STBA - Earnings call transcript Q3 2018

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Operator

Greetings, and welcome to the S&T Bancorp, Inc. third quarter 2018 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mark Kochvar, Chief Financial Officer.

Mark Kochvar

afternoon, for good conference in much, call. very and participating thanks today's Thanks

presentation, clicking on A our can provide take by S&T's the may presentation. will www.stbancorp.com. risk this an want who of be you beginning your like cautionary on Brice, quarter statements front the Investor now I Before and the that introduce to at visiting statement press This release to earnings Exchange the overview on screen statement screen provides Commission forward-looking copy third website of forward-looking I you. by is required of to about link in would CEO, time and statements results. President Todd release be obtained or Relations which S&T's and by included factors, language the in Securities our refer to for

Todd Brice

Well, And thank you, Mark. afternoon, everyone. good

of share XX% a year, share. We over million million net second record $XX.X or results of a per income are or is of results quarter per which over million of or quarter, $XX.X $X.XX per to share pleased XX% third $X.XX the quarter and $XX.X $X.XX increase XXXX report this increase for

an with of on on of tangible Our XX.XX%. were extremely common XX.XX% and operating metrics strong X.XX%, return equity of a ROA equity return

contribution. $X.X expense results $X.XX Our onetime a per tax-deductible this quarter were million or of pension related by to tax positively reduction impacted share, to

X.X% $X.X our sheet volumes was on by bright strategic XX.XX%, net asset the annualized, with continues $X.XX the this loan metrics on Credit And higher-than-normal to on the Maintaining mixed, share, loan will quarter, in net a being impacted a by metrics for charge-offs net by X.XX% remain performance delinquency short-term last X.X% Mark now $XXX,XXX, our as operating quarter -- payoffs. margin represent Financial and margin annualized. to basis growth return Chief of by were be quarter. basis or lower were return loans third focus XX Provision assets color strong X.XX%, continue of increased than they a his on a rates. quarter still but Kochvar Officer, as Balance of which and more impacted increased million per $X.X and very the to were for a this to $XXX,XXX, bit points $XX $XX $XXX,XXX, as positively increased total our X.XX% flat or lower nonperforming interest the core quarter tangible quarter million Our declined on XX.XX%. million of than at increase book X spot in is comments, million basis, points, expense as was equity interest we're deposits the assets. well is provide XXXX were positive in return be and on again,

growth markets, Our some provide color Chief economies levels folks by markets continue in Lending we've X to and resources activity lending want our but the mention around adding our very higher increasing, are that Officer, robust. do Dave I will activities, more shifted to production on be in Antolik

period year. an our Before a increase to or Board the XX. XX% want represents in to last do per our to increase of This same over payable I program quarterly that November increase increase Directors and the last Dave, X% is on the XXXX, turn quarter's mention over $X.XX dividend second and over approved $X.XX $X.XX in I share dividend a

to I So at this am point, the over David to program turn Chief Officer, Antolik. going Lending

David Antolik

of reduction $XX quarter $XX million, modest grew expanded drive real continue $XX million loan were new positive This to down experienced on our a balances due recently levels, showing or XX% market offset however, limits Total aggressive our category to growth coupled at loan in million. decision deal Todd. exit competitive was part this was commercial pipeline line reduction rates to credits the C&I to thank and An by partially And the higher momentum. in and category payoff million construction is for utilization estate has by you, everyone. Hey, commercial based during We quarter. XX%. pricing, decline a good permit our in afternoon, for balances with the sell from and $X several hold in

our as rates liquidity managing in C&I active more increase. customers short-term a We seen way have

quarter to Overall, As a at year-over-year. result, first our similar during elevated second by the remained XX% nearly and payoffs the management treasury levels, increased fees have quarter.

disciplined maintain pricing, all basis interest to markets structure in X loan quarter. the to posting results be with margin our positive points York, quarter, Ohio for Northeast this expand helped We continue net by New Central new loan Western which net and to Ohio our approach our and growth continue

focus acquisition, will demographics, growth who the year. efforts markets. market we last New this strategy Pennsylvania commercial added these attractive of and on County, Our display bankers recently been markets are Buffalo, has the new talent strategies over expansion Berks their Both York and on and focused planned

dedicated point business Our team and the addition has to new on is nearly X line business customers and we well-positioned calling in million. as Ohio. We business up a very larger the a for this credit of yielded future banking in return our at our are XX% consistent year-over-year XX%, needs XX growth have approximately we plan with and of total, further business last more $X.X develop growth quarters. In year, of than evidenced to now pipeline bankers to investment, origination bankers this by

at market. with location full office will Akron now our which and suburb, the our recently Columbus of financial a results. office Finally, excited and Akron also an Ohio office LPO Mark additional city provide an Cleveland. located of service Hilliard, in with in Ohio, We're to And opened retail between in the is move in Independence, our to forward you our open we retail plan overview

