STBA - Earnings call transcript Q3 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day ladies and gentlemen, and welcome to your S&T Bancorp Inc.

Third Quarter Earnings Conference Call. All lines have been placed in a listen-only mode and the floor will be open for your questions and comments following the presentation. At this time, it is my pleasure to turn the floor over to your host, Mark Kochvar. Sir, the floor is yours.

Mark Kochvar

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

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

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

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

Todd Brice

you you, appreciate afternoon, update. Mark, good to our time quarter everybody. and us We earnings thank third join Well for taking

a per the common is return in on continued million overall of tangible quarter the average $XX.X a a impacted Results morning, $XX.X income this As of and COVID-XX million X.XX% having of economy. equity X.XX% be return return or X.XX%; press XXXX. to assets. and to that the quarter on or third the of equity pre-provision by million compared we net on included of or on asset for a number X.X%; effects this reported our announced $X.XX quarter release per in $X.XX share $XX.X of share metrics Operating of

cautious still As customers very businesses for and and pay causing is as by uncertainty they're quarter, down being credit million on requests. debt the to $XXX economic contracted loans

of $XXX brokered decision nice saw in an our but a CDs a $XX $XXX customer so shift Our $X.X we quarter, higher cost up DDA run deposits generating increase fees Mortgage also million in accounts CDs for with million by let spot the deposits banking also reduction quarter we to of was million. a made were in off, in strategic million, over decreased and a was million, a increase bright $X.X mix of the million, at year. $XX second which the this million the $XXX

PPP Charges Loan of the have seeing the $XXX or $X.XX X.XX% the On back principal million, Customers a deferrals million provision The interest, at so [indiscernible] have nice or $XX.X contractual we deferral or total charge million] totaled to X% from to quarter allowance QX million of property in declined XX% the the a versus loans hotel whose are loans or to periods increased excluding or [$XXX allowance time the CRE record credit ceased front, due to COVID. million which X.XX% included for PPP. of excluding $XXX $XX.X million, operations on for the did a of loans total $XX quarter loans. million, of which $XXX of comprises of billion on significantly payments of portfolio end about deferral gone the XX% we expired of overall and that. lift balances. have of

credits. and whose C&I We $X.X were these is The additional have we the on primarily We the the the their negotiating been they're liens million operational, did quarter. still by disclosed COVID. kiting property. restructuring by associated against credit the agreement million but we million the debt. also specific are with reserves identify is check $X.X to that real estate payments, with quarter company is and [indiscernible] increased operations for associated $X.X related impacted customer last impacted [two] by

that and agreement QX. agreement pleased auction [indiscernible] and in finally, report the And in shareholders place in want our S&T thank continued to we a I'm has of record Board Directors We X, of have will to have of final Bancorp. few begin XX, declared your process I to expect XXXX. a days November you on for quite to November a a support $X.XX dividend payable of signed XXXX

Now, I'd David program turn like the President, to to Antolik. our

Dave Antolik

you, good Todd thank and Well, everyone. afternoon,

loans with quarter the million in the total categories mentioned, exception in Todd As of all by reduced declines $XXX driven construction. by

market, along permanent in payoffs with Our demand were which has slower impacted CRE balances by QX. active influenced

In positively balances. continue addition, the loan while our reducing conserve to liquidity, borrowers further C&I impacting positive balances

down quarter in ending utilization the XX%, rates at QX. of to revolving year-end at the at the XX% end quarter continued from Our decline XX% and

and consumer efforts Todd income mentioned categories a other the Mark XX% impact have Our as increase efforts, Central result We've mortgage particularly focused our seen of and on newer of year-over-year fee residential production markets discuss in the his had Eastern our in Ohio. quarter, activity. lending in fee presentation. in will enhanced Pennsylvania income been on a primarily we’ve

forward, began the yet had revenues details borrowing We occur March ratios. rebounded will era. with on not our point grow return need PPP in particularly have forgiveness the from X order in still normal pipeline have supply July operating for since gain PPP to better levels. momentum the in X, applications pre-COVID its since banking significant customers Looking impact see along received bottomed in highest to Page these the loans any SBA. our our at C&I commercial to chain and on funding and accepting October We and that selected in nicely forgiveness order portfolio more to improvements

as X, rate contractual steadily of have into] in size pre-COVID Page on On Page detailed the number borrowers hotel to modified our details along we average payments. return deferrals loans and X, these [run reduce slowly our normalize we to the with commercial have assets. Turning seen

our declined teens over details of XX% Average year, August. a working represents owners significant financial May show over credit rate turn from on to as which the for into by to with I'll results. to just occupancy commitment high borrowers in provide We are begins this additional Mark these enhancements, now these program low performance improvement. to in additional

