SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995 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 Identification No.)
incorporation of organization)
Broad & Main Streets
Souderton, Pennsylvania 18964
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 721-2400
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 2/29/96)
The approximate aggregate market value of voting stock held by non affiliates
of the registrant is $91,280,305 as of February 29, 1996.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has bee subject to
such filing requirements for the past ninety days.
YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this form 10-
K or any amendment to this form 10-K. ( )
Parts I and Part III incorporate information by reference from the proxy
statement for the annual meeting of shareholders on April 9, 1996. Parts I,
II, IV incorporate information by reference from the annual report to
shareholders for the year ended December 31, 1995.
PART I
Item 1. Business
General
Univest Corporation of Pennsylvania ("Univest") is a Pennsylvania
corporation organized in 1973 and registered as a bank holding company
pursuant to the Bank Holding Company Act of 1956. It owns all of the capital
stock of Union National Bank and Trust Company ("Union National Bank"),
Pennview Savings Bank, Univest Realty Corporation, Univest Leasing
Corporation, Univest Mortgage Company, Univest Financial Planning
Corporation, Univest Insurance Company, and Univest Electronic Services
Corporation.
Union National Bank is engaged in the general commercial banking
business and provides a full range of banking services and trust services to
its customers. Pennview Savings Bank is engaged in attracting deposits from
general public and investing such deposits primarily in loans secured by
residential properties, consumer loans, and to a lesser extent, loans secured
by commercial real estate and in commercial business loans. The Realty
Corporation was established to obtain, hold and operate properties for the
holding company and its subsidiaries. Both the Leasing Corporation and
Univest Mortgage Company are inactive. Univest Insurance Company offers
credit-related reinsurance plans. Univest Electronic Services Corporation
was established to provide data processing services to Union National Bank in
Souderton and other subsidiaries of Univest Corporation of Pennsylvania.
Union National Bank and Trust Company, with its head office in
Souderton, Montgomery County, serves the area through twenty (20) banking
offices, two off-premises automated teller machines and offices located in
ten retirement homes. Thirteen banking offices are in Montgomery County and
seven banking offices are in Bucks County. One off-premises automated teller
machine is located in Bucks County and the other is located in Montgomery
County.
Pennview Savings Bank conducts operations through five full-service
offices located in Souderton, Hatfield, Franconia, Silverdale and
Montgomeryville, Pennsylvania and offices located in two retirement homes.
As of January 31, 1996, Univest and its subsidiaries employed four
hundred and twenty-two (422) persons.
Competition
Univest's service areas are characterized by intense competition for
banking business among commercial banks, savings and loan associations,
mutual savings banks and other financial institutions. Each of the
Corporation's subsidiary banks actively compete with such banks and financial
institutions for local retail and commercial accounts. Union National Bank
and Pennview Savings Bank are also subject to competition from other local
banks and financial institutions in Bucks and Montgomery Counties, as well as
other financial institutions outside their primary service area.
In competing with other banks, savings and loan associations, and other
financial institutions, Union National Bank and Pennview Saving Bank seek to
provide personalized services through management's knowledge and awareness of
their service area, customers and borrowers.
Management believes this knowledge and awareness provides a business
advantage in serving the retail depositors and the small and mid-sized
commercial borrowers that comprise Union National Bank's and Pennview Savings
Bank's customer base.
Other competitors, including credit unions, consumer finance companies,
insurance companies and mutual funds, compete with certain lending and
deposit gathering services offered by Union National Bank and Pennview
Savings Bank.
Supervision and Regulation
Union National Bank is subject to supervision and is regularly examined
by the Office of the Comptroller of the Currency. Also, Union National Bank
is subject to examination by the Federal Deposit Insurance Corporation and by
the Federal Reserve System. Pennview Savings Bank is regulated by the
Federal Deposit Insurance Corporation and by the Pennsylvania Department of
Banking.
Univest is subject to the provisions of the Bank Holding Company Act of
1956, as amended, and is registered pursuant to its provisions. The Act
prohibits the acquisition by a bank holding company of a direct or indirect
ownership of more than five percent of the voting shares of any bank within
the United States without prior approval of the Board of Governors of the
Federal Reserve System, and also prohibits the granting of such approval in
respect to any bank within the United States located outside of the state
where the bank holding company's principal operations are conducted, unless
the acquisition is specifically authorized by the statutes of the state in
which the bank is located. With certain exceptions, a bank holding company
is prohibited from acquiring direct or indirect ownership or control of more
than five percent of the voting shares of any company which is not a bank,
and from engaging directly or indirectly in businesses unrelated to the
business of banking, or managing, or controlling banks. Under the Bank
Holding Company Act Amendments of 1970, which became effective on December 3,
1970, the Federal Reserve Board may approve the acquisition by bank holding
companies of non bank subsidiaries to engage in activities that are closely
related to banking and are in the public interest. The amendments include a
provision which prohibits banks, bank holding companies and subsidiaries from
engaging in tie-in arrangements. Bank tie-ins involving a loan, discount,
deposit, or trust service are specifically exempted, and the Federal Reserve
Board is authorized to make exceptions by regulations.
As a bank holding company, Univest is subject to the reporting
requirements of the Board of Governors of the Federal Reserve System, and
Univest, together with its subsidiaries, is subject to examination by the
Board. The Federal Reserve Act limits the amount of credit which a member
bank may extend to its affiliates, and the amount of its funds which it may
invest in or lend on the collateral of the securities of its affiliates.
Under the Federal Deposit Insurance Act, insured banks are subject to the
same limitations.
FDICIA
In December 1991, FDICIA was enacted, which substantially revised the
bank regulatory and funding provisions of the Federal Deposit Insurance Act
and made revisions to several other federal banking statutes.
Among other things, FDICIA requires the federal banking agencies to take
"prompt corrective action" in respect of depository institutions that do not
meet minimum capital requirements in order to minimize losses to the FDIC.
FDICIA establishes five capital tiers: "well capitalized", "adequately
capitalized", "undercapitalized", "significantly undercapitalized" and
"critically undercapitalized" and imposes significant restrictions on the
operations of a bank that is not at least adequately capitalized. A
depository institution's capital tier will depend upon where its capital
levels are in relation to various relevant capital measures, which will
include a risk-based capital measure, a leverage ratio capital measure and
certain other factors. Under the requirements, Univest has Tier I capital
ratios of 13.8% and 12.7%, and total risk-based capital ratio of 15.0% and
14.3% at December 31, 1995 and 1994, respectively. These ratios place
Univest in the "well-capitalized" category under regulatory standards.
Regulations promulgated under FDICIA also require that an institution
monitor its capital levels closely and notify its appropriate federal banking
regulators within 15 days of any material events that affect the capital
position of the institution.
FDICIA directs that each federal banking agency prescribe standards for
depository institutions and depository institution holding companies relating
to internal controls, information systems, internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth, a
maximum ratio of classified assets to capital, minimum earnings sufficient to
absorb losses, a minimum ratio of market value to book value for publicly
traded shares (if feasible) and such other standards as the agency deems
appropriate.
FDICIA also contains a variety of other provisions that affect the
operations of the Corporation, including new reporting requirements,
regulatory standards for real estate lending, "truth in savings" provisions,
certain restrictions on investments and activities of state-chartered insured
banks and their subsidiaries and limitations on credit exposure between
banks.
Finally, FDICIA limits the discretion of the FDIC with respect to
deposit insurance coverage by requiring that, except in very limited
circumstances, the FDIC's course of action in resolving a problem bank must
constitute the "least costly resolution" for the Bank Insurance Fund ("BIF")
or the Savings Association Insurance Fund ("SAIF"), as the case may be. The
FDIC has interpreted this standard as requiring it not to protect deposits
exceeding the $100,000 insurance limit in more situations than was previously
the case. In addition, FDICIA prohibits payments by the FDIC on uninsured
deposits in foreign branches of U.S. banks and will severely limit the "too
big to fail" doctrine under which the FDIC formerly protected deposits
exceeding the $100,000 insurance limit in certain failed banking
institutions.
Implementation of FDICIA has not had a material impact on the business
or operations of the Corporation.
SAIF Legislation
Spurred by pressures of the budget reconciliation process, both the
House and Senate Banking Committees approved separate bills during the
week of September 18, 1995 that include, among other items, a special one-
time assessment to recapitalize the Savings Association Insurance Fund
(SAIF) of which Pennview Savings Bank is a member. The one-time
assessment of 85 basis points of insured deposits as of March 31, 1995 is
intended to recapitalize the SAIF to the required 1.25% of insured
deposits and could be payable in early 1996. Should the bill pass in its
present form, the Corporation would be required to make a one-time pretax
charge to earnings of approximately $1.1 million. Succeeding deposit
premiums beginning in 1996 may be reduced from the current level of 23
basis points to 4.5 basis points which will benefit the Corporation in
future periods.
Credit and Monetary Policies
Union National Bank is affected by the fiscal and monetary policies of
the federal government and its agencies, including the Federal Reserve
System. An important function of the policies is to curb inflation and
control recessions through control of the supply of money and credit. The
Federal Reserve System uses its powers to regulate reserve requirements of
member banks, the discount rate on member-bank borrowings, interest rates on
time and savings deposits of member banks, and to conduct open-market
operations in United States Government securities to exercise control over
the supply of money and credit. The policies have a direct effect on the
amount of bank loans and deposits and on the interest rates charged on loans
and paid on deposits, with the result that the policies have a material
effect on bank earnings. Future policies of the Federal Reserve Bank System
and other authorities cannot be predicted, nor can their effect on future
bank earnings be predicted.
Pennview Savings Bank is a member of the Federal Home Loan Bank System
which consists of 12 regional Federal Home Loan Banks, with each subject to
supervision and regulation by the newly created Federal Housing Finance
Board. The Federal Home Loan Banks provide a central credit facility
primarily for member institutions. The Bank, as a member of the Federal Home
Loan Bank of Pittsburgh, is required to acquire and hold shares of capital
stock in that Federal Home Loan Bank in an amount equal to at least 1% of the
aggregate principal amount of its unpaid residential mortgage loans, home
purchase contracts and similar obligations at the beginning of each year, or
5% of its advances (borrowings) from the Federal Home Loan Bank of
Pittsburgh, whichever is greater.
Interstate Banking
Legislation was passed, and signed by President Clinton on September 29,
1994, which will eliminate many currently existing restrictions on interstate
banking. The legislation will authorize interstate acquisition of banks by
bank holding companies without geographic limitations one year after
enactment. Beginning June 1, 1997, the legislation will allow interstate
branching in states that have not passed legislation prohibiting interstate
branching, except that de novo branching or acquisition of a branch in
another state without acquisition of the entire bank will only be permitted
if expressly permitted by the law of the state in which such branch would be
located. Interstate branching prior to June 1, 1997 will be possible in
states that pass laws affirmatively authorizing such interstate branching.
The effect of this legislation on Univest cannot be predicted at this time.
Statistical Disclosure
Univest was incorporated under Pennsylvania law in 1973 for the purpose
of acquiring the stock of Union National Bank and subsequently to engage in
other business activities permitted under the Bank Holding Company Act. On
September 28, 1973, pursuant to an exchange offer, Univest acquired the
outstanding stock of Union National Bank. The following financial data
appearing on pages 6 through 17 reflects consolidated information. Where
averages are reported, daily information has been used for all subsidiaries.
<TABLE>
<CAPTION>
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
TABLE I. DISTRIBUTION OF ASSETS, LIABILITIES, AND STOCKHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
1995 1995/1994 1994
Average Income/ Avg. Volume Rate Average Income/ Avg.
ASSETS: Balance Expense Rate Change Change Total Balance Expense Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cash and due from banks 30,645 $ 32,914
Time deposits with other banks 406 23 5.7 $ (89) (6) (95) 1,955 $ 118 6.0
U.S. Government obligations 174,355 10,445 6.0 2,763 1,278 4,041 127,836 6,405 5.0
Oblig. of states & political sub. 2,535 118 4.7 19 4 23 2,091 95 4.5
Other securities 14,697 976 6.6 (243) 295 52 18,447 924 5.0
Federal Reserve bank stock 746 45 6.0 1 (1) 0 742 45 6.1
Federal funds sold and other
short-term investments 10,527 616 5.9 (290) 245 (45) 15,293 661 4.3
------- ------- ------ ------
Total investments 202,860 12,200 6.0 164,409 8,130 4.9
------- ------- --- ------- ------- ---
Commercial loans 190,451 17,679 9.3 (650) 2,549 1,899 196,065 15,780 8.0
Mortgage loans 292,751 24,994 8.5 60 589 649 294,251 24,345 8.3
Installment loans 53,702 4,657 8.7 674 230 904 45,934 3,753 8.2
Home equity loans 18,501 2,070 11.2 (188) 342 154 20,105 1,916 9.5
Municipal loans 28,415 1,922 6.8 (107) 149 42 29,851 1,880 6.3
-------- ------- -------- ------
Gross loans 583,820 51,322 8.8 586,206 47,674 8.1
-------- ------- ---- ------ ---
Less: valuation reserve (8,965) (8,660)
--------- -------
Net loans 574,855 577,546
--------
Property, net 14,857 13,346
Other assets 20,409 19,426
--------- --------
Total assets $844,032 $809,596
--------- --------
<CAPTION> 1995 1995/ 1994 1994
LIABILITIES: Average Income/ Avg. Volume Rate Average Income/ Avg.
Balance Expense Rate Change Change Total Balance Expense Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Demand deposits 99,547 $ 97,750
-------- --------
Interest checking deposits 72,886 1,266 1.7 $ 13 (73) $ (60) 73,160 $1,326 1.8
Money market savings 67,858 1,936 2.9 (494) 339 (155) 84,874 2,092 2.5
Regular savings 125,362 3,078 2.5 (74) 0 (74) 128,628 3,152 2.5
Unifund savings 57 1 1.8 0 (0) 0 46 1 2.2
Certificates of deposit 299,498 16,168 5.4 1,452 2,448 3,900 271,994 12,267 4.5
Time open & club accounts 30,576 1,600 5.2 769 256 1,025 15,988 575 3.6
-------- -------- -------- --------
Total time, int., and inv.
checking deposits 596,237 24,049 4.0 574,690 19,413 3.4
-------- ------ --- ------- --------
Total deposits 695,784 672,440
-------- -------
Federal funds purchased 1,093 67 6.1 25 17 42 690 25 3.6
Loans & securities sold under
agreement to repurchase 37,760 1,274 3.4 22 222 244 37,047 1,030 2.8
Other borrowings 5,338 268 5.0 (16) 17 1 5,654 267 4.7
Subordinated notes 2,986 305 10.2 (228) (5) (233) 5,229 538 10.3
------- ------- -------- --------
Total borrowings 47,177 1,914 4.1 48,620 1,860 3.8
------- ------- --- -------- -------- ----
Accrued expenses & other liab. 15,979 12,072
------- --------
Total liabilities 758,940 733,132
-------- --------
SHAREHOLDERS' EQUITY:
- --------------------
Common stock 15,727 15,717
Capital surplus 8,163 8,090
Retained earnings 61,202 52,657
-------- --------
Total shareholders' equity 85,092 76,464
-------- --------
Total liabilities and share-
holders' equity $844,032 $809,596
-------- --------
Weighted avg. yield on interest-earning assets 8.2 % 7.5 %
Weighted avg. rate paid on interest-bearing liab. 4.0 % 3.4 %
Net interest margin on weighted average interest- 4.8 % 4.6 %
earning assets
<CAPTION>
1994 1994/1993 1993
Average Income/ Avg. Volume Rate Average Income/ Avg.
