Earnings call transcript Q4 2022

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Operator

Welcome to the S&T Bancorp's Fourth Quarter Earnings Conference Call. After management's remarks, there will be a question-and-answer session.

Now, I would turn the call over to Chief Financial Officer, Mark Kochvar. Please go ahead.

Mark Kochvar

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

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Investor by obtain You McComish, a also our S&T's are and today With S&T's can site President. these CEO; Chris Dave copy materials at me Antolik, stbancorp. visiting Relations of Web

I'd now the like Chris. over to to turn call

Chris McComish

ways our which only for the strategically results celebrate historically. not both but for on was thank think proud. year Good S&T the employees, these strategically point this everybody. to great future. being to certainly started what and drives to in I and the with provided call, And very about many by the our XXXX an others inflection appreciate I also commitment absolutely the questions. in Welcome these results opportunity your your a for certainly should historic are Mark, to you call. anniversary, shareholders introduction. take afternoon, the us past celebrating -- we moment afternoon our everyone yours forward was and our and here company, engagement and we analysts thanks to look listening to XXXth a year be We and is an want and financial

to year, our while the During additions on focused all ensuring and for future performance team, building leadership delivered today. we enhancements we made significant the

this to of the our define that's a blueprint people growth the years, all team next all teammates people also purpose opportunity engage building market. around impact differentiation forward and we XXX leadership for and in purpose focused, supported our future the Our provided took move This our future. roadmap values our forward a and our for to as and with

only talk experience. stayed in building we to tomorrow, about important not the numbers today achievement employee engagement minutes also critically we and evidenced but customer While for in we'll things marketplace certainly around a as by around the the few had focused us on by

results our have proud are these financially. there's forward we as to multiple trying to everything look instances continuing leading we're and recognition and we of We We from them of there quite many so trophies do foundational define that as parties it's of for third market also. And success them.

return was increases, $X.XX In the separate level on shareholder past than over peer to significantly three This XX% our aided in which our return we current stock, addition, that dividend outpaced announced XX% median. the more yesterday. a growth by year we dividend our delivered equaling

extremely X% of drove But point X, see quarter, it you sheet. that's and quarter talk increase to record Page driven was a XX it to had of not our Page in link an a to balance also strong is balance increase to of obviously, the talk $X.XX, by well we is with our can efficiency as basis the on sensitive metrics What's about were good -- XX% Now we let as ratio as as will that turn X.XX%, -- about you us. $X.XX, PPNR about. later well on bit earnings ROTE ratio nature The rates our the very going me This over an as interest then turn important efficiency here X asset numbers Dave for I'm to $XX.XX feel aided by give -- achieving year, we the and of a NIM, talk return little and the quarter. the the higher sheet. about

like growth, While is flexibility us to the a you'll the growth point an investments having investing efficiency see company expense and move some and future needed the for that make ratio all around that at expense our forward. starting gives

million the at year this minutes. a metrics those costs. $XXX of to share time very earnings time. to net at while $X.XX same record We'll see $XX per the credit X. was team, a driven few it I Moving more by been aided, the very approximately solid and NIM Again, obviously, Again, only in strength of head about income, not and on and improved level of the in clarity financial million than but XXXX, expansion, a about year performance, Page a ago the a continuing -- Again, performance year talk opportunities return feel we opportunities we're as as the engagement together our a our forward of heck good how from marketplace. standpoint. into We said, the of moving

it With over to Dave. turn that, I'll

Dave Antolik

and million you and can our direct I company If again increased afternoon, interest Total balance loans for activity. to our $XX by by everyone. X, Chris, for X.X% thank you, driven annually, changes company. thank your quarter. sheet Well, depicts portfolio which the support in or consumer you of primarily good And Slide

has versus We supported continue to book the of residential majority our sheet mortgage which production to balance growth. this selling,

focus space, is our growth customer on deposit manifestation QX. have number the through year customer to customer equity equity this continue balances. the And segment home home in focused represents experience at We've our on This value continue and also seen to our outstandings. we from banking seen the it in the increases growing equity commitments into growth commitments, very of of customer and the consistent important In franchise. total to is utilization XX%. as growing home consistent includes base incredibly relationship us the We clearly of

