Attached files
| file | filename |
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| EX-99.1 - EXHIBIT 99.1 - S&T BANCORP INC | stba4q16investorsheetr99.htm |
| 8-K - 8-K - S&T BANCORP INC | form8-k4q16investor1.htm |
MEMBER FDIC
Full Year 2016
Forward Looking Statement
and Risk Factors
This presentation 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, outlook for earnings, revenues,
expenses, capital and liquidity levels and ratios, asset levels, asset quality, financial position, and other matters regarding or affecting S&T
and its future business and operations. Forward looking statements are typically identified by words or phrases such as “will likely result,”
“expect”, “anticipate,” “estimate,” “forecast,” “project,” “intend”, “ believe”, “assume”, “strategy”, “trend”, “plan”, “outlook”, “outcome”, “continue”,
“remain”, “potential,” “opportunity”, “believe”, “comfortable”, “current”, “position”, “maintain”, “sustain”, “seek”, “achieve” and variations of such
words and similar expressions, or future or conditional verbs such as will, would, should, could or may. Although we believe the assumptions
upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the
forward-looking statements based on these assumptions could be incorrect. The matters discussed in these forward-looking statements are
subject to various risks, uncertainties and other factors that could cause actual results and trends to differ materially from those made,
projected, or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors including, but not limited
to: credit losses, cyber-security concerns; rapid technological developments and changes; sensitivity to the interest rate environment
including a prolonged period of low interest rates, a rapid increase in interest rates or a change in the shape of the yield curve; a change in
spreads on interest-earning assets and interest-bearing liabilities; regulatory supervision and oversight; legislation affecting the financial
services industry as a whole, and S&T, in particular; the outcome of pending and future litigation and governmental proceedings; increasing
price and product/service competition; the ability to continue to introduce competitive new products and services on a timely, cost-effective
basis; managing our internal growth and acquisitions; the possibility that the anticipated benefits from acquisitions cannot be fully realized in a
timely manner or at all, or that integrating the acquired operations will be more difficult, disruptive or costly than anticipated; containing costs
and expenses; reliance on significant customer relationships; general economic or business conditions; deterioration of the housing market
and reduced demand for mortgages; deterioration in the overall macroeconomic conditions or the state of the banking industry that could
warrant further analysis of the carrying value of goodwill and could result in an adjustment to its carrying value resulting in a non-cash charge
to net income; re-emergence of turbulence in significant portions of the global financial and real estate markets that could impact our
performance, both directly, by affecting our revenues and the value of our assets and liabilities, and indirectly, by affecting the economy
generally and access to capital in the amounts, at the times and on the terms required to support our future businesses. Many of these
factors, as well as other factors, are described in our filings with the SEC. Forward-looking statements are based on beliefs and assumptions
using information available at the time the statements are made. We caution you not to unduly rely on forward-looking statements because
the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. Any
forward-looking statement speaks only as to the date on which it is made, and we undertake no obligation to update any forward-looking
statement to reflect developments occurring after the statement is made. 2
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 equivalent basis. S&T believes
these financial measures provide information useful to investors in understanding our operational
performance and business and performance trends which facilitate comparisons with the performance of
others in the financial services industry. Although S&T believes that these non-GAAP financial measures
enhance investors’ understanding of S&T’s business and performance, these non-GAAP financial
measures should not be considered an alternative to GAAP. The non-GAAP financial measures contained
therein should be read in conjunction with the audited financial statements and analysis as presented in
the Annual Report on Form 10-K as well as the unaudited financial statements and analyses as presented
in the respective Quarterly Reports on Forms 10-Q for S&T Bancorp, Inc. and subsidiaries.