ASSETS: Balance Expense Rate Change Change Total Balance Expense Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cash and due from banks $ 32,914 $ 33,927
Time deposits with other banks 1,955 $ 118 6.0 $ (73) 11 (62) 3,146 $ 180 5.7
U.S. Government obligations 127,836 6,405 5.0 881 (98) 783 109,629 5,622 5.1
Oblig. of states & political sub. 2,091 95 4.5 (40) 10 (30) 2,964 125 4.2
Other securities 18,447 924 5.0 (1,087) (196) (1,283) 39,903 2,207 5.5
Federal Reserve bank stock 742 45 6.1 6 0 6 649 39 6.0
Federal funds sold and other
short-term investments 15,293 661 4.3 75 179 254 13,528 407 3.0
-------- ------ ------- --------
Total investments 164,409 8,130 4.9 166,673 8,400 5.0
-------- ------ ---- ------- -------- ----
Commercial loans 196,065 15,780 8.0 155 875 1,030 195,244 14,750 7.6
Mortgage loans 294,251 24,345 8.3 1,549 (898) 651 275,165 23,694 8.6
Installment loans 45,934 3,753 8.2 558 (130) 428 39,302 3,325 8.5
Home equity loans 20,105 1,916 9.5 (278) 214 (64) 22,958 1,980 8.6
Municipal loans 29,851 1,880 6.3 (129) (64) (193) 31,726 2,073 6.5
-------- ------- ------- ------- ---
Gross loans 586,206 47,674 8.1 564 ,395 45,822 8.1
-------- ------ ---
Less: valuation reserve (8,660) (8,507)
-------- --------
Net loans 577,546 555,888
-------- ---------
Property, net 13,346 12,150
Other assets 19,426 15,016
-------- ---------
Total assets $809,596 $786,800
--------
1994 1994/ 1993 1993
<CAPTION>
LIABILITIES: Average Income/ Avg. Volume Rate Average Income/ Avg.
Balance Expense Rate Change Change Total Balance Expense Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Demand deposits 97,750 $ 90,485
-------- -------
Interest checking deposits 73,160 $ 1,326 1.8 $ 75 (197) (122) 68,444 $ 1,448 2.1
Money market savings 84,874 2,092 2.5 (422) (236) (658) 100,351 2,750 2.7
Regular savings 128,628 3,152 2.5 345 (285) 60 114,261 3,092 2.7
Unifund savings 46 1 2.2 (10) (5) (15) 499 16 3.2
Certificates of deposit 271,994 12,267 4.5 (432) (811) (1,243) 279,627 13,510 4.8
Time open & club accounts 15,988 575 3.6 153 83 236 11,864 339 2.9
-------- -------- -------- --------
Total time, int., and inv.
checking deposits 574,690 19,413 3.4 575,046 21,155 3.7
-------- -------- --------- ------ ---
Total deposits 672,440 665,531
-------- ---------
Federal funds purchased 690 25 3.6 10 1 11 427 14 3.3
Loans & securities sold under
agreement to repurchase 37,047 1,030 2.8 130 124 254 32,515 776 2.4
Other borrowings 5,654 267 4.7 35 6 41 4,898 226 4.6
Subordinated notes 5,229 538 10.3 (103) 43 (60) 6,235 598 9.6
-------- -------- -------- ------
Total borrowings 48,620 1,860 3.8 44,075 1,614 3.7
-------- -------- ---- -------- ------ ---
Accrued expenses & other liab. 12,072 7,877
-------- --------
Total liabilities 733,132 717,483
-------- --------
SHAREHOLDERS' EQUITY:
- --------------------
Common stock 15,717 13,822
Capital surplus 8,090 8,090
Retained earnings 52,657 47,405
-------- --------
Total shareholders' equity 76,464 69,317
-------- --------
Total liabilities and share-
holders' equity 809,596 $786,800
-------- --------
Weighted avg. yield on interest-earning assets 7.5 % 7.5 %
Weighted avg. rate paid on interest-bearing liab. 3.4 % 3.7 %
Net interest margin on weighted average interest- 4.6 % 4.3 %
earning assets
</TABLE>
Note: (1) For rate calculation purposes, average loan
categories include unearned discount.
(2) Nonaccrual loans have been included in the
average loan balances.
(3) Certain amounts have been reclassified to
conform with the current-year presentation.
(4) Included in interest income are loan fees of
$1,310,000 for 1995 $1,766,000 for 1994 and $1,897,000 for 1993.
(5) Table I has not been tax equated.
*The change due to the volume/rate variance and average volume and percent
roundings have been allocated to volume.
<TABLE>
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
TABLE II. INVESTMENT PORTFOLIO (BOOK VALUE)
(Thousands of dollars)
<CAPTION>
CARRYING AMOUNT OF INVESTMENT SECURITIES
December 31, December 31, December 31,
1995 (a) 1994 (a) 1993
------------- ------------ ------------
<S> <C> <C> <C>
U.S. Treasury, government corporations $206,117 $183,580 $108,551
and agencies
State and political subdivisions 3,873 2,529 1,505
Mortgage-backed securities 9,256 10,843 24,399
Other 5,273 5,108 4,872
-------- --------- ---------
Total $224,519 $202,060 $139,327
<CAPTION>
MATURITY DISTRIBUTION AND WEIGHTED AVERAGE YIELD
December 31, December 31, December 31, December 31, December 31, December 31,
1995 1995 1994 1994 1993 1993
AMOUNT (a) YIELD (b) AMOUNT (a) YIELD (b) AMOUNT YIELD (b)
<S> <C> <C> <C> <C> <C> <C>
1 YEAR OR LESS $52,749 5.85% $49,098 4.52% $43,725 5.01%
1 YEAR - 5 YEARS 159,807 6.19% 141,731 6.28% 73,264 4.83%
5 YEARS - 10 YEARS 5,315 5.65% 3,833 6.42% 1,229 5.58%
AFTER 10 YEARS 6,648 6.44% 7,398 6.29% 21,109 5.59%
-------- --------- ---------- --------- --------- --------
Total $224,519 6.10% $202,060 5.85% $139,327 5.01%
</TABLE>
Refer to Note 3 to the consolidated financial statements.
a. Held to maturity and available for sale portfolio's are combined.
b. Weighted average yield is calculated by dividing income, which has
not been tax equated on tax-exempt obligations, within each maturity
range by outstanding amount of the related investment.
<TABLE>
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
TABLE III. LOAN PORTFOLIO, PART A. TYPES OF LOANS
(Thousands of Dollars)
<CAPTION>
December 31, December 31, December 31, December 31, December 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Real estate loans
Construction and land development $54,840 $50,954 $60,437 $50,104 $46,753
Secured by 1-4 family residential properties 216,180 221,098 200,018 165,313 159,387
Other real estate loans 157,925 160,234 164,304 174,333 166,656
Commercial and industrial loans 120,692 114,103 115,375 116,847 124,014
Loans to individuals 40,648 36,810 34,130 42,518 48,458
All other loans 4,084 5,639 4,402 2,918 6,087
--------- --------- -------- -------- --------
Total loans $594,369 $588,838 $578,666 $552,033 $551,355
</TABLE>
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
TABLE III. LOAN PORTFOLIO, PART B, MATURITIES AND SENSITIVITY CHANGES IN
INTEREST RATES
(Thousands of Dollars)
The commercial mortgages and Industrial Development Authority mortgages
that are presently being written for a three (3) year term with a monthly
payment based on a fifteen (15) year amortization schedule. At each three-
year anniversary date of the mortgages, the interest rate is renegotiated and
the term of the loan is extended for an additional three years. At each
three-year anniversary date of the mortgages, the Bank also has the right to
require payment in full. These are included in the "Due in One to Five
Years" category on issue. The borrower has the right to prepay the loan at
any time.
The residential mortgages are presently being written on a one (1) or
three (3) year rollover basis. These are included in the "Due in One to
Five Years" category on issue. Fixed rate residential mortgages are also
being written for terms of 15 and 30 years and are included in the "Due in
Over Five Years" category.
<TABLE>
<CAPTION>
As of December 31, 1995 Due in One Due in One Due in Over
Year or Less to Five Years Five Years Total
<S> <C> <C> <C> <C>
Real estate loans
Construction and land development $17,781 $24,699 $12,360 $54,840
Secured by 1-4 family residential property 50,220 71,578 94,382 216,180
Other real estate loans 45,742 60,680 51,503 157,925
Commercial and industrial loans 68,094 44,490 8,108 120,692
Loans to individuals 20,669 10,876 9,103 40,648
All other loans 3,495 299 290 4,084
-------- -------- ------- --------
Total loans $206,001 $212,622 $175,746 $594,369
Loans with a predetermined interest rate $68,226 $129,642 $133,413 $331,281
Loans with a floating interest rate 137,775 82,980 42,333 263,088
-------- -------- -------- --------
$206,001 $212,622 $175,746 $594,369
</TABLE>
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
TABLE III. LOAN PORTFOLIO, PART C. RISK ELEMENTS
(Thousands of Dollars)
Nonaccrual, Past-Due and Restructured Loans and Other Assets
Performance of the entire loan portfolio is reviewed on a regular basis
by bank management and loan officers. A number of factors regarding the
borrower, such as overall financial strength, collateral values, and
repayment ability, are considered in deciding on what actions should be taken
when determining the collectibility of interest for accrual purposes.
Potential Problem Loans
When collectibility of interest and/or principal on a
particular loan is questionable, the loan is placed on nonaccrual status.
If, at the time a decision is made to cease accruing interest, it is
determined that the collection of perviously accrued but unpaid interest is
uncertain, unpaid interest is charged against current income. Conversly, if
a loan on nonaccrual status is paid in full, including interest, a credit is
made to current income. The $6,207 of nonaccruing and restructured loans in
1995 includes $885 which are in accordance with contractual terms. If
nonaccrual loans had performed in accordance with their contractual terms,
additional interest income of $530 would have been recorded in 1995.
Interest income of $43 was recognized on these loans. It should be noted
that loans classified as substandard could move into nonaccrual status if the
economy continues to slow. It is not possible to estimate a dollar figure
that would be added to this problem loan category.
Loan Concentrations
At December 31, 1995, there were no concentrations of loans exceeding
10% of total loans other than disclosed in Table III, Part A.
Other Assets
At December 31, 1995, $735 in Other Real Estate Owned was classified as
nonperforming. This amount represents all the Other Real Estate Owned. At
December 31, 1994 the Corporation had $1,750 in Other Real Estate Owned.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
Principal Principal Principal Principal Principal
Balance Balance Balance Balance Balance
<S> <C> <C> <C> <C> <C>
Nonaccruing loans $5,855 $5,149 $6,991 $14,969 $12,440
======== ======== ======= ======= =======
Accruing loans 90 days or more past due:
Real estate loans
Construction and land development 0 0 0 0 59
Secured by 1-4 family dwellings 234 76 87 108 373
Other real estate 93 172 36 259 65
Commercial and industrial loans 0 0 67 345 475
Loans to individuals 174 247 108 177 319
All other loans 0 0 0 0 0
--------- --------- ---------- -------- --------
Total loans, 90 days or more past due 501 495 298 889 1,291
========= ========= ========== ======== ========
Restructured loans, not included above 352 422 0 0 0
</TABLE>
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
TABLE IV. SUMMARY OF LOAN LOSS EXPERIENCE
(Thousands of Dollars)
The loan loss reserve is established at a level which
management believes is adequate to absorb potential loan losses on the
current portfolio. Loans which are currently performing that may pose
collectibility problems in the future are considered in the determination of
the loan loss reserve as described in Table IV. For financial reporting
purposes, the provision for loan losses charged to operating expenses is
based upon several factors, including:
1. A continuing review by management and the Bank's Loan Review
Committee of the loan portfolio. Loans are reviewed on a
individual basis with special attention give to those loans
which are believed to possess the possibility of loss exposure,
with regard to either principal or interest.
2. The analysis of historical loan loss experience in relation to
various types of outstanding loans, particularly in the consumer
loan portfolio.
3. Requirements of the Federal Regulatory examinations, at which time
certain loans are required to be charged against reserve for loan
losses.
If, after applying these factors, it is management's opinion that
reserves must be increased, additional amounts are provided through a charge
to operating expenses.
As the accompanying table indicates, the amount of loan loss provision
charged to expense for 1995 was $1,895 compared to $1,950 in 1994 and $2,480
in 1993.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Average amount of loans outstanding $583,398 $585,644 $563,678 $550,649 $532,501
--------- -------- -------- -------- --------
Loan loss reserve at beginning of period $8,876 $7,198 $8,240 $6,735 $6,353
Charge-offs:
Real estate loans 1,842 701 1,367 624 198
Commercial and industrial loans 416 615 2,270 871 1,193
Loans to individuals 236 127 215 265 265
Home equity
Other 71
---------- ------------- ----------- ----------- -----------
Total charge-offs 2,494 1,443 3,852 1,831 1,656
---------- ------------- ----------- ----------- -----------
Recoveries:
Real estate loans 316 146 139 52 24
Commercial and industrial loans 157 816 9 298 40
Loans to individuals 75 170 114 75 62
Home equity
Other 29 39 68 59 17
---------- ------------- ----------- ----------- -----------
Total recoveries 577 1,171 330 484 143
---------- ------------- ----------- ----------- -----------
Net charge-offs 1,917 272 3,522 1,347 1,513
Additions to loan loss reserve 1,895 1,950 2,480 2,852 1,895
--------- ------------- ----------- ----------- -------
Loan loss reserve at end of period $8,854 $8,876 $7,198 $8,240 $6,735
<CAPTION>
Loan type Loan type Loan type Loan type Loan type
as % as % as % as % as %
of loans of loans of loans of loans of loans
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Amount in reserve by category:
Real estate loans 72.2 $817 73.4 $2,999 73.4 $2,468 70.6 $3,705 67.6 $2,355
Commercial and industrial loan 20.3 2,459 19.4 2,495 19.9 2,384 21.2 3,408 22.4 2,807
Loans to individuals 6.8 347 6.3 490 5.9 402 7.7 548 8.8 885
All other loans 0.7 11 1.0 15 0.8 538 0.5 124 1.2 391
Unallocated portion 5,220 2,876 1,406 455 297
Total $8,854 $8,875 $7,198 $8,240 $6,735
Ratio - Net charge-offs versus
average loans 0.3% 0.0% 0.6% 0.2% 0.3%
</TABLE>
Total cash-basis and nonaccrual loans of $5,855 at December 31, 1995, were
generally comprised of $1,645 in residential real estate loans, $200 in
commercial and industrial loans, and $4,010 in commercial real estate loans.
