<PAGE>
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For The Period Ended March 31, 1998.
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Transition Period From to .
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UNIVEST CORPORATION OF PENNSYLVANIA
-----------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1886144
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation of organization)
10 West Broad Street, Souderton, Pennsylvania 18964
---------------------------------------------------
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code (215) 721-2400
--------------
Not applicable
--------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
--- ---
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $5 par value 7,629,745
- -------------------------- ---------
(Title of Class) (Number of shares outstanding
at 3/31/98)
<PAGE>
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
INDEX
Page Number
Part I. Financial Information:
Item 1: Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets
March 31, 1998 and December 31, 1997 1
Condensed Consolidated Statements of Income
Three Months Ended March 31, 1998 and 1997 2
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1998 and 1997 3
Notes to Condensed Consolidated Financial Statements 4
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Part II. Other Information: 13
Other Information
Part III. Financial Data Schedule 15
<PAGE>
Part I.
Item 1.
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED) (SEE NOTE)
March 31, 1998 December 31, 1997
--------------- -----------------
(In thousands)
<S> <C> <C>
ASSETS
CASH AND DUE FROM BANKS $ 31,002 $ 33,352
INVESTMENT SECURITIES HELD-TO-MATURITY 153,595 146,973
(MARKET VALUE $153,833 AT 3/31/98
AND $147,206 AT 12/31/97)
INVESTMENT SECURITIES AVAILABLE-FOR-SALE 118,457 116,193
FEDERAL FUNDS SOLD AND OTHER
SHORT TERM INVESTMENTS 5,600 2,000
LOANS 639,936 635,563
LESS: RESERVE FOR POSSIBLE LOAN LOSSES (10,247) (10,270)
--------- ---------
NET LOANS 629,689 625,293
OTHER ASSETS 50,159 49,346
--------- ---------
TOTAL ASSETS $ 988,502 $ 973,157
========== =========
LIABILITIES
DEMAND DEPOSITS, NON INTEREST BEARING $ 126,779 $ 129,892
DEMAND DEPOSITS, INTEREST BEARING 193,314 176,115
SAVINGS DEPOSITS 129,140 127,965
TIME DEPOSITS 360,652 358,896
-------- -------
TOTAL DEPOSITS 809,885 792,868
SHORT-TERM BORROWINGS 43,893 49,546
OTHER LIABILITIES 20,234 17,064
LONG-TERM DEBT 9,075 9,075
--------- ---------
TOTAL LIABILITIES 883,087 868,553
SHAREHOLDERS' EQUITY
COMMON STOCK 39,272 39,272
ADDITIONAL PAID-IN CAPITAL 14,908 14,908
RETAINED EARNINGS 55,959 53,691
ACCUMULATED OTHER COMPREHENSIVE INCOME 297 350
TREASURY STOCK (5,021) (3,617)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 105,415 104,604
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 988,502 $ 973,157
========== =========
</TABLE>
NOTE: THE CONDENSED CONSOLIDATED BALANCE SHEET AT DECEMBER 31,1997 HAS BEEN
DERIVED FROM THE AUDITED FINANCIAL STATEMENTS AT THAT DATE BUT DOES NOT
INCLUDE ALL OF THE INFORMATION AND FOOTNOTES REQUIRED BY GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES FOR COMPLETE FINANCIAL STATEMENTS.
