STBA - Earnings call transcript Q4 2021

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Operator

Good afternoon, ladies and gentlemen and welcome to the S&T Bancorp Fourth Quarter Earnings Conference Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Mark Kochvar. Sir, the floor is yours.

Mark Kochvar

Alright. Thank you very much. thank participating and call. today’s everyone afternoon, you in for conference Good

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

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

McComish, clicking conference a like With and of now is the click link over be I’d me call. our the can the slides or today is to earnings call joining by the – and Events fourth S&T’s CEO; weather website XXXX your supplement. under You over Chris. today XXXX under call, program those Antolik, turn on will quarter on screen the President to to on earnings on quarter fourth S&T’s Dave copy Presentations Chris obtain

Chris McComish

Thanks, call company. thanks your Mark and and in and the interest good for certainly our joining afternoon, everybody for thank you

I tell the months. the experience and all I couple completed take a been with then quarter fourth about numbers – of you as company year. on this your want the over discussion and the my and minutes CEO. full we of a the into have to both gone will has I quarter get into take get quarter we some few the Before the that’s first and first talk past questions, can full statements And great and

have significant been year witnessed I part of change has in I certainly have am and this past few a with months. pleased of where been S&T. over a the First, so

embrace team superior transition a an to Our our base and move financial change in has and to accept delivering toward performance. leadership showed and consistent forward employee and goal of incredible commitment company

of few happen we great While period a months, a relatively ensuring have direction a progress over work building of clarity team time. doesn’t short together strategic made of the in and short

We focused are emphasizing capabilities and delivering safety profitable means needed that levels team a soundness we people the of to which first, consistent engagement. leadership and do. a in on all focus that delivering know employee built growth as on We business a are ensure very foundation high is business we this on of

it employee digitally Our the day engaged, customers, face-to-face, bank is to here whether or our skilled and what committed will be our S&T. delivering win base, at voice-to-voice

later our anniversary this for shareholders. we we As I and future about as ability very coincidentally, into celebrate XXXth optimistic XXXX spring, deliver our results our our am and enter to

let Now, numbers. the me turn to

go you overview. X Let’s quarter fourth a great see Slide can to and

and team of quarters group, solid two news focused For of and broad-based stable. the team. was the associated portfolios broad-based quarter, both including is loan areas, business. represented commercial Great for loan lending consumer with and our were our was asset-based equity revenue consumer That’s REIT lending home our margins consecutive the strategic flat growth in and and side, growth on some our

that about the talked in in Additionally, growth and of a deposit growth. both is of a source another is positive not our subject nowadays lot that’s and our

engagement quarter, base $XX overall and the strong million demand Our deposit our growth. loyalty growth a highlighted linked deposit company. customer of continued up to with mix It’s was of improve great their by non-interest-bearing and reflection our

our executive proactive to the have and some infrastructure. of decisions our in me incentive with investments bonuses. team primarily full in business, was quarter, did it Also leadership growth and we and the with related with While expense the technology in made support associated Board by

amount customers year. the navigating a pandemic our all through has annual in our of change end been the income each day, this on other, history the our and team at They a mentioned, incredible communities an of of and have I while delivering highest company. the As significant the commitment showed to basis net an the

pay you Approximately, in provide less rate our than For of able and $XX to you our XX% We high believe made employees thank minimum hour. and proactive increase our employees important of way decision great to being pay we everyday base a you. going incentive additional forward. in December. is say to have earn an We a expectations

quarter, these While our we great it’s this serve with will in met level employee move the as for and as of base is and pay incentive a momentum satisfaction numbers the an future are not as us organization. in with forward

is who quality soundness are growth, do of doing of culture Safety we safe On on couple we ensuring book. way. improvement part a our exists in but not loan with everything we I big and the credit and pleased disappointed profitable a in while our quality am throughout overall the front, I a of sound focused only am the in that are the company and charges,

focus and added this soundness. made by underpinned all to talent consistent organization, people have changes growth the leadership and new We within elevated of profitable and the safety with company

forward the quarter, income. net – into mentioned see will $XXX the of you year, I move full As record as sorry, we am million I fourth into

