S&T Bancorp Inc. (NASDAQ:STBA) Q1 2018 Earnings Conference Call - Preliminary Transcript

Apr 19, 2018 • 01:00 pm ET

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S&T Bancorp Inc. (NASDAQ:STBA) Q1 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Greetings and welcome to the S&T Bancorp Inc. First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mark Kochvar, Chief Financial Officer for S&T Bancorp. Thank you, Mr. Kochvar. You may begin.

Executive
Mark Kochvar

Thanks very much. Good afternoon and thank you for participating in today's conference call. Before beginning the presentation, I want to take time to refer you to our statement about forward-looking statements and risk factors, which is on the screen in front of you. This statement provides the cautionary language required by the Securities and Exchange Commission for forward-looking statements that maybe included in this presentation. A copy of the first quarter earnings release can be obtained by clicking on the press release link on your screen or by visiting our Investor Relations website at www.stbancorp.com.

I would now like to introduce Todd Brice, S&T's President and CEO who will provide an overview of S&T's results.

Executive
Todd Brice

Well, thank you Mark and good afternoon everyone. We are pleased to report record net income of $26.2 million or $0.75 per share and this is a 44% increase over the first quarter of 2017 results of $18.2 million or $0.52 per share. Performance metrics were also very strong with an ROA of 1.51%, return on equity of 11.92%, return on tangible common equity of 17.83% and an efficiency ratio of 50.35%. Net income for the first quarter versus '17 was positively impacted by increased revenues, which were up 6.3%; controlled expenses, which declined by 2%; improved credit cost, which declined by 52%; and a reduction in taxes due to the decrease in the federal corporate tax rate from 35% to 21%.

For the quarter, balance sheet growth was muted as we experienced declines in our loans and deposit portfolios. Market conditions were again somewhat challenging in Q1 as we experienced higher than normal payoffs in both our commercial and consumer portfolios. We are seeing a nice lift however in our underwriting pipelines and expect to meet our overall growth objectives for the year. We continue to focus on protecting our net interest margin through increased spreads on new loan originations and letting some higher costing deposits runoff. As a result, our net interest margin did expand by 1 basis point to 3.59% even with the negative impact of the FTE adjustment from a lower statutory tax rate.

Controlled expense discipline continues to be a focus throughout the organization. Compared to first quarter last year, expenses were down $720,000 due in large part to the sale of majority interest in our Evergreen Insurance division and a state college branch. These expenses were included in first quarter numbers last year. Pre-tax, the gain on Evergreen was $1.9 million. However, the net gain after-tax was approximately $500,000. Overall, credit metrics for the quarter were very strong. Total delinquency declined to 0.53%