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Univest Corporation of Pennsylvania - Univest Bank and Trust Co. - Reports Third Quarter Results

SOUDERTON, Pa., Oct. 26, 2016 (GLOBE NEWSWIRE) -- Univest Corporation of Pennsylvania (“Univest” or “Corporation”) (NASDAQ:UVSP), parent company of Univest Bank and Trust Co. ("Bank") and its insurance, investments and equipment financing subsidiaries, today announced financial results for the third quarter ended September 30, 2016. Univest reported net income of $58 thousand or $0.00 diluted earnings per share for the three months ended September 30, 2016, compared to net income of $7.5 million or $0.39 diluted earnings per share for the three months ended September 30, 2015. Net income for the nine months ended September 30, 2016 was $12.6 million or $0.57 diluted earnings per share, compared to net income of $20.1 million or $1.02 diluted earnings per share for the comparable period in the prior year.

The financial results for the three and nine months ended September 30, 2016 included $9.2 million and $10.6 million, net of tax, respectively, of acquisition and integration related costs associated with the acquisition of Fox Chase Bancorp (“Fox Chase”), or a total of $0.35 and $0.48, respectively, of diluted earnings per share. The nine months ended September 30, 2015 included $2.4 million, net of tax, of integration and acquisition-related costs and restructuring charges incurred during the first and second quarters, or $0.12 of diluted earnings per share. The current quarter is the first reporting period reflecting financial results inclusive of Fox Chase which Univest acquired on July 1, 2016. On September 12, 2016, Univest completed the Fox Chase system conversion, moving all operations to Univest and providing all Univest and Fox Chase customers with access to an expanded financial center and ATM network.

Loans

Gross loans and leases increased $1.0 billion from December 31, 2015 and $1.1 billion from September 30, 2015, including $776.3 million of loans acquired from Fox Chase Bank. Organic loan growth, which excludes the loans acquired from Fox Chase at June 30, 2016, was $69.1 million, or 2.2% (not annualized), for the three months ended September 30, 2016. The growth in loans was primarily in commercial business, commercial real estate and residential real estate loans. Loan growth in 2016 resulted from new and existing customer relationships and Univest’s strategic move to expand its presence and hire a lending team in Lancaster County to seize opportunities as a result of market disruption caused by other bank acquisitions. Loan growth also resulted from opportunities brought by Univest’s new lending talent in its core market and through the acquisition of Fox Chase.

Deposits

Total deposits increased $784.1 million from December 31, 2015 and $805.6 million from September 30, 2015, primarily due to $738.3 million of deposits acquired from Fox Chase. Organic deposit growth, which excludes the Fox Chase deposits at June 30, 2016, was $63.2 million, or 2.0% (not annualized), for the three months ended September 30, 2016 which is primarily due to an increase in public funds deposits.

Borrowings

Total borrowings increased $324.8 million from December 31, 2015 and $327.8 million from September 30, 2015, primarily due to long-term borrowings acquired from Fox Chase which consisted of $90.0 million principal amount of Federal Home Loan bank borrowings and borrowed funds obtained from other commercial banks, the issuance by the Corporation of $45.0 million in subordinated notes on July 1, 2016 and an increase of $187.2 million in short-term borrowings.

Net Interest Income and Margin

Net interest income increased $9.4 million to $32.9 million for the third quarter of 2016 from the same period in 2015. Net interest income increased $9.6 million for the nine months ended September 30, 2016 from the same period in the prior year. The net interest margin on a tax-equivalent basis for the third quarter of 2016 was 3.68%, compared to 3.93% for the second quarter of 2016 and 3.89% for the third quarter of 2015. The increase in net interest income and decrease in net interest margin during the third quarter of 2016 was mainly due to the impact of the Fox Chase acquisition, which included a full quarter of average net interest-earning assets acquired. The favorable impact of acquisition accounting fair value adjustments was 7 basis points for the quarter ended September 30, 2016 compared to 8 basis points for the quarter ended September 30, 2015. A detailed analysis comparing net interest margin and net interest income for the quarter ended September 30, 2016 and the quarter ended June 30, 2106 is included in the attached exhibits.

