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, 2000 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) 7,173,518 --------- (Number of shares outstanding at 2/28/01) The approximate aggregate market value of voting stock held by non affiliates of the registrant is $134,787,520 as of February 28, 2001. 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 10, 2001. Parts I, II, and IV incorporate information by reference from the annual report to shareholders for the year ended December 31, 2000. PAGE 1 OF 26
PART I ITEM 1. BUSINESS GENERAL Univest Corporation of Pennsylvania ("Univest") is a Pennsylvania corporation 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 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 and consumer loans. Univest Financial Services, a wholly owned subsidiary of Pennview Savings Bank, acquired George Becker Associates on January 3, 2000. This will allow Univest Corporation to provide a broader range of insurance products. Fin-Plan Group, a wholly owned subsidiary of Pennview, allows Univest Corporation to provide a range of financial services including financial planning, investment management, insurance products and brokerage services. Delview, Inc. a wholly owned subsidiary of Pennview, is a passive investment holding company operating in Delaware. 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 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-premises 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-premises 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, 2001, Univest and its subsidiaries employed four hundred and sixty-six (466) 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. 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, Fin-Plan Group and George Becker Associates. 2
SUPERVISION AND REGULATION Union National Bank is subject to supervision and is regularly examined by the Office of 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 12.6% and 12.2%, and total risk-based capital ratios of 13.9% and 13.5% at December 31, 2000 and 1999, 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, 3
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. 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, wholly owned by Pennview, acquired George Becker Associates on January 3, 2000. This will allow Univest Corporation to provide a broader range of insurance products. Fin-Plan Group is wholly owned by Pennview 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> <CAPTION> TABLE I. DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL 2000 2000/1999 1999 Average Income/ Avg. Volume Rate Average Income/ Avg. Volume ASSETS: Balance Expense Rate Change Change Total Balance Expense Rate Change ------- ------- ---- -------- -------- ------- ------- ------- ---- -------- <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> Cash and due from banks $ 35,309 $ 34,496 Time deposits with other banks 4,544 $ 285 6.3 $ 5 $ 53 $ 58 4,415 $ 227 5.1 $ (343) U.S. Government obligations 125,937 7,333 5.8 (2,244) - (2,244) 166,343 9,577 5.8 (1,829) Oblig. of states & political sub. 29,054 1,339 4.6 349 43 392 21,684 947 4.4 647 Other securities 154,777 10,196 6.6 2,134 489 2,623 122,207 7,573 6.2 3,380 Trading Account 617 13 2.1 2 (8) (6) 548 19 3.5 19 Federal Reserve bank stock 761 46 6.0 - - - 761 46 6.0 - Federal funds sold and other short-term investments 25,791 1,672 6.5 1,042 156 1,198 9,735 474 4.9 (406) ------ ----- ----- --- Total investments 336,937 20,599 6.1 321,278 18,636 5.8 ------- ------ ------- ------ Commercial loans 207,766 18,532 8.9 2,110 552 2,662 184,019 15,870 8.6 2,412 Mortgage loans 328,517 26,315 8.0 (569) 337 (232) 337,153 26,547 7.9 (603) Installment loans 112,784 9,467 8.4 701 209 910 104,348 8,557 8.2 1,467 Home equity loans 13,190 1,494 11.3 (30) 162 132 13,505 1,362 10.1 (114) Municipal loans 55,492 3,185 