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INDIANA, Pa., July 20 /PRNewswire-FirstCall/ -- S&T Bancorp, Inc. (Nasdaq: STBA) today announced a net loss of $10.2 million or ($0.37) diluted earnings per share for the quarter ended June 30, 2009 compared to net income of $13.9 million or $0.54 diluted earnings per share for the quarter ended June 30, 2008. For the six months ending June 30, 2009, the net loss was $13.3 million or ($0.48) diluted earnings per share. The decrease in net income and earnings per share for the second quarter 2009 is primarily due to higher provision for loan losses, increased Federal Deposit Insurance Corporation (FDIC) premiums and other-than-temporary impairments.
Todd D. Brice, president and chief executive officer, commented, "We are certainly disappointed in our second quarter earnings performance but believe the increases to provision expense and net loan charge-offs are prudent. We continue to address the credit stress in our commercial loan portfolio and are confident that these aggressive actions and our strong capital position will allow us to successfully work through this difficult period."
During the second quarter of 2009, net charged-off loans were $34.2 million. The most significant charged-off loans were:
-- $26.5 million of a $30.3 million commercial relationship with an energy
exploration and drilling company. Continued decreases in energy
commodity prices have created going concern issues for the company and a
collateral liquidation strategy is in process.
-- $5.3 million on three Florida lot development projects with an aggregate
balance of $8.8 million were charged down to current market valuations.
The balance of the commercial relationship of $16.8 million is in
performing status and comprised of projects primarily located in western
Pennsylvania.
-- $1.1 million of a $1.8 million loan for a regional restaurant that
entered into bankruptcy.
The provision for loan losses was $32.2 million, $21.4 million and $5.6 million for the quarters ending June 30, 2009, March 31, 2009 and December 31, 2008, respectively. The allowance for loan losses to total loans for the same periods was 1.67 percent, 1.70 percent and 1.20 percent, respectively. Included in the $57.9 million allowance for loan losses is $15.0 million of specific reserves for nonperforming and other troubled loans as of June 30, 2009. In addition, the reserve for unfunded commitments, classified separately from the allowance for loan losses, was increased $3.3 million to $4.6 million during the first half of 2009. Also during the first six months of 2009, net charge-offs were $38.4 million or 2.20 percent of average loans on an annualized basis. For the same period of 2008, net charge-offs were $2.1 million or 0.15 percent of average loans on an annualized basis.
Nonperforming loans totaled $71.4 million at June 30, 2009 compared to $92.0 million and $42.5 million as of March 31, 2009 and December 31, 2008, respectively. The nonperforming loans to total loans for the same periods were 2.06 percent, 2.62 percent and 1.19 percent, respectively. The most significant components of nonperforming loans at June 30, 2009 included:
-- $17.1 million for three commercial real estate projects in the New York
and Connecticut regions. Projects include undeveloped land, mixed-use
commercial properties and a new condominium project. Specific reserves
of $6.1 million have been established for these projects.
-- A $7.9 million commercial real estate relationship consisting of
multiple retail projects in the western Pennsylvania region. A $0.1
million specific reserve has been established.
-- $7.3 million residual values on remaining collateral for the energy
related and Florida lot development loans partially charged off this
quarter. Collateral values are believed to approximate current market
values.
Brice commented, "Addressing troubled commercial credits quickly and conservatively has always been, and will continue to be, our credit philosophy. While we have been dealing with some stresses in our commercial loan portfolio, it is noteworthy 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."
Net interest income on a fully taxable equivalent basis increased by $3.0 million, or 9 percent, to $37.9 million for the second quarter of 2009, as compared to the same period of 2008. For the six months ending June 30, 2009 and 2008, respectively, net interest income on a fully taxable equivalent basis increased $8.8 million or 13 percent. Net interest income was positively affected by the IBT acquisition in the second quarter of 2008, and partially offset by higher delinquent interest. The net interest margin on a fully taxable equivalent basis was 3.86 percent, 3.82 percent and 4.08 percent for the quarters ending June 30, 2009, March 31, 2009 and June 30, 2008, respectively.
Earning assets have decreased $176.2 million over the past six months, primarily due to decreased commercial loan demand and balance sheet deleveraging activities that allow maturing investment securities to reduce borrowings. Residential mortgage and home equity loan applications have achieved record levels during the first six months of 2009 as consumers took advantage of lower interest rates. $59.4 million of residential mortgage loans and $80.2 million of home equity loans were originated during the year-to-date period ending June 30, 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.
