Greetings and welcome to S&T Bancorp’s First Quarter 2015 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Mark Kochvar. Thank you. You may begin.

Thank you. Good afternoon 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, who are using the webcast. 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 first quarter earnings release can be obtained by clicking on the Press Release link on your screen or by visiting our Investor Relations website at www.stbancorp.com. I’d now like to introduce Todd Brice, S&T’s President and CEO, who will provide an overview of S&T’s results.

Well, thank you Mark and good afternoon everyone. As we announced in this morning’s press release, we reported net income of $12.8 million, or $0.41 per share, compared to $14 million, or $0.47 per share, in the first quarter of 2014, and $14.5 million, or $0.49 per share, in the fourth quarter 2014. Really, the big story this quarter is the consummation of our merger with Integrity Bank shares on March 4. This did however have an impact on our financial results this quarter. A one-time merger related charges were approximately $2.3 million, or $0.05 per share. But while it’s been only a little over a month, we are very excited about our prospects in the southcentral Pennsylvania marketplace. The S&T, Integrity brand has been well received by clients and early results are very, very promising. The next milestone will be combining the banking entities and IT systems, which are going to incur on May 11th and our teams have been spending a considerable amount of time in preparation for the conversion and we do anticipate a smooth transition. From a sales perspective, I really like our position across the organization, all of our lines of business including commercial banking, small business, retail mortgage and consumer banking. We have a seasoned team of bankers, who excel in developing deep relationship with clients and that’s really as what we think as long-term value and benefit to our organization. We’re also happy with our results of deposit side of our business this quarter. With the anticipated loan volumes that we expect to achieve in 2015, we made a strategic effort this year to focus on deposit gathering throughout the organization. And in Q1 deposits increased approximately $198 million, not including the merger. The goal for the year as we have our deposit…

Thanks Todd and good afternoon everyone. As Todd mentioned, we’re very excited to have closed on the Integrity Bank merger and look forward to the opportunities for the combined organizations in southcentral Pennsylvania, particularly from a commercial and business banking perspective. Individually each company has experienced historically strong results from these business segments and each enjoys a strong and very capable staff that when combined will help to drive continued growth and exceptional financial performance. We’re also very pleased to have opened our newest loan production office in Rochester, New York on March 23rd, where we have two very experienced commercial bankers leading our efforts and we are in the process of recruiting in order to round up our team in that region. We currently have approximately $90 million of outstanding in western New York and see great potential for S&T in that market. We also eclipsed two significant milestones in Northeast Ohio and Central Ohio during the quarter where our outstandings now exceed $200 million and $100 million respectively. Our total outstandings in Ohio now exceed $319 million. It’s also important to note that our growth in these new markets is rooted in our core relationship strategy that provides opportunities for the deposit gathering and fee generation from these new S&T Bank customers. Bank wide we originated $282 million in new loans for the first quarter of 2015 versus $245 million during the first quarter of 2014, or a 15% year-over-year increase. With regard to total commercial loans, the overwhelming majority of the $757 million quarterly increase was the result of the Integrity merger. On an organic basis, our commercial loan growth for the first quarter was approximately $41 million. That growth was driven by continued success in construction lending activities and increases in C&I outstandings. We continue to experience increased competition from bank and non-bank financing sources from both the structural and pricing perspective. This has led and will lead to increased payoffs particularly in our commercial real estate portfolio. Fortunately, our team of commercial and business bankers, which now includes 63 calling officers, has built a pipeline that is significantly larger than we enjoyed at any point during the past two years. In addition to closely monitoring our competition and the source of payoffs, we continue to keep our fingers on the pulse of activity in the various segments to which we have credits exposure, paying particular attention to the oil and gas industry where we’ve seen some slowdown in recent months. As mentioned in the last quarter, we do not have significant direct commodity exposure and we stay in very close contact with our customers and industry insiders in order to remain well informed. Mark will now provide you with additional details on our financial results.

