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Univest Corporation of Pennsylvania -- Univest National Bank and Trust Co. -- Reports First Quarter Earnings

SOUDERTON, PA -- (Marketwire) -- 04/28/10 -- Univest Corporation of Pennsylvania (NASDAQ: UVSP), parent company of Univest National Bank and Trust Co. of Souderton, Pa., today announced financial results for the first quarter. Univest reported net income of $3.0 million or $0.18 diluted earnings per share for the quarter ended March 31, 2010, compared to $1.5 million or $0.09 diluted earnings per share in the previous quarter ended December 31, 2009 and $3.8 million or $0.30 diluted earnings per share for the comparable period in the prior year.

Deposits

Total non-time deposits increased $28.0 million during the quarter. The increase consisted of an increase of $4.2 million in non-interest bearing deposits and $23.8 million in NOW, money market and savings accounts. These increases were offset by a decline in time deposits of $19.6 million.

Loans

Gross loans and leases increased slightly by $1.8 million during the quarter primarily due to less credit demand and utilization of lines by businesses responding to the current economic environment.

Net Interest Income and Margin

Net interest income of $17.1 million in the first quarter of 2010 increased $760 thousand, or 4.65%, over the first quarter of 2009. The net interest margin on a tax-equivalent basis for the first quarter of 2010 increased 30 basis points to 3.99% from 3.69% for the fourth quarter ended December 31, 2009 and 23 basis points compared to 3.76% for the first quarter of 2009. The increase in the net interest income and the net interest margin can be attributed to declines in the cost of interest-bearing liabilities, primarily time deposits and Federal Home Loan Bank (FHLB) borrowings, exceeding the declines in yields on total interest-earning assets. The Corporation has continued to experience core deposit growth which has allowed the Corporation to continue to repay its maturing FHLB advances reducing FHLB advances from $92 million at December 31, 2009 to $64 million at March 31, 2010.

Non-Interest Income

Total non-interest income, excluding the impact of other-than-temporary impairments on the Corporation's bank equity portfolio, increased 11.71% for the quarter ended March 31, 2010 compared to the quarter ended March 31, 2009. For the quarter ended March 31, 2010, Univest reported total non-interest income of $8.2 million compared to $6.2 million for the comparable period in the prior year. This is attributed to increased fee income across each revenue source and reduced costs related to other-than-temporary impairment charges. Univest recorded other-than-temporary impairment charges on certain bank equity securities in the first quarter of 2010 of $5 thousand compared to charges of $1.2 million in the first quarter of 2009.

Non-Interest Expense

Non-interest expense for the first quarter of 2010 compared to the first quarter of 2009 increased $1.6 million or 10.17%, primarily due to increases in salaries and benefits expenses of $379 thousand due to investments in personnel to grow the Corporation's mortgage banking and commercial lending capabilities and increases of $521 thousand in marketing and advertising expenses to support a major brand campaign to position the Corporation to take advantage of the disruption in its markets. Other increases occurred as a result of increased audit expenses and legal fees for nonperforming loan activity.

Asset Quality and Provision for Loan and Lease Losses

Nonaccrual loans and leases were $34.9 million at March 31, 2010 compared to $33.5 million at December 31, 2009 and $3.7 million at March 31, 2009. Nonperforming loans and leases as a percentage of total loans and leases equaled 2.58% at March 31, 2010 compared to 2.65% at December 31, 2009 and 0.45% at March 31, 2009. The provision for loan and lease losses was $4.9 million for the first quarter of 2010 compared to $7.4 million for the quarter ended December 31, 2009 and $2.2 million for the quarter ended March 31, 2009. As a result of the increased provision year-over-year, the allowance for loan and lease losses as a percentage of total loans and leases increased to 1.90% at March 31, 2010 from 1.74% at December 31, 2009 and 1.01% at March 31, 2009. The allowance for loan and lease losses to nonperforming loans and leases equaled 73.45% at March 31, 2010 which increased from 65.54% at December 31, 2009. The allowance for loan and lease losses to nonperforming loans and leases was 225.39% at March 31, 2009.

