STBA - Earnings call transcript Q2 2020

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Operator

Good day, ladies and gentlemen, and welcome to the S&T Bancorp Inc Second Quarter Earnings Conference Call. [Operator Instructions] At this time, it's my pleasure to turn the floor over to Mr. Mark Kochvar. Sir, the floor is yours.

Mark Kochvar

Thank you, and good afternoon, everyone, and thank you for participating in today's conference call.

in I statement take risk about is the presentation, you to factors, the on our you. to forward-looking screen beginning want time to refer which Before of front statements and statement Commission forward-looking this Exchange presentation. the Securities included may for language by statements required This the provides and be that in cautionary Investor www.stbancorp.com. your A the XXXX quarter by second copy by screen obtained release or the at on press earnings clicking Relations visiting our of link release on website can be

We an as reviewing will of part deck be slide supplement earnings this presentation.

Dave of who'll obtain a Earnings now would slides can begin the under of Todd, me You turn Antolik, website to click Todd like and Events Call, Presentations copy Earnings program today's S&T's XXXX those Quarter President. are over on With to link. CEO today Second I our presentation. the Supplement on and Brice, Conference S&T;

Todd Brice

Well, everybody. afternoon, thank Mark, and you, good

filing a by Bank in quarter, S&T on results our XX, previously this business single negatively a check-kiting As significant activity impacted customer. This our X-K reported has May criminal to scheme subject was reporting review we're this conducted, loss and there and a $X.XX million, S&T one involved. were was to event customer, was onetime relating and independent An no of per share. or employees a internal $XX.X conducted

enhancements some in we've pursuing result collection actively are prevent In legal taken process future that of monitoring may addition, and steps a to activities and implemented fraud. number We've also recovery. channels through

of return core tangible translated of a of X.XX%. into of X.XX%, on the asset the Excluding we X.XX% on per $X.XX return loss from and which share, equity fraud, equity EPS common customer on posted return

X.XX% million XX% to assets. Our pretax pre-provision $XX.X of or average by increased

will expenses at which to spot our continue our have and be is company Controlling the Another ratio, came going so a hallmark for forward. been bright in efficiency XX.XX%.

well. demand, money employees deposit spot deposit of $XXX associated a continue million how safety do And bearing $XXX market we Over and approximately million, $XXX bright XX% loans respectively. For stimulus same experienced accounts increased with estimate of the programs. this about increase noninterest-bearing was in demand the we a deposit and half of to the customers. and breakout PPP Mortgage XX% we've savings other operate. $XXX accounts. quarter Mae. last period that million certainly year. as $XX XX% protect million. is of the impacting of quarter, program was refinancing, the million Year-to-date growth and million, growth sold Interest over significant growth, production $XX and government is COVID-XX And banking of represents is about our health we to Fannie and The we the of XX%

have before, to extended and our the on and employees impacted As inclusion. promote quality, social we funds we and Also by pandemic. safety We've customers with PPP work reopened committed enhanced we an measures environment in diversity the to we fostering mentioned to remote. with help awareness remain heightened

XX%. have would center increased Bill up XX%, payments activation are pay by by banking call you branch up have up volumes year-over-year, Zelle low transactions is expect, As and is XX% declined XX%, XX%.

become to intent a is on clients awareness. their seen that out help financial Tuesday, channels more announce we we've excited I'm digital in So to new a of really the our and and self-sufficient migration into also lot website rolled serve digital to better them our

the project has have the couldn't marketing working been really better. and nine on for Our months team been about timing

customized analytics to design, our provide online first enhanced navigation, easier the offerings include an calling provide going sales for to that a mobile tool sales digital and clients. that's features we're more Merlin Some of also data

the retail banking website quarter, as as number customer improving region and a Power were one other to banking commitment part customers. satisfaction J.D. the last our continually experience bank mentioned in for as we the of we whole well by issues in are -- Mid-Atlantic As our recognized in

