Univest Corporation Of Pennsylvania ((UVSP)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Univest Corporation of Pennsylvania’s recent earnings call conveyed a generally positive sentiment, highlighting robust growth in loans and deposits alongside improved credit quality and increased noninterest income. Despite these gains, the company faced challenges such as decreased deposits in certain areas and a rise in noninterest expenses.
Strong Loan and Deposit Growth
In the fourth quarter, Univest reported significant growth in both loans and deposits. Loans increased by $95.8 million or 5.6% on an annualized basis, while for the entirety of 2024, they grew by $259.4 million or 3.9%. Additionally, consumer and commercial deposits saw an upsurge of $104 million during the fourth quarter, marking a positive trend in the company’s core financial activities.
Noninterest Income Increase
The company achieved a notable increase in noninterest income, which rose by $2.7 million or 14.6% compared to the fourth quarter of 2023. This boost was primarily driven by advancements in wealth management, mortgage banking, and service fee income, indicating successful diversification in revenue streams.
Improved Credit Quality
Univest demonstrated improved credit quality, with nonperforming assets as a percentage of total assets decreasing by 4 basis points during the fourth quarter and 11 basis points over the year. The company also maintained minimal net charge-offs at 6 basis points for 2024, underlining its effective risk management practices.
Tangible Book Value Growth
The tangible book value per share for Univest saw a significant increase of 9.1% during 2024, reflecting the company’s successful efforts in enhancing shareholder value through prudent financial management.
Net Interest Margin Stabilization
The net interest margin (NIM) reported was 2.88%, an increase of 6 basis points from the third quarter. Excluding excess liquidity, the core NIM rose by 11 basis points to 3.02%, demonstrating stability in interest earnings despite market fluctuations.
Decrease in Total Deposits
Despite overall growth, the company experienced a decrease in total deposits by $94.9 million in the fourth quarter. This was mainly attributed to a $185.6 million reduction in public funds and a $13.4 million decline in brokered deposits, posing a challenge to the otherwise positive deposit growth.
Increase in Noninterest Expense
Noninterest expenses rose by $1.6 million or 3.3% compared to the fourth quarter of 2023. This increase highlights a potential area of concern as the company navigates its cost structure amid growing operational demands.
Forward-Looking Guidance
Looking ahead, Univest executives provided guidance for 2025, projecting loan growth between 3% and 5% with an expected increase in net interest income by approximately 5% to 7%, assuming a stable rate environment. They anticipate a provision for credit losses in the range of $12 million to $14 million, while noninterest income is expected to grow by 4% to 6%. Additionally, noninterest expenses are forecasted to rise by 4% to 5%, with an estimated effective tax rate of 20% to 20.5%. These projections suggest modest net interest margin expansion and continued strategic growth.
In conclusion, the earnings call for Univest Corporation of Pennsylvania reflected a generally positive outlook with significant achievements in loan and deposit growth, credit quality improvements, and noninterest income increases. However, challenges such as decreased deposits in specific areas and rising expenses were noted. The forward-looking guidance indicates a cautious optimism for continued growth and strategic financial management in 2025.
