S&T Bancorp (STBA) Q4 2025 Earnings Transcript

Core Insights - The company reported a net income of $34 million, equating to 89¢ per share, with a return on assets (ROA) of 1.37% and a net interest margin (NIM) of 3.99%, marking the best performance since 2023 [2][4] - Loan growth was just under 4.5% for the quarter, primarily driven by commercial banking, while customer deposit growth was at 2.9% [1][3] - The company announced a new $100 million share repurchase authorization, reflecting strong capital levels and the ability to pursue growth opportunities [1][5] Financial Performance - The company achieved a net income of $135 million for the year, with earnings per share of $3.49 and a net interest margin of 3.9% [4] - Noninterest income increased by $500,000 in Q4, with expectations for fees in 2026 to remain around $13 to $14 million per quarter [12][13] - Expenses were controlled, with a year-over-year increase of approximately 3%, leading to a projected quarterly run rate of about $58 million [13][36] Loan and Deposit Growth - Loan growth was primarily driven by commercial and industrial (C&I) loans, with C&I balances increasing by $53 million and commercial real estate (CRE) balances by $34 million [6][7] - Customer deposit growth was strong, particularly in the consumer space, with a focus on driving core deposit growth to fund loan growth [27][28] - The company anticipates mid-single-digit loan growth for 2026, supported by improved activity in C&I and CRE [7][11] Asset Quality - Asset quality was mixed, with net charge-offs at 18 basis points for the year and a reduction in criticized and classified loans by 50% over three years [3][10] - The allowance for credit losses (ACL) decreased from 1.23% to 1.15% quarter over quarter, reflecting successful problem loan resolutions [8][9] - The company expects asset quality in 2026 to perform similarly to 2025, with a focus on reducing non-performing loans (NPLs) [11][35] Capital Management - The tangible common equity (TCE) ratio decreased by 29 basis points due to share repurchases, but regulatory ratios remain strong with significant excess capital [13][14] - The company repurchased over 948,000 shares at an average price of $33.82, totaling $36.2 million [14] - The share repurchase program does not impede the company's ability to pursue mergers and acquisitions (M&A) opportunities [5][23] Market and Competitive Landscape - The company is focused on adding talent in the C&I and CRE sectors to enhance customer acquisition and support growth [19][52] - Competitive pressures on deposit rates have moderated, allowing for a more rational market environment [54][55] - The company is optimistic about its ability to grow deposits at a rate that matches projected loan growth [56]