5.7 540 - 540 46,619 2,645 5.7 262 ------ ----- ------ ----- Gross loans 717,749 58,993 8.2 685,644 54,981 8.0 ------ ------ Less: valuation reserve (10,761) (11,096) -------- -------- Net loans 706,988 674,548 ------- ------- Property, net 15,520 15,684 Other assets 47,079 38,901 ------ ------ Total assets $ 1,146,377 $ 1,089,322 ------------ ------------ </TABLE> <TABLE> <CAPTION> 1999/1998 1998 ASSETS: Rate Average Income/ Avg. Change Total Balance Expense Rate -------------- ------- ------- ---- <S> <C> <C> <C> <C> <C> Cash and due from banks $ 31,321 Time deposits with other banks $ (56) $ (399) 11,273 $ 626 5.6 U.S. Government obligations (196) (2,025) 196,033 11,602 5.9 Oblig. of states & political sub. (7) 640 6,858 307 4.5 Other securities (135) 3,245 67,637 4,328 6.4 Trading Account - 19 0 0 - Federal Reserve bank stock - - 761 46 6.0 Federal funds sold and other short-term investments (108) (514) 18,057 988 5.5 ------ --- Total investments 289,346 17,271 6.0 ------- ------ </TABLE> Commercial loans (944) 1,468 157,363 14,402 9.2 Mortgage loans (1,729) (2,332) 345,781 28,879 8.4 Installment loans (260) 1,207 86,505 7,350 8.5 Home equity loans (73) (187) 14,614 1,549 10.6 Municipal loans -- 262 41,456 2,383 5.7 ----- Gross loans 645,719 54,563 8.4 ------ Less: valuation reserve (10,439) -------- Net loans 635,280 ------- Property, net 16,237 Other assets 32,711 ------ Total assets $1,016,168 ---------- 6
<TABLE> <CAPTION> 2000 2000/1999 1999 LIABILITIES: Average Income/ Avg. Volume Rate Average Income/ Avg. Volume Balance Expense Rate Change Change Total Balance Expense Rate Change <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> Demand deposits $ 150,911 $ 150,455 Interest checking deposits 90,785 $ 925 1.0 $ 23 $ - $ 23 86,583 $ 902 1.0 $ 123 Money market savings 188,394 8,975 4.8 1,401 1,422 2,823 158,014 6,152 3.9 1,088 Regular savings 134,450 2,660 2.0 (116) - (116) 140,313 2,776 2.0 134 Certificates of deposit 345,076 19,025 5.5 1,344 642 1,986 321,097 17,039 5.3 (254) Time open & club accounts 25,163 1,352 5.4 (233) 234 1 29,253 1,351 4.6 (78) Total time, int., and inv. checking deposits 783,868 32,937 4.2 735,260 28,220 3.8 Total deposits 934,779 885,715 Federal funds purchased 496 29 5.8 (176) 14 (162) 3,515 191 5.4 178 Loans & securities sold under agreement to repurchase 64,525 2,257 3.5 (88) 135 47 67,612 2,210 3.3 381 Other borrowings 20,389 1,236 6.1 344 132 476 14,695 760 5.2 233 Subordinated notes 0 0 - - - - 0 0 0.0 - - - Total borrowings 85,410 3,522 4.1 85,822 3,161 3.7 ------ ----- ------ ----- Accrued expenses & other liab. 18,705 15,017 ------ ------ Total liabilities 1,038,894 986,554 --------- ------- SHAREHOLDERS' EQUITY: - -------------------- Common stock 40,608 39,272 Capital surplus 19,422 14,908 Retained earnings 47,453 48,588 ------ ------ Total shareholders' equity 107,483 102,768 ------- ------- Total liabilities and share- holders' equity $ 1,146,377 $ 1,089,322 ------------ ------------ Weighted avg. yield on interest-earning assets 7.5 7.3 Weighted avg. rate paid on interest-bearing liab. 4.2 3.8 Net yield 4.1 4.2 <CAPTION> 1999/1998 1998 LIABILITIES: Rate Average Income/ Avg. Change Total Balance Expense Rate <S> <C> <C> <C> <C> <C> Demand deposits $ 132,132 Interest checking deposits (322) $(199) 80,524 $ 1,101 1.4 Money market savings (258) 830 128,970 5,322 4.1 Regular savings (528) (394) 132,012 3,170 2.4 Certificates of deposit (977) (1,231) 325,798 18,270 5.6 Time open & club accounts (123) (201) 30,800 1,552 5.0 Total time, int., and inv. checking deposits 698,104 29,415 4.2 Total deposits 830,236 Federal funds purchased (1) 177 234 14 6.0 Loans & securities sold under agreement to repurchase - 381 56,181 1,829 3.3 Other borrowings (30) 203 10,135 557 5.5 Subordinated notes - - 0 0 0.0 Total borrowings 66,550 2,400 3.6 ------ ----- Accrued expenses & other liab. 14,617 ------ Total liabilities 911,403 ------- SHAREHOLDERS' EQUITY: - -------------------- Common stock 37,765 Capital surplus 19,696 Retained earnings 47,304 ------ Total shareholders' equity 104,765 ------- Total liabilities and share- holders' equity $1,016,168 ---------- Weighted avg. yield on interest-earning assets 7.7 Weighted avg. rate paid on interest-bearing liab. 4.2 Net yield 4.3 </TABLE> 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 $571 for 2000, $683 for 1999 and $1,106 for 1998. (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
