8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________________ 

FORM 8-K

_______________________ 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 25, 2017

_______________________ 

UNIVEST CORPORATION OF PENNSYLVANIA

(Exact name of registrant as specified in its charter)

Pennsylvania	0-7617	23-1886144
(State or other jurisdiction	(Commission	(I.R.S. Employer
of incorporation)	File Number)	Identification No.)

14 North Main Street, Souderton, Pennsylvania 18964

(Address of principal executive office)(Zip Code)

Registrant’s telephone number, including area code (215) 721-2400

Not applicable

(Former name or former address, if changed since last report)

_______________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2 (b) under the Exchange Act (17 CFR 240.14d-2 (b))

¨ Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4 (c))

Item 1.01 Entry into a Material Definitive Agreement.

The information set forth in Item 3.03 related to the Amendment (as defined therein) is incorporated herein by reference.

Item 1.02 Termination of a Material Definitive Agreement.

The information set forth in Item 3.03 related to the Amendment is incorporated herein by reference.

Item 2.02 Results of Operations and Financial Condition.

On January 25, 2017, Univest Corporation of Pennsylvania (the “Corporation”), parent company of Univest Bank and Trust Co., issued a press release reporting 2016fourth quarter and year-end earnings. A copy of this press release is attached to this Current Report on Form 8-K as Exhibit 99.1.

Item 3.03 Material Modification to Rights of Security Holders.

The Corporation and Broadridge Corporate Issuer Solutions, Inc. (the “Rights Agent”), have executed an Amendment (the “Amendment”), dated as of January 25, 2017 to that certain Rights Agreement dated as of September 30, 2011, between the Corporation and the Rights Agent (the “Rights Agreement”), regarding the Corporation’s Series A Junior Participating Preferred Stock purchase rights (the “Rights”).

The Amendment will have the effect of causing the Rights Agreement and the Rights to terminate on January 25, 2017.

The description contained herein of the Amendment is qualified in its entirety by reference to the terms of such document, which is attached hereto as an exhibit and incorporated herein by this reference.

Item 9.01 Financial Statements and Exhibits.

(a) Not applicable

(b) Not applicable

(c) Not applicable

(d) Exhibits

Exhibit No.	Description of Document
4.1	Amendment to Rights Agreement, dated as of September 30, 2011, between the Corporation and Broadridge Corporate Issuer Solutions, Inc., as Rights Agent.
99.1	Press release issued by Univest Corporation of Pennsylvania on January 25, 2017.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Univest Corporation of Pennsylvania
By:	/s/ Jeffrey M. Schweitzer
Name:	Jeffrey M. Schweitzer
Title:	President and Chief Executive Officer

January 25, 2017

EXHIBIT INDEX

Exhibit No.	Description of Document
4.1	Amendment to Rights Agreement, dated as of September 30, 2011, between the Corporation and Broadridge Corporate Issuer Solutions, Inc., as Rights Agent.
99.1	Press release issued by Univest Corporation of Pennsylvania on January 25, 2017.

EX-4.1

Exhibit 4.1

AMENDMENTS TO RIGHTS AGREEMENT

Amendment, dated as of January 25, 2017 (this “Amendment”), by and between Univest Corporation of Pennsylvania (the “Corporation”) and Broadridge Corporate Issuer Solutions, Inc., as duly appointed rights agent (the “Rights Agent”) to the Rights Agreement, dated as of September 30, 2011 (the “Rights Agreement”), by and between the Corporation and the Rights Agent.

WHEREAS, the parties hereto desire to amend the Rights Agreement to advance the Final Expiration Date of the Rights Agreement to January 25, 2017; and

WHEREAS, pursuant to Section 27 of the Rights Agreement, on January 25, 2017, the Board of Directors of the Corporation approved an amendment to the Rights Agreement;

NOW, THEREFORE, the parties hereto agree as follows:

1. The definition of “Final Expiration Date” set forth in Section 1 of the Rights Agreement is hereby amended and restated in its entirety as follows:

“Final Expiration Date” shall mean January 25, 2017.

2. Exhibits A, B and C to the Rights Agreement shall be deemed amended in a manner consistent with this Amendment.

3. Capitalized terms used without other definition in this Amendment are used as defined in the Rights Agreement.

4. This Amendment shall be deemed to be a contract made under the laws of the Commonwealth of Pennsylvania and for all purposes shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania applicable to contracts negotiated, made and to be performed entirely therein.

5. The Rights Agreement will not otherwise be supplemented or amended by virtue of this Amendment, but will remain in full force and effect.

6. This Amendment shall be executed in any number of counterparts and each of such counterparts will for all purposes be deemed to be an original, and all such counterparts shall together constitute one and the same instrument. A signature to this Agreement transmitted electronically will have the same authority, effect and enforceability as an original signature.

7. This Amendment shall be effective as of the date first above written and all references to the Rights Agreement shall, from and after such time, be deemed to be references to the Rights Agreement as amended hereby.

