STBA - Earnings call transcript Q1 2019

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Operator

Greetings, and welcome to the S&T Bancorp, Inc.

First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. pleasure for your S&T my Chief Mark now Officer Financial Bancorp. is to host, introduce Kochvar, It Thank you, Mr. Kochvar.

You may begin.

Mark Kochvar

call. Okay. and Thanks conference thank afternoon, you for very participating in much. Good today's

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

Todd Brice

and Mark, good you, Thank afternoon, everyone.

of net quarter [$X.XX] of million in $XX.X XXXX, share quarter. share first or the For $XX.X fourth the or $X.XX in million we’ve $X.XX versus the $XX.X first income million XXXX $X.XX share announced per quarter per per or (sic) of and

X.XX%, also reduce and response. promotions our positive enabled this special quarter, or really XX% cost of to XX.XX%. funds pay some tangible and a return us For assets increased return million $XXX.X was and deposits. balances by in equity higher on the had annualized, markets run particularly and the deposits common was X.XX% return Growth We down on was were broker on select in some did equity strong as borrowed

bring efforts long-term now $XX million. we diligently convert we’ll and through households to are importantly, in new more down X,XXX think, these flat, were loans work to able Total essentially clients. to I these

in loan were revenue provide that basis robust of million spot are Net throughout QX. year-end. color activity margin momentum on various Antolik versus interest points producing as average lines do I seeing X of will in our David quarter, bright X.XX% However to comments, up more mention to result at business. but X.XX% end increasing his loan for want the a we positive approximately activity $XX for quarter the our a the regions at was of balances

a our million. exposure, customer than Charge-offs credits, by As anticipated income loan result, remaining market, interest increased still and first The XXXX, provision large a Northeast in We and of due we $XXX,XXX to C&I has and Charge-offs charge-off first net a business by is charge-offs have the impacted $X.X net since performing. been were were provision remaining the in two facility for credit of the balance $X borrower that million $X.X restructured higher Ohio with borrower expense and on experience did quarter. a loss and is financial contract. distress he about in a loss but $X million a million. construction

close quarter has assets, which further due was the which The market of expect of for since in receiver experienced nonperforming $X million. borrower operations to is in at a sale related the is they point XXXX. the external an to with million second This in a loan borrower $X.X QX, QX. end negotiate remaining exposure The been deterioration C&I led Pennsylvania This customer our credit QX. about entity. of pressures, the to charge-off automotive a Western we In to of

program. repurchased now we $XX $XX.X or million. the last our around Total XXX,XXX repurchase take first of expectation under about for shares QX our shares basis total capital continued disclosed quarter, XX of $XX.X or full-year In net including previously Our strong year points. repurchased charge-offs million position shares to advantage is million and XXX,XXX share approximate

market will monitor our for the in pleased new to Ohio, opportunities for banking retail activities to which recently we continue location conditions opened Columbus, purposes. complement will banking future announce and look of that I’m We commercial team. our

per the have in months very opening April and Northeast about are in office on a And results to $XX Cuyahoga open these as was million will and $X.XX experiencing generated of Directors as we've retail over a finally, paid Falls of that suite a And on that first banking on of an our new services represents the been which first business deposits. our weeks dividend capitalize market we XXnd, dividend quarter in been approved locations this mortgage that encouraging. want our retail products has Our for will paid I ago the year. location to of that offer be we’re also offerings. Board three and well in momentum Akron a X% XXth, last Both share opened Ohio, that full and in mention May XX increase

support the President I’d S&T turn And Antolik. of to So, David now, over Chief you Officer, I continued your to program thank Bancorp. like Lending to want our and for

David Antolik

commitments revolving These customer in count resulting this Thanks, reflection growth million we’ve following also last a last that reflected quarters. a in all banking keeping result adding year, our million of the the of as the in four Todd. flat. stand slowed everyone. bankers past to five a success $XX.X commercial in point is commitments quarter, in for FTE the of is was growth made by years. nearly activity five investments $XX increase in in C&I average experienced in increase year, our additional This the each and while strong highest acquisition C&I of QX. Good balances Similar finish first in solid loan new loan afternoon, quarter; We to XXXX,

to the That in construction was We when to and rates CRE XXXX. Unfunded reduction rise segment. segment. utilization were reduced unchanged the now completed construction million XX%. stands The construction $XX decline permanent category. Offsetting as by moved -- by the the anticipated during million Commercial year-end was X% at compared balances quarter. commitments saw decline construction projects in an CRE also rate growth balance $XX $XX million this relatively

driving strong March we an several experienced lower. seen market-based for have sales volume new the market in CRE balances flat The has slower commitments Consumer loan and loan head to and the supported our We including With permanent for month new particularly in platform balances saw payoffs of season. into uptick in activity, growth combination were of deposit as a construction a we regard the permanent strong positive quarter. category, results XXXX was implementation QX. growth and ways,

to has Additionally, much of precedence market loan growth and our focus turn the management. been pipeline of

when ago. This to forecast. improvement mid one in year a full-year allows As growth remain loan compared to comfortable with seen result, us improvement we categories our have pipeline digit all single