Mark Kochvar

rates X end of interest to the of quarter liability improvement net sensitivity moves, from compared bearing second front Dave. the combined asset margin basis interest-bearing Fed our rate curve. Thanks, the Both with on due deposit resulted asset and points improved rate increased right. beta as All pricing last The to most competitive interest quarter. be to income $XXX,XXX, in for points by compared basis the rate Net continues to extra quarter. Deposit by and the is XX factors. day accelerated expansion one

$XXX,XXX, modest stable betas Looking by Noninterest be be compared Fed be the continue. margin ahead, flat after forward, should we the with hikes there be to compression pauses. was to interest just essentially will will expect expect to Deposit the going $XX will we million some the over income per margin and lag, rate Fed the approximately income so catchup interest quarter, last net net down relatively quarter. rate increases

Although our by saw comparatively claim and which compared processing in also benefits quarter. is increased increased expectation, the salaries by $XXX,XXX where about with mostly quarter, million noninterest in $X.X compared to were low about in activity. line Data increase last incentives, the and second we second higher expense to in medical quarter, in the

the The consulting line distributed our and are show data savings many an in During outsourcing of benefits, of item, and XX-month of functions. processing expenses of cost the ability outsourcing implementation the expenses. and up with we us that in salaries support IT the network began it improved implemented, leverage but grow without second to offsetting does more current equipment bank fully to enhanced Once stay and provide capabilities, the about and outsourcing $XXX,XXX incremental capacity however, we our to annually, software. security expect the an arrangement quarter,

and excuse million to defined quarterly as contribution at onetime noninterest benefit expense tax or -- This XX% risk deduction $XX a $X.XX pension benefit we We remain to me, the strategy, for in share quarter. a approximately the tax frozen the made pension quarter, qualifies pretax third of reduction expect of still million. $X.X our In reformer resulted $XX per a part this plan that rate. at million

quarter in just return rate X.X%, but to expect XX%. we subsequent Our in tax quarters, the to rate is third XX% approximately effective to the

We Thanks back were over Also to this it XXXX, our the impacting strong basis $X.X with set was that our strike and ratio The only of were warrants, January the was operator, was Our related million. for capital points, by shares asking and to issued warrant were modest quarter expire the very XX repurchased purchase improved a much. has XX questions. $XX.XX. At provide XXXX. will turn those in like for for program to a assets. to capital this capital price risk-weighted XXX,XXX increases in who I'd time, earnings instructions repurchase accompanied in

Operator

[Operator Instructions].

Our first Jaffray. question Piper Breese, from Matthew comes

Matthew Breese

for the portfolio, What's quarters for It growth to loan book? might the of expansion outlook here wanted like the on there. some start and construction the sounded item that then Just the book after a few loan see shrinking overall outlook.

David Antolik

Yes.

we achievable. single still digit low- think that growth mid is So to

market kind permanent CRE, We construction continue of aggressive to for loans see and a this wildcard. that's

pipeline as our grown has X. deals I quarter over and or last Although mentioned, for in our -- construction the general

some we're activity. seeing So decent

Matthew Breese

if seeing and some Where Ohio, lie? are that you strength your Upstate New you does York? could Where contrast Pittsburgh, of compare activity, markets, and the

David Antolik

activity Yes, in the newer is most coming of the markets.

an New opening in of So it's reasons one York, looking are to Buffalo. or Western office -- open the we that

booked at about in a have legacy million We market. $XXX that

as Ohio. as Northeast So Columbus, well we've Central there, and seen opportunities Pennsylvania

Matthew Breese

Got it.

the expect might Okay. bit? even excess still little higher. do like to see it Or a you capital with we growth is just we it of outlook, seems What kind that And with heading should capital? then see grow

Mark Kochvar

price have at a up. looks in our grow all options. authorization but do Although There's that our an M&A, some we interest for look point. part still should bit, we are buybacks at also come that will a taking attractive But in little an

Matthew Breese

currency peers. M&A. conversations better And than robust there on bit might market, then lot I quite touching a how maybe the of are just held they is where and your a we ahead your next? up see in mean, Are Okay.

