S&t Bancorp, Inc. · NASDAQ:STBA
S&t Bancorp — Q2 2020 Earnings Presentation
36 slides from S&t Bancorp's earnings presentation, Sep 10, 2020
Slide 1: Second Quarter 2020
Second Quarter 2020 Todd Brice Chief Executive Officer Dave Antolik President Mark Kochvar Chief Financial Officer MEMBERMEMBER FDIC FDIC
Slide 2: Forward Looking Statements and Risk Factors
Forward Looking Statements and Risk Factors This information contains certain 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, outlo
Slide 3: Corporate Profile
Corporate Profile • Headquartered in Indiana, PA • $9.5 billion in assets (as of 06.30.20) • $0.9 billion market cap (as of 06.30.20) • Locations in 5 markets • Stock symbol: STBA Rated highest in customer satisfaction with retail banking in the Mid-Atlantic Region.* *S&T Bank received the highest s
Slide 4: STBA Investment Thesis
STBA Investment Thesis STBA Investment Thesis The Right Size • Above peer performance • Big enough to: • Demonstrated expense – Provide full complement of discipline and efficiency products and services • Organic growth – Access technology • Strategic and effective mergers – Access capital markets a
Slide 5: Strategic Goals
Strategic Goals Strategic Goals • Remain a high performing, independent, regional community bank • Follow a disciplined approach focused on organic growth • Continue to enhance our market-based growth platform focused on the unique opportunities in our 5 distinct markets • Continue to improve the ef
Slide 6: Second Quarter Highlights
Second Quarter Highlights EPS: ($ 0.85) ex-fraud $0.34 • PTPP 1.79%; $41.9 million • Deposit growth $810 million Net (Loss): ($33.1) million • Strong mortgage banking Net Income: $13.3 million • ACL build $17.8 million • PPP participation Returns: ROA ROE ROTE • Efficiency ratio 50.51% (11.17%) (16.
Slide 7: Fraud
Fraud • Check Kiting Scheme – Second quarter 2020 loss of $58.7 million or $1.19 per diluted share – Perpetrated by single business relationship – Discovered and first disclosed in late May 2020 • Update and Actions Taken to Date – No additional fraud-related losses expected – Pursuing all avenues t
Slide 8: Response to Challenging Times
Response to Challenging Times We remain committed to helping our employees, customers, and communities during these unprecedented and challenging times: COVID-19 Pandemic Racial and Social Inequality Employees: • We strive to educate our employees to be • Working from home and alternate locations op
Slide 9: Digital Channels
Digital Channels Strategic investments in our technology, marketing, and analytics will help us to deliver a distinctive customer experience and drive digital revenue and account growth: New website launched in Q3 2020 Q2 2020 Digital Utilization • Mobile-first, responsive design • Year-over-year in
Slide 10: J.D. Power Award
J.D. Power Award • S&T ranked highest in customer satisfaction with retail banking in the Mid-Atlantic by J.D. Power in the 2020 U.S. Retail Banking Satisfaction Study. • We ranked #1 in the following factors: – Communication and Advice – Convenience – Product and Fees – Channel Activities • For J.D
Slide 11: Key Metrics
Key Metrics 2020 2020 2019 Second First Second Quarter Quarter Quarter Reported Metrics: Net (loss) income ($33.1 million) $13.2 million $26.1 million Diluted (loss) earnings per share ($0.85) $0.34 $0.76 Dividends declared per share $0.28 $0.28 $0.27 Book value $28.93 $30.06 $28.11 Tangible book va
Slide 12: Performance
Performance Return on Average Assets Return on Average Equity 1.50% (3) 1.6% 1.45% 15.0% 1.4% (2) 11.60% 1.08% 1.22 9.90%(2) 10.92%(3) 1.2% 8.67% 1.0% 10.0% 0.8% (1) 0.59%(4) Peer 0.6% (1) 4.48%(4) Peer 5.0% 9.98% 0.4% 1.03% 1.32% 8.37% 0.2% 0.0% 0.0% (0.44%) -0.2% (3.35%) -0.4% -0.6% (6) (5.0)% (6)