Deposits decreased $72.6 million during the six-month period primarily due to lower deposit pricings as a result of reduced funding demands for loan growth. However, a $29.7 million increase 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.
Noninterest income, excluding investment security losses, increased $2.0 million, or 20 percent, for the second quarter of 2009 as compared to the second quarter of 2008. For the six-month period ending June 30, 2009 as compared to the same period in 2008, noninterest income, excluding investment security losses, increased $3.3 million, or 18 percent. The increases are primarily due to record performances in mortgage banking activities, strong 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 in the second quarter 2008, as well as organic expansion of demand deposit accounts.
Net investment security losses for the second quarter of 2009 were $1.3 million. The investment security losses for the second quarter of 2009 are primarily due to an other-than-temporary impairment charge for one equity holding. The equity securities portfolio has a market value of $12.5 million and net unrealized losses of $2.7 million as of June 30, 2009, as compared to $13.2 million and $4.0 million of unrealized losses at March 31, 2009.
Noninterest expense increased $10.4 million, or 46 percent, for the second quarter of 2009, as compared to the second quarter 2008 period. For the six-month period ending June 30, 2009 as compared to the same period in 2008, noninterest expense increased $17.9 million, or 44 percent. Significant factors contributing to these increases are higher staff levels, infrastructure costs and core deposit intangible amortization related to the IBT merger, FDIC insurance premiums and surcharges, pension expense, reserve for unfunded loan commitments, other-than-temporary impairment charges for affordable housing partnerships and legal and consulting costs for troubled loans.
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 $2.8 million for the six-month period ending June 30, 2009. Brice commented, "Participation in the Capital Purchase Program was a difficult decision for S&T since we were already designated as "well capitalized" 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." S&T's capital ratios for leverage, Total, Tier I and tangible common capital to tangible assets at June 30, 2009 were 9.56 percent, 14.60 percent, 11.33 percent and 6.23 percent, respectively.
S&T Bancorp, Inc. declared a common stock quarterly dividend of $0.15 per share on June 15, 2009 which is payable on July 24, 2009 to shareholders of record as of June 30, 2009. This dividend represents a 5 percent projected annual yield utilizing the June 30, 2009 closing market price of $12.16.
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 $4.2 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 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 tax-equivalent basis and operating revenue. 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 are 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
June 30, 2009
(Dollars in thousands, except per share data)
2008
-------------------------------------------
March June September December
For the period: 1Q 2Q 3Q 4Q
-- -- -- --
Interest Income $50,458 $50,433 $57,416 $57,811
Interest Expense 19,909 16,791 18,245 17,226
------ ------ ------ ------
Net Interest Income 30,549 33,642 39,171 40,585
Taxable Equivalent
Adjustment 1,148 1,227 1,385 1,388
----- ----- ----- -----
Net Interest Income
(FTE) 31,697 34,869 40,556 41,973
Provision For Loan Losses 1,279 (118) 6,156 5,561
----- ---- ----- -----
Net Interest Income
After Provisions (FTE) 30,418 34,987 34,400 36,412
------ ------ ------ ------
Security Gains and
Losses, Net 611 (1,829) (341) (92)
Service Charges and Fees 2,402 2,754 3,599 3,567
Wealth Management 1,862 1,907 2,118 2,081
Insurance 1,997 2,042 2,073 1,984
Other 2,638 3,100 2,811 2,168
----- ----- ----- -----
Total Noninterest Income 8,899 9,803 10,601 9,800
Salaries and Employee
Benefits 10,060 10,514 11,725 10,409
Occupancy and Equip.
