April 20, 2009

S&T Bancorp, Inc. Announces Earnings

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.

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Todd D. Brice, president and chief executive officer, commented, "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."

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 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, "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."

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, "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."

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, 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, "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 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.

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.


    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

    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
    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
    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:

    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%

    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
                                                ----        ----
                                             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
        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%     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
         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


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