S&T Bancorp reported a net loss of $3.1 million for Q1 2009 compared to net income of $14.9 million for Q1 2008. This was primarily due to a significant increase in loan loss provisions from $1.3 million to $21.4 million. Nonperforming loans increased substantially from $42.5 million to $92 million. The CEO commented that they are working closely with commercial customers experiencing difficulties due to the deteriorating economy, but that increasing reserves was prudent given current conditions.
1. S&T Bancorp, Inc. Announces Earnings
Company Release - 04/20/2009 09:00
INDIANA, Pa., April 20 /PRNewswire-FirstCall/ -- S&T Bancorp, Inc. (Nasdaq: STBA) today announced a net loss of
$3.1 million or $0.11 diluted earnings per share for the quarter ended March 31, 2009 compared to net income of
$14.9 million or $0.60 diluted earnings per share for the first quarter of 2008. The decrease in net income and
earnings per share is primarily due to higher provision for loan losses.
(Logo: http://www.newscom.com/cgi-bin/prnh/20070917/NEM099LOGO )
Todd D. Brice, president and chief executive officer, commented, quot;The unprecedented economic environment has
negatively impacted our commercial portfolio this quarter. Several of our customers are experiencing deterioration in
their overall financial condition, which has resulted in a significant increase in our provision for loan losses. We are
extremely disappointed in our results this quarter as this is the first loss reported in many years. We do feel that the
increase to our loan loss reserve is prudent and, with our strong capital position, will allow us to work through this
difficult period with our customers.quot;
During the first quarter of 2009, nonperforming loans increased to $92.0 million or 2.62 percent of total loans as
compared to $42.5 million or 1.19 percent as of December 31, 2008.
The most significant increases to nonperforming loans were:
-- A $32.3 million commercial relationship with an energy-
related company.
Recent decreases in commodity prices have created cash
flow difficulties
for the company and a $9.3 million specific reserve has
been established
for the loans.
-- A $7.5 million real estate development participation
loan that has
delayed construction pending better economic conditions.
A $0.7 million
specific reserve has been established.
-- A $2.5 million commercial relationship secured by real
estate
partnership interests. Specific reserves for the full
loan amounts were
established pending resolution of legal issues among the
partners.
-- $4.1 million for three real estate development projects.
Specific
reserves of $0.6 million have been established.
-- $3.4 million for a condominium project. A $0.2 million
specific reserve
has been established.
The provision for loan losses was $21.4 million, $5.6 million and $1.3 million for the quarters ending March 31, 2009,
December 31, 2008 and March 31, 2008, respectively. The allowance for loan losses to total loans for the same
periods was 1.70%, 1.20% and 1.25%. During the first quarter of 2009, net charge offs were $4.2 million or 0.49
2. percent of average loans on an annualized basis. For the same period of 2008, net recoveries were $0.1 million or
0.01 percent of average loans on an annualized basis. The most significant charge offs for the quarter ending March
31, 2009 were $2.7 million for a $3.5 million loan on a mixed use commercial property that lost a major tenant, and a
$1.1 million charge off for a $2.4 million office building that was foreclosed and sold during the first quarter of 2009.
Brice commented, quot;Addressing troubled commercial credits quickly and conservatively has always been, and will
continue to be, our credit philosophy. We are fortunate that our residential mortgage and home equity portfolios
continue to perform well as a result of traditionally conservative underwriting and the avoidance of any subprime loan
products. However, we do recognize that some of our home mortgage customers are experiencing difficult economic
times, and we have implemented a number of initiatives and products to assist those customers.quot;
Net interest income on a fully taxable equivalent basis increased by $5.8 million, or 18 percent, to $37.5 million for the
first quarter of 2009, as compared to the same period of 2008. Net interest income was positively affected by the IBT
acquisition in the second quarter of 2008 and $178.0 million of organic loan growth. The net interest margin on a fully
taxable equivalent basis was 3.82 percent, 4.13 percent and 3.99 percent for the quarters ending March 31, 2009,
December 31, 2008 and March 31, 2008, respectively. The net interest margin was negatively affected in the first
quarter of 2009 by higher delinquent interest and more aggressive solicitation of deposits in order to decrease
reliance on wholesale funding sources. The fourth quarter of 2008 net interest margin was positively affected by
unusually wide spreads between federal funds and LIBOR rates.