Ohio, in brand just Akron. location to of As Northeast Todd celebrated these mentioned, which outside the look the the opening forward and in new Each a expansion Falls of continuing Central our I Ohio. opening suburb. Ohio Columbus we recently and locations evolution of location, of represent is our the new Hilliard, S&T retail Cuyahoga of

a also all forward remains New York opening and our newest location activity in the new We focus our In to of in conclusion, LPO look acquisition May. solid customer categories. in Buffalo,

market-based qualified our provide financial with highly of Mark continue order pipeline drive in expanded details growth. our some on our growth revenue to and Our motivated you additional platform new to we will build results. in and bankers and hire And and markets is support now,

Mark Kochvar

interest to by loans adjustments. fewer $XXX,XXX despite $X.X rate, were interest which contributing able in interest as to $XX X reducing Dave. net borrowings, our from net combined quarter. loan expensive prepayment million, to points income to funding million, Thanks, growth Strong Net compared margin adjustments to rate interest points deposit basis loan basis also pay and a down two we about average deposit the improving about The in to higher and our overall late due fees growth of margin the improved ratio XXXX, fourth by days improved improvement of was quarter more factor primarily mix. booked and contributed fees with X

compression, prepayments deposit in second This although on which increase, which that, return, growth by a will pace, X to additional to we X sheet quarter. balance at the in quarter, NIM bring quarter. is points. more adjustments level basis least second should as to cumulative had little combined continue the some down margin continue by should rate will We first and pressure of slower a unlikely bit in the a the an points And to have basis same base at of top expect X

expenses Beyond again were our interest typically accounted in as results. will changes, that and the offsetting the up for and first in that compensation an second impacted large offsetting value enough balance the expect to Both plan and is market quarter, we liability quarter is deferred fees stabilize. fees by sheet. margin P&L Quarterly to show is net in continue in result rate and expenses. not This asset neutral

compared fourth $XXX,XXX experienced impact this up comparing fees in increase neutral rebound $X.X This expenses, plan salaries to $X.X of about and of the decrease out to and expense both ‘XX due compensation However, of a $XXX,XXXX and of change to and income, benefits ‘XX. million, noninterest quarter, expense. the in which $X.X Last increase about we are quarter in noninterest shows in when of fourth first first market million in of a in both leaves million in both P&L combined Taking those other to and the a saw the quarter. noninterest noninterest decline an income, we fees expenses. results quarter, quarter

services being income fees fees down up due X.X in wealth reduced credit and financial categories, to days we noninterest and million overall customers the some lower activity. several decline to other; fees, in fewer in being is which lower So, the swap lower and card seasonality market have debt and some shows due most significant

in line. the benefits, costs there seasonal a is higher several expense higher loan seasonality new also occupancy some in maintenance branch expense and location and system the significant in higher $X.X associated which in most On million payroll with increase, side, salaries categories, new incentives taxes and equipment being is the and a and

expenses forward million $XX.X quarter. expect $XX.X million quarter million be approximately to per XXXX, $XX and fee range income Going between we to per million $XX.X into and to

Our was XX.X% some approximately effective over to for in than rate tax little expected be the the due And year to first rate quarter tax XXXX. items. full expect we a our discrete

repurchases this provide mentioned to share much. for to Thanks first Our instructions risk-based in the questions. I'd earlier. over very to primarily ratios it turn At back capital essentially time, like operator due asking were to the unchanged the quarter,

Operator

of [Operator Our line from Gunther your question. question first Please with Instructions] D.A. Davidson. comes Russell with proceed

Russell Gunther

to I appreciate the regional loan contribute a to from just vertical the comments if expect bit I could number growth drivers for as any give for loan single sense as will of mid a perspective, us wondering be of ‘XX? the a digit that what was finer outlook. growth on you strength of pockets we’d well

