S&T Bancorp, Inc. Announces First Quarter Earnings

News provided by

S&T Bancorp, Inc.

Apr 23, 2012, 09:00 ET

INDIANA, Pa., April 23, 2012 /PRNewswire/ -- S&T Bancorp, Inc. (NASDAQ: STBA), a full-service financial institution with office locations in 10 Pennsylvania counties, has announced its first quarter 2012 earnings.  

(Logo: http://photos.prnewswire.com/prnh/20070917/NEM099LOGO)

Todd D. Brice, president and chief executive officer of S&T Bancorp, Inc., offered the following highlights:

  • Net income available to common shareholders was $3.5 million compared to $9.3 million in the fourth quarter of 2011 and $4.7 million in the first quarter of 2011 with diluted earnings per common share of $0.12 compared to $0.33 in the fourth quarter of 2011 and $0.17 in the first quarter of 2011.
  • The merger with Mainline Bancorp, Inc. was completed in the first quarter of 2012.  First quarter 2012 results include $3.9 million or $0.11 per share of one-time merger related expenses.
  • On March 30, 2012 S&T Bancorp, Inc. announced the signing of a definitive merger agreement to acquire Gateway Bank of Pennsylvania.

"In the first quarter of 2012, we made several definitive moves to position ourselves for growth in the marketplace.  We are very excited about the seamless closing and conversion of Mainline Bank and the announcement of our pending merger with Gateway Bank," said Brice. "We have also applied additional resources to lines of business that show potential for growth, such as insurance and wealth management.  Our first quarter results demonstrate that those investments are paying off."

Merger Activity
The first quarter of 2012 included one-time merger related expenses of $3.9 million, or $0.11 per share.  This is in addition to one-time merger related expenses incurred in 2011 of $0.3 million.  Both the holding company merger and the bank merger were completed on March 9, 2012, and the systems conversion occurred over the following weekend.  Eight Mainline locations opened on March 12, 2012 as S&T Bank branches, adding approximately $130 million of loans and $205 million of deposits.

On March 30, 2012, S&T Bancorp, Inc. announced plans to merge with Gateway Bank of Pennsylvania.  The in-market cash and stock deal is expected to close in the third quarter of 2012, and will expand S&T's existing footprint in the northern and southern suburbs of Pittsburgh.  Gateway has assets of $120 million and has two branches, including the headquarters branch in McMurray as well as a branch in Cranberry Township.

Net Interest Income
Net interest income and net interest margin on a fully taxable equivalent (FTE) basis decreased from the prior quarter and the last year quarter due to a continued shift in asset mix from loans to lower yielding securities and cash combined with lower loan rates on new business.  Net interest income for the first quarter of 2012 declined to $34.5 million from $35.2 million in the fourth quarter of 2011 as the net interest margin decreased by 10 bps to 3.69%.  Average loans increased by $9.4 million from the fourth quarter of 2011, however, this includes the first quarter impact of the Mainline merger of approximately $33.4 million in average loans.  The decrease in average loans not including the Mainline merger is due to a continued high level of loan payoffs despite increases in new activity and an improving loan pipeline.  

Asset Quality
Asset quality metrics exhibited some weakness this quarter, especially in the construction portfolio.  Net charge-offs for the first quarter of 2012 were up significantly to $10.3 million, compared to $5.0 million in the fourth quarter of 2011 and only $0.4 million in the first quarter of 2011.  Over half of the net charge-offs this quarter were related to construction projects that have experienced slowdowns and lower values on updated appraisals.  Nonperforming assets increased to $67.9 million or 2.12% of total loans plus OREO compared to $60.1 million or 1.92% in the fourth quarter of 2011.  The longer term asset quality trends continue to be positive, as nonperforming assets are down from $88.5 million or 2.67% in the first quarter of 2011.  The provision for loan losses increased in the first quarter of 2012 to $9.3 million from $2.3 million in the fourth quarter of 2011, but is down from $10.6 million in the first quarter of 2011.  The allowance for loan losses at March 31, 2011 was $47.8 million or 1.49% of total loans including acquired Mainline loans.  This is little changed from the $48.8 million or 1.56% at December 31, 2011, but is down from $61.7 million or 1.87% at March 31, 2011.