Noninterest Income

Noninterest income for the quarter ended September 30, 2016 was $14.1 million, an increase of $1.4 million or 11.0% from the third quarter of 2015. Noninterest income for the nine months ended September 30, 2016 was $42.0 million, an increase of $2.7 million or 7.0% from the comparable period in the prior year. Service charges on deposits increased $275 thousand or 25.7% for the quarter and $227 thousand or 7.2% for the nine months ended September 30, 2016, mostly due to fees on deposit accounts acquired from Fox Chase. Insurance commission and fee income increased $516 thousand or 4.8% for the nine months ended September 30, 2016, primarily due to an increase in contingent commission income and growth in the group life and health and commercial product lines premiums. Bank owned life insurance (BOLI) income increased $405 thousand for the quarter and $846 thousand for the nine months ended September 30, 2016 mainly due to $26.1 million of policies acquired from Fox Chase which generated $208 thousand of income during the third quarter of 2016, the purchase of policies totaling $8.0 million during the third quarter of 2015, and the transfer of policies totaling $9.8 million during the second and fourth quarters of 2015 to a higher yielding account structure. The net gain on mortgage banking activities increased $883 thousand for the quarter and $1.2 million for the nine months ended September 30, 2016, mainly due to increases in mortgage volume during the second and third quarters of 2016. Mortgage volume closings increased $32.8 million, or 65.5%, for the three months ended September 30, 2016 and $33.4 million, or 21.7% for the nine months ended September 30, 2016, compared to the same periods in 2015.

Noninterest Expense

Noninterest expense for the quarter ended September 30, 2016 was $47.1 million, an increase of $21.8 million or 86.5%, compared to the third quarter of 2015. Noninterest expense for the nine months ended September 30, 2016 was $103.6 million, an increase of $24.1 million or 30.3% from the comparable period in the prior year. Acquisition and integration costs related to the Fox Chase merger were $14.1 million for the three months ended September 30, 2016 and $15.6 million for the nine months ended September 30, 2016. Acquisition, integration and restructuring costs related to the Valley Green merger were $3.6 million for the nine months ended September 30, 2015. Salaries and benefit expense increased $4.7 million for the quarter and $7.7 million for the nine months ended September 30, 2016, primarily attributable to higher staffing levels resulting from the Fox Chase acquisition, additional staff hired to support revenue generation across all business lines and the expansion into Lancaster County. Commission expense increased $311 thousand for the quarter and $600 thousand for the nine months ended September 30, 2016, mostly due to commissions paid on increased mortgage banking and insurance revenue. Premises and equipment expenses increased $545 thousand for the quarter and $365 thousand for the nine months ended September 30, 2016, primarily due to higher premises expense related to Fox Chase locations. Data processing expense increased $954 thousand for the quarter and $1.6 million for the nine months ended September 30, 2016 due to increased investments in computer software as well as a full quarter of Fox Chase processing expense.

Asset Quality and Provision for Loan and Lease Losses

Non-accrual loans and leases, including non-accrual troubled debt restructured loans, were $15.1 million at September 30, 2016, compared to $14.2 million at December 31, 2015 and $20.8 million at September 30, 2015. Net loan and lease charge-offs were $1.7 million during the third quarter of 2016 and $3.3 million for the nine months ended September 30, 2016. The provision for loan and lease losses was $1.4 million for the third quarter of 2016 and $2.6 million for the nine months ended September 30, 2016.

The allowance for loan and lease losses as a percentage of loans and leases held for investment was 0.53% at September 30, 2016, compared to 0.81% at December 31, 2015 and 0.89% at September 30, 2015. The allowance for loan and lease losses as a percentage of loans and leases held for investment, excluding loans acquired in the Fox Chase and Valley Green Bank acquisitions which were recorded at fair value as of the acquisition date, was 0.77% at September 30, 2016, compared to 0.94% at December 31, 2015.

