United States
Securities and Exchange Commission
Washington, DC 20549
10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Ex-
change Act of 1934 For The Period Ended June 30, 1994
-------------
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Ex-
change 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 or 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 re-
quired 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 outstand-
ing at June 30, 1994)
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
Note to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Financial Information
The consolidated financial statements include the accounts of Univest Cor-
poration of Pennsylvania (Univest) and its wholly owned subsidiaries, in-
cluding Union National Bank and Trust Company (Union) and Pennview Savings
Bank (Pennview), collectively referred to herein as the "Banks." The con-
densed 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 ac-
cepted accounting principles have been condensed or omitted pursuant to
such rules and regulations. The accompanying condensed consolidated finan-
cial statements reflect all adjustments which are, in the opinion of manage-
ment, 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, 1993, which has been filed with the
Securities and Exchange Commission.
Note 2. Investment Securities
Effective January 1, 1994, Univest Corporation adopted Statement of Finan-
cial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Invest-
ments in Debt and Equity Securities." Under this statement, securities are
classified as investments and carried at amortized cost if management has
the positive intent and ability to hold the securities to maturity.
Securities purchased with the intention of recognizing short-term profits
are placed in a trading account, and are carried at market value. Securities
not classified as investment or trading are designated as securities
available for sale and are carried at fair value with unrealized gains and
losses reflected in shareholders' equity. Prior to the adoption of SFAS No.
115, securities available for sale were carried at the lower of cost or fair
value.
Note 3. Branch Acquisition
On April 30, 1994, Union National Bank completed the purchase of selected
fixed assets, valued at $25,000, and assumed deposit liabilities of
$11,255,153 of the Plumsteadville, Pennsylvania branch of Continental Bank.
Union National also assumed the obligations of the seller under the land
lease of the branch. No loans were purchased in this transaction. A
premium of $647,461 was paid for the deposits, and will be amortized over
7 years using the straight line basis. The acquisition was accounted for
using the purchase method of accounting.
<TABLE>
UNIVEST CORPORATION OF PENNSYLVANIA AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
------------------------------------
<CAPTION>
(UNAUDITED) (SEE NOTE)<F1>
JUNE 30, 1994 DECEMBER 31, 1993
------------- -----------------
<S> <C> <C>
ASSETS
CASH AND DUE FROM BANKS $ 31,948,740 $ 34,701,868
TIME DEPOSITS WITH OTHER BANKS 1,441,065 3,299,273
INVESTMENT SECURITIES HELD-TO-MATURITY 101,958,966 91,056,109
(MARKET VALUE $100,036,000 AT 6/30/94 AND $91,405,253 AT 12/31/93)
INVESTMENT SECURITIES AVAILABLE-FOR-SALE 34,447,566 48,270,752
(MARKET VALUE $48,714,712 AT 12/31/93)
FEDERAL FUNDS SOLD AND OTHER SHORT TERM INVESTMENTS 6,924,985 12,678,108
MORTGAGE LOANS HELD FOR SALE - 8,916,100
LOANS 602,857,686 570,782,161
LESS: RESERVE FOR POSSIBLE LOAN LOSSES (8,806,882) (7,198,213)
----------- -----------
NET LOANS 594,050,804 563,583,948
OTHER ASSETS 29,999,006 27,380,909
----------- -----------
TOTAL ASSETS $ 800,771,132 $ 789,887,067
=========== ===========
LIABILITIES
DEMAND DEPOSITS, NON INTEREST BEARING $ 100,821,015 $ 103,058,755
DEMAND DEPOSITS, INTEREST BEARING 159,602,253 165,429,430
REGULAR SAVINGS DEPOSITS 133,506,635 123,675,277
TIME DEPOSITS 280,460,215 276,687,978
----------- -----------
TOTAL DEPOSITS 674,390,118 668,851,440
SHORT-TERM BORROWINGS 31,618,714 29,278,589
OTHER LIABILITIES 8,741,525 8,607,251
LONG-TERM DEBT 9,733,490 10,277,129
----------- -----------
TOTAL LIABILITIES 724,483,847 717,014,409
SHAREHOLDERS' EQUITY
COMMON STOCK 15,716,728 15,716,728
ADDITIONAL PAID-IN CAPITAL 8,090,128 8,090,128
RETAINED EARNINGS 52,629,950 49,215,323
TREASURY STOCK (149,521) (149,521)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 76,287,285 72,872,658
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 800,771,132 $ 789,887,067
=========== ===========
<FN>
<F1>NOTE: THE BALANCE SHEET AT DECEMBER 31, 1993 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.
