S&T Bancorp, Inc. Announces Second Quarter 2019 Results

INDIANA, Pa., July 18, 2019 /PRNewswire/ -- S&T Bancorp, Inc. (S&T) (NASDAQ: STBA), the holding company for S&T Bank, with operations in five markets including Western Pennsylvania, Central Pennsylvania, Northeast Ohio, Central Ohio, and Upstate New York, announced its second quarter 2019 earnings. Second quarter net income was $26.1 million, or $0.76 diluted earnings per share (EPS), compared to first quarter of 2019 net income of $22.9 million, or $0.66 diluted EPS, and second quarter of 2018 net income of $21.4 million, or $0.61 diluted EPS.

Second Quarter of 2019 Highlights:

• Return on average assets (ROA) was 1.44%, return on average equity (ROE) was 11.00% and return on average tangible equity (ROTE) (non-GAAP) was 15.89%.
• Portfolio loans increased $97.7 million, or 6.6% annualized, compared to the first quarter of 2019.
• S&T announced expansion into Southeastern Pennsylvania with the signing of a definitive merger agreement where S&T will acquire DNB Financial Corporation ($1.2 billion of assets) in an all-stock transaction.
• S&T's Board of Directors declared a $0.27 per share dividend, which is an increase of 8% compared to a $0.25 dividend in the same period last year.

"We are pleased to report quality earnings for the second quarter with solid loan growth," said Todd Brice, chief executive officer of S&T. "The execution of our growth strategy continues with the announcement of our merger with DNB Financial Corporation, Inc. in Southeastern Pennsylvania. We look forward to closing the transaction during the fourth quarter and entering into the robust markets of Chester, Delaware and Philadelphia counties."

Net Interest Income

Net interest income increased $0.5 million to $60.8 million for the second quarter of 2019 compared to $60.3 million for the first quarter of 2019.  The increase was primarily due to growth in average loan balances of $44.5 million and one additional day in the second quarter compared to the first quarter. Net interest margin on a fully taxable equivalent basis (FTE) (non-GAAP) decreased 3 basis points to 3.68% from 3.71% in the first quarter of 2019. Loan rates remained unchanged at 5.06% and total interest-bearing liability costs increased 3 basis points to 1.58% compared to 1.55% in the first quarter of 2019.

Asset Quality

Total nonperforming loans decreased $3.0 million to $45.0 million, or 0.75% of total loans, compared to $48.0 million, or 0.81% at March 31, 2019. Net loan charge-offs were $2.1 million compared to $5.2 million in the first quarter of 2019. The provision for loan losses was $2.2 million compared to $5.6 million in the first quarter of 2019 mainly due to stable credit quality and lower charge-offs. The allowance for loan losses to total portfolio loans was 1.02% at June 30, 2019 compared to 1.03% at March 31, 2019.

Noninterest Income and Expense

Noninterest income increased $1.5 million to $12.9 million compared to $11.4 million for the first quarter of 2019. The increase was mainly due to an increase in other income of $0.8 million primarily related to higher commercial loan swap and syndication fees. Noninterest income was also impacted by a $0.5 million increase in debit and credit card fees compared to the first quarter of 2019, primarily due to seasonality.

Noninterest expense increased $1.5 million to $40.4 million compared to $38.9 million in the first quarter of 2019. The increase was in part due to merger related expense of $0.6 million during the second quarter of 2019.  Other expense increased $0.7 million primarily related to $0.4 million for losses on the sale of OREO and $0.3 million of higher loan collection costs.

Financial Condition

Total assets were $7.3 billion at June 30, 2019 compared to $7.2 billion at March 31, 2019. Loan growth was strong during the quarter with an increase of $97.7 million, or 6.6% annualized compared to the first quarter of 2019.  Commercial loans grew $73.5 million during the quarter, or 6.3% annualized, due mainly to growth in the commercial and industrial and construction portfolios.  Consumer loans grew $24.2 million, 7.6% annualized, driven by growth in residential mortgage. Deposits were $5.9 billion at June 30, 2019 compared to $5.8 billion at March 31, 2019. All capital ratios remain above the well-capitalized thresholds of federal bank regulatory agencies.

S&T Bancorp, Inc. and DNB Financial Corporation Announce Merger

On June 5, 2019, S&T and DNB Financial Corporation (DNB), the holding company for DNB First, a community bank headquartered in Downingtown, Pennsylvania with 14 locations, jointly announced the signing of a definitive merger agreement pursuant to which S&T will acquire DNB in an all-stock transaction. DNB shareholders will receive 1.22 shares of S&T stock for each share of DNB stock. Based on S&T's June 4, 2019 closing price of $38.75 per share, the transaction will have an aggregate value of approximately $206 million, or $47.28 per share. The merger will expand S&T's footprint into Southeastern Pennsylvania, gaining a new presence in Chester, Delaware, and Philadelphia counties and increasing assets by $1.2 billion. On a combined basis, S&T will have approximately $8.4 billion in total assets. S&T and DNB expect to complete the transaction during the fourth quarter of 2019 after satisfaction of customary closing conditions, including regulatory approvals and the approval of the shareholders of DNB. The second quarter of 2019 results included $0.6 million, or $0.01 per diluted share, of merger related expenses.

Dividend

The Board of Directors of S&T declared a $0.27 per share cash dividend at its regular meeting held July 15, 2019. This dividend is an 8% increase compared to a $0.25 dividend in the same period last year. The dividend is payable August 15, 2019 to shareholders of record on August 1, 2019.

Conference Call

S&T will host its second quarter 2019 earnings conference call live over the Internet at 1:00 p.m. ET on Thursday, July 18, 2019. To access the webcast, go to S&T's webpage at www.stbancorp.com and click on "Events & Presentations." Select "Second Quarter 2019 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 July 25, 2019, by dialing 1.877.481.4010; the Conference ID # is 49690.

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

S&T Bancorp, Inc. is a $7.3 billion bank holding company that is headquartered in Indiana, Pennsylvania and trades on the NASDAQ Global Select Market under the symbol STBA. Its principal subsidiary, S&T Bank, was recently named by Forbes as a 2019 World's Best Bank and a 2018 Best-in-State Bank. Established in 1902, S&T Bank operates in five markets including Western Pennsylvania, Central Pennsylvania, Northeast Ohio, Central Ohio, and Upstate New York. For more information visit stbancorp.com, stbank.com, and follow us on Facebook, Instagram, and  LinkedIn.

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.