to pipelines maintain our moderate home our forward, residential ability on mortgage indicate growth and activity. pressure Moving some equity the

the at increased rates real C&I area. to during increased and first in half low anticipate the Turning Calling to seen CRE utilization digit commercial We've remain mid we 'XX XX%. to stabilize book. single slightly for commercial spaces and revolving construction stable of estate our in have activities commercial Total balances C&I categories. the in and both QX, growth

the on that the exist. experience rate and more particularly we develop to down continue quarter Our banking $XXX economic Deposits focused base growing commercial million with competitive environment. to are consistent current improve were pressures supporting due for primarily continuing to and quality existing results, given customer efforts our runoff and as asset

go focused lead manager are consumer and strong our our as strategy deposit to on and market recently, We consumer efforts. a driven relationship upon a help legacy we product building to bank, hired

Turning to Page X.

a pleased happy of The via our very customer We're strategies this individual also QX very the at execution reduction that the are illustrates support charges. of not problem of with much exit in result full reduce graph being of as assets. and efforts the and came our NPLs, desire the in bottom excessive of outcomes We made to progress the of year. in for our reducing both page the

our We impact feel added and economic reserve future during of in continue that manage credit to any potential and positions through could downturn. portfolios losses qualitative result well to business the our us supports level closely monitor potential segment quarter. all the of our that of reserve for our to We strategy

Mark. to over program the turn now I'll

Mark Kochvar

third Slide the and by quarter. quarter deposits, cycle X Dave. XX PPP before third quarter increased XX that's up deposits shows 'XX to and DDA, to margin Interest this XX compared basis is increased the Well, points the XXX total thanks, last interest points rate by of improved or that million increased interest basis basis from income quarter yields up by points The XX basis points fourth in was this to by the quarter. including points. Loan $X.X net X.X% fourth cost basis the points quarter basis to ex compared compared net bearing XX the X.XX%, of began. rate

We is interest our year Half have to of in rates, which driver continues term seen the area. increased improvement. one interest net portfolio term big income especially of and the net in short short a CPEs, interest [either] loan be to two margin

protect receive interest and As net rate ALCO income that to strategy hedged the approximately rate in a XX% declining part environment, loan concentration floating of fixed swaps. our margin we have to which

on hedging -- and the continue depend deposit will our rate which to pricing We environment the experience. and level right of evaluate

deposit immediately reprices net very that catch market up in we lower Fed DDA, $X base margin it half is expect And now rates wholesale much product interest of the compression then billion better to 'XX first different We pause, last down. NIM cycle, a levels. in Our the the 'XX. improvement up the half was money would as Fed moderate during changes rate a betas than no borrowing mix, that including longer expect over slowed Fed with has the back more and do funding in some increase with and of with

through described However, betas. to for expect see us, most prior the margin earlier, deposit mix betas funding we better the the based and better to net lower compared interest I on importantly, cycle

of item quarter compared gain property OREO an is about the for the The million, On shows increased sale fourth X, income third. noninterest which by Slide up $XXX,XXX the line. in largest other the in a $X on to

credit in of about had some some resolving as We we OREO issues. success third the gain also in an have quarter million had $X.X

variance So the compared net, favorable banking in was third quarter. for of Mortgage flat that the fees. most accounts essentially to

to mentioned, contributed production loan in went growth category. and the almost that of had all we Dave portfolio our As to the

of our salaries approximately below Salary is million sum ratio benefits, by due $X.X revenue $X.X settlement compared lump million to X, pension benefits drove efficiency XX%. Our $XX third and Also higher to fee and were On to up $X million payments due to expense higher some the about quarter. quarterly to the was performance. for million. incentives Page increased related Improved retirees. from accounting outlook within expenses primarily

depending going expense on the and buyback quarterly extended stock. as our are We'll to and infrastructure. levels, 'XX in We March look of and shows are range economic had financial the capital conditions, our for performance to which that our million opportunities for positioned expectations environment. strong million of people in through price $XX.X well our remaining. invest Page the and $XX $XX Our continue we XXXX authorization million into XX

securities smaller With strong AOCI our percent the of earnings the in of stability despite as adjustments. year TCE course portfolio efficient seen more the have assets, ratio a over sheet, we balance a and

call asking time, provide to operator like this the to for At much. very Thanks instructions I'd over turn to the questions.