</TABLE>
<TABLE>
UNIVEST CORPORATION OF PENNSYLVANIA AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------
(UNAUDITED)
<CAPTION>
FOR THE QUARTER FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
INTEREST INCOME
INTEREST AND FEES ON LOANS
TAXABLE INTEREST AND FEES ON LOANS $ 11,385,123 $ 10,870,677 $ 22,294,423 $ 21,685,284
EXEMPT FROM FEDERAL INCOME TAXES 463,226 530,520 926,414 1,084,573
----------- ----------- ----------- -----------
TOTAL INTEREST AND FEES ON LOANS 11,848,349 11,401,197 23,220,837 22,769,857
INTEREST AND DIVIDENDS ON INVESTMENT SECURITIES 1,663,109 2,109,148 3,187,475 4,345,352
INTEREST ON TIME DEPOSITS WITH OTHER BANKS 41,207 46,018 86,047 91,056
OTHER INTEREST INCOME 79,266 169,009 166,754 253,194
----------- ----------- ----------- -----------
TOTAL INTEREST INCOME 13,631,931 13,725,372 26,661,113 27,459,459
----------- ----------- ----------- -----------
INTEREST EXPENSE
INTEREST ON DEPOSITS 4,620,842 5,525,448 9,176,222 11,161,002
OTHER INTEREST EXPENSE 437,185 403,678 863,778 749,158
----------- ----------- ----------- -----------
TOTAL INTEREST EXPENSE 5,058,027 5,929,126 10,040,000 11,910,160
----------- ----------- ----------- -----------
NET INTEREST INCOME 8,573,904 7,796,246 16,621,113 15,549,299
PROVISION FOR LOAN LOSSES 645,000 645,000 1,290,000 1,290,000
----------- ----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 7,928,904 7,151,246 15,331,113 14,259,299
----------- ----------- ----------- -----------
OTHER INCOME 1,323,785 1,327,309 2,796,298 2,509,530
LOSSES ON SALES OF SECURITIES - - (26,870) -
(LOSSES) GAINS ON SALES OF MORTGAGES (17,186) 127,817 (16,577) 277,394
----------- ----------- ----------- -----------
TOTAL OTHER INCOME 1,306,599 1,455,126 2,752,851 2,786,924
OTHER EXPENSES
SALARIES AND BENEFITS 3,087,497 2,947,015 6,164,542 5,768,551
OTHER EXPENSE 2,706,186 2,677,216 5,358,529 5,141,542
----------- ----------- ----------- -----------
TOTAL OTHER EXPENSES 5,793,683 5,624,231 11,523,071 10,910,093
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES AND CUMULATIVE 3,441,820 2,982,141 6,560,893 6,136,130
EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE
APPLICABLE INCOME TAXES 1,055,763 892,694 2,007,608 1,828,240
----------- ----------- ----------- -----------
INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE 2,386,057 2,089,447 4,553,285 4,307,890
IN ACCOUNTING PRINCIPLE
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
PRINCIPLE, NET OF INCOME TAX BENEFIT OF $293,831 (570,379)
------------ ------------ ------------ ------------
NET INCOME $ 2,386,057 $ 2,089,447 $ 4,553,285 $ 3,737,511
============ ============ ============ ============
PER COMMON SHARE DATA <F1>:
INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE $ 0.76 $ 0.67 $ 1.45 $ 1.37
IN ACCOUNTING PRINCIPLE
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING $ (0.18)
PRINCIPLE
NET INCOME $ 0.76 $ 0.67 $ 1.45 $ 1.19
CASH DIVIDENDS DECLARED $ 0.15 $ 0.14 $ 0.30 $ 0.28
<FN>
<F1> PER SHARE INFORMATION IS BASED ON THE WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING OF $3,137,016 FOR BOTH
PERIODS.
