NASDAQ:STBA S&T Bancorp Q1 2024 Earnings Report $37.41 +0.79 (+2.16%) Closing price 05/2/2025 04:00 PM EasternExtended Trading$37.40 -0.01 (-0.03%) As of 05/2/2025 04:05 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast S&T Bancorp EPS ResultsActual EPS$0.81Consensus EPS $0.80Beat/MissBeat by +$0.01One Year Ago EPSN/AS&T Bancorp Revenue ResultsActual Revenue$96.31 millionExpected Revenue$96.30 millionBeat/MissBeat by +$10.00 thousandYoY Revenue GrowthN/AS&T Bancorp Announcement DetailsQuarterQ1 2024Date4/18/2024TimeN/AConference Call DateThursday, April 18, 2024Conference Call Time1:00PM ETUpcoming EarningsS&T Bancorp's Q2 2025 earnings is scheduled for Thursday, July 17, 2025Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by S&T Bancorp Q1 2024 Earnings Call TranscriptProvided by QuartrApril 18, 2024 ShareLink copied to clipboard.There are 8 speakers on the call. Operator00:00:00Welcome to the S&T Bancorp First Quarter 20 24 Conference Call. After the management's remarks, there will be a question and answer session. Now, I would like to turn the call over to Chief Financial Officer, Mark Kochvar. Please go ahead. Speaker 100:00:16Great. Thank you very much. Good afternoon, everyone. Thank you for participating in today's call. Before beginning the presentation, I want to take time to refer you to our statement about forward looking statements and risk factors. Speaker 100:00:27This 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 Q1 2024 earnings release as well as this earnings supplement slide deck can be attained by clicking on the materials button in the lower right section of your screen. This will open up a panel on the right where you can download these items. You can also obtain a copy of these materials by visiting our Investor Relations website atstbancorp.com. With me today are Chris Mokomish, S&T's CEO and Dave Antolik, S&T's President. Speaker 100:01:02I'd now like to turn the program over to Chris. Speaker 200:01:04Mark, thank you and good afternoon everybody and welcome to the call. We appreciate the analysts being with us this afternoon and we look forward to your questions. I certainly also want to thank our employees, shareholders and others listening to the call this afternoon. Before we get into the numbers, I want to continue to express how good I feel about the progress that's centered on S and T's People Forward purpose that we've made and how our strategic focus on this purpose is delivering for our customers, shareholders and the communities that we serve. A few weeks ago, we wrapped up an almost 2 week road trip where we were able to speak face to face with all 1250 of our employees in small groups. Speaker 200:01:48The energy, commitment and engagement that they displayed in these meetings was truly inspiring to both me and our entire executive leadership team. Our People Forward purpose connected to our core drivers of performance, the health and growth of our deposit franchise, solid credit quality, best in class core profitability and underpinned by the talent and engagement level of our teams are where we are focused to deliver for our shareholders. In addition to the numbers that we'll go through on Page 5, in Q1, we saw further evidence of our progress as we were recognized by Forbes as one of America's Best Banks from a financial performance perspective and one of America's Best companies for employee loyalty and engagement. The employee loyalty award is broader than just financial services and looks at all midsized employers in the United States. And this is the 2nd year in a row for this recognition. Speaker 200:02:47Turning to our quarter on Page 5, you'll see that we earned $0.81 a share, which is about $0.02 ahead of consensus estimates, with that net income over 31 $1,000,000 Our return metrics were excellent with almost a 14% ROTCE and our PPNR remained strong at 176. Our net interest margin did see some contraction though at 384 is still very strong. The 8 basis points of contraction is less than half of what we saw in Q4 of last year and our net interest income remained above $83,000,000 for the quarter. Mark will provide further color here in a few minutes. I would also look at looking at things from a credit perspective, there was a little bit of movement. Speaker 200:03:41However, it's very manageable primarily related to a couple of strategic exits. Dave is going to dive more deeply here in a few minutes. I would also call out Page 7, where we've added additional insight into our multifamily CRE portfolio. This is in line with the information that we have provided to you in previous quarters relative to office exposure. And again, we'll spend more time and color on that in a few minutes. Speaker 200:04:09Moving to Page 4, you'll see that our loan growth for the quarter was muted. However, we saw meaningful deposit growth. Historically, Q1 is typically a lower loan growth quarter for us. On the deposit side, customer deposit growth was more than $78,000,000 producing over 4% annualized growth, which is a number we feel very good about. While the deposit mix shift continued, we did see further slowing in the rate of decline of DDA balances with overall DDA balances remaining strong at 29% of total balances. Speaker 200:04:44Additionally, our customer deposit growth allowed to reduce borrowings by $130,000,000 in the quarter, which obviously had a positive impact on our net interest margin. I'm going to turn it over to Dave now and talk more about the loan book and credit quality. Then Mark will provide more color on the income statement and capital. We look forward to your questions after their remarks. Dave, over to you. Speaker 300:05:05Yes. Thank you, Chris. Turning to Page 5, I'd like to spend some time discussing asset quality results for the first quarter. The ACL reduction that is presented on this slide reflects improving asset quality, particularly in our commercial loan book and is the direct result of the significant amount of work being done by our bankers and credit teams to manage and reduce credit risk in the current economic environment. We have seen improvement in our rating stack via a combination of strategic assets or exits, sorry, as Chris mentioned, coupled with some modest improvement in the remaining book. Speaker 300:05:42Net charges for the quarter of $6,600,000 were related to one of those strategic exits, which was a CRE relationship in Western Pennsylvania and the progression of 1 Western Pennsylvania operating company through the workout process. The commercial real estate loans related to this operating company account for the majority of our NPA increase during the quarter from $23,000,000 to $33,000,000 but remain at a very manageable level of 44 basis points. We have a defined exit strategy for this credit and we're actively engaged presentation regarding our office and multifamily portfolios. Starting on Page 6 with office, you'll see the granular nature of this segment with an average loan size of $1,100,000 and average loan to value of 55% based on the most recent appraisal available. It's also important to note that geographic distribution of these properties and our limited exposure to central business district assets that totaled $47,000,000 Looking at that $47,000,000 segment, it is comprised of 30 loans averaging $1,600,000 and the largest loan in that group totaling $7,000,000 and the majority of those dollars being located in the Pittsburgh, Columbus and Buffalo MSAs. Speaker 300:07:18I'd like to call your attention to the pie chart on this and the next page and clarify that the other category is primarily made up of loans within our defined market of Pennsylvania and states adjacent to Pennsylvania. Also included in