Thanks, Dave. This quarter’s result includes the impact of the Integrity merger. One-time expenses were $2.3 million, or about $0.05 per share, primarily data processing and investment banking fees. We do expect some additional one-time items in the second quarter related to the bank merger in May, but it should be less than $1 million. The holding company merger closed on March 4th, so average balances include 27 days or 30% of the quarter with Integrity numbers. The merger accounted for the majority of improvement in net interest income, but had no impact on the net interest merger rate. We received a special dividend from the Federal Home Loan Bank of Pittsburgh of approximately $330,000, which added 3 basis points to the rate. The rest of the net interest margin improvement came from non-recurring items in the loan portfolio, mostly prepayment fees. There is no impact yet in margin related to the credit interest rate marks. We are still evaluating how that will impact us and it is of course dependent on the eventual asset quality of the acquired loans. The credit mark on the loan portfolio is approximately $11.8 million. With the addition of $789 million in acquired loans with no reserve, our reported reserve to loans ratio decreased to 1.03%. Eliminating these loans and also acquired loans from previous mergers with remaining credit marks brings this ratio to 1.27% unchanged from the fourth quarter. Our own loan growth combined with acquired Integrity loans was primarily floating for the quarter. The gap between new and paid loans has been about 35 basis points for the past few quarters, the lowest level in the past 4 years. This helps to keep the loan rate stable, not including the positive impact of the prepaid fees. Of the $180 million in growth…

[Operator Instruction] Our first question comes from the line of Collyn Gilbert with KBW. Please proceed with your question.

Good afternoon, guys.

Hi, Collyn.

Todd, could you just run through again a little bit more detail on those three credits that that came up, just maybe when they were originated, what sort of the nature of some of those credit scores, just to get a little bit more color there?

Yes, I mean, they have been originated for a few years. It was a one project. They had a little bit of cash flow difficulty and – but actually there’s two credits combined with one relationship. And like I said, they’re under contract, they’re going to get sold. And even with the increase in NPAs and then we done all of our impairment analysis and we’ve taken the appropriate mark this quarter. So we’re comfortable with where we are from a provisioning and research standpoint. Yes, as I said, it was real estate and then the other relations – Pat is here, too.

And the other relationship was just a C&I deal that experience some – some I guess job issues related to the contractor, but we expect to come out of that one here in the next quarter as well. So again, as Todd said, we’ve taken all of our marks and especially in those two real estate deals, you know, I don’t [indiscernible]

Okay. So neither of these or none of these three relationships have anything to do with oil and gas?

No, no.

Okay. Okay, okay that's helpful. And then, Mark, do you happen to have what Integrity's net interest income dollar amount contribution was this quarter?

Yes, they were about $2.2 million.

Okay, great. And then just a little – if you could just give a little bit of color on your outlook for the NIM. I know you'd said obviously the gap between the loan yield origination and maturation is narrowing. Just how are you sort of seeing the NIM? And then also with the full impact of Integrity as we look out through the rest of this year and into next year, how you're thinking about the NIM?

I think – we’re at the 3.48% which included the 3 basis points of the Home Loan Bank. And I think we’re going to be in the mid 3.40% to low 3.40%, the exceptional will be if there is some timing related issues with the credit market accounting related to the Integrity over the next several quarters, but sort of the core rate has still expected to be in the 3.40%.

Okay, okay, that's helpful. And then just circling back on loan growth, you guys have said you've done a great job in Ohio, western New York, kind of taking share away there. How are you thinking about loan growth longer term? Is it still in that high single-digit range or do you think that that can start to accelerate?

Yes, we still think that high single-digit is reasonable for us. We don’t want to take exceptional credit risk. So something that we’re focussing on and building the teams is a long-term proposition. So we opened an LPO, it takes a little while for – for it to get up and running and get some assets on the book. So if you look at the Integrity opportunity and the pipeline that they have along with our pipeline here, there is significant upside in terms of loan growth for us.

Yes, I guess you know kind of the wild card is you know on payoffs as they’ve said, they were up a little bit this quarter over where we’ve experienced in the past. But like I said, we like how the pipelines are growing and not only the commercial side, but also our small business up significantly, retail mortgage is up and we’re seeing some nice activity on the consumer side. So as I said earlier, I really like – we focused a lot of attention on the sales side of the house. And I think it’s really stating to payoff for us.

