S&T Bancorp, Inc. Announces Fourth Quarter and Full Year 2016 Results

INDIANA, Pa., Jan. 26, 2017 /PRNewswire/ -- S&T Bancorp, Inc. (S&T) (NASDAQ: STBA), the holding company for S&T Bank with locations in Pennsylvania, Ohio and New York, announced today its fourth quarter and full year 2016 earnings. Fourth quarter earnings were $17.7 million, or $0.51 per diluted share, compared to third quarter of 2016 earnings of $20.6 million, or $0.59 per diluted share, and fourth quarter of 2015 earnings of $17.4 million, or $0.50 per diluted share. For the year ended December 31, 2016, net income was a record $71.4 million, an increase of 6.4% over net income of $67.1 million for 2015. Diluted earnings per share was $2.05, an increase of 3.5% from $1.98 in 2015.

Fourth Quarter of 2016 Highlights:

• Portfolio loans increased $193 million from September 30, 2016, representing a 14.2% annualized rate.
• Total deposits increased $127 million from September 30, 2016, representing a 9.8% annualized rate.
• Return on average assets was 1.04% and return on average equity was 8.36%.
• Net interest margin (FTE) (Non-GAAP) was stable at 3.45% compared to 3.46% for the prior quarter.
• S&T declared a $0.20 per share dividend, a 5.3% increase compared to $0.19 in the same period a year ago.

Full Year 2016 Highlights:

• Net income increased 6.4% to a record $71.4 million compared to $67.1 million for 2015.
• Strong organic portfolio loan growth of $584 million, or 11.6%.
• Total deposits grew $396 million, or 8.1%.
• Return on average assets was 1.08% and return on average equity was 8.67%.

"We are pleased to announce record net income for 2016," said Todd Brice, president and chief executive officer of S&T. "The investments that we have made in our markets over the past few years have made a big impact on our overall financial performance.  Our assets grew organically almost 10% during 2016 which is a true testament to our team members and our ability to successfully execute our growth strategy.  As we move into 2017, we believe that we are well positioned for continued growth."

Fourth Quarter of 2016 Results

Net Interest Income

Net interest income increased $1.0 million, or 1.9%, to $52.5 million compared to $51.5 million in the third quarter of 2016. Net interest income was positively impacted by an increase in average loans of $131 million, or 2.4%, compared to the prior quarter. Net interest margin on a fully taxable equivalent basis (FTE) (Non-GAAP) was stable at 3.45% compared to 3.46% in the prior quarter. Loan yields and deposit costs were both relatively unchanged quarter over quarter, allowing organic growth to drive net interest income higher.

Asset Quality

Total nonperforming loans were $42.6 million, or 0.76% of total loans at December 31, 2016 compared to $40.5 million, or 0.75% of total loans at September 30, 2016. Net charge-offs for the fourth quarter of 2016 were $6.6 million compared to net charge-offs of $0.9 million in the third quarter of 2016. Included in net charge-offs for the fourth quarter of 2016 was a $1.5 million specific reserve that was previously recorded in the first quarter of 2016. The provision for loan losses was $5.6 million compared to $2.5 million in the third quarter of 2016. The higher provision was a result of higher loan charge-offs and loan growth compared to the prior quarter. The allowance for loan losses was $52.8 million, or 0.94% of total portfolio loans at December 31, 2016, compared to $53.8 million, or 0.99% of total portfolio loans, at September 30, 2016.

Noninterest Income and Expense

Noninterest income decreased $0.5 million to $12.9 million compared to $13.4 million in the third quarter of 2016. The decrease in noninterest income was primarily due to a $0.4 million decline in mortgage banking due to the increase in rates that occurred during the fourth quarter. Noninterest expense increased $1.2 million to $35.6 million from $34.4 million in the third quarter of 2016. Salaries and employee benefit expense increased $0.8 million due to higher incentives and medical costs compared to the third quarter of 2016. Other expense increased $0.8 million primarily due to significant loan related expense recoveries that occurred in the third quarter of 2016.  The efficiency ratio improved to 54.06% compared to 55.86% in the prior year.

Financial Condition

Total assets increased $225 million to $6.9 billion at December 31, 2016 compared to $6.7 billion at September 30, 2016. Commercial loans increased $182 million, or 17.4% annualized, with growth in all commercial categories. Total consumer loans increased $11.4 million, or 3.6% annualized, with growth primarily in residential mortgage. Total deposits increased $127 million, or 9.8% annualized, with growth primarily in money market accounts. S&T's risk-based capital ratios were relatively unchanged compared with the third quarter of 2016. All capital ratios remain significantly above the well-capitalized thresholds of federal bank regulatory agencies.

Full Year 2016 Results

S&T's growth strategy continued successfully in 2016 with organic loan growth of $584 million, or 11.6%.  Commercial loans grew $519 million, or 13.5%, and consumer loans grew $65 million, or 5.5%, during 2016.  Loan growth was very strong in our newer markets of Ohio, New York and south-central Pennsylvania contributing $440 million of total loan growth during 2016.

Full year 2016 earnings increased $4.3 million, or 6.4%, to a record $71.4 million compared to $67.1 million and diluted earnings per share increased $0.07, or 3.5%, to $2.05 per diluted share compared to $1.98 per diluted share for 2015. Net interest income increased by $15.7 million, or 8.4%, in 2016 due to the excellent organic loan growth. The provision for loan losses increased $7.6 million to $18.0 million in 2016 compared to $10.4 million in 2015 primarily due to higher loan charge-offs and loan growth. Net loan charge-offs increased $3.2 million to $13.3 million in 2016 from $10.2 million in 2015. To view an infographic featuring 2016 highlights, click here.

Dividend

The Board of Directors of S&T declared a $0.20 per share cash dividend at its regular meeting held January 23, 2017. This is an increase of 5.3% compared to a common stock dividend of $0.19 per share declared in the same period in the prior year. The dividend is payable February 23, 2017 to shareholders of record on February 9, 2017. Dividends declared in 2016 increased $0.04, or 5.5%, to $0.77 compared to $0.73 for 2015.

Conference Call

S&T will host its fourth quarter 2016 earnings conference call live over the Internet at 1:00 p.m. ET on Thursday, January 26, 2017. To access the webcast, go to S&T's webpage at www.stbancorp.com and click on "Events & Presentations." Select "4th Quarter 2016 Conference Call" and follow the instructions.

About S&T Bancorp, Inc.

S&T Bancorp, Inc. is a $6.9 billion bank holding company that is headquartered in Indiana, Pa. and trades on the NASDAQ Global Select Market under the symbol STBA. Its principal subsidiary, S&T Bank, was established in 1902, and operates locations in Pennsylvania, Ohio and New York. For more information visit www.stbancorp.com, www.stbank.com, or call 800.325.2265.

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