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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, 2001 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)
14 North Main Street 18964
Souderton, Pennsylvania -----
----------------------- (Zip Code)
(Address of principal executive offices)
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
--------------------------
(Title of Class) 6,991,358
---------
(Number of shares outstanding
at 2/28/02)
The approximate aggregate market value of voting stock held by non
affiliates of the registrant is $197,951,574 as of February 28, 2002.
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 been 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, 2002. Parts
I, II, and IV incorporate information by reference from the annual report to
shareholders for the year ended December 31, 2001.
PAGE 1 OF 26
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. Univest elected to become a Financial
Holding Company in 2000 as provided under Title I of the Gramm-Leach-Bliley Act.
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 Delaware, Inc., Univest Financial Services
Corporation, Univest Reinsurance Corporation, 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 the
general public and investing such deposits primarily in loans secured by
residential properties and consumer loans. Delview, Inc., a wholly owned
subsidiary of Pennview, is a passive investment holding company operating in
Delaware. Univest Financial Services Corporation, a subsidiary of Delview,
provides various financial management services and insurance products to
individuals and businesses through its subsidiaries Univest Investments, Inc.
(formerly Fin Plan Group) and Univest Insurance, Inc. (formerly George Becker
Associates). Univest Insurance Inc. acquired Gum Insurance on December 3, 2001.
This will allow Univest Corporation to provide a broader range of insurance
products. Univest Investments, Inc. allows Univest Corporation to provide a
range of financial services including financial planning, investment management,
insurance products and brokerage services. Univest Realty Corporation was
established to obtain, hold and operate properties for the holding company and
its subsidiaries. Univest Delaware, Inc. is a passive investment holding company
operating in Delaware. Univest Leasing Corporation offers services of leasing
commercial, industrial, and institutional equipment to firms and individuals.
Univest Reinsurance Corporation (formerly 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-seven (27) banking
offices, five off-premise automated teller machines, one work site office and
provides banking and trust services to the residents and employees of ten
retirement homes. Sixteen banking offices are in Montgomery County and eleven
banking offices are in Bucks County. A work site office is located in Montgomery
County. Three off-premise automated teller machines are located in Montgomery
County and two are located in Bucks County.
Pennview Savings Bank conducts operations through five (5) full-service
offices located in Souderton, Hatfield, Franconia, Silverdale and
Montgomeryville, Pennsylvania and provides banking services to the residents and
employees of two retirement homes.
As of January 31, 2002, Univest and its subsidiaries employed four
hundred and ninety-two (492) persons.
COMPETITION
Univest's service areas are characterized by intense competition for
banking business among commercial banks, savings and loan associations, 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, 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 Savings Bank seek to
provide personalized services through management's knowledge and awareness of
their service area, customers and borrowers.
2
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, Pennview Savings Bank,
Univest Investments, Inc. and Univest Insurance Inc.
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 Department of Banking of the
Commonwealth of Pennsylvania.
Univest is subject to the provisions of the Bank Holding Company Act of
1956, as amended, and is registered pursuant to its provisions. 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
that a member bank may extend to its affiliates, and the amount of its funds
that 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.
Univest elected to become a Financial Holding Company in 2000 as
provided under Title I of the Gramm-Leach-Bliley Act. The Gramm-Leach-Bliley Act
provides a new regulatory framework for regulation through the financial holding
company, which has as its umbrella regulator the Federal Reserve Board. The
Gramm-Leach-Bliley Act requires "satisfactory" or higher Community Reinvestment
Act compliance for insured depository institutions and their financial holding
companies in order for them to engage in new financial activities. The
Gramm-Leach-Bliley Act provides a federal right to privacy of non-public
personal information of individual customers.
FDICIA
In December 1991, the Federal Deposit Insurance Corporation Improvement
Act ("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 12.4% and 12.6%,
and total risk-based capital ratios of 13.6% and 13.9% at December 31, 2001 and
2000, 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
3
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.
