S&T Bancorp, Inc. Announces Earnings
Company Release - 04/20/2009 09:00

INDIANA, Pa., April 20 /PRNewswire-FirstCall/ -- ...
percent of average loans on an annualized basis. For the same period of 2008, net recoveries were $0.1 million or
0.01 per...
respectively.

On January 16, 2009, S&T received $108.7 million of funds from the U.S. Treasury's Capital Purchase Program...
Provision For Loan Losses             1,279     (118)
6,156
                                          -----     ----
-----...
Taxable Equivalent Adjustment         1,148         1,227
1,385
    Applicable Income Taxes               5,969         5,...
Interest Expense                      17,226     14,279
                                      ------     ------
          ...
Shares Outstanding at End of
    Period                            27,632,928     27,637,317
   Average Shares Outstanding...
Balance Sheet (Period-End)
   --------------------------

    Assets                              $3,463,806
$4,353,568 $4...
----      ----
                                               December    March
    Asset Quality Data                    ...
Other Time Deposits                     916,062
968,024
    Short-term borrowings                          421,894
225,898...
1.48%   -0.30%
    Return on Average
     Shareholders' Equity          17.27% 14.78%    13.93%
13.71%   -2.34%
    Return...
institutions to include 45% of the pretax net
unrealized holding
         gains on available for sale equity securities in...
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Q1 2009 Earning Report of S&T Bancorp

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Q1 2009 Earning Report of S&T Bancorp

  1. 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. 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. 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. 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. 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. 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. 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%
  8. 8. Balance Sheet (Period-End) -------------------------- Assets $3,463,806 $4,353,568 $4,461,085 Earning Assets 3,212,919 3,934,187 4,075,431 Securities 362,053 466,524 496,844 Loans, Gross 2,850,866 3,467,663 3,578,587 Total Deposits 2,605,187 3,114,560 3,131,882 Non-Interest Bearing Deposits 471,040 593,339 600,246 NOW, Money Market & Savings 1,203,833 1,325,755 1,280,816 CD's $100,000 and over 250,489 329,087 353,167 Other Time Deposits 679,825 866,379 897,653 Short-term borrowings 211,391 472,045 552,505 Long-term Debt 246,403 281,163 280,921 Shareholders' Equity 349,073 438,499 450,717 Balance Sheet (Daily Averages) ------------------------------ Assets $3,407,665 $3,701,389 $4,346,481 Earning Assets 3,198,279 3,434,268 3,961,327 Securities 369,400 386,243 472,293 Loans, Gross 2,828,762 3,048,024 3,488,843 Deposits 2,579,321 2,712,198 3,086,428 Shareholders' Equity 345,939 377,160 447,941 2008 2009
  9. 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. 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. 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. 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.

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