S&T Bancorp, Inc. Announces Fourth Quarter and Full Year 2013 Results and Declares Fourth Quarter Dividend

INDIANA, Pa., Jan. 28, 2014 /PRNewswire/ -- S&T Bancorp, Inc. (S&T) (NASDAQ: STBA)  has announced its fourth quarter and full year 2013 earnings.  Fourth quarter earnings were $11.9 million, or $0.40 per diluted share, compared to the third quarter of 2013 earnings of $12.2 million, or $0.41 per diluted share, and the fourth quarter of 2012 earnings of $9.5 million, or $0.32 per diluted share.  Full year 2013 earnings increased 48% to $50.5 million, or $1.70 per diluted share, compared to 2012 earnings of $34.2 million, or $1.18 per diluted share.

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Fourth Quarter Highlights:

• Total average loans increased $60.5 million, or 1.7%, from the third quarter of 2013.
• Net interest income increased $0.4 million from the third quarter of 2013 and net interest margin (FTE) was stable, increasing two basis points to 3.52%. 
• Asset quality improved significantly with a decrease in nonperforming assets of $14.0 million, or 38%, from the third quarter of 2013 and $33.0 million, or 59%, from the fourth quarter of 2012.
• S&T declared a $0.16 per share dividend for the fourth quarter. 

"The fourth quarter was a strong finish to our much improved performance in 2013," said Todd Brice, president and chief executive officer of S&T.  "The investment we made in expanding our sales team has paid off with a return to solid loan growth in 2013, and our focus on managing problem loans has resulted in a sizeable decrease in nonperforming assets."

Net Interest Income

Net interest income increased $0.4 million, or 1.1%, to $35.7 million compared to $35.3 million in the prior quarter. Net interest margin on a fully taxable equivalent basis (FTE) increased two basis points to 3.52% compared to 3.50% in the third quarter of 2013.  Net interest income and net interest margin were positively impacted by an improved asset mix and lower costs on certificates of deposits. The improved asset mix was mainly a result of loan growth, which increased on average by $60.5 million.    

Asset Quality

Asset quality improved significantly from the prior quarter. Total nonperforming loans were $22.5 million, or 0.63%, of total loans at December 31, 2013, which represents a 38% decrease from $36.4 million, or 1.04% of total loans at September 30, 2013.  Special mention and substandard loans also decreased $34.6 million, or 16%, to $187.7 million from $222.3 million at September 30, 2013. Net charge-offs for the fourth quarter of 2013 were $3.3 million compared to net charge-offs of $1.5 million in the third quarter of 2013. The provision for loan losses was $1.6 million in the fourth quarter of 2013 compared to $3.4 million in the third quarter of 2013. The allowance for loan losses decreased to $46.3 million, or 1.30% of total loans, compared to $48.0 million, or 1.37% of total loans at September 30, 2013.

Noninterest Income and Expense

Noninterest income decreased $1.2 million to $11.3 million compared to $12.5 million in the third quarter of 2013.  Debit and credit card fees decreased $0.2 million due to a decrease in our merchant services revenue. Insurance fees decreased $0.6 million due to a $0.4 million decrease in commission income caused by seasonality of policy renewals and a $0.2 million decrease in revenue related to our credit insurance products.  Other income decreased by $0.3 million primarily due to higher interest rate swap fees from our commercial customers in the third quarter of 2013.

Noninterest expense increased $1.5 million to $29.4 million compared to $27.9 million in the third quarter of 2013.  Salaries and benefits increased $0.3 million primarily due to higher medical costs.  Furniture and equipment increased $0.2 million and marketing increased $0.2 million due to the timing of purchases and marketing campaigns.  Other expense increased $1.0 million due to higher charitable donations in the fourth quarter of 2013 and a $0.5 million expense recovery related to one of our bank acquisitions that occurred in the third quarter of 2013. 

Financial Condition

Total assets decreased $55.0 million to $4.5 billion at December 31, 2013 compared to $4.6 billion at September 30, 2013 and $4.5 billion at December 31, 2012. Loan growth was strong during the quarter with an increase of $54.9 million, or 1.6%, in total portfolio loans. Commercial loans grew $46.2 million, or 1.8%, during the quarter, primarily due to growth in the commercial real estate portfolio. Consumer loans increased $8.7 million during the quarter with growth in residential mortgages of $10.0 million, or 2.1%, offset by declines in the installment and construction portfolios. Total deposits were essentially unchanged at $3.7 billion at both December 31, 2013 and September 30, 2013. S&T's risk-based capital ratios increased this quarter due to retained earnings growth outpacing loan growth.  All capital ratios remain significantly above the well-capitalized thresholds of federal bank regulatory agencies.

2013 Full Year

Full year 2013 earnings increased $16.3 million, or 48%, to $50.5 million, or $1.70 per diluted share, compared to $34.2 million, or $1.18 per diluted share for 2012. The increase in earnings was due to higher net interest income of $4.0 million, or 3%, a decrease in the provision for loans losses of $14.5 million, or 64%, and a decrease in noninterest expense of $5.5 million, or 4%.  Net interest income increased due to the improvement in funding costs coupled with an increase of $203.5 million in average earning assets which helped to offset the impact of declining earning asset yields. The provision for loan losses decreased due to significant improvements in asset quality, including a decrease in net charge-offs of $16.6 million, or 66%, from the prior year. The decrease in noninterest expense was primarily a result of $6.1 million of merger related expense in 2012 and expense control initiatives implemented throughout 2013. 

"We are extremely pleased with the progress we made in 2013 and look forward to carrying this momentum into the coming year.  We enter 2014 with a clear strategic vision that is focused on growing our Bank through the addition of high quality assets and improvements in our fee revenue businesses, while maintaining a strong expense discipline," said Todd Brice, president and chief executive officer of S&T.

Asset quality improved significantly throughout 2013.  Total nonperforming loans were $22.5 million, or 0.63%, of total loans at December 31, 2013, which represents a 59% decrease from $55.0 million, or 1.63% of total loans at December 31, 2012.  Special mention and substandard loans also decreased $149.4 million, or 44%, to $187.7 million from $337.1 million at December 31, 2012. The allowance for loan losses decreased to $46.3 million, or 1.30% of total loans, compared to $46.5 million, or 1.38% of total loans at December 31, 2012.

Dividend

The Board of Directors of S&T declared a $0.16 per share cash dividend at its regular meeting held January 27, 2014.  The dividend is payable February 27, 2014 to shareholders of record on February 13, 2014.  This dividend compares to a common stock dividend of $0.16 per share declared during the fourth quarter of 2013. 

Conference Call

S&T will host its fourth quarter 2013 earnings conference call live over the Internet at 1:00 p.m. ET on Tuesday, January 28, 2014. To access the webcast, go to S&T's webpage at www.stbancorp.com and click on "Events & Presentations." Select "4th Quarter 2013 Conference Call" and follow the instructions. 

About S&T Bancorp, Inc.

Headquartered in Indiana, PA, S&T operates offices within Allegheny, Armstrong, Blair, Butler, Cambria, Clarion, Clearfield, Indiana, Jefferson, Washington and Westmoreland counties as well as a loan production office in northeast Ohio. With assets of $4.5 billion, S&T stock trades on the NASDAQ Global Select Market System under the symbol STBA. For more information, visit www.stbancorp.com.

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, and asset quality, including real estate and other collateral values and competition. In addition to the results of operations presented in accordance with Generally Accepted Accounting Principles (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 taxable equivalent basis. 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 is presented in the attached selected 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.

SOURCE S&T Bancorp, Inc.