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 and Union National Bank are members 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 Banks, as members of the
Federal Home Loan Bank of Pittsburgh, are 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 ACQUISITIONS
The Interstate Banking Act allows federal regulators to approve mergers
between adequately capitalized banks from different states regardless of whether
the transaction is prohibited under any state law, unless one of the banks' home
states has enacted a law expressly prohibiting out-of-state mergers before June
1997. This act also allows a state to permit out-of-state banks to establish and
operate new branches in this state. The Commonwealth of Pennsylvania has "opted
in" to this interstate merger provision. Therefore, the prior requirement that
interstate acquisitions would only be permitted when another state had
"reciprocal" legislation that allowed acquisitions by Pennsylvania-based bank
holding companies has been eliminated. The new Pennsylvania legislation,
however, retained the requirement that an acquisition of a Pennsylvania
institution by a Pennsylvania or a non-Pennsylvania-based holding company must
be approved by the Banking Department.
4
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 and on August 1, 1990 acquired the
stock of Pennview Savings Bank. Two new subsidiaries were incorporated on
September 8, 1998 in the State of Delaware. Univest Delaware, Inc. and Delview,
Inc. were formed as passive investment companies. Univest Delaware, Inc. is
wholly owned by the Corporation and Delview, Inc. is wholly owned by Pennview.
Univest Financial Services Corporation is wholly owned by Delview. Univest
Insurance, Inc., (formerly George Becker Associates), is wholly owned by Univest
Financial Service Corporation. Univest Insurance, Inc. acquired Gum Insurance on
December 31, 2001. This will allow Univest Corporation to provide a broader
range of insurance products. Univest Investments, Inc. (formerly Fin Plan Group)
is wholly owned by Univest Financial Services Corporation and allows Univest
Corporation to provide a range of financial services.
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.
5
TABLE I. DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY; INTEREST
RATES AND INTEREST DIFFERENTIAL
2001 2001/2000 2000
Average Income/ Avg. Volume Rate Average Income/ Avg. Volume
ASSETS: Balance Expense Rate Change Change Total Balance Expense Rate Change
------- ------- ---- ------- ------- ------ ------- ------- ---- -------
Cash and due from banks $ 36,260 $ 35,309
Time deposits with other banks 9,472 $ 345 3.6 $ 183 $ (123) $ 60 4,544 $ 285 6.3 $ 5
U.S. Government obligations 98,290 5,233 5.3 (1,470) (630) (2,100) 125,937 7,333 5.8 (2,244)
Oblig. of states & political sub. 41,034 1,938 4.7 570 29 599 29,054 1,339 4.6 349
Other securities 192,616 12,483 6.5 2,442 (155) 2,287 154,777 10,196 6.6 2,134
Trading account 538 14 2.6 (2) 3 1 617 13 2.1 2
Federal Reserve bank stock 761 46 6.0 - - - 761 46 6.0 -
Federal funds sold and other
short-term investments 16,303 746 4.6 (436) (490) (926) 25,791 1,672 6.5 1,042
------- ---- ------- ------
Total investments 349,542 20,460 5.9 336,937 20,599 6.1
-------- ------- -------- -------
Commercial loans 232,609 17,950 7.7 1,911 (2,493) (582) 207,766 18,532 8.9 2,110
Mortgage loans 336,952 25,930 7.7 601 (986) (385) 328,517 26,315 8.0 (569)
Installment loans 119,414 10,002 8.4 535 - 535 112,784 9,467 8.4 701
Home equity loans 12,716 1,202 9.5 (55) (237) (292) 13,190 1,494 11.3 (30)
Municipal loans 59,949 3,319 5.5 245 (111) 134 55,492 3,185 5.7 540
------- ------ ------- ------
Gross loans 761,640 58,403 7.7 717,749 58,993 8.2
------- -------
Less: valuation reserve (10,647) (10,242)
-------- --------
Net loans 750,993 706,988
-------- --------
Property, net 15,551 15,520
Other assets 49,083 47,079
------- -------
Total assets $ 1 ,210,901 $ 1,146,377
------------ ------------
2000/1999 1999
Rate Average Income Avg.
