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Univest Corporation of Pennsylvania - Univest Bank and Trust Co. - Reports Fourth Quarter and Year End Results

SOUDERTON, Pa., Jan. 25, 2017 (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 fourth quarter and year ended December 31, 2016. Univest reported net income of $6.9 million or $0.26 diluted earnings per share for the three months ended December 31, 2016, compared to net income of $7.2 million or $0.37 diluted earnings per share for the three months ended December 31, 2015. Net income for the year ended December 31, 2016 was $19.5 million or $0.84 diluted earnings per share, compared to net income of $27.3 million or $1.39 diluted earnings per share for the prior year.

The financial results for the fourth quarter and year ended December 31, 2016 included acquisition and integration costs related to the Fox Chase acquisition plus restructuring costs related to facility closures and staffing rationalization of $1.2 million and $11.8 million, net of tax, or $0.05 and $0.51, of diluted earnings per share, respectively. The results for the fourth quarter and year ended December 31, 2016 also included $1.2 million, net of tax, or $0.05 and $0.05, of diluted earnings per share, respectively, related to the Corporation’s agreement to settle its future obligations related to its acquisition of Girard Partners, Inc.

The financial results for the fourth quarter and year ended December 31, 2015 included acquisition, integration and restructuring costs related to the Fox Chase acquisition, the Valley Green acquisition and its new financial center model of $497 thousand and $2.9 million, net of tax, or $0.03 and $0.15, of diluted earnings per share, respectively.

Loans

Gross loans and leases increased $95.5 million or 12.0% (annualized) from September 30, 2016. Gross loans and leases increased $1.1 billion from December 31, 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 $330.6 million, or 11.2%, for the year ended December 31, 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 personnel in its core market and through the acquisition of Fox Chase.

Deposits

Total deposits increased $79.1 million or 10.0% (annualized) from September 30, 2016. Deposits increased $863.2 million from December 31, 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 $124.9 million or 4.0% for the year ended December 31, 2016.

Borrowings

Total borrowings increased $344.2 million from December 31, 2015, primarily due to long-term borrowings acquired from Fox Chase which consisted of $105.0 million of Federal Home Loan bank borrowings and commercial bank borrowings, the issuance by the Corporation of $45.0 million in subordinated notes on July 1, 2016 and an increase of $172.0 million in short-term borrowings.

Net Interest Income and Margin

Net interest income increased $10.7 million to $34.2 million for the fourth quarter of 2016 from the same period in 2015. Net interest income increased $20.3 million to $114.2 million for the year ended December 31, 2016 from the prior year. The increase in net interest income during the fourth quarter and year of 2016 was mainly due to the impact of the Fox Chase acquisition, which occurred on July 1, 2016.

Net interest income increased $1.3 million to $34.2 million for the fourth quarter of 2016 from the third quarter of 2016. The net interest margin on a tax-equivalent basis for the fourth quarter of 2016 was 3.81% compared to 3.68% for the third quarter of 2016. The favorable impact of purchase accounting accretion was 20 basis points for the quarter ended December 31, 2016 compared to 7 basis points for the quarter ended September 30, 2016. The increase in the favorable impact of purchase accounting accretion is primarily due to the Corporation’s ability to exit three purchased credit impaired commercial real estate loan relationships which totaled $7.1 million during the quarter. A detailed analysis comparing net interest margin and net interest income for the quarter ended December 31, 2016 and the quarter ended September 30, 2016 is included in the attached exhibits.