things wealth management card This fee growth income to that of in growth. our sticky like fee is reflection healthy growth, business our our everybody This engagement. is highlight customer income of to interchange I want income representative fee proactive debit management, that customer and treasury engagement. a have divided Another customer again is revenue, a mention activity includes

the up over little offset will – bit mentioned our over of $XX the see CDs made consecutive Turning second the on for to annualized both businesses that talk up Again, deposit well you detail commercial more as in quarter. on see million again, broad-based the the decrease you Slide we X, sheet. balance We X% a loan in about by almost little as our in DDAs million. little business, mix, growth a $XXX a consumer left

of it relates book, those know in what year, to up that percentage point the is line seeing to line credit saw a on increase the things. the little utilization. consistent is same be actually with the bit in I to we As into line are of about thing loan quarter mid we QX. was One, X utilization, of last one interest of QX that XX% two amount. the the This It will

base work – still through to itself capacity we million. rate pandemic, as XX% borrowing there of growth. other that latest our growth economy supply into see works and our by mid low for the lead believe would we certainly over So, is getting $XXX customer in loan that issues the back We utilization to and activity chain portfolio within as opportunities

loan range. to toward the As in the side, have on is There looking that very annual it loan we an growth number. and high XXXX, confident into on relates of seasonality single-digit guided at basis

We strong have very QX.

mid in to QX keep annualized stop move Our will activity closer I pipelines good into and and going. are the over we with that in are looking turn there, building an things growth we lots to an right as probably rate but annual it of single-digit Mark, something single-digits high lot forward range. now, of

Mark Kochvar

excluding PPP, Total balances, compared the the net Thanks, core Slide million decreased interest quarter. improved quarter. excluding Average $X.X PPP, third Chris. by $XXX.X by by income contribution interest fourth by $X.X million loan to as $X.X from income, Great. $X.X in million net the million. to PPP X, declined million increased

loan $X.X approximately about security The fees. $XX remaining, in headline just in have points We million slight PPP yields. representing with interest rate million X compression margin loans net of basis decreased and remaining

the of any to and and modest growth when begin the net including interest stable for with increases, margin returning, expected rate quarter Any improvement any stabilized deploy a rate essentially the second sheet, loan short-term pressure should not be is first to should higher offset half end after in expect including modest of cash the first in higher additional security loan the balance This influence with and levels forgiveness half meaningful completed. yield ahead purchases. net with Looking PPP the income. amount on interest to allow we

rates for higher. moving well-positioned short are We

is of or Our XX% with floating to curve, on sheet prime. LIBOR over the balance asset-sensitive front

rates. better liabilities are up, like more have positioned the short Our we of cycles. industry, for prior than And rest rate the work to in million with $XXX with rate to indexed about liquidity

quarter. fourth Next, $X.X non-interest million to income increased third the the in compared quarter by

seen course of cards, up including to we to core categories quarter balances increased lending, are more the Chris three in these $XX wealth. service mentioned, the in charges have decreased saw the to million. almost compared volume a year we solid ago. and about growth, shift and this Combined, customer fourth year, lower in due XX% fees, deposit refi Over Mortgage a where loan quarter by mortgages banking portfolio as

The other favorably better swap impacted value income adjustments. category market was and by

expect Higher are to million $X higher higher by to our higher additional million investments Data in We million quarter Marketing third also in in due labor And compared making run-rate going customer expect $XX the campaigns to XXXX. some due and as non-interest increased benefits incentives $XX $XX standard part described. activity, quarter. to and processing the increased expense run-rate to talented ‘XX. and the $XX $X.X Chris to expense million systems, in through product in in million due with in be of salary Non-interest range increased million to we to the per we but the came income offerings outsourcing. timing forward, quarter. be market mainly

Net loans, to on we loans along of million a in specific the to $XX the fourth charging charges, with a to in a primarily ACL quarter, decreased XX% These to third were X.XX% aside in reduction or reserve charge-offs with the NPLs. the combined as third of million over credit $XX.X charge relationship. million off set $X.X the return contributed quarter, Our fourth of from hotel million second the on X.XX% $XX in result C&I quarter C&I quarter. then for accrual

due of Our from risk-weighted risk-based and ACL in that a cushion small assets well-capitalized X release sub regulatory the just at capital excess discussed. Tier capital million. our stands levels with fourth ratios and combined $XXX in were the down quarter debt higher slightly capital about lower We payoff to remain we

have we we on although While authorization, are no to conditions remaining monitoring buyback immediate we our have $XX.X are buybacks, for respond prepared plans to valuations a and million warrant.

capital seeing the to very or the through the should organically are growth utilize like that to time, loan is you At for questions. would to the Thank turn M&A this call over opportunity arrive. preference provide instructions operator I asking we support Our to much.