Operator

[Operator Instructions] will the line question from come Daniel DeMille first with James. of Your Raymond

Daniel DeMille

a then clarification just start, on the to lower prior and than Just assumptions expecting you NIM beta mentioned, wanted still path deposit cycle.

quarter, last think, mid the a I that high there? you to XXs. talked Is about thought still

Chris McComish

Yes.

Daniel DeMille

the million build off or And expense that range first of then guidance, noninterest income to to year? that at the quarter then another kind Is and $XX $XX and the that as clarification guidance million. for the $XX million on taken more you're to a of be of, is just looking

Mark Kochvar

range the More year. latter, the for

Daniel DeMille

So essentially. not too much growth throughout year the

I dig if sorry, then guess, margin. bounce into on the And to terrific. Okay, back but -- around could we the here, just

could quarter play I of how you that on know margin any more of pressure you if peak. If -- you might when would it the mentioned kind have the you in peak color kind terms in in and think budget? the at and back first degree or you're thinking half, where of looking second compression that the be the then level your in but of you're may if

Mark Kochvar

sort lot the are sense, in a assumptions, given quarter expectations first a of modeling maybe on also these then of from But there -- some two our of on. as pressure And in one, maybe borrowings. our expect of by smaller increases rate sidelines, going point maybe the on But cost the happen offset liability better maturities. of -- X of some expect. Fed we Fed the more of the lot quarter. early the continued continued maybe offset we some higher per expect maybe off, sort slight a for the the quarter second year being the assumptions the margin some loan the on would in a in second side, look likely basis of in that maybe might the growth first we all with And half expansion quarter, peak And just of of range leveling to compression, would we'd if margin replacement

Daniel DeMille

at XXXX? a than are by maybe bit So level little of quarter or quarter lower we the fourth the here XX% fourth

Mark Kochvar

the to same of end approximately the we time in the about of Kind by place the get year.

Chris McComish

It's in then just here from going to early fall... rise and the

Operator

line KBW. Michael Perito question with the Your of from next will come

Michael Perito

help the we to here? lot should of wanted start, always agenda for guys, charge obviously, backdrop the the uncertain, look but Curious be what mean, of and about really for kind I is productive Curious year where like on just Chris, just a as guys year the strategic you you progresses are from what's macro a and know you we anyway. done. got that's I focused standpoint? mindful 'XX

Chris McComish

question. lot a Thanks a allude I I been because to as about it's long asking to. for work team doing that talk it try that can the time for as a we've

it engaged there's centered and and year I distinctive this unique as of we said company it's celebration this what really excited and and And the this of in all this past ago. experience, about So year the place great with took things advantage a and that's me engagement around XXXth and all to And starts from. customer reputation here me of XX engagement to grow marketplace. come employee months company

do, around there's and people spent relationship digitally idea and that our we and the how that The understanding it, have being on people highly where forth, we bank. right, so lot is come whole our industry people so have an forward. focused and it's of And to people but customers and changes, deliver we that customer a time what emotional for relationships did a changes, this from change, all that tie their fact there's dialing where we back, aspect

-- to we that and define to of how extract we, are kind who us we it able and marketplace, of is win and then winning. going simplify And winning are been we to And how all the so for we've in say do reinvigorated. differentiate what