I record of Now million. gears, of to base allowance of the the for did an we switching $XX.X touch net metrics want fraud and quarter on credit

associated $X.X We to of the also loan million, perpetrating incurred this kiting charges includes net real $X.X the with scheme. million customer the estate pertaining

of last continue a And day again, Directors and total to do we were of Bancorp. communities Our report million and $XX.X times every X.XX% are we good Antolik. to period reserve increase by our start the customers XX.XX% turn in times over your of the our David to deliver loan Antolik, over -- impacted XXX-year $X the David and want company our I'll or value loans I presentation that resilient increased is $XXX.X fraud. will Thank same PPP. to million before President, to finally, to year. a and do serving I continued to track our record $XX.X million. associated President. work the and CRE is of or loyal mention that that And by to now for reserve services you support S&T to of The exceptional diligently which challenging ratio total Chancery single excluding dividend very million the them. $X.XX, Yeah, from NPAs negatively and floor with am XX increased now pleased X% the declared and NPAs Board with loan X.XX% I a finally,

Dave Antolik

million million Worth QX your to on you, growth and which responsible $XXX and everyone. end loans and for like information loan X, direct the portfolio attention Those provides were Good mix. of the $XXX Thank impact Slide million loan respectively. C&I were of in the total Todd, PPP. Yeah. and here amount is afternoon, our of to noting I'd $XXX at balances

summer and During construction the quarter, of experience and spring chaos growth million as reproduction. $XX our proceeded season. through quarter loans. in declined our due minimal We CRE COVID-XX from building construction primarily by $XX has slower million, in had on continued market impact balances the permanent projects our the the to did balances

commercial quarter, in resulting commitments increase During million a construction available new in funding commitments. outpaced the $X

by impacting plan struggling commitments C&I in declined was balances dealer and noticable including levels. cost of customer Factors balances a customers. by utilization borrowings during expanded Excluding This commitments PPP, note, Quarter-over-quarter these reduce by million. customers lower maintain PPP revolving declined positive declined C&I On funds $XX where using acquisition. to segments million, a inventory automobile deleveraging the a balances quarter-over-quarter. a This as were XX% of result most in reduction our floor $XX C&I by portfolio new XX%. C&I from flat quarter revolving was certain while $XXX to significant million rates result in customers to

line very to order across liquidity. to residential their experienced update pipelines Slide We provides an defensive by activity assistance drop area remained Commercial the have while in customers our hardship mortgage XX robust. our not board, in build declined have programs.

PPP loans have interest-only June We as as our down XX, of of XX% to borrowers based Generally, excluding assessment or to in XX. of of commercial payment the seen modified, July from we a percentage to the X-month forbearance on overall decline XX% X- offer hardship.

of begin encouraging, customers Further the resulting a As to in in we pipe has contractual on terms, results by resulted of see balances July to modifications with of which July This contractual you modified XX. in from expiring commercial loan original XX modifications detailed on payment commercial XX. payments. XX, decline Slide return modifications commercial are returning XX% as reduced Slide have through that X/XX XX% XX% seen expire, to is as to

economic loan pandemic are customers ongoing and have order in modifications For XX assistance detail extended provide as that certain hotels. who granted segment, cases, have, in severely-impacted shorter-term provides on Slide events most to we expired, terms our modified unfold.

implemented anticipate assistance capital and expires offered. through July period segment collection and and documentation hardship as longer examination recovery occupancy, points, loan This franchise portfolio, assessments, in on flows, relationships of the payable program. trends geographical program robust move details have breakeven as we that this along at extensions extremely average an XX working with process relief for rates, end including COVID sponsorship review well monitoring our daily modification are we as consumer We not net cash this being segment currently of locational frequent support focuses obligations and this forward. Slide for influences. of a data

are Slide process, to Mark to launch we program on prepare undergone over forgiveness on for which prepared more process results turn August XX. all to strong displayed for the XX. PPP We've them details on be loans PPP will of the significant a some results. Our I'll our

Mark Kochvar

levels, refinancing journey flat our paid margin couple loan deposit low quarter-over-quarter our was or come much lower income. don't to on versus not normal percentage able liability in resolution of to later deposits. by interest substantially swaps although combined believe saw cash margin rates CDs to Thanks, interest We by we and the other environment pressure mortgage over at repricing we swap XX do bank in On impact with good implying expectations. maintaining as expect net million Dave. essentially the NSF the low charges led interest improved related several mostly nonqualified The points. quarters. opportunity increase We service reduce balances in impacted activity, and in of quarter short-term balance, modifications. heavy as and core in the charges second an to on was categories, the shows we and broker mark-to-market, of the that loan a of new banking will compression the net were higher of stabilizing, interest Approximately the basis Slide was low-cost some X primarily floating We second particularly weakness have of continued the this as loan activity. Certainly, we to stock fee a income reduce XX in for we line of PPP stable service have offset had next X.XX% services, own basis commercial pandemic rate Noninterest on a assets, core quarter, next rate. accounts, market anticipate due in to in in in in deposits $X.X compared was Net rates interest with short PPP With an lower XX offset the do in to will to with income second Mortgage significantly anticipate highly revenue impact the decrease the saw came compression the fees side. average quarter the borrowings the the short-term margin increase in was some net rate the forgiven at net Volatility quarter. were of that the including benefit months first fees. levels help timing PPP stock but albeit a the relatively significantly a rate second half rates ahead primary are from loans. the deposits some the very value drivers quarter. continue of plan, about in points

