0000102212-95-000022.txt : 19950811 0000102212-95-000022.hdr.sgml : 19950811 ACCESSION NUMBER: 0000102212-95-000022 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950810 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIVEST CORP OF PENNSYLVANIA CENTRAL INDEX KEY: 0000102212 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 231886144 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-07617 FILM NUMBER: 95560661 BUSINESS ADDRESS: STREET 1: 10 W BROAD ST CITY: SOUDERTON STATE: PA ZIP: 18964 BUSINESS PHONE: 2157212400 MAIL ADDRESS: STREET 1: 10 W BROAD STREET CITY: SOUDERTON STATE: PA ZIP: 18964 10-Q 1 United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For The Period Ended June 30, 1995 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period From to . Commission File Number 0-7617 UNIVEST CORPORATION OF PENNSYLVANIA (Exact name of registrant as specified in its charter) Pennsylvania 23-1886144 _______________________________ ____________________________ (State or other jurisdiction of (IRS Employer I.D. No.) incorporation of organization) 10 West Broad Street, Souderton, Pennsylvania 18964 (Address of principal executive offices)(Zip Code) Registrant's telephone number, including area code (215) 721-2400 Not applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No . SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock, $5 par value 3,137,016 __________________________________ ____________________________ (Title of Class) (Number of shares outstanding at 6/30/95) UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1. Financial Information The consolidated financial statements include the accounts of Univest Corporation of Pennsylvania (Univest) and its wholly owned subsidiaries, including Union National Bank and Trust Company (Union) and Pennview Savings Bank (Pennview), collectively referred to herein as the "Banks". The condensed consolidated financial statements included herein have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The accompanying condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to present a fair statement of the results and condition for the interim periods presented. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the registrant's Annual Report on Form 10-K for the year ended December 31, 1994, which has been filed with the Securities and Exchange Commission. UNIVEST CORPORATON OF PENNSYLVANIA AND CONSOLIDATED SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) (SEE NOTE) JUNE 30, 1995 DECEMBER 31, 1994 ---------------- ----------------- (In Thousands) ASSETS CASH AND DUE FROM BANKS $39,123 $35,177 INVESTMENT SECURITIES HELD-TO-MATURITY 153,686 172,227 (MARKET VALUE $154,166 AT 6/30/95 AND $168,106 AT 12/31/94) INVESTMENT SECURITIES AVAILABLE-FOR-SALE 24,877 30,335 FEDERAL FUNDS SOLD AND OTHER SHORT TERM INVESTMENTS 26,734 6,848 LOANS 584,810 580,779 LESS: RESERVE FOR POSSIBLE LOAN LOSSES (9,040) (8,876) -------- ------- NET LOANS 575,770 571,903 OTHER ASSETS 30,974 30,664 -------- ------- TOTAL ASSETS $851,164 $847,154 ======== ======== LIABILITIES DEMAND DEPOSITS, NON INTEREST BEARING $110,214 $104,404 DEMAND DEPOSITS, INTEREST BEARING 141,916 155,636 REGULAR SAVINGS DEPOSITS 129,337 126,975 TIME DEPOSITS 327,014 312,058 -------- -------- TOTAL DEPOSITS 708,481 699,073 SHORT-TERM BORROWINGS 35,771 44,923 OTHER LIABILITIES 12,613 13,562 LONG-TERM DEBT 9,085 9,438 -------- -------- TOTAL LIABILITIES 765,950 766,996 SHAREHOLDERS' EQUITY COMMON STOCK 15,717 15,717 ADDITIONAL PAID-IN CAPITAL 8,090 8,090 RETAINED EARNINGS 61,527 56,983 NET UNREALIZED SECURITIES GAINS (LOSSES) 30 (482) TREASURY STOCK (150) (150) -------- -------- TOTAL SHAREHOLDERS' EQUITY 85,214 80,158 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $851,164 $847,154 ======== ========= NOTE: THE BALANCE SHEET AT DECEMBER 31, 1994 HAS BEEN DERIVED FROM THE AUDITED FINANCIAL STATEMENTS AT THAT DATE BUT DOES NOT INCLUDE ALL OF THE INFORMATION AND FOOTNOTES REQUIRED BY GENERALLY ACCEPTED ACCOUNTING PRINCIPLES FOR COMPLETE FINANCIAL STATEMENTS.
