S&T Bancorp(STBA) - 2024 Q2 - Quarterly Report

Financial Performance - As of June 30, 2024, S&T Bancorp, Inc. has total assets of $9.6 billion[101] - For the three months ended June 30, 2024, interest income on an FTE basis was $129,447 thousand, compared to $117,972 thousand for the same period in 2023, representing a 10.9% increase[98] - Net interest income for the three months ended June 30, 2024, was $83,594 thousand, down from $88,123 thousand in the same period of 2023, a decrease of 5.9%[98] - Net income for the three months ended June 30, 2024, was $34.4 million, or $0.89 per diluted share, compared to $34.5 million, or $0.89 per diluted share, for the same period in 2023[102] - Noninterest income decreased by $0.9 million, or 6.24%, for the three months ended June 30, 2024, compared to the same period in 2023[104] - Noninterest expense increased by $4.0 million, or 8.01%, for the three months ended June 30, 2024, primarily due to increases in salaries and employee benefits[104] Interest and Loan Metrics - The net interest margin for the three months ended June 30, 2024, was 3.82%, compared to 4.19% for the same period in 2023, reflecting a decline of 0.37 percentage points[98] - Total interest-earning assets for the three months ended June 30, 2024, were $8.80 billion, compared to $8.44 billion for the same period in 2023[107] - The net interest margin (FTE) for the three months ended June 30, 2024, was 3.85%, down from 4.22% for the same period in 2023[107] - Average loan balances increased by $395.5 million for the three months ended June 30, 2024, compared to the same period in 2023[112] - The average yield on loan balances increased by 28 basis points for the three months ended June 30, 2024, due to higher interest rates[112] - Interest expense increased by $16.0 million for the three months ended June 30, 2024, primarily due to higher interest rates and a shift in customer deposit mix[112] Credit Losses and Provisions - The provision for credit losses decreased to $0.4 million for the three months ended June 30, 2024, down from $10.5 million for the same period in 2023[102] - The provision for credit losses decreased by $10.1 million to $0.4 million for the three months ended June 30, 2024, compared to $10.5 million for the same period in 2023[115] - Net loan recoveries were $0.4 million for the three months ended June 30, 2024, compared to net loan charge-offs of $11.0 million for the same period in 2023[115] Deposits and Borrowings - Total deposits increased by $158.6 million, with customer deposits rising by $232.9 million, or 3.26%, at June 30, 2024 compared to December 31, 2023[121] - Total deposits increased to $7.68 billion as of June 30, 2024, up from $7.52 billion at December 31, 2023, reflecting a 2.1% increase[134] - Total borrowings decreased by $140.2 million to $363.4 million at June 30, 2024, primarily due to deposit growth[138] - Short-term borrowings fell to $275.0 million at June 30, 2024, down from $415.0 million at December 31, 2023[139] Equity and Capital Ratios - Total shareholders' equity increased by $38.0 million to $1.3 billion at June 30, 2024, primarily due to net income of $65.6 million[121] - The leverage ratio improved to 11.51% at June 30, 2024, compared to 11.21% at December 31, 2023, exceeding the well-capitalized guideline of 5.00%[146] - The Common Equity Tier 1 ratio increased to 13.89% at June 30, 2024, up from 13.37% at December 31, 2023, also above the well-capitalized guideline of 6.50%[146] Strategic Focus and Market Conditions - The company aims to focus on deposit franchise, core profitability, asset quality, and talent engagement as strategic priorities for 2024 and beyond[101] - The loan volume has slowed due to higher interest rates and an uncertain macro environment[125] - The company conducts market risk stress tests annually, which include sensitivity analyses to identify the most impactful model assumptions on pretax net interest income[151] Interest Rate Sensitivity - As of June 30, 2024, a 400 basis point increase in interest rates is projected to result in a 4.8% change in pretax net interest income over 1-12 months and a 6.8% change over 13-24 months[149] - The economic value of equity (EVE) is expected to decrease by 32.5% with a 400 basis point increase in interest rates over the 1-12 month period[149] - The company’s asset-sensitive balance sheet indicates that in a rising interest rate environment, net interest income and operating income are likely to increase due to more assets repricing than liabilities[149]