</TABLE>
<TABLE>
Univest Corporation of Pennsylvania
Consolidated Statement of Cash Flows (Unaudited)
<CAPTION>
6 MONTHS ENDED 6 MONTHS ENDED
JUNE 30, 1994 JUNE 30, 1993
<S> <C> <C>
Cash flows from operating activities
Net income $4,553,285 $3,737,511
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses in excess of net charge-offs 1,608,669 463,122
Depreciation of premises and equipment 737,797 611,173
Cumulative effect of a change in accounting principle 570,379
Premium amortization on investment securities 252,683 198,961
Deferred income benefit (494,864) (293,464)
Realized loss on investment securities 26,870
Realized (losses) gains on sales of mortgages 16,577 (277,394)
(Decrease) increase in net deferred loan fees (206,483) 323,854
Increase in interest receivable and other assets (1,158,754) (4,396,862)
Increase in accrued expenses and other
liabilities 1,138,722 3,957,685
----------- -----------
Net cash provided by operating activities 6,474,502 4,894,965
Cash flows from investing activities
Proceeds from maturing time deposits 1,858,208 91,595
Proceeds from sale of securities available for sale 7,246,544
Proceeds from maturing securities held to maturity 15,001,724 54,540,550
Proceeds from maturing securities available for sale 18,356,611
Purchases of investment securities held to maturity (29,694,416) (44,054,336)
Purchases of investment securities available for sale (8,569,013)
Net decrease (increase) in federal funds sold and other
short-term investments 5,753,123 (6,592,397)
Net decrease (increase) in loans held for sale 8,916,100 (652,400)
Proceeds from sales of mortgages 13,081,616 8,835,665
Net increase in loans (44,967,235) (17,348,177)
Capital expenditures (1,549,678) (1,554,203)
----------- -----------
Net cash used in investing activities (14,566,416) (6,733,703)
Cash flows from financing activities
Assumption of deposits 10,607,692
Net decrease in deposits (5,716,475) (13,292,835)
Net increase in short-term borrowings 2,340,125 6,364,736
Proceeds from long-term debt 4,000,000
Cash dividends (1,348,917) (1,250,000)
Repayments of long-term debt (543,639) (1,223,436)
----------- -----------
Net cash provided by financing activities 5,338,786 (5,401,535)
Net decrease in cash and due from banks (2,753,128) (7,240,273)
Cash and due from banks at beginning of period 34,701,868 34,852,819
----------- -----------
Cash and due from banks at end of period $31,948,740 $27,612,546
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $10,214,286 $12,639,438
Income taxes $2,280,990 $2,523,294
</TABLE>
MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Shareholders' equity totaled $76,287,285 at June 30, 1994. This repre-
sents an increase of 4.69% or $3,414,627 over the $72,872,658 reported at
December 31, 1993. The need for continued growth in shareholders' equity
and its importance is clearly understood, and for that reason, management
looks to shareholders for continued support. Stable earnings and a con-
tinued conservative dividend payout ratio are needed to provide the equity
growth for the future.
Interest and fees on loans for the second quarter ended June 30, 1994
increased 4.73% or $514,446 from $10,870,677 at June 30, 1993 to
$11,385,123 at June 30, 1994. For the six months ended June 30, 1994 inter-
est and fees on loans also increased $609,139 or 2.81% as compared to the
six months ended June 30, 1993. The increase in both periods was due
to increased yield, which included three prime rate increases, and volume.