Todd Brice

pretty, continual not think we've conversations what active right I seeing Yes, real But Matt. people, we're market, had is the with now. it's mean, I

are to good currency role the extent conditions that So overall, I think, keep for can. and up the to -- -- industry again, that our pretty is we but throughout

opportunity if And and when so we're an positioned arise. would

Operator

Gunther, comes Russell D.A. Davidson. from question next Our

Russell Gunther

what us outlook for Just the C&I. specific loan and drivers the to some bucket headwinds are I touched were quarterly give is up of pipelines the have to on your back might guys growth loan appreciate that you what of with of some in the there just particular conversation. momentum some sense and a with be? circling But got you there, the

David Antolik

Pittsburgh, hired group of office really well, and in some a North the open we Shore and they've seen Yes, activity. nice

-- hold kind We've compete were past limits, this saw entire said, on think based see as quarter well in some our spreading exposure of central in modest some the payouts is footprint. aggressive That to And throughout pricing. perspective. terms things from to very very -- a in in C&I PA as Columbus nice we fourth that seen some we I here with will and I pipeline good, reduce C&I and some growth we in that the word So quarter not the on activity of made decisions being some think the bucket. the of

Todd Brice

Yes.

we're it's give were X we been just can, quarters but the so from an so I year important, Russ, growth, that up, bit or think last to little little real bit helped had on ask perspective, trying a it's are -- ago. by the on a it's more we we've maintain rate pricing. again, to spread that we showing we're trying one negotiate by asking our And but to aggressive being thing the that all certainly, spread X environment, to bankers up we for for rising uptick, not a or more is, than extent

that basis deals just point basis XXX spread, on. As been not David XXX said, we elected spreads, point compete and there's to

David Antolik

customers noting The quarter other rates comments, liquidity. the worth managing much did utilization I their that in these more decline mentioned actively are is item is in my one and

the as short-term more cash. are rates actively down So appropriate just paying where management rise, debt they managing and --

the increased fees, to detrimental has strategy that management but translated So been into has outstandings. some

Russell Gunther

I there. it. color appreciate all Got the

line that question. You of the are Maybe in that seeing margin. with right, you're sticking

expect kind Fed be flat that's each continues think if raise. to to we You there Do glide hold out eat the Or catch of, can path you might Or betas you guys kind expansion side, can the laid would get that in margin keep, of way been one flip commented, with the actual up or deposited that you move? kind on with two, onto up expect a here? you that? the Xz as would to from set into of next Xz, you

Mark Kochvar

we out more, a basis on when of work. beta be lags move. If they them the more couple might every make I think depending the we'll little little a kind it or lead But maintain still to difficult contraction. points keep able spread expect get pause every on deposit how it a we maybe pause, so think, But on the point stop, on or bit a basis can that. would I we X of quarter, longer on or of a

Operator

Gilbert, Our next Collyn KBW. question comes from

Collyn Gilbert

if you have just of in Maybe discussion growth back the you to kind initiatives guys that could go loan place. and

higher, So I you much terms there versus done guys about you the know, had about indicated last years adding -- mid-single if initiatives so -- -- in loans to I or pace see X.X% you is that look like should level from low thinking acceleration this or year, material range, you -- seeing but the we filling last be that year do maybe Mark, similar X the look we but grow just on X% The I hole is in this like to have on more you've guess? -- more that it and folks, X% paydowns mean, what grew versus of to so? you over range that digits,

Todd Brice

if that things that impacted we year on a was so the Collyn, the that about... at you it the of basis, point-to-point State College sold had year, of end at the look One was last branch,

Mark Kochvar

million. About $XX

Todd Brice

$XX $XX But... $XX million, million or -- million.

Mark Kochvar

Yes.

analyzing So the rate in the going forward. is payoff first moving of step be determining to what is run this kind

levels pretty seem pretty elevated payoff quarters. we X over but last So historical consistent, levels, consistent the

gets will out difference, make growth million be X% the to which into million net can growth back getting $XX to focus that quarter, $XX we that to us if range. X% per So

Collyn Gilbert

then be sort obviously, a if for growth allowed think provision Okay. great loan tying rebounds and then to And then that, we the thinking be million Should more I we bit of quarter how thinking what growth or so no the quality a forward? about so million credit to this of you know be should going little would necessarily don't range, although, $X be range provision, that's a $X the bit, if normalized that in provision the or modest.

