S&T Bancorp, Inc. Announces First Quarter Results

News provided by

S&T Bancorp, Inc.

Apr 26, 2011, 09:00 ET

INDIANA, Pa., April 26, 2011 /PRNewswire/ -- S&T Bancorp, Inc. (NASDAQ: STBA), a full-service financial institution with office locations in 10 Pennsylvania counties, has announced its first quarter 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:

  • First quarter earnings were $4.7 million with diluted earnings per common share of $0.17 compared to $0.31 in the fourth quarter of 2010 and $0.35 in the first quarter of 2010.
  • Nonperforming assets increased to 2.67% of total loans plus OREO compared to 2.07% in the fourth quarter of 2010 and down from 2.94% in the first quarter of 2010.
  • Net charge-offs were $0.4 million compared to $12.6 million in the fourth quarter of 2010 and $1.0 million in the first quarter of 2010.  

"Asset quality proved to be challenging this quarter with the addition of two large nonperforming relationships resulting in $6.0 million of specific loan loss reserve.  Due to the nature of our commercial loan portfolio, S&T's earnings may fluctuate as we work our way through these challenging economic times.  We remain focused on resolving these loans with the most positive economic results for the Bank," said Brice.  "At the same time, S&T remains well capitalized and solidly positioned to grow as the regional economy continues to recover."

Net Interest Income

Net interest income on a fully taxable equivalent (FTE) basis for the first quarter of 2011 was $35.9 million compared to $37.4 million in the fourth quarter of 2010 and $37.1 million in the first quarter of 2010.  Net interest income has decreased from the fourth quarter due to declines in average loan balances and rate and two fewer days in the first quarter versus the fourth quarter of 2010.  Average balances on loans decreased $36.2 million and the average interest rate on loans decreased to 4.92% from 5.02% in the fourth quarter of 2010.  Net interest margin (FTE) was 3.92% in the first quarter compared to 4.06% in the fourth quarter of 2010 and 4.00% in the first quarter of 2010.  The decrease in net interest margin (FTE) of 14 basis points is primarily a result of loan repricings, maturities and pay downs and higher excess funds held at the Federal Reserve.  Positively impacting net interest margin (FTE) was core deposit repricings at the end of 2010.

Asset Quality

Nonperforming assets increased to $88.5 million or 2.67% of total loans plus other real estate owned ("OREO") compared to $69.7 million or 2.07% in the fourth quarter of 2010 and down from $99.9 million or 2.94% in the first quarter of 2010.  Included in nonperforming assets were troubled debt restructurings (TDRs) of $34.9 million.  The increase in nonperforming assets relates to the aforementioned two large relationships that became impaired during the first quarter.  The first is a $12.1 million CRE relationship in the hospitality sector that has been experiencing declining cash flows.  A specific reserve of $3.1 million has been established.  The second is a $6.7 million C&I relationship for which a $2.9 million specific reserve has been established.  

The provision for loan losses was $10.6 million for the first quarter compared to $7.7 million for the fourth quarter of 2010 and $4.4 million in the first quarter of 2010.  The provision was elevated due to the aforementioned specific reserves of $6.0 million and a $5.4 million increase in the general reserve as a result of an increase in substandard assets. Net charge-offs were $0.4 million for the first quarter compared to $12.6 million in the fourth quarter of 2010 and $1.0 million in the first quarter of 2010.  

The allowance for loan losses at March 31, 2011 was $61.7 million or 1.87% of total loans, as compared to $51.4 million or 1.53% at December 31, 2010 and $63.0 million or 1.85% at March 31, 2010.  The allowance to nonperforming loans was 76% at March 31, 2011, 80% at December 31, 2010 and 65% at March 31, 2010.  Included in the allowance is $8.6 million of specific reserves compared to $3.6 million in the fourth quarter of 2010 and $20.3 million in the first quarter of 2010.