Expense, Net 2,660 2,636 2,761 2,838
Data Processing Expense 1,071 1,668 1,365 1,384
FDIC Expense 75 74 131 129
Other 4,089 7,492 6,358 6,363
----- ----- ----- -----
Total Noninterest Expense 17,955 22,384 22,340 21,123
------ ------ ------ ------
Income (Loss) Before Taxes 21,973 20,577 22,320 24,997
Taxable Equivalent Adjustment 1,148 1,227 1,385 1,388
Applicable Income Taxes 5,969 5,489 5,249 7,809
----- ----- ----- -----
Net Income (Loss) 14,856 13,861 15,686 15,800
Preferred Stock Dividends - - - -
--- --- --- ---
Net Income (Loss)
Available to Common
Shareholders $14,856 $13,861 $15,686 $15,800
======= ======= ======= =======
Per Common Share Data:
Shares Outstanding at End
of Period 24,615,136 27,408,633 27,588,510 27,632,928
Average Shares
Outstanding - Diluted 24,680,484 25,503,920 27,602,216 27,722,550
Net Income (Loss) -
Diluted $0.60 $0.54 $0.57 $0.57
Dividends Declared $0.31 $0.31 $0.31 $0.31
Common Book Value $14.18 $16.00 $16.34 $16.24
Tangible Common Book
Value (5) $12.04 $9.52 $9.97 $9.90
Market Value $32.17 $29.06 $36.83 $35.50
Six months
2009 ended
---- -----------
March June June June
For the period: 1Q 2Q 2009 2008
-- -- ---- ----
Interest Income $50,424 $49,226 $99,650 $100,891
Interest Expense 14,279 12,677 26,956 36,700
------ ------ ------ ------
Net Interest Income 36,145 36,549 72,694 64,191
Taxable Equivalent
Adjustment 1,334 1,311 2,645 2,375
----- ----- ----- -----
Net Interest Income
(FTE) 37,479 37,860 75,339 66,566
Provision For Loan Losses 21,389 32,184 53,573 1,161
------ ------ ------ -----
Net Interest Income
After Provisions (FTE) 16,090 5,676 21,766 65,405
------ ----- ------ ------
Security Gains and
Losses, Net (1,246) (1,296) (2,542) (1,218)
Service Charges and Fees 3,056 3,232 6,288 5,156
Wealth Management 1,743 1,912 3,655 3,769
Insurance 1,862 1,985 3,847 4,039
Other 3,601 4,624 8,225 5,738
----- ----- ----- -----
Total Noninterest Income 10,262 11,753 22,015 18,702
Salaries and Employee
Benefits 11,655 12,698 24,353 20,574
Occupancy and Equip.
Expense, Net 3,082 3,023 6,106 5,296
Data Processing Expense 1,468 1,542 3,010 2,739
FDIC Expense 1,941 3,447 5,388 149
Other 7,292 12,052 19,343 11,581
----- ------ ------ ------
Total Noninterest Expense 25,438 32,762 58,200 40,339
------ ------ ------ ------
Income (Loss) Before Taxes (332) (16,629) (16,961) 42,550
Taxable Equivalent Adjustment 1,334 1,311 2,645 2,375
Applicable Income Taxes 176 (9,284) (9,108) 11,458
--- ------ ------ ------
Net Income (Loss) (1,842) (8,656) (10,498) 28,717
Preferred Stock Dividends 1,283 1,541 2,824 0
----- ----- ----- ---
Net Income (Loss)
Available to Common
Shareholders ($3,125) ($10,197) ($13,322) $28,717
======= ======== ======== =======
Per Common Share Data:
Shares Outstanding at End
of Period 27,637,317 27,654,530 27,654,530 27,408,633
Average Shares
Outstanding - Diluted 27,637,292 27,650,937 27,644,152 25,092,202
Net Income (Loss) -
Diluted ($0.11) ($0.37) ($0.48) $1.14
Dividends Declared $0.31 $0.15 $0.46 $0.62
Common Book Value $16.01 $15.48 $15.48 $16.00
Tangible Common Book
Value (5) $9.68 $9.17 $9.17 $9.52
Market Value $21.21 $12.16 $12.16 $29.06
S&T Bancorp, Inc.