1
<PAGE>
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31,
1998 1997
(In thousands, except per share data)
INTEREST INCOME
INTEREST AND FEES ON LOANS
TAXABLE INTEREST AND FEES ON LOANS $ 12,964 $ 12,518
EXEMPT FROM FEDERAL INCOME TAXES 583 488
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TOTAL INTEREST AND FEES ON LOANS 13,547 13,006
INTEREST AND DIVIDENDS ON
INVESTMENT SECURITIES 3,855 3,619
OTHER INTEREST INCOME 189 32
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TOTAL INTEREST INCOME 17,591 16,657
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INTEREST EXPENSE
INTEREST ON DEPOSITS 7,061 6,361
OTHER INTEREST EXPENSE 540 522
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TOTAL INTEREST EXPENSE 7,601 6,883
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NET INTEREST INCOME 9,990 9,774
PROVISION FOR LOAN LOSSES 333 210
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NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 9,657 9,564
OTHER INCOME 2,595 1,824
GAINS ON SALES OF SECURITIES - 45
------- ------
TOTAL OTHER INCOME 2,595 1,869
OTHER EXPENSES
SALARIES AND BENEFITS 3,848 3,774
OTHER EXPENSES 3,310 3,267
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TOTAL OTHER EXPENSES 7,158 7,041
------- -------
INCOME BEFORE INCOME TAXES 5,094 4,392
APPLICABLE INCOME TAXES 1,534 1,379
------- -------
NET INCOME $ 3,560 $ 3,013
======= =======
PER COMMON SHARE DATA:
NET INCOME PER SHARE:
BASIC $ 0.47 $ 0.39
DILUTED $ 0.46 $ 0.39
CASH DIVIDENDS DECLARED PER SHARE $ 0.125 $ 0.115
2
<PAGE>
Univest Corporation of Pennsylvania and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
For the three months ended,
(in thousands)
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,560 $ 3,013
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses (less than) in excess of net charge-offs (23) 83
Depreciation of premises and equipment 640 609
Discount accretion on investment securities (69) (142)
Deferred (tax benefit) income tax (38) (9)
Realized gains on investment securities - (45)
Realized gains on sales of mortgages (78) (21)
Decrease in net deferred loan fees - (149)
Increase in interest receivable and other assets (952) (1,528)
Increase in accrued expenses and other liabilities 3,242 1,348
-------- --------
Net cash provided by operating activities 6,282 3,159
Cash flows from investing activities:
Proceeds from sales of securities available for sale - 15,975
Proceeds from maturing securities held to maturity 15,952 21,059
Proceeds from maturing securities available for sale 5,457 2,038
Purchases of time deposits (900) (188)
Purchases of investment securities held to maturity (18,202) (11,177)
Purchases of investment securities available for sale (7,770) (31,680)
Net (increase) decrease in federal funds sold and
other short-term investments (7,037) 69
Proceeds from sales of mortgages 6,477 1,512
Net increase in loans (10,772) (7,301)
Capital expenditures (499) (701)
-------- --------
Net cash used in investing activities (17,294) (10,394)
Cash flows from financing activities:
Net increase in deposits 17,017 17,456
Net decrease in short-term borrowings (5,653) (15,458)
Purchases of treasury stock (2,285) (661)
Stock issued under dividend reinvestment and
employee stock purchase plans 269 195
Proceeds from exercise of stock options 275 20
Cash dividends (961) (895)
-------- --------
Net cash provided by financing activities 8,662 657
Net decrease in cash and due from banks (2,350) (6,578)
Cash and due from banks at beginning of period 33,352 38,934
-------- --------
Cash and due from banks at end of period $ 31,002 $ 32,356
========= ========
Supplemental disclosures of cash flow information: Cash paid during the period
for:
Interest $7,464 $6,918
Income taxes $65 $65
</TABLE>
3
<PAGE>
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Financial Information
The accompanying condensed consolidated financial statements include the
accounts of Univest Corporation of Pennsylvania (Univest) and its wholly owned
subsidiaries, including Union National Bank and Trust Company (Union) and
Pennview Savings Bank (Pennview), collectively referred to herein as the
"Banks". The condensed consolidated financial statements included herein have
been prepared without audit pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The accompanying condensed
consolidated financial statements reflect all adjustments which are, in the
opinion of management, necessary to present a fair statement of the results
and condition for the interim periods presented. Operating results for the
three-month period ended March 31, 1998 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1998. It is
suggested that these condensed financial statements be read in conjunction
with the financial statements and the notes thereto included in the
registrant's Annual Report on Form 10-K for the year ended December 31, 1997,
which has been filed with the Securities and Exchange Commission.
Note 2. Per Share Data
The following weighted average shares were used for the computation of
earnings per share:
For the Three the Months
Ended March 31,
1998 1997
Weighted Average Shares 7,644,358.0 7,762,227.6
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement No. 128, Earnings per Share, which was adopted on December 31, 1997
by the Corporation. At that time, the Corporation changed the method currently
used to compute earnings per share and restated all prior periods. Under the
new requirements for calculating basic earnings per share, the dilutive effect
of stock options is excluded.
