S&t Bancorp, Inc. · NASDAQ:STBA
S&t Bancorp — Q3 2020 Earnings Presentation
35 slides from S&t Bancorp's earnings presentation, Nov 16, 2020
Slide 1: Third Quarter 2020
Third 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 • $9.2 billion in assets (as of 09.30.20) • $694 million market cap (as of 09.30.20) • 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 sco
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 eff
Slide 6: 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 7: Third Quarter Highlights
Third Quarter Highlights EPS: $ 0.43 • PTPP* 1.61%, $37.5 million • NIM stability Net Income: • Mortgage banking $16.7 million • Moderate ACL build • Dividend of $0.28 declared Returns: ROA ROE ROTE* 0.72% 5.80% 8.96% Asset ACL NCO Provision 1.64% Quality: 0.69% $17.5 million ex-PPP* 1.77% *Refer to
Slide 8: Key Metrics
Key Metrics 2020 2020 2020 2019 Third Second Second Third Quarter Quarter Quarter Quarter Reported Metrics: Reported Ex-fraud* Net income (loss) $16.7 million ($33.1 million) $13.3 million $26.9 million Diluted earnings (loss) per share $0.43 ($0.85) $0.34 $0.79 Dividends declared per share $0.28 $0
Slide 9: Performance
Performance Return on Average Assets Return on Average Equity 1.50% (3) 1.6% 1.45% 15.0% (2) 11.60% 1.4% 1.08% 1.22 9.90%(2) 10.92%(3) 1.2% 8.67% 10.0% 1.0% Peer(1) Peer(1) 0.8% (4) (4) 4.91% 0.63% 5.0% 9.98% 0.6% 1.03% 1.32% 8.37% 0.4% (0.36%) 0.0% 0.2% (0.05%) (3.35%) 0.0% -0.2% (6) (5.0)% (6) 201
Slide 10: Expenses
Expenses (2) Noninterest Expense / Average Assets Efficiency Ratio 3.0% 65% (1) Peer Peer(1) 2.5% 60% 2.17% (3) 2.10% 2.06% 2.09% 2.01% 2.0% 55% 54.06% 53.97% (3) 51.77% 51.39% 1.5% 50.60% 50% 1.0% 0.5% 45% 0.0% (4) 40% 2016 2017 2018 2019 YTD 3Q20 2016 2017 2018 2019 YTD 3Q20 (1) BHCPR Peer Group 2
Slide 11: 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 12: 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 13: Markets
Markets S&T Operates in 5 Regional Markets Totals as of 09.30.20 Portfolio Loans - $7,395 Deposits - $7,634 Western PA Western PA Upstate NY 6% $453 50% $3,694 Other 3% $224 65% 9% Upstate NY 0% $33 $4,994 Central OH $625 Central OH 2% $116 Northeast OH 2% $142 7% $539 Northeast OH Eastern PA 28% 28
Slide 14: Loan Mix
Loan Mix MEMBER FDIC 14 Dollars in millions
Slide 15: Deposit Mix
Deposit Mix Amount % of Total DDA $2,233 29 % Money Market 2,034 27 % CDs 1,446 19 % Int Bear DDA 983 13 % Savings 938 12 % Total Deposits $7,634 100 % Amount % of Total Personal $4,218 55 % Business 3,348 44 % Brokered 68 1 % Total $7,634 100 % MEMBER FDIC 15 Dollars in millions
Slide 16: Loan Modifications
Loan Modifications In response to COVID-19, we offered loan customers needs-based payment deferrals and modifications to interest only periods: June 30, 2020 September 30, 2020 October 31, 2020 Total Mod Mod Total Mod Mod Total Mod Mod % Loan Type Balance Balance % Balance Balance % Balance Balance
Slide 17: Commercial Loan Modifications
Commercial Loan Modifications Commercial loan modifications have been reduced to $277 million or 5% of the outstanding balance: Total Modified % of Bal Total Modified % of Bal Loan Type Balance Balance Modified Loan Type Balance Balance Modified Other $495 $15 3 % Manufacturing $298 $2 1 % Multi-Fam
Slide 18: Hotels
Hotels The COVID-19 pandemic is negatively impacting the hospitality industry and our hotel portfolio: Portfolio Total Modified Balance Balance 9/30/20 9/30/20 Balance $243 $230 Number 57 45 • 84% of the portfolio is with a Average Size $4.3 $5.1 Marriott, Hilton, Holiday Inn, or Hyatt chain. • Pre-
Slide 19: SBA PPP
SBA PPP We dedicated substantial resources to the SBA PPP and approved over $550 million: Total Number of % of. Loan Size Balance(2) Loans Loans. <$50,000 $32 1,441 49.1% <$150,000 66 770 26.3% <$350,000 84 366 12.5% >$350,000 368 355 12.1% Total $550 2,932 PPP loans impacted selected ratios as belo
Slide 20: Asset Quality
Asset Quality Nonperforming Loans / Total Loans Net Charge Offs / Average Loans 0.60%(3) 1.25% 1.13% 0.60% 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 3Q 2020 2016 2017 2018 2019 YTD 3Q20 Allowance for
Slide 21: Allowance for Credit Losses
Allowance for Credit Losses After adopting CECL in 2020, we have prudently built our ACL in response to the pandemic, its impact on our customers, and the changing economic outlook: Dollars in millions Portfolio Changes: Includes balance changes, internal risk rating changes, and net charge-offs Eco
Slide 22: Net Interest Income
Net Interest Income We are asset sensitive but have experienced core NIM stabilization: • Our ex-PPP NIM was stable from Q2 to Q3 • We reduced brokered deposits by $269 million in Q3 due to low-cost customer deposit growth • We significantly reduced deposit rates several times throughout Q2 and Q3 W
Slide 23: 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 9.71% and TCE / TA is 9.22%. • We are taking a prudent approach to capital management, given economic uncertainty. • Our internally-run
Slide 24: Valuation
Valuation Stock Performance Total Annualized Shareholder Return Includes reinvested dividends (Data as of 09.30.20) 1 YR 3 YR 5 YR 10 YR STBA (49.53) % (21.20) % (8.99) % 3.06 % S&P 600 Bank (31.86) % (11.70) % (0.18) % 8.00 % NASDAQ Bank (28.55) % (11.55) % 0.35 % 6.63 % S&P 500 15.09 % 12.25 % 14.
