S&T Bancorp, Inc. Reports Improved First Quarter Earnings
INDIANA, Pa., April 19 /PRNewswire-FirstCall/ --S&T Bancorp, Inc. (Nasdaq: STBA), a full-service financial institution with office locations in 10 Pennsylvania counties, has announced its first-quarter earnings.
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Todd D. Brice, President and Chief Executive Officer, offered the following highlights:
- Diluted earnings per common share were $0.35 compared to $0.28 in the fourth quarter of 2009 and an $0.11 loss for the first quarter of 2009
- Net interest margin increased 6 basis points from the fourth quarter of 2009 to 4.00%
- Deposits increased $102 million from the first quarter of 2009
- Provision for loan losses was $4.4 million and net charge-offs were $1.0 million
- Nonperforming assets increased to $99.9 million from $95.4 million in the fourth quarter of 2009
"The economy continues to show signs of recovery, and at S&T Bank, we are pleased to report earnings for this quarter that are more in line with our expectations," Brice said. "The primary drivers for this quarter's earnings results were a reduction of net charge-offs and loan loss provision. We continue to keep a close eye on any nonperforming assets, and we remain diligent in setting aside allowances for loan losses."
Earnings
Net income available to common shareholders improved to $9.8 million from the previous quarter of $7.6 million and a $3.1 million loss in the comparable period one year ago. Net income for the first quarter, before preferred stock dividends and amortization expense related to the Capital Purchase Program ("CPP") was $11.3 million compared to $9.2 million in the fourth quarter of 2009 and a $1.8 million loss in the first quarter of 2009.
Net Interest Income
Net interest income on a fully taxable equivalent basis for the first quarter of 2010 was $37.1 million, which represents a $0.6 million decrease when compared to the fourth quarter of 2009 and a $0.3 million decrease when compared to the first quarter of 2009. The net interest margin on a fully taxable equivalent basis was 4.00% in the first quarter compared to 3.94% in the fourth quarter of 2009 and 3.81% in the first quarter of 2009. The net interest margin improvement is due to favorable repricing of deposits and other borrowed funds and disciplined loan pricing.
Earning Assets
Earning assets remain consistent with the fourth quarter of 2009 with less than a one percent decline. Earning assets decreased $198 million from the comparable period in 2009 driven by decreases of $120 million in loans and $78 million in securities. The loan decrease is primarily due to reduced demand in our market. A significant portion of maturing investment securities were not replaced in 2009 as the reward for leveraging activities was significantly reduced in a volatile interest rate environment.
Deposits
Deposits increased $102 million or three percent compared to the first quarter of 2009, included in this amount was an $84 million or 13% increase in noninterest-bearing deposit accounts. Brice commented, "Core deposit growth continues to be a strategic focus for the organization. The $84 million increase in DDA had a positive impact to our net interest margin."
Security Gains (Losses)
No significant investment impairment charges were recorded during the first quarter compared to $0.5 million in the previous quarter and $0.6 million in the first quarter of 2009. Realized gains of approximately $0.2 million were recorded from the sale of equity holdings during the first quarter of 2010.
Noninterest Income
Noninterest income totaled $11.2 million for the first quarter of 2010 compared to $11.4 million for the fourth quarter of 2009. Noninterest income was essentially unchanged as seasonally lower service charges and other fees were offset by annual bonus commission income in the insurance business. Noninterest income increased $0.9 million compared to $10.3 million in the first quarter of 2009. The increase was primarily driven by the aforementioned insurance bonus commission income and increased wealth management fees.
Noninterest Expense
Noninterest expense increased $2.8 million or 11% compared to the fourth quarter of 2009 and $2.5 million or 10% from the comparable period one year ago. The increases primarily relate to an increase in legal and consulting expenses and higher salaries and employee benefits, due to the re-introduction of incentive plans.
Nonperforming Assets
Nonperforming assets totaled $99.9 million or 2.94% of total loans plus other real estate owned ("OREO") at March 31, 2010, as compared to $95.4 million or 2.80% at December 31, 2009 and $93.5 million or 2.66% at March 31, 2009. During the first quarter of 2010, there was one significant addition, a $15.4 million multi-family residential apartment complex located in western Pennsylvania that has been experiencing a high vacancy rate and declining cash flow. The credit was previously classified as an impaired loan in the third quarter of 2008 and a specific reserve was established at that time. The specific reserve was increased to $4.1 million during 2009 and remains consistent at March 31, 2010.