Note 3. Stock Split
On January 28, 1998 the Corporation's board of directors declared a 100% stock
dividend in the form of a stock split to be paid on May 1, 1998, to
shareholders of record as of April 14, 1998. All share and per share amounts
have been retroactively adjusted to give effect to the stock split.
4
<PAGE>
Note 4. Recent Accounting Pronouncements
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earnings per Share" (SFAS No. 128). SFAS No. 128 replaced the calculation of
primary and fully diluted earnings per share with basic and diluted earnings
per share. Unlike primary earnings per share, basic earnings per share
excludes any dilutive effects of options, warrants, and convertible
securities. All earnings per share amounts for all periods have been
presented, and where appropriate, restated to conform to the SFAS No. 128
requirements. The Financial Accounting Standards Board (FASB) has issued
Statement No. 129, "Disclosure of Information about Capital Structure" (SFAS
No. 129), which is applicable to all companies. SFAS No. 129 consolidates the
existing guidance in authoritative literature relating to a company's capital
structure. SFAS No. 129 is effective for financial statements for periods
ending after December 15, 1997. The adoption of this standard did not have any
impact on the Corporation's financial statements.
As of January 1, 1998, the Corporation adopted Statement No. 130, "Reporting
Comprehensive Income" (SFAS No. 130). SFAS No. 130 establishes new rules for
the reporting and display of comprehensive income and its components; however,
the adoption of this Statement had no impact on the Corporation's net income
or shareholders' equity. SFAS No. 130 requires unrealized gains or losses on
the Corporation's available- for-sale securities which prior to adoption were
reported separately in shareholders' equity, to be included in other
comprehensive income. Prior year financial statements have been reclassified
to conform to the requirements of SFAS No. 130.
During the first quarter of 1998 and 1997, total comprehensive income amounted
to $3.9 million and $3.4 million.
In June 1997, Statement No. 131, "Disclosures about Segments of an Enterprise
and Related Information" became effective for fiscal periods beginning after
December 15, 1997, with early adoption permitted. The Corporation is currently
evaluating the additional disclosure requirements this statement is expected
to have on the Corporation's financial statements.
The FASB has recently issued Statement No. 132, Employers' "Disclosures about
Pensions and Other Postretirement Benefits", (SFAS No. 132) which is effective
for financial statements issued for periods beginning after December 31, 1997.
SFAS No. 132 does not change the recognition or measurement associated with
pension or postretirement plans. It standardizes certain disclosures, requires
additional information about changes in the benefit obligations and about
change in the fair value of plan assets to facilitate analysis, and it
eliminates certain disclosures that were not deemed useful.
5
<PAGE>
Item 2.
Management's Discussion and Analysis
of Financial Condition and
Results of Operations
Net Income
Net income for the three months ended March 31, 1998 increased $0.6
million from $3.0 million for the three months ended March 31, 1997 to $3.6
million for the three months ended March 31, 1998. The increase was due mainly
to an increase in other income.
Net Interest Income
Interest and fees on loans increased $0.5 million from $13.0 million
for the three months ended March 31, 1997 to $13.5 million for the three
months ended March 31, 1998. The increase was due to greater loan volume.
Interest on investment securities increased $0.3 million from $3.6
million for the three month period ended March 31, 1997 to $3.9 million for
the three month period ended March 31, 1998. This increase resulted from
higher average volume for the period.
Interest expense increased from $6.9 million for the three months
ended March 31, 1997 to $7.6 million for the three months ended March 31,
1998, an increase of $0.7 million or 10.1%. This higher expense is attributed
more to rate than volume.
The asset/liability management process continues with its goal of
providing stable, reliable earnings through varying interest rate
environments. Net interest income is the amount by which interest income on
earning assets exceeds interest paid on interest bearing liabilities. The
amount of net interest income is affected by changes in interest rates,
account balances or volume, and the mix of earning assets and interest bearing
liabilities. First quarter ended March 31, 1998 shows net interest income of
$10.0 million which is a $0.2 million increase over the $9.8 million recorded
for the first quarter ended March 31, 1997. Increases in net interest income
were generated more by volume than rate because the net interest spread for
the first quarter 1998 decreased by 18 basis points and the net interest
margin decreased by 19 basis points versus first quarter 1997. The decline in
net interest margin was primarily due to flatening of the interest rate curve.