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE QUARTER FOR THE SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, 1995 1994 1995 1994 (In thousands, except per share data) INTEREST INCOME INTEREST AND FEES ON LOANS TAXABLE INTEREST AND FEES ON LOANS $12,214 $11,385 $24,296 $22,295 EXEMPT FROM FEDERAL INCOME TAXES 465 463 980 926 -------- -------- --------- ------- TOTAL INTEREST AND FEES ON LOANS 12,679 11,848 25,276 23,221 INTEREST AND DIVIDENDS ON INVESTMENT SECURITIES 2,753 1,705 5,575 3,273 OTHER INTEREST INCOME 255 79 293 167 -------- -------- --------- ------- TOTAL INTEREST INCOME 15,687 13,632 31,144 26,661 -------- -------- --------- ------- INTEREST EXPENSE INTEREST ON DEPOSITS 6,007 4,621 11,546 9,176 OTHER INTEREST EXPENSE 517 437 1,032 864 -------- -------- --------- ------- TOTAL INTEREST EXPENSE 6,524 5,058 12,578 10,040 -------- -------- --------- ------- NET INTEREST INCOME 9,163 8,574 18,566 16,621 PROVISION FOR LOAN LOSSES 423 645 845 1,290 -------- -------- --------- ------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 8,740 7,929 17,721 15,331 -------- -------- --------- -------- OTHER INCOME 1,638 1,307 3,112 2,780 LOSSES ON SALES OF SECURITIES - - (1) (27) -------- -------- --------- ------- TOTAL OTHER INCOME 1,638 1,307 3,111 2,753 OTHER EXPENSES SALARIES AND BENEFITS 3,291 3,088 6,662 6,165 OTHER EXPENSES 3,003 2,706 6,061 5,358 -------- -------- --------- ------- TOTAL OTHER EXPENSES 6,294 5,794 12,723 11,523 -------- -------- --------- ------- INCOME BEFORE INCOME TAXES 4,084 3,442 8,109 6,561 APPLICABLE INCOME TAXES 1,267 1,056 2,499 2,008 -------- -------- --------- ------- NET INCOME $2,817 $2,386 $5,610 $4,553 ======== ======== ========= ======= PER COMMON SHARE DATA (1): NET INCOME $0.90 $0.76 $1.79 $1.45 CASH DIVIDENDS DECLARED $0.17 $0.15 $0.34 $0.30 (1) PER SHARE INFORMATION IS BASED ON THE WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING OF 3,137,016 FOR BOTH PERIODS.
Univest Corporation of Pennsylvania Consolidated Statement of Cash Flows (Unaudited)
For the six months ended June 30, 1995 June 30, 1994 (In thousands) Cash flows from operating activitites Net income $5,610 $4,553 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses in excess of net charge-offs 164 1,608 Depreciation of premises and equipment 830 738 (Discount accretion) premium amortization on investment securities (144) 253 Deferred income tax (183) (495) Realized loss on investment securities 1 27 Realized (gains) losses on sales of mortgages (37) 16 Decrease in net deferred loan fees (158) (206) Decrease (increase) in interest receivable and other assets 87 (1,159) (Decrease) increase in accrued expenses and other liabilities (627) 1,139 -------- ------- Net cash provided by operating activities 5,543 6,474 Cash flows from investing activities Proceeds from maturing time deposits 122 1,858 Proceeds from sales of securities available for sale 3,002 7,247 Proceeds from maturing securities held to maturity 24,118 15,002 Proceeds from maturing securities available for sale 3,388 18,356 Purchases of investment securities held to maturity (5,708) (29,694) Purchases of investment securities available for sale - (8,569) Net (increase) decrease in federal funds sold and other short-term investments (19,886) 5,753 Net decrease in loans held for sale - 8,916 Proceeds from sales of mortgages 2,847 13,082 Net increase in loans (6,683) (44,967) Capital expenditures (1,226) (1,550) -------- ------- Net cash used in investing activities (26) (14,566) Cash flows from financing activities Assumption of deposits - 10,608 Net increase (decrease) in deposits 9,408 (5,716) Net (decrease) increase in short-term borrowings (9,152) 2,340 Cash dividends (1,474) (1,349) Repayments of long-term debt (353) (544) -------- ------- Net cash (used in) provided by financing activities (1,571) 5,339 Net increase (decrease) in cash and due from banks 3,946 (2,753) Cash and due from banks at beginning of period 35,177 34,702 -------- ------- Cash and due from banks at end of period $39,123 $31,949 ======== ======= Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $11,260 $10,214 Income taxes $2,340 $2,281