Mark Kochvar

a little Thanks, more of for Dave. credit X allowance losses. Slide on the the progression detail has

We bills are in and the economic and second and factor fairly quarter of the the in the reserve FICO forecasts first due part the adopter qualitative pandemic. a mostly significant quarter, had model to

of As [downgrades] some with quarter. more that second third model our the between in allowance particular in issues in discussed, of That credit the in hotels portfolio is portfolio apparent quarter, the labeled part became increased. third the in the changes and quarter the

quarter decline in did rate reserve third the [$X resulted the of the economic qualitative our outlook in the million]. future in did On unemployment quarter a bill and expected to the million overall components. However, improve balance, second see decrease that we factor about $XXX in compared a to with economic

couple net X.XX% basis NIM quarters. points re-pricing. balances, the interest the as Moving compared Ex-PPP, margin The due in down on anticipate offset next loan a to stable slide, income the for rate [quarterly] by at was the stable to relatively quarter, are next aggressive about flat net to lower second remaining relatively was mostly We LIBOR drop by the by to million also of net rate $XXX margin QX. interest the compared at about and mostly down was second end rate interest overhang average. [$XXX,XXX] deposit quarter X which declined quarter

items to did We loan expense to closer particularly swap mix deposits impact. activity the expect XX a timing forgiveness [Both and originations non-interest including muted. credit in compared of [indiscernible] in service modest second the run quality with card continues million lowest accounts, revenue better come improving over almost moderation could on Slide was volumes have we some in any as do to brokered Non-interest asset banking, debit But to the the the shows increase income, the average also was also related but increase Commercial the deposits. the The salaries total second mentioned, mortgage do rate rates $X.X with continued fees. of benefits by Non-interest quarter. the [indiscernible] third elevated do and the the months activity. that $XX $XXX,XXX. quarter deposit quarters, a of impacted by fees quarter [indiscernible] million the versus resulted the in we've Total to in quarter. the the a third PPP new $X.X see to in Todd volatility quarter, to got with $XXX charges in been liabilities deposits million the reduction in in for the lower a variance. in new per pandemic, along further to] accounted mostly deposits refinancing next the rebound of the have lag originations to second of quarter. compared [came] balance end nine in the paid paid mortgage also million lower Salary deferrals expect We most quarter Some third closer fee rate quarter, re-pricing we into as probably to increased [loans on cost largest with the part $XX due, $X.X especially help million decline and about item. around some environments offset period PPP income side]. line versus million expense second quarter came as increase – core coming lead which about

impact on quarter and calculation. up third marketing salaries more lead we pandemic the due new $XXX,XXX higher is design. medical expense about benefits restrictions as is FDIC website of had eased up. the from to to finally, expenses up to performance claims more with And recent retirement and by the in Also our came campaign assessment $XXX,XXX was Another which pension expected. activity in the expense, higher launch due of economy triggered than were the higher

average. XX, slide, ratios primarily capital basis regulatory XX to points to of Finally, ratio, retention well-capitalized in due on levels. and capital lower capital our risk by All points depending weighted excess Slide basis are XX earnings improved

Our to expand. capital continues cushion

on impacted like At time, We very asking and turn back initial the by the to provide our ability I'd with are who stress leverage absorb questions. based you instructions program are PPP the Both ratios operator completed, that including will losses loans. to have we to scenarios. over TCE for test COVID-related comfortable the much. this Thank

Operator

from Davidson. Please go ahead. Thank first our with comes D.A. Gunther question you. [Operator Russell Instructions] And

Russell Gunther

Good afternoon, guys.

Dave Antolik

afternoon good Hey, Russell.