ASSETS: CHANGE TOTAL BALANCE EXPENS RATE
------- ------ ------- ------ ----
Cash and due from banks $ 34,496
Time deposits with other banks $ 53 $ 58 4,415 $ 227 5.1
U.S. Government obligations - (2,244) 166,343 9,577 5.8
Oblig. of states & political sub. 43 392 21,684 947 4.4
Other securities 489 2,623 122,207 7,573 6.2
Trading account (8) (6) 548 19 3.5
Federal Reserve bank stock - - 761 46 6.0
Federal funds sold and other
short-term investments 156 1,198 9,735 474 4.9
------ ---
Total investments 321,278 18,636 5.8
-------- ------
Commercial loans 552 2,662 184,019 15,870 8.6
Mortgage loans 337 (232) 337,153 26,547 7.9
Installment loans 209 910 104,348 8,557 8.2
Home equity loans 162 132 13,505 1,362 10.1
Municipal loans - 540 46,619 2,645 5.7
------- -----
Gross loans 685,644 54,981 8.0
------
Less: valuation reserve (10,577)
--------
Net loans 674,548
--------
Property, net 15,684
Other assets 38,901
--------
Total assets $1,089,322
----------
6
2001 2001/2000 2000
LIABILITIES: Average Income/ Avg. Volume Rate Average Income/ Avg. Volume
Balance Expense Rate Change Change Total Balance Expense Rate Change
Demand deposits $ 152,716 $ 150,911
Interest checking deposits 99,644 $ 1,015 1.0 $ 90 $ - $ 90 90,785 $ 925 1.0 $ 23
Money market savings 208,268 6,858 3.3 709 (2,826) (2,117) 188,394 8,975 4.8 1,401
Regular savings 134,073 2,555 1.9 29 (134) (105) 134,450 2,660 2.0 (116)
Certificates of deposit 351,751 19,376 5.5 351 - 351 345,076 19,025 5.5 1,344
Time open & club accounts 22,666 972 4.3 (103) (277) (380) 25,163 1,352 5.4 (233)
Total time, int., and inv.
checking deposits 816,402 30,776 3.8 783,868 32,937 4.2
Total deposits 969,118 934,779
Federal funds purchased 876 25 2.9 10 (14) (4) 496 29 5.8 (176)
Loans & securities sold under
agreement to repurchase 75,386 2,174 2.9 304 (387) (83) 64,525 2,257 3.5 (88)
Other borrowings 26,012 1,466 5.6 332 (102) 230 20,389 1,236 6.1 344
Subordinated notes - - - - - - - - 0.0 -
------- ------
Total borrowings 102,274 3,665 3.6 85,410 3,522 4.1
-------- ------ ------- ------
Accrued expenses & other liab. 20,298 19,224
------- -------
Total liabilities 1,091,690 1,038,894
---------- ----------
SHAREHOLDERS' EQUITY:
- --------------------
Common stock 41,037 40,608
Capital surplus 20,912 19,422
Retained earnings 57,262 47,453
------- -------
Total shareholders' equity 119,211 107,483
-------- --------
Total liabilities and share-
holders' equity $ 1,210,901 $ 1,146,377
----------- -----------
Weighted avg. yield on interest-earning assets 7.1 7.5
Weighted avg. rate paid on interest-bearing liab. 3.7 4.2
Net yield 4.0 4.1
2000/1999 1999
LIABILITIES: Rate Average Income/ Avg.
Change Total Balance Expense Rate
Demand deposits $ 150,455
Interest checking deposits $ - $ 23 86,583 $ 902 1.0
Money market savings 1,422 2,823 158,014 6,152 3.9
Regular savings - (116) 140,313 2,776 2.0
Certificates of deposit 642 1,986 321,097 17,039 5.3
Time open & club accounts 234 1 29,253 1,351 4.6
Total time, int., and inv.
checking deposits 735,260 28,220 3.8
Total deposits 885,715
Federal funds purchased 14 (162) 3,515 191 5.4
Loans & securities sold under
agreement to repurchase 135 47 67,612 2,210 3.3
Other borrowings 132 476 14,695 760 5.2
Subordinated notes - - - - 0.0
Total borrowings 85,822 3,161 3.7
------- ------
Accrued expenses & other liab. 15,536
-------
Total liabilities 986,554
-------
SHAREHOLDERS' EQUITY:
- --------------------
Common stock 39,272
Capital surplus 14,908
Retained earnings 48,588
-------
Total shareholders' equity 102,768
-------
Total liabilities and share-
holders' equity $ 1,089,322
-----------
Weighted avg. yield on interest-earning assets 7.3
Weighted avg. rate paid on interest-bearing liab. 3.8
Net yield 4.2
7
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 $551 for 2001, $571
for 2000 and $683 for 1999.
(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.
