S&T Bancorp Inc. Announces Third Quarter 2024 Results
INDIANA, Pa., Oct. 17, 2024 /PRNewswire/ -- S&T Bancorp, Inc. (S&T) (NASDAQ:STBA), the holding company for S&T Bank, announced net income of $32.6 million, or $0.85 per diluted share, for the third quarter of 2024 compared to net income of $34.4 million, or $0.89 per diluted share, for the second quarter of 2024 and net income of $33.5 million, or $0.87 per diluted share, for the third quarter of 2023.
Third Quarter of 2024 Highlights:
Solid return metrics with return on average assets (ROA) of 1.35%, return on average equity (ROE) of 9.58% and return on average tangible equity (ROTE) (non-GAAP) of 13.35% compared to ROA of 1.45%, ROE of 10.61% and ROTE (non-GAAP) of 15.01% for the second quarter of 2024.
Pre-provision net revenue to average assets (PPNR) (non-GAAP) was 1.69% compared to 1.82% for the second quarter of 2024.
Net interest margin (NIM) (FTE) (non-GAAP) remained strong at 3.82% compared to 3.85% in the second quarter of 2024.
Customer deposit growth of $100.5 million, or 5.42% annualized, was offset by lower brokered deposits of $126.0 million, resulting in a net decrease in total deposits of $25.5 million for the third quarter of 2024.
The allowance for credit losses to total portfolio loans was 1.36% compared to 1.38% at June 30, 2024.
"We are pleased to report strong third quarter results, highlighted by solid return metrics, continued improvement in asset quality and our fifth consecutive quarter of customer deposit growth. Our capital levels continue to build, positioning us to take advantage of market opportunities," said Chief Executive Officer Chris McComish. "These results would not be possible without the commitment and hard work of our teams and their focus on our people-forward purpose, which is moving our customers, employees and communities forward while delivering value to our shareholders."
Net Interest Income
Net interest income increased $0.9 million to $84.5 million for the third quarter of 2024 compared to $83.6 million for the second quarter of 2024. Net interest margin on a fully taxable equivalent basis (NIM) (FTE) (non-GAAP) remained strong at 3.82% compared to 3.85% in the prior quarter. The yield on total average loans increased one basis point to 6.30% compared to 6.29% in the second quarter of 2024. Total interest-bearing deposit costs increased 12 basis points to 3.04% compared to 2.92% in the second quarter of 2024. Higher interest-bearing deposit costs were primarily due to growth in higher costing average money market accounts of $112.8 million and certificates of deposit of $51.5 million compared to the second quarter of 2024. Average borrowings decreased $58.1 million to $292.3 million compared to $350.4 million in the second quarter of 2024 primarily due to higher average deposit balances. Total borrowing costs decreased 9 basis points to 5.37% compared to 5.46% in the second quarter of 2024.
Asset Quality
The allowance for credit losses, or ACL, was $104.3 million, or 1.36% of total portfolio loans, at September 30, 2024, compared to $106.2 million, or 1.38%, at June 30, 2024. The provision for credit losses improved by $0.9 million with a negative $0.5 million provision for credit losses for the third quarter of 2024 compared to a $0.4 million provision for credit losses in the second quarter of 2024. The decrease in the provision for credit losses for the third quarter was mainly attributed to a lower level of ACL primarily related to a decrease in qualitative reserve due to improvement in asset quality. Net loan charge-offs were $2.1 million for the third quarter of 2024 compared to net loan recoveries of $0.4 million in the second quarter of 2024. Nonperforming assets to total portfolio loans plus other real estate owned decreased 4 basis points to 0.41% on September 30, 2024, compared to 0.45% at June 30, 2024.
Noninterest Income and Expense
Noninterest income decreased $1.4 million to $11.9 million in the third quarter of 2024 compared to $13.3 million in the prior quarter. The decrease in noninterest income was primarily due to changes in the value of Visa Class B-1 common stock and losses related to the repositioning of securities into longer duration, higher-yielding securities. During the third quarter of 2024, a $2.2 million securities repositioning loss was recognized, which was partially offset by a $0.2 million unrealized gain related to Visa Class B-1 common stock resulting in a $2.0 million net loss in noninterest income. This compares to a $3.2 million securities repositioning loss, which was offset by a $3.2 million unrealized gain from the Visa exchange offer for Class B-1 common stock resulting in no net impact to noninterest income during the second quarter of 2024.
Total noninterest expense increased $1.8 million to $55.4 million compared to $53.6 million in the second quarter of 2024. Salaries and employee benefits increased $0.9 million primarily related to higher incentive costs compared to the second quarter of 2024. Data processing and information technology increased $0.8 million compared to the second quarter of 2024 due to the timing of investments in technology.