Russell Gunther

shoots C&I, comments for know, CRE Just [fourth] green you this appreciate I the regarding dynamics on correctly. and and, within portfolio heard if potential your that loan the quarter the

the know you longer translating loan able organic tougher, that little on, to growth I So, could to you see do how term? positive a you but are growth? expectations know, comment generate in terms near being

Dave Antolik

We we see meaningful growth. to be going of it's think quarter kind any Yes. another before

we're to has still sheets, chain balance around You borrower’s and the grown. robust the indicator a We leading C&I our good a did of is which see operating see pipeline much a conversation, supply loans. is which kind but more some We're starting conversations in on having first of some know, commercial we're borrowing, looking floorplans in step leverage increase having modest preview issues. new at

things all start will As quarter point towards those to incremental think growth, we of know, see, you before we're I growth. out another

Russell Gunther

heard question. That Mark, takes the first expense trajectory going Thanks, be expenses. would the Dave. of could the switching the other Two I quarter. Is forward? I touch Are there first, just to And think this rate? run it. puts my things, Got a insurance on XX] coming [say be and gears about? for I thinking you should good you FDIC

Mark Kochvar

that of did moderate [on With couple quarter, of bit up the FDIC]. we prior increase from a so see the this going a little forward the catch thousand expect we’d by hundred a have to quarter,

Russell Gunther

And Okay. potentially be? rate being or the Got contracts, longer-term, are contemplated, at there challenging just, to to the might bigger on opportunity you then, for very changes rationalization that. you there expense whether as branch outlook look revenue it's vendor as any know, still what we run Thank near-term, just picture curious it. a opportunities wholesale

Dave Antolik

Yes.

lot of terms to So, rationalization. room in move branch a us I don't for think of there's

everything we be review are You to productive There locations, which name move know, – include contracts, you leases and renegotiate vendors aggressive million approach how in have that fairly existing we know, aren't you on taking we're [indiscernible] it we we're taking at to, review $XX of it, our from, looking throughout to as we so know, size. but certain look might to we physical of terms contracts all it. but and branches a aggressive you may that at optimize average systems XX in contracts terminate an XXXX, approach may or forward, look that

Russell Gunther

it. Got

the was migration Okay. finally thoughts this hoping Dave. of could of on you me, the for and I there, the mentions classified within the hotel in comment you you of know, Appreciate the And sort but special criticized provided standards then, general portfolio, breakdown within quarter?

Dave Antolik

downgrades the know, over, portfolio [operate], general, couple a the in and went the hotel yes, the some you you of, There amounts operating of into out the other, So, in we that were [indiscernible] portfolio. know, criticized know, companies classified. did you in you the know, of were that, bulk hotel but

Russell Gunther

do a last? follow-up, you know, total criticized this and just quarter guys you and the Okay, have amount classified versus of –

Mark Kochvar

I bit under a think little the right is percent now X%.

I last quarter. under a little X% think from that went

Russell Gunther

X% both Okay, from so Got X% it. today classified and includes last criticized quarter.

Dave Antolik

Yes.

Russell Gunther

Okay. That's Thanks, it for me. guys.

Operator

our next from go Please And with Collyn question Gilbert comes KBW. ahead.

Collyn Gilbert

Thanks. Good afternoon, guys.

Dave Antolik

Hey, Collyn.

Collyn Gilbert

credits criticized restructurings or, the do kind trying could through further classified, the how on sort of these the you staying how know, know, a through you work you to through – know, magnitude given, charge-offs book, of minute, these sort timing just maybe credits did you get see credits hotel of of whole the and credit and terms as leisure see of what net loan how system? within of Dave, of resolution in book a see, of the the bucket, know, for topic just of and the among year? some sense and you the you you may any working of potential, migrate Just kind the

Dave Antolik

sure. Yes,

downgrades – they on know of are into the majority the X Mark portfolio. the C&C hotel and [shown] you bucket So, that in overwhelming mentioned, Slide and the

retain through evaluating you a credit you using these rating, know, a so of, robust to but go as NPL to to by, going process know, have forward. you having enhancement, of risk we’re You tool the and, are we conversations that better [tapping] move that know, about we for know, some as

the anticipate some into bucket. we NPL So, do migration

you You strategy. an determining one we're, each and individual know, basis know, looking our of at these on