The interest and fees on loans exempt from Federal income tax decreased
$67,294 or 12.68% for the quarter ended June 30, 1994 and also decreased
$158,159 or 14.58% for the six months ended June 30, 1994. The decrease
in both periods was primarily due to lower volume.
Interest and dividends on investment securities decreased $446,039 and
$1,157,877, respectively for the three and six months ended June 30, 1994
when compared to the same periods in 1993. The decrease in both periods
was due to decreased yield and decreased volume in the investment
portfolio.
Interest on time deposits largely represents the Corporation's invest-
ment in other bank certificates of deposits (CDs). Income on these CDs
decreased $4,811 from $46,018 at the quarter end June 30, 1993 to $41,207
at quarter end June 30, 1994. Income also decreased for the six month
period ended June 30, 1994 by $5,009 when compared to the same period in
1993. The decrease in both periods was due to lower volume.
Other interest consists mainly of Federal Funds sold, which is the
resulting daily investment activity that can be volatile in both interest
yield and volume. Second quarter ended June 30, 1994, shows income of
$79,266 as compared to $169,009 for the second quarter ended June 30, 1993.
Six months ended June 30, 1994, shows income of $166,754 as compared to
$253,194 for the same period in 1993. The differences of $89,743 and
$86,440, respectfully are due mainly to changes in volume offset by higher
yields during both periods.
Total interest expense decreased 14.69% or $871,099 from $5,929,126
for second quarter ended June 30, 1993 to $5,058,027 for second quarter
ended June 30, 1994. For the six months ended June 30, 1994 as compared to
the six months ended June 30, 1993, interest expense decreased 15.70% or
$1,870,160 from $11,910,160 in 1993 to $10,040,000 for the same period in
1994. Decreases in both periods were due to lower interest rates being
paid on deposits offset in the second quarter 1994 by increased volume due
to the assumption of deposits of Plumsteadville Branch of Continental Bank.
(see note # 3).
The asset/liability management process continues with its goal of
providing stable, reliable earnings through varying interest rate environ-
ments. For the three month period ended June 30, 1994 net interest income
of $8,573,904 increased $777,658 or 9.97% over the $7,796,246 reported for
the second quarter ended June 30, 1993. Net interest income for the six
months ended June 30, 1994 also shows an increase of $1,071,814 or 6.89%
from $15,549,299 at June 30, 1993 to $16,621,113 for June 30, 1994. Manage-
ment recognizes that with a relatively short term investment portfolio and
a significant floating rate loan portfolio (loans mainly tied to prime
rate), it is unrealistic to expect constant improvement to net interest in-
come throughout all economic rate cycles. The Corporation does not utilize,
nor is it a party to, any derivative financial instruments.
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 composi-
tion of the loan portfolio.
Each credit on the Company's internal loan "watchlist" is evaluated
periodically to estimate potential losses. In addition, minimum estimates
for each category of watchlist credits also are provided based on
management's judgment which considers past loan loss experience and other
factors. For installment and real estate mortgage loans, specific alloca-
tions are based on past loss experience adjusted for recent portfolio
growth and economic trends. The total reserves resulting from this analysis
are "allocated" reserves. The amounts specifically provided for individual
loans and pools of loans are supplemented by an unallocated amount for loan
losses. This unallocated amount is determined based on judgments regarding
risk of error in the specific allocation, and other potential exposure in
the loan portfolio, which is not easily identifiable.
