S&t Bancorp, Inc. · NASDAQ:STBA
S&t Bancorp — FY2017 Earnings Presentation
42 slides from S&t Bancorp's earnings presentation, Feb 7, 2018
Slide 1: S&T Bancorp Full Year 2017
Sai Bancorp. Full Year 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 2017 Highlights 6 Performance Summary 7 STBA Investment Thesis 8 Performance 9 Expenses 12 Growth 14 Mergers and Expansion 15 Markets 16 Asset Quality 22 Rate Sensitivity 27 Senior Management 28 Lines of Business 29 Valuation 30 The Right Size 31 Financial Dat
Slide 5: Corporate Profile
5 Corporate Profile 5 • Headquartered in Indiana, PA • $7.1 billion in assets (as of 12.31.17) • $1.4 billion market cap (as of 12.31.17) • Locations in 5 regional markets • Stock symbol: STBA Corporate Profile
Slide 6: 2017 Highlights
6 2017 Highlights • Net income increased to $73.0 million compared to $71.4 million for 2016. Excluding the net DTA re-measurement of $13.4 million, net income increased 21% to $86.4 million(1) compared to 2016. • ROA was 1.03%, ROE was 8.37% and ROTE(1) was 12.77%. • Excluding the DTA re-measuremen
Slide 7: Performance Summary
7 Performance Summary (1) Refer to appendix for reconciliation of Non-GAAP financial measures (2)These are non-GAAP numbers that adjust for the effects of a one-time, non-cash re-measurement of $13.4 million of our deferred tax asset in 2017. Refer to appendix for reconciliation of non-GAAP financia
Slide 8: STBA Investment Thesis
8 STBA Investment Thesis • Above peer performance • Demonstrated expense discipline and efficiency • Organic growth • Strategic and effective mergers and expansion • Stable regional markets with long-term oil and gas benefit • Sound asset quality STBA Investment Thesis
Slide 9: Return on Average Assets
9 Return on Average Assets 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 2013 2014 2015 2016 2017 1.03% (1) BHCPR Peer Group 2: Bank Holding Companies with $3-10 Billion of Assets through 3Q17 (2)This is a non-GAAP number that adjusts for the effects of a one-time, non-cash re-measurement of $13.4 million
Slide 10: Return on Average Equity
10 Performance Return on Average Equity 12.5% 10.0% 7.5% 5.0% 2.5% 0.0% 2013 2014 2015 2016 2017 8.37% (1) BHCPR Peer Group 2: Bank Holding Companies with $3-10 Billion of Assets through 3Q17 (2)This is a non-GAAP number that adjusts for the effects of a one-time, non-cash re-measurement of $13.4 mi
Slide 11: Return on Average Tangible Equity
11 Performance Return on Average Tangible Equity 20.0% 15.0% 10.0% 5.0% 0.0% 2013 2014 2015 2016 2017 12.77% (1) SNL Financial Custom Peer Group Holding Companies with $3-10 Billion of Assets through 3Q17. (2) )Refer to appendix for reconciliation of non-GAAP financial measures (3)This is a non-GAAP
Slide 12: Non Interest Expense / Average Assets
12 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 2017 Expenses (1) BHCPR Peer Group 2: Bank Holding Companies with $3-10 Billion of Assets through 3Q17. Peer(1)2.61% 2.46% 2.30% 2.17% 2.10%
Slide 13: Efficiency Ratio
13 Expenses Efficiency Ratio 70% 60% 50% 40% 2013 2014 2015 2016 2017 60.03% 58.67% 55.86% 54.06% 51.77% Peer(1) (1) BHCPR Peer Group 2: Bank Holding Companies with $3-10 Billion of Assets through 3Q17. (2)Refer to appendix for reconciliation of Non-GAAP financial measures (2)
Slide 14: Loan Growth
14 Loan Growth $6,000 $5,500 $5,000 $4,500 $4,000 $3,500 $3,000 $2,500 Lo an D ol la rs (in m ill io ns ) 2011 2012 2013 2014 2015 2016 2017 $3,133 $3,369 $3,568 $3,872 $5,063 $5,615 $5,766 Growth CA GR = 10.7 %
Slide 15: Mergers and expansion