<TABLE>
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
TABLE V. DEPOSITS
(Thousands of Dollars)
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
A. Average:
Noninterest-bearing demand deposits $99,547 $97,750 $90,485
Interest checking 72,886 73,160 68,444
Money Market savings 67,858 84,874 100,351
Savings deposits 125,362 128,628 114,261
Time deposits 330,131 288,028 291,990
------------ ----------- -----------
Total $695,784 $672,440 $665,531
============ =========== ===========
<CAPTION>
B. Year-end balance: ($100 or more)
outstanding as of Due 3 months Due 3 - 6 Due 6-12 Due over
December 31, 1995 or less months months 12 months
------------ ---------- ----------- ----------
<S> <C> <C> <C> <C>
Certificates of deposit $3,441 $3,308 $3,958 $10,269
Other time deposits $25,504 $5,341 $402 $1,338
</TABLE>
Note: Univest and its subsidiaries do not have foreign offices or foreign
deposits.
<TABLE>
TABLE VI. RETURN ON EQUITY AND ASSETS (RATIOS)
(Shown as percentage)
<CAPTION>
1995 1994 1993
------- ------ -------
<S> <C> <C> <C>
Return on assets 1.3 1.3 1.1
Return on equity 13.2 13.2 13.3
Dividend payout ratio 24.9 23.2 23.3
Equity to assets ratio 10.1 9.4 8.2
</TABLE>
<TABLE>
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
INTEREST RATE SENSITIVITY GAP
(Thousands of dollars)
<CAPTION>
Within 1-5 Over
1 Year Years 5 Years
<S> <C> <C> <C>
Rate Sensitive Interest Earnings Assets
Federal funds sold $16,527
Investment securities 62,910 $157,385 $423
Loans 325,676 187,337 75,567
Interest rate swap (10,000) 10,000
------- ------- -------
395,113 354,722 75,990
Rate Sensitive Liabilities
Interest bearing deposits 326,363 294,405 2,132
Borrowed funds 50,822
Net non-interest bearing funds (a) 152,103
------- ------- -------
377,185 294,405 154,235
Excess interest-earning assets (liabilities) 17,928 60,317 (78,245)
Cumulative excess interest earning assets (liabilities) $17,928 $78,245 $0
</TABLE>
Notes to interest sensitivity analysis:
(a) Net non-interest bearing funds is the sum of non-interest bearing
liabilities and shareholders' equity minus non-interest earning assets.
<TABLE>
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
TABLE VII. SHORT-TERM BORROWINGS
(Thousands of Dollars)
LOANS AND SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
<CAPTION>
1995 1994 1993
--------- -------- --------
<S> <C> <C> <C>
Balance at December 31 $45,657 $43,768 $28,124
Weighted average interest rate at year end 3.4% 3.3% 2.4%
Maximum amount outstanding at any month's end $45,657 $43,768 $39,055
Average amount outstanding during the year $37,760 $37,047 $32,515
Weighted average interest rate during the year 3.4% 2.8% 2.4%
</TABLE>
Item 2. Properties
Univest and its subsidiaries occupy twenty-five properties in
Montgomery and Bucks Counties in Pennsylvania, which are used principally as
banking offices. Note 6, appearing on page 21 of the Annual Report to
Shareholders (Exhibit 13), is hereby incorporated in this item.
Item 3. Legal Proceedings
There are no proceedings pending other than the ordinary routine
litigation incident to the business of the corporation.
Item 4. Submission of Matters to a Vote of Security Holders
Incorporated herein by reference from the registrant's definitive
proxy statement for the annual meeting of shareholders on April 9, 1996.
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters
Incorporated by reference from the 1995 Annual Report to Shareholders
(Exhibit 13), pages 39-40. Dividend and other restrictions are incorporated
by reference from Note 15 of the 1995 Annual Report to Shareholders
(Exhibit 13), pages 27 and 29. The approximate number of shareholders as of
February 29, 1996, was 1,743.
Item 6. Selected Financial Data
Incorporated by reference from the 1995 Annual Report to
Shareholders (Exhibit 13), page 31.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Incorporated by reference from the 1995 Annual Report to
Shareholders (Exhibit 13), pages 32 through 38. Dividend and other
restrictions are incorporated by reference from Note 15 of the 1995 Annual
Report to Shareholders (Exhibit 13), pages 27 and 29.
Item 8. Financial Statements and Supplementary Data
Consolidated balance sheets of the registrant at December 31, 1995
and 1994, and consolidated statements of income, changes in shareholders'
equity and cash flows for the years ended December 31, 1995, 1994 and 1993,
and the independent auditors' report thereon are incorporated by reference
from the 1995 Annual Report to Shareholders (Exhibit 13), pages 13 through 31.
Item 9. Change in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
Incorporated herein by reference from the registrant's definitive
proxy statement for the annual meeting of shareholders on April 9, 1996.
Executive Officers
The names and ages of all executive officers of the Corporation
are as follows:
<TABLE>
<CAPTION>
Principal Occupation
Officer Title during past 5 years Age
<S> <C> <C> <C>
Merrill S. Moyer Chairman Chairman and President 62
of the Corporation and
President of Union
National Bank
Norman L. Keller Executive Vice President of Pennview 58
President Savings Bank
Marvin A. Anders Vice Chairman Executive Vice President 56
and Senior Trust Officer
of Union National Bank
William S. Aichele Executive Vice Executive Vice President 45
President of the Corporation and
President and CEO of
Union National Bank
Wallace H. Bieler Senior Vice Senior Vice President 50
President and CFO of the Corporation
and Union National Bank
</TABLE>
There is no family relationship among any of the executive officers of
Univest.
Item 11. Executive Compensation
Incorporated herein by reference from the registrant's definitive
proxy statement for the annual meeting of shareholders on April 9, 1996.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Incorporated herein by reference from the registrant's definitive
proxy statement for the annual meeting of shareholders on April 9, 1996.
Item 13. Certain Relationships and Related Transactions
During 1995, the Corporation and its subsidiaries paid $512,651 to
H. Mininger & Son, Inc. for building expansion projects which were in the
normal course of business on substantially the same terms as available from
others. H. Ray Mininger, Alternate Director, is president of H. Mininger &
Son, Inc.
The law firm of Brunner, Conver and Conver, in which Neil L.
Conver, a director of Pennview Savings Bank, is a partner, performs legal
services for Pennview Savings Bank, in the ordinary course of business.
For the year ended December 31, 1995, fees received by Brunner, Conver, and
Conver for services performed for Pennview Savings Bank, amounted to less
than 5% of the firm's gross revenues.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) 1. & 2. Financial Statements and Schedules
The financial statements listed in the accompanying
index to financial statements are filed as part of
this annual report.
3. Listing of Exhibits
The exhibits listed on the accompanying index to
exhibits are filed as part of this annual report.
(b) There were no reports on Form 8-K filed in the fourth quarter
of 1995.
(c) Exhibits - The response of this portion of item 14 is
submitted as a separate section.
(d) Financial Statement Schedules - none.
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
[Item 14(a)]
<TABLE>
<CAPTION>
Annual Report
to Shareholders*
<S> <C>
Report of Independent Auditors 30
Consolidated balance sheets at 13
December 31, 1995 and 1994
Consolidated statements of income for each of the
three years in the period ended December 31, 1995 14
Consolidated statements of changes in shareholders' equity
for each of the three years in the period ended
December 31, 1995 15
Consolidated statements of cash flows for
each of the three years in the period ended
December 31, 1995 16
Notes to consolidated financial statements 17-29
</TABLE>
Financial statement schedules are omitted since the required information is
not present or is not present in amounts sufficient to require submission of
the schedule, or because the information required is included in the
financial statements and notes thereto.
*Refers to page numbers in the Annual Report to Shareholders for 1995
(Exhibit 13) which is incorporated by reference.
UNIVEST CORPORATION OF PENNSYLVANIA
AND SUBSIDIARIES
INDEX TO EXHIBITS
[Item 14(a)]
Description
(3) Articles of Incorporation and By-Laws
Articles of Incorporation and Charter are incorporated herein
by reference to the 1973 Form 10-K.
(4) Instruments Defining the Rights of Security Holders, Including Debentures
Specimen Copy of Common Stock is incorporated herein by reference to the
1973 Form 10-K.
(10) Material Contracts - Not Applicable.
(11) Statement Re Computation of Per Share Earnings - Not Applicable.
(12) Statements Re Computation of Ratios - Not Applicable.
(13) Annual Report to Shareholders
(18) Letter Re Change in Accounting Principles - Not Applicable.
(19) Previously Unfiled Documents - Not Applicable.
(21) Subsidiaries of the Registrant
(23) Consent of independent auditors
(24) Power of Attorney - Not Applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Annual Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
UNIVEST CORPORATION OF PENNSYLVANIA
Registrant
By: Robert H. Schong
Secretary, March 27, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
Merrill S. Moyer Norman G. Good
Chairman, President and Directer, March 27, 1996
Director, March 27, 1996
Charles H. Hoeflich Thomas K. Leidy
Chairman Emeritus and Director, March 27, 1996
Director, March 27, 1996
Marvin A. Anders Jules Pearlstine
Vice Chairman, March 27, 1996 Director, March 27, 1996
William S. Aichele Paul G. Shelly
Executive Vice President, Director, March 27, 1996
March 27, 1996
Norman L. Keller R. Lee Delp
Executive Vice President, Director, March 27, 1996
March 27, 1996
Wallace H. Bieler
SVP and Chief Financial
Officer, March 27, 1996
John U. Young
Director, March 27, 1996
James L. Bergey
Director, March 27, 1996
Harold M. Mininger
Director, March 27, 1996
Consolidated Financial Highlights
(in thousands, except per share data)
<TABLE>
<CAPTION>
Percentage
1995 1994 Change
<S> <C> <C> <C>
Earnings
Net interest income $ 37,582 $ 34,648 8.5
Income before income taxes 16,224 14,657 10.7
Applicable income taxes 4,997 4,537 10.1
Net income 11,227 10,120 10.9
Per share*
Average shares outstanding 3,921 3,921
Income before income taxes $ 4.13 $ 3.73 10.7
Applicable income taxes $ 1.27 $ 1.15 10.4
Net income $ 2.86 $ 2.58 10.9
Book value $ 22.78 $ 20.44 11.4
Balance Sheets
Investments $224,519 $202,060 11.1
Net loans 577,117 571,903 .9
Deposits 725,027 699,073 3.7
Shareholders' equity 89,336 80,158 11.4
Assets 881,888 847,154 4.1
</TABLE>
* The weighted average number of shares outstanding and all per share
amounts have been restated to give effect to a twenty-five percent
stock dividend, declared on November 22, 1995 to shareholders of record
as of February 15, 1996, payable on March 1, 1996.
<TABLE>
Consolidated Balance Sheets
(in thousands, except share data)
<CAPTION>
December 31,
1995 1994
<S> <C> <C>
Assets
Cash and due from banks $ 30,901 $ 35,177
Time deposits with other banks 456 501
Investment securities held to maturity 168,439 171,725
(market value $170,665 and $167,605 at
December 31, 1995 and 1994, respectively)
Investment securities available for sale 56,080 30,335
Federal funds sold and other short-term investments 16,527 6,848
Loans 585,971 580,779
Less: Reserve for possible loan losses (8,854) (8,876)
Net loans 577,117 571,903
Premises and equipment, net 16,200 13,949
Accrued interest and other assets 16,168 16,716
Total assets $881,888 $847,154
Liabilities
Demand deposits, noninterest bearing $100,300 $104,404
Demand deposits, interest bearing 154,642 155,636
Savings deposits 122,683 126,975
Time deposits 347,402 312,058
Total deposits 725,027 699,073
Securities sold under agreements to repurchase 45,657 43,768
Other short-term borrowings 1,155 1,155
Accrued expenses and other liabilities 16,628 13,562
Long-term debt 4,085 9,438
Total liabilities 792,552 766,996
Shareholders' equity
Common stock, $5 par value; 12,000,000 shares
authorized at December 31, 1995 and 1994 and
3,143,346 shares issued and 3,137,016 shares
outstanding at December 31, 1995 and 1994 19,638 15,717
Additional paid-in capital 34,559 8,090
Retained earnings 35,028 56,983
Net unrealized securities gains (losses) 261 (482)
Treasury stock, 6,330 shares at cost (150) (150)
Total shareholders' equity 89,336 80,158
Total liabilities and shareholders' equity $881,888 $847,154
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
Consolidated Statements Of Income
(in thousands, except share data)
<CAPTION>
Year ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Interest income
Interest and fees on loans
Taxable $49,400 $45,794 $43,749
Exempt from federal income taxes 1,922 1,880 2,073
Total interest and fees on loans 51,322 47,674 45,822
Interest and dividends on investment securities:
U.S. Government obligations 10,445 6,405 5,622
Obligations of state and political subdivisions 118 95 125
Other securities 1,021 968 2,246
Interest on time deposits with other banks 23 118 180
Interest on federal funds sold 616 661 407
Total interest income 63,545 55,921 54,402
Interest expense
Interest on demand deposits 3,202 3,418 4,198
Interest on savings deposits 3,078 3,152 3,092
Interest on time deposits 17,769 12,843 13,865
Interest on long-term debt 314 565 794
Interest - all other 1,600 1,295 820
Total interest expense 25,963 21,273 22,769
Net interest income 37,582 34,648 31,633
Provision for loan losses 1,895 1,950 2,480
Net interest income after provision for loan losses 35,687 32,698 29,153
Other income
Trust 2,032 1,828 1,630
Service charges on demand deposits 1,629 1,633 1,561
Losses on sales of securities (66) (27) -
Gains (losses) on sales of mortgages 101 (12) 956
Other 2,399 2,150 2,304
Total other income 6,095 5,572 6,451
Other expenses
Salaries and benefits 13,320 12,403 11,764
Net occupancy 1,856 1,665 1,584
Equipment 1,898 1,724 1,623
Other 8,484 7,821 7,155
Total other expenses 25,558 23,613 22,126
Income before income taxes and cumulative effect
of a change in accounting principle 16,224 14,657 13,478
Applicable income taxes 4,997 4,537 4,121
Income before cumulative effect of a change in
accounting principle 11,227 10,120 9,357
Cumulative effect of a change in accounting
principle, net of income taxes of $294 - - (570)
Net income $11,227 $10,120 $ 8,787
Per common share data*:
Income before cumulative effect of a change in
accounting principle $ 2.86 $ 2.58 $ 2.38
Cumulative effect of a change in accounting
principle - - (0.14)
Net income per share $ 2.86 $ 2.58 $ 2.24
</TABLE>
See accompanying notes to consolidated financial statements.