<TABLE> <CAPTION> 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, 2000 (a) 1999 (a) 1998 (a) -------- -------- -------- <S> <C> <C> <C> U. S. Treasury, government corporations and agencies $ 131,344 $ 150,096 $ 225,294 State and political subdivisions 39,346 27,020 17,966 Mortgage-backed securities 122,601 111,516 74,233 Other 55,135 23,243 10,172 ------- ------- ------ Total $ 348,426 $ 311,875 $ 327,665 ========== =========== ========== <CAPTION> MATURITY DISTRIBUTION AND WEIGHTED AVERAGE YIELD December 31, December 31, December 31, December 31, December 31, December 31, 2000 2000 1999 1999 1998 1998 Amount (a) Yield (b) Amount (a) Yield (b) Amount (a) Yield (b) ---------- --------- ---------- --------- ---------- --------- <S> <C> <C> <C> <C> <C> <C> 1 Year or less $ 77,825 5.80% $ 54,249 5.68% $ 93,671 5.78% 1 Year - 5 Years 112,536 6.07% 139,357 5.64% 158,938 5.64% 5 Years - 10 Years 38,713 6.41% 35,094 6.26% 20,781 6.33% After 10 Years 119,352 6.42% 83,175 6.17% 54,275 6.24% -------- ----- ------- ----- ------- ----- Total $ 348,426 6.17% $ 311,875 5.86% $ 327,665 5.82% ========== ===== ========== ===== ========== ===== </TABLE> 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
<TABLE> <CAPTION> 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, 2000 1999 1998 1997 1996 ---- ---- ---- ---- ---- <S> <C> <C> <C> <C> <C> Real estate Loans Construction and land development $ 39,707 $ 33,632 $ 33,530 $ 30,951 $ 34,733 Secured by 1-4 family residential properties 214,973 219,292 214,798 217,782 217,631 Other real estate loans 168,761 173,780 169,402 189,251 178,644 Commercial and industrial loans 221,101 212,656 171,699 138,812 124,788 Loans to individuals 79,320 72,658 64,306 53,500 47,466 All other loans 15,425 10,591 7,117 6,143 5,821 ------- ------- ------ ------ ----- Total loans $ 739,287 $ 722,609 $ 660,852 $ 636,439 $ 609,083 ========== ========== ========== ========== ========= </TABLE> 10
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. <TABLE> <CAPTION> AS OF DECEMBER 31, 2000 DUE IN ONE DUE IN ONE DUE IN OVER YEAR OR LESS TO FIVE YEARS FIVE YEARS TOTAL ------------ ------------- ---------- ----- <S> <C> <C> <C> <C> Real estate loans Construction and land development $ 15,074 $ 20,800 $ 3,833 $ 39,707 Secured by 1-4 family residential properties 39,896 66,539 108,538 214,973 Other real estate loans 21,897 80,290 66,574 168,761 Commercial and industrial loans 96,665 95,592 28,844 221,101 Loans to individuals 16,673 57,078 5,569 79,320 All other loans 502 14,923 - 15,425 ---- ------- -- ------ Total loans $ 190,707 $ 335,222 $ 213,358 $739,287 ========== ========== ========== ======== Loans with a predetermined interest rate $ 54,852 $ 243,417 $ 140,656 $438,925 Loans with a floating or variable interest rate 135,855 91,805 72,702 300,362 -------- ------- ------- ------- $ 190,707 $ 335,222 $ 213,358 $739,287 ========== ========== ========= ======== </TABLE> 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 2000 was $1,865. There was no interest income recognized on these loans. If nonaccrual loans had been performing in accordance with their contractual terms, additional income of $229 would have been recorded in 2000. 