We a some of income. the million historic of first items million the due to quarter $XX quarter included per the Noninterest $X.X first to tax rate million to for $X.X quarter. run noninterest Other the compared expense quarter first primarily declined in $XX expense remainder million year the to expect in credits. of merger-related in related

excess expense including We're We ability per and initial well-capitalized losses remains the impacted completed, ratios to levels. PPP absorb to million stress loans. leverage tests the are range in to our the in Both with run comfortable by on we levels, $XX of TCE on expect scenarios. Capital Slide quarter. rate $XX and have XX, COVID-related that based million be strong regulatory

to turn to our, to the questions. for like over I'd the call Now operator

Operator

D.A. We'll with Gunther take first from Instructions] question Davidson. Russell our [Operator

Russell Gunther

second expense the pieces other the positive might branch there for guys remarks XXXX? back You following Mark, moving guide operating in expense on the network challenging half contemplated gave at year, reduce environment, your might and given or help leverage? of the any in just prepared just operating the that track of look are initiatives that Todd, the your rate guide some record up half comments beyond you generate discipline, expense about

Todd Brice

people of we cutting branches you've system. Russell, on have branches, seen but in our a back lot releases Yes, of XX

about size million. $XXX average XXX, is a branch Our over

just So but or close look and look at like I things the something last I continue mean annual mean, we're out going XX% were basis we on today at table, going an to to of and it's come say will organization. some on commit the that. anything facets we not to week. But all to we be reviewing

we're that technology had efficiencies those, And open we positions million. as looking but be whether around. another XX so at shift from totals looking those to been the We're create replaced to not how have help resources that we've some at retire job. capacity. other some We've or become $X.X it exited And and about take and do company positions some

we pressure something So every we're we know is next to this And year. again, going do day. have margin

So number, I to squeeze of ways continuing answer, for of XX guess, that be look expense the we're my low and Russell. manage organization kind to out to would

Russell Gunther

then week, of sense trend deferrals, in how that that shake XX% And we're last could over of the months, out? when referenced, Slide of on next expect you have at quarter. next as to loans the you that XX couple do you talking a Do for where about

Dave Antolik

July. the April. what Russell, the of so Those happen you see of and expire the modifications most of in activity things in Yes terms of the first early at there in part end March

close consumer modified amount we'll on that why gathering where we segments way we retail through Yeah we're very crises consumer information continue those terms those regards we see And have on be keeping reductions will and included process the additional of and segments digital by have in the would their to July. our with portfolio, loans concern. of other are are with expectation modifications. some with customers. doing the CRE That's concerned Our to other tab to impact deep regard that understanding information worked economic what modifications, end dives of in

Russell Gunther

whatever particularly Okay. the And of do comments reduction, -- those Thanks, side just I the remains, given Is are you than Dave. consider commercial for then that guess those be And but already accounted expectation have that those that's as kind things. loans? taking may of and risk through, incremental therefore way provision headwind? work for out or more their reserves an be qualitative to that been on is

Mark Kochvar

is Mark. Russell, this

factor do the issues have We end some we have which do that being with specific rate anticipate they of risk, by that period. with modification forecast some of in but some unemployment both get the relies to also started through portfolios higher the time there to on

we adjustments So hotel to we of portfolio. qualitative that get some to think is the there be do issues have that ahead portfolio particular for in made to some fact try going with the

Todd Brice

as started We last Right. well. quarter

I loans comfortable evaluate PPP in is is So are reserves that my X.XX, quarter this as something that going that comments every to that about today, the where we're mentioned it's we quarter.