8
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,
2001 (a) 2000 (a) 1999 (a)
-------- -------- --------
U. S. Treasury, government corporations and agencies $ 90,823 $ 131,344 $ 150,096
State and political subdivisions 49,638 39,346 27,020
Mortgage-backed securities 152,159 122,601 111,516
Other 55,238 55,135 23,243
--------- --------- ---------
Total $ 347,858 $ 348,426 $ 311,875
========= ========= =========
MATURITY DISTRIBUTION AND WEIGHTED AVERAGE YIELD
December 31, December 31, December 31, December 31, December 31, December 31,
2001 2001 2000 2000 1999 1999
Amount (a) Yield (b) Amount (a) Yield (b) Amount (a) Yield (b)
---------- --------- ---------- --------- ---------- ---------
1 Year or less $ 16,180 4.71% $ 77,825 5.80% $ 54,249 5.68%
1 Year - 5 Years 125,258 5.54% 112,536 6.07% 139,357 5.64%
5 Years - 10 Years 47,606 6.20% 38,713 6.41% 35,094 6.26%
After 10 Years 158,814 6.22% 119,352 6.42% 83,175 6.17%
---------- ----- ---------- ----- --------- -----
Total $ 347,858 5.90% $ 348,426 6.17% $ 311,875 5.86%
========== ===== ========== ===== ========= =====
Refer to Note 3 to the consolidated financial statements.
(a) Held to maturity and available for sale portfolios 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.
9
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,
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
Real estate loans
Construction and land development $ 34,774 $ 39,707 $ 33,632 $ 33,530 $ 30,951
Secured by 1-4 family residential properties 226,962 214,973 219,292 214,798 217,782
Other real estate loans 195,872 168,761 173,780 169,402 189,251
Commercial and industrial loans 254,032 221,101 212,656 171,699 138,812
Loans to individuals 71,212 79,320 72,658 64,306 53,500
All other loans 15,495 15,425 10,591 7,117 6,143
--------- --------- --------- --------- ---------
Total loans $ 798,347 $ 739,287 $ 722,609 $ 660,852 $ 636,439
========= ========= ========= ========= =========
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
TABLE III. LOAN PORTFOLIO, PART B. MATURITIES AND SENSITIVITY TO CHANGES IN
INTEREST RATES
(Thousands of Dollars)
The commercial mortgages and Industrial Development Authority mortgages
that are presently being written at both fixed and floating rates of interest
are 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. The monthly payment on these mortgages is based on a
thirty (30) year amortization schedule, unless the borrower requests a shorter
payout period. 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, 2001 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 $ 14,756 $ 16,197 $ 3,821 $ 34,774
Secured by 1-4 family residential properties 41,899 58,349 126,714 226,962
Other real estate loans 16,785 108,233 70,854 195,872
Commercial and industrial loans 121,076 99,206 33,750 254,032
Loans to individuals 19,113 47,364 4,735 71,212
All other loans 2,011 13,484 - 15,495
--------- --------- --------- ---------
TOTAL LOANS $ 215,640 $ 342,833 $ 239,874 $ 798,347
========= ========= ========= =========
Loans with a predetermined interest rate $ 29,803 $ 280,015 $ 165,663 $ 475,481
Loans with a floating or variable interest rate 185,837 62,818 74,211 322,866
--------- --------- --------- ---------
$ 215,640 $ 342,833 $ 239,874 $ 798,347
========= ========= ========= =========
11
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 previously accrued but unpaid interest is uncertain, a stipulated
amount 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 total of nonaccruing and restructured loans in 2001 was $1,617. There was no
interest income recognized on these loans. If nonaccrual loans had been
performing in accordance with their contractual terms, additional income of $176
would have been recorded in 2001. At December 31, 2001, there were no other
potential problem loans that causes management to have serious doubts as to the
ability of the borrowers to comply with the present loan repayment terms. 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.
LOAN CONCENTRATIONS
At December 31, 2001, there were no concentrations of loans exceeding 10%
of total loans other than disclosed in Table III, Part A.
OTHER ASSETS
At December 31, 2001, there was no Other Real Estate Owned classified as
nonperforming.
