Univest Financial
Annual Report 2007

Plain-text annual report

2007 ANNUAL REPORT • LEADERSHIP AND PERFORMANCE P E R F O R M A N C E I N T E G R A T I O N G R O W T H C O M M U N I T Y L E A D E R S H I P UNIVEST GRAND PRIX – 10TH ANNIVERSARY 10 2007 ANNUAL REPORT • LEADERSHIP AND PERFORMANCE TABLE OF CONTENTS Financial Performance........................................2 Financial Highlights ...........................................3 Letter to Shareholders ...................................4-5 2007 Highlights .............................................6-11 Locations .....................................................12-13 Officers and Board of Directors .................14-15 Shareholder Information ................................16 UNIVEST GRAND PRIX – 10TH ANNIVERSARY 10 INTRODUCTION The Univest Grand Prix celebrated its 10th anniversary in 2007. Originally designed as a one-day race and festival in Montgomery County, the Univest Grand Prix was intended to be a means of bringing our communities together for the good of the region. Since the race’s expansion in 2004 to a second day of competitive racing in Doylestown, Bucks County, the benefits of the event – for the community and for Univest – have exceeded all expectations. From the first one-day race in 1998, the Univest Grand Prix has become one of the region’s most exciting, colorful and most anticipated annual events. It also can be seen to symbolize a Corporation which has grown and changed considerably in the past decade. Today, Univest Corporation is a company whose financial performance, brand awareness and community relationships have all advanced dramatically in 10 years. We’ve grown from a community bank to a fully integrated financial services organization, delivering financial solutions for work, for home and for life. We’ve focused on our employees, customers and shareholders, deepening our Corporation’s culture of excellence and positioning Univest for future success. 1 E C N A M R O F R E P L A C N A N F I I • 7 0 0 2 E C N A M R O F R E P 2 Shareholders’ Equity (in millions) 2007 2006 2005 2004 2003 2002 199 185 173 160 146 134 Net Loans and Leases (in millions) 2007 2006 2005 2004 2003 2002 1342 1340 1236 1161 1050 815 Diluted Earnings Per Share (in dollars) 2007 2006 2005 2004 2003 2002 1.98 1.95 1.91 1.80 1.78 1.61 Dividends Declared (per share) 2007 2006 2005 2004 2003 2002 .80 .78 .72 .67 .53 .49 Book Value (per share) 2007 2006 2005 2004 2003 2002 15.49 14.25 13.37 12.47 11.37 10.47 HIGHLIGHTS 2007 • FINANCIAL HIGHLIGHTS At December 31, (in Thousands) 2007 2006 Cash, interest-earning deposits and federal funds sold . . . . . . . . . . . . . . . . . . . $ 59,385. . . . . . . . $ 70,355 Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423,448 . . . . . . . . 382,400 Net loans and leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,342,356. . . . . . . 1,340,398 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147,316 . . . . . . . . 136,348 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,972,505 . . . . . $ 1,929,501 Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,532,603 . . . . . $ 1,488,545 Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208,729 . . . . . . . . 225,066 Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,447 . . . . . . . . . 30,505 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,773,779. . . . . . . 1,744,116 Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198,726 . . . . . . . . 185,385 Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,972,505 . . . . . $ 1,929,501 For the years ended December 31, (in Thousands, Except Share and Per Share Data) 2007 2006 2005 Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 116,533 . . . . . . .$ 105,166 . . . . . . . $ 85,502 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54,127 . . . . . . . . .43,651 . . . . . . . . .26,264 Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62,406 . . . . . . . . .61,515 . . . . . . . . .59,238 Provision for loan and lease losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2,166 . . . . . . . . . .2,215 . . . . . . . . . .2,109 Net interest income after provision for loan and lease losses . . . . . . . . . . . . . . . . . .60,240 . . . . . . . . .59,300 . . . . . . . . .57,129 Noninterest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26,879 . . . . . . . . .25,417 . . . . . . . . .22,444 Noninterest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52,211 . . . . . . . . .49,958 . . . . . . . . .45,796 Net income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34,908 . . . . . . . . .34,759 . . . . . . . . .33,777 Applicable income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9,351 . . . . . . . . . .9,382 . . . . . . . . . .8,910 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 25,557 . . . . . . . .