this detail are maturities by year. This information reflects limited maturity concentration in any one individual year. Digging into the large exposures, the 29 that are represented on this page as exceeding $5,000,000 These loans include 2 non owner occupied properties totaling $11,000,000 and in whole, there is a debt service coverage ratio well over 1.2 percent for the entirety of these loans. And the 4 loans over $10,000,000 average a debt service coverage ratio of over 1.4. Speaker 300:08:11I'll also note that our construction exposure in the office segment is insignificant. Turning to Page 7, you'll see similar statistics relating to our multifamily portfolio. As with office, you will see very granular exposure as evidenced by an average size of $1,000,000 and an equally diverse geographic distribution. In this segment, we have 30 loans exceeding $5,000,000 that reflect an average debt service coverage ratio of over 1.4 with the largest 9 displaying an average debt service coverage ratio of 1.6. These debt service coverage ratios exclude approximately 7 properties representing $78,000,000 in exposure that are still in their lease up and stabilization phase. Speaker 300:08:58We monitor this lease up and stabilization versus our underwriting assumptions and limit the number of construction loans that we make to the very top tier borrowers who have experience and the appropriate capital. And we have no concerns with these projects at this time. In addition, we have multifamily construction commitments totaling $215,000,000 with outstandings of $115,000,000 at the end of the quarter. All of these construction loans are within the contiguous states of Pennsylvania, Ohio and Maryland, as well as one deal in Delaware. We continue to have a positive outlook for these multifamily properties and this has been a portfolio that's performed very well for us. Speaker 300:09:48Finally, both our office and multifamily portfolios have limited criticized classified and NPL categorized loans. And I'll turn it over to Mark to dig a little deeper. Speaker 100:10:01Great. Thanks, Dave. On Slide 8, we have net interest income. The Q1 net interest margin rate, as Chris mentioned, is 3.84%. That's down about 8 basis points from last quarter, which does represent an improvement over the last several quarters in terms of the decline. Speaker 100:10:15It is in line with our expectations as the pace of deposit mix shift and exception pricing moderates. We also see this in the slowing increase in the cost of funds that's shown at the bottom left of this page. Cost of funds is up 15 basis points in the Q1. It was up 28 and 27 basis points the prior two quarters. Our emphasis on the deposit franchise has aided in helping keep that CDA mix strong at 29% and has returned us to net customer deposit growth, allowing us to reduce the more expensive wholesale funding. Speaker 100:10:51That shift on the balance graph of about $100,000,000 of brokered between money market and CDs was cost neutral. We expect funding cost pressure to continue to moderate with the net interest margin bottoming out in the mid-three seventy range in the 2nd and third quarters. We're still asset sensitive on the front of the curve. So should the Fed decide to move rates lower, we would expect 2 to 3 basis points of additional margin compression for each of the first few 25 basis point cuts. On Slide 9, we have non interest income, which returned to more normal levels in the Q1 after some unusual items in the 4th quarter. Speaker 100:11:29Those included a $3,300,000 OREO gain and over $1,000,000 of non cash valuation adjustments. Those are all in the other category. We did experience some seasonality in debit card as well as in service charges in Q1. The Q1 results were in line with our recurring fee outlook of approximately $13,000,000 per quarter. On the expense side, expenses were down $1,700,000 in the Q1 compared to the 4th, more in line with our expectations. Speaker 100:11:58The largest decline was in dollars and benefits, where medical expense returned to more normal levels after an unusually high Q4. Our run rate expectation is approximately $54,000,000 per quarter for expenses. And lastly, on Slide 11, capital TCE ratio increased by 15 basis points this quarter, overcoming 8 basis points of drag from a greater AOCI impact. TCE remains quite strong due to good earnings and a relatively small securities portfolio. All of our securities are classified as AFS. Speaker 100:12:28Capital levels position us very well for the environment and will enable us to take advantage of organic or inorganic growth opportunities. Thanks very much. At this time, I'd like to turn the call back over to the operator to provide instructions for asking Operator00:13:05Your first question comes from the line of Daniel Tamayo of Raymond James. Please go ahead. Speaker 400:13:13Hey, good afternoon guys. Speaker 300:13:16Hi, Dan. Speaker 400:13:18Maybe I appreciate all the commentary on the credit side. And it seemed like it was really the increase in net charge offs and non performers were related to the single commercial real estate credit. But as we get through a bumpier time and enter a period of uncertainty, obviously, you provided a lot of color on the office and multifamily portfolios. But can you just provide where you think credit costs go for you from here? I mean, just a high level thought on what NCOs might look like for you as we go through the year or provision whatever is easier. Speaker 100:14:03Yes. I think when Speaker 300:14:04you start with the ACL, that shows some improvement. Now this quarter obviously evidenced some charges. So we think we're we know we are improving our asset quality and we expect that to continue throughout the year. I mean, there's still risk in these portfolios and we think we're adequately reserved for those risks. Speaker 400:14:32I mean, is the run rate of I mean, I don't want to call it a run rate, but with net charge offs bouncing around a 20 basis point a quarter number, does that seem like a reasonable, I guess before the Q1 where they're a little bit higher? How do you think about what a reasonable number is going forward? Is it closer to that 20 basis points? Or should we be thinking 35 basis points or some other numbers is a better run rate for you guys in terms of credit costs? Speaker 100:15:00Yes. This is Mark. I don't think that the Q1 experientially changes our thinking for the at least for the medium or near term. So we had been expecting sort of in the 20s someplace in terms of charges over the next several quarters on average. Speaker 400:15:21Okay. All right. Thanks for that. And then I guess secondly, and I apologize if I missed this, but obviously getting the balance sheet right, right now, you're adding deposits and loan growth is not the most important thing, but just curious what the most current outlook on loan growth is? Speaker 300:15:45Yes. So, if you look at Q4, we saw relatively higher than normal loan growth. Those average balances carried into Q1. Pipelines were relatively low at the beginning of Q1. They've grown into the balance of Q1, but we're still not expecting any significant balance growth throughout the year. Speaker 300:16:06Low single digit numbers is what we would budget for. Speaker 200:16:11Dan, we've been pretty consistent about that kind of in that 3% range is where we've been looking. Speaker 400:16:19Great. Okay. All right. I'll step back. Thanks for the color guys. Speaker 200:16:23Thank you. Operator00:16:28And comes from the line of Kelly Muir from KBW. Please go ahead. Speaker 500:16:35Hi, thanks for the question. Maybe just carrying on, on that loan growth question from before, just wondering, understanding