2001 2000 1999 1998 1997
Principal Principal Principal Principal Principal
Balance Balance Balance Balance Balance
-------- -------- -------- -------- -------
Nonaccruing loans $ 1,617 $ 1,865 $ 2,285 $ 3,424 $ 3,136
======== ======== ======== ======== =======
ACCRUING LOANS 90 DAYS OR MORE PAST DUE:
Real estate loans
Construction and land development - - - - -
Secured by 1-4 family dwellings 128 138 304 705 308
Other real estate - - - 14 36
Commercial and industrial loans 3 - 63 - 21
Loans to individuals 186 208 214 204 159
All other loans - - - - -
-------- -------- -------- -------- -------
Total loans, 90 days or more past due 317 346 581 923 524
======== ======== ======== ======== =======
Restructured loans, not included above - - 38 125 206
======== ======== ======== ======== =======
12
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
TABLE IV. SUMMARY OF LOAN LOSS EXPERIENCE
(Thousands of Dollars)
Management's methodology to determine the adequacy of and the
provisions to the reserve considers specific credit reviews, past loan loss
experience, current economic conditions and trends, and the volume, growth, and
composition of the loan portfolio.
Reserve for possible loan losses is determined through a monthly
evaluation of reserve adequacy. Quarterly, this analysis 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. Non-accrual loans are evaluated individually. All other loans are
evaluated as pools. Based on historical loss experience, loss factors are
determined giving consideration to the areas noted in the first paragraph and
applied to the pooled loan categories to develop the general or allocated
portion of reserve. 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 under SFAS No.
114. Management also reviews the activity within the allowance to determine what
actions, if any, should be taken to address differences between estimated and
actual losses. Any of the above factors may cause the provision to fluctuate.
The reserve for possible loan losses is made up of the allocated or
general reserve and the unallocated portion. The following table summarizes the
two categories for the periods indicated.
DECEMBER 31,
2001 2000 1999
---- ---- ----
Allocated $ 8,920 $ 8,630 $ 8,786
Unallocated 1,374 1,578 1,918
-------- -------- ---------
Total $ 10,294 $ 10,208 $ 10,704
======== ======== ========
The $290,000 increase in the allocated portion of the reserve for the
year ended December 31, 2001 occurred due to higher reserves for growing loan
volume and migration of credit risk assessment towards weaker loan grades. Total
loan outstandings increased by 8.0% as moderate growth amongst retail portfolios
was accompanied by significant commercial portfolio growth of 11.6%. As weakness
in the economy became apparent in the latter part of the year, the proportion of
credits with identified credit issues also increased. The $204,000 reduction in
the unallocated reserve position was reflective of the strong credit quality and
favorable level of non-performing loans experienced throughout the first three
quarters of the year. Analysis of unallocated adequacy is based on a stress
testing model assessing loan grade migration as influenced by economic
conditions and grading accuracy.
The $156,000 decrease in the allocated portion of the reserve for the
year ended December 31, 2000 occurred as higher loan volume was more than offset
by the favorable impact of continuing portfolio quality improvements. Despite a
$13.6 million increase in Commercial & Industrial (C&I) loans, fewer dollars
were allocated to this loan pool due to a more favorable migration of losses
associated with Uncriticized C&I loans. Lower allocations were also recognized
for the residential mortgage, industry concentration and unfunded commitment
pools, each reflecting improved portfolio quality. These allocation reductions
combined to offset a rise in consumer installment allocations associated with
weakening consumer trends across the industry and the introduction of additional
risk in product offerings. The $340,000 reduction in the unallocated reserve
position reflects the diminishing potential of losses attributable to
Y2K-related business interruption, which offset consideration given to a stress
testing model designed to measure the impact of a slowing economy.
13
Management believes that both the allocated and unallocated portions of
the reserve are maintained at a level which is adequate to absorb potential
losses in the loan portfolio.
As the accompanying table indicates, the amount of loan loss provision
charged to expense for 2001 was $763 compared to $205 in 2000 and $1,052 in
1999.