Mark Kochvar

Geographically, Pennsylvania growth best shown well. Central Pennsylvania. two seen We've markets Ohio in and have Central as the Western Yes. that the growth pipeline are also

central The was and first Ohio. relatively for quarter Ohio flat Northeast

We New well. to expect upstate as York grow

So, Central Pennsylvania. there of the some the markets quarter first growth in the in out were quarter, soft most came first of

verticals terms growing some very noises has in perform C&I as the in well; for past In CRE pipelines consistent business most has where the grower of the continues well, the segment those are the seen our our construction performed but Company, been and well. banking to we’ve

Todd Brice

it at about the last mortgage versus the year. where at the then, And the activity quarter the end of end first quarter higher XX% is of was

Russell Gunther

great. Okay,

really for margin rate color the anything the XQ, you about are Now, half stabilize just much there, be to And what stabilization you guidance kind know this of guys. think in then, the for the that’s for the spreads really you're defend could then of side of the hikes year me that in way post a beta back on reflects. able us going understand ramp-up? if let not step-down help helpful on so expectations asset deposit stabilization talked assuming not, year? or you to the And Just you your to is

Mark Kochvar

have pause. I’ll so is a any that assume Fed Fed don’t there, increases in We

side, of We do a on side, we expect loan up throughout we stabilize so little hold bit betas should in little and pick deposit improved that the spreads arms have reprice think, to bit pricing the there. the moderate. And on to from some there. I we expect to begin year, the the up

that lot to and We accounts expect of a have repriced slow. our

long some do additional see we might point we the or onetime quarter, stabilize. expect through rates benefits a with the we quarter of some second So, in that got once get quarter as off the first but that compression basis should second down there in as the here that along easing slow of with we

Operator

with Breese Matthew of line the your question. Jaffray. from Piper comes Please question next Our with proceed

Matthew Breese

that just I a follow just question second. wanted to line of for

since they on characterize think pause Fed how deposit competition, as announced here? played out you could essentially the things have about So, we were

Mark Kochvar

at We market end, still the find money competitive. pretty front still

blood there. much really seen haven’t out We

side. some haven’t easing We short. the on rates to easing tend see and somewhat CDs. to seen start have But, on we’ve relatively the competitive. be seen They it the is But, somewhat the we come front on end anymore. pricing But, CD the increase still still down

kind on how rates. the I terms stopped are of of in think, we’ve big offers

Matthew Breese

Right. see And going do if continue where to costs is as today, lag deposit they a top I we know But, here, things what exactly quarter be will stay what there to off? peak are is essentially point, decrease. the deposit costs

Mark Kochvar

repricing probably CD more another to months. so almost reprices short several within for but increase months the to or XX they’ll slightly least to over that XX all gotten still quarters had years the that think, book several go, three us quarters for XX of at two so, have because I last we

have we CD of of probably portfolio. couple book CD relative more the So, but a the that size quarters to has shrunk counteract the

it years XX ago. did So, impact that it the have doesn’t

reprice probably rates market have quarters we of begin should to CD a on the we down So, money The those. slow side. lot couple of another as

leakage. or So, could still market some folks older priced to guess, higher do products. other I and they some is peak wild rate guess have see up demand lower to card -- wake We still a some third the fourth I But in savings we money to move that is and would extent or the continue quarter. the still

Matthew Breese

new two year And dynamics seen the activity maybe in some of seen kick pick-up some think that break market it excluding mortgage pipeline, you’ve the how and of would what's kind due in of acceleration then, or consistent thinking about implies about really you’ve growth. the hires as the to we or those outlook Is driving or you growth a for apart?

Mark Kochvar

new It’s in and of combination a our activates of market. new some hires the

that us, for So, enter expand market expand as new Buffalo, in as as as Pennsylvania we Central a Ohio, well. Central we will we be in

combination a of staff it’s So, market. and

Todd Brice

we’ve that to the of headcount keep flat. able mentioned been kind Dave

some more had some or So, into in retirements our you exits growth and we’ve markets some reallocate of mature those of dollars then higher some markets.

us. a So, nice it’s for been trade

Matthew Breese

any CECL. do but reserve last is still in stage just how we’re out? ways preliminary that I a on thoughts one to could shake first then, know And away regards you have

Mark Kochvar

Yes. Matt, Mark. this is

but are today. We of making still modeling. have we the as working We're don’t through estimate a lot good progress, an

Matthew Breese

shake the Okay. I would where you... you to going mean, if had margin, reserves lower, or the out higher

Mark Kochvar

but say not not it’s whoever how definitely a definitely we're sure much going was at to that higher; point. this I’d higher I’m do well, really

Operator

with Gilbert Our with next the of question from Collyn proceed comes Please KBW. your line question.