Mark Kochvar

but charges, would We be covering update imagine, for general, and then quarter, going growth. every we're I our providing model to in

-- that -- would up in were bit million in a expect could range that on role comes charge-offs said, higher, so million that per like we be you low $X So normalized the we them basis, $X a million per would, little $X on range. that side, Net be that up you to quarter, to in end provision.

Collyn Gilbert

to And helpful. just -- NIM. financial goals just period what to balance to sheet discipline That's to the plans? preserve these that's balance targets interest about you and growth or that to managing level? and a to be trying of do you -- income manage growth you're the disciplined just Or preserve much are Or again, thinking the or you ROA? your causing on the to Okay. there you kind then, that what top-down want sort more for of sheet of net Do desire guys some back are on achieve it targets the tying growth is outlook are

Mark Kochvar

return When looking we probably all as look assets, as tangible, of we at are on return things, those on well both. at

So we're all aware and those. -- of

need the income rates, as Fed pauses, without are to the net With been get a growth back going said, Fed to to growth, expansion. that I interest of we to lot order increasing increase able in the if we've revenue the have

on we to end would into I XXXX. move Dave able as So help to expect be the out that

Todd Brice

control. ratios on is in focus Right. that our we that And efficiency and maintaining pretty on expense that area extensively

Collyn Gilbert

I Yes. had. of Yes. sort question actually and -- Well, another

of of you in I presume additional of got? hires the million, Mark, rate these includes run that that of kind all bankers that $XX build-outs and expense these of some guidance your So have

Mark Kochvar

Yes, that's right.

Operator

Our Matt Boenning and comes Schultheis, next Scattergood. from question

Matthew Schultheis

warrants. So a repurchasing I'm tarp little rusty on

Just your haven't does not? and was that for trigger does wondering does any of -- affect going And seen it type a or in forward? gain count that that guys you share while,

Mark Kochvar

it's in have, were EPS were it they in a balance gain those the the There's on no money, count, small because the all calculation share sheet. with included But in impact historically. the being it, does diluted warrants associated on fact,

end So we an a quarter going to third else maybe transaction quarter, decline, the since diluted the didn't quarter, fourth XXX,XXX see on a impact, but the equal, of small everything in see share of have be will happened we much near the a of drop-off should about QX. basis

Operator

[Operator Instructions].

James. comes Daniel next Our Raymond question Cardenas, from

Daniel Cardenas

here. couple Just a of questions quick

saw to we growth is quarter. from markets that deposit your newer coming that side, the maybe as coming little Can color On you the market the of or a from, give bit markets? from what that this is legacy us

Mark Kochvar

primary of it's Northeast Ohio, markets, we did increase legacy mean, in but in primarily Western bit the I little in see it's a Pennsylvania. the

Daniel Cardenas

the I difference the pricing markets in Okay. new or Is should markets, versus the a there terms of in noticeable markets old established say?

Mark Kochvar

some we bit and I because are footprint Yes, network because customers the we the think, have to little needing mean, that more a there we we player in I to new of the expensive newer markets, tends are legacy be it the have the in for markets. don't steal

Daniel Cardenas

Okay.

So mirror on growth growth, loan there or then lag? and of growth will as a should think be deposit bit a we the deposit lending kind growth little expected of side, the about your

Mark Kochvar

we We forward a going expect little slower usually slower have continue bit been are side, on so the that little probably deposit to on or too. bit the side, deposit

Daniel Cardenas

have outlook? rate in margin increases terms many of All you Fair outlook, do your right. guys that baked last enough. And how question, into

Mark Kochvar

with then market. the from we specifically that mean, from different we model flat it or model of Fed the couple a when I Well, forward-looking We do the ways. that. out, and get out futures we we out don't model information

way. those at try that all to manage look and we it ways So

not numbers. into planned -- to absolute put don't our we we tend them So

none So a I perspective. guess, from client

Operator

and the Ladies have the question-and-answer end we session. gentlemen, of reached

to Now would the turn call remarks. for I like Brice to Todd back closing

Todd Brice

in Dave to Hope thank to call. look discuss and you I participating forward to a Mark I just conference next day. for and this hearing in want today's all call. the from our you opportunity good results quarter's everybody appreciate and have

Operator

This concludes today's conference.

time. your your you disconnect lines participation. at may for You this Thank

S&T Bancorp (STBA) 18 Oct 182018 Q3 Earnings call transcript