14
2001 2000 1999 1998
---- ---- ---- ----
Average amount of loans outstanding $751,030 $707,084 $674,798 $635,939
Loan loss reserve at beginning of period $ 10,208 $ 10,704 $ 10,019 $ 9,751
Charge-offs:
Real estate loans 12 156 348 575
Commercial and industrial loans 602 794 1,105 370
Loans to individuals 603 423 304 427
Home equity - - - -
Other - - - -
-------- -------- -------- --------
Total charge-offs: 1,217 1,373 1,757 1,372
======== ======== ======== ========
Recoveries:
Real estate loans 143 98 857 324
Commercial and industrial loans 223 463 440 256
Loans to individuals 174 111 93 102
Home equity - - - -
Other - - - -
-------- -------- -------- --------
Total recoveries: 540 672 1,390 682
======== ======== ======== ========
Net charge-offs: 677 701 367 690
Additions to loan loss reserve 763 205 1,052 958
Loan loss reserve at end of period $ 10,294 $ 10,208 $ 10,704 $ 10,019
======== ======== ======== ========
Loan type Loan type Loan type Loan type
as % as % as % as %
Amount in reserve by category: of Loans of Loans of Loans of Loans
-------- -------- -------- --------
Real estate loans 57.3 $ 3,515 57.3 $ 2,370 59.0 $ 2,571 63.2 $ 2,358
Commercial and industrial loans 31.8 3,939 29.9 4,848 29.4 5,356 26.0 3,575
Loans to individuals 8.9 1,455 10.7 1,401 10.1 848 9.7 1,049
All other loans 2.0 11 2.1 11 1.5 11 1.1 11
Unallocated portion 1,374 1,578 1,918 3,026
-------- -------- -------- --------
Total $ 10,294 $ 10,208 $ 10,704 $ 10,019
======== ======== ======== ========
Ratio of net charge-offs versus average loans 0.1% 0.1% 0.1% 0.1%
1997
----
Average amount of loans outstanding $617,082
Loan loss reserve at beginning of period $ 9,282
Charge-offs:
Real estate loans 552
Commercial and industrial loans 319
Loans to individuals 286
Home equity -
Other -
--------
Total charge-offs: 1,157
========
Recoveries:
Real estate loans 167
Commercial and industrial loans 78
Loans to individuals 66
Home equity -
Other 5
--------
Total recoveries: 316
========
Net charge-offs: 841
Additions to loan loss reserve 1,310
Loan loss reserve at end of period $ 9,751
========
Loan type
as %
Amount in reserve by category: of Loans
--------
Real estate loans 68.8 $ 3,511
Commercial and industrial loans 21.8 610
Loans to individuals 8.4 617
All other loans 1.0 11
Unallocated portion 5,002
--------
Total $ 9,751
========
Ratio of net charge-offs versus average loans 0.1%
Total cash-basis and nonaccrual loans of $1,617 at December 31, 2001, were
generally comprised of $242 in residential real estate loans, $617 in commercial
real estate loans and $758 in commercial and other loans.
15
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
TABLE V. DEPOSITS
(THOUSANDS OF DOLLARS)
2001 2000 1999
---- ---- ----
A. Average: Noninterest-bearing demand deposits $ 152,716 $ 150,911 $ 150,455
Interest checking 99,644 90,785 86,583
Money Market savings 208,268 188,394 158,014
Saving deposits 134,073 134,450 140,313
Time deposits 374,417 370,239 350,350
--------- --------- ---------
TOTAL $ 969,118 $ 934,779 $ 885,715
========= ========= =========
DUE 3 MONTHS DUE 3 - 6 DUE 6 - 12 DUE OVER
B. Year-end balance: ($100 or more) outstanding as of OR LESS MONTHS MONTHS 12 MONTHS
December 31, 2001 ------- ------ ------ ---------
Certificates of deposit $ 13,727 $ 8,376 $ 11,708 $ 4,056
Other time deposits $ 10,308 $ 1,829 $ 528 $ 649
Note: Univest and its subsidiaries do not have any foreign offices or foreign
deposits
TABLE VI. RETURN ON EQUITY AND ASSETS (RATIOS)
(SHOWN AS PERCENTAGES)
2001 2000 1999
---- ---- ----
Return on assets 1.6 1.5 1.5
Return on equity 16.1 16.1 15.4
Dividend payout ratio* 30.6 31.3 30.4
Equity to assets ratio 9.8 9.4 9.4
*The payout ratios have been restated to give effect to a 5% stock dividend paid
May 1, 2000.