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, 2000, there were no concentrations of loans exceeding 10% of total loans other than disclosed in Table III, Part A. OTHER ASSETS At December 31, 2000, there was no Other Real Estate Owned classified as nonperforming. <TABLE> <CAPTION> 2000 1999 1998 1997 1996 Principal Principal Principal Principal Principal Balance Balance Balance Balance Balance ------- ------- ------- ------- ------- <S> <C> <C> <C> <C> <C> Nonaccruing loans $ 1,865 $ 2,285 $ 3,424 $ 3,136 $ 4,671 ======== ======== ======== ======== ======= Accruing loans 90 days or more past due: Real estate loans Construction and land development - - - - - Secured by 1-4 family dwellings 138 304 705 308 373 Other real estate - - 14 36 12 Commercial and industrial loans - 63 - 21 19 Loans to individuals 208 214 204 159 180 All other loans - - - - - -- -- -- -- -------- Total loans, 90 days or more past due 346 581 923 524 584 ========= ======== ========= ========= ======== Restructured loans, not included above - 38 125 206 281 == === ==== ==== ======== </TABLE> 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 methodology for establishing the loan loss reserve has been enhanced to evaluate and support the range of loss factors produced (i.e. normalizing unusual influences, establishment of factor floors). The results of these changes in the methodology are immaterial. 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, ------------ 2000 1999 1998 ---- ---- ---- Allocated $ 8,619 $ 8,786 $ 6,993 Unallocated 2,108 2,437 3,545 -------- -------- -------- Total $ 10,727 $ 11,223 $ 10,538 ======== ======== ======== The $167,000 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 $329,000 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. The increase of $1.8 million in the allocated portion of the reserve for the year ended December 31, 1999 was due to a combination of portfolio growth and higher estimation factors for several portfolio segments. The volume growth occurred predominantly in the commercial and consumer loan portfolios, up 11.3% and 12.4% respectively. Increases in loss factors applied to specific loan pools effected the following portfolios. Higher loss experience from small business loans, mostly unsecured commercial and industrial credits, caused the commercial uncriticized factor to increase from 1.11% at 12/31/98 to 1.28% at 12/31/99, continuing a trend from .15% at 13
12/31/97. An above average number of properties categorized as OREO at some point during 1999, influenced the qualitative component of the residential real estate factor, which rose from .28% to .77%. The loss factor applied to industry concentrations was raised from .60% to .80% to account for changes in loan structure practices for tract development financing and to account for the decision to allow higher credit exposure to the commercial investment property industry. The increase in allocated reserves caused a related decline in the unallocated portion of the reserve. The dollar difference between the allocated increase of $1.8 million and the unallocated decrease of $1.1 million can be attributed to recoveries added back to the reserve throughout 1999, largely the culmination of long standing action plans to recoup losses from older commercial charge-offs. 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 2000 was $205 compared to $1,052 in 1999 and $958 in 1998. 14