Operator

Your Tamayo. question [Operator Instructions] first from is Daniel coming

live. line is Your

Daniel Tamayo

guys. afternoon good Hi,

Mark Kochvar

Hey, Daniel.

Daniel Tamayo

provided deployment you hike? into dig NIM benefit if just missed what the hike the guidance this are what are. little I each of the excess a could assumptions may terms in and but I with what we then for bank And your in Maybe the it, of bit assumptions there? how for the individual the rate would cash And rate much assumptions – are apologize

Mark Kochvar

Okay.

in what’s like – coming. numbers. there just So into I Right now, increases our the on for with not meeting, haven’t will even guidance sounds we any based baked I start though certainly that the things forecasted are in Fed yesterday’s is it gave,

So, we anything baked yet. those don’t numbers have into

close have In increase. within of of or of as benefit, month rate a we expect fairly immediately much immediately loans to I would that re-price about terms we $X.X we said, the billion how to

because that first won’t basis is $XXX million force. approximately, of in the So away points, XX move right there about

that a we in side bit. had So, the ledger very on liabilities. But side, on re-pricing restricts liability the little other of the it little

initially So, a lot will away of we the most and rates. right there that don’t Is way right of a that I should that debt expect missed? third pressure of part be deposit if on least at – see there

Daniel Tamayo

No.

is which Just sure the on was the last what’s are you there? is I on is if that. there the I how a part helpful. and for handle addressed am appreciate much The information trying I how guess, gave, the not you which just move, deployment to much marginal the get yes, assumptions cash. helpful. excess

Mark Kochvar

kind of growth. high Well, mentioned, we as single-digit Chris expect loan

of in year, of things year, go some and at do absorb So allow to the not have replace the up the end things. year plans catch some of will We it that, moving early the that how have little it and should and a bit then on depending those securities course over the that. into

flows a if to planned, So by goes as cash mostly everything the the of expect normalized year, would end we being year net the of replaced more by be at year. this end loan

Daniel Tamayo

but balance of terms talked don’t the number sheet, I base asset about side then of on percentage. earning the growth big How And you overall it, or I about the are the Okay. gets? kind security of mean on thinking it you’ve think the how of other put portfolio a a in

Mark Kochvar

Yes.

of we expect kind we’re think where of right But the looking from adding then maybe in the loan securities now. at assuming at of materializes as that, we’re hundred back lighting I that year. a that the couple let the we would growth half million

Daniel Tamayo

the appreciate detail. I Thank all Well, Great. Okay. you.

Chris McComish

you. Thank

Operator

Your Switzer. next Tim from question coming is

live. line Your is

Unidentified Analyst

I’m Mike Good everyone. Hi, afternoon. on from Perito.

Chris McComish

Hi, Okay. Tim.

Mark Kochvar

Tim? you, are How

Unidentified Analyst

like of Thanks through the that? about to move items of guys for the for kind of to you the been customer detailed XXXX, drivers fees $XX in primary talked those go million pretty quarterly run strong you kind non-interest gave $XX which be really seeing. guide the line million you you’ve on expect Could income, rate how will you

Mark Kochvar

Great.

expect continue. So the to card do we debit

debit card where area, the that’s improvement do continuing. credit So we that’s some and see

of very with Another and the side continuation where double-digit side, And small Chris the again we’re been we year-over-year. wealth also mentioned, have continued active the group management, charges, is business all on area our growth area then service improvement third see we working and there. the our expect management treasury of hard commercial