The allowance for loan losses at March 31, 2010 was $63.0 million or 1.85% of total loans, as compared to $59.6 million or 1.75% at December 31, 2009 and $59.8 million or 1.70% at March 31, 2009. In the first quarter of 2010, S&T recorded a provision for loan losses of $4.4 million, as compared to $10.4 million in the fourth quarter of 2009 and $21.4 million in the first quarter of 2009. Included in the allowance is $20.3 million of specific reserves, representing 23% of impaired loans. In addition to various collateral for nonperforming loans, two impaired credits are supported by approximately $6.8 million in United States Department of Agriculture (USDA) guarantees.
Charge-offs
During the first quarter of 2010, S&T experienced minimal net charge-offs of $1.0 million. The most significant charge-off was $0.6 million for a commercial relationship; the charge was the result of a write down on the collateral of residential property to current market value supported by a recent appraisal.
Capital Position
S&T's capital ratios continue to exceed the "well-capitalized" thresholds of federal bank regulatory agencies with a tier 1 leverage capital ratio of 10.51%, tier 1 risk-based capital ratio of 12.40% and total risk-based capital ratio of 15.75%.
About S&T Bancorp, Inc.
Headquartered in Indiana, PA, S&T Bancorp, Inc. operates 55 offices within Allegheny, Armstrong, Blair, Butler, Cambria, Clarion, Clearfield, Indiana, Jefferson and Westmoreland counties. With assets of $4.1 billion, S&T Bancorp, Inc. stock trades on the NASDAQ Global Select Market System under the symbol STBA.
This information may contain forward-looking statements regarding future financial performance which are not historical facts and which involve risks and uncertainties. Actual results and performance could differ materially from those anticipated by these forward-looking statements. Factors that could cause such a difference include, but are not limited to, general economic conditions, change in interest rates, deposit flows, loan demand, asset quality, including real estate and other collateral values, and competition. In addition to the results of operations presented in accordance with Generally Accepted Accounting Principles (GAAP), S&T management uses, and this press release contains or references, certain non-GAAP financial measures, such as net interest income on a fully taxable equivalent basis. S&T believes these non-GAAP financial measures provide information useful to investors in understanding our underlying operational performance and our business and performance trends as they 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. A reconciliation of these non-GAAP financial measures is presented in the attached financial data spreadsheet. This information should be read in conjunction with the audited financial statements and analysis as presented in the Annual Report on Form 10-K for S&T Bancorp, Inc. and subsidiaries.
S&T Bancorp, Inc.
Consolidated Selected Financial Data
(Dollars in thousands, except per share data)
2010 2009
------- ------------------
First Fourth First
Quarter Quarter Quarter
------- ------- -------
Income Statements
-----------------
Interest Income $45,324 $47,126 $50,424
Interest Expense 9,410 10,671 14,279
----- ------ ------
Net Interest Income 35,914 36,455 36,145
Taxable Equivalent
Adjustment 1,222 1,274 1,334
----- ----- -----
Net Interest Income (FTE) 37,136 37,729 37,479
Provision For Loan Losses 4,430 10,399 21,389
----- ------ ------
Net Interest Income
After Provisions (FTE) 32,706 27,330 16,090
------ ------ ------
Security Gains (Losses), Net 153 (487) (1,246)
Service Charges and Fees 2,971 3,349 3,056
Wealth Management 1,984 1,924 1,743
Insurance 2,368 1,884 1,862
Other 3,867 4,213 3,601
----- ----- -----