Capital

Univest continues to remain well-capitalized at March 31, 2010. Univest's total risk-based capital at December 31, 2009 was 15.78%, well in excess of the regulatory minimum for well capitalized status of 10% for total risk-based capital.

Dividend

On April 1, 2010, Univest Corporation paid a quarterly cash dividend of $0.20 per share, which represented a 4.36% annualized yield based on the closing price of Univest's stock on the date the dividend was paid.

About Univest Corporation

Headquartered in Souderton, Pa., Univest Corporation of Pennsylvania (www.univest.net) and its subsidiaries serve the financial needs of residents, businesses, and nonprofit organizations in Bucks, Chester, Montgomery and Lehigh counties. Univest National Bank and Trust Co., member FDIC and Equal Housing Lender, offers customers 32 financial service centers, 12 retirement financial services centers, and 38 ATM locations throughout the region, and is the parent company of Univest Capital, Inc., a small ticket commercial finance business; Univest Insurance, Inc., an independent insurance agency headquartered in Lansdale, Pa., which serves commercial and personal customers; and Univest Investments, Inc., Member FINRA and SIPC, a full-service broker-dealer and investment advisory firm. For more information on Univest Corporation of Pennsylvania and its subsidiaries, please visit www.univest.net.

This press release of Univest Corporation and the reports Univest Corporation files with the Securities and Exchange Commission often contain "forward-looking statements" relating to present or future trends or factors affecting the banking industry and, specifically, the financial operations, markets and products of Univest Corporation. These forward-looking statements involve certain risks and uncertainties. There are a number of important factors that could cause Univest Corporation's future results to differ materially from historical performance or projected performance. These factors include, but are not limited to: (1) a significant increase in competitive pressures among financial institutions; (2) changes in the interest rate environment that may reduce net interest margins; (3) changes in prepayment speeds, loan sale volumes, charge-offs and loan loss provisions; (4) general economic conditions; (5) legislative or regulatory changes that may adversely affect the businesses in which Univest Corporation is engaged; (6) technological issues which may adversely affect Univest Corporation's financial operations or customers; (7) changes in the securities markets or (8) risk factors mentioned in the reports and registration statements Univest Corporation files with the Securities and Exchange Commission. Univest Corporation undertakes no obligation to revise these forward-looking statements or to reflect events or circumstances after the date of this press release.

                    Univest Corporation of Pennsylvania
                   Consolidated Selected Financial Data
                              March 31, 2010

(Dollars in thousands)

Balance Sheet
 (Period End)    03/31/10    12/31/09    09/30/09    06/30/09    03/31/09
                ----------  ----------  ----------  ----------  ----------
Assets          $2,064,822  $2,085,421  $2,117,849  $2,086,821  $2,065,901
Securities         436,368     420,045     472,491     425,774     410,357
Loans held for
 sale                1,165       1,693       1,439       1,119       5,072
Loans and
 leases, gross   1,427,805   1,425,980   1,451,128   1,464,886   1,450,420
Allowance for
 loan and lease
 losses             27,065      24,798      21,945      18,824      14,720
Loans and
 leases, net     1,400,740   1,401,182   1,429,183   1,446,062   1,435,700
Total deposits   1,572,681   1,564,257   1,536,903   1,565,076   1,573,052
Non-interest
 bearing
 deposits          246,909     242,691     226,395     222,877     218,148
NOW, Money
 Market and
 Savings           894,799     871,024     812,122     833,825     819,659
Time deposits      430,973     450,542     498,386     508,374     535,245
Borrowings         187,637     214,063     267,821     265,457     245,962
Shareholders'
 equity            267,850     267,807     268,052     208,358     206,238


