S&T Bancorp, Inc.

Good day, ladies and gentlemen, and welcome to the S&T Bank Corp, Inc. Second Quarter Earnings Conference Call. After the presentation, there will be a question and answer session. If you should require assistance during the call, please press star zero and an operator will assist you. At this time, it's my pleasure to turn the floor over to Mr. Mark Kochvar. Sir, the floor is yours.

Thank you. Good afternoon, everyone, and thank you for participating in today's conference call. Before beginning the presentation, I want to take time to refer you to our statement about forward-looking statements and risk factors, which is on the screen in front of you. This 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 second quarter 2020 earnings release can be obtained by clicking on the press release link on your screen or by visiting our investor relations website at www.stbankcorp.com. We will be reviewing an earnings supplement slide deck as part of this presentation. You can obtain a copy of those slides on our website under events and presentations, second quarter 2020 earnings conference call. Click on the earnings supplement link. With me today are Todd Wright, CEO of S&T, and Dave Antola, S&T's president. I would now like to turn the program over to Todd, who will begin today's presentation.

Well, thank you, Mark, and good afternoon, everybody. As previously reported in our 8K webinar on May 26th, S&T Bank was subject to a significant check-paying scheme conducted by a single business customer. This criminal activity has negatively impacted our results this quarter, and we're reporting a loss of $33.1 million, or 85 cents per share. An independent internal review was conducted, and this was a one-time event relating to one customer, and there were no S&T employees involved. In addition, we've implemented a process of monitoring enhancements to prevent future frauds, We've also taken a number of steps and are actively pursuing collection activities through legal channels that may result in some recovery. Excluding the loss from the customer fraud, we posted core EPS of $0.34 per share, which translated into return on asset of 0.57%, return on equity of 4.48%, and return on tangible common equity of 6.86%. Our pre-tax pre-provision increased by 16% to $41.9 million. or 1.79% of average assets. Another bright spot is our efficiency ratio has came in at 50.51%. Controlling the expenses has been a hallmark for our company and will continue to be so going forward. For the quarter, we experienced significant deposit growth of $810 million. Over half of the growth, $548 million, was in non-interest-bearing demand deposit accounts. Interest rating demand, money market, and savings accounts increased $92 million, $154 million, and $80 million, respectively. And we do estimate that approximately 40% of deposit growth is associated with the PPP program and other government stimulus programs. Mortgage banking was a price plug this quarter as well. Year-to-date production of $213 million represents a 54% increase over the same period of last year. The breakout is about 70% refinancing, and we've sold about 78% of the loans to Fannie Mae. COVID-19 is certainly impacting how we operate, and we continue to protect the health and safety of our employees and customers. As we mentioned before, we have employees working remote. We've reopened with enhanced safety measures, and we've extended PPP funds to help our customers impacted by the pandemic. Also, with the heightened awareness on social inequality, we remain committed to fostering an environment that promotes diversity and inclusion. As you expect, year-over-year, brand transactions have declined by 24%. Call center volumes have increased by 41%. Mobile banking activation is up 50%. Dell Pay is up 57%, and Dell Payments are up 27%. So we're seeing a lot of migration into our digital channels. And also, I'm excited to announce that on Tuesday, We rolled out a new website to better serve our digital clients, and really the intent is to help them become more self-sufficient in their financial awareness. Our marketing team has been working on the project for about nine months, and the timing really couldn't have been better. Some of the features include a mobile-first design, easier navigation, an online digital sales tool that we're calling Merlin, and it's also going to provide enhanced data analytics to provide more customized sales offerings for our clients. As we mentioned last quarter, we were recognized by J.D. Power, the number one bank in customer satisfaction and retail banking in the Mid-Atlantic region. And the website, as well as other initiatives, are part of our commitment to continually improving the banking experience for our customers. Switching gears, I want to touch base on credit measures for the quarter. We did record an allowance net of the fraud of $28.1 million. We also incur a net charge of $9.4 million. This includes $4.2 million associated with the real estate loan pertaining to the customer perpetrated the cutting scheme. Our total reserve increased 18.34% to $114.6 million. The reserve to loan ratio is now 1.64%, excluding PPP. And finally, NPAs increased by $15.7 million to $92.5 million. 9 million or 1.19% of total loans. And again, the NPAs were negatively impacted by the 10.9 million that transferred in through the CROD loan, associated with fraud. I am filing a plea to report that our board of directors declared a dividend of 28 cents, which is a 3% increase over the same period last year. And before I do start a presentation over to David Antulik, our president, I do want to mention that we're a resilient company with a 118-year track record of serving our loyal customers, and communities through good times and challenging times, and we will continue to work very diligently every single day to deliver exceptional services that I do them. Thank you for your continued support of S&P Bancorp. And now I'll turn the program over to our president, Dave Antoli.