Total Noninterest Income 11,190 11,370 10,262
Salaries and Employee Benefits 12,565 12,211 11,655
Occupancy and Equipment Expense, Net 3,072 2,898 3,082
Data Processing Expense 1,603 1,473 1,468
FDIC Expense 1,301 1,475 1,941
Other 9,389 7,031 7,292
----- ----- -----
Total Noninterest Expense 27,930 25,088 25,438
------ ------ ------
Income (Loss) Before Taxes 16,119 13,125 (332)
Taxable Equivalent Adjustment 1,222 1,274 1,334
Applicable Income Taxes 3,593 2,660 176
----- ----- ---
Net Income (Loss) 11,304 9,191 (1,842)
Preferred Stock Dividends 1,547 1,545 1,283
----- ----- -----
Net Income (Loss) Available to
Common Shareholders $9,757 $7,646 ($3,125)
====== ====== =======
Per Common Share Data:
Shares Outstanding at End of Period 27,777,931 27,746,554 27,637,317
Average Shares Outstanding - Diluted 27,753,384 27,701,846 27,637,292
Net Income (Loss) - Diluted $0.35 $0.28 ($0.11)
Dividends Declared $0.15* $0.00* $0.31
Common Book Value $16.39 $16.14 $16.01
Tangible Common Book Value (5) $10.12 $9.85 $9.68
Market Value $20.90 $17.01 $21.21
* S&T's Board of Directors approved a change in timing of the declaration
and payment of dividends to provide better alignment with quarterly
earnings beginning in the fourth quarter of 2009. The Board declared a
$0.15 per common share cash dividend at its meeting held January 18,
2010 relating to the fourth quarter of 2009 performance.
S&T Bancorp, Inc.
Consolidated Selected Financial Data
(Dollars in thousands)
2010 2009
------- ---------------------
First Fourth First
Quarter Quarter Quarter
------- ------- -------
Balance Sheet (Period-End)
--------------------------
Assets $4,135,767 $4,170,475 $4,314,540
Earning Assets 3,750,674 3,782,809 3,948,774
Securities 352,271 378,402 429,919
Loans, Gross 3,398,403 3,404,407 3,518,855
Total Deposits 3,345,816 3,304,542 3,244,197
Noninterest-Bearing
Deposits 709,422 712,121 625,325
NOW, Money Market and
Savings 1,256,274 1,302,051 1,264,407
CD's $100,000 and over 502,100 411,901 422,841
Other Time Deposits 878,020 878,469 931,624
Short-term Borrowings 47,996 96,235 225,898
Long-term Debt 136,250 176,513 232,282
Shareholders' Equity 560,743 553,318 547,276
Balance Sheet
(Daily Averages)
----------------
Assets $4,137,480 $4,167,295 $4,360,166
Earning Assets 3,756,958 3,798,477 3,980,258
Securities 352,862 385,966 445,150
Loans, Gross 3,404,096 3,412,510 3,534,064
Deposits 3,250,586 3,271,199 3,251,587
Shareholders' Equity 555,659 545,787 542,240
Loans (Period-End)
------------------
Consumer
Home Equity $457,178 $458,643 $447,388
Residential Mortgage 360,113 363,466 402,798
Consumer Installment 76,997 81,141 81,087
Construction 8,899 11,836 13,865
----- ------ ------
Total Consumer
Loans 903,187 915,086 945,138
Commercial
Commercial Real Estate 1,422,761 1,428,329 1,401,484
Commercial & Industrial 715,178 701,650 809,980
Construction 357,277 359,342 362,253
------- ------- -------
Total Commercial
Loans 2,495,216 2,489,321 2,573,717
--------- --------- ---------
Total Loans $3,398,403 $3,404,407 $3,518,855
========== ========== ==========
Nonperforming Loans (NPL) % NPL % NPL % NPL
------------------------- ----- ----- -----
Consumer
Home Equity $1,618 0.35% $2,252 0.49% $1,983 0.44%
Residential Mortgage 4,695 1.30% 5,583 1.54% 7,699 1.91%
Consumer Installment 99 0.13% 20 0.02% 205 0.25%
Construction - - - - - -
-- -- --
Total Consumer
Loans 6,412 0.71% $7,855 0.86% 9,887 1.05%
Commercial
Commercial Real Estate 66,138 4.65% 53,789 3.77% 18,188 1.30%
Commercial & Industrial 3,356 0.47% 7,489 1.07% 35,035 4.33%
Construction 20,884 5.85% 21,674 6.03% 28,937 7.99%
------ ------ ------
Total Commercial
Loans 90,378 3.62% 82,952 3.33% 82,160 3.19%
------ ------ ------
Total Nonperforming Loans $96,790 2.85% $90,807 2.67% $92,047 2.62%
====== ======= ======
S&T Bancorp, Inc.
