Evans Bank(US:EVBN)2022-02-04 02:15Financial Data and Key Metrics Changes - The company achieved record net income of $24 million for the full year 2021, more than double the prior year [8] - Net income for Q4 2021 was $5.9 million or $1.06 per diluted share, down slightly from the prior year due to a lower tax rate in the previous period [16] - Net interest income increased by $3.2 million or 20% year-over-year and $1.5 million or 8% sequentially [17] - The effective tax rate for Q4 2021 was 23.4%, compared to 25.6% in Q3 2021 and 12% in Q4 2020 [23] Business Line Data and Key Metrics Changes - Record commercial loan production exceeded $312 million, offsetting commercial loan payoffs which ran at double average rates [9] - The residential mortgage operation produced a record $119 million in mortgages in 2021 [13] - Noninterest income for Q4 was $4.7 million, with a decline in insurance revenues due to higher loss ratios [20] Market Data and Key Metrics Changes - Total deposits grew to $1.9 billion, up 3% sequentially and 9% year-over-year [28] - The balance of PPP loans forgiven in Q4 2021 was $51 million, bringing the total forgiven to $273 million [25] Company Strategy and Development Direction - The company aims to deliver results in the top quartile of banks its size, focusing on commercial banking and expanding its residential mortgage team [32][34] - A formal career development program has been initiated to support new hires in the insurance sector [36] - The company is leveraging technology to enhance client experience and operational efficiency [37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in strong loan growth and improving net interest margins as excess liquidity is deployed [29] - The company remains disciplined in maintaining credit standards despite competitive pressures [27] - Management anticipates that labor inflation will primarily affect retention rather than incentive growth [58] Other Important Information - The company made $0.5 million in philanthropic contributions during the year [39] - The company expects core net interest margin to improve by 15 to 20 basis points as excess liquidity is utilized [29] Q&A Session Summary Question: Can you walk us through how you came up with the performance goals? - Management indicated that the goals are dynamic and based on production levels, pipeline, and added talent [42][43] Question: What is the expected run rate for salaries going into next year? - The expected run rate for salaries is around $9.7 million per quarter, reflecting a more typical level after higher incentives in the previous year [45][46] Question: Why did the reserve increase despite improved nonperforming loans? - The increase in reserves was due to growth in performing assets, as many payoffs were from non-accrued loans [48][49] Question: How will excess liquidity be deployed? - The company plans to utilize most of the excess liquidity by the end of June, focusing on loan portfolio growth and investment securities [54] Question: What is the expected effective tax rate for next year? - The effective tax rate for 2022 is expected to be similar to that of Q4 2021 [60]