$ 25,377 . . . . . . .$ 24,867 Book value per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 15.49 . . . . . . . . .$ 14.25 . . . . . . . . $ 13.37 Net income per share: Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.98 . . . . . . . . . . .1.96 . . . . . . . . . . .1.93 Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.98 . . . . . . . . . . .1.95 . . . . . . . . . . .1.91 Dividends declared per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0.80 . . . . . . . . . . .0.78 . . . . . . . . . . .0.72 Weighted average shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12,884,801 . . . . . .12,960,074 . . . . . 12,867,080 Period end shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12,830,609 . . . . . .13,005,329 . . . . .12,947,001 3 GROWTH 2007 • LETTER TO SHAREHOLDERS To our Family of Employees, Customers and Shareholders: We are proud to report another year of solid and stable growth for the Corporation. Despite national economic pressures, uncertain market conditions and increased competition continuing to impact the financial services industry, Univest Corporation’s performance continues to be strong. As of December 31, 2007, we reported net income of $25,557,000, representing another year of record earnings. We continued to be a well capitalized institution, and the quality of our assets remains solid. While our core banking business is responsible for the majority of our net income, our non-traditional businesses continue to grow and thrive, adding depth and stability to our financial performance. The year 2007 was marked by a milestone community event for Univest Corporation and its subsidiaries – the 10th anniversary of the Univest Grand Prix, which serves as the theme for this annual report. The Univest Grand Prix, one of the top professional cycling events in the country, has strengthened relationships with key audiences and helped build partnerships benefiting our communities. Since its inception in 1998, the race’s unique blend of regional cooperation and volunteerism has fueled the local economy and enhanced the Univest brand. Even though Univest was founded more than 131 years ago, the past ten years have been dedicated to planning and implementing our strategy to grow well beyond a traditional community bank. Through acquisition we diversified and expanded the business, and just as the race has grown organically over time, so too has Univest. The parallels between the Univest Grand Prix and Univest Corporation are intriguing. Bicycle racing is a dynamic sport, with teams changing tactics on the fly. If a strategy developed before the race isn’t working, a successful team develops and executes another plan mid-race. As in the fast-paced sport of cycling, Univest has had to act quickly and decisively to keep pace with the high-velocity change in our industry. When deregulation provided new business opportunities in 1999, Univest expanded wisely, growing our platform of financial services over the years to include banking, insurance, investments, wealth management, trust and equipment leasing solutions. This past year, we achieved many successes. We introduced new brand initiatives such as financialSEN$E – a financial literacy program designed to provide financial advice and guidance to individuals through every stage of their lives. Another exciting community-based branding initiative, the Univest “Around Town” program, revolved around two company vehicles serving as mobile billboards as employees drove them throughout our service area, providing a platform to tell the Univest story. Univest also expanded its e-Commerce strategy, introducing new business and consumer deposit accounts nationwide through www.univestdirect.com, and attracting customers from 48 states. In addition to new products and programs, Univest made it a priority to improve operating efficiencies and strengthen the customer experience. We realigned our retail business under the leadership of our corporate banking Market Presidents and named a new Chief Experience Officer for the Corporation. We streamlined personal checking products to make it easier for our sales personnel to align the right solutions with the customers’ needs. And, technology enhancements, featuring the installation of a new teller automation system and phone system, have already improved our responsiveness to customers. Our strong record of achievement in 2007 reflects the value of our employees. They are our company’s greatest asset. This past year, we challenged our employees to think like entrepreneurs and embrace a culture of excellence to help differentiate Univest in our competitive marketplace. It is clear our employees are building a stronger organization, and through