Dividend

On August 19, 2016, Univest declared a quarterly cash dividend of $0.20 per share, payable on October 3, 2016. This represented a 3.45% 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 results on Thursday, October 27, 2016 at 9:00 a.m. EDT. Participants may preregister at http://dpregister.com/10094672. The general public can access the call by dialing 1-888-338-6515. A replay of the conference call will be available through November 27, 2016 by dialing 1-877-344-7529; using Conference ID: 10094672.

About Univest Corporation of Pennsylvania

Univest Corporation of Pennsylvania (UVSP), including its wholly-owned subsidiary, Univest Bank and Trust Co., has approximately $4.1 billion in assets and $3.0 billion in assets under management and supervision through its Wealth Management lines of business. Headquartered in Souderton, Pa. and founded in 1876, the Corporation and its subsidiaries provide a full range of financial solutions for individuals, businesses, municipalities and nonprofit organizations in the Mid-Atlantic Region. Univest delivers these services through a network of more than 50 offices in southeastern Pennsylvania extending to the Lehigh Valley 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) 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
September 30, 2016
(Dollars in thousands)
Balance Sheet (Period End) 09/30/16 06/30/16 03/31/16 12/31/15 09/30/15
Assets $ 4,140,444 $ 3,107,617 $ 2,824,777 $ 2,879,451 $ 2,851,568
Investment securities 484,213 286,980 329,357 370,760 374,558
Loans held for sale 3,844 4,657 3,818 4,680 9,151
Loans and leases held for investment, gross 3,190,361 2,345,037 2,183,256 2,179,013 2,097,807
Allowance for loan and lease losses 16,899 17,153 16,452 17,628 18,620
Loans and leases held for investment, net 3,173,462 2,327,884 2,166,804 2,161,385 2,079,187
Total deposits 3,178,509 2,377,084 2,334,361 2,394,360 2,372,865
Noninterest-bearing deposits 874,581 689,916 559,827 541,460 519,767
NOW, money market and savings 1,652,696 1,326,976 1,391,626 1,398,494 1,361,827
Time deposits 651,232 360,192 382,908 454,406 491,271
Borrowings 398,341 309,666 75,265 73,588 70,531
Shareholders' equity 509,249 369,160 367,003 361,574 359,109
Balance Sheet (Average) For the three months ended, For the nine months ended,
09/30/16 06/30/16 03/31/16 12/31/15 09/30/15 09/30/16 09/30/15
Assets $ 4,147,468 $ 2,854,561 $ 2,834,557 $ 2,866,848 $ 2,804,578 $ 3,281,469 $ 2,745,767
Investment securities 503,790 302,492 342,218 370,163 368,837 383,275 375,200
Loans and leases, gross 3,164,273 2,239,674 2,177,091 2,132,922 2,098,007 2,529,339 2,063,259
Deposits 3,177,060 2,340,959 2,351,816 2,393,655 2,325,049 2,625,299 2,268,685
Shareholders' equity 506,464 368,466 364,092 360,521 357,150 413,348 359,457
Asset Quality Data (Period End)
09/30/16 06/30/16 03/31/16 12/31/15 09/30/15
Nonaccrual loans and leases, including nonaccrual troubled debt restructured
loans and leases and nonaccrual loans held for sale $ 15,050 $ 13,265 $ 13,482 $ 14,183 $ 20,838
Accruing loans and leases 90 days or more past due 1,128 748 693 379 428
Accruing troubled debt restructured loans and leases 3,286 4,413 4,279 5,245 4,789
Other real estate owned 6,041 3,131 3,073 1,276 955
Nonperforming assets 25,505 21,557 21,527 21,083 27,010
Allowance for loan and lease losses 16,899 17,153 16,452 17,628 18,620
Nonaccrual loans and leases / Loans and leases held for investment and nonaccrual 0.47% 0.57% 0.62% 0.65% 0.99%
loans held for sale
Nonperforming loans and leases / Loans and leases held for investment and nonaccrual 0.61% 0.79% 0.85% 0.91% 1.24%
loans held for sale
Allowance for loan and lease losses / Loans and leases held for investment 0.53% 0.73% 0.75% 0.81% 0.89%
Allowance for loan and lease losses / Loans and leases held for investment 0.77% 0.82% 0.86% 0.94% 1.06%
(excluding acquired loans at period-end)
Allowance for loan and lease losses / Nonaccrual loans and leases held for investment 112.29% 129.31% 122.03% 124.29% 110.58%
Allowance for loan and lease losses / Nonperforming loans and leases held for investment 86.82% 93.09% 89.15% 89.00% 84.43%
Acquired credit impaired loans $ 14,575 $ 942 $ 1,267 $ 1,253 $ 1,379
For the three months ended, For the nine months ended,
09/30/16 06/30/16 03/31/16 12/31/15 09/30/15 09/30/16 09/30/15
Net loan and lease charge-offs $ 1,669 $ 129 $ 1,502 $ 1,909 $ 1,652 $ 3,300 $ 4,927
Net loan and lease charge-offs (annualized)/Average loans and leases 0.21% 0.02% 0.28% 0.36% 0.31% 0.17% 0.32%

