S&T Bancorp(US:STBA)2021-01-28 21:28Financial Data and Key Metrics Changes - The company reported net income of $0.62 per share or $24.2 million, compared to $0.43 per share or $16.7 million in the third quarter [5] - Return on assets was 1.05%, return on equity was 8.35%, and return on tangible equity was 12.71% [5] - The pretax pre-provision income totaled $37 million or 1.61% of average assets [5] - Total deposits decreased by $213 million, primarily in Money Market and Certificates of Deposit categories [6] - Provision expense was $7.1 million, a decrease of $10.4 million from Q3, with net charge-offs of $11.2 million compared to $12.9 million in Q3 [6] Business Line Data and Key Metrics Changes - Portfolio loans decreased by $169 million, including $85 million in PPP forgiveness [9] - Commercial and Industrial (C&I) commitment utilization rates remained 4% to 5% below pre-pandemic levels [9] - Consumer balances declined by $33 million in Q4 due to residential mortgage declines [10] - Non-hotel modified balances at year-end reduced to $18 million [12] Market Data and Key Metrics Changes - The company experienced pressure on its Commercial Real Estate (CRE) balances, which declined by $45 million in the quarter [10] - The hotel portfolio saw an increase in nonperforming loans, with $56.7 million of hotel loans moving into non-accrual status [6][12] Company Strategy and Development Direction - The company anticipates modest loan growth in the low-single-digit range for 2021, supported by improved C&I utilization rates and growth in mortgage balances [13] - The company is fully participating in the second round of PPP, with approximately 650 applications received [11] - The focus remains on reducing deposit costs due to liquidity position [6] Management's Comments on Operating Environment and Future Outlook - Management noted that customers are still feeling the impacts of COVID-19, affecting loan balances and utilization rates [5] - The company expects a stable core net interest margin rate for the first half of the year, with potential volatility from PPP forgiveness timing [17] - Management expressed a cautious approach regarding credit risks and the hotel portfolio due to ongoing uncertainties related to the pandemic [29] Other Important Information - The Board of Directors declared a quarterly dividend of $0.28 per share payable on February 25 [6] - The CEO announced retirement effective March 31, marking the end of a 13-year tenure [22] Q&A Session Summary Question: Expense guidance of $47 million to $48 million - Management indicated that the guidance reflects a clean operation with no large programs to reduce franchise expenses, and some nonrecurring items are included [26] Question: Loan growth and geographic strength - Management highlighted strong activity in Central Ohio and plans to revisit opportunities in Eastern Pennsylvania post-COVID [28] Question: Potential buyback and use of capital - Management remains cautious on credit risks and has no immediate plans for a buyback program [29] Question: Non-performing hotel loans - 18 loans totaling $57 million moved into non-accrual, with average LTVs at 73% [34] Question: Commercial real estate and construction pipeline - Management sees decent activity in the CRE space, particularly in multifamily, but is cautious about internal limits [41] Question: Update on CEO search - The company is conducting interviews for the CEO position and aims to have a successor in place by the end of Q1 [44]