Financial Condition
Total assets were $9.6 billion at both September 30, 2024, and June 30, 2024. Total portfolio loans were $7.7 billion at both September 30, 2024, and June 30, 2024. Total portfolio loans decreased $24.5 million with a $76.4 million decrease in commercial loans partially offset by consumer loan growth of $51.9 million compared to June 30, 2024. Commercial loan growth continues to be impacted by a lower level of loan originations and higher payoffs. Total deposits were $7.7 billion at both September 30, 2024, and June 30, 2024. Customer deposit growth continues to be strong allowing for a reduction in higher costing borrowings and brokered deposits. Customer deposit growth was $100.5 million, or 5.42% annualized, which was offset by lower brokered deposits of $126.0 million, resulting in a decrease in total deposits of $25.5 million for the third quarter of 2024. Total borrowings decreased $25.0 million to $338.4 million compared to $363.4 million at June 30, 2024.
S&T continues to maintain a strong regulatory capital position with all capital ratios above the well-capitalized thresholds of federal bank regulatory agencies.
Conference Call
S&T will host its third quarter 2024 earnings conference call live via webcast at 1:00 p.m. ET on Thursday, October 17, 2024. To access the webcast, go to S&T Bancorp Inc.'s investor Relations webpage stbancorp.com. After the live presentation, the webcast will be archived at stbancorp.com for 12 months.
About S&T Bancorp, Inc. and S&T Bank
S&T Bancorp, Inc. is a $9.6 billion bank holding company that is headquartered in Indiana, Pennsylvania and trades on the NASDAQ Global Select Market under the symbol STBA. Its principal subsidiary, S&T Bank, was established in 1902 and operates in Pennsylvania and Ohio. For more information, visit stbancorp.com or stbank.com. Follow us on Facebook, Instagram and LinkedIn.
Forward-Looking Statements
This information contains or incorporates statements that we believe are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to our financial condition, results of operations, plans, objectives, outlook for earnings, revenues, expenses, capital and liquidity levels and ratios, asset levels, asset quality, financial position and other matters regarding or affecting S&T and its future business and operations. Forward-looking statements are typically identified by words or phrases such as "will likely result," "expect," "anticipate," "estimate," "forecast," "project," "intend," "believe," "assume," "strategy," "trend," "plan," "outlook," "outcome," "continue," "remain," "potential," "opportunity," "comfortable," "current," "position," "maintain," "sustain," "seek," "achieve" and variations of such words and similar expressions, or future or conditional verbs such as will, would, should, could or may. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. The matters discussed in these forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results and trends to differ materially from those made, projected or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors including, but not limited to: credit losses and the credit risk of our commercial and consumer loan products; changes in the level of charge-offs and changes in estimates of the adequacy of the allowance for credit losses, or ACL; cyber-security concerns; rapid technological developments and changes; operational risks or risk management failures by us or critical third parties, including fraud risk; our ability to manage our reputational risks; sensitivity to the interest rate environment, a rapid increase in interest rates or a change in the shape of the yield curve; a change in spreads on interest-earning assets and interest-bearing liabilities; any remaining uncertainties with the transition from LIBOR as a reference rate; regulatory supervision and oversight, including changes in regulatory capital requirements and our ability to address those requirements; unanticipated changes in our liquidity position; unanticipated changes in regulatory and governmental policies impacting interest rates and financial markets; changes in accounting policies, practices or guidance; legislation affecting the financial services industry as a whole, and S&T, in particular; developments affecting the industry and the soundness of financial institutions and further disruption to the economy and U.S. banking system; the outcome of pending and future litigation and governmental proceedings; increasing price and product/service competition; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; managing our internal growth and acquisitions; the possibility that the anticipated benefits from acquisitions cannot be fully realized in a timely manner or at all, or that integrating the acquired operations will be more difficult, disruptive or costly than anticipated; containing costs and expenses; reliance on significant customer relationships; an interruption or cessation of an important service by a third-party provider; our ability to attract and retain talented executives and employees; general economic or business conditions, including the strength of regional economic conditions in our market area; ESG practices and disclosures, including climate change, hiring practices, the diversity of the work force, and racial and social justice issues; deterioration of the housing market and reduced demand for mortgages; deterioration in the overall macroeconomic conditions or the state of the banking industry that could warrant further analysis of the carrying value of goodwill and could result in an adjustment to its carrying value resulting in a non-cash charge to net income; the stability of our core deposit base and access to contingency funding; re-emergence of turbulence in significant portions of the global financial and real estate markets that could impact our performance, both directly, by affecting our revenues and the value of our assets and liabilities, and indirectly, by affecting the economy generally and access to capital in the amounts, at the times and on the terms required to support our future businesses and geopolitical tensions and conflicts between nations.
Many of these factors, as well as other factors, are described in our Annual Report on Form 10-K for the year ended December 31, 2023, including Part I, Item 1A-"Risk Factors" and any of our subsequent filings with the SEC. Forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. We caution you not to unduly rely on forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. Any forward-looking statement speaks only as to the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.
Non-GAAP Financial Measures
In addition to traditional measures presented in accordance with GAAP, our management uses, and this information contains or references, certain non-GAAP financial measures, such as tangible book value, return on average tangible shareholder's equity, PPNR to average assets, efficiency ratio, tangible common equity to tangible assets and net interest margin on an FTE basis. We believe 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 other companies in the financial services industry. Although we believe that these non-GAAP financial measures enhance investors' understanding of our business and performance, these non-GAAP financial measures should not be considered alternatives to GAAP or considered to be more important than financial results determined in accordance with GAAP, nor are they necessarily comparable with non-GAAP measures which may be presented by other companies. See Definitions and Reconciliation of GAAP to Non-GAAP Financial Measures for more information related to these financial measures.