Univest Corporation of Pennsylvania
Consolidated Selected Financial Data
September 30, 2016
(Dollars in thousands, except per share data)
For the three months ended, For the nine months ended,
For the period: 09/30/16 06/30/16 03/31/16 12/31/15 09/30/15 09/30/16 09/30/15
Interest income $ 36,705 $ 26,112 $ 25,734 $ 25,747 $ 25,704 $ 88,551 $ 76,236
Interest expense 3,836 2,451 2,211 2,278 2,220 8,498 5,787
Net interest income 32,869 23,661 23,523 23,469 23,484 80,053 70,449
Provision for loan and lease losses 1,415 830 326 917 670 2,571 2,885
Net interest income after provision 31,454 22,831 23,197 22,552 22,814 77,482 67,564
Noninterest income:
Trust fee income 1,958 1,997 1,865 2,030 1,904 5,820 5,878
Service charges on deposit accounts 1,344 1,056 998 1,059 1,069 3,398 3,171
Investment advisory commission and fee income 2,864 2,759 2,669 2,583 2,687 8,292 8,190
Insurance commission and fee income 3,267 3,503 4,558 3,073 3,232 11,328 10,812
Bank owned life insurance income 711 535 470 425 306 1,716 870
Net gain on sales of investment securities 30 413 44 697 296 487 568
Net gain on mortgage banking activities 2,006 1,711 1,218 1,090 1,123 4,935 3,748
Other income 1,957 2,027 2,009 2,231 2,119 5,993 6,000
Total noninterest income 14,137 14,001 13,831 13,188 12,736 41,969 39,237
Noninterest expense:
Salaries and benefits 16,710 14,080 14,182 12,828 11,970 44,972 37,241
Commissions 2,485 2,363 1,895 1,894 2,174 6,743 6,143
Premises and equipment 3,424 2,841 2,872 2,817 2,879 9,137 8,772
Data processing 2,169 1,530 1,281 1,244 1,215 4,980 3,416
Professional fees 1,322 947 1,020 870 1,096 3,289 2,969
Intangible expenses 906 996 770 178 710 2,672 2,389
Acquisition-related costs 8,784 1,158 214 540 - 10,156 507
Integration costs 5,365 27 6 6 - 5,398 1,484
Restructuring charges (85) - - - - (85) 1,642
Other expense 5,986 5,604 4,699 5,652 5,199 16,289 14,923
Total noninterest expense 47,066 29,546 26,939 26,029 25,243 103,551 79,486
Income before taxes (1,475) 7,286 10,089 9,711 10,307 15,900 27,315
Income taxes (1,533) 2,046 2,800 2,553 2,779 3,313 7,205
Net income $ 58 $ 5,240 $ 7,289 $ 7,158 $ 7,528 $ 12,587 $ 20,110
Per common share data:
Book value per share $ 19.17 $ 18.88 $ 18.73 $ 18.51 $ 18.41 $ 19.17 $ 18.41
Net income per share:
Basic $ - $ 0.27 $ 0.37 $ 0.37 $ 0.39 $ 0.58 $ 1.02
Diluted $ - $ 0.27 $ 0.37 $ 0.37 $ 0.39 $ 0.57 $ 1.02
Dividends declared per share $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.60 $ 0.60
Weighted average shares outstanding 26,555,626 19,603,310 19,578,438 19,525,701 19,506,609 21,929,403 19,709,322
Period end shares outstanding 26,558,412 19,557,958 19,592,798 19,530,930 19,502,613 26,558,412 19,502,613