Balance Sheet
 (Average)                      For the three months ended,
                ----------  ----------  ----------  ----------  ----------
                  03/31/10    12/31/09    09/30/09    06/30/09    03/31/09
                ----------  ----------  ----------  ----------  ----------
Assets          $2,038,739  $2,096,945  $2,098,964  $2,077,565  $2,059,965
Securities         409,188     454,096     447,925     413,142     419,995
Loans and
 leases, gross   1,420,830   1,438,880   1,456,446   1,471,243   1,446,157
Deposits         1,537,676   1,553,308   1,547,436   1,560,317   1,555,964
Shareholders'
 equity            269,030     267,645     240,267     208,321     204,544


Asset Quality
 Data
 (Period End)
                 03/31/10    12/31/09    09/30/09    06/30/09    03/31/09
                ----------  ----------  ----------  ----------  ----------
Nonaccrual
 loans and
 leases         $   34,856  $   33,498  $   33,116  $    5,762  $    3,675
Accruing loans
 and leases 90
 days or more
 past due              303         726         644       1,839       2,109
Troubled debt
 restructured        1,691       3,611       3,216       3,324         747
Other real
 estate owned        2,453       3,428       3,330       2,812       2,824
Nonperforming
 assets             39,303      41,263      40,306      13,737       9,355
Allowance for
 loan and lease
 losses             27,065      24,798      21,945      18,824      14,720
Nonperforming
 loans and
 leases / Loans
 and leases           2.58%       2.65%       2.55%       0.75%       0.45%
Allowance for
 loan and lease
 losses / Loans
 and leases           1.90%       1.74%       1.51%       1.29%       1.01%
Allowance for
 loan and lease
 losses /
 Nonperforming
 loans               73.45%      65.54%      59.35%     172.30%     225.39%


                                For the three months ended,
                ----------  ----------  ----------  ----------  ----------
                  03/31/10    12/31/09    09/30/09    06/30/09    03/31/09
                ----------  ----------  ----------  ----------  ----------
Net loan and
 lease
 charge-offs    $    2,628  $    4,595  $    2,807  $    1,249  $      554
Net loan and
 lease
 charge-offs
 (annualized)/-
 Average loans
 and leases           0.75%       1.27%       0.76%       0.34%       0.16%




                    Univest Corporation of Pennsylvania
                   Consolidated Selected Financial Data
                              March 31, 2010

(Dollars in thousands,
 except per share data)
                                For the three months ended,
                ----------------------------------------------------------
For the period:  03/31/10    12/31/09    09/30/09    06/30/09    03/31/09
                ----------  ----------  ----------  ----------  ----------
Interest income $   22,485  $   23,184  $   24,244  $   24,529  $   24,402
Interest
 expense             5,380       6,409       6,901       7,356       8,057
                ----------  ----------  ----------  ----------  ----------
  Net
   interest
   income           17,105      16,775      17,343      17,173      16,345
Provision for
 loan and lease
 losses              4,895       7,449       5,928       5,353       2,156
                ----------  ----------  ----------  ----------  ----------
Net interest
 income after
 provision          12,210       9,326      11,415      11,820      14,189
Noninterest
 income:
  Trust fee
   income            1,500       1,461       1,325       1,325       1,425
  Service
   charges on
   deposit
   accounts          1,782       1,986       1,745       1,692       1,613
  Investment
   advisory
   commission
   and fee
   income            1,056       1,025         876         766         760
  Insurance
   commissions
   and fee
   income            2,243       1,514       1,470       1,964       2,133
  Bank owned
   life
   insurance
   income              332         351         405         408         157
  Other-than-
   temporary
   impairment           (5)       (761)        (47)       (223)     (1,177)
  Net gain
   (loss) on
   sales of
   securities           49       1,023         112         (22)         37
  Gain on
   sales of
   loans held
   for sale            360         891         401         669         261
  Other
   income              890       1,329         811       1,247         965
                ----------  ----------  ----------  ----------  ----------
Total
 noninterest
 income              8,207       8,819       7,098       7,826       6,174
Noninterest
 expense
  Salaries and
   benefits          9,811       9,755       8,818       9,417       9,432
  Premises and
   equipment         2,292       2,138       2,216       2,125       2,233
  Deposit
   insurance
   premiums            597         599         526       1,477         583
  Other expense      4,379       4,976       4,003       3,771       3,255
                ----------  ----------  ----------  ----------  ----------
Total
 noninterest
 expense            17,079      17,468      15,563      16,790      15,503
                ----------  ----------  ----------  ----------  ----------
Income before
 taxes               3,338         677       2,950       2,856       4,860
Applicable
 income taxes          368        (845)        197         187       1,024
                ----------  ----------  ----------  ----------  ----------
Net income      $    2,970  $    1,522  $    2,753  $    2,669  $    3,836
                ==========  ==========  ==========  ==========  ==========