that pipelines are relatively low, where you're still seeing opportunities versus where demand for credit from your borrowers is more muted at this point in the cycle? Speaker 300:17:03Sure. Sure. We spent a lot of time building out our business banking teams. We think that's a space. Lower middle market C and I as well, where we can differentiate ourselves from many of our competitors and drive some growth. Speaker 300:17:18Those often come with deposit opportunities as well. So our approach to building relationships with these customers from a deposit perspective as well as supporting those customers with loan needs is important to us in terms of our people forward strategy. Speaker 200:17:39Yes. Things are not as robust in the commercial real estate area, as you'd expect, right? Given the rate environment, this is as much customer caution as anything. The good news is we've got very deep relationships in the commercial real estate space. So we're able to be proactive with them. Speaker 200:18:00So we don't believe we're missing opportunities. It's really lower demand. I think Dave is exactly right. Small business space has been one that's been a real positive for us both on the loan and deposit side and it's an area that we'll continue to focus. Speaker 500:18:17Got it. That's super helpful. And in the absence of kind of stronger growth, capital continues to build quite nicely. Just wondering as you look ahead what your priorities are for capital return here? Speaker 200:18:33Yes. We get that question a lot seeing where we are relative to $10,000,000,000 in size and the regulatory responsibilities that come with that. And as we've talked about in previous quarters and for the past couple of years, we've really done a nice job of building this foundation for growth relative to regulatory and compliance oversight and we feel like we're there today. We also are highly interested in organic growth And we believe there may be opportunities down the road and those are long term relationships that we're working hard to continue to build. We believe that we've got a great story to tell in that regard. Speaker 200:19:19When you think about the capital levels of the company, the efficiency of our company, the customer experience recognition that we have, employee engagement all of those things give us a good foundation to be able to potentially be a good partner for somebody that's looking to become part of a larger organization. So very interested in the states that we're in today in both Pennsylvania and Ohio in this geography. Speaker 500:19:47Got it. That's helpful. Maybe last question from me. On the fee side, both the card revenues and service charges were a little weaker. How much of that was just seasonality? Speaker 500:20:01Or is there any other changes that were made that we should be cognizant of as we kind of think about the year ahead? Speaker 100:20:08I think most of it was seasonality. It was primarily in the cards. It was primarily debit card activity driven. And then in the service charges, it's primarily NSF and that's often seasonal as tax returns and some spending slows. So we typically see some slower NSF in the Q1 of years. Speaker 500:20:30Great. I appreciate all the color. Sorry. Speaker 100:20:34A year ago, we did make some change, some NSS changes. The year over year comparison on service charges impacted by that, but from Q4 to 1st, that's more seasonality. Speaker 500:20:45Got it. That's helpful. Thanks so much. Speaker 200:20:47Thank you. Operator00:20:51Your next question comes from the line of Manuel Neves of D. A. Davidson Companies. Please go ahead. Hi, this is Sharon Gee on for Manuel Nieves. Operator00:21:03Thank you so much for taking my questions. I was wondering what sorry, what would you assume for deposit betas in a rate down scenario? Speaker 100:21:17Yes. So, I mean, it gets a little tricky because in the early stages of that with rates if the Fed were to move, we would still anticipate our cost of deposits to increase some, but just at a lower pace. So the quantification of that data gets a little trickier. So the easiest way for me to think about it has been that our margin will be up again about 2 to 3 basis points lower than it would have been in the absence of the Fed rate cuts. So we are expecting compression to the kind of mid-370s in the kind of 2nd quarter, 3rd quarter timeframe. Speaker 100:22:01So if we were to see the Fed move, say, in September, I would expect that margin to go from kind of mid-370s to low-370s. And that experience would continue if the Fed were to keep on going for at least the next several Operator00:22:18cuts. I see. Thank you. That's it for me. Your next question comes from the line of Daniel Cardenas from Janney Montgomery Scott. Operator00:22:30Please go ahead. Speaker 600:22:32Hey, good afternoon, guys. Hey, Dan. Hey, Dan. Hey, Dan. Speaker 100:22:36Hey, Dan. Speaker 600:22:36Hey, Mark, can you give me the AOCI impact this quarter? Speaker 100:22:44The change was like 8 basis points. Speaker 600:22:52Okay. And what was the dollar amount? I think last quarter you were at 90,900,000 dollars Where did that go to this quarter? Speaker 100:23:03About 98,000,000. Speaker 600:23:06Okay. Excellent. Excellent. All right. And then on the credit quality front, can Speaker 100:23:13you give us a little bit Speaker 600:23:13of color as to the industry that the company that you guys had some issues with? What industry were they operating in? And then maybe some thoughts as to just overall watch list trends. I mean, they sound pretty good, but maybe just a little bit more color on that. Speaker 300:23:33Yes, Dan. With regard to the one credit to CIN workout, it is an active workout. So I don't want to disclose anything that might disrupt our ability to collect. With regard to the overall rating stack, we have seen some improvement. And as I mentioned in the prepared comments, it is a combination of some strategic exits and we've got some additional execution there to continue to build momentum in reducing the CNC assets because they continue to be higher than where we'd like to have them, as well as making sure that we're monitoring and actively following the remainder of the rating stack and where we have seen improvement. Speaker 300:24:17And then on top of that, making sure that we're underwriting to the current environment, meaning costs, rates, all of those things. Those things combined will help to continue us or allow us to tell a better credit story as we move forward. Speaker 600:24:34Okay, got it. And then with that one credit that you're working out, do you think you'll have any additional losses associated with that? Or do you think what happened this quarter is pretty much will cover those losses? Speaker 300:24:48Yes. We're in good shape relative to future losses. It's just really a matter of timing of the final resolution with this customer. Speaker 600:25:00Okay. All right. And then on the deposit front, what we saw here in Q1, do you think that's sustainable throughout the rest of the year? I mean, I know it's a fist fight right now for everybody for good core deposit growth, But how do you guys feel about the growth overall for 2024 on deposits? Speaker 200:25:21Dan, yes, it's Chris. I feel We feel very good about the team and all the work that we've done, be it from the commercial side of our business and emphasis on treasury management, the additional channels and avenues through which we're originating deposits and deepening customer relationships. The focus that we've put within our teams either in our branches or contact centers, how we've changed incentive plans. We've pulled many levers and none of those things happen overnight and this has