Univest Corporation of Pennsylvania
Consolidated Selected Financial Data
September 30, 2016
For the three months ended, For the nine months ended,
Profitability Ratios (annualized) 09/30/16 06/30/16 03/31/16 12/31/15 09/30/15 09/30/16 09/30/15
Return on average assets 0.01% 0.74% 1.03% 0.99% 1.06% 0.51% 0.98%
Return on average assets, excluding integration 0.88% 0.90% 1.07% 1.06% 1.06% 0.94% 1.09%
and acquisition-related costs and restructuring charges (1), (2)
Return on average shareholders' equity 0.05% 5.72% 8.05% 7.88% 8.36% 4.07% 7.48%
Return on average shareholders' equity, excluding 7.24% 6.99% 8.29% 8.42% 8.36% 7.47% 8.36%
integration and acquisition-related costs and
restructuring charges (1), (2)
Return on average tangible common equity, excluding 11.54% 10.56% 12.63% 12.92% 12.91% 11.57% 12.84%
integration and acquisition-related costs and
restructuring charges (1), (2)
Net interest margin (FTE) 3.68% 3.93% 3.91% 3.80% 3.89% 3.82% 4.02%
Efficiency ratio (3) 96.45% 75.22% 69.23% 68.10% 66.96% 81.54% 69.66%
Efficiency ratio, excluding integration and 67.63% 72.20% 68.67% 66.67% 66.96% 69.36% 66.47%
acquisition-related costs and restructuring charges (1), (3), (4)
Capitalization Ratios
Dividends declared to net income N/M 74.64% 53.62% 54.08% 51.79% 104.27% 58.68%
Shareholders' equity to assets (Period End) 12.30% 11.88% 12.99% 12.56% 12.59% 12.30% 12.59%
Tangible common equity to tangible assets 8.10% 8.21% 8.97% 8.58% 8.56% 8.10% 8.56%
Regulatory Capital Ratios (Period End)
Tier 1 leverage ratio 8.80% 9.90% 9.93% 9.69% 9.75% 8.80% 9.75%
Common equity tier 1 risk-based capital ratio 9.58% 10.24% 10.81% 10.65% 10.85% 9.58% 10.85%
Tier 1 risk-based capital ratio 9.58% 10.24% 10.81% 10.65% 10.85% 9.58% 10.85%
Total risk-based capital ratio 12.64% 12.77% 13.47% 13.35% 13.69% 12.64% 13.69%
(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) Integration and acquisition-related costs and restructuring charges $ 14,064 $ 1,185 $ 220 $ 546 $ - $ 15,469 $ 3,633
Tax effect on integration and acquisition-related costs and restructuring charges 4,910 22 2 49 - 4,934 1,270
(b) Integration and acquisition-related costs and restructuring charges, net of tax $ 9,154 $ 1,163 $ 218 $ 497 $ - $ 10,535 $ 2,363
(2)Net income in this ratio excludes integration and acquisition-related costs and 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 integration and acquisition-related costs and restructuring charges. See (1)(a) above.
N/MNot meaningful