Todd Brice

of know, are having in process you the ones classified [phrase that in policies. we're, or] And you the know, bucket, the

you’re to some – downgrades bucket. the see you So, migration know, NPL you probably starting start see in QX negative of the would the when some be and QX to into

Mark Kochvar

and customers the second the end of were released so QX. will we of Yes, offered year and round QX next of into the early deferrals of expire part at those

Collyn Gilbert

Okay.

it level? are you how reserve you positioning So, lower how next XXXX about think does So, an do – sort elevated then quarters? given [as foresee kind does of being bleed of should and… it thinking then that bit – a about you opportunity then for reserve level the guys say couple the the little you And to let the]

Dave Antolik

it Yes. I declines the mean, takes reserve overall off as long that – [indiscernible] as as as well. the criticized some and overall levels classified actually decline, the pressure as

Collyn Gilbert

there you think Okay, kind to then, as something buybacks deployment conversation? need or are And happen before in builds, guys – capital not, is capital see and you lastly, that? okay. as just into of would coming also how by if you engaging you catalyst started about And is a the that kind of to there

Dave Antolik

past. it go with I think farther need to we

worst we for see going recovery and prospects credit here again. losses entertain the of know, some forward better feel about and part before the You pandemic buybacks the

Todd Brice

about mean, they call and Yes. you talking you start a you [indiscernible] know, I know, know, this second again. [indiscernible] down how do shutting wave

those of some just things, clarity on. some to we further see want So,

Collyn Gilbert

Okay, right. Thanks, all guys. okay. All have. That's I

Operator

[Operator Inc. we to Matthew Breese move next Instructions] Stephens with And

Matthew Breese

good Hey, afternoon.

Dave Antolik

Hi, Matthew.

Matthew Breese

quick follow-up couple of a questions. Just

quarter? next what First, non-interest was for it, outlook I income missed think the I

Mark Kochvar

XX. Around

Matthew Breese

was And that? okay. income all-in XX, quarter, then, of in for PPP the terms what

Mark Kochvar

was [indiscernible] It's million. about, it around including the interest X

Matthew Breese

that know, new the And bucket, versus Okay. hotel been old loans of Curious, go go What's change that the the you been appraisal have for the the mentioned valuation? LTV? you reappraisal. in what that has loans the Todd, then, into made jump, through as process you classified

Todd Brice

on this in don't of [indiscernible] the really are those indication have we so just process We’re where any at point.

Matthew Breese

there? charge-off Okay. just what then, What the remind estate happened underlying And a was And this on us lastly loan real you what in? of quarter, for was sector commercial me, the it that could required business there?

Dave Antolik

do still you We potential sale. a Yes. working disclose because not they're through, know that

until still door, their the end. know, close on they mean, we decided, I you were know, it trying have they're to to to so their you you want know, they respect they making liquidate So, through, ability. working just payments

not So, what disclosed is. have we that business

Matthew Breese

had. good. I That's very you. all right, All Thank Okay.

Dave Antolik

Thanks, Matt.

Operator

appear time. be this at there questions And to further no

to it any So, back remarks. turn closing over I'll for management

Todd Brice

I Internet, that we in think the on an question came had a on the fraud. update

auction So, know, of they're Department filed by as you we did available quarter. we yesterday charges the we're their we that]. discovery and to process so plead Justice, The estate real the close for may hope through [get wrapped know, on going and, days that are pursuing see you activities collection forfeiture. contract guilty process were discussed still earlier, mentioned XX would in QX And, to what in assets be last And up to underlying [is beginning have you under] of the as on collateral. [principle] XX I know, the to in

So kind where of point time. we're in this at that's

the So, in conference for that and call that want discuss call. forward to I right? Mark again everybody look your was in you next think from to had, only thank hearing one I appreciate other you opportunity David, we this the and our results quarter’s today. And I to participating

Dave Antolik

you. Thank

Operator

That concludes attendance. We your today’s call. appreciate conference

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

S&T Bancorp (STBA) 22 Oct 202020 Q3 Earnings call transcript