Noninterest Income and Expense
Noninterest income showed improvement over both the fourth quarter of 2011 and the first quarter of 2011 due in large part to increases in Wealth Management and Insurance, as new producers have been added in both of these lines of business.  Mortgage banking activity, which is included in Other Noninterest Income, improved in the second half of 2011 as rates declined, and has remained strong through the first quarter of 2012.

Noninterest expense was elevated in the first quarter of 2012 primarily due to the aforementioned one-time merger related expenses of $3.9 million.  Salaries and Benefits includes one-time merger related expenses of $1.7 million and were also higher compared to the fourth quarter of 2011 due to annual merit increases of $0.4 million, higher pension expense of $0.5 million and higher payroll expense of $0.7 million, which is typically higher in the first quarter.  Data Processing in the first quarter of 2012 included the buyout of Mainline's remaining contract and Other Noninterest Expense included marketing and various professional expenses related to the merger.  Also included in Other is an increase in the unfunded commitment reserve of $0.3 million compared to a decline of $0.5 million in the fourth quarter of 2011.

Financial Condition
The size of the balance sheet increased over the fourth quarter of 2011 to $4.3 billion in total assets from $4.1 billion due to the merger with Mainline, which added $130 million of loans and $205 million of deposits.

S&T's capital ratios were little changed due to the merger and flat retained earnings from modest net income.  All capital ratios remain significantly above the well-capitalized thresholds of federal bank regulatory agencies with a tier 1 leverage capital ratio of 9.20%, tier 1 risk-based capital ratio of 11.62% and total risk-based capital ratio of 15.14%.  With the redemption of the $108.7 million of preferred stock from the U.S. Department of Treasury's Capital Purchase Program in the fourth quarter of 2011, S&T paid no preferred stock dividends in the first quarter of 2012, an after tax improvement of almost $1.6 million this quarter.

About S&T Bancorp, Inc.
Headquartered in Indiana, PA, S&T Bancorp, Inc. operates offices within Allegheny, Armstrong, Blair, Butler, Cambria, Clarion, Clearfield, Indiana, Jefferson and Westmoreland counties.  With assets of $4.3 billion, S&T Bancorp, Inc. stock trades on the NASDAQ Global Select Market System under the symbol STBA.  For more information, visit www.stbancorp.com.

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




Unaudited




(in thousands, except per share data)











2012

2011

2011

First

Fourth

First

Quarter

Quarter

Quarter






Income Statements




Interest Income

$39,140

$40,258

$42,192

Interest Expense

5,819

6,192

7,320

         Net Interest Income

33,321

34,066

34,872

         Taxable Equivalent Adjustment

1,129

1,101

1,038

         Net Interest Income (FTE)

34,450

35,167

35,910






Provision For Loan Losses

9,272

2,336

10,640






         Net Interest Income After Provisions (FTE)

25,178

32,831

25,270






Security Gains (Losses) , Net

840

-

13






Service Charges and Fees

2,408

2,622

2,404

Wealth Management

2,419

2,021

2,050

Insurance

2,212

1,809

2,132

Other

5,190

5,122

4,427






         Total Noninterest Income

12,229

11,574

11,013






Salaries and Employee Benefits

16,472

13,446

13,320

Occupancy and Equipment Expense, Net

3,022

2,831

3,048

Data Processing Expense

3,240

1,925

1,504

FDIC Expense

608

678

1,226

Other

9,441

7,792

8,351






         Total Noninterest Expense

32,783

26,672

27,449






Income Before Taxes

5,464

17,733

8,847

Taxable Equivalent Adjustment

1,129

1,101

1,038

Applicable Income Taxes

855

4,376

1,514






          Net Income

3,480

12,256

6,295

Preferred Stock Dividends and Discount Amortization

-

2,939

1,555






Net Income Available to Common Shareholders

$3,480

$9,317

$4,740






Per Common Share Data:












Shares Outstanding at End of Period

28,873,043

28,131,249

28,033,757

Average Shares Outstanding - Diluted

28,272,568

28,068,064

27,957,002

Diluted Earnings Per Common Share *

$0.12

$0.33

$0.17

Dividends Declared

$0.15

$0.15

$0.15

Common Book Value

$17.47

$17.44

$16.90

Tangible Common Book Value (1)

$11.32

$11.36

$10.76

Market Value

$21.69

$19.55

$21.57






* Diluted earnings per share under the two-class method is determined on the net income reported on the income statement less earnings allocated to participating securities.