Noninterest Income

Noninterest income was $11.0 million compared to $12.0 million in the fourth quarter of 2010 and $11.2 million in the first quarter of 2010.  The decrease from the prior quarter primarily related to a decrease of $0.6 million in mortgage banking activities as a result of decreased volume in loan sales due to rising interest rates.  Service charges and fees and other fee income were down for the quarter including $0.2 million for NSF fees and $0.2 million of letter of credit fees.  Insurance activities made a positive contribution during the quarter including a $0.3 million increase in income primarily related to annual bonus commissions received.

Noninterest Expense

Noninterest expense for the first quarter was $27.4 million compared to $27.0 million for the fourth quarter of 2010 and $27.9 million for the first quarter of 2010.  The increase primarily relates to higher payroll taxes of $0.8 million due to timing and elevated consulting fees of $0.6 million.  Positively impacting noninterest expense for the quarter was $0.6 million of decreased expenses related to OREO compared to the fourth quarter and a $0.3 million reduction in legal expenses.

Financial Condition

Total assets were $4.1 billion at March 31, 2011, December 31, 2010 and March 31, 2010.  Total loans were $3.3 billion at March 31, 2011 compared to $3.4 billion at December 31, 2010 and March 31, 2010.  Total loans have decreased $59.6 million from the prior quarter including $31.3 million in consumer and $28.3 million in commercial. The decreases primarily relate to higher than expected pay downs during the quarter and soft loan demand within our market.

Total deposits were $3.3 billion at March 31, 2011, December 31, 2010 and March 31, 2010.  Noninterest-bearing demand deposits remain strong at $802.7 million as of March 31, 2011 compared to $765.8 million at December 31, 2010 and $709.4 million at March 31, 2010.  Securities increased $42.4 million to $352.8 compared to $310.4 as of December 31, 2010 and $352.3 million at March 31, 2010.  Security purchases made during the quarter are intended to deploy cash from loan pay downs and to improve asset liquidity.  

S&T's capital ratios continue to improve and exceed the "well capitalized" thresholds of federal bank regulatory agencies with a tier 1 leverage ratio of 11.19%, tier 1 risk-based capital ratio of 13.54% and total risk-based capital ratio of 16.99%.  The increase in capital ratios in the first quarter of 2011 is primarily attributable to a reduction in risk-weighted assets.  S&T's tangible common equity ratio was 7.70% compared to 7.61% for the fourth quarter of 2010 and 7.09% for the first quarter of 2010.  

About S&T Bancorp, Inc.

Headquartered in Indiana, PA, S&T Bancorp, Inc. operates 51 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 consolidated selected 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)







2011

2010

2010

First

Fourth

First

Quarter

Quarter

Quarter






Income Statements




Interest Income

$42,192


$44,210


$45,324

Interest Expense

7,320


7,876


9,410

         Net Interest Income

34,872


36,334


35,914

         Taxable Equivalent Adjustment

1,038


1,075


1,222

         Net Interest Income (FTE)

35,910


37,409


37,136







Provision For Loan Losses

10,640


7,676


4,430







         Net Interest Income After Provisions (FTE)

25,270


29,733


32,706







Security Gains (Losses), Net

13


11


153







Service Charges and Fees

2,404


2,602


2,971

Wealth Management

2,050


2,047


1,984

Insurance

2,132


1,855


2,368

Other

4,427


5,487


3,867







         Total Noninterest Income

11,013


11,991


11,190







Salaries and Employee Benefits

13,320


12,452


12,565

Occupancy and Equipment Expense, Net

3,048


3,123


3,072

Data Processing Expense

1,504


1,544


1,603

FDIC Expense

1,226


1,367


1,301

Other

8,351


8,532


9,389







         Total Noninterest Expense

27,449


27,018


27,930







Income Before Taxes

8,847


14,717


16,119

Taxable Equivalent Adjustment

1,038


1,075


1,222

Applicable Income Taxes

1,514


3,352


3,593







          Net Income

6,295


10,290


11,304

Preferred Stock Dividends

1,555


1,553


1,547







Net Income Available to Common Shareholders

$4,740


$8,737


$9,757







Per Common Share Data:












Shares Outstanding at End of Period

28,033,757


27,951,689


27,777,931

Average Shares Outstanding - Diluted

27,957,002


27,883,109


27,753,384

Diluted Earnings Per Share

$0.17


$0.31


$0.35

Dividends Declared

$0.15


$0.15


$0.15

Common Book Value

$16.90


$16.91


$16.39

Tangible Common Book Value (1)

$10.76


$10.73


$10.12

Market Value

$21.57


$22.59


$20.90

S&T Bancorp, Inc.