Unidentified Analyst

thanks. the And then expense... Okay, on

Chris McComish

the management Obviously, and new have but market under assets assets in fee by because things. Just growing customers in impact we’re business. it’s the changes transaction-based an It’s expansion relationships, – to under management be of management, so clear, a the is not an wealth income the impacted flows could business. two

down go headwinds, things. those are to same that those market but in were faces significantly everybody So

Unidentified Analyst

the priced Right. that And like of of income you So the of off is level QX the quarter? end of for your management beginning going is business wealth dictate quarter? of get the to this kind

Mark Kochvar

A of asset described. there activity based some is the but large – of part under during the size that’s or on on quarter, a of flows management, significant part it. that’s based assets you is as There

Unidentified Analyst

of expenses, it. about what most bringing infrastructure then you are kind of and got then some the making and investments And the expense Could led some growth. of are the with I that that drivers? if more some either outline And investments tech efficiencies you’re Okay. impactful doing? were savings you’ve directed you or they been of revenue the to talking towards

Mark Kochvar

both in and fee on our enhancing a higher number It’s the FTE expenses of risk the loan There a But related in mix. is credit structures the also the the and area areas also operations there area. ads side. there are – also on side, to in the as within and production our for well capacity, is their support our

that’s basic production and between a of mix sort of infrastructure. So more kind

the will that will CRM of well there productive. risk that kind Chris safety that we also are expenses some talking implemented is as teams there lot with as a anticipate or being software type support was that the is potential programs software, additional that more On some of be about. rollout of FF&E the that help to our is But some

Chris McComish

capability. customer-facing mix Mark the talked revenue-generating there is CRM to enhancements, a So of

we not We’re products for to that in core working that the it our but XXXX have an enhancing digital business. building, have, systems example, opportunities our mobile capitalized banking the availing – as that that management example. some have we’re around on is The offering, not past. is ourselves may we’re capabilities continued represents providers on online discussion we in investment treasury This throughout

lead revenue then with there expenses, Some our lots within is it. base, additional offset but associated of which of has represents that that also customer activity could to

Unidentified Analyst

Thank you, guys. That’s detail. great

Chris McComish

thanks. Sure,

Operator

is Your next question Gunther. Russell coming from

live. is line Your

Chris McComish

Good afternoon, Russell.

Russell Gunther

guide. I taking clarification on Mark, Thank wanted my afternoon, guys. Good a for to start, margin question. the just you

your earning to absent expectations begin So of with improve the to XXX hikes for reported remix expecting? you margin the rate did due comments average asset you’re

Mark Kochvar

see We over new the kind on correct. to the of would of that’s expect We we’ve mode course Yes, year the rate. that think improvement.

Russell Gunther

the then bank out prepared called in the remarks. And Okay. you asset the sensitivity of guys

us the betas point give of could of you either in assuming what means NII hoping XX deposit sense just couple perspective, whatever you within first a perspective basis for point terms from guys was moves? I are So hike a basis and

Mark Kochvar

Yes. I last just to guess the one first. hit

deposit a a those had have than past. they cycle rate lot the expect somewhat at prior different price be competition we We’ve accounts. in would so the did this better we market billing to to liquidity, management to both money than and lower the lot bank the much And more seen much expect we with with hold On beta, past, system, we the we – in different would than in up in we in a be least, on the DDA, back been have would the the lower rates. that initially initially at against and more a

going net be well that does. we’d so into of depending how terms interest much on that of In to pricing – to that’s keep able income play how that

The we past, other had the would rate we rate the thing in that quoting repriced. that that borrower, lot we now, floating debt helps typically a have been of a us zero did net have was because is of essentially debt. Right –

of the improvement bottom more goes directly. asset more to line that So,

So all out $X that quarter million with that up income. net or about interest a said, of $X.X being loans approximately so us of billion a for starts annualized number on at rate a

the $XX by of we some the about it’s line, any but kinks top see for again, a first the at would looking million. – basis give number at, in, that, we’re Now not million first points $X the price least but that maybe positive XX with all

Russell Gunther

expectations of for and Okay, And current loan or I expectation, of you, take continue in appetite on could hoping that of an magnitude. is growth single-family kind I commercial around to over? the portfolio then order the levels was this in appreciate terms particularly the Thank helpful. guys. comment very you mix