Per Common
 Share Data:
Book value per
 share          $    16.17  $    16.27  $    16.30  $    16.00  $    15.87
Net income per
 share:
     Basic      $     0.18  $     0.09  $     0.19  $     0.21  $     0.30
     Diluted    $     0.18  $     0.09  $     0.19  $     0.21  $     0.30
Dividends per
 share          $     0.20  $     0.20  $     0.20  $     0.20  $     0.20
Weighted
 average shares
 outstanding    16,535,461  16,464,824  13,635,961  13,023,148  12,977,369
Period end
 shares
 outstanding    16,561,807  16,465,083  16,442,021  13,023,704  12,996,291





                    Univest Corporation of Pennsylvania
                   Consolidated Selected Financial Data
                              March 31, 2010


                                    For the three months ended,
                          ------------------------------------------------
Profitability Ratios
 (annualized)             03/31/10  12/31/09  09/30/09  06/30/09  03/31/09
                          --------  --------  --------  --------  --------

Return on average assets      0.59%     0.29%     0.52%     0.52%     0.76%
Return on average
 shareholders' equity         4.48%     2.26%     4.55%     5.14%     7.61%
Net interest margin (FTE)     3.99%     3.69%     3.82%     3.87%     3.76%
Efficiency ratio (1)         64.33%    65.36%    60.58%    63.96%    65.70%

Capitalization Ratios

Dividends paid to net
 income                     111.55%   216.43%   119.47%    97.60%    67.75%
Shareholders' equity to
 assets (Period End)         12.97%    12.84%    12.66%     9.98%     9.98%
Tangible common equity to
 tangible assets             10.55%    10.44%    10.28%     7.49%     7.47%


Regulatory Capital Ratios
  (Period End)
Tier 1 leverage ratio        11.82%    11.46%    11.51%     8.86%     8.89%
Tier 1 risk-based capital
 ratio                       14.44%    14.41%    14.12%    10.65%    10.72%
Total risk-based capital
 ratio                       15.78%    15.76%    15.47%    11.89%    11.74%



(1) Total operating expenses to net interest income before loan loss
    provision plus non-interest income adjusted for tax equivalent income.




      Distribution of Assets, Liabilities and Shareholders' Equity:
                Interest Rates and Interest Differential
                      ----------------------------------------------------
                              For the Three Months Ended March 31,
                      ----------------------------------------------------
Tax Equivalent Basis                2010                       2009
                      ----------------------------------------------------
                                           Ave-                       Ave-
                        Average   Income/  rage    Average   Income/  rage
                        Balance   Expense  Rate    Balance   Expense  Rate
                      ----------  -------- ----  ----------  -------- ----
Assets:
Interest-earning
 deposits with other
 banks                $   14,293  $     11 0.31% $    3,333  $      3 0.37%
U.S. Government
 obligations             114,164       742 2.64      94,844       982 4.20
Obligations of state
 and political
 subdivisions            106,634     1,739 6.61     100,450     1,712 6.91
Other debt and equity
 securities              188,390     2,019 4.36     224,701     2,834 5.11
Federal funds sold             -         -    -         233         -    -
                      ----------  --------       ----------  --------
  Total
   interest-earning
   deposits,
   investments and
   federal funds
   sold                  423,481     4,511 4.32     423,561     5,531 5.30
                      ----------  --------       ----------  --------