Consolidated Selected Financial Data
(Dollars in thousands, except per share data)
2010 2009
------- -------------------------
First Fourth First
Quarter Quarter Quarter
------- ------- -------
Construction and
Commercial Real
Estate (CRE) by
Location
----------------
Pennsylvania $1,425,369 $1,441,493 $1,462,159
New York 106,428 97,864 86,246
Ohio 68,277 68,189 63,026
North Carolina 20,113 19,848 14,794
Arizona 18,032 18,250 19,467
Florida 13,753 13,288 20,950
Southeast Region 54,701 50,713 35,464
Midwest Region 23,706 25,998 18,584
Southwest Region 13,552 13,270 9,349
Western Region 13,313 13,223 11,738
Mid-Atlantic Region 12,160 14,875 10,444
New England 10,634 10,660 11,516
------ ------ ------
Total
Construction
and CRE by
Location $1,780,038 $1,787,671 $1,763,737
========== ========== ==========
Construction and
Commercial
Real Estate -
NPL by Location % NPL % NPL % NPL
---------------- ----- ----- -----
Pennsylvania $62,579 4.39% $55,413 3.84% $22,339 1.53%
New York 4,883 4.59% 5,847 5.97% 9,950 11.54%
Ohio - - - - - -
North Carolina 5,348 26.59% 169 0.85% 184 1.24%
Arizona 722 4.00% 990 5.42% 3,097 15.91%
Florida 3,301 24.00% 2,850 21.45% - -
Southeast Region - - - - 2,277 6.42%
Midwest Region - - - - - -
Southwest Region 2,717 20.05% 2,722 20.51% 1,013 10.83%
Western Region - - - - - -
Mid-Atlantic Region - - - - - -
New England 7,472 70.26% 7,472 70.10% 8,265 71.77%
----- ----- -----
Total Construction
and CRE - NPL by
Location $87,022 4.89% $75,463 4.22% $47,125 2.67%
======= ======= =======
Construction and
Commercial Real
Estate by Type
---------------
Retail/Strip Malls $295,630 $278,811 $291,388
Residential Rental
Properties 284,807 268,813 259,593
Offices 239,746 247,098 248,271
Hotels 175,870 165,953 140,735
Manufacturing/
Industrial/
Warehouse 131,854 121,928 109,537
Real Estate
Development -
Commercial 108,141 106,762 116,832
Flex/Mixed Use 107,537 107,324 98,666
Healthcare/
Education 99,632 101,500 94,549
Real Estate
Development -
Residential 83,718 83,352 109,393
Miscellaneous 253,103 306,130 294,773
------- ------- -------
Total
Construction
and CRE by
Type $1,780,038 $1,787,671 $1,763,737
========== ========== ==========
Construction and
Commercial
Real Estate -
NPL by Type % NPL % NPL % NPL
---------------- ----- ----- -----
Retail/Strip Malls $4,373 1.48% $4,998 1.79% $4,930 1.69%
Residential Rental
Properties 19,975 7.01% 5,255 1.95% 3,855 1.48%
Offices 1,296 0.54% 1,426 0.58% 7,543 3.04%
Hotels 2,095 1.19% 2,095 1.26% - -
Manufacturing/
Industrial/
Warehouse 4,262 3.23% 3,632 2.98% - -
Real Estate
Development -
Commercial 10,652 9.85% 10,493 9.83% 11,851 10.14%
Flex/Mixed Use 6,046 5.62% 6,113 5.70% 794 0.80%
Healthcare/
Education 3,283 3.30% 3,566 3.51% 672 0.71%
Real Estate
Development -
Residential 9,043 10.80% 9,362 11.23% 8,172 7.47%
Miscellaneous 25,997 10.27% 28,523 9.32% 9,308 3.16%
------ ------ -----
Total
Construction
and CRE -
NPL by Type $87,022 4.89% $75,463 4.22% $47,125 2.67%
======= ======= =======
S&T Bancorp, Inc.