3
Corporate Profile
4
• Headquartered in Indiana, PA
• $6.9 billion in assets (as of 12.31.16)
• $1.4 billion market cap (as of 12.31.16)
• Bank holding company with
64 offices and 5 insurance locations
• Stock symbol: STBA
• Named Sandler O’Neill Sm-All Star in 2013,
2014, and 2015
Performance
5
Performance Summary
(1)Refer to appendix for reconciliation of Non-GAAP financial measures
6
2016 2015 2014 2013 2012
Net Income (in $ thousands) $71,392 $67,081 $57,910 $50,539 $34,200
Diluted Earnings per Share $2.05 $1.98 $1.95 $1.7 $1.18
Dividends Declared per Share $0.77 $0.73 $0.68 $0.61 $0.60
Total Assets (in $ millions) $6,943 $6,318 $4,965 $4,533 $4,527
Total Loans (in $ millions) $5,615 $5,063 $3,872 $3,568 $3,369
Total Deposits (in $ millions) $5,272 $4,877 $3,909 $3,672 $3,638
Return on Average Assets 1.08% 1.13% 1.22% 1.12% 0.79%
Return on Average Equity 8.67% 8.94% 9.71% 9.21% 6.62%
Return on Tangible Equity(1) 13.71% 14.39% 14.02% 13.94% 10.35%
Net Interest Margin (FTE) (1) 3.47% 3.56% 3.50% 3.50% 3.57%
Nonperforming Assets/Loans+OREO 0.77% 0.71% 0.33% 0.64% 1.66%
Allowance for Loan Losses/Total Loans 0.94% 0.96% 1.24% 1.30% 1.38%
Net Loan Charge-offs/Average Loans 0.25% 0.22% 0.00% 0.25% 0.78%
Risk Based Capital-Total 11.86% 11.60% 14.27% 14.36% 15.39%
Tangible Common Equity/Tangible Assets(1) 8.23% 8.24% 9.00% 9.03% 8.24%
STBA Investment Thesis
• Above peer performance
• Strategic and effective mergers and expansion
• Demonstrated expense discipline and efficiency
• Organic growth
• Sound asset quality
• Stable regional economies with long-term
oil and gas benefit
• Undervalued compared to peer
7
8
Performance
9
Performance
10
Performance
11
Mergers and expansion
12
Expenses
13
Expenses
14
Growth
Market Opportunity
MSA 2017 Population (in thousands)
2017-2022
% Change
Median HH Income
(in thousands) Locations
Deposits
(in millions)
Deposit Market
Share %
Loans
(in millions)
Pittsburgh, PA 2,349 0.08 % $56 27 $1,955 1.6% $2,035
Indiana, PA1 86 (1.42)% $46 9 $1,345 58.0% $384
Jefferson-Clarion, PA2 84 (0.65)% $45 8 $572 35.3% $254
DuBois, PA1 81 (0.30)% $42 2 $207 15.2% $125
Johnstown, PA 134 (3.25)% $45 6 $138 4.7% $85
Altoona, PA 125 (0.65)% $46 1 $65 2.7% $146
Harrisburg-Carlisle, PA 570 2.41 % $61 4 $560 4.3% $322
Lancaster, PA 541 2.54 % $62 3 $245 2.3% $429
York-Hanover, PA 445 1.69 % $61 1 $29 0.4% $90
State College, PA 163 3.19 % $54 1 $19 0.6% $67
Akron, OH 705 0.51 % $54 1 - - $118
Cleveland-Elyra, OH 2,058 (0.04)% $52 - - - $135
Columbus, OH 2,058 4.34 % $60 1 - - $307
Rochester, NY 1,081 0.69 % $55 1 - - $122
Buffalo-Cheektowaga-Niagara Falls, NY 1,135 0.68 % $53 - - - $165
15
1 Micropolitan statistical area
2 Counties not part of an MSA or Micropolitan statistical area
Source: SNL, Nielson, and internal data
Growth
16
Asset quality
17
Asset quality
18
Asset quality
19
Asset quality
Stable regional economies with long-term oil & gas benefit
20
Regional economy
21
Valuation
22
Undervalued compared to peer(1)
Valuation
(1)KRX-Dow Jones KBW Regional Bank Index Members
Stock prices as of 01.31.17; Performance for last twelve months reported
Source: Bloomberg
23
Valuation
24
Senior Management
25
Name Title Years in Banking Years with S&T
Todd D. Brice President & CEO 31 31
Mark Kochvar Chief Financial Officer 30 24
David G. Antolik Chief Lending Officer 28 26
Ernest J. Draganza Chief Risk Officer 30 25
Patrick J. Haberfield Chief Credit Officer 29 6
David P. Ruddock Chief Operating Officer 31 31
Thomas J. Sposito, II Market Executive 31 4
Rebecca A. Stapleton Chief Banking Officer 28 28
Continuous Improvement
26
Multi-Faceted
Growth
Profit
Improvement
Operational
Effectiveness Culture
Customer
Experience
Risk
Management
3 mergers since 2012
LPO expansions to
new markets
Akron, OH office
relocated in 2016
North Shore,
