S&T Bancorp, Inc. Announces First Quarter 2018 Results

INDIANA, Pa., April 19, 2018 /PRNewswire/ -- S&T Bancorp, Inc. (S&T) (NASDAQ: STBA), the holding company for S&T Bank with locations in Pennsylvania, Ohio and New York, announced today its first quarter 2018 earnings. First quarter net income was a record high of $26.2 million, or $0.75 diluted earnings per share (EPS), compared to first quarter of 2017 net income of $18.2 million, or $0.52 diluted EPS and fourth quarter of 2017 net income of $9.3 million, or $0.27 diluted EPS.

First Quarter of 2018 Highlights:

• Net income of $26.2 million and diluted EPS of $0.75 both represent record high levels for S&T.
     
• Diluted EPS increased by 44.2% compared to the first quarter of 2017.
    
• Annualized performance metrics were solid and improved significantly compared to prior periods, with return on average assets of 1.51%, return on average shareholders' equity of 11.92% and return on average tangible shareholders' equity of 17.83% (non-GAAP).
    
• Expenses continue to be well controlled with an efficiency ratio of 50.35% (non-GAAP).
   
• Net income was positively impacted by the Tax Cuts and Jobs Act (Tax Act) which lowered the federal corporate tax rate from 35% to 21% effective January 1, 2018.
   
• Nonperforming loans decreased 10.9% compared to the fourth quarter of 2017.
   
• S&T's Board of Directors approved a 13.6%, or $0.03 per share, increase in the quarterly cash dividend to $0.25 per share. This represents a 25% increase in the dividend from the same period last year.

"We are pleased to start off  2018 with record quarterly net income," said Todd Brice, president and chief executive officer of S&T. "Higher net interest income, our continued attention to expenses, lower provision for loan losses and the positive impact of tax reform have resulted in impressive performance metrics compared to a year ago."

Net Interest Income

Net interest income was $56.9 million compared to $57.8 million for the fourth quarter of 2017. Net interest margin on a fully taxable equivalent basis (FTE) (non-GAAP) increased 1 basis point to 3.59% even with the negative impact of the FTE adjustment from a lower statutory tax rate. The decrease in net interest income was primarily due to two less days in the first quarter compared to the fourth quarter of 2017.

Asset Quality

Total nonperforming loans decreased 10.9% to $21.3 million, or 0.37% of total loans, at March 31, 2018 compared to $23.9 million, or 0.42% of total loans, at December 31, 2017. OREO increased $2.5 million related to two land lots owned by S&T Bank that are for sale and are no longer intended to be future branch locations. During the first quarter of 2018, there were net loan recoveries of $0.2 million compared to net charge-offs of $1.3 million in the fourth quarter of 2017. The provision for loan loss was $2.5 million compared to $1.0 million in the fourth quarter of 2017. The allowance for loan losses (ALLL) to total portfolio loans was 1.03% at March 31, 2018 compared to 0.98% at December 31, 2017. Both the increase in the provision and ALLL are primarily due to an increase in special mention and substandard loans compared to December 31, 2017.

Noninterest Income and Expense

Noninterest income increased $1.1 million to $13.8 million for the first quarter of 2018 compared to $12.7 million for the fourth quarter of 2017. The increase primarily related to a $1.9 million gain on the sale of a majority interest of our insurance business. Insurance fees decreased $1.0 million as a result of this sale. The decrease of $0.8 million in other income related to a branch sale in the fourth quarter of 2017.

Expenses remain well controlled decreasing to $36.1 million compared to $38.0 million for the fourth quarter of 2017. Salaries and employee benefits decreased $1.2 million due to the sale of our insurance business, lower incentives and seasonally lower medical costs. Marketing expense decreased $0.5 million due to the timing of marketing campaigns and other expense decreased $0.7 million primarily due to lower loan related expense. Other taxes increased by $0.6 million related to a state sales tax assessment. The efficiency ratio (non-GAAP) improved to 50.35% compared to 51.75% in the fourth quarter and 53.83% in the first quarter of 2017 due to expense control and higher revenue.

