S&T Bancorp Inc. (S&T) (NASDAQ: STBA), the holding company for S&T Bank, announced net income of $31.2 million, or $0.81 per diluted share, for the first quarter of 2024 compared to net income of $37.0 million, or $0.96 per diluted share, for the fourth quarter of 2023 and net income of $39.8 million, or $1.02 per diluted share, for the first quarter of 2023.
First Quarter of 2024 Highlights:
- Solid return metrics with return on average assets (ROA) of 1.32%, return on average equity (ROE) of 9.74% and return on average tangible equity (ROTE) (non-GAAP) of 13.85% compared to ROA of 1.55%, ROE of 11.79% and ROTE (non-GAAP) of 17.00% for the fourth quarter of 2023.
- Pre-provision net revenue to average assets (PPNR) (non-GAAP) was 1.76% compared to 1.97% for the fourth quarter of 2023.
- Net interest margin (NIM) (FTE) (non-GAAP) remains strong at 3.84% compared to 3.92% in the fourth quarter of 2023.
- Total deposits increased $78.6 million to $7.6 billion at March 31, 2024 compared to $7.5 billion at December 31, 2023, representing the third consecutive quarter of deposit growth.
- Nonperforming assets remain low at $33.3 million, or 0.44% of total loans plus other real estate owned, or OREO, compared to $23.0 million, or 0.30% of total loans plus OREO, at December 31, 2023.
“I am very pleased that we had a solid start to the year with excellent return metrics,” said Chief Executive Officer Chris McComish. “Our team continues to execute on strategies that have driven our strong results and deposit growth. The deep customer relationships built by our dedicated teams are at the core of our success. And for a second year in a row, we were named to the 2024 Forbes list of America’s Best Midsize Employers, based on survey feedback from our highly engaged employees. I am confident that our people-forward approach will continue to show positive results.”
Net Interest Income
Net interest income was $83.5 million for the first quarter of 2024 compared to $85.1 million for the fourth quarter of 2023. The decrease of $1.6 million in net interest income was driven by higher funding costs, partially offset by higher yields on interest-earning assets. Net interest margin on a fully taxable equivalent basis (NIM) (FTE) (non-GAAP) remains strong at 3.84% compared to 3.92% in the prior quarter. The yield on total average loans increased 6 basis points to 6.25% compared to 6.19% in the fourth quarter of 2023. Average loan balances increased $103.4 million to $7.7 billion compared to $7.6 billion in the fourth quarter of 2023. Total interest-bearing deposit costs increased 24 basis points to 2.77% compared to 2.53% in the fourth quarter of 2023. Higher interest-bearing deposit costs primarily related to growth in higher costing deposit products combined with a continued shift in the mix of deposits. Average money market balances increased $76.7 million and average CD balances increased $105.8 million compared to the fourth quarter of 2023. Average borrowings decreased $26.9 million to $496.9 million compared to $523.8 million in the fourth quarter of 2023 due to higher average deposit balances.
Asset Quality
The allowance for credit losses was $104.8 million, or 1.37% of total portfolio loans, as of March 31, 2024, compared to $108.0 million, or 1.41%, at December 31, 2023. The provision for credit losses was $2.6 million for the first quarter of 2024 compared to $0.9 million in the fourth quarter of 2023. The increase in the provision for credit losses primarily related to higher net charge-offs offset by a lower level of required reserve compared to the fourth quarter of 2023. Net loan charge-offs were $6.6 million for the first quarter of 2024 compared to net loan charge-offs of $3.6 million in the fourth quarter of 2023. Nonperforming assets to total loans plus OREO remained low at 0.44% as of March 31, 2024, compared to 0.30% at December 31, 2023.
Noninterest Income and Expense
Noninterest income decreased $5.3 million to $12.8 million in the first quarter of 2024 compared to $18.1 million in the fourth quarter of 2023. The decrease is primarily due to a return to more normal levels of noninterest income in the first quarter of 2024 after experiencing unusual items in the fourth quarter of 2023 including a gain on OREO of $3.3 million and valuation adjustments on our commercial loan swaps of $0.3 million and on a nonqualified benefit plan of $0.8 million. Customer activity was also seasonally slower in the first quarter of 2024 resulting in lower debit card fees and service charges. Noninterest expense decreased $1.7 million to $54.5 million compared to $56.2 million in the fourth quarter of 2023. The decrease was primarily due to lower salaries and employee benefits of $1.4 million mainly related to a decrease in medical expense compared to the fourth quarter of 2023.
Financial Condition
Total assets were $9.5 billion at March 31, 2024, compared to $9.6 billion at December 31, 2023. Total portfolio loans remained unchanged at $7.7 billion compared to December 31, 2023. The consumer loan portfolio increased $40.8 million with growth in residential mortgages of $39.4 million compared to December 31, 2023. The commercial loan portfolio decreased $38.1 million primarily due to a decline in commercial and industrial of $45.0 million compared to December 31, 2023. Total deposits increased $78.6 million , or 4.2% annualized, compared to December 31, 2023. CDs increased $162.8 million compared to December 31, 2023, due to the replacement of $101.0 million of brokered money market funds with a like amount of brokered CDs and customers shifting from other deposit types. Total borrowings decreased $130.1 million to $373.5 million compared to $503.6 million at December 31, 2023 primarily related to deposit growth.
About S&T Bancorp Inc. and S&T Bank
S&T Bancorp Inc. is a $9.5 billion bank holding company that is headquartered in Indiana, Pennsylvania, and trades on the NASDAQ Global Select Market under the symbol STBA. Its principal subsidiary, S&T Bank, was established in 1902 and operates in Pennsylvania and Ohio. S&T Bank was named by Forbes as a 2023 Best-in-State Bank. For more information, visit stbancorp.com or stbank.com. Follow us on Facebook, Instagram and LinkedIn.
