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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.
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
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
--------- --------
1995 1995/ 1994 1994
LIABILITIES: Average Income/ Avg. Volume Rate Average Income/ Avg.
Balance Expense Rate Change Change Total Balance Expense Rate
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
1994 1994/1993 1993
Average Income/ Avg. Volume Rate Average Income/ Avg.
ASSETS: Balance Expense Rate Change Change Total Balance Expense Rate
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
LIABILITIES: Average Income/ Avg. Volume Rate Average Income/ Avg.
Balance Expense Rate Change Change Total Balance Expense Rate
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
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.
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
TABLE II. INVESTMENT PORTFOLIO (BOOK VALUE)
(Thousands of dollars)
CARRYING AMOUNT OF INVESTMENT SECURITIES
December 31, December 31, December 31,
1995 (a) 1994 (a) 1993
------------- ------------ ------------
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
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)
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%
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.
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
TABLE III. LOAN PORTFOLIO, PART A. TYPES OF LOANS
(Thousands of Dollars)
December 31, December 31, December 31, December 31, December 31,
1995 1994 1993 1992 1991
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
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.
As of December 31, 1995 Due in One Due in One Due in Over
Year or Less to Five Years Five Years Total
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
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.
1995 1994 1993 1992 1991
Principal Principal Principal Principal Principal
Balance Balance Balance Balance Balance
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
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.
1995 1994 1993 1992 1991
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
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
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%
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.
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
TABLE V. DEPOSITS
(Thousands of Dollars)
1995 1994 1993
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
============ =========== ===========
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
------------ ---------- ----------- ----------
Certificates of deposit $3,441 $3,308 $3,958 $10,269
Other time deposits $25,504 $5,341 $402 $1,338
Note: Univest and its subsidiaries do not have foreign offices or foreign
deposits.
TABLE VI. RETURN ON EQUITY AND ASSETS (RATIOS)
(Shown as percentage)
1995 1994 1993
------- ------ -------
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
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
INTEREST RATE SENSITIVITY GAP
(Thousands of dollars)
Within 1-5 Over
1 Year Years 5 Years
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
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.
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
TABLE VII. SHORT-TERM BORROWINGS
(Thousands of Dollars)
LOANS AND SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
1995 1994 1993
--------- -------- --------
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%
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:
Principal Occupation
Officer Title during past 5 years Age
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
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)]
Annual Report
to Shareholders*
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
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