Univest Corporation of Pennsylvania
Distribution of Assets, Liabilities and Shareholders' Equity: Interest Rates and Interest Differential
For the Three Months Ended ,
Tax Equivalent BasisSeptember 30, 2016 June 30, 2016
AverageIncome/Average AverageIncome/Average
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate
Assets:
Interest-earning deposits with other banks$16,248 $14 0.34% $ 7,654 $ 9 0.47%
U.S. government obligations 43,622 125 1.14 57,776 176 1.23
Obligations of state and political subdivisions 96,581 1,030 4.24 101,241 1,092 4.34
Other debt and equity securities 363,587 1,358 1.49 143,475 1,012 2.84
Federal funds sold and other earning assets (1) 18,987 321 6.73 11,018 121 4.42
Total interest-earning deposits, investments, federal funds sold and other earning assets 539,025 2,848 2.10 321,164 2,410 3.02
Commercial, financial, and agricultural loans 674,569 6,571 3.88 436,189 4,132 3.81
Real estate—commercial and construction loans 1,382,947 15,816 4.55 898,494 10,106 4.52
Real estate—residential loans 710,814 7,887 4.41 557,733 6,141 4.43
Loans to individuals 31,416 415 5.26 30,301 408 5.42
Municipal loans and leases 288,391 3,030 4.18 241,507 2,723 4.53
Lease financings 76,136 1,547 8.08 75,450 1,524 8.12
Gross loans and leases 3,164,273 35,266 4.43 2,239,674 25,034 4.50
Total interest-earning assets 3,703,298 38,114 4.09 2,560,838 27,444 4.31
Cash and due from banks 40,835 32,647
Reserve for loan and lease losses (17,110) (16,789)
Premises and equipment, net 61,361 43,990
Other assets 359,084 233,875
Total assets$ 4,147,468 $ 2,854,561
Liabilities:
Interest-bearing checking deposits$389,079 $114 0.12 $ 351,011 $ 75 0.09
Money market savings 483,579 428 0.35 337,250 322 0.38
Regular savings 793,644 352 0.18 644,199 199 0.12
Time deposits 606,561 1,187 0.78 374,936 862 0.92
Total time and interest-bearing deposits 2,272,863 2,081 0.36 1,707,396 1,458 0.34
Short-term borrowings 229,282 276 0.48 53,874 320 2.39
Long-term debt (2) 93,188 218 0.93 - - -
Subordinated notes (3) 94,035 1,261 5.33 49,431 673 5.48
Total borrowings 416,505 1,755 1.68 103,305 993 3.87
Total interest-bearing liabilities 2,689,368 3,836 0.57 1,810,701 2,451 0.54
Noninterest-bearing deposits 904,197 633,563
Accrued expenses and other liabilities 47,439 41,831
Total liabilities 3,641,004 2,486,095
Shareholders' Equity:
Common stock 144,559 110,271
Additional paid-in capital 229,319 121,070
Retained earnings and other equity 132,586 137,125
Total shareholders' equity 506,464 368,466
Total liabilities and shareholders' equity$ 4,147,468 $ 2,854,561
Net interest income $ 34,278 $ 24,993
Net interest spread 3.52 3.77
Effect of net interest-free funding sources 0.16 0.16
Net interest margin 3.68% 3.93%
Ratio of average interest-earning assets to average interest-bearing liabilities 137.70% 141.43%
(1) Other earning assets include Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost.
(2) The average interest rate on long-term debt includes the net accretion of acquisition accounting fair value adjustments.
(3) The interest rate on subordinated notes is calculated on a 30/360 day basis with a weighted average note rate of 5.05% and 5.10% for the
three months ended September 30, 2016 and June 30, 2016, respectively. The balance is net of debt issuance costs which are amortized to interest expense.
Notes: For rate calculation purposes, average loan and lease categories include unearned discount.
Nonaccrual loans and leases have been included in the average loan and lease balances.
Loans held for sale have been included in the average loan balances.
Tax-equivalent amounts for the three months ended September 30, 2016 and June 30, 2016 have been calculated using the Corporation’s federal applicable rate of 35.0%.

