		$	2,188,727		$	2,192,164
Investment securities			508,751			499,579			515,256			439,092			451,433
Loans held for sale			3,606			4,530			6,146			1,333			2,535
Loans and leases held for investment, gross			1,487,375			1,481,862			1,469,511			1,465,449			1,459,830
Allowance for loan and lease losses			25,222			24,746			27,096			30,502			30,597
Loans and leases held for investment, net			1,462,153			1,457,116			1,442,415			1,434,947			1,429,233
Total deposits			1,814,610			1,865,333			1,777,930			1,743,922			1,730,030
Noninterest-bearing deposits			380,447			368,948			334,856			334,828			307,769
NOW, money market and savings			1,127,643			1,164,874			1,101,147			1,052,217			1,029,145
Time deposits			306,520			331,511			341,927			356,877			393,116
Borrowings			124,895			117,276			132,920			121,878			144,208
Shareholders' equity			284,784			284,277			281,589			277,316			275,525
Balance Sheet (Average)		For the three months ended,
		03/31/13			12/31/12			09/30/12			06/30/12			03/31/12
Assets		$	2,233,147		$	2,264,863		$	2,214,283		$	2,173,698		$	2,180,451
Investment securities			497,032			499,017			474,523			450,482			457,511
Loans and leases, gross			1,484,043			1,478,156			1,465,897			1,460,275			1,457,320
Deposits			1,790,108			1,823,707			1,771,454			1,726,441			1,724,310
Shareholders' equity			285,558			286,980			280,172			277,621			275,071
Asset Quality Data (Period End)
		03/31/13			12/31/12			09/30/12			06/30/12			03/31/12
Nonaccrual loans and leases, including nonaccrual troubled debt restructured
loans and leases and nonaccrual loans held for sale		$	28,887		$	32,132		$	30,525		$	36,762		$	36,270
Accruing loans and leases 90 days or more past due			366			441			690			384			523
Accruing troubled debt restructured loans and leases			13,037			13,457			13,383			7,591			7,301
Other real estate owned			3,616			1,607			3,301			3,922			4,993
Nonperforming assets			45,906			47,637			47,899			48,659			49,087
Allowance for loan and lease losses			25,222			24,746			27,096			30,502			30,597
Nonaccrual loans and leases / Loans and leases held for investment and nonaccrual loans held for sale			1.94%			2.17%			2.07%			2.51%			2.48%
Nonperforming loans and leases / Loans and leases held for investment and nonaccrual loans held for sale			2.84%			3.11%			3.03%			3.05%			3.02%
Allowance for loan and lease losses / Loans and leases held for investment			1.70%			1.67%			1.84%			2.08%			2.10%
Allowance for loan and lease losses / Nonaccrual loans and leases held for investment			87.31%			77.01%			97.03%			82.97%			84.36%
Allowance for loan and lease losses / Nonperforming loans and leases held for investment			59.64%			53.76%			64.52%			68.18%			69.39%
		For the three months ended,
		03/31/13			12/31/12			09/30/12			06/30/12			03/31/12
Net loan and lease charge-offs		$	1,598		$	4,732		$	5,616		$	1,438		$	3,373
Net loan and lease charge-offs (annualized)/Average loans and leases			0.44%			1.27%			1.52%			0.40%			0.93%

Univest Corporation of Pennsylvania
Consolidated Selected Financial Data
March 31, 2013
(Dollars in thousands, except per share data)
			For the three months ended,
For the period:			03/31/13			12/31/12			09/30/12			06/30/12			03/31/12
Interest income			$	19,489		$	19,988		$	19,977		$	20,258		$	20,431
Interest expense				1,546			1,838			1,958			2,111			2,267
	Net interest income			17,943			18,150			18,019			18,147			18,164
Provision for loan and lease losses				2,074			2,382			2,210			1,343			4,100
Net interest income after provision				15,869			15,768			15,809			16,804			14,064
Noninterest income:
	Trust fee income			1,734			1,902			1,625			1,625			1,625
	Service charges on deposit accounts			1,086			1,128			1,122			1,079			1,100
	Investment advisory commission and fee income			1,701			1,407			1,350			1,350			1,256
	Insurance commission and fee income			2,718			2,078			2,129			2,057			2,267
	Bank owned life insurance income			504			365			463			336			1,506
	Other-than-temporary impairment			-			-			(4)			(6)			(3)
	Net gain on sales of investment securities			185			14			9			24			258
	Net gain on mortgage banking activities			1,696			1,571			2,171			1,074			1,272
	Other income			1,851			1,913			1,996			461			1,740
Total noninterest income				11,475			10,378			10,861			8,000			11,021
Noninterest expense
	Salaries and benefits			9,860			9,121			8,944			9,100			10,141
	Commissions			2,115			2,042			1,884			1,633			1,422
	Premises and equipment			2,581			2,664			2,597			2,513			2,428
	Deposit insurance premiums			392			410			406			429			444
	Restructuring charges			539			-			-			-			-
	Other expense			4,749			5,475			5,227			4,961			4,441
Total noninterest expense				20,236			19,712			19,058			18,636			18,876
Income before taxes				7,108			6,434			7,612			6,168			6,209
Income taxes				1,710			1,358			1,842			1,405			946
Net income			$	5,398		$	5,076		$	5,770		$	4,763		$	5,263
Per Common Share Data:
Book value per share			$	16.99		$	16.95		$	16.80		$	16.55		$	16.42
Net income per share:
	Basic		$	0.32		$	0.30		$	0.34		$	0.28		$	0.31
	Diluted		$	0.32		$	0.30		$	0.34		$	0.28		$	0.31
Dividends declared per share			$	0.20		$	0.20		$	0.20		$	0.20		$	0.20
Weighted average shares outstanding			16,788,152			16,765,199			16,760,080			16,770,290			16,749,134
Period end shares outstanding			16,762,695			16,770,232			16,765,126			16,759,893			16,780,416