* The weighted average number of shares outstanding and all per share amounts
have been restated to give effect to a twenty-five percent stock dividend
declared on November 22, 1995 to shareholders of record as of February 15,
1996, payable on March 1, 1996.
<TABLE>
Consolidated Statements Of Changes In Shareholders' Equity
(in thousands, except share data)
<CAPTION>
Net
Additional Unrealized
Common Paid-in Retained Securities Treasury
Stock Capital Earnings Gains (Losses) Stock Total
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992 $ 7,858 $ 8,090 $50,483 $ - $ (150) $66,281
Net income for 1993 8,787 8,787
Cash dividends declared*
($.56 per share) (2,196) (2,196)
Two-for-one common stock in the
form of a 100% stock dividend 7,859 (7,859) -
Balance at December 31, 1993 15,717 8,090 49,215 - (150) 72,872
Adjustment to beginning
balance for change in
accounting method,
net of income taxes
of $151 293 293
Change in unrealized gains
and (losses) on investment
securities available for sale,
net of income taxes of ($399) (775) (775)
Net income for 1994 10,120 10,120
Cash dividends declared*
($.60 per share) (2,352) (2,352)
Balance at December 31, 1994 15,717 8,090 56,983 (482) (150) 80,158
Change in unrealized gains
and (losses) on investment
securities available for sale,
net of income taxes of $394 743 743
Net income for 1995 11,227 11,227
Cash dividends declared*
($.712 per share) (2,792) (2,792)
25% stock dividend
payable March 1, 1996,
784,254 shares at fair
market value 3,921 26,469 (30,390)
Balance at December 31, 1995 $19,638 $34,559 $35,028 $261 $(150) $89,336
</TABLE>
See accompanying notes to consolidated financial statements.
* Cash dividends per share have been restated to give effect to a twenty-five
percent stock dividend declared on November 22, 1995 to shareholders of
record as of February 15, 1996 payable on March 1, 1996, however the
outstanding common shares reflected on the accompanying consolidated balance
sheet do not reflect the issuance of the common shares in connection with the
stock dividend payable March 1, 1996, since such shares have not been legally
issued as of December 31, 1995.
<TABLE>
Consolidated Statements Of Cash Flows (in thousands)
<CAPTION>
Year ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities
Net income $11,227 $10,120 $8,787
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses (less than) in excess of net charge-offs (22) 1,678 (1,042)
Depreciation of premises and equipment 1,725 1,527 1,293
Cumulative effect of a change in accounting principle - - 570
(Discount accretion) premium amortization on
investment securities and time deposits (346) 290 511
Deferred income tax 353 139 472
Realized losses on investment securities 66 27 -
Realized (gains) losses on sales of mortgages (101) 12 (956)
Decrease in net deferred loan fees (258) (552) (54)
Decrease (increase) in interest receivable and other assets 1,115 (1,320) 795
Increase (decrease) in accrued expenses and other liabilities 2,069 5,000 (1,408)
Net cash provided by operating activities 15,828 16,921 8,968
Cash flows from investing activities
Proceeds from maturing time deposits 45 2,798 48
Proceeds from maturing securities - - 98,634
Proceeds from maturing securities held to maturity 47,288 24,335 -
Proceeds from maturing securities available for sale 5,873 29,987 -
Proceeds from sales of securities available for sale 14,994 7,247 -
Purchases of investment securities held to maturity (76,059) (108,784) (67,751)
Purchases of investment securities available for sale (13,138) (16,565) -
Net (increase) decrease in federal funds sold and
other short-term investments (9,679) 5,830 1,551
Net decrease (increase) in loans held for sale - 8,916 (1,422)
Proceeds from sales of mortgages 8,276 14,918 34,499
Net increase in loans (13,109) (24,374) (62,431)
Capital expenditures (3,976) (2,843) (1,341)
Net cash (used in) provided by investing activities (39,485) (58,535) 1,787
Cash flows from financing activities
Assumption of deposits 11,916 10,608 -
Net increase (decrease) in deposits 13,470 18,966 (8,419)
Net increase (decrease) in short-term borrowings 1,889 15,644 (2,587)
Proceeds from long-term debt - - 4,000
Cash dividends (2,541) (2,290) (2,101)
Repayments of long-term debt (5,353) (839) (1,799)
Net cash provided by (used in) financing activities 19,381 42,089 (10,906)
Net (decrease) increase in cash and due from banks (4,276) 475 (151)
Cash and due from banks at beginning of year 35,177 34,702 34,853
Cash and due from banks at end of year $30,901 $35,177 $34,702
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest $23,899 $20,600 $23,576
Income taxes $ 4,290 $ 4,450 $ 4,351
</TABLE>
Supplemental disclosure of noncash activity
During the year ended December 31, 1993, the Corporation entered into
a capital lease obligation for $491.
See accompanying notes to consolidated financial statements.
Notes To Consolidated Financial Statements
(dollars in thousands, except per share data)
Note 1 - Summary of Significant Accounting Policies
Organization
Univest Corporation of Pennsylvania (the Corporation) through its wholly
owned subsidiaries, Union National Bank and Trust Company (Union) and
Pennview Savings Bank (Pennview), is engaged in general domestic commercial
and retail banking services and provides a full range of banking and trust
services to its customers. Union and Pennview serve the Montgomery and Bucks
Counties of Pennsylvania through 25 banking offices.
Principles of Consolidation
The consolidated financial statements include the accounts of Univest
Corporation of Pennsylvania and its wholly owned subsidiaries, including
Union National Bank and Trust Company and Pennview Savings Bank, collectively
referred to herein as the "Banks." All significant intercompany balances and
transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Investment Securities
Effective January 1, 1994, the Corporation adopted Statement of
Financial Accounting Standard ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." 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 the
trading account and are carried at market value. Securities not classified
as investment or trading are designated securities available for sale and
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.
As a result of adopting SFAS No. 115, securities with an original carrying
value of $48,271 were classified as available-for-sale at January 1, 1994
and were written up to their aggregate fair value of $48,715. After
the related tax effects, shareholders' equity at January 1, 1994 was
increased by $293 to reflect the write-up of those securities to fair
value. The accumulated net unrealized gain (loss) on available-for-
sale securities included in retained earnings was $261 at December 31,
1995 and ($482) at December 31, 1994. On November 15, 1995, the FASB
staff issued a Special Report, A Guide to Implementation of Statement
115 on Accounting for Certain Investments in Debt and Equity
Securities. In accordance with provisions in that Special Report, the
Corporation chose to reclassify securities from held-to-maturity to
available-for-sale. At the date of transfer, the amortized cost of
those securities was $32,425 and the unrealized loss on those
securities was $93, which is included in shareholders' equity.
Gains and losses on sales of securities are generally computed on a
specific security basis.
Loans
Loans are stated at the principal amount less net deferred loan fees and
unearned discount. Interest income on commercial and mortgage loans is
recorded on the outstanding balance method, using actual interest rates
applied to daily principal balances. Unearned discount on installment loans
is recognized in income using the "rule of 78ths" method (sum-of-the-digits),
which materially approximates the interest method. Accrual of interest
income on loans ceases when collectibility of interest and/or principal is
questionable. If it is determined that the collection of interest previously
accrued is uncertain, such accrual is reversed and charged to current
earnings. Thereafter, income is only recognized as payments are received for
loans on which there is no uncertainty as to the collectibility of principal.
Effective January 1, 1996, the Corporation will adopt Statement of
Financial Accounting Standard ("SFAS") No. 122, "Accounting for Mortgage
Servicing Rights." SFAS No. 122 requires capitalization of the cost of
mortgage servicing rights when the Company intends to retain the servicing
rights and sell the related loans or when the Company purchases servicing
rights but not the related loans. SFAS No. 122 also addresses how servicing
assets should be evaluated for impairment. The adoption of SFAS No. 122 is
not expected to have a material impact on the Corporation's financial
condition or results of operations.
Loan Fees
Fees collected upon loan origination and certain direct costs of
originating loans are deferred and recognized over the contractual lives of
the related loans as yield adjustments. Upon prepayment or other disposition
of the underlying loans before their contractual maturities, any associated
unamortized fees or costs are recognized.
Reserve for Possible Loan Losses
The reserve for loan losses is based on management's evaluation of the
loan portfolio under current economic conditions and such other factors which
deserve recognition in estimating possible loan losses. This evaluation is
inherently subjective as it requires material estimates including the amounts
and timing of future cash flows expected to be received on impaired loans
that may be susceptible to significant change. Additions to the
reserve arise from the provision for loan losses charged to operations
or from the recovery of amounts previously charged off. Loan charge-
offs reduce the reserve. Loans are charged off when there has been
permanent impairment.
The Corporation adopted Statement of Financial Accounting Standard
("SFAS") No. 114, "Accounting by Creditors for Impairment of a Loan," and
Statement No. 118 "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures" effective January 1, 1995. As a result of
applying the new rules, certain impaired loans are reported at the present
value of expected future cash flows using the loan's initial effective
interest rate, or as a practical expedient, at the loan's observable market
price or the fair value of the collateral if the loan is collateral
dependent. The adoption of these standards did not have any impact on the
Corporation's financial position or results of operations.
Premises and Equipment
Land is stated at cost, and bank premises and equipment are stated at
cost less accumulated depreciation. Depreciation is computed on the
straight-line method and charged to operating expenses over the
estimated useful lives of the assets (bank premises and improvements -
average life 25 years; furniture and equipment - average life 10 years).
Other Real Estate Owned
Other real estate owned represents properties acquired through
customers' loan defaults, and is included in accrued interest and
other assets. The real estate is stated at an amount equal to the
loan balance prior to foreclosure, plus costs incurred for
improvements to the property, but no more than the fair market value
of the property, less estimated costs to sell.
Stock Options
The Corporation grants stock options for a fixed number of shares
to employees with an exercise price equal to the fair value of the
shares at the date of grant. The Corporation accounts for stock
option grants in accordance with APB Opinion No. 25, Accounting for
Stock Issued to Employees, and, accordingly, recognizes no
compensation expense for the stock option grants.
Net Income Per Share
Net income per common share is based on the weighted average
number of shares outstanding during each fiscal year. All share and
per share amounts have been retroactively adjusted to give effect to a
twenty-five percent stock dividend declared November 22, 1995 to
shareholders of record as of February 15, 1996, payable on March 1,
1996. The assumed exercise of the options under the Long-Term
Incentive Plan did not have a materially dilutive effect on the
earnings per share in 1995 and 1994.
Income Taxes
Deferred income taxes are provided on temporary differences
between amounts reported for financial statement and tax purposes in
accordance with SFAS No. 109, "Accounting for Income Taxes."
Intangible Assets
The purchase price of Pennview in excess of the fair value of the
net assets acquired was recorded as goodwill and is being amortized on
a straight-line basis over a 15-year period. At December 31, 1995,
the unamortized balance is approximately $1.7 million ($1.9 million at
December 31, 1994), net of accumulated amortization of approximately
$1 million ($.8 million at December 31, 1994).
Retirement Plan
Nearly all employees are covered by a noncontributory retirement
plan. The plan provides benefits based on a formula of each
participant's final average pay. The amount funded is not more than
the maximum amount deductible for federal income tax purposes. In
addition, Univest sponsors a 401(k) deferred salary savings plan,
which is a qualified defined contribution plan, and which covers all
employees of Univest and its subsidiaries, and provides that the
Corporation make matching contributions as defined by the plan.
Postretirement Benefits Other Than Pensions
Effective January 1, 1993, the Corporation adopted Statement of
Financial Accounting Standard No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" (SFAS No. 106). SFAS No.
106 requires that employers accrue the costs associated with providing
postretirement benefits during the active service periods of
employees. As permitted under SFAS No. 106, the Corporation elected
to immediately recognize the January 1, 1993 transitional liability of
$864, $570 after-tax or $.14 per share, as the cumulative effect of a
change in accounting principle.
Statement of Cash Flows
Univest has defined those items included in the caption "Cash and
due from banks" as cash and cash equivalents.
Trust Assets
Assets held by Union in a fiduciary or agency capacity for its
customers are not included in the consolidated financial statements
since such items are not assets of Union. Trust service income is
reported on a cash basis. Reporting such income on a cash basis
instead of the accrual basis does not materially affect net income or
financial position.
Note 2. Restrictions on Cash and Due from Bank Account
Union is required to maintain reserve balances with the Federal
Reserve Bank. The average amount of those reserve balances for 1995
was $4.8 million and for 1994 was $5.3 million.
Note 3. Investment Securities
Securities with a market value of $92.4 million and $93.5 million at
December 31, 1995 and 1994, respectively, were pledged to secure public
deposits and for other purposes as required by law. The following table
shows the amortized cost and approximate market value of the held-
to-maturity securities and available-for-sale securities at December 31,
1995 and 1994, by maturity within each type:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
Gross Gross Gross Gross
Amortized Unrealized Unrealized Market Amorized Unrealized Unrealized Market
Cost Gains Losses Value Cost Gains Losses Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Held-to-Maturity Securities
U.S. Treasury, government
corporations and agencies
obligations:
Within 1 year $ 40,472 $ 234 $ (76) $ 40,630 $ 41,113 $ - $ (481) $ 40,632
1 to 5 years 119,794 2,015 (29) 121,780 122,661 - (3,490) 119,171
160,266 2,249 (105) 162,410 163,774 - (3,971) 159,803
State and political Subdivisions:
Within 1 year 1,180 - - 1,180 15 - - 15
1 to 5 years 1,335 25 - 1,360 2,514 - (60) 2,454
5 to 10 years 1,358 - (5) 1,353 - - - -
3,873 25 (5) 3,893 2,529 - (60) 2,469
Mortgage-backed securities:
1 to 5 years 2,724 62 (1) 2,785 3,520 34 (45) 3,509
5 to 10 years 176 - - 176 402 - (1) 401
Over 10 years - - - - 100 - - 100
2,900 62 (1) 2,961 4,022 34 (46) 4,010
Other:
1 to 5 years 1,200 - (10) 1,190 1,200 - (70) 1,130
5 to 10 years 200 11 - 211 200 - (7) 193
1,400 11 (10) 1,401 1,400 - (77) 1,323
Total $168,439 $2,347 $(121)$170,665 $171,725 $34 $(4,154) $167,605
Securities Available for Sale
U.S. Treasury, government
corporations and agencies
obligations:
Within 1 year $ 10,997 $ 102 $ (2) $11,097 $ 8,012 $ - $ (42) $ 7,970
1 to 5 years 34,337 480 (63) 34,754 11,990 20 (174) 11,836
45,334 582 (65) 45,851 20,002 20 (216) 19,806
Mortgage-backed securities:
5 to 10 years 3,654 - (73) 3,581 3,534 - (303) 3,231
Over 10 years 2,813 - (38) 2,775 3,823 - (233) 3,590
6,467 - (111) 6,356 7,357 - (536) 6,821
Other:
Over 10 years 3,873 - - 3,873 3,707 1 - 3,708
3,873 - - 3,873 3,707 1 - 3,708
Total $ 55,674 $ 582 $ (176) $56,080 $31,066 $21 $ (752) $30,335
</TABLE>
Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations
without call or prepayment penalties.