Noninterest Income

Noninterest income for the quarter ended December 31, 2016 was $14.0 million, an increase of $806 thousand or 6.1% from the fourth quarter of 2015. Noninterest income for the year ended December 31, 2016 was $56.0 million, an increase of $3.5 million or 6.7% from the prior year. Service charges on deposits increased $234 thousand or 22.1% for the quarter and $461 thousand or 10.9% for the year ended December 31, 2016 mostly due to fees on deposit accounts acquired from Fox Chase. Investment advisory commission and fee income increased $482 thousand or 18.7% for the quarter and $584 thousand or 5.4% for the year ended December 31, 2016 due to an increase in assets under management during 2016. This increase was primarily due to a combination of both increased new customer relationships and improvement in market performance during the second half of 2016. Insurance commission and fee income increased $202 thousand or 6.6% for the quarter and $718 thousand or 5.2% for the year ended December 31, 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 $790 thousand for the quarter and $1.6 million for the year ended December 31, 2016 primarily due to proceeds from bank owned life insurance death benefits of $450 thousand recognized in the fourth quarter of 2016 as well as $26.1 million of policies acquired from Fox Chase, the purchase of $8.0 million and the transfer of $9.8 million of policies to a higher yielding account structure during 2015. The net gain on mortgage banking increased $1.2 million or 24.5% for the year ended December 31, 2016, mainly due to an increase in mortgage volume during 2016. Mortgage loan closings increased $48.7 million, or 23.3% for the year ended December 31, 2016 compared to the same period in 2015. The net gain on mortgage banking activities decreased $914 thousand to $1.1 million for the quarter as compared to the third quarter of 2016 and was the same amount as the fourth quarter 2015. The link quarter decrease is due to seasonal slowdown in mortgage activity during the fourth quarter. These favorable increases were partially offset by a decline in the net gain on sales of investment securities for the quarter and year ended December 31, 2016 of $666 thousand and $747 thousand, respectively, compared to the same periods in 2015.

Noninterest Expense

Noninterest expense for the quarter ended December 31, 2016 was $38.4 million, an increase of $12.4 million or 47.6%, compared to the fourth quarter of 2015. Noninterest expense for the year ended December 31, 2016 was $142.0 million, an increase of $36.5 million or 34.6% from the prior year. Acquisition and integration costs related to the Fox Chase acquisition and restructuring costs related to facility closures and staffing rationalization totaled $2.2 million for the quarter and $17.7 million for the year ended December 31, 2016. Acquisition, integration and restructuring costs related to the Fox Chase acquisition, the Valley Green acquisition and new financial center model were $546 thousand for the quarter and $4.2 million for the year ended December 31, 2015.

Salaries and benefit expense increased $3.7 million for the quarter and $11.4 million for the year ended December 31, 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. Salaries and benefit expense decreased $164 thousand for the quarter as compared to the quarter ended September 30, 2016. Included in salaries and benefit expense for the quarter is the cost of a pension settlement of $1.4 million as the Corporation offered lump sum payouts to former employees in its noncontributory retirement plan. This amount was recorded as a reclassification with the accumulated other comprehensive income component of equity and had no impact on the Corporation’s reported equity. This pension distribution was partially offset by the Corporation’s modification of its paid time off policy which resulted in a non-cash reduction in expense of $1.3 million during the quarter. Commission expense increased $724 thousand for the quarter and $1.3 million for the year ended December 31, 2016, primarily due to commissions paid on increased mortgage banking activities, investment advisor fees and insurance revenues. Premises and equipment expenses increased $1.1 million for the quarter and $1.4 million for the year ended December 31, 2016, primarily due to higher premises expense related to Fox Chase locations and expansion into Philadelphia, Lancaster County and the Lehigh Valley. Data processing expense increased $757 thousand for the quarter and $2.3 million for the year ended December 31, 2016 due to increased investments in computer software as well as six months of Fox Chase processing expense. Intangible expenses increased $2.8 million for the quarter and $3.1 million for the year ended December 31, 2016 as the Corporation reached an agreement to settle its future obligation related to its acquisition of Girard Partners, Inc.

Asset Quality and Provision for Loan and Lease Losses

Non-accrual loans and leases, including non-accrual troubled debt restructured loans, were $17.9 million at December 31, 2016, compared to $15.1 million at September 30, 2016 and $14.2 million at December 31, 2015. Net loan and lease charge-offs were $1.7 million during the fourth quarter of 2016 and $5.0 million for the year ended December 31, 2016. The provision for loan and lease losses was $2.3 million for the fourth quarter of 2016 and $4.8 million for the year ended December 31, 2016.