Earning assets have increased $735.9 million over the past 12 months, primarily driven by $749.2 million acquired
through the IBT merger, a $153.8 million, or 7 percent, increase in commercial lending and a $24.2 million, or 3
percent, increase in consumer lending. Residential mortgage and home equity loan applications have achieved
record levels during the first quarter of 2009 as consumers took advantage of lower interest rates. $36.1 million of
residential mortgage loans and $38.4 million of home equity loans were originated during the quarter ending March
31, 2009. Most of the new residential mortgage loans are sold to FNMA in order to minimize the interest rate risk
associated with long term mortgages in loan portfolios. Investment securities were reduced by $191.3 million over the
same 12-month period, as the risk/reward opportunities for leveraging activities has been significantly reduced during
the period.
Deposits increased $639.0 million during the 12-month period, including $573.6 million from the IBT acquisition. Brice
added, quot;The $93 million of organic growth in demand deposits is especially encouraging since this has been an area
of strategic focus in order to deepen our relationship banking philosophy with both commercial and retail customers.
We know that we have excellent and very competitive deposit products, especially our CMA savings account, cash
management services and electronic banking systems, that we believe will continue to keep us competitive and serve
our customers' needs well into the future.quot;
Noninterest income, excluding investment security losses, increased $1.4 million for the first quarter of 2009 as
compared to the first quarter of 2008. The increase is primarily due to strong performances in mortgage banking
activities, debit/credit card revenues and higher deposit fees. Positively affecting debit/credit card and deposit fees
was the increased customer base resulting from the IBT merger, as well as organic expansion of demand deposit
accounts.
Net investment security losses for the first quarter of 2009 were $1.2 million, a decrease from the $0.6 million of
realized gains for the same period of 2008. The investment security losses for the first quarter of 2009 are other-than-
temporary impairment charges for two bank equity holdings. The equity securities portfolio has a market value of
$13.2 million and net unrealized losses of $4.0 million as of March 31, 2009, as compared to $40.3 million and $8.2
million of unrealized gains at March 31, 2008.
Noninterest expense increased $7.5 million, or 42 percent, for the first three months of 2009, as compared to the
2008 period. Salaries and benefits increased $1.6 million primarily due to the addition of 159 average full-time
equivalent staff, mostly due to the IBT acquisition, and normal merit increases. Pension expenses increased $0.8
million as a result of market value declines in the portfolio and the addition of IBT retained staff. Salaries and benefits
were positively affected by reduced accruals for incentives in anticipation of decreased earnings performance for
2009. Occupancy, equipment and data processing costs increased through the integration of eight new branches
from the IBT merger. Other significant factors affecting noninterest expense increases include FDIC insurance
premiums, core deposit intangible amortization, amortization of affordable housing partnerships and higher
legal/consulting costs associated with troubled loans. The efficiency ratio, which measures recurring noninterest
expense to noninterest income, excluding security gains (losses), plus recurring net interest income on a fully taxable
equivalent basis, was 53 percent and 44 percent for the quarters ended March 31, 2009 and March 31, 2008,
3. respectively.
On January 16, 2009, S&T received $108.7 million of funds from the U.S. Treasury's Capital Purchase Program
through the issuance of preferred stock and warrants for common stock. The purpose of the government program
was to promote lending by healthy banks to individuals and businesses in order to stimulate the economy. Expenses
associated with this preferred stock were $1.3 million for the period ending March 31, 2009. Brice commented,
quot;Participation in the Capital Purchase Program was a difficult decision for S&T since we were already designated as
quot;well capitalizedquot; by regulatory guidelines. While the additional capital is comforting during these times, our intention
is to obtain regulatory approval for returning these funds once a positive direction in the economy becomes more
clear.quot; S&T's capital ratios for leverage, Total, Tier I and tangible common capital to tangible assets at March 31,
2009 were 9.73 percent, 14.82 percent, 11.58 percent and 6.46 percent, respectively.
S&T Bancorp, Inc. declared a common stock quarterly dividend of $0.31 per share on March 16, 2009 which is
payable on April 24, 2009 to shareholders of record as of March 31, 2009. This dividend represents a 5.8 percent
projected annual yield utilizing the March 31, 2009 closing market price of $21.21.
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 $4.3 billion, S&T
Bancorp, Inc. stock trades on the NASDAQ Global Select Market System under the symbol STBA.
S&T Bancorp, Inc.