Consolidated Selected Financial Data

Unaudited

(in thousands)








2011

2010

2010

First

Fourth

First

Quarter

Quarter

Quarter







Net Interest Margin (Quarterly Averages)





Assets





 Loans - FTE

$3,324,606

4.92%

$3,360,786

5.02%

$3,404,096

5.12%

 Securities/Other - FTE

384,796

3.02%

296,270

3.77%

352,862

4.06%

    Total Interest-earning Assets

3,709,402

4.72%

3,657,056

4.92%

3,756,958

5.02%

 Noninterest-earning Assets

378,012


460,073


380,522


Total Assets

$4,087,414


$4,117,129


$4,137,480









Liabilities and Shareholders' Equity





 Now/Money Market/Savings

$1,295,224

0.18%

$1,289,946

0.25%

$1,249,940

0.29%

 Certificates of Deposit

1,231,162

1.81%

1,268,473

1.82%

1,316,673

2.08%

 Borrowed funds < 1 year

42,582

0.14%

48,121

0.11%

132,300

0.28%

 Borrowed funds > 1 year

119,736

4.21%

120,192

4.16%

157,386

4.34%

    Total Interest-bearing Liabilities

2,688,704

1.10%

2,726,732

1.15%

2,856,299

1.34%







Noninterest-bearing Liabilities





 Demand Deposits

767,581


757,857


683,973


 Shareholders' Equity/Other

631,129


632,540


597,208


    Total Noninterest-bearing Liabilities

1,398,710


1,390,397


1,281,181


Total Liabilities and Shareholders' Equity

$4,087,414


$4,117,129


$4,137,480









Net Yield on Interest-earning Assets

3.92%

4.06%

4.00%








2011

2010

2010

First

Fourth

First

Balance Sheet (Period-End)

Quarter

Quarter

Quarter

Assets





 Cash

$108,855


$108,196


$72,652


 Securities

352,783


310,390


352,271


 Loans, Net

3,242,658


3,312,540


3,335,380


 Other Assets

385,758


383,213


375,464


Total Assets

$4,090,054


$4,114,339


$4,135,767









Liabilities and Shareholders' Equity





 Noninterest-bearing Deposits

$802,748


$765,812


$709,422


 Interest-bearing Deposits

2,503,091


2,551,712


2,636,394


 Short-term Borrowings

38,270


40,653


47,996


 Long-term Debt

119,593


119,984


136,250


 Other Liabilities

46,237


57,513


44,962


 Shareholders' Equity

580,115


578,665


560,743


Total Liabilities and Shareholders' Equity

$4,090,054


$4,114,339


$4,135,767


S&T Bancorp, Inc.

Consolidated Selected Financial Data

Unaudited

(in thousands)








2011

2010

2010

First

Fourth

First

Loans (Period-End)

Quarter

Quarter

Quarter

Consumer





    Home Equity

$436,357


$441,096


$457,178


    Residential Mortgage

345,209


367,873


360,113


    Installment

70,573


74,780


76,997


    Construction

4,322


4,019


8,899


         Total Consumer Loans

856,461


887,768


903,187


Commercial





    Commercial Real Estate

1,488,700


1,494,202


1,422,761


    Commercial & Industrial

713,683


722,359


715,178


    Construction

245,477


259,598


357,277


         Total Commercial Loans

2,447,860


2,476,159


2,495,216


Total Loans

$3,304,321


$3,363,927


$3,398,403










2011

2010

2010

First

Fourth

First

Nonperforming Loans (NPL)

