S&T Bancorp(US:STBA)2025-08-07 20:26PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements This section presents S&T Bancorp's unaudited interim financial statements, detailing balance sheets, income, equity, and cash flows, reflecting asset growth and Q2 2025 net income Consolidated Balance Sheets Total assets increased to $9.81 billion by June 30, 2025, driven by loan growth, with deposits rising to $7.92 billion and shareholders' equity to $1.45 billion Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $9,810,069 | $9,657,972 | | Portfolio loans, net | $7,835,854 | $7,641,464 | | Securities available for sale | $1,021,183 | $987,591 | | Total Liabilities | $8,364,576 | $8,277,678 | | Total Deposits | $7,920,920 | $7,783,117 | | Total Shareholders' Equity | $1,445,493 | $1,380,294 | Condensed Consolidated Statements of Comprehensive Income Q2 2025 net income decreased to $31.9 million from $34.4 million in Q2 2024, with diluted EPS at $0.83, while six-month net income remained stable Key Income Statement Data (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $86,572 | $83,594 | $169,895 | $167,071 | | Provision for credit losses | $1,974 | $422 | $(1,066) | $3,049 | | Net Income | $31,900 | $34,371 | $65,301 | $65,610 | | Earnings per share—diluted | $0.83 | $0.89 | $1.69 | $1.70 | | Dividends declared per share | $0.34 | $0.33 | $0.68 | $0.66 | Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity increased to $1.45 billion by June 30, 2025, driven by net income and positive changes in other comprehensive income, partially offset by dividends - For the six months ended June 30, 2025, total shareholders' equity increased by $65.2 million, reflecting strong earnings and favorable movements in other comprehensive income10 Condensed Consolidated Statements of Cash Flows Net cash decreased by $41.7 million in the first half of 2025, with investing activities using $208.7 million primarily for loan growth, funded by financing and operating activities Six Months Ended June 30, Cash Flow Summary (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $56,976 | $91,123 | | Net Cash Used in Investing Activities | $(208,712) | $(70,651) | | Net Cash Provided by (Used in) Financing Activities | $110,034 | $(7,774) | | Net (decrease) increase in cash | $(41,702) | $12,698 | Notes to Condensed Consolidated Financial Statements Notes provide detailed disclosures on accounting policies, fair value, securities, loans, and commitments, highlighting improved asset quality and reduced unrealized losses - The available-for-sale securities portfolio stood at $1.02 billion, with net unrealized losses decreasing to $46.1 million from $71.7 million at year-end 2024, primarily due to changes in interest rates3234 - Total loans grew to $7.93 billion. The Allowance for Credit Losses (ACL) decreased to $98.6 million, or 1.24% of total loans, at June 30, 2025, down from 1.31% at December 31, 202436115 - Commitments to extend credit increased to $2.53 billion as of June 30, 2025, from $2.38 billion at the end of 202465 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, noting increased net interest income, improved asset quality, and balance sheet expansion driven by deposit growth, despite a decline in net income due to higher noninterest expenses Executive Overview S&T Bancorp, a $9.8 billion bank holding company, outlines strategic priorities for 2025 focusing on deposit growth, profitability, asset quality, and talent investment - The company's strategic priorities for 2025 and beyond are focused on growing the deposit franchise, core profitability, asset quality, and talent and engagement78 Earnings Summary Q2 2025 net income was $31.9 million ($0.83 diluted EPS), a decrease from Q2 2024, with return on average assets at 1.32% and tangible equity at 12.12% Q2 2025 vs Q2 2024 Profitability | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income | $31.9 million | $34.4 million | | Earnings per share - diluted | $0.83 | $0.89 | | Return on average assets | 1.32% | 1.45% | | Return on average tangible shareholders' equity (non-GAAP) | 12.12% | 15.01% | Net Interest Income Net interest income (FTE) increased by 3.4% to $87.2 million in Q2 2025, with the FTE net interest margin expanding to 3.88% due to an improved funding mix - Net interest income increased