Univest Corporation of Pennsylvania
Distribution of Assets, Liabilities and Shareholders' Equity: Interest Rates and Interest Differential
For the Three Months Ended September 30,
Tax Equivalent Basis 2016
2015
AverageIncome/Average AverageIncome/Average
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate
Assets:
Interest-earning deposits with other banks$16,248 $14 0.34% $ 50,514 $ 21 0.16%
U.S. government obligations 43,622 125 1.14 119,712 345 1.14
Obligations of state and political subdivisions 96,581 1,030 4.24 109,300 1,335 4.85
Other debt and equity securities 363,587 1,358 1.49 139,825 859 2.44
Federal funds sold and other earning assets (1) 18,987 321 6.73 8,998 119 5.25
Total interest-earning deposits, investments, federal funds sold and other earning assets 539,025 2,848 2.10 428,349 2,679 2.48
Commercial, financial, and agricultural loans 674,569 6,571 3.88 423,912 4,219 3.95
Real estate—commercial and construction loans 1,382,947 15,816 4.55 857,181 9,942 4.60
Real estate—residential loans 710,814 7,887 4.41 509,599 5,786 4.50
Loans to individuals 31,416 415 5.26 28,957 388 5.32
Municipal loans and leases 288,391 3,030 4.18 205,302 2,450 4.73
Lease financings 76,136 1,547 8.08 73,056 1,555 8.44
Gross loans and leases 3,164,273 35,266 4.43 2,098,007 24,340 4.60
Total interest-earning assets 3,703,298 38,114 4.09 2,526,356 27,019 4.24
Cash and due from banks 40,835 35,419
Reserve for loan and lease losses (17,110) (20,494)
Premises and equipment, net 61,361 40,852
Other assets 359,084 222,445
Total assets$ 4,147,468 $ 2,804,578
Liabilities:
Interest-bearing checking deposits$389,079 $114 0.12 $ 375,362 $ 77 0.08
Money market savings 483,579 428 0.35 361,530 318 0.35
Regular savings 793,644 352 0.18 590,331 134 0.09
Time deposits 606,561 1,187 0.78 463,524 1,014 0.87
Total time and interest-bearing deposits 2,272,863 2,081 0.36 1,790,747 1,543 0.34
Short-term borrowings 229,282 276 0.48 30,520 10 0.13
Long-term debt (2) 93,188 218 0.93 - - -
Subordinated notes (3) 94,035 1,261 5.33 49,321 667 5.37
Total borrowings 416,505 1,755 1.68 79,841 677 3.36
Total interest-bearing liabilities 2,689,368 3,836 0.57 1,870,588 2,220 0.47
Noninterest-bearing deposits 904,197 534,302
Accrued expenses and other liabilities 47,439 42,538
Total liabilities 3,641,004 2,447,428
Shareholders' Equity:
Common stock 144,559 110,271
Additional paid-in capital 229,319 120,770
Retained earnings and other equity 132,586 126,109
Total shareholders' equity 506,464 357,150
Total liabilities and shareholders' equity$ 4,147,468 $ 2,804,578
Net interest income $ 34,278 $ 24,799
Net interest spread 3.52 3.77
Effect of net interest-free funding sources 0.16 0.12
Net interest margin 3.68% 3.89%
Ratio of average interest-earning assets to average interest-bearing liabilities 137.70% 135.06%
(1) Other earning assets include Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost.
(2) The average interest rate on long-term debt includes the net accretion of acquisition accounting fair value adjustments.
(3) The interest rate on subordinated notes is calculated on a 30/360 day basis with a weighted average note rate of 5.05% and 5.10% for the
three months ended September 30, 2016 and 2015, respectively. The balance is net of debt issuance costs which are amortized to interest expense.
Notes: For rate calculation purposes, average loan and lease categories include unearned discount.
Nonaccrual loans and leases have been included in the average loan and lease balances.
Loans held for sale have been included in the average loan balances.
Tax-equivalent amounts for the three months ended September 30, 2016 and 2015 have been calculated
using the Corporation’s federal applicable rate of 35.0%.