Consolidated Selected Financial Data
March 31, 2009
(Dollars in thousands, except per share data)
2008
----------------------
---------
March June
September
For the period: 1Q 2Q
3Q
------- -------
-------
Interest Income $50,458 $50,433
$57,416
Interest Expense 19,909 16,791
18,245
------ ------
------
Net Interest Income 30,549 33,642
39,171
Taxable Equivalent
Adjustment 1,148 1,227
1,385
----- -----
-----
Net Interest Income (FTE) 31,697 34,869
40,556
4. Provision For Loan Losses 1,279 (118)
6,156
----- ----
-----
Net Interest Income
After Provisions (FTE) 30,418 34,987
34,400
------ ------
------
Security Gains (Losses), Net 611 (1,829)
(341)
Service Charges and Fees 2,402 2,754
3,599
Wealth Management 1,862 1,907
2,118
Insurance 1,997 2,042
2,073
Other 2,638 3,100
2,811
----- -----
-----
Total Noninterest Income 8,899 9,803
10,601
Salaries and Employee Benefits 10,060 10,514
11,725
Occupancy and Equip. Expense, Net 2,660 2,636
2,761
Data Processing Expense 1,071 1,668
1,365
FDIC Expense 75 74
131
Other 4,089 7,492
6,358
----- -----
-----
Total Noninterest Expense 17,955 22,384
22,340
------ ------
------
Income (Loss) Before Taxes 21,973 20,577
22,320
5. Taxable Equivalent Adjustment 1,148 1,227
1,385
Applicable Income Taxes 5,969 5,489
5,249
----- -----
-----
Net Income (Loss) 14,856 13,861
15,686
Preferred Stock Dividends - -
-
--- ---
---
Net Income (Loss) Available to
Common Shareholders $14,856 $13,861
$15,686
======= =======
=======
Per Common Share Data:
Shares Outstanding at End of
Period 24,615,136 27,408,633
27,588,510
Average Shares Outstanding -
Diluted 24,680,484 25,503,920
27,602,216
Net Income (Loss) - Diluted $0.60 $0.54
$0.57
Dividends Declared $0.31 $0.31
$0.31
Common Book Value (6) $14.18 $16.00
$16.34
Tangible Common Book Value (5) $12.04 $9.52
$9.97
Market Value $32.17 $29.06
$36.83
2008 2009
-------- -------
December March
For the period: 4Q 1Q
------ -----
Interest Income $57,811 $50,424
6. Interest Expense 17,226 14,279
------ ------
Net Interest Income 40,585 36,145
Taxable Equivalent
Adjustment 1,388 1,334
----- -----
Net Interest Income (FTE) 41,973 37,479
Provision For Loan Losses 5,561 21,389
----- ------
Net Interest Income
After Provisions (FTE) 36,412 16,090
------ ------
Security Gains (Losses), Net (92) (1,246)
Service Charges and Fees 3,567 3,056
Wealth Management 2,081 1,743
Insurance 1,984 1,862
Other 2,168 3,601
----- -----
Total Noninterest Income 9,800 10,262
Salaries and Employee Benefits 10,409 11,655
Occupancy and Equip. Expense, Net 2,838 3,082
Data Processing Expense 1,384 1,468
FDIC Expense 129 1,941
Other 6,363 7,292
----- -----
Total Noninterest Expense 21,123 25,438
------ ------
Income (Loss) Before Taxes 24,997 (332)
Taxable Equivalent Adjustment 1,388 1,334
Applicable Income Taxes 7,809 176
----- ---
Net Income (Loss) 15,800 (1,842)
Preferred Stock Dividends - 1,283
--- -----
Net Income (Loss) Available to
Common Shareholders $15,800 ($3,125)
======= =======
Per Common Share Data:
7. Shares Outstanding at End of
Period 27,632,928 27,637,317
Average Shares Outstanding -
Diluted 27,722,550 27,637,292
Net Income (Loss) - Diluted $0.57 ($0.11)
Dividends Declared $0.31 $0.31
Common Book Value (6) $16.24 $16.01
Tangible Common Book Value (5) $9.90 $9.68
Market Value $35.50 $21.21
S&T Bancorp, Inc.