6
<PAGE>
The following demonstrates the aforementioned effects:
1st QUARTER 1998 1st QUARTER 1997
AVG. BALANCE RATE AVG. BALANCE RATE
----------------- -----------------
Interest Earnings Assets $905,058 7.77% $847,311 7.86%
Interest Bearing Liabilities 730,322 4.16% 676,319 4.07%
Net Interest Income 9,990 9,774
Net Interest Spread 3.61% 3.79%
Net Interest Margin 4.42% 4.61%
The Corporation is permitted to use interest-rate swap agreements
which convert a portion of its floating rate commercial loans to a fixed
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.
At March 31, 1998, March 31,1997 and December 31, 1997 $50.0 million
in notional amount of "Pay Floating, Receive Fixed" swaps were outstanding.
The net payable or receivable from interest rate swap agreements is accrued as
an adjustment to interest income. The $50.0 million in notional amount
interest rate swaps outstanding at March 31, 1998 expire as follows: $20.0
million in notional principal amount in first quarter 1999, $10.0 million in
notional principal amount in third quarter 1999, $10.0 million in first
quarter 2000 and $10.0 million in second quarter 2000. The impact of interest
rate swaps on net interest income for the quarter ended March 31, 1998 was a
positive $18 thousand as compared to a positive $26 thousand for the quarter
ended March 31, 1997.
The Corporation's current credit exposure on swaps is limited to the
value of interest-rate swaps that have become favorable to the Corporation. As
of March 31, 1998, the market value of interest-rate swaps in a favorable
position was $92 thousand. The market value of interest rate swaps in an
unfavorable position totaled $17 thousand.
ASSET QUALITY
Management believes the allowance for loan losses is maintained at a
level which is adequate to absorb potential losses in the loan portfolio.
Management's methodology to determine the adequacy of the allowance
7
<PAGE>
considers specific credit reviews, past loan loss experience, current economic
conditions and trends, and the volume, growth and composition of the loan
portfolio.
The allowance for loan losses is determined through a quarterly
evaluation of reserve adequacy which takes into consideration the growth of
the loan portfolio, the status of past-due loans, current economic conditions,
various types of lending activity, policies, real estate and other loan
commitments, and significant change in the charge-off activity. Loans are also
reviewed for impairment based on discounted cash flows using the loans initial
effective interest rate or the fair value of the collateral for certain
collateral dependent loans as provided for under SFAS 114. Any of the above
criteria may cause the provision to fluctuate. For the quarter ended March 31,
1998, the provision was $333 thousand and for the quarter ended March 31,
1997, the provision was $210 thousand. The increase was due to loan growth and
higher net charge-offs.
At March 31, 1998, the recorded investment in loans that are
considered to be impaired was $2.1 million (all of which were on a non-accrual
basis); the related allowance for credit losses for these loans was $391
thousand. At March 31, 1997, the recorded investment loans considered to be
impaired was $2.8 million and the related allowance for credit losses for
those loans was $480 thousand.
Generally, a loan (including an impaired loan) is classified as
non-accrual and the accrual of interest on such loan is discontinued when the
contractual payment of principal or interest has become 90 days due or
management has serious doubts about the further collectibility of principal or
interest, even though the loan is currently performing. A loan may remain on
accrual status if it is in the process of collection and is either guaranteed
or well secured. When a loan is placed on non-accrual 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
non-accrual loans generally is either applied against principal or reported as
interest income, according to management's judgment as to the collectibility
of principal. Generally, loans are restored to accrual status when the
obligation is brought current, has performed in accordance with the
contractual terms for a reasonable period of time and the ultimate
collectibility of the total contractual principal and interest is no longer in
doubt. Total cash basis, nonaccrual and restructured loans at March 31, 1998,
were $3.9 million and consist mainly of real estate related commercial loans.