their 4 efforts we were recognized for the second consecutive year as one of the Top 100 Best Places to Work in Pennsylvania, improving our ranking among large companies from 32 to 14. We have been blessed with strong leadership and talented associates. After 24 years of dedicated service on the Univest Board of Directors, James L. Bergey announced his retirement effective January 23, 2008. William G. Morral, Alternate Director, has been appointed to Director replacing Jim. Wallace H. Bieler, Chief Financial Officer, Chief Operation Officer, Corporate Secretary and Senior Executive Vice President, also announced his retirement after 42 years of service, effective January 31, 2008. Wally has been appointed to Alternate Director of Univest Corporation and will serve as Board Secretary. Jeffrey M. Schweitzer, CPA was appointed Chief Financial Officer and Executive Vice President. In 2007 after 30 years with Univest, Diane L. Koehler retired as Chief Risk Officer and Executive Vice President. We are grateful for the contributions made by Jim, Wally and Diane to help Univest continue to excel, and we are pleased to welcome Jeff to the Univest family. In the pages to follow, we have highlighted our many 2007 achievements. We worked as a team, never losing site of our goals. We strived to differentiate Univest from our competitors by creating and nurturing a culture of excellence, providing outstanding customer service and building long-lasting relationships with our employees, customers, shareholders and communities. We’re proud of our accomplishments and the work we’ve done this past year to deliver a fair profit for both the Corporation and our shareholders. On behalf of the entire Univest family, we want to thank you for your support, confidence and investment. Sincerely, William S. Aichele Chairman, President and Chief Executive Officer January 31, 2008 Thanks for 42 Rewarding Years I am pleased to announce my retirement after 42 years of service with Univest Corporation. Remaining loyal to one company for four decades is not typical in most businesses today, but for me it was easy. Univest has a unique corporate culture highlighted by unwavering ethical business standards and strong ties to community, faith and family. The Univest family comprises our employees, customers, shareholders and community members, and the relationships I have been privileged to share with each of these groups have been deeply meaningful to me. I did not just have colleagues and customers, but rather friendships that grew over the years. It has been an honor to work every day with a strong management team and dedicated employees. Together, we strived to do our very best for our shareholders and community. Univest truly is a “Best Place to Work!” I am looking forward to retirement as well as the opportunity to continue working with my colleagues and serving Univest through my involvement on the Board of Directors. I have enjoyed every opportunity afforded to me and want to thank our employees, customers, shareholders and communities for helping to make my 42-year career rewarding and memorable. Wallace H. Bieler 5 TEAMWORK 2007 • HIGHLIGHTS A YEAR OF BUSINESS SUCCESSES IN CHALLENGING TIMES Cycling is among the most demanding sports, both physically and mentally. When cyclists “hit the wall” – an expression used in competitive cycling to describe when competitors experience extreme muscle fatigue – they must stay focused on their goal in spite of the rigors of the race. In a similar manner, 2007 presented a stern test for the financial services industry. It was one of the most challenging years in history due to ongoing unfavorable interest rates, which dampened financial performance for the fourth consecutive year. Although the Federal Reserve Bank started to improve the interest rate environment in September 2007 by cutting rates for the first time since May 2004, the industry does not anticipate the immediate return of a sustained, normalized yield curve. Government, corporate and personal debt also mounted in 2007 as the liquidity crisis expanded. De novo banks, community bank branch expansions and credit unions added to an already competitive banking market. And, the subprime mortgage crisis and housing market slowdown were the major business news stories for the year. Nevertheless, Univest stayed on course, keeping in mind our top three areas of focus – top line revenue growth, cultural excellence and entrepreneurial thinking – and delivering steady and stable growth. Operating to achieve the long-term goals of Univest required focus and discipline during a year of economic turmoil. We kept our mission and core values in the forefront, managing our deposit growth and sustaining our credit quality to better manage our risk. We also