Chris McComish

seeing refi Russell, obviously a mix Yes. over. you’re the marketplace standpoint, in boom From is the

is average could some so size the activity, take give that the level lot to which activity balance involved the out purchase up we’re And put of on mortgage with, Fannie, there potentially conforming which a ends construction ability guidelines, us more mortgages Freddie some higher those which you sheet.

we do So balance some of see of change because the sheet growth mix.

customer that focus have to there, mortgage home of within some work portfolio, continued some ability amortization things, portfolio, attractive got growth, small been life that things. base to turns quickly. is business. the we’ve we of the that’s but of And pretty average and our on the and equity side is that us, on something side On growth it show There

in basically the and got you’ve both customer important management is still customers in somehow, are business have that which And then customer a treasury area. small more amortizing on we’re that employee within The invest. sides. base that’s the event-driven, a base we and capabilities our levels your there sheet, production to So things, And side small of to to is the business of need activity offsetting We believe capability business but they and latent world on there. the then opportunities we that the do continue loan other need. on small balance and us deposit really the us of day lot the is the spoke every side very business we of going that will focused and C&I are

active that group the our way. remain regroup. some saw of growth that very about specialty a ABL, real we’ve our got will You We’ve estate lines, talked in that

expecting year, number through the again, it’s single-digit that broad-based. is fairly about. high we’re So talking what we’re But

Russell Gunther

And you could. last good if me that. for the That’s color. one I for Thank then

content would you of in was this to that’s would of chunk remaining you above continue Just big characterize how Thank as you charge-offs expect terms thoughts for remain assets broadly that outlook you Just problem loss you. in would what through it. level a And recognized a try the quarter was to to this take XXXX like be work would your on the get remaining? normalized speaking, there?

Mark Kochvar

NPLs one We to difficult be certainly predict. continues the in lower in improve. to down economy have charges outlook Yes. for expect to the and ‘XX as That’s ‘XX a the come than

in would or shown numbers COVID losses had to those I difficult. expect lower. be their do the the more in, COVID, situations expressed prior mean fourth made we really had had we quarter then you stress some So and that coming

book situations would improvement. other categories on We’re those our with seeing the there fewer it improvement pandemic again, see as in But and also see we curve that that by the hotel we some debt well. dependent as similar of is with are we’ve exemplified the the seen

Chris McComish

said, the a into $XX levels. to going ‘XX much compared the down $XX higher you that look little non-performing north XQ mean, we of I million, new of million, year, loans at as

soundness that to the we’ve here leadership So shape. the to ensure – those in from to better in to is me my year speaking, into safety Board we’re with lot the this that you commitment are consistent a already going to we talent as Chris the that’s can do investing and And was producing well company thing right is and bring to team. profitable this in talent I critically the company. our growth only is soundness. And and done our all as and elevate we on tell both important and foundation focus our of And employees, have that safety that our

Russell Gunther

guys for you, taking questions. Thank Understood. my

Chris McComish

thanks. Sure,

Operator

this no time. lines from at questions have further the We

Mark Kochvar

assets now have the So relatively between stable the do the for And half the year. online. came making throughout in earning is then We stable that in guide the securities, shift assets loans half and the one actually, and Okay. on versus and there first cash with second stay NIM grow question earning interest in the being income? prolification net

the of given both. guidance asset both really the do is averaging NIM stability for interest year, that income expect balance. the of the over the and We show that net to improvement the So course

very Okay. much. Chris? Thanks

Chris McComish

your time interest you. get forward the to warm. dialogue we spend as Thank appreciate Greatly you in and Thank with all. taking we company, our stay XXXX you, further time into look to and us,

Operator

today’s Thank gentlemen. you, and ladies call. conference concludes This

you for your time, this Thank day. You have participation. a wonderful may at disconnect and

Mark Kochvar	Senior Executive Vice President and Chief Financial Officer
Chris McComish	Chief Executive Officer
Dave Antolik	President
Daniel Tamayo	Raymond James
Russell Gunther	D.A. Davidson

S&T Bancorp (STBA) 27 Jan 222021 Q4 Earnings call transcript