Cash basis, nonaccrual and restructured loans at March 31, 1997 totaled $4.6
million. For the quarter ended March 31, 1998, non-accrual loans resulted in
lost interest income of $76 thousand as compared to $79 thousand for the
quarter ended March 31, 1997. At March 31, 1998, the Corporation had no
commitments to lend additional funds with respect to nonperforming loans. In
management's evaluation of the loan portfolio risks, any significant future
increases in nonperforming loans are dependent to a large extent on the
economic environment, or specific industry problems.
8
<PAGE>
At March 31, 1998, and December 31, 1997, the reserve for loan losses
remained constant at 1.6% of total loans.
At March 31, 1998, the Corporation has $250 thousand of Other Real
Estate Owned ("OREO") consisting of two commercial properties ($184 thousand)
and one single family residence ($66 thousand). This amount is recorded in
"Other Assets" at lower of cost or fair market value in the accompanying
consolidated balance sheets.
Other Income
Other income which is non-interest related consists mainly of general
fee income, trust department fee income, and other miscellaneous non-recurring
types of income. It also includes various types of service charges, such as
ATM fees and, for 1998, increases in the cash surrender value of Bank-Owned
Life Insurance (BOLI). Other income of $2.6 million for the three months ended
March 31, 1998 is $0.8 million or 44.4% greater than the $1.8 million earned
for the three months ended March 31, 1997. The increase is attributed to a
$0.2 million increase in the net cash surrender value of a $15.0 million Bank
Owned Life Insurance Policy, along with trust income, which continues to be a
major source of non-interest income. Trust income for the quarter ended March
31, 1998 of $0.9 million was $0.1 million or 12.5% more than the $0.8 million
reported for the three months ended March 31, 1997. Fee income, mainly due to
increases in various other transaction fees and deposit service fees increased
from $0.9 million for the three months ended March 31, 1997 to $1.2 million
for the three months ended March 31, 1998, an increase of $0.3 million or
33.3%.
There were no gains on sales of securities for the three months ended
March 31, 1998. During the first quarter of 1997, securities totaling
approximately $16 million were sold from the available for sale portfolio at a
net gain of $45 thousand. Those securities were sold to provide future yield
enhancement and extend maturities.
Debt securities that the Corporation has both the positive intent and
ability to hold to maturity are carried at amortized cost. All other debt
securities and all marketable equity securities are classified as
available-for-sale or trading and carried at fair value. Unrealized holding
gains and losses on securities classified as available-for-sale are carried
net of taxes and included in Accumulated Other Comprehensive Income.
Unrealized holding gains and losses on securities classified as trading are
reported in earnings. The total debt and equity securities held in the
available-for-sale account as of March 31, 1998, is $118.5 million as compared
to $116.2 million at December 31, 1997. At March 31, 1998, a net unrealized
gain of $297 thousand was recorded, compared to a net unrealized gain of $350
thousand at December 31, 1997.
9
<PAGE>
Non-interest Expense
Other expenses make up the operating costs of the Corporation,
including but not limited to salaries and benefits, equipment, data-processing
and occupancy costs. This category is usually referred to as non-interest
expense and receives ongoing management attention in an attempt to contain and
minimize the growth of the various expense categories, while encouraging
technological innovation in conjunction with the expansion of the Corporation.
The quarter ended March 31, 1998, totals $7.2 million which is 2.9% or $0.2
million more than the $7.0 million shown for the quarter ended March 31, 1997.
Except for an increase of $74 thousand in salaries and benefits due to normal
salary increases, other expenses remained constant at $3.3 million for the
three months ended March 31, 1998 and 1997.
Year 2000
As reported in the Corporation's Annual Report on Form 10-K for the
year ended December 31, 1997, a Year 2000 committee has been established. This
group represents most areas of the Corporation and has developed a plan,
inventoried software, identified hardware, contracts, and insurance issues all
of which are under review.
Testing for Year 2000 compliance has already begun on all core
applications, personal computers, and ancillary systems and is expected to be
completed in 1998. Also, full integration testing is scheduled for the fall of
1998.
The Corporation has initiated communications with all of its
significant suppliers and customers. This will enhance the level of
understanding and help to identify significant areas of third-party risk.
These critical business areas may require contingency plans, which are now
under study.
