Veritex (US:VBTX)2022-01-26 17:44Financial Data and Key Metrics Changes - The company reported operating income of $0.84 per share for Q4 2021, a 20% increase from $0.70 per share in Q3 2021, marking the strongest quarter in the company's history [7] - Total deposits grew by $851 million or 13% for the year, with 49% of that growth in non-interest bearing deposits, which now represent 34% of total deposits [10] - The operating return on average tangible common equity was 20.5% for Q4 and 17.6% for the full year 2021 [16] Business Line Data and Key Metrics Changes - Loan growth, excluding mortgage warehouse and PPP, was $150 million for Q4 and $918 million for the year, representing 9% and 16% growth respectively [8] - The C&I and ADC portfolios grew at 11.9% and 13.5% respectively during Q4 [19] - Average mortgage warehouse balances increased just under 4% in Q4, reflecting new customer acquisition [20] Market Data and Key Metrics Changes - Non-performing assets (NPAs) reduced by $24 million, bringing NPAs to total assets down to 0.51% from 0.77%, with a year-over-year reduction of over 50% [11] - Charge-offs were just shy of $13 million, with all charge-offs previously identified and provided for in earlier periods [12] Company Strategy and Development Direction - The company aims to continue producing mid-teens annual loan growth and is focused on hiring new talent in both production and operational areas [10][13] - The acquisition of North Avenue Capital is expected to enhance the company's pipeline and overall business culture [14] - The company is actively evaluating M&A opportunities in both bank and non-bank spaces to meet strategic needs [42] Management's Comments on Operating Environment and Future Outlook - Management expressed strong confidence in continuing positive results in 2022, despite challenges posed by the pandemic and economic uncertainty [41] - The company anticipates that the current economic environment will support its growth initiatives, with expectations of three to four Fed rate hikes in 2022 contributing to net interest income [25] Other Important Information - Operating non-interest income for the full year 2021 was $57 million, a 27% increase over 2020, driven by strategic investments in diversified revenue sources [29] - The operating efficiency ratio was 47.6% for Q4 and 49.3% for the full year 2021, indicating efficient operations despite significant talent investments [18] Q&A Session Summary Question: Can you tell me about the types of lenders hired and the outlook for loan growth? - The company hired 23 new producers, primarily from the community bank space, and expects mid-teens loan growth in 2022 [46][51] Question: How do you view the expense side of the equation given wage inflation? - The company anticipates expenses in the range of $180 million to $200 million, factoring in inflation and continued hiring [54][57] Question: What are the expectations for the North Avenue Capital acquisition? - Management feels optimistic about the revenue guidance initially laid out for NAC and noted recent hiring to support production [58] Question: What is the outlook for the core margin and loan to deposit ratio? - The core margin is expected to be around 3.38%, and the company is focused on improving deposit growth trends [63][71] Question: How does the company view its capital levels and growth? - The company aims to increase its CET1 ratio to between 9% and 9.25% over the year, prioritizing capital growth [107][109]