The allowance for loan losses is determined through a quarterly evalua-
tion 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 com-
mitments, and any significant change in the charge-off activity - all of
which may cause the provision to fluctuate. The provision for loan losses
for the three and six month periods ending June 30, 1994 and June 30, 1993
was $645,000 and $1,290,000 for each three and six month period, respec-
tively. Total nonaccrual loans at June 30, 1994 of $7,036,422 are mainly
real estate related which have slowed in performance due to the economy
and is consistent with the December 31, 1993 total of $6,991,391. With a
loan coming off nonaccrual and several going on, results are a comparable
balance. Nonaccrual loans at June 30, 1993 totaled $9,419,202. The
decrease was due to a number of commercial loans being either totally or
partially charged off. The Corporation currently has approximately
$2,400,000 of "Other Real Estate Owned" consisting of one commercial loan
($2,000,000) and one residential mortgage loan ($400,000). These amounts
are recorded in "Other Assets" at the lower of cost or fair market value in
the accompanying consolidated balance sheets. For the quarter ended June 30,
1994 nonaccrual loans resulted in lost interest income of $204,843 as
compared to $181,549 for the quarter ended June 30, 1993. For the six months
ended June 30, 1994 nonaccrual loans accounted for lost interest income of
$383,564 as compared to $413,272 for the six months ended June 30, 1993.
Based on a comprehensive evaluation, management has determined that the
level of the reserve is adequate at this time. At June 30, 1994, the
Corporation has 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 is dependent
to a large extent on the economic environment. In a deteriorating or
uncertain economy, management applies more conservative assumptions when
assessing the future prospects of borrowers and when estimating collateral
values. This may result in a higher number of loans being classified as
nonperforming.
At June 30, 1994, the reserve for loan losses is 1.46% of total loans
as compared to 1.26% at December 31, 1993.
Management and the board of directors of the Corporation and its af-
filiates evaluate existing practices and procedures on an ongoing basis. In
addition, regulators often make recommendations during the course of their
examinations that relate to the operations of the Corporation and its af-
filiates. As a matter of practice, management and the board of directors of
the Corporation and its subsidiaries consider such recommendations promptly.
In May 1993, the Financial Accounting Standards Board issued FAS 114
"Accounting by Creditors for Impairment of a Loan." FAS 114, which becomes
effective for fiscal years beginning after December 15, 1994, requires im-
pairment of a loan be measured based on the present value of expected fu-
ture cash flows discounted at the loan's effective interest rate. Univest
is currently evaluating the impact from adoption of this standard.
Other income which is non-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 second quarter ended June 30, 1994, other income
totaled $1,323,785 which is $3,524 less than the $1,327,309 recorded for
the quarter ended June 30, 1993. Other income of $2,796,298 for the six
months ended June 30, 1994 increased by 286,768 or 11.43% more than the
$2,509,530 for the six months ended June 30, 1993. The main reason for the
changes was due to the fluctuations of Trust department income in the first
and second quarters of 1994.
In May 1993, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 115, "Accounting for Certain Invest-
ments in Debt and Equity Securities," effective for fiscal years beginning
after December 15, 1993. Under the new rules, which were adopted by the
Corporation as of January 1, 1994, 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 component of shareholders' equity.
Unrealized holding gains and losses on securities classified as trading are
reported in earnings.
Previously the company classified most debt securities as held for in-
vestment and carried them at amortized cost. The $91,056,109 recorded as
held for investment at December 31, 1993 was transferred to the held-to-
maturity account as of January 1, 1994 in accordance with the new rule.
Accordingly, the $48,270,752 recorded as held-for-sale and carried at lower
of cost or market at December 31, 1993 was transferred to available-for-
sale as of January 1, 1994 and resulted in an increase of approximately
$300,000 in shareholders' equity at that date, representing the unrealized
appreciation, net of taxes, of the Corporation's investment in debt and
equity securities determined to be available-for-sale.
During the first quarter ended March 31, 1994 securities totaling ap-
proximately $7,200,000 were sold from the available-for-sale account and a
net loss of $26,870 was recorded. The Corporation did not record any gain
or loss for the second quarter ended June 30, 1994, or for the three and
six month periods ending June 30, 1993. The total of debt and equity
securities held in the available-for-sale account as of June 30, 1994, is
$34,447,566. The unrealized loss of $197,554 net of taxes has been charged
against equity during the six months ended June 30, 1994. The Corporation
has not designated any of its securities as trading for the six months
ended June 30, 1994.
