S&T Bancorp(US:STBA)2021-10-21 19:57Financial Data and Key Metrics Changes - The company reported earnings of $0.70 per share, driven by strong loan growth exceeding $100 million linked quarter [17][19] - Net interest income improved by approximately $400,000 compared to the second quarter, aided by an increase in average loan balances and PPP activity [27] - Noninterest income increased by about $400,000, primarily due to higher mortgage banking activity [29] - Noninterest expense rose by $1.4 million compared to the second quarter, remaining controlled at $47.2 million [30] Business Line Data and Key Metrics Changes - Loan growth, excluding PPP, was $118 million during the quarter, representing a 7% annualized growth rate compared to Q2 [20] - Commercial and industrial (C&I) loan utilization increased from 31% to 33%, contributing approximately $31 million to balance growth [21] - Consumer loan growth totaled $38 million, primarily driven by increases in residential mortgage balances [23] Market Data and Key Metrics Changes - The commercial loan pipeline improved quarter-over-quarter, including C&I, commercial real estate, and business banking segments [24] - The consumer pipeline also grew, reflecting increased demand for residential first mortgages and home equity loans [24] Company Strategy and Development Direction - The company is focused on employee engagement and operational excellence to drive profitable growth [15][19] - There is a strategic emphasis on asset-based lending, which is expected to continue as a focus area moving forward [22] - The company plans to enhance its digital offerings and customer engagement to improve fee income growth [62] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting strengths in employee engagement and customer experience [13][19] - The company anticipates loan growth returning and plans to deploy higher cash levels on the balance sheet to stabilize net interest margins [28] - Management noted that the economic environment remains stable, with a focus on organic growth and potential M&A opportunities [70] Other Important Information - The allowance for credit losses to loans decreased slightly from 1.56% to 1.55%, with a release of about $1.3 million [31] - The company increased its dividend by $0.01 or 3.6% to $0.29 per share [19] Q&A Session Summary Question: Loan growth expectations - Management is comfortable guiding towards low single-digit loan growth for the remainder of the year, with potential for higher growth driven by increased utilization [38] Question: Expense growth outlook - The company anticipates a higher expense run rate in 2022 due to necessary investments for growth, which may not immediately correlate with revenue [50] Question: Capital deployment strategy - Management is cautious about buybacks due to regulatory capital requirements but is open to organic growth and M&A opportunities [46][70] Question: C&I credit status - A C&I relationship totaling $21.7 million was downgraded to nonperforming status, with expectations for resolution in 2022 [54] Question: ABL portfolio growth - The ABL portfolio commitments were around $165 million, with plans to accelerate growth in this area [56] Question: Securities portfolio increase - The company expects to continue increasing its securities portfolio as cash normalizes [71]