continued operating with solid corporate governance practices and delivering integrated solutions to diversify our revenue streams. Our solid performance in 2007 was, in part, a result of the strength created by the diversity of our business. Univest began offering integrated solutions in 1999 with the acquisition of Fin-Plan Group, an investment, financial planning, insurance and brokerage-services company. In the intervening years, the Corporation acquired six additional firms to help us create a strong, diversified company, including nontraditional businesses in insurance, investments, wealth management and equipment leasing. In 2007, these nontraditional banking businesses helped us again report record earnings, validating our vision to integrate and reinforce our commitment to remain a high performing financial solutions organization. Univest Insurance benefited from the first full year of West Chester-based B.G. Balmer & Company’s addition to its business, which has helped strengthen our insurance business at a time of general softness in the insurance market. In December, “Who’s Who in Bank Insurance” ranked Univest among the top 100 banks in insurance as measured by reported insurance brokerage revenues. The Wealth Management and Trust Group and Investments Group – which in 2006 surpassed $1 billion in managed assets and the half-billion dollar mark in assets under management, respectively – continued to grow and, again, F O C U S S O L U T I O N S D I S C I P L I N E 6 S T R E N G T H recorded record years. Univest Capital, Inc., (Doing Business as Vanguard Leasing, Inc.) a new start-up established in 2006, experienced significant growth and exceeded expectations in terms of its early contribution to annual revenues. We look forward to growing this business through significant opportunities for reverse integration and relationship expansion in 2008, specifically with our commercial client base. Certainly, the Corporation’s integrated platform adds balance, depth and stability to our financial standing. Yet, our traditional banking business continues to contribute the majority of Univest’s revenue – despite national and regional banking challenges. In 2007, we increased deposits in Chester, Montgomery, and Bucks counties and improved our market share in the highly competitive Bucks County region. Efforts also focused on improving operating efficiencies and strengthening the customer experience. We streamlined personal checking products to make it easier for our sales personnel to align the right solutions with customers’ needs. UNIVEST GRAND PRIX AND GRASSROOTS MARKETING HELP ACCELERATE GROWTH, BRAND AWARENESS The exciting and fast-paced Univest Grand Prix’s Montgomery County road race and Doylestown criterium begin in the same fashion: from a standing start. It is the events’ only static moment. At the sound of the starter’s pistol, the competitors accelerate slowly but steadily. Soon, they are racing at full speed, and averaging close to 30 miles per hour throughout the 107.3-mile course. Univest’s growth in business, awareness and reputation has also accelerated in the past ten years – particularly in Bucks County. The launch of the second day of racing in Doylestown in 2004 came just a year after the acquisition of seven former First County and Suburban Community financial service centers in the county. Today, Univest has more branch offices in Bucks County than in Montgomery County, and based on the market demographics and planned economic development, the area holds a wealth of opportunity for future growth. The Univest Grand Prix continues as the Corporation’s signature event, and the 10th anniversary celebration was a record setter. More than 30,000 spectators attended the two-day festival. On Saturday, a record 600 cyclists participated in the amateur Cyclosportif prior to the start of the 107.3-mile professional road race. More than 400 children participated in sprint competitions in Souderton, Lansdale and Doylestown. And thousands of visitors to downtown Souderton enjoyed the Univest Community Expo. G R O W T H S E R V I C E S TA B I L I T Y 7 GRAND PRIX 10 UNIVEST GRAND PRIX – 10TH ANNIVERSARY On Sunday, spectators were attracted to the exciting, fast-paced criterium, which featured an expanded 1.4-mile circuit around the popular Doylestown Arts Festival. The start/finish line was relocated to Main and Court streets in front of the Doylestown courthouse, the county seat of Bucks County. The huge crowd at the Sunday race witnessed the exciting conclusion to the weekend-long spectacle, which included the participation of long-time Univest Grand Prix supporter and champion bicyclist Floyd Landis. Floyd led Saturday’s Cyclosportif fun ride, which for the tenth year benefited Indian Creek