The allowance for loan and lease losses as a percentage of loans and leases held for investment was 0.53% at December 31, 2016, compared to 0.53% at September 30, 2016 and 0.81% at December 31, 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 0.73% at December 31, 2016, compared to 0.77% at September 30, 2016 and 0.94% at December 31, 2015.

Tax Provision

The effective income tax rate for the year ended December 31, 2016 was 16.6%, compared to 26.4% for the year ended December 31, 2015. These rates reflect the Corporation’s levels of tax exempt income for both periods relative to the overall level of taxable income.

Dividend

On November 23, 2016, Univest declared a quarterly cash dividend of $0.20 per share, payable on January 2, 2017. This represented a 2.59% annualized yield based on the closing price of Univest’s stock on the date the dividend was paid.

Termination of Shareholder Rights Plan

Finally, following a periodic review of corporate governance practices, and taking into account comments received as part of an ongoing dialogue with shareholders, the Corporation’s Board of Directors voted to terminate the Corporation’s shareholder rights plan, originally adopted in September 2011, effective January 25, 2017. The shareholders’ rights plan will terminate automatically as a result of the Board’s action, and shareholders do not have to take any action as a result of the termination.

Conference Call

Univest will host a conference call to discuss fourth quarter and year end 2016 results on Thursday, January 26, 2017 at 9:00 a.m. EST. Participants may preregister at http://dpregister.com/10099225. The general public can access the call by dialing 1-888-338-6515. A replay of the conference call will be available through February 26, 2017 by dialing 1-877-344-7529; using Conference ID: 10099225.

About Univest Corporation of Pennsylvania

Univest Corporation of Pennsylvania (UVSP), including its wholly-owned subsidiary, Univest Bank and Trust Co., has approximately $4.2 billion in assets and $3.2 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
December 31, 2016
(Dollars in thousands)
Balance Sheet (Period End) 12/31/16 09/30/16 06/30/16 03/31/16 12/31/15
Assets $ 4,230,528 $ 4,140,444 $ 3,107,617 $ 2,824,777 $ 2,879,451
Investment securities 468,518 484,213 286,980 329,357 370,760
Loans held for sale 5,890 3,844 4,657 3,818 4,680
Loans and leases held for investment, gross 3,285,886 3,190,361 2,345,037 2,183,256 2,179,013
Allowance for loan and lease losses 17,499 16,899 17,153 16,452 17,628
Loans and leases held for investment, net 3,268,387 3,173,462 2,327,884 2,166,804 2,161,385
Total deposits 3,257,567 3,178,509 2,377,084 2,334,361 2,394,360
Noninterest-bearing deposits 918,337 874,581 689,916 559,827 541,460
NOW, money market and savings 1,713,041 1,652,696 1,326,976 1,391,626 1,398,494
Time deposits 626,189 651,232 360,192 382,908 454,406
Borrowings 417,780 398,341 309,666 75,265 73,588
Shareholders' equity 505,209 509,249 369,160 367,003 361,574
Balance Sheet (Average) For the three months ended, For the twelve months ended,
12/31/16 09/30/16 06/30/16 03/31/16 12/31/15 12/31/16 12/31/15
Assets $ 4,134,976 $ 4,147,468 $ 2,854,561 $ 2,834,557 $ 2,866,848 $ 3,496,012 $ 2,776,283
Investment securities 473,890 503,790 302,492 342,218 370,163 406,053 373,930
Loans and leases, gross 3,208,171 3,164,273 2,239,674 2,177,091 2,132,922 2,699,973 2,080,817
Deposits 3,237,778 3,177,060 2,340,959 2,351,816 2,393,655 2,779,255 2,300,184
Shareholders' equity 507,832 506,464 368,466 364,092 360,521 437,098 359,725
Asset Quality Data (Period End)
12/31/16 09/30/16 06/30/16 03/31/16 12/31/15
Nonaccrual loans and leases, including nonaccrual troubled debt restructured
loans and leases and nonaccrual loans held for sale $ 17,916 $ 15,050 $ 13,265 $ 13,482 $ 14,183
Accruing loans and leases 90 days or more past due 987 1,128 748 693 379
Accruing troubled debt restructured loans and leases 3,252 3,286 4,413 4,279 5,245
Other real estate owned 4,969 6,041 3,131 3,073 1,276
Nonperforming assets 27,124 25,505 21,557 21,527 21,083
Allowance for loan and lease losses 17,499 16,899 17,153 16,452 17,628
Nonaccrual loans and leases / Loans and leases held for investment and nonaccrual 0.55% 0.47% 0.57% 0.62% 0.65%
loans held for sale
Nonperforming loans and leases / Loans and leases held for investment and 0.67% 0.61% 0.79% 0.85% 0.91%
nonaccrual loans held for sale
Allowance for loan and lease losses / Loans and leases held for investment 0.53% 0.53% 0.73% 0.75% 0.81%
Allowance for loan and lease losses / Loans and leases held for investment 0.73% 0.77% 0.82% 0.86% 0.94%
(excluding acquired loans at period-end)
Allowance for loan and lease losses / Nonaccrual loans and leases held for
investment 97.67% 112.29% 129.31% 122.03% 124.29%
Allowance for loan and lease losses / Nonperforming loans and leases held for
investment 78.98% 86.82% 93.09% 89.15% 89.00%
Acquired credit impaired loans $ 7,352 $ 14,575 $ 942 $ 1,267 $ 1,253
For the three months ended, For the twelve months ended,
12/31/16 09/30/16 06/30/16 03/31/16 12/31/15 12/31/16 12/31/15
Net loan and lease charge-offs $ 1,650 $ 1,669 $ 129 $ 1,502 $ 1,909 $ 4,950 $ 6,836
Net loan and lease charge-offs (annualized)/Average loans and leases 0.20% 0.21% 0.02% 0.28% 0.36% 0.18% 0.33%