Management's Discussion and Analysis of Financial Condition and Results of Operations Total assets increased approximately $4.0 million or 0.47% to $851.2 million at June 30, 1995 when compared to the $847.2 million at December 31, 1994. The increase was due to a $3.9 million increase in cash and due from banks and a $3.9 million increase in net loans offset by a $4.1 million decrease in the investment and federal funds sold portfolios. Deposits grew by $9.4 million due to an increase of $15 million in time deposits, which resulted from increased rates. Short term borrowings, (sweep repurchase accounts) decreased $9.2 million mainly due to normal commercial business cycle volatility. Shareholders' equity increased 6.23% or $5.0 million from $80.2 million at December 31, 1994 to $85.2 million at June 30, 1995. Cash dividends increased $0.04 per share from $0.30 for the six months ended June 30, 1994 to $0.34 for the six months ended June 30, 1995. Net income for the three months ended June 30, 1995 grew $0.4 million or 16.7% from $2.4 million at June 30, 1994 to $2.8 million at June 30, 1995. For the six months ended June 30, 1995 net income increased $1.0 million or 21.74% from $4.6 million at June 30, 1994 to $5.6 million at June 30, 1995. Both increases were due mainly to increased net interest income. Interest and fees on loans grew from $11.8 million for the three months ended June 30, 1994 to $12.7 million for the three months ended June 30, 1995. An increase of $0.9 million or 7.63%. For the six months ended June 30, 1995 interest and fees on loans increased to $25.3 million as compared to $23.2 million at June 30, 1994, representing an increase of $2.1 million or 9.05%. The increase for both periods was due to prime rate increases. The prime rate increased from 6.00% at January 1, 1994 to 9.00% at June 30, 1995. Repricing of adjustable rate real estate loans also contributed to the increase. Interest on investment securities increased $1.1 million or 64.7% from $1.7 million for the three months ended June 30, 1994 to $2.8 million for the three months ended June 30, 1995. Interest on investment securities also grew from $3.3 million for the six month period ended June 30, 1994 to $5.6 million for the six month period ended June 30, 1995, an increase of $2.3 million or 69.7%. The increase in both periods is attributed to increased yields and volume. Other interest income consists mainly of income received on federal funds sold, which is the resulting daily investment activity that can be volatile on both interest yield and volume. Second quarter 1995 shows income of $255 thousand as compared to $79 thousand for second quarter 1994. For the six months ended June 30, 1995 income of $293 thousand was recorded as compared to $167 thousand for the same period in 1994. Increases in both periods were due to higher average balances and increased yields. Interest expense increased $1.4 million or 27.45% to $6.5 million for the three months ended June 30, 1995 when compared to the $5.1 million recorded for the same period in 1994. For the six month period ended June 30, 1995 interest increased $2.6 million or 26.0% to $12.6 million when compared to the $10.0 million shown for the six months ended June 30, 1994. The increases were mainly due to increased rates and volumes on certificates of deposits. As of August 4, 1995 the Corporation redeemed outstanding subordinated debt of $5 million. The debt which did not permit prepayment without penalty before the conversion date of July 31, 1995. The note carried a fixed rate of 10.35% until the conversion date. This debt was incurred by the Corporation in 1990 to partially finance the acquisition of Pennview Savings Bank. The asset/liability management process continues with its goal of providing stable reliable earnings through varying interest rate environments. Net interest income is the amount by which interest income on earning assets exceeds interest paid on interest bearing liabilities. The amount of net interest income is affected by changes in interest rates, account balances or volume, and the mix of earning assets and interest bearing liabilities. Six months ended June 30, 1995 shows $18.6 million in net interest income which is $2.0 million or 12.05% higher than the $16.6 million for the same period in 1994. A positive gap position is maintained on a cumulative basis at three months and longer. For the six months period ended June 30, 1995 increases in net interest income resulted from rate rather than volume because the net interest spread for the period increased 11 basis points and the net interest margin increased by 26 basis points when compared to the six months ended June 30, 1994. The following demonstrates the aforementioned effects: SIX MONTHS ENDED