8. The undersigned officer of the Corporation, being duly authorized on behalf of the Corporation, hereby certifies in his or her capacity as an officer on behalf of the Corporation to the Rights Agent that this Amendment is in compliance with the terms of Section 27 of the Rights Agreement.

9. By its execution and delivery hereof, the Corporation directs the Rights Agent to execute this Amendment.

IN WITNESS WHEREOF, this Amendment has been duly executed by the Corporation and the Rights Agent as of the effective time stated above.

UNIVEST CORPORATION OF PENNSYLVANIA
By:	/s/ Jeffrey M. Schweitzer
	Name:	Jeffrey M. Schweitzer
	Title:	President and Chief Executive Officer
BROADRIDGE CORPORATE ISSUER SOLUTIONS, INC., as Rights Agent
By:	/s/ John P. Dunn
	Name:	John P. Dunn
	Title:	Vice President

EX-99.1

Exhibit 99.1

NEWS

CONTACT:     Roger Deacon

UNIVEST CORPORATION OF PENNSYLVANIA

Chief Financial Officer

215-721-2455, DeaconR@univest.net

FOR IMMEDIATE RELEASE

UNIVEST CORPORATION OF PENNSYLVANIA - UNIVEST

BANK AND TRUST CO. - REPORTS FOURTH QUARTER AND YEAR END RESULTS

(Fourth Quarter Annualized Loan Growth of 12%)

SOUDERTON, Pa., January 25, 2017 - 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 athttp://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)	12/31/2016			9/30/2016			6/30/2016			3/31/2016			12/31/2015
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,
	12/31/2016			9/30/2016			6/30/2016			3/31/2016			12/31/2015			12/31/2016			12/31/2015
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)
	12/31/2016			9/30/2016			6/30/2016			3/31/2016			12/31/2015
Nonaccrual loans and leases, including nonaccrual troubled debt restructured loans and leases	$	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	0.55		%	0.47		%	0.57		%	0.62		%	0.65		%
Nonperforming loans and leases / Loans and leases held for investment	0.67		%	0.61		%	0.79		%	0.85		%	0.91		%
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 (excluding acquired loans at period-end)	0.73		%	0.77		%	0.82		%	0.86		%	0.94		%
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,
	12/31/2016			9/30/2016			6/30/2016			3/31/2016			12/31/2015			12/31/2016			12/31/2015
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:	12/31/2016		9/30/2016			6/30/2016		3/31/2016		12/31/2015		12/31/2016		12/31/2015
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 expense	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		26,555,626			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)	12/31/2016			9/30/2016			6/30/2016			3/31/2016			12/31/2015			12/31/2016			12/31/2015
Return on average assets	0.67		%	0.01		%	0.74		%	1.03		%	0.99		%	0.56		%	0.98		%
Return on average assets, excluding integration and acquisition-related costs and restructuring charges (1), (2)	0.78		%	0.88		%	0.90		%	1.07		%	1.06		%	0.89		%	1.09		%
Return on average shareholders' equity	5.42		%	0.05		%	5.72		%	8.05		%	7.88		%	4.46		%	7.58		%
Return on average shareholder's equity, excluding integration and acquisition-related costs and restructuring charges (1), (2)	6.37		%	7.24		%	6.99		%	8.29		%	8.42		%	7.15		%	8.38		%
Return on average tangible common equity, excluding integration and acquisition-related costs and restructuring charges (1), (2), (5)	9.95		%	11.32		%	10.31		%	12.33		%	12.61		%	10.93		%	12.56		%
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 acquisition-related costs and restructuring charges (1), (3), (4)	72.13		%	67.63		%	72.20		%	68.67		%	66.67		%	70.15		%	66.52		%
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 restructuring charges	$	2,165		$	14,064		$	1,185		$	220		$	546		$	17,634		$	4,179
Tax effect on integration and acquisition-related cost and restructuring charges	969			4,910			22			2			49			5,904			1,319
(b) Integration and acquisition-related costs and restructuring charges, net of tax	$	1,196		$	9,154		$	1,163		$	218		$	497		$	11,730		$	2,860
(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/M Not Meaningful

Univest Corporation of Pennsylvania
Distribution of Assets, Liabilities and Shareholders' Equity: Interest Rates and Interest Differential
	For the Three Months Ended
Tax Equivalent Basis	December 31, 2016							September 30, 2016
	Average			Income/		Average		Average			Income/		Average
(Dollars in thousands)	Balance			Expense		Rate		Balance			Expense		Rate
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 December31, 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 endedDecember 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
	Average			Income/		Average		Average			Income/		Average
(Dollars in thousands)	Balance			Expense		Rate		Balance			Expense		Rate
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 31,
Tax Equivalent Basis	2016							2015
	Average			Income/		Average		Average			Income/		Average
(Dollars in thousands)	Balance			Expense		Rate		Balance			Expense		Rate
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%.