Univest Corporation of Pennsylvania
Consolidated Selected Financial Data
December 31, 2016
(Dollars in thousands, except per share data)
For the three months ended, For the twelve months ended,
For the period: 12/31/16 09/30/16 06/30/16 03/31/16 12/31/15 12/31/16 12/31/15
Interest income $ 38,056 $ 36,705 $ 26,112 $ 25,734 $ 25,747 $ 126,607 $ 101,983
Interest expense 3,884 3,836 2,451 2,211 2,278 12,382 8,065
Net interest income 34,172 32,869 23,661 23,523 23,469 114,225 93,918
Provision for loan and lease losses 2,250 1,415 830 326 917 4,821 3,802
Net interest income after provision 31,922 31,454 22,831 23,197 22,552 109,404 90,116
Noninterest income:
Trust fee income 1,921 1,958 1,997 1,865 2,030 7,741 7,908
Service charges on deposit accounts 1,293 1,344 1,056 998 1,059 4,691 4,230
Investment advisory commission and fee income 3,065 2,864 2,759 2,669 2,583 11,357 10,773
Insurance commission and fee income 3,275 3,267 3,503 4,558 3,073 14,603 13,885
Bank owned life insurance income 1,215 711 535 470 425 2,931 1,295
Net gain on sales of investment securities 31 30 413 44 697 518 1,265
Net gain on mortgage banking activities 1,092 2,006 1,711 1,218 1,090 6,027 4,838
Other income 2,102 1,957 2,027 2,009 2,231 8,095 8,231
Total noninterest income 13,994 14,137 14,001 13,831 13,188 55,963 52,425
Noninterest expense:
Salaries and benefits 16,546 16,710 14,080 14,182 12,828 61,518 50,069
Commissions 2,618 2,485 2,363 1,895 1,894 9,361 8,037
Premises and equipment 3,884 3,424 2,841 2,872 2,817 13,021 11,589
Data processing 2,001 2,169 1,530 1,281 1,244 6,981 4,660
Professional fees 1,258 1,322 947 1,020 870 4,547 3,839
Marketing and advertising 619 345 513 538 759 2,015 2,253
Deposit insurance premiums 521 327 418 447 463 1,713 1,730
Intangible expenses 2,962 906 996 770 178 5,634 2,567
Acquisition-related costs 101 8,784 1,158 214 540 10,257 1,047
Integration costs 269 5,365 27 6 6 5,667 1,490
Restructuring charges (recoveries) 1,816 (85) - - - 1,731 1,642
Other expense 5,835 5,314 4,673 3,714 4,430 19,536 16,592
Total noninterest expense 38,430 47,066 29,546 26,939 26,029 141,981 105,515
Income before taxes 7,486 (1,475) 7,286 10,089 9,711 23,386 37,026
Income tax expense (benefit) 568 (1,533) 2,046 2,800 2,553 3,881 9,758
Net income $ 6,918 $ 58 $ 5,240 $ 7,289 $ 7,158 $ 19,505 $ 27,268
Per common share data:
Book value per share $ 19.00 $ 19.17 $ 18.88 $ 18.73 $ 18.51 $ 19.00 $ 18.51
Net income per share:
Basic $ 0.26 $ - $ 0.27 $ 0.37 $ 0.37 $ 0.85 $ 1.39
Diluted $ 0.26 $ - $ 0.27 $ 0.37 $ 0.37 $ 0.84 $ 1.39
Dividends declared per share $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.80 $ 0.80
Weighted average shares outstanding 26,577,948 26,554,626 19,603,310 19,578,438 19,525,701 23,097,638 19,663,039
Period end shares outstanding 26,589,353 26,558,412 19,557,958 19,592,798 19,530,930 26,589,353 19,530,930