6/30/95 6/30/94 AVG. BALANCE RATE AVG. BALANCE RATE Interest Earning Assets $777,529 8.01% $735,284 7.25% Interest Bearing Liabilities $639,841 3.93% $612,426 3.28% Net Interest Income $ 18,566 $ 16,621 Net Interest Spread 4.08% 3.97% Net Interest Margin 4.78% 4.52%
ASSET QUALITY Management believes the allowance for loan losses is maintained at a level which is adequate to absorb potential losses in the loan portfolio. Management's methodology to determine the adequacy of and the provisions to the allowance considers specific credit reviews, past loan loss experience, current economic conditions and trends, and the volume, growth and composition of the loan portfolio. The allowance for loan losses is determined through a quarterly evaluation of reserve adequacy which takes into consideration the growth of the loan portfolio, the status of past-due loans, current economic conditions, various types of lending activity, policies, real estate and other loan commitments, and significant change in the charge-off activity. Loans are also reviewed for impairment based on discounted cash flows using the loans initial effective interest rate or the fair value of the collateral for certain collateral dependent loans as provided for under FAS 114, which was adopted by the Corporation effective January 1, 1995. Any of the above criteria may cause the provision to fluctuate. For the three and six months ended June 30, 1995 the provisions for loan losses were $423 thousand and $845 thousand respectively. For the three and six month periods ended June 30, 1994 the provisions were $645 thousand and $1.3 million respectively. Effective January 1, 1995, the Corporation adopted Financial Accounting Standards Board Statement No. 114, "Accounting by Creditors for Impairment of a Loan." Under the new standard, the 1995 allowance for credit losses related to loans that are identified as impaired in accordance with Statement 114 is based on discounted cash flows using the loan's initial effective rate or the fair value of collateral for certain collateral dependent loans. Prior to 1995 the allowance for credit losses related to these loans was based on undiscounted cash flows or the fair value of the collateral for collateral dependent loans. At June 30, 1995 the recorded investment in loans that are considered to be impaired under Statement 114 was $4.0 million (all of which were on a nonaccrual basis); the related allowance for credit losses for those loans is $1.0 million. All loans considered impaired at June 30, 1995 have an allowance for credit loss. For the six months ended June 30, 1995 the Corporation recognized $135 thousand in interest income on those impaired loans. Generally, a loan (including a loan impaired under Statement 114) is classified as nonaccrual and the accrual of interest on such loan is discontinued when the contractual payment of principal or interest has become 90 days due or management has serious doubts about the further collectibility of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against "other expense." Interest received on nonaccrual loans generally is either applied against principal or reported as interest income, according to management's judgment as to the collectibility of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable periods of time and the ultimate collectibility of the total contractual principal and interest is no longer in doubt. Total cash basis and nonaccrual loans at June 30, 1995 are $5.6 million and consist mainly of real estate related commercial loans. Cash basis and nonaccrual loans at June 30, 1994 aggregated $7.0 million. For the quarter ended June 30, 1995 nonaccrual loans resulted in lost interest income of $200 thousand as compared to $205 thousand for the three months ended June 30, 1994. For the six months ended June 30, 1995 lost interest income totaled $326 thousand as compared to $384 thousand for the same period in 1994. At June 30, 1995 the Corporation had no material commitments to lend additional funds with respect to nonperforming loans. In management's evaluation of the loan portfolio risks, any significant future increases in nonperforming loans are dependent to a large extent on the economic environment. At June 30, 1995 the Corporation has approximately $1.3 million of Other Real Estate Owned ("OREO") consisting of two commercial properties. This amount is recorded in "Other Assets" at the lower of cost or fair market value in the accompanying consolidated balance sheets. Included in other operating