S&t Bancorp, Inc. · NASDAQ:STBA
S&t Bancorp — Q2 2017 Earnings Presentation
40 slides from S&t Bancorp's earnings presentation, Jul 31, 2017
Slide 1: Second Quarter 2017
MEMBER FDIC Second Quarter 2017
Slide 2: Forward-Looking Statements
2 This presentation contains or incorporates statements that we believe are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to our financial condition, results of operations, plans, objectives, outlook
Slide 3: Non-GAAP Financial Measures
3 Non-GAAP Financial Measures In addition to the results of operations presented in accordance with Generally Accepted Accounting Principles (GAAP), S&T management uses and this presentation contains or references certain non- GAAP financial measures, such as net interest income on a fully taxable e
Slide 4: Table of Contents
4 Table of Contents Corporate Profile ............................................................................................................................................ 5 Performance Summary ...................................................................................................
Slide 5: Corporate Profile
5 Corporate Profile 5 • Headquartered in Indiana, PA • $7.1 billion in assets (as of 06.30.17) • $1.3 billion market cap (as of 06.30.17) • Locations in 5 regional markets • Stock symbol: STBA
Slide 6: Performance Summary
6 Performance Summary (1) Annualized for quarterly data (2)Refer to appendix for reconciliation of Non-GAAP financial measures 2Q17 1Q17 2016 2015 2014 2013 Net Income (in $ thousands) $22,765 $18,188 $71,392 $67,081 $57,910 $50,539 Diluted Earnings per Share $0.65 $0.52 $2.05 $1.98 $1.95 $1.70 Divi
Slide 7: STBA Investment Thesis
7 STBA Investment Thesis • Above peer performance • Undervalued compared to peer • Strategic and effective mergers and expansion • Demonstrated expense discipline and efficiency • Organic growth • Stable regional markets with long-term oil and gas benefit • Sound asset quality
Slide 8: Return on Average Assets
8 Return on Average Assets 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 2013 2014 2015 2016 1Q17 2Q17 1.12% 1.22% 1.13% 1.08% 1.06% 1.29% (1) BHCPR Peer Group 2: Bank Holding Companies with $3-10 Billion of Assets (2)Annualized Performance Peer(1) (2)(2)
Slide 9: Return on Average Equity
9 Performance Return on Average Equity 12.5% 10.0% 7.5% 5.0% 2.5% 0.0% 2013 2014 2015 2016 1Q17 2Q17 9.21% 9.71% 8.94% 8.67% 8.68% 10.55% (1) BHCPR Peer Group 2: Bank Holding Companies with $3-10 Billion of Assets (2)Annualized Peer(1) (2)(2)
Slide 10: Return on Average Tangible Equity
10 Performance Return on Average Tangible Equity 20.0% 15.0% 10.0% 5.0% 0.0% 2013 2014 2015 2016 1Q17 2Q17 13.94% 14.02% 14.39% 13.71% 13.45% 16.15% (1) SNL Financial Custom Peer Group Holding Companies with $3-10 Billion of Assets (2) Annualized (3)Refer to appendix for reconciliation of Non-GAAP f
Slide 11: Undervalued compared to peer
11 Undervalued compared to peer(1) Valuation (1)KRX-Dow Jones KBW Regional Bank Index Members Stock prices as of 07.24.17; Performance for last twelve months reported Source: Bloomberg 75% Percentile 1.16 Median 0.98 25% Percentile 0.88 S&T 1.15 75% Percentile 14.27 Median 11.94 25% Percentile 10.64
Slide 12: Stock Performance
12 NASDAQ Bank S&P 500 KRX Regional Bank S&T Bancorp Stock Price Change (%) 70 60 50 40 30 20 10 0 -10 Pr ic e C ha ng e( % ) Ju n 16 Ju l1 6 Au g 16 Se p 16 O ct 16 N ov 16 D ec 16 Ja n 17 Fe b 17 M ar 17 Ap r1 7 M ay 17 Ju n 17 Valuation 1 YR 3 YR 5 YR 10 YR STBA 50.39% 15.91% 17.33% 4.02% NASDAQ
Slide 13: Mergers and expansion
13 Mergers and expansion S&T Bank Mainline Bank Gateway Bank Integrity Bank $7,000 $6,000 $5,000 $4,000 $3,000 $ (M ill io ns ) 2012 2013 2014 2015 2016 2Q17 4,159 4,533 $4,533 4,965 $4,965 5,452 6,943 $6,943 7,086 $7,086 242 126 $4,527 866 $6,318
Slide 14: Expenses: Non Interest Expense / Average Assets