During the year ended December 31, 1995, available-for-sale debt
securities with a fair value at the date of sale of $14,994 were sold
($7,247 in 1994). There were no realized gains on such sales during
1995 ($19 in 1994), and the gross realized losses totaled $66 ($46 in
1994). The net adjustment to unrealized holding gains (losses) on
available-for-sale securities included as a separate component of
shareholders' equity totaled $261 in 1995 and ($482) in 1994.
There were no sales of investments in debt securities during
1993.
Unrealized losses in investment securities at December 31, 1995
do not represent permanent impairments.
At December 31, 1995 and 1994, there were no investments in any
single non-federal issuer representing more than 10% of shareholders'
equity.
Note 4. Loans
The following is a summary of the major loan categories:
<TABLE>
<CAPTION>
December 31,
1995 1994
<S> <C> <C>
Real estate - construction $ 54,840 $ 50,954
Real estate - commercial 157,925 160,234
Real estate - residential 216,180 221,098
Commercial and industrial 120,692 114,103
Loans to individuals 40,648 36,810
All other 4,084 5,639
Total loans 594,369 588,838
Less: Unearned income (8,398) (8,059)
$585,971 $ 580,779
</TABLE>
At December 31, 1995, loans to directors and executive officers of
Univest and companies in which directors have an interest aggregated
$10,502. These loans have been made in the ordinary course of business
on substantially the same terms, including interest rates and collateral,
as those prevailing at the same time for comparable transactions with
customers and did not involve more than the normal risk of collectibility
or present other unfavorable terms. The summary of activity for the past
year is as follows:
<TABLE>
<CAPTION>
Balance at Amounts Balance at
January 1, 1995 Additions Collected December 31, 1995
<S> <C> <C> <C>
$16,426 $18,142 $24,066 $10,502
</TABLE>
Note 5. Reserve for Possible Loan Losses
A summary of the transactions in the reserve for possible loan losses
is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Balance at beginning of year $ 8,876 $ 7,198 $ 8,240
Provision charged to operating expenses 1,895 1,950 2,480
Recoveries 577 1,171 330
Loans charged off (2,494) (1,443) (3,852)
Balance at end of year $ 8,854 $ 8,876 $ 7,198
</TABLE>
Effective January 1, 1995, the Corporation adopted Statement of
Financial Accounting Standard No. 114, "Accounting by Creditors for
Impairment of a Loan" and Statement No. 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures." Under SFAS
No. 114, the 1995 allowance for credit losses related to loans that are
identified for evaluation in accordance with SFAS No. 114 is based on
discounted cash flows using the loans' initial effective interest rate or
the fair value of collateral for certain collateral dependent loans.
Included in the total impaired loans is $1,712 against which $728 of the
allowance for loan losses is allocated. SFAS No. 118 amended SFAS No.
114's income recognition policy and clarifies SFAS No. 114's disclosure
requirements. At December 31, 1995 the recorded investment in loans that
are considered to be impaired under SFAS No. 114 was $3,800 (all of which
were on a nonaccrual basis). The average recorded investment in impaired
loans during the year ended December 31, 1995 was approximately $3,700.
For the year ended December 31, 1995, the Corporation recognized $34 in
interest income on those impaired loans.
At December 31, 1995, the total of nonaccrual and restructured loans
was $5,350 ($4,748 at December 31, 1994). If these loans had been
performing in accordance with their contractual terms, additional
interest income of $530, $567, and $661 would have been recorded in 1995,
1994, and 1993, respectively. In addition, Pennview had first
residential mortgage loans of $857 at December 31, 1995 ($824 at December
31, 1994) which were over 90 days delinquent.
The total of the real estate owned at December 31,1995 was $735
($1,750 at December 31,1994). Other expenses for 1995 include costs of
$1,100,000 associated with the disposition of other real estate owned
($300,000 in 1994).
Note 6. Premises and Equipment
<TABLE>
<CAPTION>
December 31,
1995 1994
<S> <C> <C>
Land and land improvements $ 3,261 $ 3,265
Premises and improvements 14,137 12,579
Furniture and equipment 14,889 12,659
32,287 28,503
Less: accumulated depreciation (16,087) (14,554)
$16,200 $13,949
</TABLE>
As of December 31, 1995, Univest and its subsidiaries were obligated
under noncancelable leases for various premises and equipment. A summary
of the future minimum rental commitments under noncancelable operating
leases net of related sublease revenue is as follows: 1996-$227;
1997-$215; 1998-$206; 1999-$181; 2000-$122. Rental expense charged to
operations was $232, $135, and $87 for 1995, 1994, and 1993,
respectively.
Note 7. Income Taxes
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. The assets and liabilities giving rise to the Corporation's
deferred tax liabilities and assets as of December 31, 1995 and 1994 are
as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Deferred tax assets:
Loan loss $2,734 $ 2,851
Deferred compensation 286 306
Deferred fee income 223 469
Postretirement benefits 355 323
Net unrealized securities losses - 249
3,598 4,198
Deferred tax liabilities:
Accretion 225 71
Retirement plans 216 148
Depreciation 334 250
Intangible assets 377 403
Mark-to-market adjustment 62 226
Other 116 36
Net deferred tax assets $2,268 $ 3,064
</TABLE>
The provision for federal and state income taxes included in the
accompanying consolidated statements of income consists of the
following:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Currently payable $ 4,644 $ 4,397 $ 3,648
Deferred 353 140 473
$ 4,997 $ 4,537 $ 4,121
</TABLE>
The effective tax rates are less than the statutory federal rate of
35% because interest on loans and investment securities of state and
political subdivisions is exempt from income tax. Deferred federal income
taxes (tax benefits) arise from timing differences in the recognition of
income and expenses for tax and financial reporting purposes.
Pennview is permitted to deduct an annual addition to a tax reserve
for bad debts, which differs from the method used for financial accounting
purposes. As of December 31, 1995, Pennview has taken approximately
$2,596 in bad debt deductions for which no deferred income taxes have been
provided, since management does not intend to use the reserve for purposes
other than to absorb bad debt losses.
Note 8. Retirement Plan
Net pension expense recognized in 1995, 1994, and 1993 amounted
to $185, $193, and $351, respectively, and is summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 364 $ 419 $ 365
Interest cost on projected benefit obligation 733 686 723
Actual return on plan assets (2,240) 189 (872)
Net amortization and deferral 1,328 (1,101) 135
$ 185 $ 193 $ 351
</TABLE>
The funded status is reconciled to prepaid pension expense
recognized in the financial statements at December 31, 1995 and
1994, as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Fair value of plan assets $11,174 $ 9,024
Actuarial present value of benefit obligations:
Vested 8,506 6,222
Nonvested 442 331
Accumulated benefit obligation 8,948 6,553
Effect of projected future salary increase 2,708 1,662
Projected benefit obligation 11,656 8,215
Plan assets (less than) in excess of
projected benefit obligation (482) 809
Unrecognized net asset at transition (631) (757)
Unrecognized prior service costs (760) (836)
Unrecognized net loss 2,493 1,211
Prepaid pension expense $ 620 $ 427
Assumed discount rate for obligation 6.75% 8.50%
Assumed long-term rate of investment return 8.50% 8.50%
Assumed salary increase rate 5.60% 5.60%
</TABLE>
The unrecognized net asset at transition is being amortized on the
straight-line method over 15 years. Plan assets include marketable equity
securities, corporate and government debt securities, and certificates of
deposit.
Pension expense for the 401(k) deferred salary savings plan for the
years ended December 31, 1995, 1994, and 1993, was $203, $196, and $177,
respectively.
Note 9. Other Postretirement Benefit Plans
The Corporation provides certain postretirement health care and life
insurance benefits for retired employees. The liability for these
postretirement benefits is unfunded. Statement of Financial Accounting
Standard No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions" (SFAS No. 106) was issued in December 1990, to establish the
accounting for postretirement benefits. SFAS No. 106 requires that
employers accrue the costs associated with providing postretirement
benefits during the active service periods of employees, rather than the
previously accepted accounting practice of recognizing those costs on a pay-
as-you-go basis.
Effective January 1, 1993, the Corporation adopted SFAS No. 106. As
permitted under SFAS No. 106, the Corporation elected to recognize
immediately the transitional postretirement benefit liability of $864, $570
after-tax or $.14 per share, as the cumulative effect of a change in
accounting principle. The impact of SFAS No. 106 included in salaries and
benefits on the Consolidated Statements of Income for the years ended
December 31, 1995, 1994, and 1993, was an increase of $38, $26, and $33,
respectively.
The liability for postretirement benefits included in other
liabilities at December 31, 1995 and 1994, was as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ (788) $ (596)
Fully eligible active plan participants (42) (32)
Other active plan participants (250) (189)
Unrecognized net loss (gain) 65 (160)
Accrued postretirement benefit cost $(1,015) $ (977)
</TABLE>
Net periodic postretirement benefit cost for the years ended
December 31, 1995, 1994, and 1993 includes the following components:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 13 $ 16 $ 14
Interest cost on accumulated postretirement benefit obligation 68 68 66
$ 81 $ 84 $ 80
</TABLE>
For measurement purposes, a 9.0 percent annual rate of increase in
the per capita cost of covered health care benefits was assumed in 1995;
the rate was assumed to decrease gradually by 1/2 percent per year,
reaching 5 percent in 2003 and after. The health care cost trend rate
assumption has a significant effect on the amounts reported. To
illustrate, increasing the assumed health care cost trend rates by 1
percentage point in each year would increase the accumulated
postretirement benefit obligation as of December 31, 1995 by $60 and the
aggregate of the service and interest cost components of net periodic
postretirement benefit cost for the year ended by $.5.
The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation was 6.75 percent and 8.50
percent, at December 31, 1995 and 1994, respectively, and the assumed
salary increase rate was 5.60 percent at December 31, 1995 and 1994.
Note 10. Long-Term Incentive Plan
During 1993, the Corporation adopted the 1993 Long-Term Incentive Plan,
whereby the Corporation may grant options to employees to purchase up to
156,850 shares of common stock. The plan provides for the issuance of
options to purchase common shares at prices not less than 100 percent of the
fair market value at the date of option grant. Options are exercisable as to
33 percent of the optioned shares each year from the date of grant for a
period not exceeding six years. 88,000 common shares were available for
future options at December 31, 1995. Transactions involving the plan are
summarized as follows:
<TABLE>
<CAPTION>
Shares Option
Under Price Per
Option Share
<S> <C> <C>
Outstanding at December 31, 1992 _ _
Granted 25,000 $ 34.00
Exercised _ _
Outstanding at December 31, 1993 25,000 34.00
Granted _ _
Exercised _ _
Outstanding at December 31, 1994 25,000 34.00
Granted 43,850 38.75
Exercised _ _
Outstanding at December 31, 1995 68,850 $ 34.00-$38.75
</TABLE>
Note 11. Time Deposits
The aggregate amount of certificates of deposit in denominations of
$100 or more was $20,976 at December 31, 1995, and $21,725 at December
31, 1994, with interest expense of $1,143 for 1995, and $1,104 for 1994.
Other time deposits in denominations of $100 or more were $32,585 at
December 31, 1995, and $21,546 at December 31, 1994, with interest
expense of $1,535 for 1995, and $549 for 1994.
Note 12. Long-Term Debt
At December 31, 1995 and 1994, long-term debt consisted of the
following:
<TABLE>
<CAPTION>
December 31, December 31, Interest
Description 1995 1994 Rate Maturity
<S> <C> <C> <C> <C>
Subordinated Note $ - $ 5,000 10.35% through July 31, 1995 -
Federal Home Loan
Bank Advance 4,000 4,000 4.82% February 1996
Federal Home Loan
Bank Advance 75 75 4.00% September 2006
Federal Home Loan
Bank Advance 10 10 2.50% March 1996
Capital lease obligation - 353 6.91% -
$ 4,085 $ 9,438
</TABLE>
Advances from the Federal Home Loan Bank are collateralized by Federal
Home Loan Bank stock and substantially all first mortgage loans of Pennview.
The advances are subject to the payment of a prepayment fee in the event
of repayment of the advance in whole or in part prior to maturity.
Note 13. Financial Instruments with Off-Balance-Sheet Risk and
Commitments
Loan commitments are made to accommodate the financial needs of the
Institutions' customers. Standby letters of credit commit the
Institutions to make payments on behalf of customers when certain
specified future events occur. They primarily are issued to support
commercial paper, medium- and long-term notes and debentures, including
industrial revenue obligations. Historically, substantially all standby
letters of credit expire unfunded. Both arrangements have credit risk
essentially the same as that involved in extending loans to customers and
are subject to the Institutions' normal credit policies. Collateral is
obtained based on management's credit assessment of the customer.
The Banks offer commercial, mortgage, and consumer credit products
to their customers in the normal course of business which are detailed in
Note 4. These products represent a diversified credit portfolio and are
generally issued to borrowers within the Banks' branch office systems in
eastern Pennsylvania. The ability of the customers to repay their credit
is, to some extent, dependent upon the economy in the Banks' market
areas.
The Banks also control their credit risks by limiting the amount of
credit to any business, institution, or individual, but as of December
31, 1995, the Banks have identified the due from banks' balance as a
significant concentration of credit risk because it contains a balance
due from a single depository institution in the amount of $13,917 which
is unsecured. Management evaluates the creditworthiness of the
institution on at least a quarterly basis in an effort to monitor its
credit risk associated with this concentration.
The following schedule summarizes the Corporation's off-balance-
sheet financial instruments:
<TABLE>
<CAPTION>
Contract or
Notional Amount
<S> <C>
Financial instruments representing credit risk:
Commitments to extend credit $123,858
Standby letters of credit or commercial
letters of credit 20,100
Interest rate swap, notional principal amount 10,000
</TABLE>
The Corporation may enter into interest-rate swaps in managing its
interest-rate risk. In these swaps, the Corporation agrees to exchange,
at specified intervals, the difference between fixed- and floating-
interest amounts calculated on an agreed-upon notional principal amount.
