S & T Bancorp Inc : S&T Bancorp, Inc. Announces First Quarter Earnings
04/23/2012| 09:05am US/Eastern
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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.
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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.
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