Okay, that's great, that's helpful. I'll leave it there. Thanks, guys.

Thank you, Collyn.

[Operator Instruction] Our next question comes from William Wallace with Raymond James. Please process with your question.

Hi, guys.

Hi, Wallace.

Hi. Maybe just a little bit more clarity on margin. I believe in the prepared remarks, you also mentioned that there was some benefit in the first quarter from prepayments. Can you quantify that?

Yes, about $200,000 and may be around 2 basis points of that and our core rate without those two items, it’s probably like the flat to fourth quarter at about 3.43%.

And is that $200,000 above what you normally have?

Right, actually in fourth quarter we didn’t have any…

Okay. Okay. That was all I had. Everything else you guys addressed.

Okay. Thank you.

Our next question comes from the line of Matt Schultheis with Boenning and Scattergood. Please proceed with your question.

Hi, good afternoon gentlemen.

Good afternoon, Matt.

With regards to the deposit growth that you had, you broke down the retail and wealth management, but are you doing anything specific with, say, hot rates and money market or CD specials or anything of that nature? Or is this just a more concerted effort to cross-sell or a little bit of both?

It gets – it’s more of the later we – and we did have some specials in the fourth quarter, but those weren’t in place in the first quarter. So, it was – there is some seasonality I think in the first quarter in the consumer side with taxes. So we did probably see some benefit from that, but I think it’s more just a consorted effort and attention that we’re paying to deposit growth internally.

Okay. And with regards to deposits in general or deposit service fees in general, obviously there's some distortion with the acquisition, but looking at relative to where you were anticipating overdrafts to be – the first quarter to budget or plan, are they coming in a little light or are they coming in as anticipated?

In the first quarter, they are – they were a little bit light. We did note that some – especially in January and in February, the activity was light, March and April, we did see a bit of a pickup and we actually saw – first time in a long time the numbers in March were actually ahead of a year ago period, but it wasn’t enough to offset January and February, which were lower than prior periods.

Okay. And one last question with regards to the loan growth in the quarter. It was a little bit below your targeted run rate of, say, 8%. I am looking at this – I know there's always a little bit of seasonality but did the harsh winter make it a little more super-seasonal, if you will, or was this more of a function you had to take some people off the line and have them focus on the acquisition?

Matt, really it was just seasonality. If you break the quarter down, January was a very difficult month. Originations were significantly less than what we have forecasted. February was fairly robust and March was extremely strong. So we like the trajectory, we like the pipeline, but I think we’ll be back in line with our forecast.

Okay, thank you very much.

There are no further questions at this time. At this point, I’d like to turn the call over to Todd Brice for closing comments.

A just one further point that we’d like to make to, I think Collyn you touched on base on it, a question but obviously there’s a lot of attention right now on the oil and gas business in the region. And as Dave said, we’re having continual conversations with clients and trying to stay on top of some of those events. And there’s been some slowdown. There’s been some migration of jobs out of the region. But I think for the most part, as we sit today, we haven’t seen any deterioration in our portfolio as a result of the oil and gas exposures that we have. So Dave…

Yes, so some of activity has shifted from top-hole drilling to getting the gas to the market, which means pipelining is very active and servicing is very active as the industry continues to mature here in western Pennsylvania. So we’re happy with the exposure that we have. Todd mentioned we haven’t seen any downgrades within the portfolio and we’re keeping our to ears to the tracks with regards to activity in that industry.

Right, and there is certain amount of infrastructure that still needs to be maintained once the wells are completed to, so whether it would be hauling the water or some of the other services that they provide. So now that the wells are in place that – again, some of our clients report, the completed well programs and that’s been good for their business. So – we’re looking at and we’ll stay on top of it and we appreciate the everyone’s participation in today’s call and looking forward to getting together next quarter to discuss our results. Thanks again.

This concludes today’s teleconference. Thank you for your participation. You may disconnect your lines at this time and have a great day.