Foundation, a local nonprofit organization serving individuals with developmental disabilities. Beyond the spectators attending the Univest Grand Prix on Saturday and Sunday, thousands more race fans tuned into WNPV-AM and WFMZ-TV and viewed live race coverage online at www.wfmz.com and www.cycling.tv. The race was even streamed live to a sizeable European audience. Post-race coverage was provided to a national audience by Comcast SportsNet and to the Philadelphia and Dallas areas by NBC-10 and NBC-5, respectively. In 2007, the Univest Grand Prix became the top professional race in the nation for live television coverage and one of the top internationally for Internet media coverage. It is fitting that the Univest Grand Prix has become one of the Corporation’s major branding initiatives during its ten-year run. The race is a classic win-win for Univest and its communities. Much of the event’s success is due to hundreds of volunteers and businesses who support the race — including 17 corporate sponsors — and additional financial support from Pennsylvania State tourism. In turn, the weekend’s events have an enormous economic impact in the region, attracting race enthusiasts who patronize local restaurants, shops and hotels. Univest used other grassroots initiatives in 2007 to increase brand awareness in our market area. The “Around Town” program revolved around the use of two FJ Cruisers, the uniquely styled SUV. Each vehicle, emblazoned with the Univest logo and www.univest.net, acted as a mobile billboard, promoting the Univest brand, generating top-of-mind awareness and creating a platform for employees to tell the Univest story as they drove the vehicles throughout our communities, attending events and visiting customers. In April, we launched financialSEN$E, an ongoing financial literacy program designed to provide financial advice and guidance to individuals through every stage of their lives. As part of the program, Univest was the sole sponsor of NBC 10’s Money School, a four week series of free financial seminars which occurred in the spring and again in the fall. In June, we launched a children’s banking program in partnership with the popular Berenstain Bears to help youth understand the importance of saving early. The program, our first step in introducing generational marketing, targets 8 One community tradition for the Univest Grand Prix is the commemorative poster. young savers up to 18 years of age with the Univest Bear Country Savings Account. In addition to Berenstain Bear- branded activities in the branches, customers can learn about money and good money-management habits online at www.univest.net/financialsense. The online resources offer financial advice and tips for all ages. BUILDING A CULTURE OF EXCELLENCE TO SERVE A NATIONWIDE CUSTOMER BASE The professional cyclists who compete in the Univest Grand Prix are among the world’s most talented and dedicated athletes. As in other sports, the difference between winning and losing often comes down to character and determination. The top riders separate themselves from the peloton – the rest of the field – through their will to win. Likewise, it is the talent, dedication and entrepreneurial thinking of our employees that will continue to make Univest a winner in the competitive financial services marketplace. Entrepreneurial thinking may not be the first trait you’d associate with an institution celebrating 131 years of financial services and community leadership. But the ability to recognize opportunities and to develop those opportunities profitably is the key to running a successful enterprise in a fast-paced business environment. Univest depends upon – and has been rewarded by – the entrepreneurialism of our employees. The Corporation’s expansion over the past ten years has been driven by the acquisition of several non-traditional businesses – companies founded and run by entrepreneurs. These companies have brought a rich, service-oriented culture which matches well with our belief in the importance of the employee and customer experience. It has become more and more difficult for today’s financial institutions to profitably differentiate themselves based upon product and price. At Univest, we strive to set ourselves apart from the competition by improving the customer experience through superior service delivered by outstanding employees. An important indication that Univest is succeeding in building a strong culture of excellence was our inclusion, for the second year in a row, among the Top 100 Best Places to Work in Pennsylvania. Univest was ranked 14 among large companies, improving from a 2006 ranking of 32. In 2007, Univest established experience-based differentiation as a key business priority. To support the delivery of superior customer