S&T Bancorp(US:STBA)2022-08-03 21:31Financial Performance - Net income for the three months ended June 30, 2022, increased to $28.858 million, compared to $28.367 million for the same period in 2021, primarily due to a $6.9 million increase in net interest income [104]. - Net income for the three months ended June 30, 2022, was $115,750, compared to $113,778 for the same period in 2021, reflecting an increase of 1.1% [113]. - The company reported a return on average assets of 1.25% for the three months ended June 30, 2022, compared to 1.21% for the same period in 2021 [104]. - The return on average tangible shareholders' equity was 14.63% for the three months ended June 30, 2022, compared to 14.41% for the same period in 2021 [104]. Income and Expenses - Net interest income rose by $6.9 million and $4.0 million for the three and six months ended June 30, 2022, respectively, attributed to higher interest rates during 2022 [105]. - Noninterest income decreased by $2.8 million to $12.6 million for the three months ended June 30, 2022, and by $4.9 million to $27.9 million for the six months ended June 30, 2022, primarily due to lower mortgage banking income [107]. - Noninterest expense increased by $2.6 million to $48.4 million for the three months ended June 30, 2022, and by $4.3 million to $95.8 million for the six months ended June 30, 2022, driven by higher professional services and legal costs [108]. - The provision for credit losses increased by $0.6 million to $3.2 million for the three months ended June 30, 2022, but decreased by $3.0 million to $2.7 million for the six months ended June 30, 2022, due to recoveries in large loans [106]. Assets and Liabilities - S&T Bancorp, Inc. had total assets of $9.1 billion as of June 30, 2022, operating in five markets across Pennsylvania and Ohio [101]. - Total assets decreased by $384.7 million to $9.1 billion at June 30, 2022, compared to $9.5 billion at December 31, 2021 [133]. - Total deposits decreased by $384.3 million to $7.6 billion at June 30, 2022, compared to $8.0 billion at December 31, 2021 [135]. - Total borrowings decreased by $45.6 million to $115.7 million as of June 30, 2022, primarily due to a decrease in securities sold under repurchase agreements [156]. Loan Portfolio - Total portfolio loans increased by $40.9 million to $7.0 billion at June 30, 2022, compared to December 31, 2021 [133]. - Commercial loans decreased by $109.5 million to comprise 75.2% of total portfolio loans at June 30, 2022, down from 77.2% at December 31, 2021 [143]. - Consumer loans increased by $150.4 million at June 30, 2022, representing 24.8% of total portfolio loans, up from 22.8% at December 31, 2021 [146]. - The allowance for credit losses (ACL) was $98.1 million, or 1.39% of total portfolio loans, at June 30, 2022, compared to $98.6 million, or 1.41%, at December 31, 2021 [148]. Capital and Ratios - The leverage ratio improved to 10.25% as of June 30, 2022, compared to 9.74% at December 31, 2021, exceeding the regulatory guideline of 5.00% [165]. - The Common Equity Tier 1 ratio was 12.34% as of June 30, 2022, up from 12.03% at December 31, 2021, both above the regulatory minimum of 6.50% [165]. Market Risk and Interest Rates - The company implemented various ALCO strategies to manage interest rate and liquidity risks effectively, contributing to the stability of net interest income [115]. - The rate shock analyses indicate a 30.1% increase in pretax net interest income over 1-12 months with a 400 basis point increase in interest rates as of June 30, 2022 [174]. - The economic value of equity (EVE) shows a decline of 4.0% over 1-12 months with a 400 basis point increase in interest rates as of June 30, 2022 [174]. - The company has policy guidelines that limit changes in pretax net interest income and EVE using rate shocks in increments of +/- 100 basis points [171][172]. Strategic Initiatives - The company aims to pursue high-impact growth initiatives and enhance its digital platform as part of its strategic priorities for 2022 and beyond [103]. - S&T Bancorp is monitoring the impact of the pandemic and is taking a prudent approach to capital management due to economic uncertainty [168].