Because the Corporation's interest-earning assets tend to be short-term
floating rate instruments while the Corporation's interest-bearing
liabilities tend to be longer-term fixed rate instruments, interest rate
swaps in which the Corporation pays a floating rate and receives a fixed
rate are used to reduce the impact of changes in interest rates on the
Corporation's net interest income.
During 1995, $10 million of such "pay floating" swaps were entered
into by the Corporation. The net amount payable or receivable from
interest-rate swap agreements is accrued as an adjustment to interest
income. No interest-rate swap contracts were outstanding at December 31,
1994, and the contract entered into by the Corporation during 1995 expires
in August 1997. The impact of the interest-rate swap on net interest
income during 1995 was not material.
The Corporation's current credit exposure on swaps is limited to the
value of interest-rate swaps that have become favorable to the Corporation.
At December 31, 1995, the market value of interest-rate swaps in a
favorable value position was $121. Credit risk also exists when the
counterparty to a derivative contract with an unrealized gain fails to
perform according to the terms of the agreement.
Note 14. Fair Values of Financial Instruments
Statement of Financial Accounting Standard No. 107 (SFAS No. 107),
"Disclosures about Fair Value of Financial Instruments," requires all
entities to disclose the estimated fair value of its financial instruments
whether or not recognized in the balance sheet. For Univest, as for most
financial institutions, substantially all of its assets and liabilities are
considered financial instruments as defined in FAS 107. Many of the
Corporation's financial instruments, however, lack an available trading
market as characterized by a willing buyer and willing seller engaging in
an exchange transaction. It is also the Corporation's general practice and
intent to hold its financial instruments to maturity and to not engage in
trading or sales activities other than residential mortgage loans held for
sale and those investment securities classified as available for sale.
Significant estimations and present value calculations, which are
significantly affected by the assumptions used, including the discount rate
and estimate of future cash flows, were used by the Corporation for the
purposes of this disclosure.
Estimated fair values have been determined by the Corporation using
the best available data, and an estimation methodology suitable for each
category of financial instruments. For those loans and deposits with
floating interest rates, it is presumed that estimated fair values
generally approximate the recorded book balances. Various methodologies
are described in the accompanying notes.
SFAS No. 107 excludes certain financial instruments and all
nonfinancial instruments from its disclosure requirements. Accordingly,
the aggregate fair value amounts presented do not represent the underlying
value of the Corporation.
Management is concerned that reasonable comparability between
financial institutions may not be likely due to the wide range of permitted
valuation techniques and numerous estimates which must be made given the
absence of readily available active secondary market valuations for many of
the financial instruments. This lack of uniform valuation methodologies
also introduces a greater degree of subjectivity to these estimated fair
values. Certain estimated fair values cannot be substantiated by
comparison to independent valuation sources and, in many cases, might not
be realized in immediate settlement of the instrument.
The following table represents the estimates of fair value of
financial instruments:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
Carrying or Carrying or
Notional/Contract Fair Notional/Contract Fair
Amount Value Amount Value
<S> <C> <C> <C> <C>
Assets
Cash and short-term assets $ 47,884 $ 47,884 $ 42,526 $ 42,526
Investment securities 224,519 226,745 202,060 197,940
Net loans 577,117 568,533 571,903 553,648
Liabilities
Demand deposits and savings deposits 377,625 377,625 387,015 387,015
Time deposits 347,402 347,798 312,058 307,635
Short-term borrowings 46,812 46,812 44,923 44,923
Long-term debt 4,085 4,085 9,438 8,903
Off-Balance-Sheet
Commitments to extend credit 123,858 (158) 120,277 (190)
Letters of credit 20,100 (302) 19,663 (295)
Interest-rate swap, notional
principal amount 10,000 121 - -
</TABLE>
The following methods and assumptions were used by the Corporation in
estimating its fair value disclosures for financial instruments:
Cash and due from banks and short-term investments: The carrying
amounts reported in the balance sheets for cash and due from banks, time
deposits with other banks, and federal funds sold and other short-term
investments approximates those assets' fair values.
Investment securities (including mortgage-backed securities): Fair
values for investment securities are based on quoted market prices.
Loans: For variable rate loans that reprice frequently and with no
significant change in credit risk, fair values are based on carrying
values. The fair values for other loans are estimated using discounted
cash flow analyses, using interest rates currently being offered for loans
with similar terms to borrowers of similar credit quality. The carrying
amount of accrued interest approximates its fair value.
Off-balance-sheet instruments: Fair values for the Corporation's off-
balance-sheet instruments are based on the fees currently charged to enter
into similar agreements, taking into account the remaining terms of the
agreements and the counterparties' credit standing.
Deposit liabilities: The fair values disclosed for demand deposits
(e.g., interest and noninterest checking, passbook savings, and certain
types of money market accounts) are, by definition, equal to the amount
payable on demand at the reporting date (i.e., their carrying amounts).
The carrying amounts for variable-rate, fixed-term money market accounts
and certificates of deposit approximate their fair values at the reporting
date. Fair values for fixed-rate certificates of deposit are estimated
using a discounted cash flow calculation that applies interest rates
currently being offered on certificates to a schedule of aggregated
expected monthly maturities on time deposits.
Short-term borrowings: The carrying amounts of securities sold under
repurchase agreements, and other short-term borrowings approximate their
fair values.
Long-term debt: The fair values of the Corporation's long-term
borrowings (other than deposits) are estimated using discounted cash flow
analyses, based on the Corporation's current borrowing rates for similar
types of borrowing arrangements.
Note 15. Parent Company Financial Information
Condensed financial statements of Univest, Parent Company only, follow:
<TABLE>
<CAPTION>
Balance Sheets
December 31,
1995 1994
<S> <C> <C>
Assets:
Deposits with bank subsidiary $ 72 $ 11
Loan to non-bank subsidiary 275 275
Investments in U.S. Government obligations
held to maturity 1,999 5,838
Investments in subsidiaries,
at equity in net assets:
Banks 83,391 76,442
Non-banks 5,392 4,293
Other assets 1,725 1,228
Total assets $92,854 $ 88,087
Liabilities:
Dividends payable $ 1,192 $ 941
Subordinated note - 5,000
Other liabilities 2,326 1,988
Total liabilities 3,518 7,929
Shareholders' equity 89,336 80,158
Total liabilities and shareholders' equity $92,854 $ 88,087
</TABLE>
<TABLE>
<CAPTION>
Statements of Income
Year ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Dividends from banks $ 5,251 $ 5,626 $ 6,206
Other income 6,479 6,358 5,290
Total operating income 11,730 11,984 11,496
Operating expenses 6,675 6,479 5,983
Income before income tax benefit and equity in
undistributed income of subsidiaries 5,055 5,505 5,513
Applicable income tax expense (benefit) (27) 1 (200)
Income before equity in undistributed income
of subsidiaries 5,082 5,504 5,713
Equity in undistributed income (loss) of subsidiaries:
Banks 6,205 4,656 3,604
Non-banks (60) (40) 40
Income before cumulative effect of a change
in accounting principle 11,227 10,120 9,357
Cumulative effect of a change in accounting principle - - (570)
Net income $ 11,227 $ 10,120 $ 8,787
</TABLE>
<TABLE>
<CAPTION>
Statements of Cash Flows
Year ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 11,227 $ 10,120 $ 8,787
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of a change in accounting principle - - 570
Equity in undistributed net income of subsidiaries (6,145) (4,616) (3,644)
(Increase) decrease in other assets (750) (338) 164
Depreciation of premises and equipment 253 268 265
Increase (decrease) in other liabilities 338 430 (28)
Net cash provided by operating activities 4,923 5,864 6,114
Cash flows from investing activities:
Proceeds from maturities of securities held to maturity 5,838 1,899 -
Purchases of investment securities held to maturity (1,999) (4,835) -
Proceeds from maturities of securities - - 1,737
Purchases of investment securities - - (2,903)
Investment in non-bank subsidiaries (1,160) (600) (400)
Net cash provided by (used in) investing activities 2,679 (3,536) (1,566)
Cash flows from financing activities:
Repayment of subordinated note (5,000) (750) (1,750)
Cash dividends (2,541) (2,290) (2,102)
Net cash used in financing activities (7,541) (3,040) (3,852)
Net increase (decrease) in deposits with bank subsidiary 61 (712) 696
Deposits with bank subsidiary at beginning of year 11 723 27
Deposits with bank subsidiary at end of year $ 72 $ 11 $ 723
</TABLE>
During 1995, 1994, and 1993, the parent company made income tax
payments of $4,250, $4,150, and $4,116, respectively, and made interest
payments of $305, $538, and $598, respectively.
Dividend and Other Restrictions
The approval of the Comptroller of the Currency is required for a
national bank to pay dividends if the total of all dividends declared in
any calendar year exceeds the bank's net profits (as defined) for that
year combined with its retained net profits for the preceding two
calendar years. Under this formula, Union can declare dividends in 1996
without approval of the Comptroller of the Currency of approximately
$10,835 plus an additional amount equal to the Bank's net profits for
1996 up to the date of any such dividend declaration.
The Federal Reserve Act requires that extension of credit by the
Bank to certain affiliates, including Univest (parent), be secured by
readily marketable securities, that extension of credit to any one
affiliate be limited to 10% of the Bank's capital and surplus as defined,
and that extensions of credit to all such affiliates be limited to 20% of
Union's capital and surplus.
Note 16. Quarterly Data (Unaudited)
The unaudited results of operations for the quarters for the years ended
December 31, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1995 Quarterly Financial Data
December 31 September 30 June 30 March 31
<S> <C> <C> <C> <C>
Interest income $ 16,350 $ 16,051 $ 15,687 $ 15,457
Interest expense 6,784 6,601 6,524 6,054
Net interest income 9,566 9,450 9,163 9,403
Provision for loan losses 550 500 423 422
Net interest income after provision for loan losses 9,016 8,950 8,740 8,981
Other income 1,577 1,407 1,638 1,473
Other expenses 6,968 5,867 6,294 6,429
Income before income taxes 3,625 4,490 4,084 4,025
Applicable income taxes 1,080 1,418 1,267 1,232
Net income $ 2,545 $ 3,072 $ 2,817 $ 2,793
Per share data:*
Net earnings per share $ .65 $ .78 $ .72 $ .71
Dividends per share $ .304 $ .136 $ .136 $ .136
<CAPTION>
1994 Quarterly Financial Data
December 31 September 30 June 30 March 31
<S> <C> <C> <C> <C>
Interest income $ 14,915 $ 14,345 $ 13,632 $ 13,029
Interest expense 5,842 5,391 5,058 4,982
Net interest income 9,073 8,954 8,574 8,047
Provision for loan losses 315 345 645 645
Net interest income after provision for loan losses 8,758 8,609 7,929 7,402
Other income 1,385 1,434 1,307 1,446
Other expenses 5,902 6,188 5,794 5,729
Income before income taxes 4,241 3,855 3,442 3,119
Applicable income taxes 1,334 1,195 1,056 952
Net income $ 2,907 $ 2,660 $ 2,386 $ 2,167
Per share data:*
Net earnings per share $ .74 $ .68 $ .61 $ .55
Dividends per share $ .24 $ .12 $ .12 $ .12
</TABLE>
* Per share data has been restated to give effect to a twenty-five
percent stock dividend declared on November 22, 1995 to shareholders of
record as of February 15, 1996, payable on March 1, 1996.
Report of Independent Auditors
Board of Directors and Shareholders
Univest Corporation of Pennsylvania
We have audited the accompanying consolidated balance sheets of
Univest Corporation of Pennsylvania as of December 31, 1995 and 1994, and
the related consolidated statements of income, changes in shareholders'
equity, and cash flows for each of the three years in the period ended
December 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Univest Corporation of Pennsylvania at December 31,
1995 and 1994, and the consolidated results of its operations and its
cash flows for each of the three years in the period ended December 31,
1995, in conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, in 1994 the
Company changed its method of accounting for certain investments in debt
and equity securities and in 1993 changed its method of accounting for
postretirement benefits other than pensions.
/S/Ernst & Young LLP
Philadelphia, Pennsylvania
January 19, 1996
<TABLE>
Five-Year Performance Highlights
<CAPTION>
Earnings Per Share: Average Deposits: (Millions of Dollars)
<S> <C> <C> <C>
1991 1.95 1991 638.6
1992 2.15 1992 655.8
1993 2.24 1993 663.5
1994 2.58 1994 669.5
1995 2.86 1995 695.8
<CAPTION>
Average Loans: Income Before Change in Accounting Principles
(Millions of Dollars) (Millions of Dollars)
<S> <C> <C> <C>
1991 527.7 1991 7.66
1992 549.8 1992 8.41
1993 562.6 1993 9.36
1994 583.6 1994 10.12
1995 583.8 1995 11.23
</TABLE>
<TABLE>
<CAPTION>
Selected Financial Data
(In Thousands, except per share data)
Year ended December 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Total assets $881,888 $847,154 $789,887 $791,335 $756,536
Long-term obligations 4,085 9,438 10,277 7,585 9,500
Interest income 63,545 55,921 54,402 58,612 66,553
Net interest income 37,582 34,648 31,633 29,835 27,727
Provision for loan losses 1,895 1,950 2,480 2,852 1,895
Net income 11,227 10,120 8,787 8,414 7,656
Net income per share* $ 2.86 $ 2.58 $ 2.24 $ 2.15 $ 1.95
Dividends declared per share* .712 0.60 0.56 0.50 0.46
</TABLE>
* Per share data has been restated to give effect to a twenty-five
percent stock dividend, declared on November 22, 1995 to shareholders of
record as of February 15, 1996, payable on March 1, 1996.
Management's Discussion And Analysis Of Financial Condition And Results
Of Operations
Results of Operations
Univest Corporation of Pennsylvania's consolidated net income (in
thousands) and earnings per share for 1995, 1994, and 1993 were as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Net income $11,227 $10,120 $8,787
Earnings per share $ 2.86 $ 2.58 $ 2.24
</TABLE>
The prior-period per share amounts have been restated to reflect the
twenty-five percent stock dividend declared on November 22, 1995 to
shareholders of record as of February 15, 1996, payable on March 1, 1996.
1995 versus 1994
The 1995 results compared to 1994 include the following significant
pretax components:
- Net interest income rose $2.9 million or 8.5% due to a 4.6%
increase in average earning assets and a 4.3% increase in the net
interest margin.
- Salaries and benefits expense increased 7.3% or $900,000 due to
staff additions in response to the opening of new branch
locations, and normal salary increases.
- Net occupancy expense increased $191,000 or 11.5% due to the
addition of several branch locations in 1994 and 1995.
- Other expenses increased $662,000 or 8.5% due to costs associated
with the disposition of other real estate owned, less reduction of
deposit insurance during 1995.
