S&T Bancorp(STBA) - 2023 Q2 - Quarterly Report

Financial Performance - Net income for the three months ended June 30, 2023, was $34.5 million, or $0.89 per diluted share, compared to $28.9 million, or $0.74 per diluted share for the same period in 2022, representing a 19.4% increase in net income[100] - Noninterest income for the three months ended June 30, 2023, increased by $1.6 million to $14.2 million, while mortgage banking income decreased due to a decline in loan sale activity[104] - Noninterest expense increased by $1.2 million to $49.6 million for the three months ended June 30, 2023, primarily due to higher salaries and employee benefits[105] - Total interest and dividend income for Q2 2023 was $117,333, an increase of 51.2% from $77,599 in Q2 2022[110] - Net interest income for Q2 2023 was $88,123, up 17.5% from $75,194 in Q2 2022[110] - Return on average tangible shareholders' equity for Q2 2023 was 16.32%, up from 14.63% in Q2 2022[110] - Total shareholders' equity increased by $28.2 million to $1.2 billion at June 30, 2023, primarily due to net income of $74.3 million[134] Asset and Loan Growth - As of June 30, 2023, S&T Bancorp, Inc. has total assets of $9.3 billion[96] - Total assets increased by $142.4 million to $9.3 billion at June 30, 2023, compared to $9.1 billion at December 31, 2022[131] - Total portfolio loans increased by $135.6 million to $7.3 billion at June 30, 2023, primarily driven by consumer loan growth of $155.5 million[131] - Total loans increased to $7,283,238 in Q2 2023, compared to $6,973,926 in Q2 2022[110] - Average loan balances increased by $263.2 million for the six months ended June 30, 2023, compared to the same period in 2022, with the average yield on loans rising by 197 basis points[117] Deposits and Borrowings - Total deposits decreased by 1.1% compared to December 31, 2022, with total uninsured deposits at $2.2 billion, or 30% of the total deposit base[99] - Deposits decreased by $78.8 million to $7.1 billion at June 30, 2023, attributed to current economic conditions and competition in a higher interest rate environment[133] - Total borrowings increased by $184.8 million to $624.0 million at June 30, 2023, primarily due to loan growth and a decline in deposits[134] - Short-term borrowings rose by $160.0 million to $530.0 million at June 30, 2023, with an average interest rate during the period of 5.18%, up from 4.15% in the previous year[155] - Long-term borrowings increased to $39.5 million at June 30, 2023, from $14.7 million at December 31, 2022, with the average interest rate rising to 3.71% from 2.15%[156] Interest Income and Expense - Net interest income increased by $34.2 million, or 23.7%, for the six months ended June 30, 2023, compared to the same period in 2022, primarily due to higher interest rates[116] - Interest expense rose by $46.5 million for the six months ended June 30, 2023, primarily due to higher interest rates, with the average rate paid on interest-bearing deposits increasing by 137 basis points[119] - Total interest expense for Q2 2023 was $29,210, significantly higher than $2,405 in Q2 2022[110] - The cost of interest-bearing liabilities increased by 177 basis points for the six months ended June 30, 2023, compared to the same period in 2022[119] Credit Quality - The provision for credit losses rose to $10.5 million for the three months ended June 30, 2023, compared to $3.2 million for the same period in 2022, reflecting increased net loan charge-offs[103] - Net loan charge-offs were $11.0 million for the three months ended June 30, 2023, compared to $3.0 million for the same period in 2022[123] - The allowance for credit losses (ACL) was $105.8 million, or 1.44% of total portfolio loans, as of June 30, 2023, up from $101.3 million, or 1.41%, at December 31, 2022[145] - Nonperforming assets decreased by $4.1 million, or 18.6%, to $18.0 million at June 30, 2023, compared to $22.1 million at December 31, 2022[150] Liquidity and Capital Ratios - S&T Bancorp maintains a strong liquidity position with $3.8 billion in remaining borrowing availability as of June 30, 2023[99] - The Common Equity Tier 1 Ratio was 13.07% and the total capital ratio was 15.06% at June 30, 2023, indicating strong capital levels[99] - The leverage ratio stood at 11.12% as of June 30, 2023, compared to 11.06% at December 31, 2022, exceeding the regulatory guideline of 5.00%[162] - The Common Equity Tier 1 ratio improved to 13.07% at June 30, 2023, from 12.81% at December 31, 2022, surpassing the regulatory requirement of 6.50%[163] Interest Rate Sensitivity - The company has an asset sensitive balance sheet, meaning more assets than liabilities will reprice during measured time frames, impacting net interest income positively in a rising interest rate environment[171] - The percentage change in pretax net interest income for a 400 basis point increase in interest rates is 10.8% for the 1-12 month period and 13.9% for the 13-24 month period[170] - The percentage change in pretax net interest income for a 400 basis point decrease in interest rates is -15.9% for the 1-12 month period and -21.3% for the 13-24 month period[170] - The company conducts market risk stress tests annually, which include sensitivity analyses and simulations to assess the impact of various interest rate changes[173]