Consolidated Selected Financial Data
March 31, 2009
(Dollars in thousands)
2008
------------------
-------------
March June
September
Asset Quality Data 1Q 2Q
3Q
------------------ ------- ------
- -------
Nonaccrual Loans and Nonperforming Loans $23,212
$15,959 $32,793
Assets acquired through foreclosure
or repossession 630
1,884 1,111
Nonperforming Assets 23,842
17,843 33,904
Allowance for Loan Losses 35,717
38,796 43,235
Nonperforming Loans / Loans 0.81%
0.46% 0.92%
Allowance for Loan Losses / Loans 1.25%
1.12% 1.21%
Allowance for Loan Losses /
Nonperforming Loans 154%
243% 132%
Net Loan Charge-offs (Recoveries) (94)
2,224 1,717
Net Loan Charge-offs (Recoveries)
(annualized)/Average Loans -0.01%
0.29% 0.20%
9. ---- ----
December March
Asset Quality Data 4Q 1Q
------------------ ------- ------
-
Nonaccrual Loans and Nonperforming Loans $42,466
$92,047
Assets acquired through foreclosure
or repossession 851
1,452
Nonperforming Assets 43,317
93,499
Allowance for Loan Losses 42,689
59,847
Nonperforming Loans / Loans 1.19%
2.62%
Allowance for Loan Losses / Loans 1.20%
1.70%
Allowance for Loan Losses /
Nonperforming Loans 101%
65%
Net Loan Charge-offs (Recoveries) 6,107
4,231
Net Loan Charge-offs (Recoveries)
(annualized)/Average Loans 0.68%
0.49%
Balance Sheet (Period-End)
--------------------------
Assets $4,438,368
$4,314,540
Earning Assets 4,044,970
3,948,774
Securities 476,255
429,919
Loans, Gross 3,568,716
3,518,855
Total Deposits 3,228,416
3,244,197
Non-Interest Bearing Deposits 600,282
625,325
NOW, Money Market & Savings 1,334,324
1,264,407
CD's $100,000 and over 377,748
386,441
10. Other Time Deposits 916,062
968,024
Short-term borrowings 421,894
225,898
Long-term Debt 270,950
232,282
Shareholders' Equity 448,694
547,276
Balance Sheet (Daily Averages)
------------------------------
Assets $4,419,465
$4,360,166
Earning Assets 4,042,118
3,980,258
Securities 490,754
445,150
Loans, Gross 3,551,179
3,534,064
Deposits 3,205,711
3,251,587
Shareholders' Equity 458,600
542,240
S&T Bancorp, Inc.
Consolidated Selected Financial Data
March 31, 2009
(Dollars in thousands, except per share data)
2008
2009
-----------------------------
---- -----
Profitability Ratios March June September
December March
(annualized) 1Q 2Q 3Q
4Q 1Q
-------------------- ---- ---- ----
---- -----
Return on Average Assets 1.75% 1.51% 1.44%
1.42% -0.29%
Return on Average Tangible
Common Assets (5) 1.78% 1.54% 1.50%
11. 1.48% -0.30%
Return on Average
Shareholders' Equity 17.27% 14.78% 13.93%
13.71% -2.34%
Return on Average Tangible
Common Equity (5) 20.37% 19.17% 22.95%
22.19% -4.53%
Yield on Earning Assets (FTE) 6.49% 6.05% 5.92%
5.83% 5.27%
Cost of Interest Bearing Funds 3.10% 2.43% 2.23%
2.06% 1.82%
Net Interest Margin (FTE)(4) 3.99% 4.08% 4.07%
4.13% 3.82%
Efficiency Ratio (FTE)(1) 44.23% 50.11% 43.67%
40.80% 53.28%
Capitalization Ratios
---------------------
Dividends Paid to Net Income 51.23% 55.05% 54.17%
54.13% -273.87%
Shareholders' Equity to
Assets (Period End) 10.08% 10.07% 10.10%
10.11% 12.68%
Leverage Ratio (2) 9.28% 8.05% 7.15%
7.30% 9.73%
Risk Based Capital -
Tier I (3) 10.29% 7.99% 8.23%
8.65% 11.58%
Risk Based Capital -
Tier II (3) 12.46% 11.12% 11.40%
11.82% 14.82%
Tangible Common Equity/
Tangible Assets (5) 8.69% 6.25% 6.42%
6.41% 6.46%
Definitions:
------------
(1) Recurring non-interest expense divided by recurring
non-interest
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
12. 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) Excludes goodwill, other intangible assets and
preferred stock from
the calculation.
(6) Excludes preferred stock from the calculation.
SOURCE S&T Bancorp, Inc.
Contact: Robert E. Rout, Chief Administrative and Chief Financial Officer of S&T Bancorp, Inc., +1-724-465-1487
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. 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.