experiences, we realigned our retail banking and corporate banking functions – including small business banking – in our primary markets of Montgomery and Bucks counties under the leadership of those markets’ presidents, Phillip C. Jackson and Kenneth L. Keller, respectively. Every year, a local artist is selected to create a print depicting an aspect of the race. 9 COMMUNITY 2007 • PARTNERSHIPS In addition, we aligned the Corporation’s marketing function to support the experienced-based differentiation priority by creating a new corporate experience management function. Annette D. Szygiel, our Senior Vice President and Director of Marketing, was also appointed Chief Experience Officer. Enhancing the customer experience at every touch point is critical to successfully implementing experience-based differentiation for competitive advantage. At Univest, this means strengthening customer attraction, engagement, loyalty and profitability through flawless execution of a measurable buying experience. By leveraging customer loyalty, we are expanding our referral network garnering new business opportunities. Technology, when employed with vision and with customers’ needs in mind, has become an increasingly important tool for delivering our array of financial services. It motivates us to stay agile. We believe – and discussions at various industry events have confirmed – Univest’s e-Commerce strategy is more advanced than most of our community bank peers. As more and more consumers become comfortable with online banking, the Univest Web site becomes an evermore important portal to help us grow the business in our local market and beyond. For example, in 2007 we attracted deposits in 48 states – and depositors in California are among our fastest growing customer groups. As a result of our national success, we elected to make it easier for our e-Commerce customers throughout the country to do business with Univest through our membership in Allpoint, a network of 32,000 surcharge-free automatic teller machines nationwide. And, technology enhancements with the installation of a new teller automation system and phone system will improve our responsiveness to customers and our ability to provide the financial solutions they need. STRENGTHENING OUR PRESENCE IN OUR COMMUNITIES The Univest Grand Prix road race traverses 17 Montgomery County municipalities. For these communities, race day is filled with excitement and anticipation. As the cyclists speed through town, residents get a rare opportunity to become a part of one of the region’s most colorful community events. Just as the Univest Grand Prix winds its way through Montgomery County and the streets of Doylestown, so, too, has Univest Corporation weaved its way into the fabric of its communities – providing important financial services, working with community members on important local initiatives and providing volunteers and financial resources to address community needs. C O M M U N I T Y L O Y A LT Y 10 E M P L O Y E E S We have experienced tremendous growth in the last decade by embracing industry change as an opportunity to grow and diversify the business for the benefit of our employees, shareholders, customers and communities. Yet, we never lost site of our tradition of giving back to the community. Our most significant contribution in 2007 was, of course, the Univest Grand Prix – uniting thousands of our neighbors and visitors for a remarkable celebration, stimulating our local economy and giving back through countless Grand Prix-related activities. In addition to the race, Univest employees continued to serve on various boards and committees, volunteering hours to help local nonprofits advance their missions and to assist communities throughout Bucks, Chester and Montgomery counties. In 2007, Univest again took time to assist in the Hurricane Katrina relief efforts. Traveling all the way to Pass Christian, Mississippi, 15 Univest employees rebuilt homes and cleaned up the aftermath of the devastating storm. This was a life- changing experience for our team of employees – one they will never forget. Univest also partnered with WIP Sports Radio in Philadelphia to sponsor the first annual WIP-Univest Student Athlete of the Year Award, a $1,000 award recognizing students at 15 area public and parochial high schools who demonstrated strong character, sportsmanship and leadership. This program is yet another way for Univest to reach out to area youth and support them in their journey toward becoming leaders of their communities. RESULTS DRIVEN BY LEADERSHIP AND PERFORMANCE In this annual report, the tenth anniversary of the Univest Grand Prix has served as a metaphor to share the Corporation’s successes and challenges in 2007. But as we close this review of Univest’s