16
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES
TABLE VII. SHORT TERM BORROWINGS
(Thousands of Dollars)
LOANS AND SECURITIES SOLD UNDER AGREEMENT TO REPURCHASE
2001 2000 1999
---- ---- ----
Balance at December 31 $ 73,745 $ 67,370 $ 70,943
Weighted average interest rate at year end 1.5% 3.7% 3.3%
Maximum amount outstanding at any month's end $ 91,986 $ 71,830 $ 75,439
Average amount outstanding during the year $ 75,386 $ 64,525 $ 67,612
Weighted average interest rate during the year 2.9% 3.5% 3.3%
17
ITEM 2. PROPERTIES
Univest and its subsidiaries occupy thirty-two properties in Montgomery
and Bucks Counties in Pennsylvania, which are used principally as banking
offices. Note 6, appearing on page 24 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, 2002.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Incorporated by reference from the 2001 Annual Report to Shareholders
(Exhibit 13), pages 46-47. Dividend and other restrictions are incorporated by
reference from Note 16 of the 2001 Annual Report to Shareholders (Exhibit 13),
pages 30 and 31. The number of shareholders as of February 28, 2002, was 2,060.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated by reference from the 2001 Annual Report to Shareholders
(Exhibit 13), page 36.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Incorporated by reference from the 2001 Annual Report to Shareholders
(Exhibit 13), pages 37 through 45. Dividend and other restrictions are
incorporated by reference from Note 16 of the 2001 Annual Report to Shareholders
(Exhibit 13), pages 30 and 31.
ITEM 7 (A). QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Incorporated by reference from the 2001 Annual Report to Shareholders
(Exhibit 13), page 45.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated balance sheets of the registrant at December 31, 2001 and
2000, and consolidated statements of income, changes in shareholders' equity and
cash flows for each of the three years ended December 31, 2001, and the
independent auditors' report thereon are incorporated by reference from the 2001
Annual Report to Shareholders (Exhibit 13), pages 13 through 16.
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None
18
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, 2002.
EXECUTIVE OFFICERS
The names and ages of all executive officers of Univest are as follows:
PRINCIPAL OCCUPATION
OFFICER TITLE DURING PAST 5 YEARS AGE
William S. Aichele President President and CEO of the 51
Corporation and
Union National Bank
Marvin A. Anders Chairman Chairman of the Corporation 62
And Union National Bank
Norman L. Keller Executive Vice President and CEO of Pennview 64
President Savings Bank and Executive
Vice President of the Corporation
Wallace H. Bieler Executive Vice Executive Vice President 56
President and CFO of the Corporation
and Union National Bank
K. Leon Moyer Executive Vice Executive Vice President 52
President 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, 2002.
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, 2002.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 2001, the Corporation and its subsidiaries paid $70,767 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, Director, is president of H. Mininger & Sons, Inc.
19
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
2001.
(c) Exhibits - The response of this portion of item 14 is submitted as
a separate section.
(d) Financial Statement Schedules - none.
20
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 35
Consolidated balance sheets at 13
December 31, 2001 and 2000
Consolidated statements of income for each of the 14
three years in the period ended December 31, 2001
Consolidated statements of changes in shareholders' equity 15
for each of the three years in the period ended
December 31, 2001
Consolidated statements of cash flows for 16
each of the three years in the period ended
December 31, 2001
Notes to consolidated financial statements 17-34
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 2001 (Exhibit
13) which is incorporated by references.
21
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 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 - See Footnote 13 in Item
(13).
(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.
22
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: /s/ Norman L. Keller
---------------------------------
Norman L. Keller
Secretary and Executive Vice President, March 27, 2002
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:
/s William S. Aichele /s/ James L. Bergey
- ------------------------------------------------ ---------------------------------
William S. Aichele James L. Bergey
President, CEO and Director, March 27, 2002 Director, March 27, 2002
/s/ Marvin A. Anders /s/ H. Ray Mininger
- ------------------------------------------------ ---------------------------------
Marvin A. Anders H. Ray Mininger
Chairman and Director, March 27, 2002 Director, March 27, 2002
/s/ Wallace H. Bieler /s/ Paul G. Shelly
- ------------------------------------------------ ---------------------------------
Wallace H. Bieler Paul G. Shelly
Executive Vice President and CFO, March 27, 2002 Director, March 27, 2002
/s/ K. Leon Moyer /s/ R. Lee Delp
- ------------------------------------------------ ---------------------------------
K. Leon Moyer R. Lee Delp
Executive Vice President , March 27, 2002 Director, March 27, 2002
/s/ Charles H. Hoeflich /s/ Thomas K. Leidy
- ------------------------------------------------ ---------------------------------
Charles H. Hoeflich Thomas K. Leidy
Chairman Emeritus, March 27, 2002 Director, March 27, 2002
/s/ Merrill S. Moyer /s/ John U. Young
- --------------------------------- ---------------------------------
Merrill S. Moyer John U. Young
Director, March 27, 2002 Director, March 27, 2002
23