Consolidated Selected Financial Data
(Dollars in thousands, except per share data)
2010 2009
------- ----------------
First Fourth First
Quarter Quarter Quarter
------- ------- -------
Asset Quality Data
------------------
Nonaccrual Loans and Nonperforming Loans $96,790 $90,807 $92,047
Assets Acquired through Foreclosure or
Repossession 3,087 4,607 1,452
Nonperforming Assets 99,877 95,414 93,499
Allowance for Loan Losses 63,023 59,580 59,847
Nonperforming Loans / Loans 2.85% 2.67% 2.62%
Nonperforming Assets / Loans plus OREO 2.94% 2.80% 2.66%
Allowance for Loan Losses / Loans 1.85% 1.75% 1.70%
Allowance for Loan Losses / Nonperforming
Loans 65% 66% 65%
Net Loan Charge-offs (Recoveries) 987 11,699 4,231
Net Loan Charge-offs (Recoveries)
(Annualized)/Average Loans 0.12% 1.36% 0.49%
Profitability Ratios (Annualized)
---------------------------------
Common Return on Average Assets 0.96% 0.73% -0.29%
Common Return on Average Tangible Common
Assets (6) 1.00% 0.76% -0.30%
Common Return on Average Shareholders'
Equity 7.12% 5.56% -2.34%
Common Return on Average Tangible Common
Equity (7) 14.34% 11.42% -4.53%
Yield on Earning Assets (FTE) 5.03% 5.06% 5.27%
Cost of Interest Bearing Funds 1.33% 1.46% 1.82%
Net Interest Margin (FTE)(4) 4.00% 3.94% 3.81%
Efficiency Ratio (FTE)(1) 57.79% 51.10% 53.28%
Capitalization Ratios
---------------------
Dividends Paid to Net Income (Loss) 42.67% 54.31% -273.87%
Common Equity to Assets (8) 11.01% 10.74% 10.26%
Leverage Ratio (2) 10.51% 10.26% 9.73%
Risk Based Capital - Tier I (3) 12.40% 12.10% 11.58%
Risk Based Capital - Total (3) 15.75% 15.43% 14.82%
Tangible Common Equity/Tangible Assets (8) 7.09% 6.84% 6.46%
Definitions and Reconciliation of GAAP to Non-GAAP Financial Measures:
----------------------------------------------------------------------
(1) Recurring noninterest expense divided by recurring noninterest
income plus net interest income, on a fully taxable equivalent basis.
(2) Equity less goodwill to total assets and allowance for loan losses.
(3) Effective October 1, 1998, banking regulators require financial
institutions to include 45% of the pretax net unrealized holding
gains on available-for-sale equity securities in Tier 2 capital.
(4) Net interest income, on a fully taxable equivalent basis,
annualized, divided by quarter-to-date average earning assets.
(5) Tangible Common Book Value
Common Book Value (GAAP Basis) $16.39 $16.14 $16.01
Effect of Excluding Intangible Assets (6.27) (6.29) (6.33)
----- ----- -----
Tangible Common Book Value $10.12 $9.85 $9.68
(6) Common Return on Average Tangible Common Assets
Common Return on Average Assets (GAAP
Basis) 0.96% 0.73% -0.29%
Effect of Excluding Intangible Assets 0.04% 0.03% -0.01%
---- ---- -----
Common Return on Average Tangible Common
Assets 1.00% 0.76% -0.30%
(7) Common Return on Average Tangible Common Equity
Common Return on Average Equity (GAAP
Basis) 7.12% 5.56% -2.34%
Effect of Excluding Intangible Assets 3.97% 3.24% -1.08%
Effect of Excluding Preferred Stock 3.25% 2.62% -1.11%
---- ---- -----
Common Return on Average Tangible Common
Equity 14.34% 11.42% -4.53%
(8) Tangible Common Equity / Tangible Assets
Common Equity / Assets (GAAP Basis) 11.01% 10.74% 10.26%
Effect of Excluding Intangible Assets -3.92% -3.90% -3.80%
----- ----- -----
Tangible Common Equity / Tangible Assets 7.09% 6.84% 6.46%
SOURCE S&T Bancorp, Inc.
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