Consolidated Selected Financial Data
June 30, 2009
(Dollars in thousands)
2008
----
March June September December
Asset Quality Data 1Q 2Q 3Q 4Q
------------------ -- -- -- --
Nonaccrual Loans and
Nonperforming Loans $23,212 $15,959 $32,793 $42,466
Assets Acquired through
Foreclosure or
Repossession 630 1,884 1,111 851
Nonperforming Assets 23,842 17,843 33,904 43,317
Allowance for Loan Losses 35,717 38,796 43,235 42,689
Nonperforming Loans /
Loans 0.81% 0.46% 0.92% 1.19%
Allowance for Loan Losses
/ Loans 1.25% 1.12% 1.21% 1.20%
Allowance for Loan Losses
/ Nonperforming Loans 154% 243% 132% 101%
Net Loan Charge-offs
(Recoveries) (94) 2,224 1,717 6,107
Net Loan Charge-offs
(Recoveries) (annualized)/
Average Loans -0.01% 0.29% 0.20% 0.68%
Balance Sheet (Period-End)
--------------------------
Assets $3,463,806 $4,353,568 $4,461,085 $4,438,368
Earning Assets 3,212,919 3,934,187 4,075,431 4,044,970
Securities 362,053 466,524 496,844 476,255
Loans, Gross 2,850,866 3,467,663 3,578,587 3,568,716
Total Deposits 2,605,187 3,114,560 3,131,882 3,228,416
Non-Interest Bearing
Deposits 471,040 593,339 600,246 600,282
NOW, Money Market &
Savings 1,203,833 1,325,755 1,280,816 1,334,324
CD's $100,000 and over 250,489 329,087 353,167 377,748
Other Time Deposits 679,825 866,379 897,653 916,062
Short-term Borrowings 211,391 472,045 552,505 421,894
Long-term Debt 246,403 281,163 280,921 270,950
Shareholders' Equity 349,073 438,499 450,717 448,694
Balance Sheet (Daily Averages)
------------------------------
Assets $3,407,665 $3,701,389 $4,346,481 $4,419,465
Earning Assets 3,198,279 3,434,268 3,961,327 4,042,118
Securities 369,400 386,243 472,293 490,754
Loans, Gross 2,828,762 3,048,024 3,488,843 3,551,179
Deposits 2,579,321 2,712,198 3,086,428 3,205,711
Shareholders' Equity 345,939 377,160 447,941 458,600
2009
----
March June
Asset Quality Data 1Q 2Q
------------------ -- --
Nonaccrual Loans and
Nonperforming Loans $92,047 $71,433
Assets Acquired through
Foreclosure or
Repossession 1,452 2,262
Nonperforming Assets 93,499 73,695
Allowance for Loan Losses 59,847 57,875
Nonperforming Loans /
Loans 2.62% 2.06%
Allowance for Loan Losses
/ Loans 1.70% 1.67%
Allowance for Loan Losses
/ Nonperforming Loans 65% 81%
Net Loan Charge-offs
(Recoveries) 4,231 34,156
Net Loan Charge-offs
(Recoveries) (annualized)/
Average Loans 0.49% 3.91%
Balance Sheet (Period-End)
--------------------------
Assets $4,314,540 $4,243,876
Earning Assets 3,948,774 3,868,782
Securities 429,919 409,011
Loans, Gross 3,518,855 3,459,771
Total Deposits 3,244,197 3,155,852
Non-Interest Bearing
Deposits 625,325 629,967
NOW, Money Market &
Savings 1,264,407 1,170,573
CD's $100,000 and over 386,441 362,627
Other Time Deposits 968,024 992,685
Short-term Borrowings 225,898 291,763
Long-term Debt 232,282 207,028
Shareholders' Equity 547,276 533,094
Balance Sheet (Daily Averages)
------------------------------
Assets $4,360,166 $4,304,406
Earning Assets 3,980,258 3,935,389
Securities 445,150 427,285
Loans, Gross 3,534,064 3,508,104
Deposits 3,251,587 3,220,761
Shareholders' Equity 542,240 549,968
S&T Bancorp, Inc.
Consolidated Selected Financial Data
June 30, 2009
(Dollars in thousands, except per share data)
2008
----
March June September December
1Q 2Q 3Q 4Q
-- -- -- --
Profitability Ratios (annualized)
---------------------------------
Common Return on Average Assets 1.75% 1.51% 1.44% 1.42%
Common Return on Average
Tangible Common Assets (6) 1.78% 1.54% 1.50% 1.48%
Common Return on Average
Shareholders' Equity 17.27% 14.78% 13.93% 13.71%
Common Return on Average
Tangible Common Equity (7) 20.37% 19.17% 22.95% 22.19%
Yield on Earning Assets (FTE) 6.49% 6.05% 5.92% 5.83%
Cost of Interest Bearing Funds 3.10% 2.43% 2.23% 2.06%
Net Interest Margin (FTE)(4) 3.99% 4.08% 4.07% 4.13%
Efficiency Ratio (FTE)(1) 44.23% 50.11% 43.67% 40.80%
Capitalization Ratios
---------------------
Dividends Paid to Net Income 51.23% 55.05% 54.17% 54.13%
Common Equity to Assets (8) 10.08% 10.07% 10.10% 10.11%
