INDIANA, Pa., April 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 first quarter 2019 earnings. First quarter net income was $22.9 million, or $0.66 diluted earnings per share (EPS), compared to fourth quarter of 2018 net income of $26.9 million, or $0.77 diluted EPS, and first quarter of 2018 net income of $26.2 million, or $0.75 diluted EPS.
First Quarter of 2019 Highlights:
- Return on average assets (ROA) was 1.29%, return on average equity (ROE) was 9.84% and return on average tangible equity (ROTE) (non-GAAP) was 14.27%.
- Net interest margin (FTE) (non-GAAP) increased 6 basis points to 3.71% and net interest income increased $0.5 million to $60.3 million compared to the fourth quarter of 2018.
- Average loan balances increased $75.3 million compared to the fourth quarter of 2018.
- Deposits increased $159.5 million, or 11.4% annualized, compared to the fourth quarter of 2018.
- 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.
- Recognized as a World's Best Bank by Forbes receiving the #3 ranking in the United States out of 60 institutions.
"Relationship banking has been the foundation of our business for over 115 years and we are thrilled that our customers recognized us through the Forbes World's Best Bank award," said Todd Brice, chief executive officer of S&T. "We are pleased with our deposit growth and new customer acquisition during the quarter. While our performance did not meet our expectations this quarter, we are encouraged by the level of new business activity across our markets which will support future growth."
Net Interest Income
Net interest income increased $0.5 million to $60.3 million for the first quarter of 2019 compared to $59.8 million for the fourth quarter of 2018. Net interest margin on a fully taxable equivalent basis (FTE) (non-GAAP) increased 6 basis points to 3.71% from 3.65% in the fourth quarter of 2018. Higher interest adjustments and prepayment fees increased the net interest margin by 4 basis points compared to the fourth quarter of 2018. Average loan balances increased $75.3 million compared to the fourth quarter of 2018. Loan rates increased 16 basis points to 5.06% compared to 4.90% in the prior quarter and total interest-bearing liabilities increased 14 basis points to 1.55% compared to 1.41%.
Asset Quality
Net loan charge-offs increased $2.9 million to $5.2 million compared to $2.3 million in the fourth quarter of 2018. Net loan charge-offs were significantly impacted by two commercial and industrial borrowers that resulted in charge-offs of $5.1 million during the first quarter of 2019. The provision for loan losses increased $2.9 million to $5.6 million compared to $2.7 million in the fourth quarter of 2018 mainly due to higher charge-offs. The allowance for loan losses to total portfolio loans was 1.03% at both March 31, 2019 and December 31, 2018. Total nonperforming loans were $48.0 million, or 0.81% of total loans, at March 31, 2019 compared to $46.1 million, or 0.77% of total loans at December 31, 2018. The increase in nonperforming loans was primarily due to a new $5.3 million commercial real estate nonperforming loan in the first quarter of 2019.
Noninterest Income and Expense
The volatility in the stock market in the fourth quarter of 2018 and the first quarter of 2019 have had a significant impact on our noninterest income and noninterest expense. A mark-to-market adjustment for a deferred compensation plan is reported in both other income and salary and employee benefits expense resulting in no impact to net income. The adjustment added $0.6 million to both other income and salary and employee benefits expense in the first quarter of 2019 compared to a subtraction of $0.8 million in the fourth quarter of 2018, resulting in a net increase of $1.4 million in both total noninterest income and noninterest expense.
Noninterest income increased $0.3 million to $11.4 million compared to $11.1 million for the fourth quarter of 2018. The increase was mainly due to an increase in other income of $0.8 million primarily related to the deferred compensation mark-to-market adjustment noted above offset by a decrease in commercial loan swap fees of $0.3 million compared to the fourth quarter of 2018. Noninterest income was also impacted negatively by fewer days in the first quarter of 2019 compared to the fourth quarter of 2018 and seasonality in debit and credit card fees. Wealth management income decreased $0.3 million due to lower financial services activity and declines in the stock market compared to the fourth quarter of 2018.
Noninterest expense increased $2.5 million to $38.9 million compared to $36.4 million in the fourth quarter of 2018. The increase was mainly due to an increase in salaries and employee benefits of $2.0 million compared to the fourth quarter of 2018. In addition to the $1.4 million deferred compensation increase noted above, salaries and employee benefits increased due to higher incentive costs and seasonally higher payroll taxes. Net occupancy increased $0.3 million due to seasonally higher branch maintenance costs and a new location.
Financial Condition
Total assets were $7.2 billion at March 31, 2019 compared to $7.3 billion at December 31, 2018. Total portfolio loans decreased $11.2 million compared to December 31, 2018 with a decline of $12.2 million in commercial loans. Deposits increased $159.5 million, or 11.4% annualized, to $5.8 billion at March 31, 2019 compared to $5.7 billion at December 31, 2018. Money market accounts increased $218.9 million partially due to successful marketing campaigns in targeted markets during the quarter. All capital ratios remain above the well-capitalized thresholds of federal bank regulatory agencies.
Dividend
The Board of Directors of S&T declared a $0.27 per share cash dividend at its regular meeting held April 15, 2019. This dividend is an 8% increase compared to a $0.25 dividend in the same period last year. The dividend is payable May 16, 2019 to shareholders of record on May 2, 2019.
Conference Call
S&T will host its first quarter 2019 earnings conference call live over the Internet at 1:00 p.m. ET on Thursday, April 18, 2019. To access the webcast, go to S&T's webpage at www.stbancorp.com and click on "Events & Presentations." Select "1st 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 April 25, 2019, by dialing 1.877.481.4010; the Conference ID # is 45705.
About S&T Bancorp, Inc. and S&T Bank
S&T Bancorp, Inc. is a $7.2 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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