14 Expenses Non Interest Expense / Average Assets 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2013 2014 2015 2016 1Q17 2Q17 2.61% 2.46% 2.30% 2.17% 2.15% 2.06% (1) BHCPR Peer Group 2: Bank Holding Companies with $3-10 Billion of Assets (2)Annualized Peer(1) (2)(2)
Slide 15: Expenses: Efficiency Ratio
15 Expenses Efficiency Ratio 70% 60% 50% 40% 2013 2014 2015 2016 1Q17 2Q17 60.03% 58.67% 55.86% 54.06% 53.83% 51.48% Peer(1) (1) BHCPR Peer Group 2: Bank Holding Companies with $3-10 Billion of Assets (2)Refer to appendix for reconciliation of Non-GAAP financial measures (2)
Slide 16: Organic Loan Growth
16 Organic Loan Growth Annual Change $700 $600 $500 $400 $300 $200 $100 $0 Lo an D ol la rs (in m ill io ns ) 2013 2014 2015 2016 06/30/17 $220 $303 $370 $584 $146 Growth (1)Annualized for year-to-date data (8.5%) (9.6%) (11.6%) (5.3%)(1) (6.6%)
Slide 17: S&T Operates in Regional Markets
17 Markets S&T Operates in 5 Regional Markets MSAs Locations Deposits(2) Loans(2) Southwestern PA(1) Pittsburgh Altoona Johnstown 51 $3,786 $3,030 Central PA Lancaster Harrisburg York 8 689 839 Northeast OH AkronCleveland 1 27 277 Central OH Columbus 1 22 310 Western NY RochesterBuffalo 1 14 351 (1)
Slide 18: Projected Population Change 2017-2022
18 Projected Population Change 2017-2022 5% 4% 3% 2% 1% 0% -1% Southwestern PA Central PA Northeast Ohio Central Ohio Western New York (0.33)% 2.25% 0.10% 4.34% 0.69% 3.77% 2,859 1,557 2,762 2,058 2,216 Source: SNL & Nielson 2017 Population 2017 in 000s Markets U.S. Average
Slide 19: Median Household Income
19 Median Household Income $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Southwestern PA Central PA Northeast Ohio Central Ohio Western New York $53,961 $61,435 $52,697 $60,039 $53,890 $57,462 U.S. Average Source: SNL & Nielson 2017 Markets
Slide 20: Unemployment Rate
20 Unemployment Rate 7% 6% 5% 4% 3% 2% 1% Southwestern PA Central PA Northeast Ohio Central Ohio Western New York 5.38% 4.35% 5.47% 3.70% 4.65% 4.10% Source: May 2017 Bureau of Labor Statistics; not seasonally adjusted U.S. Average Markets
Slide 21: Stable regional markets with long-term oil & gas benefit
21 Stable regional markets with long-term oil & gas benefit Markets
Slide 22: Asset quality: Nonperforming Loans / Total Loans
22 Asset quality Nonperforming Loans / Total Loans 1.5% 1.0% 0.5% 0.0% 2013 2014 2015 2016 1Q17 2Q17 0.63% 0.32% 0.70% 0.76% 0.80% 0.63% (1) BHCPR Peer Group 2: Bank Holding Companies with $3-10 Billion of Assets Peer(1)
Slide 23: Asset quality: Net Charge Offs / Average Loans
23 Asset quality Net Charge Offs / Average Loans 0.50% 0.40% 0.30% 0.20% 0.10% 0.00% 2013 2014 2015 2016 1Q17 2Q17 0.25% —% 0.22% 0.25% 0.15% 0.37% (1) BHCPR Peer Group 2: Bank Holding Companies with $3-10 Billion of Assets (2)Annualized Peer(1) (2)(2)
Slide 24: Asset quality: Loan Mix
24 Consumer Mortgage/ Construction $710 56% Home Equity $485 38% Other $70 6% Commercial CRE $2,665 59% C&I $1,401 31% Construction $427 10% Asset quality Total Portfolio Loans $5,758 Commercial $4,493 78% Consumer $1,265 22% Loan Mix As of 6.30.17 in $ Millions
Slide 25: Commercial Real Estate Diversification
25 Asset quality Commercial Real Estate Diversification As of 6.30.17 Total CRE $2,665 million Recreational 1% Convenience Stores 2% Mobile Home Park 2% Restaurant 2% Dealerships 4% Warehouse/Storage 4% Student Rentals 4% Retail Space 6% Manufacturing 6% Other 6% Healthcare 8% Flex/Mixed Use 8% Hote
Slide 26: Commercial & Industrial Diversification
26 Agriculture 1% Information 1% Co. & Enter. 1% Support Svs. 1% Arts, Enter. & Recr. 1% Food Svs. 1% Finance/Insurance 2% Mining 3% Utilities 3% Transportation 3% Professional Svs. 3% Wholesale Trade 4% Other Svs. 4% Educational Svs 9% RE- Rent/Lease 11% Health Care 11% Public Admin. 11% Retail Tra
Slide 27: Rate Sensitivity
27 Loans & Securities Floating Rate $2,436 37% ARM/Future Reset 1,685 26% Fixed Rate 2,450 37% Total $6,571 100% Deposits & Borrowings Floating Rate/Short Wholesale Borrowings $1,160 19% Non-Maturity Variable Deposits 2,292 37% Non-Interest Bearing DDA 1,336 22% Fixed Rate 1,372 22% Total $6,160 100
Slide 28: Senior Management