Univest Corporation of Pennsylvania
Consolidated Selected Financial Data
December 31, 2016
For the three months ended, For the twelve months ended,
Profitability Ratios (annualized) 12/31/16 09/30/16 06/30/16 03/31/16 12/31/15 12/31/16 12/31/15
Return on average assets 0.67% 0.01% 0.74% 1.03% 0.99% 0.56% 0.98%
Return on average assets, excluding integration 0.78% 0.88% 0.90% 1.07% 1.06% 0.89% 1.09%
and acquisition-related costs and restructuring charges (1), (2)
Return on average shareholders' equity 5.42% 0.05% 5.72% 8.05% 7.88% 4.46% 7.58%
Return on average shareholders' equity, excluding 6.37% 7.24% 6.99% 8.29% 8.42% 7.15% 8.38%
integration and acquisition-related costs and
restructuring charges (1), (2)
Return on average tangible common equity, excluding 9.95% 11.32% 10.31% 12.33% 12.61% 10.93% 12.56%
integration and acquisition-related costs and
restructuring charges (1), (2), (5)
Net interest margin (FTE) 3.81% 3.68% 3.93% 3.91% 3.80% 3.82% 3.96%
Efficiency ratio (3) 76.48% 96.45% 75.22% 69.23% 68.10% 80.11% 69.27%
Efficiency ratio, excluding integration and 72.13% 67.63% 72.20% 68.67% 66.67% 70.15% 66.52%
acquisition-related costs and restructuring charges (1), (3), (4)
Capitalization Ratios
Dividends declared to net income 76.76% N/M 74.64% 53.62% 54.08% 94.51% 57.35%
Shareholders' equity to assets (Period End) 11.94% 12.30% 11.88% 12.99% 12.56% 11.94% 12.56%
Tangible common equity to tangible assets (5) 7.97% 8.24% 8.39% 9.17% 8.77% 7.97% 8.77%
Tangible book value per share (5) $12.13 $12.28 $12.82 $12.66 $12.40 $12.13 $ 12.40
Tangible book value per share - Core (5), (6) $12.32 $12.21 $12.72 $12.62 $12.43 $12.32 $12.43
Regulatory Capital Ratios (Period End)
Tier 1 leverage ratio 8.84% 8.80% 9.90% 9.93% 9.69% 8.84% 9.69%
Common equity tier 1 risk-based capital ratio 9.41% 9.58% 10.24% 10.81% 10.65% 9.41% 10.65%
Tier 1 risk-based capital ratio 9.41% 9.58% 10.24% 10.81% 10.65% 9.41% 10.65%
Total risk-based capital ratio 12.43% 12.64% 12.77% 13.47% 13.35% 12.43% 13.35%
(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$2,186 $14,064 $1,185 $220 $546 $17,655 $ 4,179
restructuring charges
Tax effect on integration and acquisition-related 969 4,910 22 2 49 5,904 1,319
costs and restructuring charges
(b) Integration and acquisition-related costs and$ 1,217 $9,154 $1,163 $218 $497 $11,751 $2,860
restructuring charges, net of tax
(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.
(5)Tangible equity represents total shareholders' equity less goodwill and other intangible assets, but includes mortgage servicing rights which were $6,485 at December 31, 2016, $6,167 at September 30, 2016, $5,896 at June 30, 2016, $5,839 at March 31, 2016 and $5,877 at December 31, 2015.
(6)Tangible equity as defined in (5), excluding the impact of accumulated other comprehensive (loss) income on available-for-sale investment securities, net (($4,989) at December 31, 2016, $1,789 at September 30, 2016, $1,907 at June 30, 2016, $821 at March 31, 2016, and ($592) at December 31, 2015), divided by total shares outstanding.
