Univest(US:UVSP)2023-02-24 19:40Financial Performance - Interest income for 2022 was $252,193,000, an increase from $209,731,000 in 2021, representing a growth of approximately 20.2%[144] - Net interest income after provision for credit losses for 2022 was $206,099,000, compared to $198,515,000 in 2021, reflecting an increase of about 3.0%[144] - Noninterest income decreased to $77,885,000 in 2022 from $83,224,000 in 2021, a decline of approximately 6.0%[144] - The net income for 2022 was $78,120,000, a decrease from $91,801,000 in 2021, representing a decline of approximately 14.9%[144] - Diluted earnings per share for 2022 were $2.64, down from $3.11 in 2021, reflecting a decline of 14.7%[147] - Total comprehensive income for 2022 was $39,298,000, down from $121,661,000 in 2021, reflecting a decrease of 67.7%[263] Credit Losses and Provisions - The provision for credit losses in 2022 was $12,198,000, a reversal from a provision of $(10,132,000) in 2021, indicating a significant change in credit loss expectations[144] - The allowance for credit losses on loans and leases was $79.0 million as of December 31, 2022, representing 1.29% of loans and leases held for investment[163] - The company experienced a net loan and lease charge-off of $3.9 million for the year ended December 31, 2022, an increase from $213 thousand in 2021[162] - Total net charge-offs for 2022 were $3.9 million, representing 0.07% of average loans, compared to $213,000 in 2021[202] Assets and Liabilities - Total assets at year-end 2022 were $7,222,016,000, slightly up from $7,122,421,000 in 2021, marking an increase of about 1.4%[144] - Total assets increased to $7,222.0 million as of December 31, 2022, compared to $7,122.4 million in 2021, marking a growth of approximately 1.4%[259] - Total deposits decreased to $5,913.5 million in 2022 from $6,055.1 million in 2021, a decline of about 2.3%[259] - Total borrowings increased by $226.4 million from December 31, 2021, driven by a $125.0 million increase in short-term FHLB overnight borrowings[210] Operational Efficiency - The efficiency ratio for 2022 was 62.4%, compared to 60.9% in 2021, indicating a decrease in operational efficiency[144] - The return on average assets for 2022 was 1.12%, down from 1.38% in 2021, reflecting a decline in profitability[144] - The Corporation's Tier 1 risk-based capital ratio was 10.37% as of December 31, 2022, down from 11.08% in 2021, while the total risk-based capital ratio decreased to 13.67% from 13.77%[220] Noninterest Expenses - Noninterest expense for the year ended December 31, 2022 was $186.8 million, an increase of $19.4 million, or 11.6%, compared to 2021[174] - Salaries, benefits, and commissions increased by $11.6 million, or 11.1%, reflecting expansion efforts and annual merit increases[174] - Other expenses increased by $2.6 million, or 11.3%, driven by higher travel and entertainment expenses[177] Digital Transformation and Investments - The development of a comprehensive digital platform incurred expenses of $3.8 million, or $0.10 diluted earnings per share, in 2022[148] - Data processing expense rose by $2.5 million, or 19.4%, due to investments in technology and support for a digital transformation initiative[175] - Professional fees increased by $1.6 million, or 21.4%, primarily for consulting fees related to the digital transformation initiative[176] Market and Economic Conditions - The Corporation anticipates a greater amount of liabilities repricing than assets in the next twelve months, indicating potential interest rate risk[226] - A simulation indicated that a +200 basis points rate shock could increase net interest income by $7.93 million (3.16%) over the next 12 months[230] - The Corporation's loan portfolio is managed with strict adherence to underwriting standards, focusing on borrower capacity and collateral sufficiency[231] Shareholder Equity and Dividends - Shareholders' equity increased by $2.7 million to $776.5 million, primarily due to an increase in retained earnings of $53.5 million[214] - Cash dividends declared increased to $0.83 per share in 2022 from $0.80 per share in 2021, totaling $24.40 million[269] Asset Quality - Nonaccrual loans and leases decreased to $13.4 million in 2022 from $33.3 million in 2021, indicating improved asset quality[195] - The ratio of allowance for credit losses to nonaccrual loans and leases was 591.66%, indicating strong coverage for potential losses[199] Revenue Recognition and Accounting Policies - The Corporation's revenue consists of net interest income and noninterest income, recognized when obligations under contracts with customers are satisfied[328] - The Corporation recognizes all derivative financial instruments at fair value, with changes in fair value recorded in income or other comprehensive income depending on the nature of the hedge[317][318]