15 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 2017 4,159 4,533 $4,533 4,965 $4,965 5,452 6,943 $6,943 7,060 $7,060 242 126 $4,527 866 $6,318 North Shore Pittsburgh LPO opened - November 16, 201
Slide 16: Loan Growth by Market
16 Loan Growth by Market 2012 2017 Markets Western NY Western NY Central PA Central PA Southwestern PA Southwestern PA Northeast OH Northeast OH Central OH Central OH
Slide 17: S&T Operates in 5 Regional Markets
17 MSAs Locations Deposits(2) % Loans(2) % Southwestern PA(1) Pittsburgh 50 $3,849 70.9% $2,975 51.6%Altoona Johnstown Central PA Lancaster 8 696 12.8% 838 14.5%Harrisburg York Other PA 123 2.3% 380 6.6% Total PA 4,668 86.0% 4,193 72.7% Northeast OH Akron 1 42 0.7% 314 5.4% Cleveland Central OH Colu
Slide 18: Projected Population Change 2018-2023
18 Projected Population Change 2018-2023 5% 4% 3% 2% 1% 0% -1% -2% Southwestern PA Central PA Northeast OH Central OH Western NY (0.66)% 1.99% (0.14)% 4.01% 0.25% 3.50% 2,838 1,561 2,752 2,076 2,208 Source: SNL & Nielson 2017 Estimated Population 2018 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 OH Central OH Western NY $57,787 $64,246 $56,107 $63,009 $58,110 $61,045 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 OH Central OH Western NY 4.37% 3.55% 4.55% 3.50% 5.20% 4.10% Source: November 2017 Bureau of Labor Statistics; 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: Nonperforming Loans / Total Loans
22 Asset quality Nonperforming Loans / Total Loans 1.5% 1.0% 0.5% 0.0% 2013 2014 2015 2016 2017 0.63% 0.32% 0.70% 0.76% (1) BHCPR Peer Group 2: Bank Holding Companies with $3-10 Billion of Assets through 3Q17 Peer(1) 0.42%
Slide 23: 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 2017 0.25% 0.00% 0.22% 0.25% 0.18% (1) BHCPR Peer Group 2: Bank Holding Companies with $3-10 Billion of Assets through 3Q17 Peer(1)
Slide 24: Loan Mix
24 Commercial CRE $2,686 60% C&I $1,433 32% Asset quality Loan Mix As of 12.31.17 Total Portfolio Loans $5,761 Commercial $4,504 78% Consumer $1,257 22% Consumer Mortgage/ Construction $703 56% Home Equity $487 39% Other $67 5% in $ Millions Construction $385 8%
Slide 25: Commercial Real Estate Diversification
25 Asset quality Recreational 1% Mobile Home Park 2% Convenience Stores 2% Restaurant 2% Student Rentals 3% Dealerships 4% Warehouse/Storage 4% Other 5% Manufacturing 6% Retail Space 7% Flex/Mixed Use 9% Healthcare 9% Strip Malls 9% Hotels 10% Multi-Family 12% Offices 15% Commercial Real Estate Dive
Slide 26: Commercial & Industrial Diversification
26 Asset quality Commercial & Industrial Diversification As of 12.31.17 Total C&I $1,433 million Agriculture 1% Arts, Enter. & Recr. 1% Food Svs. 1% Support Svs. 1% Finance/Insurance 2% Mining 3% Transportation 3% Professional Svs. 3% Wholesale Trade 5% Construction 5% Other Svs. 5% Educational Svs
Slide 27: Rate Sensitivity
27 Loans & Securities Floating Rate $2,426 37% ARM/Future Reset 1,705 26% Fixed Rate 2,424 37% Total $6,555 100% Deposits & Borrowings Floating Rate/Short Wholesale Borrowings $1,052 17% Non-Maturity Variable Deposits 2,375 39% Non-Interest Bearing DDA 1,388 23% Fixed Rate 1,296 21% Total $6,111 100
Slide 28: Senior Management
28 Senior Management Name Title Years in Banking Years with S&T Todd D. Brice President & CEO 32 32 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 • 46 commercial bankers • 19 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: Stock Performance
30 1 YR 3 YR 5 YR 10 YR STBA 4.23% 12.88% 20.21% 6.86% NASDAQ Bank 5.47% 16.56% 18.67% 6.48% KRX-Dow Jones KBW Regional Bank 1.82% 14.49% 17.68% 6.34% S&P 500 21.89% 11.40% 15.77% 8.48% Valuation NASDAQ Bank S&P 500 KRX Regional Bank S&T Bancorp Stock Price Change (%) 30 20 10 0 -10 -20 Pr ic e C ha