Collyn Gilbert

wanted Mark, that just the on guidance I to NIM clarify you gave.

X prepays to it like of looking and because is closer pressure? the we X, then of of deposit pricing are then X the X to to decline points So, collectively, basis because

Mark Kochvar

That's correct.

Collyn Gilbert

credit missed of in -- think going what apologize, beginning Todd, these outlook, what of you some comments, then, of say that general were how to quarters on your just And be these you again, I that the assumptions of gave ratio just into forward. credit Okay. you're net through or trending going the of you kind then Can numbers are charge-offs I just after as those the your what seeing of you are And into credits. sort and sort running I couple anticipating just is here?

Todd Brice

Collyn. Pat Thanks, is here. Yes. Haberfield Sure.

going to weigh in. him let So I'm

Pat Haberfield

been going for kind points. gone credits see of around in -- And we’ve net basis-point XX change year. that looked don't basis really that think saying for our that back range quarters off I and last And from mind this XX right the charge-off portfolio. I Again, at the we we’ve believe think, be year ratio, and through coming number. couple to we of of anything now, these it’s the full

Collyn Gilbert

anything And came Todd. you're seeing that had of broadly, else these of is bank, bit and or these would areas about you -- you issues, into customers then, structurally indicated or that just you're credit when for kind anything when couple you're the of But there curious sort kind the of catalyst thinking on that or kind of that are that that little point cycle? you the if thinking a cautious there as to -- just how is sort so cracks,

Todd Brice

got caused in and So, distress these into a so door. are right it now, and kind still contract operating have an business one-offs, company coming it was their some on financials, the they just bad of

get signed we the just different road They And been a debt. But markets, had down, restructure to it’d it. We note. industries. kind the paid down on different so, of

not seeing systemic that Is anything we're portfolio. So, through the right?

Pat Haberfield

in Collyn, call that I say seems And like time But, don’t right. unique, it's it kind on it a going else of, it's every one-off. from that with on was we situation, stress to don't run want just I again, into over to something their some own just That's from think to five want a anywhere model that particular I industry well the And books from these within years, having business business. particular or years experiencing maybe. XX

Todd Brice

across conditions various they with in different can and markets, positive if conversations, people. outlook, business are find good now just they're and clients hiring, But have people Collyn, right the

But, a estate and looking finding at I think steady, little industry, that's auto manufacturing the right to are seems businesses steady probably that's fill what the active. people to bit positions. real no is tougher. has been now matter qualified be one area Everybody, you're open and

different now in we mode. buckets the growth into still are So, right the of lend some that

Collyn Gilbert

And capital then, just the on deployment.

at some how foresee of -- But, to structure, you sitting then appetite. are robust I with tools? management going guess, capital want manage very aggressive you prioritize purchase kind sort capital to or do about talked and managing you're sort your Mark, that looking are ratio those down capital a how you how you of guys So, -- of as of

Mark Kochvar

look our at we're first priority TCE X zone so to in X, low And fits growth. would our neighborhood. that is managing -- We ratio, kind so our X be loan and there, of comfort to for general

manage back then, let price payback get case would So, with M&A help in ready If And regardless is, towards to would price the us little use we’ll buyback And secondly, were But first. what from that. a that. us always from the to that of the we an then of and an guide too that little we have seems want much, bit capital present we TCE our away opportunity to itself. that. we

Collyn Gilbert

a And there that do out probability how of high? this -- there leads about more M&A? seeing you like me could in to a you is my as question, to the -- of maybe deploying of you're happening, talk final just it is relates M&A. little feel environment the bit there terms Just year Is chatter deal

Todd Brice

to out market, something I find would Yes. in something in would or Central the changed interest. an PA some would something defiantly we been don’t markets there couple interest kind names Pennsylvania, have routing in the they have there mean, to out a an if we if we be would the of adding I really franchise. it’s lot would Western quite. it’s of in And Ohio think come Again, last quarters;

we present itself. if conversations and just and prepared an would So, when have opportunity be for

Operator

hand would the queue. There I call closing for further comments. the in like questions to back are to management no

Todd Brice

call. from conference today's in opportunity our a participating our hearing quarterly for everybody day. forward thank and to appreciate results Mark to great call. to and at and want I Have just next you Dave conference look I discuss the

Operator

conclude Thank this your participation. gentlemen, today's for and teleconference. Ladies does you

day. your time disconnect wonderful at may and have lines this You a

S&T Bancorp (STBA) 18 Apr 192019 Q1 Earnings call transcript