Slide 13: Expenses
Expenses (3) Noninterest Expense / Average Assets Efficiency Ratio 3.0% 65% (1) Peer Peer(1) 2.5% 60% 2.17% (2) (4) 2.10% 2.06% 2.09% 1.99% 2.0% 55% 54.06% (2) (4) 51.77% 51.39% 51.68% 1.5% 50.60% 50% 1.0% 0.5% 45% 0.0% (5) 40% 2016 2017 2018 2019 YTD 2Q20 2016 2017 2018 2019 YTD 2Q20 (1) BHCPR Peer
Slide 14: Mergers and Expansion
Mergers and Expansion Western PA Central OH Upstate NY Branch opens in Hillard, OH LPO Opens in Pittsburgh, PA Northeast OH LPO Opens in Buffalo, NY Eastern PA March 4, 2019 (LPO 2014) October 31, 2016 LPO opens in Independence, OH May 29, 2019 (LPO 2015) Acquired DNB Financial Corp. August 13, 2018
Slide 15: Eastern PA Expansion
Eastern PA Expansion DNB Financial Timeline • June 5, 2019 - S&T & DNB announced merger • November 30, 2019 - Merger is finalized • February 10, 2020 - All systems are converted and DNB starts operating under the name S&T Bank • DNB adds ◦ 14 Branches ◦ $900 million in Loans ◦ $991 million in Deposi
Slide 16: Markets
Markets S&T Operates in 5 Regional Markets Totals as of 06.30.20 Portfolio Loans - $7,549 Deposits - $7,868 Western PA Western PA Upstate NY 6% $443 51% $3,813 64% 8% Other 6% $5,063 Central OH $627 $485 Upstate NY 0% $38 7% Central OH 2% $112 Northeast OH 2% $156 $548 Northeast OH Eastern PA 26% 28
Slide 17: Deposits
Deposits Deposit Mix as of 06.30.20 Amount % of Total DDA $2,251 29 % Money Market 2,122 27 % CD's 1,524 19 % Int Bear DDA 1,055 14 % Savings 916 11 % Total Deposits $7,868 100 % Amount % of Total Personal $4,213 54 % Business 3,178 41 % Brokered 477 5 % Total $7,868 100 % MEMBER FDIC 17 Dollars in
Slide 18: Total Portfolio Loans
Total Portfolio Loans $ 7,549 MEMBER FDIC 18
Slide 19: Loan Modifications
Loan Modifications In response to COVID-19, we offered loan customers needs-based payment deferrals and modifications to interest only periods: March 31, 2020 June 30, 2020 August 31, 2020 Loan Type Total Mod Total Mod Total Mod Balance Balance Mod % Balance Balance Mod % Balance Balance Mod % 3/31/
Slide 20: Commercial Loan Modifications
Commercial Loan Modifications We are working with our customers as modifications expire and have reduced the modified balance of commercial loans from 22% to 8% since June 30, 2020: Total Modified % of Bal Total Modified % of Bal Loan Type Balance Balance Modified Loan Type Balance Balance Modified
Slide 21: Hotels
Hotels The COVID-19 pandemic is negatively impacting the hospitality industry and our hotel portfolio. Portfolio Total Modified % of Bal Balance Balance Modified 6/30/20 8/31/20 Balance $233 $201 86% • 84% of the portfolio is with a Number 63 42 67% Marriott, Hilton, Holiday Inn, or Average Size $3.
Slide 22: SBA PPP
SBA PPP We dedicated substantial resources to the SBA PPP and approved over $547 million: Total Number of % of. Loan Size Balance Loans Loans. <$150,000 $98.0 2,213 75.5% <$350,000 83.2 364 12.4% >$350,000 366.4 354 12.1% Total $547.6 2,931 PPP loans impacted selected ratios as below: Excluding Incl
Slide 23: Asset Quality
Asset Quality Nonperforming Loans / Total Loans Net Charge Offs / Average Loans 1.19% 1.25% 0.60% 0.56%(3) 1.00% 0.45% 0.76% 0.77% 0.76% 0.75% 0.30% (1) 0.25% 0.50% 0.42% Peer 0.22% 0.18% 0.18% 0.15% 0.25% Peer(1) 0.00% 0.00% (2) 2016 2017 2018 2019 2Q 2020 2016 2017 2018 2019 YTD 2Q20 Allowance for
Slide 24: Capital
Capital We are well-capitalized and have sufficient excess capital: Key points: • The Leverage Ratio and TCE / TA are impacted by PPP. The ex-PPP Leverage Ratio is 9.11% and TCE / TA is 8.83%. • We are taking a prudent approach to capital management, given economic uncertainty. • Our internally-run
Slide 25: Valuation