Slide 31: The Right Size
31 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 The Right Size
Slide 32: Income Statement
32 Income Statement Dollars in thousands, except per share data (1)These are non-GAAP numbers that adjust for the effects of a one-time, non-cash re-measurement of $13.4 million of our deferred tax asset in 2017. Refer to appendix for reconciliation of non-GAAP financial measures. 2017 Excludes DTA(
Slide 33: Balance Sheet
33 Balance Sheet Dollars in thousands 2017 2016 2015 2014 2013 Securities $698,291 $693,487 $660,963 $640,273 $509,425 Interest-bearing Balances 61,965 87,201 41,639 57,048 53,594 Loans, Net 5,709,544 5,562,437 5,014,786 3,823,805 3,522,080 Other 590,455 599,928 600,966 443,560 448,091 Total Assets
Slide 34: Net Interest Margin
34 Net Interest Margin (1)Refer to appendix for reconciliation of Non-GAAP financial measures 2017 2016 2015 2014 2013 Securities - FTE 2.48% 2.41% 2.48% 2.58% 2.64% Loans - FTE 4.32% 4.08% 4.09% 4.06% 4.22% Total Interest-earning Assets - FTE 4.09% 3.87% 3.86% 3.78% 3.86% Deposits 0.62% 0.51% 0.37%
Slide 35: Loan Portfolio
35 Loan Portfolio Dollars in thousands 2017 2016 2015 2014 2013 Commercial Commercial Real Estate $2,685,994 $2,498,476 $2,166,603 $1,682,236 $1,607,756 Commercial & Industrial 1,433,266 1,401,035 1,256,830 994,138 842,449 Construction 384,334 455,884 413,444 216,148 143,675 Total Commercial 4,503,5
Slide 36: Asset Quality
36 Asset Quality Dollars in thousands 2017 2016 2015 2014 2013 Total Nonperforming Loans $23,938 $42,635 $35,382 $12,457 $22,454 Nonperforming Loans/Total Loans 0.42% 0.76% 0.70% 0.32% 0.63% Nonperforming Assets/Total Loans + OREO 0.42% 0.77% 0.71% 0.33% 0.64% Net Charge-offs (Recoveries)/Average Lo
Slide 37: Capital
37 Capital (1)Refer to appendix for reconciliation of Non-GAAP financial measures 2017 2016 2015 2014 2013 Leverage 9.17% 8.98% 8.96% 9.80% 9.75% Common Tier 1 – Risk-Based Capital 10.71% 10.04% 9.77% 11.81% 11.79% Tier 1 – Risk-Based Capital 11.06% 10.39% 10.15% 12.34% 12.37% Total – Risk-Based Cap
Slide 38: APPENDIX – Non-GAAP Measures
38 APPENDIX – Non-GAAP Measures 2017 2016 2015 2014 2013 Tangible shareholders' equity/tangible assets (non-GAAP) Total Shareholders’ Equity (GAAP basis) $884,031 $841,956 $792,237 $608,389 $571,306 Less: goodwill and other intangible assets (295,347) (296,580) (298,289) (178,451) (179,580) Tax effe
Slide 39: APPENDIX – Non-GAAP Measures
39 APPENDIX – Non-GAAP Measures 2017 2016 2015 2014 2013 Efficiency ratio (non-GAAP) Noninterest expense $147,907 $143,232 $136,717 $117,240 $117,392 Net interest income 225,733 203,259 187,551 148,042 139,193 Plus: taxable equivalent adjustment 7,493 7,043 6,123 5,461 4,850 Net interest income (FTE
Slide 40: APPENDIX – Non-GAAP Measures
40 APPENDIX – Non-GAAP Measures 2017 2016 2015 2014 2013 Net Interest Margin Rate (FTE) (Non-GAAP) Total interest income $260,642 $227,774 $203,548 $160,523 $153,756 Less: interest expense (34,909) (24,515) (15,997) (12,481) (14,563) Net interest income per consolidated statements of net income 225,
Slide 41: APPENDIX – Non-GAAP Measures
41 APPENDIX – Non-GAAP Measures 2017 2017 Return on Average Equity Return on Tangible Shareholders' Equity Net Income $72,968 Net Income $72,968 Plus: DTA re-measurement 13,433 Plus: DTA re-measurement 13,433 Adjusted net income (non-GAAP) 86,401 Adjusted net income (non-GAAP) 86,401 Average assets
Slide 42: S&T Bancorp Full Year 2017
Sai Bancorp. Full Year 2017