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 BasisDecember 31, 2016 September 30, 2016
AverageIncome/Average AverageIncome/Average
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate
Assets:
Interest-earning deposits with other banks$ 10,235 $10 0.39% $ 16,248 $ 14 0.34%
U.S. government obligations 33,341 98 1.17 43,622 125 1.14
Obligations of state and political subdivisions 90,499 921 4.05 96,581 1,030 4.24
Other debt and equity securities 350,050 1,337 1.52 363,587 1,358 1.49
Federal funds sold and other earning assets (1) 20,578 217 4.20 18,987 321 6.73
Total interest-earning deposits, investments, federal funds sold and other earning assets 504,703 2,583 2.04 539,025 2,848 2.10
Commercial, financial, and agricultural loans 683,746 7,247 4.22 674,569 6,571 3.88
Real estate—commercial and construction loans 1,411,104 16,391 4.62 1,382,947 15,816 4.55
Real estate—residential loans 723,193 8,097 4.45 710,814 7,887 4.41
Loans to individuals 30,796 432 5.58 31,416 415 5.26
Municipal loans and leases 282,297 3,178 4.48 288,391 3,030 4.18
Lease financings 77,035 1,555 8.03 76,136 1,547 8.08
Gross loans and leases 3,208,171 36,900 4.58 3,164,273 35,266 4.43
Total interest-earning assets 3,712,874 39,483 4.23 3,703,298 38,114 4.09
Cash and due from banks 42,946 40,835
Reserve for loan and lease losses (16,921) (17,110)
Premises and equipment, net 63,712 61,361
Other assets 332,365 359,084
Total assets$ 4,134,976 $ 4,147,468
Liabilities:
Interest-bearing checking deposits$ 402,247 $89 0.09 $ 389,079 $ 114 0.12
Money market savings 472,461 450 0.38 483,579 428 0.35
Regular savings 792,778 327 0.16 793,644 352 0.18
Time deposits 647,665 1,277 0.78 606,561 1,187 0.78
Total time and interest-bearing deposits 2,315,151 2,143 0.37 2,272,863 2,081 0.36
Short-term borrowings 128,498 149 0.46 201,832 259 0.51
Long-term debt 121,895 331 1.08 120,638 235 0.77
Subordinated notes (2) 94,055 1,261 5.33 94,035 1,261 5.33
Total borrowings 344,448 1,741 2.01 416,505 1,755 1.68
Total interest-bearing liabilities 2,659,599 3,884 0.58 2,689,368 3,836 0.57
Noninterest-bearing deposits 922,627 904,197
Accrued expenses and other liabilities 44,918 47,439
Total liabilities 3,627,144 3,641,004
Shareholders' Equity:
Common stock 144,559 144,559
Additional paid-in capital 230,037 229,319
Retained earnings and other equity 133,236 132,586
Total shareholders' equity 507,832 506,464
Total liabilities and shareholders' equity$ 4,134,976 $ 4,147,468
Net interest income $ 35,599 $ 34,278
Net interest spread 3.65 3.52
Effect of net interest-free funding sources 0.16 0.16
Net interest margin 3.81% 3.68%
Ratio of average interest-earning assets to average interest-bearing liabilities 139.60% 137.70%
(1) Other earning assets include Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost.
(2) The interest rate on subordinated notes is calculated on a 30/360 day basis with a weighted average note rate of 5.05% for both the three months ended December 31, 2016 and September 30, 2016. 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 December 31, 2016 and September 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 December 31,