<TABLE> <CAPTION> 2000 1999 1998 1997 1996 -------- -------- -------- -------- -------- <S> <C> <C> <C> <C> <C> Average amount of loans outstanding $707,084 $674,798 $635,939 $617,082 $590,144 Loan loss reserve at beginning of period $ 11,223 $ 10,538 $ 10,270 $ 9,801 $ 8,854 Charge-offs: Real estate loans 156 348 575 552 990 Commercial and industrial loans 794 1,105 370 319 20 Loans to individuals 423 304 427 286 175 Home equity -- -- -- -- -- Other -- -- -- -- -- -------- -------- -------- -------- -------- Total charge-offs: 1,373 1,757 1,372 1,157 1,185 ======== ======== ======== ======== ======== Recoveries: Real estate loans 98 857 324 167 458 Commercial and industrial loans 463 440 256 78 529 Loans to individuals 111 93 102 66 76 Home equity -- -- -- -- -- Other -- -- -- 5 24 -------- -------- -------- -------- -------- Total recoveries: 672 1,390 682 316 1,087 ======== ======== ======== ======== ======== Net charge-offs: 701 367 690 841 98 Additions to loan loss reserve 205 1,052 958 1,310 1,045 Loan loss reserve at end of period $ 10,727 $ 11,223 $ 10,538 $ 10,270 $ 9,801 ======== ======== ======== ======== ======== <CAPTION> Loan type Loan type Loan type Loan type Loan type as % as % as % as % as % Amount in reserve by category: of loans of loans of loans of loans of loans -------- -------- -------- --------- -------- <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> Real estate loans 57.3 $ 2,370 59.0 $ 2,571 63.2 $ 2,358 68.8 $ 3,511 70.8 $ 3,146 Commercial and industrial loans 29.9 4,848 29.4 5,356 26.0 3,575 21.8 610 20.5 1,332 Loans to individuals 10.7 1,401 10.1 848 9.7 1,049 8.4 617 7.8 354 All other loans 2.1 11 1.5 11 1.1 11 1.0 11 0.9 11 Unallocated portion 2,097 2,437 3,545 5,521 4,958 -------- ------- ------- ------ -------- Total $ 10,727 $ 11,223 $ 10,538 $ 10,270 $ 9,801 ======== ========= ======== ========= ======== Ratio of Net charge-offs versus average loans 0.1% 0.1% 0.1% 0.1% 0.0% </TABLE> Total cash-basis and nonaccrual loans of $1,865 at December 31, 2000, were generally comprised of $368 in residential real estate loans, $174 in commercial real estate loans and $1,323 in commercial and other loans. 15
UNIVEST CORPORATION OF PENNSYLVANIA AND SUBSIDIARIES <TABLE> <CAPTION> TABLE V. DEPOSITS (THOUSANDS OF DOLLARS) 2000 1999 1998 ---- ---- ---- <S> <C> <C> <C> A. Average: Noninterest-bearing demand deposits $ 150,911 $ 150,455 $ 132,132 Interest checking 90,785 86,583 80,524 Money Market savings 188,394 158,014 128,970 Saving deposits 134,450 140,313 132,012 Time deposits 370,239 350,350 356,598 -------- -------- ------- Total $ 934,779 $ 885,715 $ 830,236 ========== ========== ========= <CAPTION> 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, 2000 ------- ------ ------ --------- <S> <C> <C> <C> <C> Certificates of deposit $ 6,326 $ 7,556 $ 11,866 $ 5,914 Other time deposits $ 12,525 $ 4,230 $ 1,949 $ 1,352 </TABLE> Note: Univest and its subsidiaries do not have any foreign offices or foreign deposits <TABLE> <CAPTION> TABLE VI. RETURN ON EQUITY AND ASSETS (RATIOS) (SHOWN AS PERCENTAGES) 2000 1999 1998 ---- ---- ---- <S> <C> <C> <C> Return on assets 1.5 1.5 1.4 Return on equity 16.1 15.4 13.8 Dividend payout ratio* 31.3 30.4 30.1 Equity to assets ratio 9.4 9.4 10.3 </TABLE> *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 2000 1999 1998 ---- ---- ---- Balance at December 31 $ 67,370 $ 70,943 $ 62,890 Weighted average interest rate at year end 3.7% 3.3% 3.2% Maximum amount outstanding at any month's end $ 71,830 $ 75,439 $ 68,384 Average amount outstanding during the year $ 64,525 $ 67,612 $ 56,181 Weighted average interest rate during the year 3.5% 3.3% 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 22 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 10, 2001. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS Incorporated by reference from the 2000 Annual Report to Shareholders (Exhibit 13), pages 43-44. Dividend and other restrictions are incorporated by reference from Note 16 of the 2000 Annual Report to Shareholders (Exhibit 13), pages 29 and 30. The number of shareholders as of February 28, 2001, was 2,073. ITEM 6. SELECTED FINANCIAL DATA Incorporated by reference from the 2000 Annual Report to Shareholders (Exhibit 13), page 34. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Incorporated by reference from the 2000 Annual Report to Shareholders (Exhibit 13), pages 35 through 42. Dividend and other restrictions are incorporated by reference from Note 16 of the 2000 Annual Report to Shareholders (Exhibit 13), pages 29 and 30. ITEM 7 (A). QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK Incorporated by reference from the 2000 Annual Report to Shareholders (Exhibit 13), pages 41 and 42. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Consolidated balance sheets of the registrant at December 31, 2000 and 1999, and consolidated statements of income, changes in shareholders' equity and cash flows for each of the three years ended December 31, 2000, and the independent auditors' report thereon are incorporated by reference from the 2000 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 10, 2001. EXECUTIVE OFFICERS The names and ages of all executive officers of Univest are as follows: <TABLE> <CAPTION> PRINCIPAL OCCUPATION OFFICER TITLE DURING PAST 5 YEARS AGE <S> <C> <C> <C> William S. Aichele President President and CEO of the 50 Corporation and Union National Bank Marvin A. Anders Chairman Chairman of the Corporation 61 and Union National Bank Norman L. Keller Executive Vice President and CEO of Pennview 63 President Savings Bank and Executive Vice President of the Corporation Wallace H. Bieler Executive Vice Executive Vice President 55 President and CFO of the Corporation and Union National Bank K. Leon Moyer Executive Vice Executive Vice President 51 President of the Corporation and Union National Bank </TABLE> There is no family relationship among any of the executive officers of Univest. ITEM 11. EXECUTIVE COMPENSATION Incorporated herein by reference from the registrant's definitive proxy statement for the annual meeting of shareholders on April 10, 2001. 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 10, 2001. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS During 2000, the Corporation and its subsidiaries paid $707,942 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 & 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 2000. (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 33 Consolidated balance sheets at 13 December 31, 2000 and 1999 Consolidated statements of income for each of the 14 three years in the period ended December 31, 2000 Consolidated statements of changes in shareholders' equity 15 for each of the three years in the period ended December 31, 2000 Consolidated statements of cash flows for 16 each of the three years in the period ended December 31, 2000 Notes to consolidated financial statements 17-32 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 2000 (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 28, 2001 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 28, 2001 Director, March 28, 2001 /s/ Marvin A. Anders /s/ H. Ray Mininger - ----------------------------------------- --------------------------------- Marvin A. Anders H. Ray Mininger Chairman and Director, March 28, 2001 Director, March 28, 2001 /s/ Wallace H. Bieler /s/ Paul G. Shelly - ----------------------------------------- --------------------------------- Wallace H. Bieler Paul G. Shelly Executive Vice President and CFO, March 28, 2001 Director, March 28, 2001 /s/ K. Leon Moyer /s/ R. Lee Delp - ----------------------------------------- --------------------------------- K. Leon Moyer R. Lee Delp Executive Vice President , March 28, 2001 Director, March 28, 2001 /s/ Charles H. Hoeflich /s/ Clair W. Clemens - ----------------------------------------- --------------------------------- Charles H. Hoeflich Clair W. Clemens Chairman Emeritus, March 28, 2001 Director, March 28, 2001 /s/ Merrill S. Moyer /s/ John U. Young - --------------------------------- --------------------------------- Merrill S. Moyer John U. Young Director, March 28, 2001 Director, March 28, 2001 23
/s/ Thomas K. Leidy Thomas K. Leidy Director, March 28, 2001 24