You on our whole of year were that deposit may I'll rate the a environment, health increasing, say franchise talking about of and we is tell relationships. this before but you franchise and rates started it's all that deposit focus ago the the customer

that our very in to out Deposit out large built of forward. Head a for interested business a and building we've national also business all hired recently of and a that that's We've with us. hired -- out Head we a part that running teams of to have of bank, came we've Deposits talent. Commercial started this came being going what So Consumer company very deliver We've significant building very bank of

as where So capability. a lot We're of our within the as working on work around the well people opportunities our prospects. are and base customer understanding product

treasury is ensuring the So all who like of it from those ensuring a isn't management is, important aligned offerings, things deposit deposit importance And that's plans standpoint, like because their bank that of franchise. that our the to things, we have things we're that doing are important product deliver are are important our And digital is. why customers. then customer defines incentive where how business that that banking to understanding our around

stop intensity company, health different to an than had that put would highly franchise of us. that growth growth is the focused capital deploy never been and it. focus market we're important say We've and to every going loan here asset at But it opportunity S&T. of the and making been to deposit the historically it oriented I so we gives And way. we're on that us loans, know is in

that of, back and does it credit margin with strategically way. net to an we things but win we're where things what that's focus represent quality on is to want then interest Dave intense proud inferior credit moving -- about, that making we how [XXX] talked clear really and You've the improvement play, think in want forward. not that seen something attacking quality The around to give the we

engagement talent very to And we so by underpinned that and to the Mike, profitability this need the stay know but focused inherited and of really level But and ratio of team. that that the way Obviously, something is also proud I'm is well. in that, the we all efficiency drive we're there. we're our range, I invest we continue at to level company going of,

a things where we're of talking things. so and those time X,XXX four employees about spending the focused, we're with individually those our are pillars big And lot

Michael Perito

financial Mark, on one less it -- this a sub-XX%, feels of of just kind and ratio almost of that get then being questions, is become efficiency table invest to trying necessary this becoming banks that's to another I stakes. And efficient that couple asked for mean and the me. actually we morning. branches follow-up like as my technology in I here more

I'm So you're curious thinking how it. about

peak this it you is just your kind where are that for just we NIM or as low the of feel of suitable So arbitrarily guys to highs, kind move of efficiency guys is you structurally given range forward? hopeful

Mark Kochvar

Part stability, think that, we of that is key the efficiency though, on the to more mean, be it I margin is maintaining much maintaining that's going focused type and of ratio. sustainable. we're to that

Michael Perito

And it of then fees, on outlook. correct? was think the that just Is quarterly $XX I million

Mark Kochvar

Yes.

Michael Perito

much basis were basically core this from growth a not you quarter. where on So

I'm so to mean, stable And and break -- next volatility in just think you of pretty pretty stable market you is that that bucket be you year? curious environment, what layer? assuming as could wealth too investment can anything conservative another environment maybe I that mortgage down where because

Mark Kochvar

mortgage low that the that assumes some sales. secondary we to the the change thing potentially think what we that to side, in could relative pretty value on we mortgage Fannie's pricing, million fair additional kind one pricing market the see a a the of is way now, mean side. is mortgage see level of could $XX were and for I their on sales the production if Right just

same. kind assuming looks that, the of we're So market that

the just in up, the well, we kind sheet overdraft look is the have assume on the in We increase how overcome to big it that at does would as be help beneficial Wealth for number, the do need some we see on potential not that which the positioned as us of growth sort If change product first that as well. especially the So AUM an would that market pressure market, year. of well. side, naturally us because would grew half. and it's for that balance on out could stock impact but a as

would… So can think of that those are the that things I

Chris McComish

us, offset that a the And credit then commercial treasury management credit I be rates mean charge. as the forward. that then some an would we counter, through move as intensely environment. your it's I on to on to for earnings The say year, focused in the the the on we're side, is of focus going earnings growth there's rate business, the And offset increase that and service

So we're earnings look terms net the trying not the relative to to in and measure growth of at absolute credit. it so much

Mark Kochvar

Mike, don't itself year-over-year OREO on of $X worth kind gains that basis, we year. We in to expect this Just a about had year. of million repeat next

Michael Perito

Got it.