S&T Bancorp, Inc.





Consolidated Selected Financial Data





Unaudited





(in thousands)













2012

2011

2011

First

Fourth

First

Quarter

Quarter

Quarter







Net Interest Margin (FTE) (Quarterly Averages)





Assets





 Loans

$3,135,517

4.74%

$3,126,126

4.83%

$3,324,606

4.92%

 Securities/Other

612,791

2.12%

562,541

2.32%

384,796

3.02%

    Total Interest-earning Assets

3,748,308

4.31%

3,688,667

4.45%

3,709,402

4.72%

 Noninterest-earning Assets

395,577

381,191

378,012

Total Assets

$4,143,885

$4,069,858

$4,087,414







Liabilities and Shareholders' Equity





 Now/Money Market/Savings

$1,401,848

0.18%

$1,338,276

0.14%

$1,295,224

0.18%

 Certificates of Deposit

1,132,687

1.46%

1,135,517

1.64%

1,231,162

1.81%

 Borrowed Funds < 1 Year

112,944

0.20%

41,261

0.11%

42,582

0.14%

 Borrowed Funds > 1 Year

122,214

3.32%

122,660

3.21%

119,736

4.21%

    Total Interest-bearing Liabilities

2,769,693

0.84%

2,637,714

0.93%

2,688,704

1.10%







Noninterest-bearing Liabilities





Demand Deposits

809,464

800,188

767,581

 Shareholders' Equity/Other

564,728

631,956

631,129

    Total Noninterest-bearing Liabilities

1,374,192

1,432,144

1,398,710

Total Liabilities and Shareholders' Equity

$4,143,885

$4,069,858

$4,087,414







Net Interest Margin

3.69%

3.79%

3.92%

S&T Bancorp, Inc.





Consolidated Selected Financial Data





Unaudited





(in thousands)













2012

2011

2011

First

Fourth


First

Quarter

Quarter

Quarter

Balance Sheets (Period-End)





Assets





 Cash

$53,838

$61,723

$108,855

 Securities/Other

715,636

584,615

352,783

 Loans, Net

3,153,616

3,083,768

3,242,658

 Other Assets

407,885

389,888

385,758

Total Assets

$4,330,975

$4,119,994

$4,090,054







Liabilities and Shareholders' Equity





 Noninterest-bearing Demand Deposits

$860,108

$818,686

$802,748

 Interest-bearing Deposits

2,662,247

2,517,173

2,503,091

 Short-term Borrowings

115,638

105,370

38,270

 Long-term Debt

122,045

122,493

119,593

 Other Liabilities

66,519

65,746

46,237

 Shareholders' Equity

504,418

490,526

580,115

Total Liabilities and Shareholders' Equity

$4,330,975

$4,119,994

$4,090,054








2012

2011

2011

First

Fourth

First

Quarter

Quarter

Quarter

Loans (Period-End)





Consumer





    Home Equity

$441,648

$411,404

$436,357

    Residential Mortgage

382,884

358,846

342,904

    Installment & Other Consumer

82,223

67,131

70,573

    Construction

2,211

2,440

4,322

         Total Consumer Loans

908,966

839,821

854,156

Commercial





    Commercial Real Estate

1,416,663

1,415,333

1,488,700

    Commercial & Industrial

703,112

685,753

713,683

    Construction

169,039

188,852

245,477

         Total Commercial Loans

2,288,814

2,289,938

2,447,860

Total Portfolio Loans

3,197,780

3,129,759

3,302,016

    Loans Held for Sale

3,663

2,850

2,305

Total Loans

$3,201,443

$3,132,609

$3,304,321







Nonperforming Loans (NPL)





Consumer

% NPL

% NPL

% NPL

    Home Equity

$3,490

0.79%

$2,936

0.71%

$1,858

0.43%

    Residential Mortgage

8,260

2.16%

7,228

2.01%

5,337

1.56%

    Installment & Other Consumer

27

0.03%

4

0.01%

25

0.04%

    Construction

181

8.19%

181

7.42%

-

-

         Total Consumer Loans

11,958

1.32%

10,349

1.23%

7,220

0.85%

Commercial





    Commercial Real Estate

32,816

2.32%

31,648

2.24%

57,189

3.84%

    Commercial & Industrial

8,269

1.18%

7,571

1.10%

9,081

1.27%

    Construction

11,460

6.78%

6,547

3.47%

7,356

3.00%

         Total Commercial Loans

52,545

2.30%

45,766

2.00%

73,626

3.01%

Total Nonperforming Loans

$64,503

2.02%

$56,115

1.79%

$80,846

2.45%

S&T Bancorp, Inc.