Slide 25: Performance Summary
Performance Performance Summary YTD YTD 2019 2017 3Q 2020 2019 Excludes 2018 2017 Excludes Excludes (2) (3) 3Q 2020 (5) Merger Exp DTA Fraud Net (Loss)Income (in thousands) ($3,136) $43,214 $98,234 $107,478 $105,334 $72,968 $86,401 Diluted (Loss) Earnings per Share ($0.08) $1.11 $2.82 $3.09 $3.01 $2
Slide 26: Financial Data
Financial Data Income Statement YTD 3Q 2020 2019 Exludes (1) (2) 2017 Dollars in thousands, except for share data YTD 3Q 2020 Excludes Fraud 2019 Merger Exp 2018 2017 Excludes DTA(3) 2016 Net Interest Income $209,460 $246,791 $234,438 $225,733 $203,259 Noninterest Income 44,110 52,558 49,181 55,462
Slide 27: Financial Data
Financial Data Net Interest Margin Loan Portfolio YTD 3Q 2020 2019 2018 2017 2016 Dollars in thousands 3Q 2020 2019 2018 2017 2016 Commercial Securities - FTE 2.50 % 2.64 % 2.62 % 2.48 % 2.41 % Commercial Real Estate $3,290,138 $3,416,518 $2,921,832 $2,685,994 $2,498,476 Commercial & Industrial 2,04
Slide 28: Reconciliation of GAAP to Non-GAAP Financial Measures
Appendix Definitions and Reconciliation of GAAP to Non-GAAP Financial Measures: 2020 2020 QTD 2019 Third Second 2Q 2020 Third Excludes Quarter Quarter Fraud Quarter Tangible Book Value (Non-GAAP) Total shareholders' equity $1,142,115 $1,135,777 $982,447 Less: goodwill and other intangible assets (38
Slide 29: Reconciliation of GAAP to Non-GAAP Financial Measures
Appendix Definitions and Reconciliation of GAAP to Non-GAAP Financial Measures: 2020 2020 QTD 2019 Third Second 2Q 2020 Third Excludes Quarter Quarter Fraud Quarter Return on Average Tangible Equity (non-GAAP) Net Income (loss) $16,705 ($33,072) ($33,072) $26,936 Nonrecurring items — — 58,671 — Tax
Slide 30: Reconciliation of GAAP to Non-GAAP Financial Measures
Appendix Definitions and Reconciliation of GAAP to Non-GAAP Financial Measures: 2020 2020 QTD 2019 Third Second 2Q 2020 Third Excludes Quarter Quarter Fraud Quarter PTPP / Average Assets (non-GAAP) Income (loss) before taxes $20,028 ($44,865) $31,679 Plus: Provision for credit losses 17,485 86,759 4
Slide 31: Reconciliation of GAAP to Non-GAAP Financial Measures
Appendix Definitions and Reconciliation of GAAP to Non-GAAP YTD YTD 2019 2017 Financial Measures: 3Q 2020 2019 Excludes 2018 2017 Excludes 2016 3Q 2020 Excludes Merger Exp DTA Fraud Net Income excluding nonrecurring items Net (loss) income ($3,136) $98,234 $72,968 Nonrecurring items 58,671 11,350 13
Slide 32: Reconciliation of GAAP to Non-GAAP Financial Measures
Appendix Definitions and Reconciliation of GAAP to Non-GAAP YTD YTD 3Q 2020 2019 2017 Financial Measures: 2019 Excludes 2018 2017 Excludes 2016 3Q 2020 Excludes Merger Exp DTA Fraud Return on Average Tangible Equity (non-GAAP) Net (loss) income ($3,136) ($3,136) $98,234 $98,234 $105,334 $72,968 $72,
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 3Q 2020 2019 Excludes 2018 2017 Excludes 2016 3Q 2020 Excludes Merger Exp DTA PPP loans Efficiency Ratio (YTD) (non-GAAP) Noninterest expense $138,115 $167,116 $145,445 $147,907 $143,232 Less: nonrecurr
Slide 34: Reconciliation of GAAP to Non-GAAP Financial Measures
Appendix Definitions and Reconciliation of GAAP to Non-GAAP YTD YTD 2019 2017 Financial Measures: 3Q 2020 2019 Excludes 2018 2017 Excludes 2016 3Q 2020 Excludes Merger Exp DTA PPP loans Allowance for Credit Losses /Total Portfolio Loans (Non-GAAP) Allowance for credit losses $120,998 Total portfolio
Slide 35: Third Quarter 2020
Third Quarter 2020 MEMBERMEMBER FDIC FDIC