1994 versus 1993
The 1994 results compared to 1993 include the following
significant pretax components:
- Net interest income rose $3.0 million or 9.5% due to an increase
in average earning assets of 2.5% and an increase in the net
interest margin of 7.0%.
- The provision for loan losses decreased $530,000 or 21.4% due to
an improvement in asset quality.
- Other income decreased $879,000 or 13.6% due to a reduction of
$968,000 in the gains on sales of mortgages which resulted from the
sharp rise in interest rates during 1994.
- Salaries and benefits expense increased $639,000 or 5.4% due to
staff additions and normal salary increases.
- Other expense increased $666,000 or 9.3% due in part to expenses
associated with other real estate owned. 1993 net income also
includes the cumulative effect of the adoption of FASB Statement
No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions," which reduced net income in 1993 by
$570,000.
Net interest Income
Net interest income is the difference between interest earned on
loans, investments and other earning assets and interest paid on deposits
and other interest-bearing liabilities. Net interest income is the
principal source of the Corporation's revenues. The following table
demonstrates a trend of increasing amounts for 1993 through 1995.
Sensitivities associated with the mix of assets and liabilities are
numerous and very complex, thus the Corporation commits significant time
to maximizing the net interest margin. The Asset/Liability Management
and Investment Committees, along with the Funds Management Department,
work to implement strategies with the intent and effort to at least
maintain or improve the net interest margin.
The investment portfolio is and has been primarily short-term in
nature, resulting in frequent repricing opportunities for Univest over
the three (3) year period analyzed in this report. Investments maturing
during the year 1994 were replaced with purchases at higher yields. It
is important to again underscore the complexities associated with
asset/liability pricing noting the competition within the marketplace
that can dramatically impact the margin results. For this reason, as we
look to the future, it must be understood that an improving or increasing
net interest income is not certain. As discussed later in this section,
Univest maintains a short-term positive gap resulting from a large
floating-rate loan portfolio.
The following table presents a summary of Univest's average
balances, the yields earned on average assets, the cost of average
liabilities, and shareholders' equity for the years ended December 31,
1995, 1994, and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
Interest Interest Interest
Average Income/ Average Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate Balance Expense Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Investments $203,266 $12,223 6.0% $166,364 $ 8,247 4.9% $169,819 $ 8,580 5.0%
Loans 583,820 51,322 8.8% 586,206 47,674 8.1% 564,395 45,822 8.1%
Total interest-earning assets 787,086 63,545 8.1% 752,570 55,921 7.4% 734,214 54,402 7.4%
Non interest-earning assets 56,946 57,026 52,586
Total assets $844,032 $809,596 $786,800
Interest-bearing liabilities:
Deposits $596,237 24,049 4.0% $574,690 19,413 3.4% $575,046 21,155 3.7%
Borrowings 47,177 1,914 4.1% 48,620 1,860 3.8% 44,075 1,614 3.7%
Total interest-bearing liabilities 643,414 25,963 4.0% 623,310 21,273 3.4% 619,121 22,769 3.7%
Noninterest-bearing liabilities 115,526 109,822 98,362
Total liabilities 758,940 733,132 717,483
Shareholders' equity 85,092 76,464 69,317
Total liabilities and
shareholders' equity $844,032 $809,596 $786,800
Net interest income $37,582 $34,648 $31,633
Interest-rate spread 4.1% 4.0% 3.7%
Net interest margin on weighted
average interest-earning assets 4.8% 4.6% 4.3%
Ratio of average interest-earning
assets to average interest-bearing
liabilities 122.3% 120.7% 118.6%
</TABLE>
Interest Income
Interest and fees on loans increased 7.6% or $3.6 million from the
$47.7 million recorded for the year ended December 31, 1994, as compared
to the $51.3 million for the year ended December 31, 1995. Interest and
fees on loans also increased $1.9 million or 4.2% when comparing the
$47.7 million for 1994 to the $45.8 million for 1993. The increase for
both periods was due to the positive impact of prime rate increases
throughout 1994 and into 1995, from 6.0% at January 1, 1994 to 9.0% at
July 7, 1995 when it decreased to 8.8%, with another decrease to 8.5% at
December 20, 1995. Repricing of adjustable rate residential real estate
loans and increased volume also contributed to the increase.
Tax-free interest remained constant at $1.9 million when comparing
December 31, 1995 to December 31, 1994. Tax-free interest decreased from
$2.1 million in 1993 to $1.9 million in 1994.
Interest on U.S. Government obligations increased from $6.4 million
for the year ended December 31, 1994 to $10.4 million at December 31,
1995 and also increased from $5.6 million at December 31, 1993 to $6.4
million at December 31, 1994. The increases in both periods were due to
increased yields and volume. Investments maturing during 1994 were
replaced with purchases at higher yields. In addition, proceeds from
deposit growth were used to acquire additional investment securities.
Interest and dividends on state and political subdivisions remains
constant, increasing from $95 thousand in 1994 to $118 thousand in 1995.
Year end December 31, 1994 showed a decrease to $95 thousand from $125
thousand for 1993. Volume increased slightly in 1995 after decreasing in
1993 and 1994.
The other securities category consists mainly of U.S. Government
Agency obligations. Income on other securities remained stable at $1.0
million for both years ended December 31, 1995 and 1994. Interest income
on other securities decreased 54.6% or $1.2 million from $2.2 million in
1993 to $1.0 million in 1994. This decrease was due to prepayments,
maturities, and sales of mortgage-backed agency obligations.
Interest on federal funds sold is the resulting daily investment
activity that can be volatile in both interest rate and volume. Interest
on federal funds sold decreased from $661 thousand in 1994 to $616
thousand in 1995 due to decreased volume offset by increased yield.
Income increased from $407 thousand in 1993 to $661 thousand in 1994
which resulted from higher yields and increased volume.
Interest Expense
Interest expense on deposits decreased 5.9% or $200 thousand from
$3.4 million in 1994 to $3.2 million in 1995. The decrease was due to
lower volume. For the year ended December 31, 1994, interest expense on
demand deposits decreased 19.1% or $800 thousand from $4.2 million in
1993 to $3.4 million in 1994, due to lower yields and reduced volume.
Interest expense on savings deposits remained stable decreasing from
$3.2 million in 1994 to $3.1 million in 1995 and increasing from $3.1
million in 1993 to $3.2 million in 1994.
Interest expense on time deposits for the year ended December 31,
1995 was $17.8 million which is 39.06% or $5.0 million more than the
$12.8 million paid in 1994. This increase was due to higher volume and
increase yields. Interest expense on time deposits decreased from $13.9
million in 1993 to $12.8 million in 1994, a decrease of $1.1 million or
7.9%. The decrease was due to lower yields, particularly during the
first and second quarters of 1994.
Interest expense - all other, consists of interest paid on short-
term borrowings such as federal funds purchased, the corporate line of
credit, repurchase agreements and treasury tax and loan deposit. In
addition, Union National Bank offers an automated cash management
checking account that sweeps funds daily into a repurchase agreements
account. Interest expense increased to $1.6 million in 1995 from $1.3
million in 1994 and $820 thousand in 1993. Increases were due to both
higher volumes and increased rates due to the increase in short-term
interest rates during 1994 and the first half of 1995.
Long-Term Debt
Interest on long-term debt decreased from $565 thousand in 1994 to
$314 in 1995 due to the redemption, during 1995, of $5.0 million of
subordinated debt which was incurred by the Corporation in 1990 to
partially finance the acquisition of Pennview Savings Bank.
Additionally, a long-term capital lease obligation to finance data
processing equipment, whose balance at December 31, 1994 was $353
thousand, was paid in full during 1995. The remaining long-term debt of
$4.1 million as of December 31, 1995 represented borrowings by Pennview
Savings Bank, for liquidity purposes from the Federal Home Loan Bank
(FHLB) of Pittsburgh. Interest on long-term debt for the year ended
December 31, 1994 was $565 thousand as compared to $794 thousand in 1993.
The 1994 decrease was due mainly to a $750 thousand payment on the
subordinated debt during 1994.
Allowance For Loan Losses
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 changes 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 factors may cause the
provision to fluctuate. The provision for loan losses for the year ended
December 31, 1995 was $1.9 million as compared to $2.0 million for 1994
and $2.5 million for 1993.
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
loans initial effective rate or the fair value of collateral for certain
collateral dependent loans. Included in total impaired loans is $1.7
million against which $728 thousand of the allowance for loan losses is
allocated. At December 31, 1995 the recorded investment in loans that
are considered to be impaired under Statement 114 was $3.8 million (all
of which were on a nonaccrual basis). For the year ended December 31,
1995, the Corporation recognized $34 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 past 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 judgement 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 period of time and the ultimate collectibility of
the total contractual principal and interest is no longer in doubt. Total
cash basis restructured and nonaccrual loans at December 31, 1995 total
$6.3 million (versus $5.6 million at December 31, 1994 and $7.0 million
at December 31, 1993) and consist mainly of real estate related
commercial loans. For the year ended December 31, 1995 nonaccrual loans
resulted in lost interest income of $530 thousand as compared to $567
thousand in 1994 and $661 thousand in 1993. 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. The ratio of the allowance for loan losses to total loans
at December 31, 1995 and 1994 is 1.5%. The Corporation's ratio of
nonperforming assets to total loans was 1.1% as of December 31, 1995 and
1.3% as of December 31, 1994.
During the first quarter of 1995, the Office of the Comptroller of
the Currency completed a safety and soundness examination at Union
National Bank, the Corporation's subsidiary commercial bank and during
the second quarter of 1995, a similar examination was completed by the
Pennsylvania State Department of Banking at Pennview Savings Bank. The
dollar value of identified potential problem loans was not revised
significantly as a result of either examination. Examination procedures
require individual judgements about the borrower's ability to repay
loans, sufficiency of collateral values, and the effects of changing
economic circumstances. The procedures are similar to those employed by
the Corporation in determining the adequacy of the allowance for loan
losses and in classifying loans. Judgements made by regulatory examiners
may differ from those made by management.
At December 31, 1995 the Corporation has approximately $735 thousand
of Other Real Estate Owned ("OREO") consisting of one commercial property
and one single-family residence. This amount is recorded in "Other
Assets" at the lower of cost or fair market value in the accompanying
consolidated balance sheets. At December 31, 1994, the Corporation had
approximately $1.7 million in OREO. The decrease was due to the disposal
of two commercial properties during the fourth quarter of 1995 which
necessitated a write-off during the year ended December 31, 1995 of $1.1
million of which $800 thousand was recorded during the fourth quarter.
This amount is included in other expense in the consolidated statements
of income. During 1994 a provision of $300 thousand was recorded in
other expense for these two commercial properties.
Noninterest Income
Trust income continues to be a major source of noninterest income,
generating fee income for the year ended December 31, 1995 of $2.0
million which was $200 thousand or 11.1% more than the $1.8 million
reported for year end December 31, 1994 versus an increase of 12.5% or
$200 thousand from 1993 to 1994. The increases result from increases in
the market value of assets under management, particularly in 1995, and
increase in the volume of trust accounts.
Service charges on demand deposits remained constant at $1.6 million
for the years ended December 31, 1995, 1994, and 1993. The Corporation's
pricing committee continuously monitors the entire fee structure and
process.
Other income which is noninterest related consists mainly of general
fee income and other miscellaneous nonrecurring types of income. It also
includes various types of service charges, such as ATM fees, overdraft
fees, and safe deposit box rent. Other noninterest income of $2.4 million
for 1995 is 9.1% or $200 thousand more than the $2.2 million shown for
1994. The 1994 income of $2.2 million is 4.3% or $100 thousand less than
the $2.3 million shown for 1993.
Asset Sales
Sales of mortgage loans during the year ended December 31, 1995
resulted in a pretax gain of $101 thousand as compared to a loss of $12
thousand for the year ended December 31, 1994. The increase resulted
from decreasing long-term rates during 1995. The Corporation currently
sells all long-term fixed rate residential mortgage loans with terms in
excess of fifteen (15) years. For the year ended December 31, 1994 sales
of mortgage loans provided a pretax loss of $12 thousand as compared to a
pretax gain of $956 thousand for the year ended December 31, 1993. The
decrease was due to a sharp increase in long-term rates which
considerably decreased mortgage origination volume especially in the area
of refinancing which was extremely popular during the low rate
environment of 1993.
During 1995 U.S. Treasury Notes totaling approximately $15 million
were sold from the available-for-sale portfolio at a net loss of $66
thousand. These securities were sold to provide future yield enhancement
and extend maturities. In 1994 securities totaling approximately $7.2
million were sold from the available-for-sale account and a net loss of
$27 thousand was recorded. The Corporation did not sell any investment
securities during the year ended December 31, 1993. The total of debt and
equity securities held in the available-for-sale account as of December
31, 1995 is $56 million versus $30 million at December 31, 1994. The
cumulative unrealized gain of $261 thousand, net of taxes, has been
credited to shareholders' equity as of December 31, 1995. On November 15,
1995, the FASB staff issued a Special Report, "A Guide to Implementation
of Statement 115 on Accounting for Certain Investments in Debt and Equity
Securities." In accordance with provisions in that Special Report, the
Corporation chose to reclassify securities from held-to-maturity to
available-for-sale. At the date of transfer, the amortized cost of those
securities was $32.0 million and the unrealized loss on those securities
was $93 thousand, which is included in shareholders' equity.
Noninterest Expense
The operating costs of the Corporation are known as other expense,
and include, but are not limited to, salaries and benefits, equipment
expense, and occupancy costs. Expense control is very important to the
management of the Corporation, and every effort is made to contain and
minimize the growth of operating expenses, while attempting to provide
technological innovation whenever practical, as operations change or
expand. Salaries and benefits increased $900 thousand or 7.3% from $12.4
million in 1994 to $13.3 million in 1995. Salaries and benefits also
increased 5.08% or $600 thousand from $11.8 million in 1993 to $12.4
million in 1994. The increases were due to normal salary and staff
increases and the opening of four additional offices during 1995 and one
in 1994. A serious effort to contain salaries and benefits is being made
by management with an ongoing goal to work "smarter" being communicated
throughout the organization.
Net occupancy expense increased by 11.8% or $200 thousand from $1.7
million for the year ended December 31, 1994 to $1.9 million at December
31, 1995. The increases were mainly due to the opening of four
additional locations and the expansion to larger facilities of two
locations. For the year ended 1994 occupancy expense increased 6.3% or
$100 thousand from $1.6 million as of December 31, 1993 to $1.7 million
as of December 31, 1994. This increase was due to routine property cost
increases and the addition of a new branch. Equipment expense increased
11.8% from $1.7 million in 1994 to $1.9 million in 1995, an increase of
$200,000. Equipment also increased $100 thousand or 6.2% from $1.6
million in 1993 to $1.7 million in 1994. Both increases were due to
additional equipment costs for the new or expanded branch locations.