Income Tax Expense

The Tax Act changed the federal corporate tax rate from 35% to 21% effective January 1, 2018. As a result the effective tax rate declined to 18.7% for the first quarter of 2018. Included in the effective tax rate for the first quarter were non-recurring discrete items of $0.9 million, primarily related to the sale of a majority interest of our insurance business.

Financial Condition

Total assets were $7.0 billion at March 31, 2018 compared to $7.1 billion as of December 31, 2017. Higher than usual pay-offs in commercial loans combined with lower seasonal demand resulted in a decrease in portfolio loans of $30.8 million. Total deposits decreased $40.8 million as competition for customer funds accelerated, with declines in all categories except money market accounts. All capital ratios increased this quarter due to strong retained earnings, a decline in average assets and slower risk weighted asset growth. All capital ratios remain above the well-capitalized thresholds of federal bank regulatory agencies.

Dividend

The Board of Directors of S&T declared a 13.6% increase in the quarterly cash dividend at its regular meeting held April 16, 2018. The dividend increased to $0.25 per share compared to $0.20 per share declared in the same period in the prior year, a 25% increase. The dividend is payable May 17, 2018 to shareholders of record on May 3, 2018.

Conference Call

S&T will host its first quarter 2018 earnings conference call live over the Internet at 1:00 p.m. ET on Thursday, April 19, 2018. To access the webcast, go to S&T's webpage at www.stbancorp.com and click on "Events & Presentations." Select "1st Quarter 2018 Conference Call" and follow the instructions. After the live presentation, the webcast will be archived on this website for at least 90 days. A replay of the call will also be available until April 26, 2018, by dialing 1.877.481.4010; the Conference ID # is 27217.

About S&T Bancorp, Inc. and S&T Bank

S&T Bancorp, Inc. is a $7.0 billion bank holding company that is headquartered in Indiana, Pa. and trades on the NASDAQ Global Select Market under the symbol STBA. Its principal subsidiary, S&T Bank, was established in 1902, and operates locations in Pennsylvania, Ohio and New York. For more information visit www.stbancorp.com or www.stbank.com.

This information contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to our financial condition, results of operations, plans, objectives, outlook for earnings, revenues, expenses, capital and liquidity levels and ratios, asset levels, asset quality, financial position and other matters regarding or affecting S&T and its future business and operations. Forward looking statements are typically identified by words or phrases such as "will likely result", "expect", "anticipate" ,"estimate", "forecast", "project", "intend", " believe", "assume", "strategy", "trend", "plan", "outlook", "outcome", "continue", "remain", "potential", "opportunity", "believe", "comfortable", "current", "position", "maintain", "sustain", "seek", "achieve" and variations of such words and similar expressions, or future or conditional verbs such as will, would, should, could or may. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. The matters discussed in these forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results and trends to differ materially from those made, projected, or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors including, but not limited to: credit losses, cyber-security concerns; rapid technological developments and changes; sensitivity to the interest rate environment including a prolonged period of low interest rates, a rapid increase in interest rates or a change in the shape of the yield curve; a change in spreads on interest-earning assets and interest-bearing liabilities; regulatory supervision and oversight; legislation affecting the financial services industry as a whole, and S&T, in particular; the outcome of pending and future litigation and governmental proceedings; increasing price and product/service competition; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; managing our internal growth and acquisitions; the possibility that the anticipated benefits from acquisitions cannot be fully realized in a timely manner or at all, or that integrating the acquired operations will be more difficult, disruptive or costly than anticipated; containing costs and expenses; reliance on significant customer relationships; general economic or business conditions; deterioration of the housing market and reduced demand for mortgages; deterioration in the overall macroeconomic conditions or the state of the banking industry that could warrant further analysis of the carrying value of goodwill and could result in an adjustment to its carrying value resulting in a non-cash charge to net income; re-emergence of turbulence in significant portions of the global financial and real estate markets that could impact our performance, both directly, by affecting our revenues and the value of our assets and liabilities, and indirectly, by affecting the economy generally and access to capital in the amounts, at the times and on the terms required to support our future businesses. Many of these factors, as well as other factors, are described in our filings with the SEC. Forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. We caution you not to unduly rely on forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. Any forward-looking statement speaks only as to the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.

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SOURCE S&T Bancorp, Inc.