Valuation Stock Performance Total Annualized Shareholder Return Includes reinvested dividends (Data as of 06.30.20) 1 YR 3 YR 5 YR 10 YR STBA (35.04) % (10.79) % (1.96) % 4.62 % S&P 600 Bank (26.14) % (7.51) % 0.96 % 8.91 % NASDAQ Bank (23.37) % (7.87) % 1.19 % 7.31 % S&P 500 7.43 % 10.71 % 10.71 %
Slide 26: Performance Summary
Performance Performance Summary YTD YTD 2019 2017 2Q 2020 2019 Excludes 2018 2017 Excludes Excludes (2) (3) 2Q 2020 (5) Merger Exp DTA Fraud Net Income (in thousands) (1) ($19,481) $26,509 $98,234 $107,478 $105,334 $72,968 $86,401 Diluted Earnings per Share ($0.51) $0.68 $2.82 $3.09 $3.01 $2.09 $2.4
Slide 27: Financial Data
Financial Data Income Statement YTD 2Q 2020 2019 Exludes (1) (2) 2017 YTD 2Q 2020 Excludes Fraud 2019 Merger Exp 2018 2017 Excludes DTA(3) 2016 Net Interest Income $140,184 $246,791 $234,438 $225,733 $203,259 Noninterest Income 27,627 52,558 49,181 55,462 54,635 Total Revenue 167,811 299,349 283,619
Slide 28: Financial Data
Financial Data Net Interest Margin Loan Portfolio YTD 2Q 2020 2019 2018 2017 2016 Dollars in thousands 2Q 2020 2019 2018 2017 2016 Commercial Securities - FTE 2.55 % 2.64 % 2.62 % 2.48 % 2.41 % Commercial Real Estate $3,345,513 $3,416,518 $2,921,832 $2,685,994 $2,498,476 Commercial & Industrial 2,14
Slide 29: Reconciliation of GAAP to Non-GAAP Financial Measures
Appendix Definitions and Reconciliation of GAAP to Non-GAAP Financial Measures: 2020 QTD 2020 QTD 2019 Second 2Q 2020 First 1Q 2020 Second Excludes Excludes Quarter Fraud (5) Quarter Merger Exp(2) Quarter Tangible Book Value (Non-GAAP) Total shareholders' equity $1,135,777 $1,176,251 $964,953 Less:
Slide 30: Reconciliation of GAAP to Non-GAAP Financial Measures
Appendix Definitions and Reconciliation of GAAP to Non-GAAP Financial Measures: 2020 QTD 2020 QTD 2019 Second 2Q 2020 First 1Q 2020 Second Excludes Excludes Quarter Fraud (5) Quarter Merger Exp(2) Quarter Return on Average Tangible Equity (non-GAAP) Net (loss) income (1) ($33,072) ($33,072) $13,231
Slide 31: Reconciliation of GAAP to Non-GAAP Financial Measures
Appendix Definitions and Reconciliation of GAAP to Non-GAAP Financial Measures: 2020 QTD 2020 QTD 2019 Second 2Q 2020 First 1Q 2020 Second Excludes Excludes Quarter Fraud (5) Quarter Merger Exp(2) Quarter PTPP / Average Assets (non-GAAP) (Loss) income before taxes ($44,865) $15,998 $31,171 Plus: Pro
Slide 32: Reconciliation of GAAP to Non-GAAP Financial Measures
Appendix Definitions and Reconciliation of GAAP to Non-GAAP YTD YTD 2019 2017 Financial Measures: 2Q 2020 2019 Excludes 2018 2017 Excludes 2016 2Q 2020 Excludes (2) (3) (4) Merger Exp DTA Fraud Net Income excluding nonrecurring items Net (loss) income (1) ($19,841) $98,234 $72,968 Nonrecurring items
Slide 33: Reconciliation of GAAP to Non-GAAP Financial Measures
Appendix Definitions and Reconciliation of GAAP to Non-GAAP YTD Financial Measures: YTD 2019 2017 2Q 2020 2019 Excludes 2018 2017 Excludes 2016 2Q 2020 Excludes (2) (3) (4) Merger Exp DTA Fraud Return on Average Tangible Equity (non-GAAP) Net (loss) income (1) ($19,841) ($19,841) $98,234 $98,234 $10
Slide 34: Reconciliation of GAAP to Non-GAAP Financial Measures
Appendix Definitions and Reconciliation of GAAP to Non-GAAP YTD Financial Measures: YTD 2019 2017 2Q 2020 2019 Excludes 2018 2017 Excludes 2016 2Q 2020 Excludes Merger Exp(2) DTA(3) PPP loans Efficiency Ratio (YTD) (non-GAAP) Noninterest expense $89,869 $167,116 $145,445 $147,907 $143,232 Less: nonr
Slide 35: Reconciliation of GAAP to Non-GAAP Financial Measures
Appendix Definitions and Reconciliation of GAAP to Non-GAAP 2Q 2020 2019 2017 Financial Measures: 2Q 2020 Excludes 2019 Excludes 2018 2017 Excludes 2016 Fraud (4) Merger Exp(2) DTA(3) Allowance for Credit Losses /Total Portfolio Loans (Non-GAAP) Allowance for credit losses $114,609 Total portfolio l
Slide 36: Second Quarter 2020
Second Quarter 2020 MEMBERMEMBER FDIC FDIC