Russell Gunther

you organic back so thought doesn't billion sound one loan half balance on the that? unlikely year robust about Okay, for you're the on me, moment mean an I issue, the the how then might side that thinking thanks but with around just your the growth threshold And thoughts end and last of guys. opportunities just the at like it the and $XX sheet in the of potentially general where the quarter year are all for

Dave Antolik

got modifications balance I year, certainly we've our arms partially loan the attack don't that any credit the where kind significant see resources growth of around through to -- the some making of risk. sure and

some is set is so space, quickly as mentioned, pointing the on-boarding of we've like floor a period online, they are our get in those the two-month but QX flourishing, inventories. to that profitable, plan by very deleveraging come significant, existing going had I readvancing customers to in has down C&I It borrowers some they're they're ABL Group. in But XX%. are reduced doing been this balances well, with out some the We to can't new our amazing And portfolio. me over customers

and it's whether the the or So availability the borrowers of releverage. to some of C&I macro-economic not and going be issues inventory

of year. of of forward as the we the kind that So some through move unknown is balance

Todd Brice

as about forgiveness well. we're that weigh by of will PPP the will estimating were the other that in given XX% of The million. $XXX year-end gifts on thing that And be loans

unwind. will those So

Operator

take next from Stephens We'll Matthew with Breese Inc. question our

Matthew Breese

on fraud. question one the Just

selling why versus bucket. P&L elsewhere? you I understand how charge-off So me the of the it and I fraud kind commercial was would figured classified to struggle how and there up a elsewhere. ends hit help me through just to loan walk it Can have

Mark Kochvar

creates There's it because becomes no loan. Matt, a technically an technical loan. overdraft

it any other, process any, through charge-off. So with its that loan like works a the way allowance a that like prescribed charge-off like

a as of the charge-off well. overdraft But will we'll, And have lot small. BBA so every run very, they or but charge-offs essentially typically, through very they're process quarter, CSF reserve

Matthew Breese

very flex-mixed helpful. loans of requiring of and a the looks hotels. Okay. second consist the On XX, That's bulk use deferral. They Great. Page it like office

hotel deferral? to get provide Just You pages. against for talk of require buffer that the LTV on second the one sense ensuing a about and in But you the space just LTVs can office losses. flex want the

Todd Brice

for Yes, Matt, we can we that now, right don't have that but get you.

Matthew Breese

minimums. capital XX, excess on And I regulatory you having know in talked Page lastly, Okay. of then about

have similar preferred but a or peers with capital, number We raising sub seen of still debt. your excess

Just curious that's and you we there whether pursue. something your see thoughts might

Mark Kochvar

that's but cost have a I continue This is that the market, evaluate Mark. something it. mean to does we to

at So right issuance. any firm we of any don't it, have do we're looking plans as now to

Operator

Collyn do through we a with KBW. And have coming question Gilbert from

Collyn Gilbert

Just start. to

Just credit question. a

You the loan is and within within retail the size average happen the size the then what what loan book book? hotel to have average is CRE

Todd Brice

it's Yes, that slide. on

Collyn Gilbert

it? is Oh, Okay.

Mark Kochvar

Slide So has average hotel. the XX

book So is, a average $X.X million. and $X.X total hotel is average little million the bit the modified higher, is

Collyn Gilbert

Okay.

sorry. see there, Sorry. Yes, I that right

the of because internally when a the then Okay. all, and the if fraud, came you late. in just with is that covered little I But relationship guys you it Got through? have how from terms originated too, just anything a your And that helpful. there happen curious done perspective also, bank? beginning Todd, it. process of got comments, differently on then in that to And apologize That's of I

Todd Brice

Yes.

oversight really, And it we comes Collyn it a I if a just thorough and to. as enhanced relationship, to back down goes XXXX know what So and processes you investigation. very really, think is did we

Operator

in over any back the call like further this to management I'd the time turn at to questions there queue, closing remarks. And are no for

Todd Brice

So this look opportunity just results participating to you, today. at discuss to day. and call Dave a from for the Mark, like you quarter's and our thank forward conference Thank I'd appreciate the good call. and everybody next in to I hearing

Operator

participation. gentlemen, appreciate your this conference. Ladies and concludes does We today’s

You at may have disconnect this great and a time day.

S&T Bancorp (STBA) 1 Aug 202020 Q2 Earnings call transcript