expenses for the six months ended June 30, 1995 were adjustments of $300 thousand to the carrying value of these OREO properties to approximate net realizable value. No adjustments to carrying value were recorded for the six month ended June 30, 1994. At June 30, 1995 the reserve for loan losses is 1.55% of total loans as compared to 1.53% at December 31, 1994. Other income which is not interest related consists mainly of general fee income, trust department commissions and other miscellaneous non- recurring types of income. Since these types of income are not tied directly to volume or rate structure, noticeable fluctuations may occur on a quarterly basis. For the quarter ended June 30, 1995 other income totaled $1.6 million as compared to $1.3 million for the quarter ended June 30, 1994. For the six months ended June 30, 1995 other income increased to $3.1 million from the $2.8 million recorded for the same period in 1994. The increases in both periods were due to fluctuations in trust department income due to improved investment performance, and general fee income in the first and second quarters of 1995. Debt securities that the Corporation has both the positive intent and ability to hold to maturity are carried at amortized cost. All other debt securities and all marketable equity securities are classified as available- for-sale or trading and carried at fair value. Unrealized holding gains and losses on securities classified as available-for-sale are carried as a separate component of shareholders' equity. Unrealized holding gains and losses on securities classified as trading are reported in earnings. The total debt and equity securities held in the available-for-sale account as of June 30, 1995 is $24.9 million as compared to $30.3 million at December 31, 1994. At June 30, 1995 a net unrealized gain of $30 thousand was recorded, compared to a net unrealized loss of $482 thousand at December 31, 1994. This change was due to the increase in short-term rates during the period. Other expenses make up the operating costs of the Corporation, including but not limited to salaries and benefits, equipment, data- processing and occupancy costs. This category is usually referred to as noninterest expense and receives ongoing management attention in an attempt to contain and minimize the growth of the various expense categories, while encouraging technological innovation in conjunction with the expansion of the Corporation. The quarter ended June 30, 1995 totals $6.3 million, which is 8.62% or $0.5 million more than the $5.8 million reported for the quarter ended June 30, 1994. For the six months ended June 30, 1995 other expenses totaled $12.7 million, which is 10.43% or $1.2 million more than the $11.5 million shown for the same period in 1994. Increases in both periods were mainly due to normal salary and staff increases, and occupancy and equipment expenses for three additional branch facilities opened since June 30, 1994. Also, contributing to the increase was a $300 thousand loss provision for OREO to reflect a decline in the fair market value of other real estate owned. Real estate owned expenses also increased in both periods. An income tax provision of $1.3 million is shown for the quarter ended June 30, 1995 and $1.1 million for the quarter ended June 30, 1994 with effective tax rates of 31.0% for both periods. For the six months ended June 30, 1995 the provision was $2.5 million as compared to $2.0 million for the six months ended June 30, 1994. The effective tax rate for both periods was 31.0% Part II. OTHER INFORMATION Item 1. Legal Proceedings--None Item 2. Changes in Securities--None Item 3. Defaults upon Senior Securities--None Item 4. Submission of Matters to a Vote of Security Holders--Not applicable Item 5. Other Information--None Item 6. Exhibits and Reports on Form 8-K--None SIGNATURES 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 thereunto duly authorized. Univest Corporation of Pennsylvania Registrant Date: 7/21/95 Merrill S. Moyer, Chairman Date: 7/20/95 Wallace H. Bieler, Senior Vice President & Chief Financial Officer EX-27 2 ARTICLE 9 FDS FOR 10-Q WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
9 1000 6-MOS DEC-31-1995 JUN-30-1995 39,123 379 26,734 0 24,877 153,686 154,166 584,810 9,040 851,164 708,481 35,771 12,613 9,085 15,717 0 0 69,497 851,164 25,276 5,575 293 31,144 11,546 12,578 18,566 845 -1 12,723 8,109 8,109 0 0 5,610 1.79 1.79 4.97 6,297 219 0 431 8,876 1,096 416 9,040 9,040 0 5,162