Pittsburgh commercial
banking office opened
in 2016
McCandless, PA branch
opened in 2015
Platinum banking
Bank at work program
Closed 6 locations in
the last 3 years
Converted 1 branch
to a drive-up
New wealth
management
restructure
Repositioned credit
card product
New floor plan system
New mortgage
origination system
New consumer loan
origination system
Replaced computer
network infrastructure
Organization wide
focus
Employee wellness
program
Green initiative
Summer internship
program
Support our
communities work
initiative
Digital strategy
Solution Center
Marketing rebranding
2 branch innovation
centers
Enterprise-wide focus
Balanced risk vs. reward
IT security infrastructure
Lines of Business
Commercial Banking
• 49 commercial bankers
• 18 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 team
Retail Banking
• Competitive, relationship driven
• Robust suite of deposit, loan, and digital products
• Over 132,400 households
• 64 locations; average size of $82.4 million
• Technology driven with over 106,000 online banking
and nearly 55,000 mobile banking customers
• Solution center support
S&T-Evergreen Insurance
• Full service agency
• Commercial P&C (76%)
• Group life and health (12%)
• Personal lines (12%)
• Annual revenue of $4.7 million
• Focus on increasing penetration of S&T
customer base
Wealth Management
• $1.9 billion AUA
• 3 divisions
• S&T Trust
• S&T Financial Services
• RIA/Stewart Capital Advisors
• Annual revenue of $10.5 million
• New leadership: Greg Lefever, 34 years in
financial services
27
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
28
Income Statement
Dollars in thousands, except per share data
29
2016 2015 2014 2013 2012
Net Interest Income $203,259 $187,551 $148,042 $139,193 $135,227
Noninterest Income 54,635 51,033 46,338 51,527 51,912
Total Revenue 257,894 238,584 194,380 190,720 187,139
Noninterest Expense 143,232 136,717 117,240 117,392 122,863
Provision for Loan Losses 17,965 10,388 1,715 8,311 22,815
Net Income Before Taxes 96,697 91,479 75,425 65,017 41,461
Taxes 25,305 24,398 17,515 14,478 7,261
Net Income $71,392 $67,081 $57,910 $50,539 $34,200
Diluted Earnings per Share $2.05 $1.98 $1.95 $1.70 $1.18
Balance Sheet
Dollars in thousands
30
2016 2015 2014 2013 2012
Securities $693,487 $660,963 $640,273 $509,425 $452,266
Interest-bearing Balances 87,201 41,639 57,048 53,594 257,116
Loans, Net 5,562,437 5,014,786 3,823,805 3,522,080 3,322,637
Other 599,928 600,966 443,560 448,091 494,683
Total Assets $6,943,053 $6,318,354 $4,964,686 $4,533,190 $4,526,702
Deposits $5,272,377 $4,876,611 $3,908,842 $3,672,308 $3,638,428
Borrowings 771,164 580,748 385,666 241,276 262,302
Other Liabilities 57,556 68,758 61,789 48,300 88,550
Equity 841,956 792,237 608,389 571,306 537,422
Total Liabilities & Equity $6,943,053 $6,318,354 $4,964,686 $4,533,190 $4,526,702
Net Interest Margin
(1)Refer to appendix for reconciliation of Non-GAAP financial measures
31
2016 2015 2014 2013 2012
Securities/Other – FTE 2.37% 2.41% 2.28% 2.00% 1.86%
Loans - FTE 4.08% 4.09% 4.06% 4.22% 4.59%
Total Interest-earning Assets 3.87% 3.86% 3.78% 3.86% 4.10%
Deposits 0.51% 0.37% 0.36% 0.42% 0.64%
Borrowings 0.86% 0.71% 0.91% 1.28% 1.90%
Total Costing Liabilities 0.55% 0.40% 0.41% 0.50% 0.74%
Net Interest Margin – FTE(1) 3.47% 3.56% 3.50% 3.50% 3.57%
Purchase Accounting NIM – FTE(1) 3.41% 3.44% 3.49% 3.49% 3.53%
Loan Portfolio
Dollars in thousands 32
2016 2015 2014 2013 2012
Commercial
Commercial Real Estate $2,498,476 $2,166,603 $1,682,236 $1,607,756 $1,452,133
Commercial & Industrial 1,401,035 1,256,830 994,138 842,449 791,396
Construction 455,884 413,444 216,148 143,675 168,143
Total Commercial 4,355,395 3,836,877 2,892,522 2,593,880 2,411,672
Consumer
Residential Mortgage 701,982 639,372 489,586 487,092 427,303