Sales of mortgages during the second quarter ended June 30, 1994 and
six months ended June 30, 1994 resulted in losses of $17,186 and $16,577,
respectively. For the comparable three and six month period ended June 30,
1993, sales of mortgages resulted in gains of $127,817 and $277,394, respec-
tively. The change was due to variations of market prices caused by in-
creasing long-term mortgage rates. Because of the increase in long-term
mortgage rates, mortgage lending, especially in the area of refinancing
decreased considerably. Due to these conditions, during the second quarter
of 1994, a Corporate decision was made to discontinue holding loans for
sale. All long-term fixed rate loans that are not granted for a third
party by prior commitment, from such third party, will be held in
portfolio. The Corporation has both the intent and ability to hold these
loans until maturity.
Other expenses make up the operating cost of the Corporation, includ-
ing but not limited to salaries and benefits, equipment, data-processing
and occupancy costs. This category is usually referred to as noninterest
expense and receives continuing management attention in an attempt to con-
tain and minimize the growth of the various expense categories, while en-
couraging technological innovation in conjunction with the expansion of the
Corporation. The quarter ended June 30, 1994 totals $5,793,683 which is
3.01% or $169,452 more than the $5,624,231 reported at quarter end June 30,
1993. For the six months ended June 30, 1994 other expenses totaled
$11,523,071 which is 5.62% or $612,978 more than the $10,910,093 shown for
the six months ended June 30, 1993. The reason for the increase was
primarily due to normal salary and staff increases along with increasing
benefit cost, as well as an increase in total advertising expense. Net
occupancy costs, especially utilities and maintenance, increased mainly in
the first quarter of 1994 due to the severe winter weather conditions. An
effort toward cost control is an ongoing corporate goal in an attempt to
minimize the impact of noninterest expense.
Effective January 1, 1993, Univest adopted Statement of Financial Ac-
counting Standards No. 106," Employers' Accounting for Postretirement
Benefits Other Than Pensions" (FAS 106). FAS 106 requires that employers
accrue the costs associated with providing postretirement benefits during
the active service periods of employees, rather than previously accepted
accounting practice of recognizing these costs on a pay-as-you-go basis. As
permitted under FAS 106, Univest elected to recognize immediately a one-
time, non-cash charge for the January 1,1993 transitional liability of
$864,000, $570,000 after-tax, as the cumulative effect of a change in ac-
counting principle.
An income tax provision is shown for the quarter ended June 30, 1994
of $1,055,763 and for the quarter ended June 30, 1993 of $892,694 with ef-
fective tax rates of 30.1% and 29.9%, respectively. For the six months
ended June 30, 1994 the tax provision was $2,007,608 with an effective tax
rate of 30.6% as compared to the tax provision of $1,828,240 with an effec-
tive tax rate of 29.8% for the six months ended June 30, 1993. If the
Corporation's income which is exempt from federal income tax continues to
decline, and if the annual taxable income exceeds $10,000,000, it is
anticipated that the Corporation's effective tax rate will continue to
increase.
Net income for the quarter ended June 30, 1994 increased $296,610 or
14.20% from $2,089,447 ($0.67 per share) at June 30, 1993 to $2,386,057
($0.76 per share) at June 30, 1994. The increase was mainly due to in-
creased net interest income, offset by increased other expense. For the
six months ended June 30, 1994, net income increased by $815,774 or 21.83%
from $3,737,511 ($1.19 per share) at June 30, 1993 to $4,553,285 ($1.45 per
share) at June 30, 1994. The increase for the six month period was due to
increased net interest income and the effect of the change in accounting of
accounting principle for the six month period ended June 30, 1993.
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)
Merrill S. Moyer
Date: July 14, 1994 --------------------------
Merrill S. Moyer, Chairman
Wallace H. Bieler
Date: July 14, 1994 ---------------------------
Wallace H. Bieler, Senior Vice
President and Chief Financial
Officer