been a couple of year journey that we're on long before the significant rise in interest rates. And as you said, this hand to hand combat started in the industry. Speaker 200:26:07So the progress we've been made we've made as a company, we feel very good about around this focus on our driver of the deposit franchise. And so this is 2 quarters in a row of meaningful deposit growth, dollars 100,000,000 last quarter, $70,000,000 this quarter. Our DDA percentages of a total remain solid. So I think the stability of the rate environment actually helps us a little bit. And we're going to continue to be as proactive as we need to be. Speaker 600:26:46All right. Good to hear. And then last question for me. How should we be thinking about your tax rate on a go forward basis? It looks like it was a little bit higher in Q1 versus last year. Speaker 600:26:58And is that 20% -ish kind of a good run rate going forward? Speaker 100:27:03Yes. We expect it right around 20% effective. Great. Speaker 600:27:09Thank you, guys. I'll step back. Operator00:27:19Your next question comes from the line of Matthew Breese of Stephens. Please go ahead. Speaker 700:27:26Hey, good morning sorry, good afternoon, everybody. Speaker 300:27:28Hey, Matthew. Hey, Matt. Speaker 700:27:31I wanted to go back to the disclosures on the office book. One quick one is just the average LTVs, could you confirm for us are those at origination or are there any updates? Or how do you kind of go about that process? Speaker 300:27:45Yes. It would be the most recent appraisal available. So in some cases where we have a reason to update the appraisal, we would use that number. Otherwise, it's at that origination. Speaker 700:27:58Is there any sort of way to frame that time wise weighted average of 2, 3 years old or is it for the most part 4, 5 years old? Speaker 300:28:08Look, the way we look at this book and the way that I look at value is we focus on debt service coverage, right? And that operating income because that ultimately determines the value of the property. So that's what we spend most of our time looking at, testing, stressing. So the rent roll that goes into making up that service coverage is what we focus in on. Speaker 700:28:35And how often are those debt service coverage ratios updated? Speaker 300:28:38At a minimum annually. Okay. Yes. So all the numbers that I referenced today would have come out of the most recent annual review and most of those are done in the back half of the year. So those are pretty current numbers that I referenced relative to debt service coverage. Speaker 700:28:58Okay. So along those lines, if I look at the maturity by year, you have $48,000,000 maturing in 2024. I'm assuming some of those have kind of already matured and renewed or gone elsewhere. I'm just curious as even if it's a limited sample set, as those have kind of come up for renewal, how have the debt service coverage ratios reacted and have they've been able to kind of maintain a north of 1 or 1.2 times level from what you've seen? Speaker 300:29:28Yes. First part of the question, these numbers are just moving forward. So the things in Q1 that would have reset have already reset. They've matured and we've either rewritten them or they've been taken out by others. And we haven't seen any deterioration relative to resetting in the current interest rate environment. Speaker 300:29:50I think the biggest question here for any bank is what does that occupancy look like. Unlike the multifamily office CRE has is usually limited to the number of tenants and those tenants pay a fixed rental rate for a longer period of time. So as I mentioned in the call, the office CRE, debt service coverage ratios tend to lag multifamily because multifamily landlords have the ability to adjust rental rates on a more frequent basis typically annually. Speaker 700:30:24Okay. That makes sense. Could you just go into the biggest office loans, the $10,000,000 bucket and the biggest multifamily loan similar to $10,000,000 North. How are those larger loans performing? Any sort of past dues or any sort of issues there? Speaker 700:30:40Just some broader color on the big stuff. Speaker 300:30:43Yes. I think the biggest takeaway is that those largest loans, particularly those above $10,000,000 have stronger debt service coverage ratios for both office and multifamily. And in the multifamily space, the debt service coverage ratios are significantly higher than what we would test to in terms of an annual review for a debt service coverage covenant that we have in place on most of these loans. And they're geographically diverse for the most part. As I said, that other category is really just a deeper dive into our geography, but they're pretty well dispersed. Speaker 300:31:31Obviously, the larger concentration by number and dollar is in Pittsburgh, but they're not outsized. It's not a $140,000,000 loan. The average sizes are significantly larger than $10,000,000 for the largest type of loan that we would have. Speaker 700:31:50Okay. And then are any of these loans criticized or classified, not considered pass? Speaker 300:32:00There is one loan in the office space that's criticized of the top you're referring to the top 29 years what? Speaker 700:32:14Yes, the biggest ones tend to do the most damage when they go sideways. Exactly. Speaker 300:32:20There's one loan in the office pool. There's nothing in the multifamily. There's one loan in the office pool of those $5,000,000 and larger Speaker 100:32:29that is a that's a criticized loan. Speaker 300:32:34Okay. The last one Speaker 700:32:36I had just in regards to the NIM, and I appreciate taking all my questions. The pace of loan yield expansion has also slowed. And I was just curious in the absence of rate cuts, is this kind of 4 to 6 basis point range of loan yield increase? Is this a good kind of near term proxy for which we should expect until there's rate cuts? Speaker 100:32:58Yes, I think in that 5.5 to 6, right around in there, that's what we expect for the next several quarters at least. Speaker 700:33:08Okay. I'll leave it there. I appreciate taking all my questions. Thank you. Speaker 200:33:11Certainly. We appreciate the interest. Thank you. Operator00:33:16There are no further questions at this time. I would like to turn the call over to Chief Executive Officer, Chris McComish for closing remarks. Speaker 200:33:25Yes. Thank you all for the engagement and the thoughtful questions. Anything follow-up, feel free to reach out. Again, we feel real good about the start of the year, particularly this deposit growth and where things stand. And we certainly appreciate your time and your interest. Speaker 200:33:43Look forward to talking to you soon. Bye bye. Operator00:33:46Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallS&T Bancorp Q1 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) S&T Bancorp Earnings HeadlinesS&T Bancorp Highlights Strategic Priorities in Investor PresentationMay 2 at 6:07 PM | tipranks.comS&T Bancorp, Inc. Declares DividendApril 30 at 1:06 PM | prnewswire.comBuffett’s favorite chart just hit 209% – here’s what that means for goldA Historic Gold Announcement Is About to Rock Wall Street For months, sharp-eyed analysts have watched the quiet buildup behind the scenes. Now, in just days, the floodgates are set to open. The greatest investor of all time is about to validate what Garrett Goggin has been saying for months: Gold is entering a once-in-a-generation mania. Front-running Buffett has never been more urgent — and four tiny miners could be your ticket to 100X gains.May 3, 2025 | Golden Portfolio (Ad)S&T Bancorp (NASDAQ:STBA) Price Target Cut to $43.00 by Analysts at Keefe, Bruyette & WoodsApril 29, 2025 | americanbankingnews.comQ1 2025 S&T Bancorp Inc Earnings Call TranscriptApril 25, 2025 | gurufocus.comS&T Bancorp, Inc. (STBA) Q1 2025 Earnings Call TranscriptApril 24, 2025 | seekingalpha.comSee More S&T Bancorp Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like S&T Bancorp? Sign up for Earnings360's daily newsletter to receive timely earnings updates on S&T Bancorp and other key companies, straight to your email. Email Address About S&T BancorpS&T Bancorp (NASDAQ:STBA) is a bank holding company, which engages in the provision of consumer, commercial, and small business banking services. It operates through the following segments: Commercial Real Estate, Commercial and Industrial, Commercial Construction, Business Banking, Consumer Real Estate, and Other Consumer. The Commercial Real Estate segment includes both owner-occupied properties and investment properties for various purposes such as hotels, retail, multifamily and health care. The Commercial and Industrial segment focuses on the companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing. The Commercial Construction segment refers to the finance construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes. The Business Banking segment is made to small businesses that are standard, non-complex products evaluated through a streamlined credit approval process that has been designed to maximize efficiency while maintaining high credit quality standards. The Consumer Real Estate segment offers first and second liens such as 1-4 family residential mortgages, home equity loans and home equity lines of credit. The Other Consumer segment consists of individuals that may be secured by assets other than 1-4 family residences, as well as unsecured loans. 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There are 8 speakers on the call. Operator00:00:00Welcome to the S&T Bancorp First Quarter 20 24 Conference Call. After the management's remarks, there will be a question and answer session. Now, I would like to turn the call over to Chief Financial Officer, Mark Kochvar. Please go ahead. Speaker 100:00:16Great. Thank you very much. Good afternoon, everyone. Thank you for participating in today's call. Before beginning the presentation, I want to take time to refer you to our statement about forward looking statements and risk factors. Speaker 100:00:27This 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 Q1 2024 earnings release as well as this earnings supplement slide deck can be attained by clicking on the materials button in the lower right section of your screen. This will open up a panel on the right where you can download these items. You can also obtain a copy of these materials by visiting our Investor Relations website atstbancorp.com. With me today are Chris Mokomish, S&T's CEO and Dave Antolik, S&T's President. Speaker 100:01:02I'd now like to turn the program over to Chris. Speaker 200:01:04Mark, thank you and good afternoon everybody and welcome to the call. We appreciate the analysts being with us this afternoon and we look forward to your questions. I certainly also want to thank our employees, shareholders and others listening to the call this afternoon. Before we get into the numbers, I want to continue to express how good I feel about the progress that's centered on S and T's People Forward purpose that we've made and how our strategic focus on this purpose is delivering for our customers, shareholders and the communities that we serve. A few weeks ago, we wrapped up an almost 2 week road trip where we were able to speak face to face with all 1250 of our employees in small groups. Speaker 200:01:48The energy, commitment and engagement that they displayed in these meetings was truly inspiring to both me and our entire executive leadership team. Our People Forward purpose connected to our core drivers of performance, the health and growth of our deposit franchise, solid credit quality, best in class core profitability and underpinned by the talent and engagement level of our teams are where we are focused to deliver for our shareholders. In addition to the numbers that we'll go through on Page 5, in Q1, we saw further evidence of our progress as we were recognized by Forbes as one of America's Best Banks from a financial performance perspective and one of America's Best companies for employee loyalty and engagement. The employee loyalty award is broader than just financial services and looks at all midsized employers in the United States. And this is the 2nd year in a row for this recognition. Speaker 200:02:47Turning to our quarter on Page 5, you'll see that we earned $0.81 a share, which is about $0.02 ahead of consensus estimates, with that net income over 31 $1,000,000 Our return metrics were excellent with almost a 14% ROTCE and our PPNR remained strong at 176. Our net interest margin did see some contraction though at 384 is still very strong. The 8 basis points of contraction is less than half of what we saw in Q4 of last year and our net interest income remained above $83,000,000 for the quarter. Mark will provide further color here in a few minutes. I would also look at looking at things from a credit perspective, there was a little bit of movement. Speaker 200:03:41However, it's very manageable primarily related to a couple of strategic exits. Dave is going to dive more deeply here in a few minutes. I would also call out Page 7, where we've added additional insight into our multifamily CRE portfolio. This is in line with the information that we have provided to you in previous quarters relative to office exposure. And again, we'll spend more time and color on that in a few minutes. Speaker 200:04:09Moving to Page 4, you'll see that our loan growth for the quarter was muted. However, we saw meaningful deposit growth. Historically, Q1 is typically a lower loan growth quarter for us. On the deposit side, customer deposit growth was more than $78,000,000 producing over 4% annualized growth, which is a number we feel very good about. While the deposit mix shift continued, we did see further slowing in the rate of decline of DDA balances with overall DDA balances remaining strong at 29% of total balances. Speaker 200:04:44Additionally, our customer deposit growth allowed to reduce borrowings by $130,000,000 in the quarter, which obviously had a positive impact on our net interest margin. I'm going to turn it over to Dave now and talk more about the loan book and credit quality. Then Mark will provide more color on the income statement and capital. We look forward to your questions after their remarks. Dave, over to you. Speaker 300:05:05Yes. Thank you, Chris. Turning to Page 5, I'd like to spend some time discussing asset quality results for the first quarter. The ACL reduction that is presented on this slide reflects improving asset quality, particularly in our commercial loan book and is the direct result of the significant amount of work being done by our bankers and credit teams to manage and reduce credit risk in the current economic environment. We have seen improvement in our rating stack via a combination of strategic assets or exits, sorry, as Chris mentioned, coupled with some modest improvement in the remaining book. Speaker 300:05:42Net charges for the quarter of $6,600,000 were related to one of those strategic exits, which was a CRE relationship in Western Pennsylvania and the progression of 1 Western Pennsylvania operating company through the workout process. The commercial real estate loans related to this operating company account for the majority of our NPA increase during the quarter from $23,000,000 to $33,000,000 but remain at a very manageable level of 44 basis points. We have a defined exit strategy for this credit and we're actively engaged presentation regarding our office and multifamily portfolios. Starting on Page 6 with office, you'll see the granular nature of this segment with an average loan size of $1,100,000 and average loan to value of 55% based on the most recent appraisal available. It's also important to note that geographic distribution of these properties and our limited exposure to central business district assets that totaled $47,000,000 Looking at that $47,000,000 segment, it is comprised of 30 loans averaging $1,600,000 and the largest loan in that group totaling $7,000,000 and the majority of those dollars being located in the Pittsburgh, Columbus and Buffalo MSAs. Speaker 300:07:18I'd like to call your attention to the pie chart on this and the next page and clarify that the other category is primarily made up of loans within our defined market of Pennsylvania and states adjacent to Pennsylvania. Also included in this detail are maturities by year. This information reflects limited maturity concentration in any one individual year. Digging into the large exposures, the 29 that are represented on this page as exceeding $5,000,000 These loans include 2 non owner occupied properties totaling $11,000,000 and in whole, there is a debt service coverage ratio well over 1.2 percent for the entirety of these loans. And the 4 loans over $10,000,000 average a debt service coverage ratio of over 1.4. Speaker 300:08:11I'll also note that our construction exposure in the office segment is insignificant. Turning to Page 7, you'll see similar statistics relating to our multifamily portfolio. As with office, you will see very granular exposure as evidenced by an average size of $1,000,000 and an equally diverse geographic distribution. In this segment, we have 30 loans exceeding $5,000,000 that reflect an average debt service coverage ratio of over 1.4 with the largest 9 displaying an average debt service coverage ratio of 1.6. These debt service coverage ratios exclude approximately 7 properties representing $78,000,000 in exposure that are still in their lease up and stabilization phase. Speaker 300:08:58We monitor this lease up and stabilization versus our underwriting assumptions and limit the number of construction loans that we make to the very top tier borrowers who have experience and the appropriate capital. And we have no concerns with these projects at this time. In addition, we have multifamily construction commitments totaling $215,000,000 with outstandings of $115,000,000 at the end of the quarter. All of these construction loans are within the contiguous states of Pennsylvania, Ohio and Maryland, as well as one deal in Delaware. We continue to have a positive outlook for these multifamily properties and this has been a portfolio that's performed very well for us. Speaker 300:09:48Finally, both our office and multifamily portfolios have limited criticized classified and NPL categorized loans. And I'll turn it over to Mark to dig a little deeper. Speaker 100:10:01Great. Thanks, Dave. On Slide 8, we have net interest income. The Q1 net interest margin rate, as Chris mentioned, is 3.84%. That's down about 8 basis points from last quarter, which does represent an improvement over the last several quarters in terms of the decline. Speaker 100:10:15It is in line with our expectations as the pace of deposit mix shift and exception pricing moderates. We also see this in the slowing increase in the cost of funds that's shown at the bottom left of this page. Cost of funds is up 15 basis points in the Q1. It was up 28 and 27 basis points the prior two quarters. Our emphasis on the deposit franchise has aided in helping keep that CDA mix strong at 29% and has returned us to net customer deposit growth, allowing us to reduce the more expensive wholesale funding. Speaker 100:10:51That shift on the balance graph of about $100,000,000 of brokered between money market and CDs was cost neutral. We expect funding cost pressure to continue to moderate with the net interest margin bottoming out in the mid-three seventy range in the 2nd and third quarters. We're still asset sensitive on the front of the curve. So should the Fed decide to move rates lower, we would expect 2 to 3 basis points of additional margin compression for each of the first few 25 basis point cuts. On Slide 9, we have non interest income, which returned to more normal levels in the Q1 after some unusual items in the 4th quarter. Speaker 100:11:29Those included a $3,300,000 OREO gain and over $1,000,000 of non cash valuation adjustments. Those are all in the other category. We did experience some seasonality in debit card as well as in service charges in Q1. The Q1 results were in line with our recurring fee outlook of approximately $13,000,000 per quarter. On the expense side, expenses were down $1,700,000 in the Q1 compared to the 4th, more in line with our expectations. Speaker 100:11:58The largest decline was in dollars and benefits, where medical expense returned to more normal levels after an unusually high Q4. Our run rate expectation is approximately $54,000,000 per quarter for expenses. And lastly, on Slide 11, capital TCE ratio increased by 15 basis points this quarter, overcoming 8 basis points of drag from a greater AOCI impact. TCE remains quite strong due to good earnings and a relatively small securities portfolio. All of our securities are classified as AFS. Speaker 100:12:28Capital levels position us very well for the environment and will enable us to take advantage of organic or inorganic growth opportunities. Thanks very much. At this time, I'd like to turn the call back over to the operator to provide instructions for asking Operator00:13:05Your first question comes from the line of Daniel Tamayo of Raymond James. Please go ahead. Speaker 400:13:13Hey, good afternoon guys. Speaker 300:13:16Hi, Dan. Speaker 400:13:18Maybe I appreciate all the commentary on the credit side. And it seemed like it was really the increase in net charge offs and non performers were related to the single commercial real estate credit. But as we get through a bumpier time and enter a period of uncertainty, obviously, you provided a lot of color on the office and multifamily portfolios. But can you just provide where you think credit costs go for you from here? I mean, just a high level thought on what NCOs might look like for you as we go through the year or provision whatever is easier. Speaker 100:14:03Yes. I think when Speaker 300:14:04you start with the ACL, that shows some improvement. Now this quarter obviously evidenced some charges. So we think we're we know we are improving our asset quality and we expect that to continue throughout the year. I mean, there's still risk in these portfolios and we think we're adequately reserved for those risks. Speaker 400:14:32I mean, is the run rate of I mean, I don't want to call it a run rate, but with net charge offs bouncing around a 20 basis point a quarter number, does that seem like a reasonable, I guess before the Q1 where they're a little bit higher? How do you think about what a reasonable number is going forward? Is it closer to that 20 basis points? Or should we be thinking 35 basis points or some other numbers is a better run rate for you guys in terms of credit costs? Speaker 100:15:00Yes. This is Mark. I don't think that the Q1 experientially changes our thinking for the at least for the medium or near term. So we had been expecting sort of in the 20s someplace in terms of charges over the next several quarters on average. Speaker 400:15:21Okay. All right. Thanks for that. And then I guess secondly, and I apologize if I missed this, but obviously getting the balance sheet right, right now, you're adding deposits and loan growth is not the most important thing, but just curious what the most current outlook on loan growth is? Speaker 300:15:45Yes. So, if you look at Q4, we saw relatively higher than normal loan growth. Those average balances carried into Q1. Pipelines were relatively low at the beginning of Q1. They've grown into the balance of Q1, but we're still not expecting any significant balance growth throughout the year. Speaker 300:16:06Low single digit numbers is what we would budget for. Speaker 200:16:11Dan, we've been pretty consistent about that kind of in that 3% range is where we've been looking. Speaker 400:16:19Great. Okay. All right. I'll step back. Thanks for the color guys. Speaker 200:16:23Thank you. Operator00:16:28And comes from the line of Kelly Muir from KBW. Please go ahead. Speaker 500:16:35Hi, thanks for the question. Maybe just carrying on, on that loan growth question from before, just wondering, understanding that pipelines are relatively low, where you're still seeing opportunities versus where demand for credit from your borrowers is more muted at this point in the cycle? Speaker 300:17:03Sure. Sure. We spent a lot of time building out our business banking teams. We think that's a space. Lower middle market C and I as well, where we can differentiate ourselves from many of our competitors and drive some growth. Speaker 300:17:18Those often come with deposit opportunities as well. So our approach to building relationships with these customers from a deposit perspective as well as supporting those customers with loan needs is important to us in terms of our people forward strategy. Speaker 200:17:39Yes. Things are not as robust in the commercial real estate area, as you'd expect, right? Given the rate environment, this is as much customer caution as anything. The good news is we've got very deep relationships in the commercial real estate space. So we're able to be proactive with them. Speaker 200:18:00So we don't believe we're missing opportunities. It's really lower demand. I think Dave is exactly right. Small business space has been one that's been a real positive for us both on the loan and deposit side and it's an area that we'll continue to focus. Speaker 500:18:17Got it. That's super helpful. And in the absence of kind of stronger growth, capital continues to build quite nicely. Just wondering as you look ahead what your priorities are for capital return here? Speaker 200:18:33Yes. We get that question a lot seeing where we are relative to $10,000,000,000 in size and the regulatory responsibilities that come with that. And as we've talked about in previous quarters and for the past couple of years, we've really done a nice job of building this foundation for growth relative to regulatory and compliance oversight and we feel like we're there today. We also are highly interested in organic growth And we believe there may be opportunities down the road and those are long term relationships that we're working hard to continue to build. We believe that we've got a great story to tell in that regard. Speaker 200:19:19When you think about the capital levels of the company, the efficiency of our company, the customer experience recognition that we have, employee engagement all of those things give us a good foundation to be able to potentially be a good partner for somebody that's looking to become part of a larger organization. So very interested in the states that we're in today in both Pennsylvania and Ohio in this geography. Speaker 500:19:47Got it. That's helpful. Maybe last question from me. On the fee side, both the card revenues and service charges were a little weaker. How much of that was just seasonality? Speaker 500:20:01Or is there any other changes that were made that we should be cognizant of as we kind of think about the year ahead? Speaker 100:20:08I think most of it was seasonality. It was primarily in the cards. It was primarily debit card activity driven. And then in the service charges, it's primarily NSF and that's often seasonal as tax returns and some spending slows. So we typically see some slower NSF in the Q1 of years. Speaker 500:20:30Great. I appreciate all the color. Sorry. Speaker 100:20:34A year ago, we did make some change, some NSS changes. The year over year comparison on service charges impacted by that, but from Q4 to 1st, that's more seasonality. Speaker 500:20:45Got it. That's helpful. Thanks so much. Speaker 200:20:47Thank you. Operator00:20:51Your next question comes from the line of Manuel Neves of D. A. Davidson Companies. Please go ahead. Hi, this is Sharon Gee on for Manuel Nieves. Operator00:21:03Thank you so much for taking my questions. I was wondering what sorry, what would you assume for deposit betas in a rate down scenario? Speaker 100:21:17Yes. So, I mean, it gets a little tricky because in the early stages of that with rates if the Fed were to move, we would still anticipate our cost of deposits to increase some, but just at a lower pace. So the quantification of that data gets a little trickier. So the easiest way for me to think about it has been that our margin will be up again about 2 to 3 basis points lower than it would have been in the absence of the Fed rate cuts. So we are expecting compression to the kind of mid-370s in the kind of 2nd quarter, 3rd quarter timeframe. Speaker 100:22:01So if we were to see the Fed move, say, in September, I would expect that margin to go from kind of mid-370s to low-370s. And that experience would continue if the Fed were to keep on going for at least the next several Operator00:22:18cuts. I see. Thank you. That's it for me. Your next question comes from the line of Daniel Cardenas from Janney Montgomery Scott. Operator00:22:30Please go ahead. Speaker 600:22:32Hey, good afternoon, guys. Hey, Dan. Hey, Dan. Hey, Dan. Speaker 100:22:36Hey, Dan. Speaker 600:22:36Hey, Mark, can you give me the AOCI impact this quarter? Speaker 100:22:44The change was like 8 basis points. Speaker 600:22:52Okay. And what was the dollar amount? I think last quarter you were at 90,900,000 dollars Where did that go to this quarter? Speaker 100:23:03About 98,000,000. Speaker 600:23:06Okay. Excellent. Excellent. All right. And then on the credit quality front, can Speaker 100:23:13you give us a little bit Speaker 600:23:13of color as to the industry that the company that you guys had some issues with? What industry were they operating in? And then maybe some thoughts as to just overall watch list trends. I mean, they sound pretty good, but maybe just a little bit more color on that. Speaker 300:23:33Yes, Dan. With regard to the one credit to CIN workout, it is an active workout. So I don't want to disclose anything that might disrupt our ability to collect. With regard to the overall rating stack, we have seen some improvement. And as I mentioned in the prepared comments, it is a combination of some strategic exits and we've got some additional execution there to continue to build momentum in reducing the CNC assets because they continue to be higher than where we'd like to have them, as well as making sure that we're monitoring and actively following the remainder of the rating stack and where we have seen improvement. Speaker 300:24:17And then on top of that, making sure that we're underwriting to the current environment, meaning costs, rates, all of those things. Those things combined will help to continue us or allow us to tell a better credit story as we move forward. Speaker 600:24:34Okay, got it. And then with that one credit that you're working out, do you think you'll have any additional losses associated with that? Or do you think what happened this quarter is pretty much will cover those losses? Speaker 300:24:48Yes. We're in good shape relative to future losses. It's just really a matter of timing of the final resolution with this customer. Speaker 600:25:00Okay. All right. And then on the deposit front, what we saw here in Q1, do you think that's sustainable throughout the rest of the year? I mean, I know it's a fist fight right now for everybody for good core deposit growth, But how do you guys feel about the growth overall for 2024 on deposits? Speaker 200:25:21Dan, yes, it's Chris. I feel We feel very good about the team and all the work that we've done, be it from the commercial side of our business and emphasis on treasury management, the additional channels and avenues through which we're originating deposits and deepening customer relationships. The focus that we've put within our teams either in our branches or contact centers, how we've changed incentive plans. We've pulled many levers and none of those things happen overnight and this has been a couple of year journey that we're on long before the significant rise in interest rates. And as you said, this hand to hand combat started in the industry. Speaker 200:26:07So the progress we've been made we've made as a company, we feel very good about around this focus on our driver of the deposit franchise. And so this is 2 quarters in a row of meaningful deposit growth, dollars 100,000,000 last quarter, $70,000,000 this quarter. Our DDA percentages of a total remain solid. So I think the stability of the rate environment actually helps us a little bit. And we're going to continue to be as proactive as we need to be. Speaker 600:26:46All right. Good to hear. And then last question for me. How should we be thinking about your tax rate on a go forward basis? It looks like it was a little bit higher in Q1 versus last year. Speaker 600:26:58And is that 20% -ish kind of a good run rate going forward? Speaker 100:27:03Yes. We expect it right around 20% effective. Great. Speaker 600:27:09Thank you, guys. I'll step back. Operator00:27:19Your next question comes from the line of Matthew Breese of Stephens. Please go ahead. Speaker 700:27:26Hey, good morning sorry, good afternoon, everybody. Speaker 300:27:28Hey, Matthew. Hey, Matt. Speaker 700:27:31I wanted to go back to the disclosures on the office book. One quick one is just the average LTVs, could you confirm for us are those at origination or are there any updates? Or how do you kind of go about that process? Speaker 300:27:45Yes. It would be the most recent appraisal available. So in some cases where we have a reason to update the appraisal, we would use that number. Otherwise, it's at that origination. Speaker 700:27:58Is there any sort of way to frame that time wise weighted average of 2, 3 years old or is it for the most part 4, 5 years old? Speaker 300:28:08Look, the way we look at this book and the way that I look at value is we focus on debt service coverage, right? And that operating income because that ultimately determines the value of the property. So that's what we spend most of our time looking at, testing, stressing. So the rent roll that goes into making up that service coverage is what we focus in on. Speaker 700:28:35And how often are those debt service coverage ratios updated? Speaker 300:28:38At a minimum annually. Okay. Yes. So all the numbers that I referenced today would have come out of the most recent annual review and most of those are done in the back half of the year. So those are pretty current numbers that I referenced relative to debt service coverage. Speaker 700:28:58Okay. So along those lines, if I look at the maturity by year, you have $48,000,000 maturing in 2024. I'm assuming some of those have kind of already matured and renewed or gone elsewhere. I'm just curious as even if it's a limited sample set, as those have kind of come up for renewal, how have the debt service coverage ratios reacted and have they've been able to kind of maintain a north of 1 or 1.2 times level from what you've seen? Speaker 300:29:28Yes. First part of the question, these numbers are just moving forward. So the things in Q1 that would have reset have already reset. They've matured and we've either rewritten them or they've been taken out by others. And we haven't seen any deterioration relative to resetting in the current interest rate environment. Speaker 300:29:50I think the biggest question here for any bank is what does that occupancy look like. Unlike the multifamily office CRE has is usually limited to the number of tenants and those tenants pay a fixed rental rate for a longer period of time. So as I mentioned in the call, the office CRE, debt service coverage ratios tend to lag multifamily because multifamily landlords have the ability to adjust rental rates on a more frequent basis typically annually. Speaker 700:30:24Okay. That makes sense. Could you just go into the biggest office loans, the $10,000,000 bucket and the biggest multifamily loan similar to $10,000,000 North. How are those larger loans performing? Any sort of past dues or any sort of issues there? Speaker 700:30:40Just some broader color on the big stuff. Speaker 300:30:43Yes. I think the biggest takeaway is that those largest loans, particularly those above $10,000,000 have stronger debt service coverage ratios for both office and multifamily. And in the multifamily space, the debt service coverage ratios are significantly higher than what we would test to in terms of an annual review for a debt service coverage covenant that we have in place on most of these loans. And they're geographically diverse for the most part. As I said, that other category is really just a deeper dive into our geography, but they're pretty well dispersed. Speaker 300:31:31Obviously, the larger concentration by number and dollar is in Pittsburgh, but they're not outsized. It's not a $140,000,000 loan. The average sizes are significantly larger than $10,000,000 for the largest type of loan that we would have. Speaker 700:31:50Okay. And then are any of these loans criticized or classified, not considered pass? Speaker 300:32:00There is one loan in the office space that's criticized of the top you're referring to the top 29 years what? Speaker 700:32:14Yes, the biggest ones tend to do the most damage when they go sideways. Exactly. Speaker 300:32:20There's one loan in the office pool. There's nothing in the multifamily. There's one loan in the office pool of those $5,000,000 and larger Speaker 100:32:29that is a that's a criticized loan. Speaker 300:32:34Okay. The last one Speaker 700:32:36I had just in regards to the NIM, and I appreciate taking all my questions. The pace of loan yield expansion has also slowed. And I was just curious in the absence of rate cuts, is this kind of 4 to 6 basis point range of loan yield increase? Is this a good kind of near term proxy for which we should expect until there's rate cuts? Speaker 100:32:58Yes, I think in that 5.5 to 6, right around in there, that's what we expect for the next several quarters at least. Speaker 700:33:08Okay. I'll leave it there. I appreciate taking all my questions. Thank you. Speaker 200:33:11Certainly. We appreciate the interest. Thank you. Operator00:33:16There are no further questions at this time. I would like to turn the call over to Chief Executive Officer, Chris McComish for closing remarks. Speaker 200:33:25Yes. Thank you all for the engagement and the thoughtful questions. Anything follow-up, feel free to reach out. Again, we feel real good about the start of the year, particularly this deposit growth and where things stand. And we certainly appreciate your time and your interest. Speaker 200:33:43Look forward to talking to you soon. Bye bye. Operator00:33:46Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.Read morePowered by