Tax Equivalent Basis 2016 2015
AverageIncome/Average AverageIncome/Average
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate
Assets:
Interest-earning deposits with other banks$ 10,235 $10 0.39% $ 75,782 $ 58 0.30%
U.S. government obligations 33,341 98 1.17 105,635 300 1.13
Obligations of state and political subdivisions 90,499 921 4.05 105,415 1,292 4.86
Other debt and equity securities 350,050 1,337 1.52 159,113 1,029 2.57
Federal funds sold and other earning assets (1) 20,578 217 4.20 8,983 123 5.43
Total interest-earning deposits, investments, federal funds sold and other earning assets 504,703 2,583 2.04 454,928 2,802 2.44
Commercial, financial, and agricultural loans 683,746 7,247 4.22 409,184 3,950 3.83
Real estate—commercial and construction loans 1,411,104 16,391 4.62 870,620 9,822 4.48
Real estate—residential loans 723,193 8,097 4.45 530,550 5,967 4.46
Loans to individuals 30,796 432 5.58 29,900 403 5.35
Municipal loans and leases 282,297 3,178 4.48 218,585 2,572 4.67
Lease financings 77,035 1,555 8.03 74,083 1,567 8.39
Gross loans and leases 3,208,171 36,900 4.58 2,132,922 24,281 4.52
Total interest-earning assets 3,712,874 39,483 4.23 2,587,850 27,083 4.15
Cash and due from banks 42,946 33,787
Reserve for loan and lease losses (16,921) (18,858)
Premises and equipment, net 63,712 41,699
Other assets 332,365 222,370
Total assets$ 4,134,976 $ 2,866,848
Liabilities:
Interest-bearing checking deposits$ 402,247 $89 0.09 $ 386,243 $ 79 0.08
Money market savings 472,461 450 0.38 391,891 348 0.35
Regular savings 792,778 327 0.16 595,019 141 0.09
Time deposits 647,665 1,277 0.78 477,524 1,034 0.86
Total time and interest-bearing deposits 2,315,151 2,143 0.37 1,850,677 1,602 0.34
Short-term borrowings 128,498 149 0.46 21,189 2 0.04
Long-term debt 121,895 331 1.08 - - -
Subordinated notes (2) 94,055 1,261 5.33 49,358 674 5.42
Total borrowings 344,448 1,741 2.01 70,547 676 3.80
Total interest-bearing liabilities 2,659,599 3,884 0.58 1,921,224 2,278 0.47
Noninterest-bearing deposits 922,627 542,978
Accrued expenses and other liabilities 44,918 42,125
Total liabilities 3,627,144 2,506,327
Shareholders' Equity:
Common stock 144,559 110,271
Additional paid-in capital 230,037 121,028
Retained earnings and other equity 133,236 129,222
Total shareholders' equity 507,832 360,521
Total liabilities and shareholders' equity$ 4,134,976 $ 2,866,848
Net interest income $ 35,599 $ 24,805
Net interest spread 3.65 3.68
Effect of net interest-free funding sources 0.16 0.12
Net interest margin 3.81% 3.80%
Ratio of average interest-earning assets to average interest-bearing liabilities 139.60% 134.70%
(1) Other earning assets include Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost.
(2) 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 December 31, 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 December 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 Twelve Months Ended December 30,
