Yahoo Finanza S&T Bancorp Inc (STBA) Q1 2024 Earnings Call Transcript Highlights: Surpassing Expectations ...
Earnings Per Share (EPS): $0.81, approximately $0.02 ahead of consensus estimate.
Net Income: Over $31 million.
Return on Tangible Common Equity (ROTCE): Nearly 14%.
Pre-Provision Net Revenue (PPNR): $176 million.
Net Interest Margin (NIM): 3.84%, down eight basis points from the previous quarter.
Net Interest Income: Remained above $83 million for the quarter.
Loan Growth: Muted for the quarter.
Deposit Growth: Customer deposit growth exceeded $78 million, more than 4% annualized growth.
Reduction in Borrowings: Reduced by $130 million, positively impacting net interest margin.
Non-Interest Income: Returned to normal levels, around $13 million per quarter.
Operating Expenses: Down $1.7 million from the previous quarter, with a run rate expectation of approximately $54 million per quarter.
Tangible Common Equity (TCE) Ratio: Increased by 15 basis points.
Release Date: April 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you provide an overview of the credit costs and expectations for net charge-offs as we move through the year? A: David Antolik, President of S&T Bancorp, indicated that asset quality is improving, reflected by the ACL reduction. He expects this trend to continue throughout the year, with net charge-offs averaging around 20 basis points over the next several quarters, despite existing risks in the portfolios.
Q: What is the current outlook on loan growth, especially considering the balance sheet adjustments? A: David Antolik mentioned that while Q4 saw higher than normal loan growth, Q1 started with low pipelines, which have since grown. However, significant balance growth is not expected throughout the year, with projections around low single-digit percentages.
Q: How are you addressing opportunities for credit demand, particularly in different market segments? A: CEO Christopher McComish highlighted the focus on building out business banking teams to support lower middle market C&I, which also brings deposit opportunities. Despite a cautious commercial real estate market due to interest rates, the bank maintains strong relationships and proactive engagement in this sector.
Q: What are the priorities for capital return given the current capital levels? A: Christopher McComish discussed the interest in inorganic growth and potential partnerships, especially in the bank's current geographic areas. The bank's strong capital levels, efficiency, and customer experience are seen as advantageous for potential future consolidations.
Q: Can you discuss the seasonality impacts on non-interest income, particularly card revenues and service charges? A: CFO Mark Kochvar explained that the decrease in card revenues and service charges in Q1 is typical due to seasonality, influenced by tax returns and spending patterns. He anticipates these to align with normal levels in subsequent quarters.
Q: What is the strategy for managing deposit growth and maintaining strong deposit levels throughout 2024? A: Christopher McComish expressed confidence in the bank's strategy, emphasizing efforts in commercial banking and treasury management. The focus remains on deepening customer relationships and leveraging various channels to sustain deposit growth, supported by a stable rate environment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