Other expenses of $8.5 million increased $700 thousand or 9.0% for
the year ended December 31, 1995 as compared to $7.8 million expense for
1994. The increase is mainly due to the write-down of other real estate
owned of $1.1 million. Increases in consulting and student loan
processing fees added to the increase. The increase was offset in part
by a decrease of approximately $550 thousand due to the reduction of
Federal Deposit Insurance Corporation (FDIC) premiums paid by Union
National Bank. Due to the Bank Insurance Fund (BIF) reaching its 1.25%
reserve requirement, members of the BIF began paying premiums of 4 basis
points on insured deposits during third and fourth quarters of 1995.
Previously Union paid 23 basis points. Beginning in the first quarter of
1996, Union National will pay a minimum annual premium of $2 thousand.
The $7.8 million for 1994 exceeds the 1993 expense of $7.2 million by
$600 thousand or 8.3%. The increase was mainly due to the write-down of
other real estate owned of $300 thousand, along with increased
advertising, postage and acquisition costs associated with the
acquisition of a branch location. Other expense includes but is not
limited to items such as data processing, goodwill amortization,
marketing, audit, exam, legal and other fees, other taxes, along with
insurance, printing, stationery, supplies and contributions, any of which
can fluctuate up or down in a given year.
Spurred by pressures of the budget reconciliation process, both the
House and Senate Banking Committees approved separate bills during the
week of September 18, 1995 that include, among other items, a special one-
time assessment to recapitalize the Savings Association Insurance Fund
(SAIF) of which Pennview Savings Bank is a member. The one-time
assessment of 85 basis points of insured deposits as of March 31, 1995 is
intended to recapitalize the SAIF to the required 1.25% of insured
deposits and could be payable in early 1996. Should the bill pass in its
present form, the Corporation would be required to make a one-time pretax
charge to earnings of approximately $1.1 million. Succeeding deposit
premiums beginning in 1996 may be reduced from the current level of 23
basis points to 4.5 basis points which will benefit the Corporation in
future periods.
Effective January 1, 1993, the Corporation adopted Statement of
Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" (SFAS 106). SFAS 106
requires that employers accrue the costs associated with providing
postretirement benefits during the active service periods of employees,
rather than the previously accepted accounting practice of recognizing
these costs on a pay-as-you-go-basis. As permitted under SFAS 106, the
Corporation 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 accounting principle.
Adoption of SFAS 106 did not have a material impact on salaries and
benefits expense in 1995 or 1994.
Tax Provision
The provision for income taxes was $5 million in 1995 compared to
$4.5 million in 1994 and $4.1 million in 1993. The increases in each year
were the result of higher pretax book income. The provision for income
taxes for 1995, 1994 and 1993 were at effective rates of 30.8%, 31.0% and
30.6%, respectively.
As of December 31, 1995, the Corporation's net deferred tax asset
was $2.3 million. Realization of this asset over time is dependent in
part upon the Corporation generating earnings in future periods. In
determining that the realization of the deferred tax asset was "more
likely than not," the Corporation gave consideration to a number of
factors, including its recent earnings history and its expectations for
earnings in the future and concluded that no valuation allowance was
necessary at December 31, 1995. The Corporation will continue to review
the tax criteria of "more likely than not" for the recognition of the
deferred tax asset on a quarterly basis.
Financial Condition
During 1995, total assets increased to $881.9 million, an increase
of $34.7 million or 4.1% over the $847.2 million in 1994. Investment
securities increased $22.4 million to $224.5 million as compared to the
$202.1 million at December 31, 1994, which resulted from the growth in
total deposits of $25.9 million from $699.1 million at December 31, 1994
to $725 million at December 31, 1995. Deposit growth was aided by the
purchase of approximately $13.0 million of deposit liabilities during the
fourth quarter of 1995.
Federal funds sold increased from $6.8 million at December 31, 1994
to $16.5 million at December 31, 1995, an increase of $9.7 million.
Total loans increased by $5.2 million from $580.8 million at
December 31, 1994 to $586.0 million at December 31, 1995.
Long-term debt decreased $5.0 million due to the redemption during
1995 of subordinated debt, which was incurred by the Corporation in 1990
to partially finance the acquisition of Pennview Savings Bank.
Shareholders' equity increased $9.1 million or 11.4% to $89.3
million compared to $80.2 million at December 31, 1994. Dividends on a
declared basis increased 18.7% from $.60 for the year ended December 31,
1994 to $.712 for the year ended December 31, 1995. The Corporation's
Board of Directors on November 22, 1995 declared a twenty-five percent
stock dividend to all shareholders of record as of February 15, 1996,
payable on March 1, 1996.
Asset/Liability Management, Liquidity
The primary functions of Asset/Liability Management are to assure
adequate liquidity while maintaining an appropriate balance between
interest-earning assets and interest-bearing liabilities. Liquidity
management involves the ability to meet cash flow requirements of
customers. Interest rate sensitivity management seeks to avoid
fluctuating net interest margins and to enhance consistent growth of net
interest income through periods of changing rates. Univest analyzes its
position by the use of Gap analysis, flow of funds reports, and a
simulation model. More emphasis continues to be placed on the
simulations which show the impact of different rate environments and
their respective projected results relative to the current balance sheet
makeup.
Univest focuses on the management of the one year interest rate
sensitivity gap. The one-year cumulative gap, which reflects the
Corporation's interest sensitivity over that period of time was
positive at December 31, 1995. This positive or asset-sensitive gap will
generally benefit the Corporation's net interest rate margin in a rising
interest rate environment while falling interest rates will negatively
impact the Corporation. The Corporation remains asset sensitive mainly
as a result of a large floating rate portfolio held by the commercial
bank subsidiary. The floating loans mentioned here are tied to prime,
and fall into the one-month gap category causing the asset-sensitive
position.
The Corporation is permitted to use interest-rate swap agreements
which convert a portion of its floating rate commercial loans to a fixed
rate basis, thus reducing the impact of interest changes on future
income. In these swaps, the Corporation agrees to exchange, at specified
intervals, the difference between fixed and floating-interest amounts
calculated on an agreed upon notional principal amount. Because the
Corporation's interest-earning assets tend to be short-term floating rate
instruments while the Corporation's interest-bearing liabilities tend to
be longer-term fixed rate instruments, interest rate swaps in which the
Corporation pays a floating rate and receives a fixed rate are used to
reduce the impact of changes in interest rates on the Corporation's net
interest income.
During 1995, $10 million of "pay floating" swaps were entered into
by the Corporation. The net payable or receivable from interest-rate
swap agreements is accrued as an adjustment to interest income. No
interest-rate swap contracts were outstanding at December 31, 1994, and
the contract entered into by the Corporation during 1995 expires in
August 1997. The impact of the interest rate swap on net interest income
during 1995 was not material.
The Corporation's current credit exposure on swaps is limited to the
value of interest-rate swaps that have become favorable to the
Corporation. At December 31, 1995, the market value of and the net fair
value of interest-rate swaps in a favorable value position was $121
thousand. Credit risk also exists when the counterparty to a derivative
contract with an unrealized gain fails to perform according to the terms
of the agreement.
Capital Adequacy
Shareholders' equity at December 31, 1995 was $89.3 million or 10.1%
of total assets compared to shareholders' equity of $80.2 million or 9.5%
as of December 31, 1994. December 31, 1995 shareholders' equity includes
a positive adjustment of $261 thousand related to the unrealized security
gains, net of taxes on investment securities available for sale, while
shareholders' equity at December 31, 1994 includes net unrealized
securities losses of $482 thousand.
Capital guidelines which banking regulators have adopted assign
minimum capital requirements for categories of assets depending on their
assigned risks. The components of risk-based capital are Tier 1, which
is composed of total shareholders' equity, excluding the adjustment for
the unrealized securities gains and losses, and also excluding any
goodwill, Tier II, also includes the applicable portion of the allowance
for possible loan losses and applicable adjustment for subordinated debt.
Minimum acquired Tier II total risk-based capital is 8.0%. Under the
requirements, Univest has Tier I capital ratios of 13.8% and 12.7%, and
total risk-based capital ratio of 15.0% and 14.3% at December 31, 1995
and 1994, respectively. These ratios place Univest in the "well-
capitalized" category under regulatory standards.
<TABLE>
Capital Analysis
<CAPTION>
December 31, 1995 December 31, 1994
Minimum Minimum
Actual Requirement Excess Actual Requirement Excess
<S> <C> <C> <C> <C> <C> <C>
Tier I Capital $86,222 $25,050 $61,172 $78,101 $24,680 $53,421
Total Risk-Based Capital $94,050 $50,100 $43,950 $88,314 $49,361 $38,953
Risk Weighted Assets $626,255 $617,008
Capital Ratios
Tier I Capital 13.8% 4.0% 9.8% 12.7% 4.00% 8.7%
Total Risk-Based Capital 15.0% 8.0% 7.0% 14.3% 8.00% 6.3%
</TABLE>
Supplementary Information
Range of Market Prices
The following table shows the range of market values of the
Corporation's stock. The Trust Department, Union National Bank and Trust
Company, serves at the Corporation's Stock Transfer Agent and Registrar
and Dividend Disbursement Agency pursuant to the trust powers of national
banks. The prices shown on this page represent transactions between
dealers and do not include retail markups, markdowns, or commissions.
<TABLE>
<CAPTION>
High Low
<S> <C> <C>
1995
January - March 35 1/2 34
April - June 35 1/2 34
July - September 35 1/2 34
October - December 39 3/4 34 1/2
<CAPTION>
High Low
<S> <C> <C>
1994
January - March 35 34
April - June 36 36
July - September 36 1/2 34 1/4
October - December 35 1/2 34 1/2
</TABLE>
<TABLE>
Cash Dividends Paid Per Share*
<CAPTION>
1995
<S> <C> <C>
January 2 $0.12 regular
$0.12 extra
0.24
April 1 0.136
July 1 0.136
October 1 0.136
$.0648 for the year 1995
<CAPTION>
1994
<S> <C> <C>
January 2 $0.112 regular
$0.112 extra
0.224
April 1 0.12
July 1 0.12
October 1 0.12
$.0584 for the year 1994
</TABLE>
*The cash dividends per share have been restated to give effect to a
twenty-five percent stock dividend declared on November 22, 1995 to
shareholders of record as of February 15, 1996, payable on March 1, 1996.
Supplementary Information (Cont.)
Description of Business
Univest Corporation of Pennsylvania is a multibank holding company
with banking and financial subsidiaries operating in eastern
Pennsylvania.
Union National Bank and Trust Company of Souderton, Pennsylvania has
20 offices and offers all normal commercial bank and trust services.
Pennview Savings Bank has 5 offices and emphasizes deposits from the
general public and residential mortgage loans.
Univest Leasing Corporation offers services of leasing commercial,
industrial, and institutional equipment to firms and individuals in the
same geographical area.
Univest Realty Corporation owns and manages real estate for all
subsidiaries of the holding company.
Univest Mortgage Company provides real estate financing for
individuals, with funding through the secondary mortgage market.
Univest Financial Planning Corporation provides various financial
management services to individuals and businesses within the holding
company's market area.
Univest Insurance Company, as a reinsurer, offers life and
disability insurance to individuals in connection with credit extended to
them by the bank.
Univest Electronic Services Corporation provides the data processing
operation and electronic development for all subsidiaries of the holding
company.
Securities Market
Univest Corporation of Pennsylvania stock is traded over the counter
and is generally held by individuals residing within the market area of
the Corporation as stated under Description of Business. The approximate
number of shareholders as of December 31, 1995 was 1,739.
Securities and Exchange Commission Reports
The Corporation will provide at no charge a copy of the SEC Form 10-
K annual report for the year 1995 to each shareholder who requests one in
writing after March 31, 1996. Requests should be directed to: Robert H.
Schong, Secretary, Univest Corporation of Pennsylvania, Broad and Main
Streets, Souderton, PA 18964.
UNIVEST CORPORATION OF PENNSYLVANIA
AND SUBSIDIARIES
EXHIBIT
[Item 14(c)]
Subsidiaries
(1) Union National Bank and Trust Company is chartered in the Commonwealth
of Pennsylvania.
(2) Pennview Savings Bank is chartered in the Commonwealth of Pennsylvania.
(3) Univest Leasing Corporation is chartered in the Commonwealth of
Pennsylvania.
(4) Univest Realty Corporation is chartered in the Commonwealth of
Pennsylvania.
(5) Univest Mortgage Company is chartered in the Commonwealth of
Pennsylvania.
(6) Univest Financial Planning Company is chartered in the Commonwealth of
Pennsylvania.
(7) Univest Insurance Company is chartered in the State of Arizona.
(8) Univest Electronic Services Corporation is chartered in the Commonwealth
of Pennsylvania.
All the subsidiaries do business under the above names.
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report on Form
10-K of Univest Corporation of Pennsylvania of our report dated January 19,
1996, included in the 1995 Annual Report to Shareholders (Exhibit 13) of
Univest Corporation of Pennsylvania.
/S/ERNST & YOUNG LLP
Philadelphia, Pennsylvania
January 19, 1996
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 30,901
<INT-BEARING-DEPOSITS> 456
<FED-FUNDS-SOLD> 16,527
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 56,080
<INVESTMENTS-CARRYING> 168,439
<INVESTMENTS-MARKET> 170,665
<LOANS> 585,971
<ALLOWANCE> 8,854
<TOTAL-ASSETS> 881,888
<DEPOSITS> 725,027
<SHORT-TERM> 46,812
<LIABILITIES-OTHER> 16,628
<LONG-TERM> 4,085
<COMMON> 19,638
0
0
<OTHER-SE> 69,698
<TOTAL-LIABILITIES-AND-EQUITY> 881,888
<INTEREST-LOAN> 51,322
<INTEREST-INVEST> 11,607
<INTEREST-OTHER> 616
<INTEREST-TOTAL> 63,545
<INTEREST-DEPOSIT> 24,049
<INTEREST-EXPENSE> 25,963
<INTEREST-INCOME-NET> 37,582
<LOAN-LOSSES> 1,895
<SECURITIES-GAINS> -66
<EXPENSE-OTHER> 25,558
<INCOME-PRETAX> 16,224
<INCOME-PRE-EXTRAORDINARY> 16,224
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,227
<EPS-PRIMARY> 2.86
<EPS-DILUTED> 2.86
<YIELD-ACTUAL> 4.97
<LOANS-NON> 5,855
<LOANS-PAST> 397
<LOANS-TROUBLED> 352
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 8,876
<CHARGE-OFFS> 2,494
<RECOVERIES> 577
<ALLOWANCE-CLOSE> 8,854
<ALLOWANCE-DOMESTIC> 8,854
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 5,220
</TABLE>