Tax Equivalent Basis 2016 2015
AverageIncome/Average AverageIncome/Average
(Dollars in thousands)BalanceExpenseRate BalanceExpenseRate
Assets:
Interest-earning deposits with other banks$ 13,438 $61 0.45% $ 38,515 $ 95 0.25%
U.S. government obligations 54,220 649 1.20 123,593 1,375 1.11
Obligations of state and political subdivisions 97,325 4,172 4.29 107,204 5,303 4.95
Other debt and equity securities 254,508 4,731 1.86 143,133 3,296 2.30
Federal funds sold and other earning assets (1) 16,370 790 4.83 9,936 525 5.28
Total interest-earning deposits, investments, federal funds sold and other earning assets 435,861 10,403 2.39 422,381 10,594 2.51
Commercial, financial, and agricultural loans 552,322 21,964 3.98 422,507 16,901 4.00
Real estate—commercial and construction loans 1,146,293 52,232 4.56 849,161 39,275 4.63
Real estate—residential loans 633,886 28,101 4.43 499,208 22,789 4.57
Loans to individuals 30,501 1,654 5.42 29,653 1,587 5.35
Municipal loans and leases 261,057 11,556 4.43 208,236 9,890 4.75
Lease financings 75,914 6,168 8.12 72,052 6,240 8.66
Gross loans and leases 2,699,973 121,675 4.51 2,080,817 96,682 4.65
Total interest-earning assets 3,135,834 132,078 4.21 2,503,198 107,276 4.29
Cash and due from banks 37,050 33,025
Reserve for loan and lease losses (17,147) (20,447)
Premises and equipment, net 53,036 40,891
Other assets 287,239 219,616
Total assets$ 3,496,012 $ 2,776,283
Liabilities:
Interest-bearing checking deposits$ 386,176 $362 0.09% $ 369,611 $ 269 0.07
Money market savings 414,121 1,540 0.37 368,392 1,205 0.33
Regular savings 714,809 1,052 0.15 582,647 533 0.09
Time deposits 512,557 4,261 0.83 461,968 4,000 0.87
Total time and interest-bearing deposits 2,027,663 7,215 0.36 1,782,618 6,007 0.34
Short-term borrowings 103,238 748 0.72 35,932 35 0.10
Long-term debt 60,965 549 0.90 - - -
Subordinated notes (2) 71,851 3,870 5.39 37,431 2,023 5.40
Total borrowings 236,054 5,167 2.19 73,363 2,058 2.81
Total interest-bearing liabilities 2,263,717 12,382 0.55 1,855,981 8,065 0.43
Noninterest-bearing deposits 751,592 517,566
Accrued expenses and other liabilities 43,605 43,011
Total liabilities 3,058,914 2,416,558
Shareholders' Equity:
Common stock 127,509 110,271
Additional paid-in capital 175,609 120,565
Retained earnings and other equity 133,980 128,889
Total shareholders' equity 437,098 359,725
Total liabilities and shareholders' equity$ 3,496,012 $ 2,776,283
Net interest income $ 119,696 $ 99,211
Net interest spread 3.66 3.86
Effect of net interest-free funding sources 0.16 0.10
Net interest margin 3.82% 3.96%
Ratio of average interest-earning assets to average interest-bearing liabilities 138.53% 134.87%
(1) Other earning assets include Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost.
(2) The interest rate on subordinated notes is calculated on a 30/360 day basis with a weighted average note rate of 5.07% and 5.10% for the twelve months ended December 31, 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 twelve months ended December 31, 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