Leverage Ratio (2) 9.28% 8.05% 7.15% 7.30%
Risk Based Capital - Tier I (3) 10.29% 7.99% 8.23% 8.65%
Risk Based Capital - Tier II (3) 12.46% 11.12% 11.40% 11.82%
Tangible Common Equity/Tangible
Assets (8) 8.69% 6.25% 6.42% 6.41%
Definitions and reconciliation of GAAP to non-GAAP financial measures:
----------------------------------------------------------------------
(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
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) Tangible Common Book Value
Common book value (GAAP
basis) $14.18 $16.00 $16.34 $16.24
Effect of excluding
intangible assets (2.14) (6.48) (6.37) (6.34)
----- ----- ----- -----
Tangible common book value $12.04 $9.52 $9.97 $9.90
(6) Common Return on Average
Tangible Common Assets
Common return on average assets
(GAAP basis) 1.75% 1.51% 1.44% 1.42%
Effect of excluding intangible
assets 0.03% 0.03% 0.06% 0.06%
---- ---- ---- ----
Common return on average
tangible common assets 1.78% 1.54% 1.50% 1.48%
(7) Common Return on Average
Tangible Common Equity
Common return on average equity
(GAAP basis) 17.27% 14.78% 13.93% 13.71%
Effect of excluding intangible
assets 3.10% 4.39% 9.02% 8.48%
Effect of excluding preferred
stock - - - -
---- ---- ---- ----
Common return on average
tangible common equity 20.37% 19.17% 22.95% 22.19%
(8) Tangible Common Equity /
Tangible Assets
Common equity / Assets (GAAP
basis) 10.08% 10.07% 10.10% 10.11%
Effect of excluding intangible
assets -1.39% -3.82% -3.68% -3.70%
----- ----- ----- -----
Tangible common equity /
Tangible assets 8.69% 6.25% 6.42% 6.41%
2009 Year-to-date
---- ------------
March June June June
1Q 2Q 2009 2008
-- -- ---- ----
Profitability Ratios (annualized)
---------------------------------
Common Return on Average Assets -0.29% -0.95% -0.62% 1.62%
Common Return on Average
Tangible Common Assets (6) -0.30% -0.99% -0.65% 1.66%
Common Return on Average
Shareholders' Equity -2.34% -7.44% -4.92% 15.97%
Common Return on Average
Tangible Common Equity (7) -4.53% -15.13% -9.77% 19.90%
Yield on Earning Assets (FTE) 5.27% 5.16% 5.21% 6.26%
Cost of Interest Bearing Funds 1.82% 1.65% 1.73% 2.75%
Net Interest Margin (FTE)(4) 3.82% 3.86% 3.84% 4.04%
Efficiency Ratio (FTE)(1) 53.28% 66.04% 59.78% 47.31%
-----
Capitalization Ratios
---------------------
Dividends Paid to Net Income -273.87% -84.02%
Common Equity to Assets (8) 10.26% 10.09%
Leverage Ratio (2) 9.73% 9.56%
Risk Based Capital - Tier I (3) 11.58% 11.33%
Risk Based Capital - Tier II (3) 14.82% 14.60%
Tangible Common Equity/Tangible
Assets (8) 6.46% 6.23%
Definitions and reconciliation of GAAP to non-GAAP financial measures:
----------------------------------------------------------------------
(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
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) Tangible Common Book Value
Common book value (GAAP
basis) $16.01 $15.48 $15.48 $16.00
Effect of excluding intangible
assets (6.33) (6.31) (6.31) (6.48)
----- ----- ----- -----
Tangible common book value $9.68 $9.17 $9.17 $9.52
(6) Common Return on Average
Tangible Common Assets
Common return on average assets
(GAAP basis) -0.29% -0.95% -0.62% 1.62%
Effect of excluding intangible
assets -0.01% -0.04% -0.03% 0.04%
----- ----- ----- ----
Common return on average
tangible common assets -0.30% -0.99% -0.65% 1.66%
(7) Common Return on Average
Tangible Common Equity
Common return on average equity
(GAAP basis) -2.34% -7.44% -4.92% 15.97%
Effect of excluding intangible
assets -1.08% -4.23% -2.53% 3.93%
Effect of excluding preferred
stock -1.11% -3.46% -2.32% -
----- ----- ----- ----
Common return on average
tangible common equity -4.53% -15.13% -9.77% 19.90%
(8) Tangible Common Equity /
Tangible Assets
Common equity / Assets (GAAP
basis) 10.26% 10.09%
Effect of excluding intangible
assets -3.80% -3.86%
----- -----
Tangible common equity /
Tangible assets 6.46% 6.23%
SOURCE S&T Bancorp, Inc.
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