Home Equity 482,284 470,845 418,563 414,195 431,335
Installment and Other Consumer 65,852 73,939 65,567 67,883 73,875
Construction 5,906 6,579 2,508 3,149 2,437
Total Consumer 1,256,024 1,190,735 976,224 972,319 934,950
Total Portfolio Loans 5,611,419 5,027,612 3,868,746 3,566,199 3,346,622
Total Loans Held for Sale 3,793 35,321 2,970 2,136 22,499
Total Loans $5,615,212 $5,062,933 $3,871,716 $3,568,335 $3,369,121
Asset Quality
33
Dollars in thousands
2016 2015 2014 2013 2012
Total Nonperforming Loans $42,635 $35,382 $12,457 $22,454 $54,959
Nonperforming Loans/Total Loans 0.76% 0.70% 0.32% 0.63% 1.63%
Nonperforming Assets/Total Loans + OREO 0.77% 0.71% 0.33% 0.64% 1.66%
Net Charge-offs (Recoveries)/Average Loans 0.25% 0.22% 0.00% 0.25% 0.78%
Allowance for Loan Losses/Total Loans 0.94% 0.96% 1.24% 1.30% 1.38%
Allowance for Loan Losses/Nonperforming Loans 124% 136% 385% 206% 85%
Capital
(1)Refer to appendix for reconciliation of Non-GAAP financial measures
34
2016 2015 2014 2013 2012
Leverage 8.98% 8.96% 9.80% 9.75% 9.31%
Common Tier 1 – Risk-Based Capital 10.04% 9.77% 11.81% 11.79% 11.37%
Tier 1 – Risk-Based Capital 10.39% 10.15% 12.34% 12.37% 11.98%
Total – Risk-Based Capital 11.86% 11.60% 14.27% 14.36% 15.39%
Tangible Common Equity/Tangible Assets(1) 8.23% 8.24% 9.00% 9.03% 8.24%
APPENDIX – Non-GAAP Measures
35
2016 2015 2014 2013 2012
Tangible Common Equity/Tangible Assets (Non-GAAP)
Total Shareholders’ Equity $841,956 $792,237 $608,389 $571,306 $537,422
Less: Preferred Equity, Goodwill & Other Intangible Assets, net of
deferred tax liability (294,862) (296,005) (177,530) (178,264) (179,210)
Tangible Common Equity (Non-GAAP) 547,094 496,232 430,859 393,042 358,212
Total Assets 6,943,053 6,318,354 4,964,686 4,533,190 4,526,702
Less: Goodwill & Other Intangible Assets, net
of deferred tax liability (294,862) (296,005) (177,530) (178,264) (179,211)
Tangible Assets (Non-GAAP) $6,648,191 $6,022,349 $4,787,156 $4,354,926 $4,347,491
Tangible Common Equity/Tangible Assets (Non-GAAP) 8.23% 8.24% 9.00% 9.03% 8.24%
Return on Average Tangible Shareholders’ Equity (Non-GAAP)
Net Income (annualized) $71,392 $67,081 $57,910 $50,539 $34,200
Plus: Amortization of Intangibles net of Tax (annualized) 1,050 1,182 734 1,034 1,111
Net Income Before Amortization of Intangibles (annualized) 72,442 68,263 58,644 51,573 35,311
Average Shareholders’ Equity 823,607 750,069 596,155 548,771 516,812
Less, Average Goodwill and Other Intangibles,
Net of Deferred Tax Liability (295,385) (275,847) (177,881) (178,757) (175,501)
Average Tangible Equity (Non-GAAP) $528,222 $474,222 $418,274 $370,014 $341,311
Return on Average Tangible Equity (Non-GAAP) 13.71% 14.39% 14.02% 13.94% 10.35%
Dollars in thousands
APPENDIX – Non-GAAP Measures
36
2016 2015 2014 2013 2012
Net Interest Margin Rate (FTE) (Non-GAAP)
Total Interest Income $227,774 $203,548 $160,523 $153,756 $156,251
Total Interest Expense (24,515) (15,997) (12,481) (14,563) (21,024)
Net Interest Income per Consolidated Statements of Net Income 203,259 187,551 148,042 139,193 135,227
Adjustment to FTE Basis 7,043 6,123 5,461 4,850 4,471
Net Interest Income (FTE) (Non-GAAP) $210,302 $193,674 $153,503 $144,043 $139.698
Purchase Accounting Adjustment (2,952) (6,202) (109) (458) (1,379)
Purchase Accounting Net Interest Income (FTE) (Non-GAAP) 207,350 187,472 153,394 143,585 138,319
Average Interest Earning Assets $6,067,151 $5,432,862 $4,386,799 $4,111,281 $3,907,775
Net Interest Margin 3.35 % 3.45 % 3.37 % 3.39 % 3.45 %
Adjustment to FTE Basis 0.12 % 0.11 % 0.13 % 0.11 % 0.12 %
Net Interest Margin (FTE) (Non-GAAP) 3.47 % 3.56 % 3.50 % 3.50 % 3.57 %
Purchase Accounting Adjustment (0.06)% (0.12)% (0.01)% (0.01)% (0.04)%
Purchase Accounting NIM – FTE (Non-GAAP) 3.41 % 3.44 % 3.49 % 3.49 % 3.53 %
Dollars in thousands
MEMBER FDIC
Full Year 2016