Univest Corporation of Pennsylvania
Consolidated Selected Financial Data
March 31, 2013
		For the three months ended,
Profitability Ratios (annualized)		03/31/13		12/31/12		09/30/12		06/30/12		03/31/12
Return on average assets		0.98%		0.89%		1.04%		0.88%		0.97%
Return on average shareholders' equity		7.67%		7.04%		8.19%		6.90%		7.70%
Net interest margin (FTE)		3.83%		3.80%		3.84%		3.97%		3.95%
Efficiency ratio (1)		65.61%		65.93%		62.84%		67.59%		60.46%
Capitalization Ratios
Dividends declared to net income		62.21%		66.06%		58.09%		70.48%		63.63%
Shareholders' equity to assets (Period End)		12.58%		12.33%		12.62%		12.67%		12.57%
Tangible common equity to tangible assets		10.08%		9.88%		10.12%		10.11%		10.18%
Regulatory Capital Ratios (Period End)
Tier 1 leverage ratio		11.71%		11.47%		11.48%		11.57%		11.64%
Tier 1 risk-based capital ratio		14.10%		14.35%		14.07%		14.38%		14.50%
Total risk-based capital ratio		15.37%		15.62%		15.34%		15.64%		15.76%

(1)		Total operating expenses to net interest income before loan loss provision plus non-interest income adjusted for tax equivalent income.

Distribution of Assets, Liabilities and Shareholders' Equity: Interest Rates and Interest Differential
				For the Three Months Ended March 31,
Tax Equivalent Basis				2013										2012
				Average				Income/			Average			Average				Income/			Average
				Balance				Expense			Rate			Balance				Expense			Rate
Assets:
Interest-earning deposits with other banks				$	40,552			$	35		0.35	%		$	59,453			$	38		0.26	%
U.S. Government obligations					174,408				477		1.11				147,146				519		1.42
Obligations of state and political subdivisions					121,686				1,579		5.26				116,918				1,708		5.88
Other debt and equity securities					200,938				895		1.81				193,447				1,234		2.57
	Total interest-earning deposits and investments				537,584				2,986		2.25				516,964				3,499		2.72
Commercial, financial, and agricultural loans					438,434				4,676		4.33				440,906				4,742		4.33
Real estate-commercial and construction loans					544,865				6,658		4.96				534,079				6,988		5.26
Real estate-residential loans					257,435				2,455		3.87				247,295				2,605		4.24
Loans to individuals					42,781				596		5.65				44,497				630		5.69
Municipal loans and leases					134,450				1,716		5.18				133,896				1,821		5.47
Lease financings					66,078				1,557		9.56				56,647				1,372		9.74
	Gross loans and leases				1,484,043				17,658		4.83				1,457,320				18,158		5.01
		Total interest-earning assets			2,021,627				20,644		4.14				1,974,284				21,657		4.41
Cash and due from banks					40,070										34,956
Reserve for loan and lease losses					(25,245	)									(31,908	)
Premises and equipment, net					33,046										34,299
Other assets					163,649										168,820
	Total assets			$	2,233,147									$	2,180,451
Liabilities:
Interest-bearing checking deposits				$	244,089			$	36		0.06			$	220,360			$	57		0.10
Money market savings					325,677				80		0.10				310,878				148		0.19
Regular savings					534,701				76		0.06				498,572				264		0.21
Time deposits					323,982				1,048		1.31				400,433				1,384		1.39
	Total time and interest-bearing deposits				1,428,449				1,240		0.35				1,430,243				1,853		0.52
Short-term borrowings					102,444				17		0.07				118,255				106		0.36
Long-term debt					-				-		-				440				4		3.66
Subordinated notes and capital securities					20,982				289		5.59				22,486				304		5.44
	Total borrowings				123,426				306		1.01				141,181				414		1.18
	Total interest-bearing liabilities				1,551,875				1,546		0.40				1,571,424				2,267		0.58
Demand deposits, non-interest bearing					361,659										294,067
Accrued expenses and other liabilities					34,055										39,889
	Total liabilities				1,947,589										1,905,380
Shareholders' Equity
Common stock					91,332										91,332
Additional paid-in capital					64,721										61,402
Retained earnings and other equity					129,505										122,337
	Total shareholders' equity				285,558										275,071
	Total liabilities and shareholders' equity			$	2,233,147									$	2,180,451
Net interest income								$	19,098									$	19,390
Net interest spread											3.74										3.83
Effect of net interest-free funding sources											0.09										0.12	%
Net interest margin											3.83	%									3.95
Ratio of average interest-earning assets to average interest-bearing liabilities					130.27	%									125.64	%

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, 2013 and 2012 have been calculated using the Corporation's federal applicable rate of 35.0%.