Consolidated Selected Financial Data





Unaudited





(in thousands)













2012

2011

2011

First

Fourth

First

Quarter

Quarter

Quarter

Construction and Commercial Real Estate (CRE)





PA vs. Out-of-State





Pennsylvania

$1,305,367


$1,301,211


$1,375,688


Out-of-State

280,335


302,974


358,489


Total Construction and CRE PA vs. Out-of-State

$1,585,702


$1,604,185


$1,734,177









Construction and CRE - NPL PA vs. Out-of-State

% NPL

% NPL

% NPL

Pennsylvania

$37,623

2.88%

$33,665

2.59%

$43,799

3.18%

Out-of-State

6,653

2.37%

4,530

1.50%

20,746

5.79%

Total Construction and CRE - NPL PA vs. Out-of-State

$44,276

2.79%

$38,195

2.38%

$64,545

3.72%








2012

2011

2011

First

Fourth

First

Quarter

Quarter

Quarter

Construction and CRE by Type





Retail/Strip Malls

$290,023


$288,453


$297,339


Offices

203,483


218,619


226,163


Hotels

194,658


193,833


194,543


Residential Rental Properties

182,941


198,011


237,879


Healthcare/Education

104,104


105,642


108,472


Manufacturing/Industrial/Warehouse

102,095


95,883


117,857


Real Estate Development - Commercial

95,053


102,623


93,301


Flex/Mixed Use

90,130


97,766


113,483


Real Estate Development - Residential

54,660


60,808


81,956


Recreational

41,557


43,152


44,118


Restaurant

29,873


29,921


39,814


Convenience Stores

28,919


29,489


26,377


Miscellaneous

168,206


139,985


152,875


Total Construction and CRE by Type

$1,585,702


$1,604,185


$1,734,177










2012

2011

2011

First

Fourth

First

Quarter

Quarter

Quarter

Construction and CRE - NPL by Type

% NPL

% NPL

% NPL

Retail/Strip Malls

$3,262

1.12%

$5,285

1.83%

$3,031

1.02%

Offices

3,973

1.95%

3,973

1.82%

2,768

1.22%

Hotels

700

0.36%

700

0.36%

                 13,585

6.98%

Residential Rental Properties

3,595

1.97%

2,851

1.44%

10,971

4.61%

Healthcare/Education

                      598

0.57%

                      311

0.29%

818

0.75%

Manufacturing/Industrial/Warehouse

4,596

4.50%

4,638

4.84%

                   3,592

3.05%

Real Estate Development - Commercial

2,782

2.93%

771

0.75%

5,968

6.40%

Flex/Mixed Use

                        62

0.07%

                           -

-

2,388

2.10%

Real Estate Development - Residential

8,844

16.18%

6,284

10.33%

6,073

7.41%

Recreational

10,402

25.03%

9,365

21.70%

9,334

21.16%

Restaurant

1,863

6.24%

940

3.14%

4,070

10.22%

Convenience Stores

                        73

0.25%

                           -

-

                           -

-

Miscellaneous

3,526

2.10%

3,077

2.20%

1,947

1.27%

Total Construction and CRE - NPL by Type

$44,276

2.79%

$38,195

2.38%

$64,545

3.72%

S&T Bancorp, Inc.