Commercial,
 financial, and
 agricultural loans      409,663     4,666 4.62     396,127     4,567 4.68
Real estate --
 commercial and
 construction loans      524,084     7,561 5.85     502,111     7,278 5.88
Real estate --
 residential loans       260,959     2,858 4.44     310,926     3,718 4.85
Loans to individuals      47,509       798 6.81      53,275       941 7.16
Municipal loans and
 leases                   97,448     1,425 5.93      85,899     1,315 6.21
Lease financings          81,167     1,723 8.61      97,819     2,044 8.47
                      ----------  --------       ----------  --------
  Gross loans and
   leases              1,420,830    19,031 5.43   1,446,157    19,863 5.57
                      ----------  --------       ----------  --------
     Total
      interest-earning
      assets           1,844,311    23,542 5.18   1,869,718    25,394 5.51
                      ----------  --------       ----------  --------
 Cash and due from
  banks                   31,621                     31,184
  Reserve for loan
   losses                (26,579)                   (13,669)
  Premise and
   equipment, net         34,859                     32,495
  Other assets           154,527                    140,237
                      ----------                 ----------

  Total assets        $2,038,739                 $2,059,965
                      ==========                 ==========

Liabilities:
Interest-bearing
 checking deposits    $  171,978  $     57 0.13  $  155,147  $     87 0.23
Money market savings     279,912       317 0.46     327,777       644 0.80
Regular savings          415,934       781 0.76     319,497       779 0.99
Time deposits            434,166     3,065 2.86     541,795     4,902 3.67
                      ----------  --------       ----------  --------
  Total time and
   interest-bearing
   deposits            1,301,990     4,220 1.31   1,344,216     6,412 1.93
                      ----------  --------       ----------  --------

Securities sold under
 agreements to
 repurchase               95,841       117 0.50      75,513       118 0.63
Other short-term
 borrowings               71,266       685 3.90      74,762       361 1.96
Long-term debt             5,746        47 3.32      83,967       838 4.05
Subordinated notes
 and capital
 securities               25,494       311 4.95      26,998       328 4.93
                      ----------  --------       ----------  --------
  Total borrowings       198,347     1,160 2.37     261,240     1,645 2.55
                      ----------  --------       ----------  --------
  Total interest-
   bearing
   liabilities         1,500,337     5,380 1.45   1,605,456     8,057 2.04
                      ----------  --------       ----------  --------
 Demand deposits,
  non-interest
  bearing                235,686                    211,748
 Accrued expenses and
  other liabilities       33,686                     38,217
                      ----------                 ----------
     Total
      liabilities      1,769,709                  1,855,421
                      ----------                 ----------

Shareholders' Equity
Common stock              91,332                     74,370
Capital surplus           61,420                     22,793
Retained earnings and
 other equity            116,278                    107,381
                      ----------                 ----------
     Total
      shareholders'
      equity             269,030                    204,544
                      ----------                 ----------
     Total
      liabilities and
      shareholders'
      equity          $2,038,739                 $2,059,965
                      ==========                 ==========
Net interest income               $ 18,162                   $ 17,337
                                  ========                   ========

Net interest spread                        3.73                       3.47
Effect of net
 interest-free
 funding sources                           0.26                       0.29
                                           ----                       ----
Net interest margin                        3.99%                      3.76%
                                           ====                       ====
Ratio of average
 interest-earning
 assets to average
 interest-bearing
 liabilities equity       122.93%                    116.46%
                      ==========                 ==========

Notes: For rate calculation purposes, average loan and lease categories
        include unearned discount.
       Nonaccrual loans and leases have been included in the average loan
        and lease balances.
       Loans held for sale have been included in the average loan balances.
       Tax-equivalent amounts for the three months ended March 31, 2010 and
        2009 have been calculated using the Corporation's federal
        applicable rate of 35.0%.

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