by $3.0 million (3.56%) in Q2 2025 compared to Q2 2024, primarily due to an improved funding mix and lower interest rates on liabilities80 Net Interest Margin (FTE) (non-GAAP) | Period | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Interest Margin (FTE) | 3.88% | 3.85% | Provision for Credit Losses The provision for credit losses increased to $2.0 million in Q2 2025, driven by higher provisions for unfunded commitments and charge-offs, despite improved asset quality - For the six months ended June 30, 2025, the provision for credit losses was a negative $1.1 million, a significant decrease from a $3.0 million provision in the same period of 2024, driven by improved asset quality and a $4.2 million reduction in specific reserves8195 Noninterest Income Noninterest income remained flat at $13.5 million in Q2 2025, primarily due to the absence of security losses, offset by a decline in other noninterest income - The absence of security sale losses in Q2 2025 ($0 vs $3.2 million loss in Q2 2024) was the primary driver for the stable noninterest income, offset by lower other income97 Noninterest Expense Total noninterest expense increased by 8.4% to $58.1 million in Q2 2025, primarily driven by an 8.3% rise in salaries and employee benefits Noninterest Expense Comparison (in thousands) | Expense Category | Q2 2025 | Q2 2024 | $ Change | | :--- | :--- | :--- | :--- | | Salaries and employee benefits | $32,907 | $30,388 | $2,519 | | Data processing and IT | $4,847 | $4,215 | $632 | | Total Noninterest Expense | $58,114 | $53,608 | $4,506 | Financial Condition Total assets grew to $9.8 billion by June 30, 2025, driven by loan portfolio expansion and funded by increased customer deposits, while shareholders' equity also rose - Total portfolio loans increased by $191.5 million (2.5%) in the first half of 2025, with growth in both commercial ($148.8 million) and consumer ($42.7 million) portfolios102110 - Customer deposits grew by $162.6 million, while brokered deposits decreased by $24.8 million, indicating a strategic focus on core deposit growth104117 - The allowance for credit losses (ACL) as a percentage of total loans decreased to 1.24% from 1.31% at year-end 2024, reflecting improved asset quality115 - Nonaccrual loans decreased by $6.6 million to $21.3 million, representing just 0.27% of total portfolio loans, down from 0.36% at year-end 2024116 Liquidity and Capital Resources The company maintains strong liquidity and capital, with $3.8 billion in borrowing capacity exceeding uninsured deposits, and all regulatory capital ratios well above 'well-capitalized' thresholds Capital Ratios as of June 30, 2025 | Ratio (S&T Bancorp, Inc.) | Actual Ratio | Well-Capitalized Minimum | | :--- | :--- | :--- | | Tier 1 leverage | 12.18% | 5.00% | | Common equity tier 1 | 14.59% | 6.50% | | Tier 1 capital | 14.91% | 8.00% | | Total capital | 16.48% | 10.00% | - Total available borrowing capacity was $3.8 billion, providing significant coverage for the $2.7 billion in uninsured deposits126118 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate risk, with its asset-sensitive balance sheet modeled to increase pretax net interest income by 0.7% in a +100 basis point rate shock Interest Rate Sensitivity Analysis (June 30, 2025) | Change in Interest Rate (bps) | % Change in Pretax Net Interest Income (1-12 Months) | | :--- | :--- | | +200 | 1.2% | | +100 | 0.7% | | -100 | (1.9)% | | -200 | (4.4)% | Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the reporting period137 - No changes were made to internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls138 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reports no material legal proceedings - There are no legal proceedings to report141 Item 1A. Risk Factors No material changes to risk factors have occurred since the last annual report - No material changes to risk factors have occurred since the last annual report141 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase common stock in Q2 2025, but the Board extended its $50 million share repurchase plan until July 31, 2026 - No shares were repurchased during the second quarter of 2025142 - The Board of Directors extended the $50 million share repurchase plan until July 31, 2026142 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL data