STBA 8-K
S&T Bancorp Inc (STBA)
8-K
2020-04-30
For: 2020-04-29
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Added on
April 09, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (date of earliest event reported)
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
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(800 ) 325-2265
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(Not applicable)
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
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Item 2.02 Results of Operations and Financial Condition.
On April 30, 2020 S&T Bancorp, Inc. announced by press release its earnings for the three months ended March 31, 2020. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference in this Item 2.02. The information contained in this Item 2.02 of this Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Exchange Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 7.01 Regulation FD Disclosure
In connection with the issuance of its earnings for the three months ended March 31, 2020, S&T has also made available on its website materials that contain supplemental information about S&T’s financial results (“Supplemental Information”). A copy of the Supplemental Information is included in this Current Report as Exhibit 99.2 and is incorporated by reference in this Item 7.01. The information contained in this Item 7.01 of this Report on Form 8-K, including Exhibit 99.2 hereto, is being furnished and shall not be deemed to be "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by reference in such a filing.
Item 8.01 Other Events.
The Board of Directors of S&T declared a $0.28 per share cash dividend on April 29, 2020. This is an increase of 3.7% compared to a dividend of $0.27 per share declared in the same period last year. The dividend is payable June 2, 2020 to shareholders of record on May 19, 2020.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed by the undersigned thereunto duly authorized.
S&T Bancorp, Inc. | |
/s/ Mark Kochvar | |
April 30, 2020 | Mark Kochvar Senior Executive Vice President, Chief Financial Officer |
S&T Earnings Release -1
CONTACT: Mark Kochvar Chief Financial Officer 724.465.4826 800 Philadelphia Street Indiana, PA 15701 www.stbancorp.com |  | |
FOR IMMEDIATE RELEASE
S&T Bancorp, Inc. Announces First Quarter 2020 Results and Declares First Quarter Dividend
Indiana, Pa. - April 30, 2020 - S&T Bancorp, Inc. (S&T) (NASDAQ: STBA), the holding company for S&T Bank, with operations in five markets including Western Pennsylvania, Eastern Pennsylvania, Northeast Ohio, Central Ohio, and Upstate New York, announced its first quarter 2020 earnings. Net income was $13.2 million, or $0.34 per diluted share, for the first quarter of 2020 compared to net income of $22.3 million, or $0.62 per diluted share, for the fourth quarter of 2019, and $22.9 million, or $0.66 per diluted share, for the first quarter of 2019. The first quarter of 2020 financial results included one-time expenses of $2.3 million, or $0.05 per diluted share, related to the DNB Financial Corporation (DNB) merger which closed on November 30, 2019, compared to $10.2 million, or $0.23 per diluted share in the fourth quarter of 2019.
Impact and Response to the COVID-19 Pandemic:
In response to the COVID-19 pandemic numerous measures have been taken to promote the health and safety of our employees, and the customers and communities we serve. Preventive health measures including social distancing, wearing masks, remote work where feasible, extra cleaning and branch access restrictions have been implemented. Our ongoing Business Continuity teams were activated and have guided our efforts to respond to the rapidly developing situation.
We have made strong efforts to support our customers and communities through the potential financial hardships that have arisen through this crisis, including:
• | Consumer and homeowner needs based loan assistance |
• | Commercial and Business needs based loan assistance |
• | Access to the SBA Paycheck Protection Program |
• | Extended Solution Center (call center) hours |
• | Promotion of Mobile and Online banking solutions |
• | $85,000 of donations to local food banks and hospitals |
S&T is well positioned to be a source of strength and support during this crisis through our employees and customers supported by strong capital and liquidity.
First Quarter of 2020 Highlights:
• | Portfolio loans increased $109.6 million, or 6.2% annualized, compared to the fourth quarter of 2019. |
• | Net interest margin was 3.53% compared to 3.55% for the fourth quarter of 2019 and 3.71% for the same quarter a year ago. |
• | Return on average assets (ROA) was 0.61%, return on average equity (ROE) was 4.47% and return on average tangible equity (ROTE) (non-GAAP) was 6.82%. Excluding $2.3 million of merger related expenses ROA was 0.70% (non-GAAP), ROE was 5.13% (non-GAAP) and ROTE was 7.79% (non-GAAP) |
• | S&T's Board of Directors declared a $0.28 per share dividend. This is an increase of 3.7% compared to a dividend of $0.27 per share declared in the same period in the prior year. |
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S&T Earnings Release -2
“Despite facing obvious challenges in the final month of the quarter, it has been rewarding to see the commitment and dedication of the S&T Bank team to adapt to a rapidly changing environment,” said Todd Brice, Chief Executive Officer. “The pandemic has presented many uncertainties, but the response of our employees to assist clients has been amazing and will strengthen our long-standing relationships with them.” Mr. Brice continued, “Prior to the COVID-19 pandemic we had tremendous momentum across all our lines of business and markets and are well positioned to capitalize on opportunities as the economy recovers.”
Net Interest Income
Net interest income increased $5.6 million to $70.0 million for the first quarter of 2020 compared to $64.4 million for the fourth quarter of 2019. The increase was primarily due to growth in average loan balances of $666.3 million, the majority due to a full quarter impact for the DNB merger, which added $900 million of loans and $991 million of deposits. Net interest margin on a fully taxable equivalent basis (FTE) (non-GAAP) declined 2 basis points to 3.53% for the first quarter of 2020 from 3.55% in the fourth quarter of 2019 primarily due to decreases in short-term rates. Loan rates decreased 13 basis points to 4.64% and total interest-bearing liability costs decreased 16 basis points to 1.22%.
Asset Quality
The adoption of the Current Expected Credit Loss (CECL) accounting standard as of January 1, 2020 and the uncertainty around the COVID-19 pandemic both contributed to the higher Allowance for Credit Losses (ACL) of 1.34% of total portfolio loans as of March 31, 2020 compared to 0.87% at December 31, 2019. The provision for credit losses increased to $20.0 million in the first quarter of 2020 compared to $2.2 million in the fourth quarter of 2019. Included in the provision for credit losses in the first quarter of 2020 is $1.6 million for the reserve for unfunded commitments compared to $0.1 million in the fourth quarter of 2019. Net loan charge-offs were $11.2 million for the first quarter of 2020 compared to $2.0 million in the fourth quarter of 2019. The increase in net loan charge-offs in the first quarter 2020 primarily related to a $9.9 million Commercial & Industrial loan charge-off, which was classified as nonperforming and impaired in the fourth quarter of 2019. Total nonperforming loans increased $19.7 million to $73.8 million, or 1.02% of total loans, at March 31, 2020 compared to $54.1 million, or 0.76% of total loans at December 31, 2019. The increase in nonperforming loans in the first quarter of 2020 primarily related to a $20.9 million Commercial Real Estate relationship that had been experiencing difficulties prior to the onset of the pandemic.
Noninterest Income and Expense
Noninterest income decreased $2.8 million to $12.4 million in the first quarter of 2020 compared to $15.2 million in the fourth quarter of 2019. Other noninterest income decreased by $3.5 million primarily due to the decline in the fair value of the assets in a nonqualified benefit plan of $1.6 million and a reduction in the fair value of equity securities of $2.0 million. Mortgage banking income improved during the quarter by $0.5 million due to increased refinancing activity.
Noninterest expense decreased $3.7 million to $46.4 million for the first quarter of 2020 compared to $50.0 million in the fourth quarter of 2019. The decrease in noninterest expense was mainly due to a $7.9 million decrease in merger related expenses, to $2.3 million in the first quarter of 2020 compared to $10.2 million in the fourth quarter of 2019. The decrease of $1.5 million in salaries and employee benefits primarily related to the decline in the fair value of the liability in a nonqualified benefit plan. These decreases were offset by increases of $2.1 million in other expenses, $2.4 million in other taxes and $0.5 million in FDIC insurance expense. Included in other expenses was a $1.1 million increase related to historic tax credits and a $0.3 million increase in amortization of intangibles due to the DNB merger. Other taxes increased $2.4 million mainly due to a one-time adjustment related to a state sales tax assessment in the fourth quarter of 2019. The increase in FDIC insurance expense was due to $0.5 million of Small Bank Assessment Credits received in the fourth quarter of 2019.
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S&T Earnings Release -3
Financial Condition
Total assets increased $0.2 billion to $9.0 billion at March 31, 2020 compared to $8.8 billion at December 31, 2019. Portfolio loans grew during the quarter with an increase of $109.6 million, or 6.2% annualized, compared to the fourth quarter of 2019. Commercial loans grew $107.6 million during the quarter, or 7.9% annualized, with growth in all commercial portfolios. Deposits were $7.1 billion at March 31, 2020 compared to $7.0 billion at December 31, 2019.
Common shares totaling 411,430 were repurchased during the first quarter of 2020 at a total cost of $12.6 million, or an average of $30.52 per share. As the impact of the COVID-19 pandemic spread, repurchase activity was suspended in mid-March.
All regulatory risk-based capital ratios declined at March 31, 2020 compared to December 31, 2019 due to increases in risk weighted assets, lower retained earnings growth and share repurchases. S&T continues to maintain a strong capital position with all capital ratios above the well-capitalized thresholds of federal bank regulatory agencies.
Dividend
The Board of Directors of S&T declared a $0.28 per share cash dividend on April 29, 2020. This is an increase of 3.7% compared to a dividend of $0.27 per share declared in the same period in the prior year. The dividend is payable June 2, 2020 to shareholders of record on May 19, 2020.
Conference Call
S&T will host its first quarter 2020 earnings conference call live over the Internet at 1:00 p.m. ET on Thursday, April 30, 2020. To access the webcast, go to S&T’s webpage at www.stbancorp.com and click on “Events & Presentations.” Select “1st Quarter 2020 Earnings Conference Call” and follow the instructions. After the live presentation, the webcast will be archived on this website for at least 90 days. A replay of the call will also be available until May 7, 2020, by dialing 1.877.481.4010; the Conference ID is 33995.
About S&T Bancorp, Inc. and S&T Bank
S&T Bancorp, Inc. is a $9.0 billion bank holding company that is headquartered in Indiana, Pennsylvania and trades on the NASDAQ Global Select Market under the symbol STBA. Its principal subsidiary, S&T Bank, was recently named by Forbes as a 2019 World's Best Bank. Established in 1902, S&T Bank operates in five markets including Western Pennsylvania, Eastern Pennsylvania, Northeast Ohio, Central Ohio, and Upstate New York. For more information visit stbancorp.com, stbank.com, and follow us on Facebook, Instagram, and LinkedIn.
This information 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
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S&T Earnings Release -4
by the forward-looking statements depending on a variety of uncertainties or other factors including, but not limited to: credit losses and the credit risk of our commercial and consumer loan products; changes in the level of charge-offs and changes in estimates of the adequacy of the allowance for 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, including changes in regulatory capital requirements and our ability to address those requirements; changes in accounting policies, practices, or guidance, for example, our adoption of CECL; 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, including DNB, 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; an interruption or cessation of an important service by a third-party provider; general economic or business conditions, including the strength of regional economic conditions in our market area; the duration and severity of the coronavirus (“COVID-19”) pandemic, both in our principal area of operations and nationally, including the ultimate impact of the pandemic on the economy generally and on our operations; 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; the stability of our core deposit base and access to contingency funding; 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.
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S&T Bancorp, Inc. | S&T Earnings Release - | 5 | |
Consolidated Selected Financial Data | |||
Unaudited | |||
2020 | 2019 | 2019 | |||||||
First | Fourth | First | |||||||
(dollars in thousands, except per share data) | Quarter | Quarter | Quarter | ||||||
INTEREST AND DIVIDEND INCOME | |||||||||
Loans, including fees | $82,051 | $77,426 | $73,392 | ||||||
Investment securities: | |||||||||
Taxable | 4,215 | 3,744 | 3,790 | ||||||
Tax-exempt | 870 | 836 | 844 | ||||||
Dividends | 453 | 451 | 564 | ||||||
Total Interest and Dividend Income | 87,589 | 82,457 | 78,590 | ||||||
INTEREST EXPENSE | |||||||||
Deposits | 15,338 | 15,783 | 14,981 | ||||||
Borrowings and junior subordinated debt securities | 2,215 | 2,262 | 3,253 | ||||||
Total Interest Expense | 17,553 | 18,045 | 18,234 | ||||||
NET INTEREST INCOME | 70,036 | 64,412 | 60,356 | ||||||
Provision for credit losses(a) | 20,050 | 2,239 | 5,684 | ||||||
Net Interest Income After Provision for Credit Losses | 49,986 | 62,173 | 54,672 | ||||||
NONINTEREST INCOME | |||||||||
Net gain (loss) on sale of securities | — | (26 | ) | — | |||||
Service charges on deposit accounts | 3,558 | 3,540 | 3,153 | ||||||
Debit and credit card | 3,482 | 3,454 | 2,974 | ||||||
Commercial loan swap income | 2,484 | 2,356 | 581 | ||||||
Wealth management | 2,362 | 2,412 | 2,048 | ||||||
Mortgage banking | 1,236 | 765 | 494 | ||||||
Other | (719) | 2,730 | 2,112 | ||||||
Total Noninterest Income | 12,403 | 15,231 | 11,362 | ||||||
NONINTEREST EXPENSE | |||||||||
Salaries and employee benefits | 21,335 | 22,851 | 20,910 | ||||||
Data processing and information technology | 3,868 | 4,141 | 3,233 | ||||||
Net occupancy | 3,765 | 3,219 | 3,036 | ||||||
Furniture, equipment and software | 2,519 | 2,337 | 2,230 | ||||||
Merger related expense | 2,342 | 10,179 | — | ||||||
Other taxes | 1,600 | (818) | 1,185 | ||||||
Marketing | 1,111 | 1,116 | 1,141 | ||||||
Professional services and legal | 1,048 | 862 | 1,184 | ||||||
FDIC insurance | 770 | 222 | 516 | ||||||
Other | 8,033 | 5,935 | 5,449 | ||||||
Total Noninterest Expense | 46,391 | 50,044 | 38,884 | ||||||
Income Before Taxes | 15,998 | 27,360 | 27,150 | ||||||
Provision for income taxes | 2,767 | 5,091 | 4,222 | ||||||
Net Income | $13,231 | $22,269 | $22,928 | ||||||
Per Share Data | |||||||||
Shares outstanding at end of period | 39,125,425 | 39,560,304 | 34,330,136 | ||||||
Average shares outstanding - diluted | 39,325,938 | 35,913,237 | 34,542,811 | ||||||
Diluted earnings per share | $0.34 | $0.62 | $0.66 | ||||||
Dividends declared per share | $0.28 | $0.28 | $0.27 | ||||||
Dividend yield (annualized) | 4.10 | % | 2.78 | % | 2.73 | % | |||
Dividends paid to net income | 83.52 | % | 42.94 | % | 40.64 | % | |||
Book value | $30.06 | $30.13 | $27.47 | ||||||
Tangible book value (1) | $20.29 | $20.52 | $19.04 | ||||||
Market value | $27.32 | $40.29 | $39.53 | ||||||
Profitability Ratios (annualized) | |||||||||
Return on average assets | 0.61 | % | 1.11 | % | 1.29 | % | |||
Return on average shareholders' equity | 4.47 | % | 8.30 | % | 9.84 | % | |||
Return on average tangible shareholders' equity (2) | 6.82 | % | 12.04 | % | 14.27 | % | |||
Efficiency ratio (FTE) (3) | 52.89 | % | 49.64 | % | 53.55 | % | |||
(a)Upon adoption of CECL on January 1, 2020, provision for credit losses has been modified to also include amounts related to unfunded loan commitments. Prior period amounts have been restated to conform to the current presentation.
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S&T Bancorp, Inc. | S&T Earnings Release - | 6 | |
Consolidated Selected Financial Data | |||
Unaudited | |||
2020 | 2019 | 2019 | |||||||
First | Fourth | First | |||||||
(dollars in thousands) | Quarter | Quarter | Quarter | ||||||
ASSETS | |||||||||
Cash and due from banks, including interest-bearing deposits | $187,684 | $169,304 | $116,820 | ||||||
Federal funds sold | — | 28,519 | — | ||||||
Securities, at fair value | 799,532 | 784,283 | 680,420 | ||||||
Loans held for sale | 7,309 | 5,256 | 2,706 | ||||||
Commercial loans: | |||||||||
Commercial real estate | 3,442,495 | 3,416,518 | 2,901,625 | ||||||
Commercial and industrial | 1,781,402 | 1,720,833 | 1,513,007 | ||||||
Commercial construction | 396,518 | 375,445 | 245,658 | ||||||
Total Commercial Loans | 5,620,415 | 5,512,796 | 4,660,290 | ||||||
Consumer loans: | |||||||||
Residential mortgage | 988,816 | 998,585 | 729,914 | ||||||
Home equity | 544,405 | 538,348 | 463,566 | ||||||
Installment and other consumer | 79,887 | 79,033 | 70,960 | ||||||
Consumer construction | 13,222 | 8,390 | 10,722 | ||||||
Total Consumer Loans | 1,626,330 | 1,624,356 | 1,275,162 | ||||||
Total Portfolio Loans | 7,246,745 | 7,137,152 | 5,935,452 | ||||||
Allowance for credit losses | (96,850) | (62,224) | (61,409) | ||||||
Total Portfolio Loans, Net | 7,149,895 | 7,074,928 | 5,874,043 | ||||||
Federal Home Loan Bank and other restricted stock, at cost | 28,253 | 22,977 | 19,959 | ||||||
Commercial rate swaps | 88,135 | 25,647 | 10,645 | ||||||
Goodwill | 374,270 | 371,621 | 287,446 | ||||||
Other assets | 370,418 | 282,115 | 237,223 | ||||||
Total Assets | $9,005,496 | $8,764,649 | $7,229,262 | ||||||
LIABILITIES | |||||||||
Deposits: | |||||||||
Noninterest-bearing demand | $1,702,960 | $1,698,082 | $1,423,436 | ||||||
Interest-bearing demand | 962,937 | 962,331 | 541,053 | ||||||
Money market | 1,967,692 | 1,949,811 | 1,700,964 | ||||||
Savings | 836,237 | 830,919 | 767,175 | ||||||
Certificates of deposit | 1,588,053 | 1,595,433 | 1,400,773 | ||||||
Total Deposits | 7,057,879 | 7,036,576 | 5,833,401 | ||||||
Borrowings: | |||||||||
Securities sold under repurchase agreements | 69,644 | 19,888 | 23,427 | ||||||
Short-term borrowings | 410,240 | 281,319 | 235,000 | ||||||
Long-term borrowings | 50,180 | 50,868 | 70,418 | ||||||
Junior subordinated debt securities | 64,038 | 64,277 | 45,619 | ||||||
Total Borrowings | 594,102 | 416,352 | 374,464 | ||||||
Other liabilities | 177,264 | 119,723 | 78,241 | ||||||
Total Liabilities | 7,829,245 | 7,572,651 | 6,286,106 | ||||||
SHAREHOLDERS' EQUITY | |||||||||
Total Shareholders' Equity | 1,176,251 | 1,191,998 | 943,156 | ||||||
Total Liabilities and Shareholders' Equity | $9,005,496 | $8,764,649 | $7,229,262 | ||||||
Capitalization Ratios | |||||||||
Shareholders' equity / assets | 13.06 | % | 13.60 | % | 13.05 | % | |||
Tangible common equity / tangible assets (4) | 9.21 | % | 9.68 | % | 9.42 | % | |||
Tier 1 leverage ratio | 10.03 | % | 10.29 | % | 9.96 | % | |||
Common equity tier 1 capital | 10.93 | % | 11.43 | % | 11.35 | % | |||
Risk-based capital - tier 1 | 11.32 | % | 11.84 | % | 11.69 | % | |||
Risk-based capital - total | 12.73 | % | 13.22 | % | 13.19 | % | |||
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S&T Bancorp, Inc. | S&T Earnings Release - | 7 | |
Consolidated Selected Financial Data | |||
Unaudited | |||
2020 | 2019 | 2019 | ||||
First | Fourth | First | ||||
(dollars in thousands) | Quarter | Quarter | Quarter | |||
Net Interest Margin (FTE) (QTD Averages) | ||||||
ASSETS | ||||||
Interest-bearing deposits with banks | $99,646 | 1.42% | $82,255 | 1.44% | $53,588 | 2.63% |
Securities, at fair value | 786,858 | 2.54% | 696,889 | 2.61% | 680,517 | 2.68% |
Loans held for sale | 1,867 | 3.76% | 3,582 | 3.56% | 894 | 4.07% |
Commercial real estate | 3,408,684 | 4.73% | 3,056,513 | 4.77% | 2,905,272 | 5.02% |
Commercial and industrial | 1,751,678 | 4.53% | 1,666,061 | 4.77% | 1,508,658 | 5.20% |
Commercial construction | 386,363 | 4.68% | 339,274 | 4.71% | 249,997 | 5.37% |
Total Commercial Loans | 5,546,725 | 4.66% | 5,061,848 | 4.77% | 4,663,927 | 5.10% |
Residential mortgage | 990,866 | 4.18% | 850,566 | 4.42% | 722,554 | 4.38% |
Home equity | 540,193 | 4.84% | 499,520 | 5.03% | 467,739 | 5.44% |
Installment and other consumer | 79,680 | 7.01% | 76,029 | 7.13% | 69,099 | 7.17% |
Consumer construction | 10,508 | 4.61% | 12,021 | 4.96% | 9,466 | 6.19% |
Total Consumer Loans | 1,621,247 | 4.54% | 1,438,136 | 4.78% | 1,268,858 | 4.93% |
Total Portfolio Loans | 7,167,972 | 4.64% | 6,499,984 | 4.77% | 5,932,785 | 5.06% |
Total Loans | 7,169,839 | 4.64% | 6,503,566 | 4.77% | 5,933,679 | 5.06% |
Federal Home Loan Bank and other restricted stock | 23,601 | 6.90% | 21,791 | 7.44% | 24,471 | 8.49% |
Total Interest-earning Assets | 8,079,944 | 4.40% | 7,304,501 | 4.53% | 6,692,255 | 4.81% |
Noninterest-earning assets | 687,382 | 619,586 | 518,500 | |||
Total Assets | $8,767,326 | $7,924,087 | $7,210,755 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
Interest-bearing demand | $942,030 | 0.59% | $810,909 | 0.75% | $545,695 | 0.41% |
Money market | 1,993,764 | 1.27% | 1,791,981 | 1.53% | 1,568,417 | 1.89% |
Savings | 830,985 | 0.23% | 783,990 | 0.26% | 770,587 | 0.25% |
Certificates of deposit | 1,601,324 | 1.80% | 1,417,619 | 1.91% | 1,434,511 | 1.88% |
Total interest-bearing Deposits | 5,368,103 | 1.15% | 4,804,499 | 1.30% | 4,319,210 | 1.41% |
Securities sold under repurchase agreements | 30,790 | 0.56% | 14,046 | 0.75% | 23,170 | 0.52% |
Short-term borrowings | 286,365 | 1.61% | 241,368 | 2.08% | 319,389 | 2.72% |
Long-term borrowings | 51,845 | 2.52% | 56,026 | 2.63% | 70,196 | 2.84% |
Junior subordinated debt securities | 64,195 | 4.40% | 54,801 | 4.33% | 45,619 | 5.21% |
Total Borrowings | 433,195 | 2.06% | 366,241 | 2.45% | 458,374 | 2.88% |
Total interest-bearing Liabilities | 5,801,298 | 1.22% | 5,170,740 | 1.38% | 4,777,584 | 1.55% |
Noninterest-bearing liabilities | 1,776,453 | 1,689,076 | 1,488,057 | |||
Shareholders' equity | 1,189,575 | 1,064,271 | 945,114 | |||
Total Liabilities and Shareholders' Equity | $8,767,326 | $7,924,087 | $7,210,755 | |||
Net Interest Margin (5) | 3.53% | 3.55% | 3.71% | |||
- more -
S&T Bancorp, Inc. | S&T Earnings Release - | 8 | |
Consolidated Selected Financial Data | |||
Unaudited | |||
2020 | 2019 | 2019 | ||||||||||
First | Fourth | First | ||||||||||
(dollars in thousands) | Quarter | Quarter | Quarter | |||||||||
Nonperforming Loans (NPL) | ||||||||||||
Commercial loans: | % NPL | % NPL | % NPL | |||||||||
Commercial real estate | $50,508 | 1.47% | $29,140 | 0.85% | $29,109 | 1.00% | ||||||
Commercial and industrial | 9,081 | 0.51% | 13,982 | 0.81% | 6,810 | 0.45% | ||||||
Commercial construction | 571 | 0.14% | 737 | 0.20% | 1,226 | 0.50% | ||||||
Total Nonperforming Commercial Loans | 60,160 | 1.07% | 43,859 | 0.80% | 37,145 | 0.80% | ||||||
Consumer loans: | ||||||||||||
Residential mortgage | 10,582 | 1.07% | 7,519 | 0.75% | 6,630 | 0.91% | ||||||
Home equity | 2,797 | 0.51% | 2,639 | 0.49% | 4,146 | 0.89% | ||||||
Installment and other consumer | 258 | 0.32% | 40 | 0.05% | 29 | 0.04% | ||||||
Total Nonperforming Consumer Loans | 13,637 | 0.83% | 10,198 | 0.63% | 10,805 | 0.85% | ||||||
Total Nonperforming Loans | $73,797 | 1.02% | $54,057 | 0.76% | $47,950 | 0.81% | ||||||
2020 | 2019 | 2019 | ||||||||||
First | Fourth | First | ||||||||||
(dollars in thousands) | Quarter | Quarter | Quarter | |||||||||
Loan Charge-offs/(Recoveries) | ||||||||||||
Charge-offs | $11,445 | $2,798 | $6,023 | |||||||||
Recoveries | (289 | ) | (802 | ) | (788 | ) | ||||||
Net Loan Charge-offs/(Recoveries) | $11,156 | $1,996 | $5,235 | |||||||||
Net Loan Charge-offs/(Recoveries) | ||||||||||||
Commercial loans: | ||||||||||||
Commercial real estate | $428 | $829 | ($121 | ) | ||||||||
Commercial and industrial | 10,265 | (121 | ) | 5,059 | ||||||||
Commercial construction | (2 | ) | 404 | (1 | ) | |||||||
Total Commercial Loan Charge-offs/(Recoveries) | 10,691 | 1,112 | 4,937 | |||||||||
Consumer loans: | ||||||||||||
Residential mortgage | 19 | 112 | 115 | |||||||||
Home equity | 80 | 383 | (19 | ) | ||||||||
Installment and other consumer | 366 | 389 | 284 | |||||||||
Consumer construction | — | — | (82 | ) | ||||||||
Total Consumer Loan Charge-offs | 465 | 884 | 298 | |||||||||
Total Net Loan Charge-offs/(Recoveries) | $11,156 | $1,996 | $5,235 | |||||||||
2020 | 2019 | 2019 | ||||||||||
First | Fourth | First | ||||||||||
(dollars in thousands) | Quarter | Quarter | Quarter | |||||||||
Asset Quality Data | ||||||||||||
Nonperforming loans | $73,797 | $54,057 | $47,950 | |||||||||
OREO | 3,389 | 3,525 | 2,828 | |||||||||
Nonperforming assets | 77,186 | 57,582 | 50,778 | |||||||||
Troubled debt restructurings (nonaccruing) | 36,054 | 8,912 | 7,873 | |||||||||
Troubled debt restructurings (accruing) | 15,189 | 36,960 | 23,002 | |||||||||
Total troubled debt restructurings | 51,243 | 45,872 | 30,875 | |||||||||
Nonperforming loans / loans | 1.02 | % | 0.76 | % | 0.81 | % | ||||||
Nonperforming assets / loans plus OREO | 1.06 | % | 0.81 | % | 0.85 | % | ||||||
Allowance for credit losses / total portfolio loans | 1.34 | % | 0.87 | % | 1.03 | % | ||||||
Allowance for credit losses / nonperforming loans | 131 | % | 115 | % | 128 | % | ||||||
Net loan charge-offs (recoveries) | $11,156 | $1,996 | $5,235 | |||||||||
Net loan charge-offs (recoveries)(annualized) / average loans | 0.63 | % | 0.12 | % | 0.36 | % | ||||||
- more -
S&T Bancorp, Inc. | S&T Earnings Release - | 9 | |
Consolidated Selected Financial Data | |||
Unaudited | |||
Definitions and Reconciliation of GAAP to Non-GAAP Financial Measures:
2020 | 2019 | 2019 | ||||||||||
First | Fourth | First | ||||||||||
Quarter | Quarter | Quarter | ||||||||||
(1) Tangible Book Value (non-GAAP) | ||||||||||||
Total shareholders' equity | $1,176,251 | $1,191,998 | $943,156 | |||||||||
Less: goodwill and other intangible assets | (384,557 | ) | (382,540 | ) | (289,864 | ) | ||||||
Tax effect of other intangible assets | 2,160 | 2,293 | 508 | |||||||||
Tangible common equity (non-GAAP) | $793,854 | $811,751 | $653,800 | |||||||||
Common shares outstanding | 39,125 | 39,560 | 34,330 | |||||||||
Tangible book value (non-GAAP) | $20.29 | $20.52 | $19.04 | |||||||||
(2) Return on Average Tangible Shareholders' Equity (non-GAAP) | ||||||||||||
Net income (annualized) | $53,216 | $88,350 | $92,987 | |||||||||
Plus: amortization of intangibles (annualized) | 2,542 | 1,298 | 739 | |||||||||
Tax effect of amortization of intangibles (annualized) | (534 | ) | (273 | ) | (155 | ) | ||||||
Net income before amortization of intangibles (annualized) | $55,224 | $89,375 | $93,571 | |||||||||
Average total shareholders' equity | $1,189,575 | $1,064,271 | $945,114 | |||||||||
Less: average goodwill and other intangible assets | (382,025 | ) | (323,281 | ) | (289,954 | ) | ||||||
Tax effect of average goodwill and other intangible assets | 2,235 | 1,077 | 527 | |||||||||
Average tangible equity (non-GAAP) | $809,785 | $742,067 | $655,687 | |||||||||
Return on average tangible shareholders' equity (non-GAAP) | 6.82 | % | 12.04 | % | 14.27 | % | ||||||
(3) Efficiency Ratio (non-GAAP) | ||||||||||||
Noninterest expense | $46,391 | $50,178 | $38,919 | |||||||||
Less: merger related expenses | (2,342 | ) | (10,179 | ) | — | |||||||
Noninterest expense excluding nonrecurring items | $44,049 | $39,999 | $38,919 | |||||||||
Net interest income per consolidated statements of net income | $70,036 | $60,827 | $60,356 | |||||||||
Less: net (gains) losses on sale of securities | — | 26,000 | — | |||||||||
Plus: taxable equivalent adjustment | 849 | 903 | 961 | |||||||||
Net interest income (FTE) (non-GAAP) | $70,885 | $65,341 | $61,317 | |||||||||
Noninterest income | 12,403 | 15,231 | 11,362 | |||||||||
Net interest income (FTE) (non-GAAP) plus noninterest income | $83,288 | $80,572 | $72,679 | |||||||||
Efficiency ratio (non-GAAP) | 52.89 | % | 49.64 | % | 53.55 | % | ||||||
(4) Tangible Common Equity / Tangible Assets (non-GAAP) | ||||||||||||
Total shareholders' equity | $1,176,251 | $1,191,998 | $943,156 | |||||||||
Less: goodwill and other intangible assets | (384,557 | ) | (382,540 | ) | (289,864 | ) | ||||||
Tax effect of goodwill and other intangible assets | 2,160 | 2,293 | 508 | |||||||||
Tangible common equity (non-GAAP) | $793,854 | $811,751 | $653,800 | |||||||||
Total assets | $9,005,497 | $8,764,649 | $7,229,262 | |||||||||
Less: goodwill and other intangible assets | (384,557 | ) | (382,540 | ) | (289,864 | ) | ||||||
Tax effect of goodwill and other intangible assets | 2,160 | 2,293 | 508 | |||||||||
Tangible assets (non-GAAP) | $8,623,100 | $8,384,402 | $6,939,906 | |||||||||
Tangible common equity to tangible assets (non-GAAP) | 9.21 | % | 9.68 | % | 9.42 | % | ||||||
(5) Net Interest Margin Rate (FTE) (non-GAAP) | ||||||||||||
Interest income | $87,589 | $82,457 | $78,590 | |||||||||
Less: interest expense | 17,553 | (18,045 | ) | (18,234 | ) | |||||||
Net interest income per consolidated statements of net income | $70,036 | $64,412 | $60,356 | |||||||||
Plus: taxable equivalent adjustment | 849 | 903 | 961 | |||||||||
Net interest income (FTE) (non-GAAP) | $70,885 | $65,315 | $61,317 | |||||||||
Net interest income (FTE) (annualized) | $285,098 | $259,130 | $248,675 | |||||||||
Average earning assets | $8,079,944 | $7,304,501 | $6,692,255 | |||||||||
Net interest margin - (FTE) (non-GAAP) | 3.53 | % | 3.55 | % | 3.71 | % | ||||||
- more -
S&T Bancorp, Inc. | S&T Earnings Release - | 10 | |
Consolidated Selected Financial Data | |||
Unaudited | |||
Definitions and Reconciliation of GAAP to Non-GAAP Financial Measures:
The following profitability metrics are adjusted to exclude merger related expenses from the DNB merger in the first quarter ended March 31, 2020.
2020 | ||||
First | ||||
Quarter | ||||
Return on Average Tangible Shareholders' Equity (non-GAAP) | ||||
Net income | $13,231 | |||
Adjust for merger related expenses | 2,342 | |||
Tax effect of merger related expenses | (405 | ) | ||
Net income excluding merger related expenses | $15,168 | |||
Net income excluding merger related expenses (annualized) | $61,005 | |||
Plus: amortization of intangibles (annualized) | 2,542 | |||
Tax effect of amortization of intangibles (annualized) | (440 | ) | ||
Net income before amortization of intangibles (annualized) | $63,107 | |||
Average total shareholders' equity | $1,189,575 | |||
Less: average goodwill and other intangible assets | (382,025 | ) | ||
Tax effect of average goodwill and other intangible assets | 2,235 | |||
Average tangible equity (non-GAAP) | $809,785 | |||
Return on average tangible shareholders' equity (non-GAAP) | 7.79 | % | ||
Return on Average Assets (non-GAAP) | ||||
Net income excluding merger related expenses (annualized) | $61,005 | |||
Average total assets | 8,767,326 | |||
Return on average assets (non-GAAP) | 0.70 | % | ||
Return on Average Equity (non-GAAP) | ||||
Net income excluding merger related expenses (annualized) | $61,005 | |||
Average total shareholders' equity | 1,189,575 | |||
Return on average assets (non-GAAP) | 5.13 | % | ||
First Quarter 2020 Earnings Supplement MEMBER FDIC
Forward Looking Statements and Risk Factors This information 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 and the credit risk of our commercial and consumer loan products; changes in the level of charge-offs and changes in estimates of the adequacy of the allowance for loan 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, including changes in regulatory capital requirements and our ability to address those requirements; changes in accounting policies, practices, or guidance, for example, our adoption of CECL; 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, including DNB, 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; an interruption or cessation of an important service by a third-party provider; general economic or business conditions, including the strength of regional economic conditions in our market area; the duration and severity of the corona virus (“COVID-19”) pandemic, both in our principal area of operations and nationally, including the ultimate impact of the pandemic on the economy generally and on our operations; 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; the stability of our core deposit base and access to contingency funding; 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. 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 in Exhibit 99.1 of Form 8-K for S&T Bancorp, Inc. and subsidiaries. 2
First Quarter 2020 Highlights 2020 2019 2019 First Fourth First Quarter Quarter Quarter Reported Metrics: Net Income $13.2 million $22.3 million $22.9 million Diluted earnings per share $0.34 $0.62 $0.66 Dividends declared per share $0.28 $0.28 $0.27 Book value $30.06 $30.13 $27.47 Tangible book value(1) $20.29 $20.52 $19.04 Return on average assets 0.61% 1.11% 1.29% Return on average shareholders' equity 4.47% 8.30% 9.84% Return on average tangible shareholders' equity(2) 6.82% 12.04% 14.27% Efficiency ratio (FTE)(3) 52.89% 49.64% 53.55% Net Interest Margin(4) 3.53% 3.55% 3.71% Merger related expenses $2.3 million $10.2 million - Core Metrics (Non-GAAP): (excludes merger related expenses) Diluted earnings per share $0.39 $0.85 $0.66 Return on average assets(5) 0.70% 1.53% 1.29% Return on average shareholders' equity(6) 5.13% 11.38% 9.84% Return on average tangible shareholders' equity(7) 7.79% 16.46% 14.27% Refer to appendix for reconciliation of non-GAAP financial measures 3
First Quarter 2020 COVID-19 We are committed to helping our employees, customers, and communities during these unprecedented and challenging times: Employees Consumers Businesses Communities Working from home Needs-based loan Needs-based loan $75,000 donation to payment deferrals payment deferrals local food banks Rotating schedules Extended solution SBA PPP lending $10,000 donation to Split ops staff between center hours local hospital multiple facilities Extended solution Encouraged use of center hours Bonus pay for those online/mobile solutions working in offices Encouraged use of online/mobile solutions Paid child care for school closures Drive-up only Rigorous sanitation Suspended all travel Financial wellness 4
First Quarter 2020 Loan Mix Other $511 Multi-Family 433 Offices 429 Health Care 389 Flex/Mixed Use 335 Manufacturing 254 Hotels 236 Strip Malls 209 Retail Space 187 Storage 150 Dealerships 111 Convenience Stores 83 Restaurants 59 Student Rentals 57 Total CRE 3,443 Manufacturing 340 Services 258 Construction 150 Real Estate Rent/Lease 130 Floorplans 129 Health Care 124 Other 116 Transportation 115 Public Admin 109 Wholesale Trade 105 Retail Trade 96 Education 58 Utilities 51 Total C&I 1,781 Mortgage/Construction 593 Home Equity 544 Resi Secured Business 409 Other 80 Total Consumer 1,626 Construction 397 Total Portfolio Loans $7,247 Data as of March 31, 2020 $ in millions 5
First Quarter 2020 Commercial Loan Modifications In response to COVID-19, we are offering commercial loan customers needs-based payment deferrals and modifications to interest only periods: Total Modified % of Bal Total Modified % of Bal Loan Type Loan Type Balance Balance Modified Balance Balance Modified Other $511 $105 20% Manufacturing $340 $17 5% Multi-Family 433 57 13% Services 258 20 8% Offices 429 97 23% Construction 150 11 7% Health Care 389 23 6% Real Estate Rent/Lease 130 16 12% Flex/Mixed Use 335 102 31% Floorplans 129 126 98% Manufacturing 254 13 5% Health Care 124 13 11% Hotels 236 218 92% Other 116 35 30% Strip Malls 209 91 44% Transportation 115 30 26% Retail Space 187 63 34% Public Admin 109 2 2% Storage 150 16 11% Wholesale Trade 105 8 8% Dealerships 111 25 23% Retail Trade 96 21 22% Convenience Stores 83 1 1% Education 58 12 22% Restaurants 59 32 55% Utilities 51 0 0% Student Rentals 57 20 35% Total C&I $1,781 $313 18% Total CRE $3,443 $863 25% Resi Secured Business* $409 $47 11% Total $6,030 $1,258 21% Construction $397 $35 9% Total Real Estate $4,249 $944 22% *Reported as Consumer Loans Balances as of March 31, 2020; modification requests as of April 26, 2020. $ in millions 6
First Quarter 2020 Hotels The COVID-19 pandemic is negatively impacting the hotel industry. Our hotel portfolio is comprised of 79 loans and totals $254 million: • 92% of the hotel portfolio is pass-rated. • 84% of the portfolio is with a Marriott, Geography: Hilton, Holiday Inn, or Hyatt chain. State Balance • 90% of the hotel portfolio (58 loans) have Pennsylvania $158 requested modifications. Ohio 60 New York 22 Virginia 8 Total Modified % of Bal West Virginia 5 Loan Type Balance Balance Modified Total $254 CRE $236 $218 92% Construction 18 10 56% Total Hotel Portfolio $254 $228 90% Balances as of March 31, 2020; modification requests as of April 26, 2020. $ in millions 7
First Quarter 2020 Consumer Loan Modifications In response to COVID-19, we are offering mortgage and consumer loan payment deferrals with no negative credit bureau reporting and have paused foreclosures/repossessions: Total Modified % of Bal Total Avg Mod Avg Loan Type General Program Details Balance Balance Modified FICO FICO 90-day principal and interest payment deferral Mortgages $593 $30 5% 742 711 interest does not accrue during the deferral period maturity is extended 3 months Home equity 90-day principal and interest payment deferral 171 10 6% 740 712 interest does not accrue during the deferral period installment loans maturity is extended 3 months Home equity 373 18 5% 752 741 90-day principal deferral lines of credit Consumer 90-day principal and interest payment deferral 51 2 5% 743 706 interest does not accrue during the deferral period installment loans maturity is extended 3 months Unsecured 29 0 0% 749 n/a Not eligible for payment deferrals lines of credit Total $1,217 $60 5% 745 725 Balances as of March 31, 2020; approved modifications requests as of April 27, 2020. $ in millions 8
First Quarter 2020 SBA PPP We dedicated substantial resources to the SBA PPP and approved over $537 million: Total Number of Average Loan Size Balance Loans Balance Total $537,543 2,560 $210 Data as of April 29, 2020. $ in thousands 9
First Quarter 2020 Line Utilization We have experienced limited increases in line usage since February 2020: Data as of April 24, 2020 $ in millions 10
First Quarter 2020 Allowance for Credit Losses (ACL) Our allowance for credit losses increased $34.7 million, or 47 bps, since last quarter, due to the adoption of CECL and the uncertainty of the COVID-19 pandemic: Does not include unfunded commitment reserve. $ in millions 11
First Quarter 2020 Low Interest Rate Environment We are asset sensitive and expect NIM compression in a low rate environment: Loans and Securities LIBOR Fixed Floating Rate Rate We benefit from LIBOR's delayed decrease, as we have more LIBOR-based assets than LIBOR-based liabilities: LIBOR-based assets $2,671 LIBOR-based liabilities 357 ARM / LIBOR Gap $2,314 Future Reset Deposits and Borrowings Funding Repricing Opportunities Fixed Floating We expect favorable repricing on the following funding Rate Rate/Short throughout the next twelve months: Wholesale Liabilities Funding type Balance Rate Non- CD maturities $1,315 1.75% Interest Non-Maturity Intro MMIA rate expirations 187 2.34% Bearing Variable Long-term wholesale funding 70 2.43% DDA Deposits Total $1,572 1.85% Data as of March 31, 2020 $ in millions 12
First Quarter 2020 Capital We are well-capitalized and have sufficient excess capital: Ratio Well Cap Excess % Capital $ Excess $ Leverage Ratio 10.03% 5.00% 5.03% $844 $423 Common Equity Tier 1 Ratio 10.93% 6.50% 4.43% 815 330 Tier 1 Capital Ratio 11.32% 8.00% 3.32% 844 247 Total Capital Ratio 12.73% 10.00% 2.73% 949 203 TCE / TA 9.21% 794 Key points: We are taking a prudent approach to capital management, given economic uncertainty. Our internally-run capital stress test results demonstrate that we have adequate capital cushions. We intend to utilize the five-year CECL transition for regulatory capital purposes. Data as of March 31, 2020 $ in millions 13
First Quarter 2020 Liquidity We have access to over $3.5 billion of liquidity from multiple sources: Liquidity Source Availability FHLB $2,455 Federal Reserve 610 Unpledged securities 498 Fed Funds Lines 130 Total $3,693 We have established access to the Federal Reserve’s PPP Lending Facility. Loans and deposits have grown since quarter end: Loans: Increased $482 million, or 6.7% Due to funding PPP loans. Loan volume remains soft, prepayments have slowed. Deposits: Increased $622 million, or 8.8%. Due to funding PPP loans and over $65 million of economic impact payments. Limited outflows due to recent rate reductions. Data as of April 24, 2020 $ in millions 14
First Quarter 2020 Appendix Definitions and Reconciliation of GAAP to Non-GAAP Financial Measures: 2020 2019 2019 First Fourth First Quarter Quarter Quarter (1) Tangible Book Value (non-GAAP) Total shareholders' equity $1,176,251 $1,191,998 $943,156 Less: goodwill and other intangible assets (384,557) (382,540) (289,864) Tax effect of other intangible assets 2,160 2,293 508 Tangible common equity (non-GAAP) $793,854 $811,751 $653,800 Common shares outstanding 39,125 39,560 34,330 Tangible book value (non-GAAP) $20.29 $20.52 $19.04 (2) Return on Average Tangible Shareholders' Equity (non-GAAP) Net income (annualized) $53,216 $88,350 $92,987 Plus: amortization of intangibles (annualized) 2,542 1,298 739 Tax effect of amortization of intangibles (annualized) (534) (273) (155) Net income before amortization of intangibles (annualized) $55,224 $89,375 $93,571 Average total shareholders' equity $1,189,575 $1,064,271 $945,114 Less: average goodwill and other intangible assets (382,025) (323,281) (289,954) Tax effect of average goodwill and other intangible assets 2,235 1,077 527 Average tangible equity (non-GAAP) $809,785 $742,067 $655,687 Return on average tangible shareholders' equity (non-GAAP) 6.82% 12.04% 14.27% 15
First Quarter 2020 Appendix Definitions and Reconciliation of GAAP to Non-GAAP Financial Measures: 2020 2019 2019 First Fourth First Quarter Quarter Quarter (3) Efficiency Ratio (non-GAAP) Noninterest expense $46,391 $50,178 $38,919 Less: merger related expenses (2,342) (10,179) — Noninterest expense excluding nonrecurring items $44,049 $39,999 $38,919 Net interest income per consolidated statements of net income $70,036 $60,827 $60,356 Less: net (gains) losses on sale of securities — 26,000 — Plus: taxable equivalent adjustment 849 903 961 Net interest income (FTE) (non-GAAP) $70,885 $65,341 $61,317 Noninterest income 12,403 15,231 11,362 Net interest income (FTE) (non-GAAP) plus noninterest income $83,288 $80,572 $72,679 Efficiency ratio (non-GAAP) 52.89% 49.64% 53.55% (4) Net Interest Margin Rate (FTE) (non-GAAP) Interest income $87,589 $82,457 $78,590 Less: interest expense (17,553) (18,045) (18,234) Net interest income per consolidated statements of net income $70,036 $64,412 $60,356 Plus: taxable equivalent adjustment 849 903 961 Net interest income (FTE) (non-GAAP) $70,885 $65,315 $61,317 Net interest income (FTE) (annualized) $285,098 $259,130 $248,675 Average earning assets $8,079,944 $7,304,501 $6,692,255 Net interest margin - (FTE) (non-GAAP) 3.53% 3.55% 3.71% 16
First Quarter 2020 Appendix Definitions and Reconciliation of GAAP to Non-GAAP Financial Measures: The following profitability metrics are adjusted to exclude merger related expenses from the DNB 2020 2019 merger in the first quarter ended March 31, 2020 and the fourth quarter ended December 31, 2019. First Fourth Quarter Quarter (5) Return on Average Assets (non-GAAP) Net income excluding merger related expenses (quarterly annualized) $61,005 $121,148 Average total assets 8,767,326 7,924,087 Return on average assets (non-GAAP) 0.70% 1.53% (6) Return on Average Equity (non-GAAP) Net income excluding merger related expenses (quarterly annualized) $61,005 $121,148 Average total shareholders' equity 1,189,575 1,064,271 Return on average shareholders' equity (non-GAAP) 5.13% 11.38% (7) Return on Average Tangible Shareholders' Equity (non-GAAP) Net income $13,231 $22,269 Adjust for merger related expenses 2,342 10,179 Tax effect of merger related expenses (405) (1,912) Net income excluding merger related expenses $15,168 $30,536 Net income excluding merger related expenses (quarterly annualized) $61,005 $121,148 Plus: amortization of intangibles (quarterly annualized) 2,542 1,298 Tax effect of amortization of intangibles (quarterly annualized) (440) (273) Net income before amortization of intangibles (quarterly annualized) $63,107 $122,173 Average total shareholders' equity $1,189,575 $1,064,271 Less: average goodwill and other intangible assets (382,025) (323,281) Tax effect of other intangible assets 2,235 1,077 Average tangible equity (non-GAAP) $809,785 $742,067 Return on average tangible shareholders' equity (non-GAAP) 7.79% 16.46% 17
First Quarter 2020 Earnings Supplement MEMBER FDIC