Consolidated Selected Financial Data




Unaudited




(in thousands)











2012

2011

2011

First

Fourth

First

Quarter

Quarter

Quarter

Commercial Credit Exposure




Pass




Commercial Real Estate

$1,244,497

$1,229,005

$1,250,149

Commercial & Industrial

613,393

600,895

610,750

Construction

122,277

136,270

201,984

Total Pass

$1,980,167

$1,966,170

$2,062,883






Special Mention




Commercial Real Estate

$71,342

$84,400

$98,780

Commercial & Industrial

34,295

33,135

57,460

Construction

14,135

17,106

10,534

Total Special Mention

$119,772

$134,641

$166,774






Substandard




Commercial Real Estate

$100,824

$101,928

$139,771

Commercial & Industrial

55,424

51,723

45,473

Construction

32,627

35,476

32,959

Total Substandard

$188,875

$189,127

$218,203

S&T Bancorp, Inc.




Consolidated Selected Financial Data




Unaudited




(in thousands)











2012

2011

2011

First

Fourth

First

Quarter

Quarter

Quarter

Asset Quality Data




Nonperforming Loans

$64,503

$56,115

$80,846

Assets Acquired through Foreclosure or Repossession

3,371

3,967

7,696

Nonperforming Assets

67,874

60,082

88,542

Troubled Debt Restructurings (Nonaccrual)

22,963

18,184

35,665

Troubled Debt Restructurings (Accruing)

41,189

49,716

8,500

Total Troubled Debt Restructurings

64,152

67,900

44,165

Allowance for Loan Losses

47,827

48,841

61,663

Nonperforming Loans / Loans

2.01%

1.79%

2.45%

Nonperforming Assets / Loans plus OREO

2.12%

1.92%

2.67%

Allowance for Loan Losses / Loans

1.49%

1.56%

1.87%

Allowance for Loan Losses / Nonperforming Loans

74%

87%

76%

Net Loan Charge-offs (Recoveries)

10,286

5,028

364

Net Loan Charge-offs (Recoveries) (Annualized) / Average Loans

1.32%

0.64%

0.04%






Profitability Ratios (Annualized)




Common Return on Average Assets

0.34%

0.91%

0.47%

Common Return on Average Tangible Assets (2)

0.35%

0.95%

0.49%

Common Return on Average Equity

2.82%

6.41%

3.31%

Common Return on Average Tangible Common Equity (3)

4.31%

11.29%

6.35%

Efficiency Ratio (FTE) (4)

70.23%

57.06%

58.50%






Capitalization Ratios




Dividends Paid to Net Income

121.26%

45.25%

88.46%

Common Equity / Assets

11.65%

11.91%

11.58%

Tier 1 Leverage Ratio

9.20%

9.17%

11.19%

Risk-Based Capital - Tier 1

11.62%

11.63%

13.54%

Risk-Based Capital - Total

15.14%

15.20%

16.99%

Tangible Common Equity / Tangible Assets (5)

7.87%

8.09%

7.70%

S&T Bancorp, Inc.




Consolidated Selected Financial Data




Unaudited











2012

2011

2011

First

Fourth

First

Quarter

Quarter

Quarter

Definitions and Reconciliation of GAAP to




     Non-GAAP Financial Measures:










(1)  Tangible Common Book Value




    Common Book Value (GAAP Basis)

$17.47

$17.44

$16.90

    Effect of Excluding Intangible Assets

(6.15)

(6.08)

(6.14)

    Tangible Common Book Value

$11.32

$11.36

$10.76






(2)  Common Return on Average Tangible Assets




    Common Return on Average Assets (GAAP Basis)

0.34%

0.91%

0.47%

    Effect of Excluding Intangible Assets

0.01%

0.04%

0.02%

    Common Return on Average Tangible Assets

0.35%

0.95%

0.49%






(3)  Common Return on Average Tangible Common Equity




    Common Return on Average Common Equity (GAAP Basis)

2.82%

6.41%

3.31%

    Effect of Excluding Intangible Assets

1.49%

2.17%

1.65%

    Effect of Excluding Preferred Stock

0.00%

2.71%

1.39%

    Common Return on Average Tangible Common Equity

4.31%

11.29%

6.35%






(4)  Noninterest expense divided by noninterest income plus net interest income, on a fully taxable equivalent basis.






(5)  Tangible Common Equity / Tangible Assets




    Common Equity / Assets (GAAP Basis)

11.65%

11.91%

11.58%

    Effect of Excluding Intangible Assets

-3.78%

-3.82%

-3.88%

    Tangible Common Equity / Tangible Assets

7.87%

8.09%

7.70%

SOURCE S&T Bancorp, Inc.