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Univest Corporation of Pennsylvania Reports Second Quarter Results

Company Release - 7/25/2018 4:35 PM ET

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 BasisJune 30, 2018 March 31, 2018  
 AverageIncome/Average AverageIncome/Average  
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate  
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   
 AverageIncome/Average AverageIncome/Average  
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate  
Assets:         
Interest-earning deposits with other banks$37,254 $1481.59%$17,951 $390.87% 
U.S. government obligations 23,183  911.57  33,453  1131.35  
Obligations of state and political subdivisions 71,092  6033.40  83,356  8864.26  
Other debt and equity securities 356,100  2,1772.45  351,792  1,7201.96  
Federal funds sold and other earning assets 32,788  5096.23  29,860  3965.32  
Total interest-earning deposits, investments, federal funds sold and other earning assets 520,417  3,5282.72  516,412  3,1542.45  
          
Commercial, financial, and agricultural loans 810,610  9,7504.82  761,544  8,1724.30  
Real estate—commercial and construction loans 1,661,198  19,0444.60  1,501,258  16,6294.44  
Real estate—residential loans 853,769  10,0464.72  750,149  8,4794.53  
Loans to individuals 28,985  4446.14  27,850  4065.85  
Municipal loans and leases 313,181  2,9613.79  283,129  3,1854.51  
Lease financings 75,452  1,3537.19  77,395  1,4167.34  
Gross loans and leases 3,743,195  43,5984.67  3,401,325  38,2874.51  
Total interest-earning assets 4,263,612  47,1264.43  3,917,737  41,4414.24  
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 $3830.33%$445,830 $1180.11% 
Money market savings 694,734  1,7581.01  560,350  6940.50  
Regular savings 803,586  5820.29  835,495  4460.21  
Time deposits 553,579  1,8191.32  547,115  1,2030.88  
Total time and interest-bearing deposits 2,515,055  4,5420.72  2,388,790  2,4610.41  
          
Short-term borrowings 217,327  9581.77  139,146  3250.94  
Long-term debt 155,628  7091.83  200,207  6831.37  
Subordinated notes 94,420  1,2615.36  94,176  1,2615.37  
Total borrowings 467,375  2,9282.51  433,529  2,2692.10  
Total interest-bearing liabilities 2,982,430  7,4701.00  2,822,319  4,7300.67  
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   
 AverageIncome/Average AverageIncome/Average  
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate  
Assets:         
Interest-earning deposits with other banks$28,269 $2241.60%$13,297 $550.83% 
U.S. government obligations 23,550  1851.58  33,744  2191.31  
Obligations of state and political subdivisions 72,814  1,1963.31  84,598  1,8084.31  
Other debt and equity securities 357,766  4,2722.41  351,104  3,3021.90  
Federal funds sold and other earning assets 30,933  1,0136.60  27,896  7545.45  
Total interest-earning deposits, investments, federal funds sold and other earning assets 513,332  6,8902.71  510,639  6,1382.42  
          
Commercial, financial, and agricultural loans 796,483  18,6504.72  741,409  16,0134.36  
Real estate—commercial and construction loans 1,630,964  36,6624.53  1,480,757  32,3694.41  
Real estate—residential loans 845,677  19,7214.70  744,213  16,7154.53  
Loans to individuals 28,475  8576.07  28,707  8065.66  
Municipal loans and leases 312,470  5,8533.78  281,264  6,3054.52  
Lease financings 75,083  2,6977.24  78,011  2,8997.49  
Gross loans and leases 3,689,152  84,4404.62  3,354,361  75,1074.52  
Total interest-earning assets 4,202,484  91,3304.38  3,865,000  81,2454.24  
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 $6750.31 $436,155 $2230.10  
Money market savings 676,651  3,1010.92  546,083  1,2570.46  
Regular savings 818,895  1,1390.28  821,725  7950.20  
Time deposits 547,562  3,3181.22  569,341  2,3770.84  
Total time and interest-bearing deposits 2,487,305  8,2330.67  2,373,304  4,6520.40  
          
Short-term borrowings 196,690  1,6031.64  144,620  5870.82  
Long-term debt 155,697  1,3741.78  174,263  1,0821.25  
Subordinated notes 94,390  2,5225.39  94,146  2,5225.40  
Total borrowings 446,777  5,4992.48  413,029  4,1912.05  
Total interest-bearing liabilities 2,934,082  13,7320.94  2,786,333  8,8430.64  
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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Source: Univest Corporation of Pennsylvania
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