Quarter

Quarter

Quarter

Consumer

% NPL

% NPL

% NPL

    Home Equity

$1,858

0.43%

$1,432

0.32%

$1,618

0.35%

    Residential Mortgage

                   5,337

1.55%

                   5,996

1.63%

                   4,695

1.30%

    Installment

                        25

0.04%

                        65

0.09%

                        99

0.13%

    Construction

                           -

       -

                      526

13.09%

                           -

       -

         Total Consumer Loans

                   7,220

0.84%

                   8,019

0.90%

$6,412

0.71%

Commercial





    Commercial Real Estate

                 57,189

3.84%

                 44,310

2.97%

                 66,138

4.65%

    Commercial & Industrial

                   9,081

1.27%

                   3,567

0.49%

                   3,356

0.47%

    Construction

7,356

3.00%

7,987

3.08%

20,884

5.85%

         Total Commercial Loans

                 73,626

3.01%

                 55,864

2.26%

                 90,378

3.62%

Total Nonperforming Loans

$80,846

2.45%

$63,883

1.90%

$96,790

2.85%

S&T Bancorp, Inc. 

Consolidated Selected Financial Data

Unaudited

(in thousands)








2011

2010

2010

First

Fourth

First

Quarter

Quarter

Quarter

Construction and Commercial Real Estate (CRE)





PA vs. Out-of-state





Pennsylvania

$1,375,688


$1,390,635


$1,425,369


Out-of-state

358,489


363,165


354,669


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

$1,734,177


$1,753,800


$1,780,038










2011

2010

2010

First

Fourth

First

Quarter

Quarter

Quarter

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

% NPL

% NPL

% NPL

Pennsylvania

$43,799

3.18%

$43,515

3.13%

$62,579

4.39%

Out-of-state

20,746

5.79%

8,782

2.42%

24,443

6.89%

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

$64,545

3.72%

$52,297

2.98%

$87,022

4.89%








2011

2010

2010

First

Fourth

First

Quarter

Quarter

Quarter

Construction and CRE by Type





Retail/Strip Malls

$297,339


$304,324


$295,630


Residential Rental Properties

237,879


242,756


284,807


Offices

226,163


232,655


239,746


Hotels

194,543


192,954


175,870


Manufacturing/Industrial/Warehouse

117,857


118,791


131,854


Flex/Mixed Use

113,483


118,610


107,537


Healthcare/Education

108,472


95,029


99,632


Real Estate Development - Commercial

93,301


90,136


108,141


Real Estate Development - Residential

81,956


88,487


83,718


Miscellaneous

263,184


270,058


253,103


Total Construction and CRE by Type

$1,734,177


$1,753,800


$1,780,038










2011

2010

2010

First

Fourth

First

Quarter

Quarter

Quarter

Construction and CRE - NPL by Type

% NPL

% NPL

% NPL

Retail/Strip Malls

$3,031

1.02%

$3,176

1.04%

$4,373

1.48%

Residential Rental Properties

10,971

4.61%

11,087

4.57%

19,975

7.01%

Offices

2,768

1.22%

2,720

1.17%

1,296

0.54%

Hotels

13,585

6.98%

1,465

0.76%

                   2,095

1.19%

Manufacturing/Industrial/Warehouse

3,592

3.05%

1,944

1.64%

                   4,262

3.23%

Flex/Mixed Use

2,388

2.10%

2,740

2.31%

6,046

5.62%

Healthcare/Education

818

0.75%

1,509

1.59%

3,283

3.30%

Real Estate Development - Commercial

5,968

6.40%

5,525

6.13%

10,652

9.85%

Real Estate Development - Residential

6,073

7.41%

6,693

7.56%

9,043

10.80%

Miscellaneous

15,351

5.83%

15,438

5.72%

25,997

10.27%

Total Construction and CRE - NPL by Type

$64,545

3.72%

$52,297

2.98%

$87,022

4.89%

S&T Bancorp, Inc.