The Year 2000 project cost is estimated at approximately $0.4 million
in 1998. Total cost for the first three months ended March 31, 1998 was not
material to the Corporation's results of operations. The cost of the project
and the date on which the Corporation believes it will complete the project
are based on best estimates, which were derived utilizing numerous assumptions
of future events, including the continued availability of certain resources
and other factors. However, there can be no guarantee that these estimates
will be achieved and actual results could differ from those anticipated.
Tax Provision
An income tax provision of $1.5 million is shown for the quarter
ended March 31, 1998 and $1.4 million for the quarter ended March 31, 1997.
The provision for income taxes for the quarter ended March 31, 1998 and March
31, 1997 were at effective rates of 30.1% and 31.4% respectively. The
effective tax rates reflects the benefits of tax credits generated from
investments in low-income housing projects, tax-free income from investment in
securities, loans and bank-owned life insurance.
10
<PAGE>
Financial Condition
Total assets increased $15.3 million from $973.2 million at December
31, 1997 to $988.5 at March 31, 1998. Net loans and investments increased $4.4
million and $8.9 million respectively. Deposits increased $17.0 million mainly
due to increased activity in certain types of money market accounts due to
higher rates being paid.
Shareholders' equity increased $0.8 million from $104.6 million at
December 31, 1997 to $105.4 million at March 31, 1998. Book value per share
increased from $13.64 at December 31, 1997 to $13.82 at March 31, 1998, an
increase of $0.18 per share.
Recent Accounting Pronouncements
In 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share" (SFAS No. 128). SFAS No. 128 replaced the
calculation of primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options, warrants, and convertible
securities. All earnings per share amounts for all periods have been
presented, and where appropriate, restated to conform to the SFAS No. 128
requirements.
The Financial Accounting Standards Board (FASB) has issued Statement
No. 129, "Disclosure of Information about Capital Structure" (SFAS No. 129),
which is applicable to all companies. SFAS No. 129 consolidates the existing
guidance in authoritative literature relating to a company's capital
structure. SFAS No. 129 is effective for financial statements for periods
ending after December 15, 1997. The adoption of this standard did not have any
impact on the Corporation's financial statements.
As of January 1, 1998, the Corporation adopted Statement No. 130,
"Reporting Comprehensive Income" (SFAS No. 130). SFAS No. 130 establishes new
rules for the reporting and display of comprehensive income and its
components; however, the adoption of this Statement had no impact on the
Corporation's net income or shareholders' equity. SFAS No. 130 requires
unrealized gains or losses on the Corporation's available- for-sale securities
which prior to adoption were reported separately in shareholders' equity, to
be included in other comprehensive income. Prior year financial statements
have been reclassified to conform to the requirements of SFAS No. 130.
During the first quarter of 1998 and 1997, total comprehensive income
amounted to $3.9 million and $3.4 million.
11
<PAGE>
In June 1997, the FASB issued Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information." This statement becomes
effective for fiscal periods beginning after December 15, 1997, with early
adoption permitted. The Corporation is evaluating the additional disclosure
requirements this Statement is expected to have on the Corporation's financial
statements.
The FASB has recently issued Statement No. 132, Employers'
Disclosures about Pensions and Other Postretirement Benefits, ("SFAS No. 132")
which is effective for financial statements issued for periods beginning after
December 31, 1997. SFAS No. 132 does not change the recognition or measurement
associated with pension or postretirement plans. It standardizes certain
disclosures, requires additional information about changes in the benefit
obligations and about change in the fair value of plan assets to facilitate
analysis, and it eliminates certain disclosures that were not deemed useful.
12
<PAGE>
Part II. OTHER INFORMATION
Item 1. Legal Proceedings--None
Item 2. Changes in Securities--None
Item 3. Defaults upon Senior Securities--None
Item 4. Submission of Matters to a Vote of Security Holders--Not applicable
Item 5. Other Information--None
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule
No reports on Form 8-K were filed during the quarter for which this
report is filed.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Univest Corporation of Pennsylvania
-----------------------------------
(Registrant)
Date: 4/30/98 /s/ Merrill S. Moyer
------- --------------------
Merrill S. Moyer, Chairman
Date: 4/30/98 /s/ Wallace H. Bieler
------- ---------------------
Wallace H. Bieler, Executive Vice President
and Chief Financial Officer
14
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