Univest(US:UVSP)2022-01-27 17:46Financial Data and Key Metrics Changes - The company reported net income of $17.4 million for Q4 2021, or $0.59 per share, and a total net income of $91.8 million for the year, or $3.11 per share [3] - Loan growth was solid at $111.8 million, or 8.7% annualized during the quarter, contributing to a total growth of $455.2 million, or 9.4% for 2021, excluding PPP loans [4] - The reported margin was 2.86%, down 25 basis points compared to Q3, while the net interest margin (NIM) was negatively impacted by 43 basis points due to excess liquidity [6][7] Business Line Data and Key Metrics Changes - Noninterest income increased by $4.9 million, or 6.3% in 2021 compared to 2020, representing 31% of total revenue [10] - Noninterest expenses rose by $12.4 million, or 8% for the full year compared to 2020, with salaries, benefits, and commissions increasing by $11 million, or 11.8% [11] Market Data and Key Metrics Changes - The company experienced a significant increase in average excess liquidity, averaging $874 million for the quarter, compared to $490 million in Q3 [7] - The allowance for credit loss coverage ratio, excluding PPP loans, was 1.36% as of December 31, consistent with September 30 [9] Company Strategy and Development Direction - The company completed the acquisition of the Paul I. Sheaffer Insurance Agency to bolster its fee income business and expand into the Lancaster market [5] - For 2022, the company expects loan growth of approximately 8% to 9% excluding PPP loans, with net interest income growth projected at 8% to 10% [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining loan growth despite competitive pressures, attributing success to the strength of their team [20] - The company anticipates that the provision for credit losses will be driven by changes in economic forecasts and performance of the portfolio, estimating a provision of approximately $6 to $8 million for 2022 [13] Other Important Information - The company expects noninterest income growth of approximately 1% to 3% off a base of $82.1 million for 2022, translating to a compound annual growth rate of approximately 8% to 9% from 2019 to 2022 [14] - Noninterest expenses are expected to grow approximately 6% to 8% in 2022, with an effective tax rate projected at 19% to 20% [14] Q&A Session Summary Question: How should the company think about the split of the 6% to 8% expense growth? - The company indicated that the high single-digit range assumption for salary benefits and commission growth year-over-year is a significant driver, along with high single-digit to low double-digit growth in data processing expenses [18] Question: What is the outlook for loan growth in the competitive landscape? - Management noted that while the marketplace remains competitive, they are comfortable with their growth guidance and will continue to expand their team [20] Question: What type of betas is the company assuming for deposit rates? - The company expects low betas for the first couple of rate increases, estimating a range of 20% to 30% based on current excess liquidity [24] Question: What are the expectations for mortgage banking fee income? - The company anticipates a pullback of 25% to 30% in mortgage banking fee income due to tightening margins, while expecting growth in investment advisory and insurance sectors [35]