Consolidated Selected Financial Data

Unaudited

(in thousands)







2011

2010

2010

First

Fourth

First

Quarter

Quarter

Quarter

Commercial Credit Exposure




Credit Risk Profile by Creditworthiness Category




Pass




Commercial Real Estate

$1,250,149


$1,297,242


$1,182,387

Commercial & Industrial

               610,750


               619,011


               623,323

Construction

               201,984


               221,492


               301,665

Total Pass

$2,062,883


$2,137,745


$2,107,375







Special Mention




Commercial Real Estate

$98,780


$86,653


$131,603

Commercial & Industrial

                 57,460


                 76,158


                 68,889

Construction

                 10,534


                 16,308


                 25,758

Total Special Mention

$166,774


$179,119


$226,250







Substandard




Commercial Real Estate

$139,771


$110,307


$108,771

Commercial & Industrial

                 45,473


                 27,190


                 22,966

Construction

                 32,959


                 21,798


                 29,854

Total Substandard

$218,203


$159,295


$161,591

S&T Bancorp, Inc.

Consolidated Selected Financial Data

Unaudited

(in thousands)







2011

2010

2010

First

Fourth

First

Quarter

Quarter

Quarter

Asset Quality Data




Nonaccrual Loans and Nonperforming Loans

$80,846


$63,883


$96,790

Assets Acquired through Foreclosure or Repossession

7,696


5,820


3,087

Nonperforming Assets

88,542


69,703


99,877

Troubled Debt Restructurings (nonaccrual)

34,943


32,779


                         -  

Troubled Debt Restructurings (accruing)

3,310


2,139


                         -  

Total Troubled Debt Restructurings

38,253


34,918


                         -  

Allowance for Loan Losses

61,663


51,387


63,023

Nonperforming Loans / Loans

2.45%

1.90%

2.85%

Nonperforming Assets / Loans plus OREO

2.67%

2.07%

2.94%

Allowance for Loan Losses / Loans

1.87%

1.53%

1.85%

Allowance for Loan Losses / Nonperforming Loans

76%

80%

65%

Net Loan Charge-offs (Recoveries)

364


12,570


987

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

0.04%

1.48%

0.12%






Profitability Ratios (Annualized)




Common Return on Average Assets

0.47%

0.84%

0.96%

Common Return on Average Tangible Assets (2)

0.49%

0.88%

1.00%

Common Return on Average Equity

3.31%

6.00%

7.12%

Common Return on Average Tangible Common Equity (3)

6.35%

11.59%

14.34%

Efficiency Ratio (FTE) (4)

58.50%

54.69%

57.79%






Capitalization Ratios




Dividends Paid to Net Income

88.46%

47.82%

42.67%

Common Equity / Assets

11.58%

11.48%

11.01%

Tier 1 Leverage Ratio

11.19%

11.07%

10.51%

Risk-Based Capital - Tier 1

13.54%

13.28%

12.40%

Risk-Based Capital - Total

16.99%

16.68%

15.75%

Tangible Common Equity / Tangible Assets (5)

7.70%

7.61%

7.09%

S&T Bancorp, Inc.

Consolidated Selected Financial Data

Unaudited













2011

2010

2010

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)

$16.90


$16.91


$16.39

    Effect of Excluding Intangible Assets

(6.14)

(6.18)

(6.27)

    Tangible Common Book Value

$10.76

$10.73

$10.12






(2)  Common Return on Average Tangible Assets




    Common Return on Average Assets (GAAP Basis)

0.47%

0.84%

0.96%

    Effect of Excluding Intangible Assets

0.02%

0.04%

0.04%

    Common Return on Average Tangible Assets

0.49%

0.88%

1.00%






(3)  Common Return on Average Tangible Common Equity




    Common Return on Average Common Equity (GAAP Basis)

3.31%

6.00%

7.12%

    Effect of Excluding Intangible Assets

1.65%

3.03%

3.97%

    Effect of Excluding Preferred Stock

1.39%

2.56%

3.25%

    Common Return on Average Tangible Common Equity

6.35%

11.59%

14.34%






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






(5)  Tangible Common Equity / Tangible Assets




    Common Equity / Assets (GAAP Basis)

11.58%

11.48%

11.01%

    Effect of Excluding Intangible Assets

-3.88%

-3.87%

-3.92%

    Tangible Common Equity / Tangible Assets

7.70%

7.61%

7.09%

SOURCE S&T Bancorp, Inc.