Dave Antolik

have opportunities one our sold we where have do treasury actively The segment, banking products. within business area not where we

group segment desperately they a We and into customer on service that order focusing that drive have provide dedicated need. in mining to who's product customer that a

design the management So and results. some better the product, drive supporting is it treasury believe with to we people going

Operator

Your next the come Breese of Stephens. Matthew from line with question will

Matthew Breese

of outlook how item. maintained some on just given just how of retail deposit account at date sense cycle fourth noninterest far account have Look, give this the hoping bucket. was deposits Maybe and gone be results than growth structurally bearing a it kind cycle the noninterest has together hone balanced to better within give in might deposit us flavor what's I mix been have -- versus to the ability deposit is versus some would of hold some growth? for in shift line drift your us might how or where that quarter. as and to? business, How the that beta better point of thought to And has growth it much to for the down I your in bearing

Mark Kochvar

past in business years. several split the growth consumer lot business about over the a is seen the it's and Well, about we've the where that's is side of -- XX-XX,

mix business in the lot a commercial is. of side. We banks on When we're think to at essence, heavily have we us, where even of on other mixes loan sort doubling side, greater, some that's side. similar they So towards the that a have greater the look commercial down opportunity that

customers think though commercial management, talked and from and opportunity. Chris there's the with have of there's effectively for about kind have proactively of that might book we gotten small even some lot we lot but Dave loan think for there focusing treasury So we relationships. opportunity of not of And be about some the as their upside the their on deposit We there's business. customers -- a And that runoff existing the there. we both a but talked also think

Matthew Breese

have at you do the And of dealing reference, end frame the cost for going of what we're quarter? into just quarter the deposits with all-in first

Mark Kochvar

I end, have. quarter don't At

full the For right it I for was of me quarter, the the XX front all basis don't in. points quarter in have end.

Matthew Breese

for one thoughts… Last just me,

Chris McComish

a mass The on remember, very much the thing bank. side, other consumer we're market consumer

So don't you the you average kind of -- stability. kind therefore, the look at gains have it's kind mix, or of represents and in would that huge which, through significant of create median some doesn't if declines see, cycle, of what we

Matthew Breese

around projected $XX potential threshold, and driven thoughts timing billion expenses the the Last the updated then just billion, loss from outlook and then crossing is one amount? crossing $XX on

Chris McComish

here, I'll if XX in speak been elevated that you organization focused something timing. for all is the that But we've brought been let in that. this and talent talent we've in months I've preparation to and the look I've is Mark the last on at over the level

$XX our to rate when because in evolutionary when for process future, over expense even go time there. up a So and -- we some standpoint we're we the is through and of run today if fair and setting building ourselves for from -- work we're recognizing there's so a and amount people there's we this or that billion, embedded still

as through seminars, it, through have in and as with been and the gone well from of others working advisers talking this it's talent that time have So in accountants to peers sort work. that industry everything spending

a really in to top it's for line So it's standpoint, things line with billion -- all regulations. only about it's it's or way $XX we're important building doing the growth but foundation ensuring and not whether but that we're the a us a from growth in $XX billion, generating compliant

Mark Kochvar

it then a about it it, from comes probably organic which digit the -- right cross at just at once to away we're looked the time mid a perspective, [Durbin], half loan We're we sort single then timing up of -- while, years higher debit of last is we a sort about based billion basis. when ends it, on And $X year around full billion. on couple looked an a now And bit of look being a from little at or of growth. I $X on the about our million it's $XX card,

Operator

[Operator Instructions].

Dave Antolik

simple Operator, mid answer in for loan we digit regarding And did single have was the for one growth. the growth is, XXXX. loan question outlook it queue,

of it If side, Mark my at commercial and we comments understand, temper what to expect consumer at you Chris kind I expect to activity, And to look in regarding expansion and we on described described, some as kind perform continue prepared said, NIM point. the focused that of has. I as we growth, the the of and stop year, as do and back half

And growth. the do out. we terms in understand of revenue, asset growth, we're to teams will some building by So be that have driven

we're on have that, place strategy. comfortable the to that do and executing in very We infrastructure

Operator

line from comes the Daniel with question Scott. of next Janney Cardenas Our Montgomery

Daniel Cardenas

me the bit production current production, basis, color give a are you to are in And yields on how -- kind down were then maybe what current you fourth rolling of yields what's quarter? what Could and of seeing as of monthly yields the a looking little loan kind for break off?

Mark Kochvar

both total range our about off, in to start were for loan kind yields -- QX, that [X.XX] and new and payments around the [X.XX]. of our of compared So payoffs of kind roll

basis we on about had a So that. improvement XX, points based XX

Daniel Cardenas

this paydowns quarter? And like what payoffs and were

Mark Kochvar

didn't line. see in They were, heavy any I We path by mean, stretch.