Univest Corporation of Pennsylvania
Distribution of Assets, Liabilities and Shareholders' Equity: Interest Rates and Interest Differential
For the Nine Months Ended September 30,
Tax Equivalent Basis 2016 2015
AverageIncome/Average AverageIncome/Average
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate
Assets:
Interest-earning deposits with other banks$14,514 $51 0.47% $ 25,957 $ 37 0.19%
U.S. government obligations 61,231 551 1.20 129,646 1,075 1.11
Obligations of state and political subdivisions 99,617 3,251 4.36 107,807 4,011 4.97
Other debt and equity securities 222,427 3,394 2.04 137,747 2,267 2.20
Federal funds sold and other earning assets (1) 14,956 573 5.12 10,256 402 5.24
Total interest-earning deposits, investments, federal funds sold and other earning assets 412,745 7,820 2.53 411,413 7,792 2.53
Commercial, financial, and agricultural loans 508,195 14,717 3.87 426,997 12,951 4.06
Real estate—commercial and construction loans 1,057,379 35,841 4.53 841,930 29,486 4.68
Real estate—residential loans 603,900 20,004 4.42 488,646 16,789 4.59
Loans to individuals 30,402 1,222 5.37 29,570 1,184 5.35
Municipal loans and leases 253,925 8,378 4.41 204,748 7,318 4.78
Lease financings 75,538 4,613 8.16 71,368 4,673 8.75
Gross loans and leases 2,529,339 84,775 4.48 2,063,259 72,401 4.69
Total interest-earning assets 2,942,084 92,595 4.20 2,474,672 80,193 4.33
Cash and due from banks 35,070 32,768
Reserve for loan and lease losses (17,223) (20,983)
Premises and equipment, net 49,451 40,618
Other assets 272,087 218,692
Total assets$ 3,281,469 $ 2,745,767
Liabilities:
Interest-bearing checking deposits$380,780 $273 0.10 $ 364,006 $ 190 0.07
Money market savings 394,532 1,090 0.37 360,473 857 0.32
Regular savings 688,630 725 0.14 578,478 392 0.09
Time deposits 467,192 2,984 0.85 456,726 2,966 0.87
Total time and interest-bearing deposits 1,931,134 5,072 0.35 1,759,683 4,405 0.33
Short-term borrowings 103,974 599 0.77 40,902 33 0.11
Long-term debt (2) 31,290 218 0.93 - - -
Subordinated notes (3) 64,395 2,609 5.41 33,411 1,349 5.40
Total borrowings 199,659 3,426 2.29 74,313 1,382 2.49
Total interest-bearing liabilities 2,130,793 8,498 0.53 1,833,996 5,787 0.42
Noninterest-bearing deposits 694,165 509,002
Accrued expenses and other liabilities 43,163 43,312
Total liabilities 2,868,121 2,386,310
Shareholders' Equity:
Common stock 121,784 110,271
Additional paid-in capital 157,334 120,409
Retained earnings and other equity 134,230 128,777
Total shareholders' equity 413,348 359,457
Total liabilities and shareholders' equity$ 3,281,469 $ 2,745,767
Net interest income $ 84,097 $ 74,406
Net interest spread 3.67 3.91
Effect of net interest-free funding sources 0.15 0.11
Net interest margin 3.82% 4.02%
Ratio of average interest-earning assets to average interest-bearing liabilities 138.07% 134.93%
(1) Other earning assets include Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost.
(2) The average interest rate on long-term debt includes the net accretion of acquisition accounting fair value adjustments.
(3) The interest rate on subordinated notes is calculated on a 30/360 day basis with a weighted average note rate of 5.08% and 5.10% for the
nine months ended September 30, 2016 and 2015, respectively. The balance is net of debt issuance costs which are amortized to interest expense.
Notes: For rate calculation purposes, average loan and lease categories include unearned discount.
Nonaccrual loans and leases have been included in the average loan and lease balances.
Loans held for sale have been included in the average loan balances.
Tax-equivalent amounts for the nine months ended September 30, 2016 and 2015 have been calculated
using the Corporation’s federal applicable rate of 35.0%.


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

Source:Univest Corporation of Pennsylvania