S&T Bancorp Inc. (NASDAQ:STBA) Q2 2020 Earnings Conference Call - Final Transcript

Jul 30, 2020 • 01:00 pm ET

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S&T Bancorp Inc. (NASDAQ:STBA) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome, to the S&T Bancorp Inc. Second Quarter Earnings Conference Call. [Operator Instructions]

At this time, it's my pleasure to turn the floor over to Mr. Mark Kochvar. Sir, the floor is yours.

Executive
Mark Kochvar

Oh. Thank you. Good afternoon, everyone, 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 may be included in this presentation. A copy of the second quarter 2020 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.

We will be reviewing an earnings supplement slide deck as part of this presentation, you can obtain a copy of those slides on our website under Events and Presentations Second Quarter 2020 Earnings Conference Call, click on the earnings supplement link.

With me today, are Todd Brice, CEO of S&T; and David Antolik, S&T's President. I would now like to turn the program over to Todd, who will begin today's presentation.

Executive
Todd D. Brice

Well, thank you, Mark. And good afternoon, everybody. As previously reported in our 8-K filing on May 26th, S&T Bank was subject to a significant check kitting scheme conducted by a single business customer. This criminal activity has negatively impacted our results this quarter and we're reporting a loss of $33.1 million or $0.85 per share. An independent internal review is conducted and this was a one-time event relating to one customer and there were no S&T employees involved. In addition, we've implemented process and monitoring enhancements to prevent future fraud. We've also taken a number of steps and are actively pursuing collection activities through legal channels that may result in some recovery.

Excluding the loss from the customer fraud, we posted core EPS of $0.34 per share, which translated into return on asset of 0.57%, return on equity of 4.48% and return on tangible common equity of 6.86%. Our pre-tax pre-provision increased by 16% to $41.9 million or 1.7% of average assets. Another bright spot is our efficiency ratio, which came in 50.51%, controlling expenses have been a hallmark for our company and will continue to be so going forward.

For the quarter, we experienced significant deposit growth of $810 million, over half of the growth $548 million was in non-interest bearing demand deposit accounts. Interest bearing demand, money market and savings accounts increased $92 million, $154 million and $80 million respectively and we do estimate that approximately 40% of deposit growth is associated with the PPP growth program, another government stimulus programs.

Mortgage banking with the price -- by this quarter as well. Year-to-date production of $213 million represented 54% increase over the same period of last year and the breakout is about 70% refinancing and we've sold about 78%