performance and the celebration of 10 years of cycling excitement, the parallels between racing and Univest’s past, present and future are not perfectly aligned. When competitors in the Univest Grand Prix’s Montgomery County road race and Doylestown criterium complete these courses, they are exhausted, filled with satisfaction and a feeling of accomplishment. They have endured, and their work – at least for the day’s event – is completed. Like the most grueling race, the course Univest Corporation traveled in 2007 was full of challenges, and we completed the year proud of our many accomplishments and our solid performance. But for Univest employees, the Finish Line is never within reach – and there is no time to rest on our laurels. We start 2008 with a renewed commitment to the work ahead of us, knowing there will be obstacles to overcome, but confident in our abilities and our strategic direction – and grateful for the continuing support of you, our loyal shareholders. C O M M I T M E N T P E R F O R M A N C E S U P P O R T 11 LOCATIONS 2007 • FINANCIAL SERVICE CENTERS IN BUCKS AND MONTGOMERY COUNTIES BUCKS COUNTY Bensalem 215.224.9200 3325 Street Road Suite 110 Bensalem, PA 19020 Buckingham 215.794.5916 Hunt Acres Center 5006 York Road Holicong, PA 18928 Bucks County Regional Center 267.898.0520 1980 South Easton Road Suite 150 Doylestown, PA 18901 Chalfont 215.996.1633 195 E. Butler Avenue Chalfont, PA 18914 Doylestown 215.348.7966 191 W. State Street Doylestown, PA 18901 Doylestown - Cross Keys 215.348.8620 842 North Easton Road Doylestown, PA 18902 Feasterville 215.354.0330 40 E. Street Road Feasterville, PA 19053 Hilltown 215.721.2471 Routes 113 & 309 Souderton, PA 18964 Milford 215.536.4204 1950 John Fries Highway Milford Square, PA 18935 Newtown 215.504.2828 3 Friends Lane Newtown, PA 18940 Perkasie 215.257.6607 545 Constitution Avenue Perkasie, PA 18944 Plumsteadville 215.766.3701 5829 Easton Road Plumsteadville, PA 18949 Quakertown 215.538.3407 GIANT Food Stores 1465-7 W. Broad Street Quakertown, PA 18951 Sellersville 215.257.8060 835 Lawn Avenue Sellersville, PA 18960 Silverdale 215.257.9600 103 Baringer Avenue Silverdale, PA 18962 Solebury 215.862.3750 Logan Square Shopping Center - York Road New Hope, PA 18938 Telford Supermarket 215.721.0973 Landis Market 2685 County Line Road Telford, PA 18969 Warminster 215.956.1611 601 Louis Drive Warminster, PA 18974 MONTGOMERY COUNTY Blue Bell 610.279.3901 694 DeKalb Pike Blue Bell, PA 19422 Kulpsville 215.368.1666 1715 Sumneytown Pike Kulpsville, PA 19443 Montgomery 215.699.3525 Route 309 & Stump Road Montgomeryville, PA 18936 Souderton 215.721.2464 10 W. Broad Street Souderton, PA 18964 East Greenville 215.679.7928 321 Main Street East Greenville, PA 18041 Lansdale Area 215.362.8835 Route 63 & Forty Foot Road Lansdale, PA 19446 Royersford 484.931.2600 328 North Lewis Road Royersford, PA 19468 Franconia 215.721.0707 Route 113 & Allentown Road Franconia, PA 18924 Green Lane 215.234.4511 101 Walnut Street Green Lane, PA 18054 Lansdale East 215.412.9750 Super Fresh 620 E. Main Street. Lansdale, PA 19446 Line Lexington 215.822.3314 Route 309 & Line Lexington Road Line Lexington, PA 18932 Schwenksville 610.287.7811 415 Main Street Schwenksville, PA 19473 Skippack 610.222.3923 Township Line Road & Route 113 Skippack, PA 19473 Telford 215.723.4515 50 Penn Avenue Telford, PA 18969 Trappe 610.454.0883 595 W. Main Street Trappe, PA 19426 Vernfield 215.256.9413 2870 Shelly Road Harleysville, PA 19438 12 Bucks County Locations Montgomery County Locations Univest National Bank and Trust Co. offers 12 retirement community financial service centers throughout Bucks and Montgomery counties. For a complete listing of our retirement community offices, please visit wwwwww..uunniivveesstt..nneett. 13 LEADERSHIP 2007 • OFFICERS AND BOARD OF DIRECTORS UNIVEST NATIONAL BANK AND TRUST CO. EXECUTIVE MANAGEMENT GROUP William S. Aichele Chairman and Chief Executive Officer K. Leon Moyer President and Chief Operating Officer Wallace H. Bieler Senior Executive Vice President and Corporate Secretary Philip C. Jackson Market President Montgomery County Kenneth L. Keller Market President Bucks County Ronald S. Price Market President Chester County Duane J. Brobst Executive Vice President and Chief Credit Officer Jeffrey M. Schweitzer Executive Vice President and Chief Financial Officer Barry L. Stoltzfus Executive Vice President Richard R. Swartley Executive Vice President DELVIEW, INC. (SUBSIDIARY OF UNIVEST NATIONAL BANK AND TRUST CO.) UNIVEST INVESTMENTS, INC. William S. Aichele, Chairman Kenneth D. Hochstetler, President Wallace H. Bieler, Secretary/Treasurer UNIVEST INSURANCE, INC. William S. Aichele, Chairman Kenneth D. Hochstetler, President Wallace H. Bieler, Secretary/Treasurer