28 Senior Management Name Title Years in Banking Years with S&T Todd D. Brice President & CEO 31 31 Mark Kochvar Chief Financial Officer 31 25 David G. Antolik Chief Lending Officer 29 27 Ernest J. Draganza Chief Risk Officer 30 25 Patrick J. Haberfield Chief Credit Officer 30 7 David P. Ruddock Chi
Slide 29: Lines of Business
29 Lines of Business Commercial Banking • 47 commercial bankers • 16 business bankers • C&I growth focused on privately held companies with sales up to $150 million • Regional team based approach to credit delivery • Dedicated small business (B2B) delivery channel • Dedicated treasury management tea
Slide 30: The Right Size
30 The Right Size • Big enough to: • Provide full complement of products and services • Access technology • Access capital markets • Attract talent • Expand – mergers and acquisitions/de novo • Small enough to: • Stay close to our customers • Understand our markets • Be responsive
Slide 31: Income Statement
31 Income Statement Dollars in thousands, except per share data 2Q17 1Q17 2016 2015 2014 2013 Net Interest Income $56,570 $53,878 $203,259 $187,551 $148,042 $139,193 Noninterest Income 16,265 12,996 54,635 51,033 46,338 51,527 Total Revenue 72,835 66,874 257,894 238,584 194,380 190,720 Noninterest E
Slide 32: Balance Sheet
32 Balance Sheet Dollars in thousands 2Q17 1Q17 2016 2015 2014 2013 Securities $689,388 $713,198 $693,487 $660,963 $640,273 $509,425 Interest-bearing Balances 66,764 47,469 87,201 41,639 57,048 53,594 Loans, Net 5,725,588 5,705,365 5,562,437 5,014,786 3,823,805 3,522,080 Other 604,426 599,066 599,92
Slide 33: Net Interest Margin
33 Net Interest Margin (1)Refer to appendix for reconciliation of Non-GAAP financial measures 2Q17 1Q17 2016 2015 2014 2013 Securities - FTE 2.48% 2.44% 2.41% 2.48% 2.58% 2.64% Loans - FTE 4.30% 4.18% 4.08% 4.09% 4.06% 4.22% Total Interest-earning Assets - FTE 4.08% 3.96% 3.87% 3.86% 3.78% 3.86% Dep
Slide 34: Loan Portfolio
34 Loan Portfolio Dollars in thousands 2Q17 1Q17 2016 2015 2014 2013 Commercial Commercial Real Estate $2,664,642 $2,614,724 $2,498,476 $2,166,603 $1,682,236 $1,607,756 Commercial & Industrial 1,401,283 1,422,297 1,401,035 1,256,830 994,138 842,449 Construction 426,754 455,211 455,884 413,444 216,14
Slide 35: Asset Quality
35 Asset Quality Dollars in thousands (1)Annualized for quarterly data 2Q17 1Q17 2016 2015 2014 2013 Total Nonperforming Loans $36,669 $45,992 $42,635 $35,382 $12,457 $22,454 Nonperforming Loans/Total Loans 0.63% 0.80% 0.76% 0.70% 0.32% 0.63% Nonperforming Assets/Total Loans + OREO 0.66% 0.81% 0.77%
Slide 36: Capital
36 Capital (1)Refer to appendix for reconciliation of Non-GAAP financial measures 2Q17 1Q17 2016 2015 2014 2013 Leverage 9.01% 8.92% 8.98% 8.96% 9.80% 9.75% Common Tier 1 – Risk-Based Capital 10.53% 10.16% 10.04% 9.77% 11.81% 11.79% Tier 1 – Risk-Based Capital 10.89% 10.52% 10.39% 10.15% 12.34% 12.3
Slide 37: APPENDIX – Non-GAAP Measures
37 APPENDIX – Non-GAAP Measures 2Q17 1Q17 2016 2015 2014 2013 Tangible common equity/tangible assets (non-GAAP) Total Shareholders’ Equity (GAAP basis) $871,062 $855,180 $841,956 $792,237 $608,389 $571,306 Less: goodwill & other intangible assets (295,861) (296,222) (296,580) (298,289) (178,451) (17
Slide 38: APPENDIX – Non-GAAP Measures: Efficiency Ratio
38 APPENDIX – Non-GAAP Measures 2Q17 1Q17 2016 2015 2014 2013 Efficiency ratio (non-GAAP) Noninterest expense $36,597 $36,808 $143,232 $136,717 $117,240 $117,392 Net interest income 56,570 53,878 203,259 187,551 148,042 139,193 Plus: taxable equivalent adjustment 1,877 1,871 7,043 6,123 5,461 4,850
Slide 39: APPENDIX – Non-GAAP Measures: Net Interest Margin
39 APPENDIX – Non-GAAP Measures 2Q17 1Q17 2016 2015 2014 2013 Net Interest Margin Rate (FTE) (Non-GAAP) Total interest income $64,914 $61,150 $227,774 $203,548 $160,523 $153,756 Total interest expense (8,344) (7,272) (24,515) (15,997) (12,481) (14,563) Net interest income per consolidated statements
Slide 40: Second Quarter 2017
MEMBER FDIC Second Quarter 2017