So the normal they more side. the expect and what kind of both of we'd were on consumer commercial

Daniel Cardenas

for maybe looking on like guys? then you right M&A, for And Chris, what's now the thoughts environment

Chris McComish

us to tell here said, very my consolidations. for Well, results how inorganic should control that a in and I that's that but growth. something, as believe a foundation than we our in we that -- for growth. growth got on preparation financial a control But we have organic day where lot happens be -- growth we more I do is future, it prepare a the and to over And job standpoint. When, build we it's from if the future we're and participant certainly from happen would focused and is the will again, the

Daniel Cardenas

of as guys laid, I kind of you foundation terms mean, what in? So the of are size what is most -- interested institution in parameters,

Chris McComish

and and the a for talk is of the health franchise The that Some of importance markets it up about whether make being you're our very driven. in we're event doing gain. culturally of well that and it's But makes size better lot us. very something kind We in almost being answer. see foundation to it's dollar don't work not are of We said, really growth. deposit -- is adjacent or geographies is is lot of a below for ourselves attractive range, billion probably a the that that for the aware, that a

at that and while opportunity building So about same cultural relationships the there there fit, for time, strategic it's is growth. is the right the and financial understanding

Daniel Cardenas

you last for about guys? growth And thinking should for be How XXXX then. deposit question we in me

Mark Kochvar

on are pretty our side. modest the deposit I growth for expectations mean

focusing relationships about. going think a I the to mix talking were lot we're that and on be developing Chris Dave and

balances largest a improvement DDA on the business We of that especially be the the would increase might not side, see DDA decent in but the we So better, but expect, quality in should quality. the expect but a see just bank. come year, higher shifting. to CD going of areas by We some the lot of the of end other from migration to from some of would that's balances the

net-net, So the we expect. huge We'd pressure consider that deposit successful given for that looking increases. not rate we're

Chris McComish

mix the quality and relationships. talk on focused We're the it about -- very tying to we back of and franchise customer as the

Operator

from D.A. Your Davidson. next of the will line question with Navas Manuel come

Manuel Navas

around bit general. down a you the you XX% said and you in level protect? trying protecting opportunistic kind like more you're Can thinking brought where color what to how You floating rate add of the about Like little are go, to that is it margin? could

Mark Kochvar

trying look -- pieces on that. at reverse Fed -- the is down of kind when protection, course. X the we One of rates the we're protection should there's on So just

meant we've primarily the that's protect more to hedging So that. that is done

parameters and limit analysis internal with. type can that live a we analysis income that certain ramp to and So net type we have we're percentage look just we shop trying at to to decline

combined And with so the hedging, that factors additional structure in the of the that book borrowings we and have, that. deposit that

fact bit the ways down works some on So borrowing some rates we're little that short is the protection. in end additional a now actually

if rates larger bit would compression side, down move the Fed actually don't -- rates go. So little or certainly to than larger we a if on expect see

-- we to trying we're So limit limit that.

end market side, demanding hot our bit On less day, so maintain we this rate the trying -- sensitive are that, have of maintenance the the the a as to that quality that for franchise to aren't at rate this rates it's and of and the more deposit money. about top higher customers little back

of is continue the course to something the on over that that So work year. we'll

of that deposit we margin So of franchise that we help reducing will end tell is support our can the quality and see. that hopefully, would the of compression higher at that you amount year the

Operator

Executive closing call Christopher for to to I'd Chief remarks. now McComish, Officer, turn like the over

Chris McComish

and your thanks us your the for that. and analysts thank Well, better make all call we you interest in and your you of on to greatly the questions. Okay. We company, and engagement appreciate help the

And again, we're 'XX. the new moving 'XX very off proud and we're So into year. forward of into we're

talking So soon. you forward to to thanks. Look again

Operator

Thank today's joining. meeting. conclude does for That you all

You may now disconnect.

S&T Bancorp (STBA) 26 Jan 232022 Q4 Earnings call transcript