VANGUARD LEASING, INC. (SUBSIDIARY OF UNIVEST NATIONAL BANK AND TRUST CO.) Hugh W. Connelly, President Wallace H. Bieler, Secretary/Treasurer (L-R)Wallace H. Bieler, William S. Aichele, K. Leon Moyer, Jeffrey M. Schweitzer UNIVEST CORPORATION OF PENNSYLVANIA OFFICERS EXECUTIVE MANAGEMENT GROUP William S. Aichele, Chairman, President and Chief Executive Officer Wallace H. Bieler, Chief Operation Officer, Senior Executive Vice President, and Corporate Secretary K. Leon Moyer Senior Executive Vice President Duane J. Brobst Executive Vice President, Chief Credit Officer Kenneth D. Hochstetler Executive Vice President Jeffrey M. Schweitzer Executive Vice President and Chief Financial Officer Barry L. Stoltzfus Executive Vice President Richard R. Swartley Executive Vice President OTHER PRINCIPAL SUBSIDIARIES UNIVEST CORPORATION OF PENNSYLVANIA Univest Delaware, Inc. Univest Realty Corporation Univest Reinsurance Corporation 14 UNIVEST CORPORATION OF PENNSYLVANIA BOARD OF DIRECTORS William S. Aichele *† Chairman, President & Chief Executive Officer, Univest Corporation of Pennsylvania and Chairman, and Chief Executive Officer, Univest National Bank and Trust Co. Marvin A. Anders *† Retired Chairman, Univest Corporation of Pennsylvania and Retired Chairman, Univest National Bank and Trust Co. James L. Bergey *† President & Sales Manager Abram W. Bergey & Sons, Inc. R. Lee Delp * Principal, R.L. Delp & Company K. Leon Moyer † President and Chief Operating Officer Univest National Bank and Trust Co. Merrill S. Moyer *† Retired Chairman, Univest Corporation of Pennsylvania and Retired Chairman, Univest National Bank and Trust Co. Mark A. Schlosser o President, Schlosser Steel, Inc. Paul Gregory Shelly *† President, Shelly Enterprises, Inc. John U. Young * Consultant & Director, Alderfer Bologna Co., Inc. Charles H. Hoeflich *† Chairman Emeritus, Univest Corporation of Pennsylvania Margaret K. Zook o Executive Director, Souderton Mennonite Homes Norman L. Keller * Retired Executive Vice President Univest Corporation of Pennsylvania Thomas K. Leidy *† President & CEO, Leidy's, Inc. H. Ray Mininger * President, H. Mininger & Son, Inc. William G. Morral, CPA o Financial Consultant Former CFO of Moyer Packing Company * Director of Univest Corporation of Pennsylvania † Director of Univest National Bank and Trust Co. o Alternate Director of Univest Corporation of Pennsylvania 15 SHAREHOLDER 2007 • SHAREHOLDER INFORMATION CORPORATE HEADQUARTERS Univest Plaza 14 North Main Street P.O. Box 64197 Souderton, Pennsylvania 18964 SHAREHOLDERS' MEETING The Annual Shareholders' Meeting will take place at 10:45 a.m., Tuesday, April 8, 2008, in the Board Room at Univest Plaza, 14 North Main Street, Souderton, Pennsylvania UNIVEST INSURANCE LOCATIONS UNIVEST STOCK TRANSFER AGENT Univest Insurance, Inc. - Lansdale Office 521 Main Street PO Box 391 Lansdale, Pennsylvania 19446 Univest Insurance, Inc. - Chester County Glenloch Corporate Campus 1473 Dunwoody Drive West Chester, Pennsylvania 19380 UNIVEST INVESTMENTS HEADQUARTERS Univest Plaza 14 North Main Street P.O. Box 64197 Souderton, Pennsylvania 18964 UNIVEST CAPITAL HEADQUARTERS Univest Capital, Inc. (Doing Business as Vanguard Leasing, Inc.) 3325 Street Road, Suite 125 Bensalem, PA 19020 For more information on Univest Corporation of Pennsylvania common stock, please call StockTrans, Inc., at 610.649.7300 or contact them at 44 West Lancaster Avenue, Ardmore, PA 19003. You may also click on our investor relations link at www.univest.net. UNIVEST SHAREHOLDER INFORMATION HOTLINE For more information on Univest Corporation of Pennsylvania, please call 800.660.4276 or 215.721.2434 MARKET MAKERS FOR UNIVEST CORPORATION OF PENNSYLVANIA COMMON STOCK Boenning & Scattergood, Inc. Ferris, Baker Watts, Inc. Knight Equity Markets, L.P. Susquehanna Financial Group, LLP Timber Hill, Inc. 16 P E R F O R M A N C E L E A D E R S H I P OUR MISSION Our purpose and philosophy is to be a strong, influential leader in the markets we choose to serve. We will provide financial solutions to individuals, businesses and nonprofit organizations; maintain an active role in our communities; and build loyal relationships with our customers and employees so that a fair profit will be provided for both the Corporation and our shareholders. CORE VALUES Tradition • Integrity • Excellence • Community • Spirituality He gives strength to the weary and increases the power of the weak...but those who hope in the LORD will renew their strength. They will soar on wings like eagles; they will run and not grow weary, they will walk and not faint. Isaiah 40:29, 31 17 Univest Plaza 14 North Main Street P.O. Box 64197 Souderton, Pennsylvania 18964 1-800-660-4276 www.univest.net 

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