S&T Bancorp, Inc.
Consolidated Selected Financial Data
Unaudited
2024
2024
2023
Third
Second
Third
(dollars in thousands, except per share data)
Quarter
Quarter
Quarter
INTEREST AND DIVIDEND INCOME
Loans, including fees
$120,907
$119,564
$114,258
Investment Securities:
Taxable
10,221
8,761
7,857
Tax-exempt
165
168
213
Dividends
181
272
631
Total Interest and Dividend Income
131,474
128,765
122,959
INTEREST EXPENSE
Deposits
42,493
39,629
24,910
Borrowings, junior subordinated debt securities and other
4,504
5,542
10,662
Total Interest Expense
46,997
45,171
35,572
NET INTEREST INCOME
84,477
83,594
87,387
Provision for credit losses
(454)
422
5,498
Net Interest Income After Provision for Credit Losses
84,931
83,172
81,889
NONINTEREST INCOME
Loss on sale of securities
(2,199)
(3,150)
—
Debit and credit card
4,688
4,713
4,690
Service charges on deposit accounts
4,181
4,089
4,060
Wealth management
3,071
2,995
3,003
Mortgage banking
355
254
294
Other
1,781
4,404
131
Total Noninterest Income
11,877
13,305
12,178
NONINTEREST EXPENSE
Salaries and employee benefits
31,274
30,388
27,521
Data processing and information technology
5,003
4,215
4,479
Occupancy
3,828
3,649
3,671
Furniture, equipment and software
3,410
3,382
3,125
Other taxes
1,874
1,433
1,831
Marketing
1,382
1,404
1,741
Professional services and legal
1,229
1,403
1,965
FDIC insurance
1,054
1,053
1,029
Other noninterest expense
6,311
6,681
7,437
Total Noninterest Expense
55,365
53,608
52,799
Income Before Taxes
41,443
42,869
41,268
Income tax expense
8,853
8,498
7,800
Net Income
$32,590
$34,371
$33,468
Per Share Data
Shares outstanding at end of period
38,259,730
38,256,204
38,244,309
Average shares outstanding - diluted
38,560,409
38,531,692
38,336,016
Diluted earnings per share
$0.85
$0.89
$0.87
Dividends declared per share
$0.33
$0.33
$0.32
Dividend yield (annualized)
3.15 %
3.95 %
4.73 %
Dividends paid to net income
38.77 %
36.97 %
36.55 %
Book value
$35.96
$34.54
$31.99
Tangible book value (1)
$26.13
$24.71
$22.14
Market value
$41.97
$33.39
$27.08
Profitability Ratios (Annualized)
Return on average assets
1.35 %
1.45 %
1.42 %
Return on average shareholders' equity
9.58 %
10.61 %
10.84 %
Return on average tangible shareholders' equity(2)
13.35 %
15.01 %
15.78 %
Pre-provision net revenue / average assets(3)
1.69 %
1.82 %
1.99 %
Efficiency ratio (FTE)(4)
55.88 %
54.94 %
52.67 %
S&T Bancorp, Inc.
Consolidated Selected Financial Data
Unaudited
Nine Months Ended September 30,
(dollars in thousands, except per share data)
2024
2023
INTEREST AND DIVIDEND INCOME
Loans, including fees
$359,048
$325,681
Investment Securities:
Taxable
27,577
23,120
Tax-exempt
526
642
Dividends
842
1,752
Total Interest and Dividend Income
387,993
351,195
INTEREST EXPENSE
Deposits
118,784
59,915
Borrowings, junior subordinated debt securities and other
17,661
26,979
Total Interest Expense
136,445
86,894
NET INTEREST INCOME
251,548
264,301
Provision for credit losses
2,595
16,949
Net Interest Income After Provision for Credit Losses
248,953
247,352
NONINTEREST INCOME
Loss on sale of securities
(5,346)
—
Debit and credit card
13,636
13,708
Service charges on deposit accounts
12,098
12,064
Wealth management
9,108
9,136
Mortgage banking
886
884
Other
7,630
3,767
Total Noninterest Income
38,012
39,559
NONINTEREST EXPENSE
Salaries and employee benefits
91,174
80,513
Data processing and information technology
14,172
12,914
Occupancy
11,347
11,216
Furniture, equipment and software
10,264
9,178
Professional services and legal
5,178
4,943
Other taxes
4,729
5,053
Marketing
4,352
5,855
FDIC insurance
3,156
3,073
Other noninterest expense
19,121
21,386
Total Noninterest Expense
163,493
154,131
Income Before Taxes
123,472
132,780
Income tax expense
25,272
25,046
Net Income
$98,200
$107,734
Per Share Data
Average shares outstanding - diluted
38,563,721
38,668,964
Diluted earnings per share
$2.55
$2.78
Dividends declared per share
$0.99
$0.96
Dividends paid to net income
38.66 %
34.43 %
Profitability Ratios (annualized)
