S&T Bancorp Inc. (STBA, Financial) filed Quarterly Report for the period ended 2012-09-30.
S&t Bancorp Inc has a market cap of $511.6 million; its shares were traded at around $17.53 with a P/E ratio of 13.6 and P/S ratio of 2.4. The dividend yield of S&t Bancorp Inc stocks is 3.4%.
Our performance continues to be significantly impacted by our asset quality and the related provision for loan losses. For the three months ended September 30, 2012, our provision for losses increased $0.8 million to $2.3 million compared to $1.5 million for the three months ended September 30, 2011. The provision for the nine months ended September 30, 2012 was $18.6 million compared to $13.3 million for the nine months ended September 30, 2011. Our net interest income declined $0.1 million to $33.8 million compared to $33.9 million in the third quarter of 2011 and by $2.4 million to $100.9 million for the nine months ended September 30, 2012 compared to $103.3 million for the nine months ended September 30, 2011. Total interest-earning assets increased in 2012 compared to 2011, however, we experienced an unfavorable shift in our asset mix from loans to lower yielding securities and interest-bearing deposits. Noninterest income increased $4.4 million compared to the third quarter of 2011, and increased by $7.9 million compared to the nine month period ending September 30, 2011. Higher fee income is primarily due to increased fees in our mortgage banking and wealth management businesses. Our mortgage banking business has benefited from attractive interest rates and customer demand, and our wealth management business is seeing results from increased sales efforts. Further increasing noninterest income were realized gains on equity positions of $2.2 million for the three months ended September 30, 2012 and $3.0 million for the nine months ended September 30, 2012. Noninterest expense increased $6.8 million for the quarter ended September 30, 2012 and $15.9 million for the nine month period ended September 30, 2012, related to $0.8 million and $5.3 million in one-time merger related expenses incurred with the acquisitions of Gateway and Mainline, and higher employee costs.
Net interest income was positively impacted during the third quarter by an increase of $23.3 million and negatively impacted for the year to date by a decrease of $16.6 million in average net free funds, when compared to the same periods in the prior year. Average net free funds are the excess of noninterest-bearing demand deposits, other noninterest-bearing liabilities and shareholders equity over noninterest-earning assets. The increase in net free funds in the third quarter was due to the net impact of a $104.7 million increase in noninterest-bearing demand deposits, the redemption of $108.7 million of preferred stock from the CPP in the fourth quarter of 2011 and various changes to the balance sheet resulting from the recent acquisitions of Gateway and Mainline. The year to date decrease in net free funds was due to the net impact of the $108.7 million redemption of preferred stock from the CPP, as well as a $69.0 million increase in noninterest-bearing demand deposits and other changes to assets, liabilities and equity resulting from both acquisitions. Noninterest-bearing demand deposits increased as a result of the low interest rate environment, marketing efforts for new demand accounts, corporate cash management services and the unlimited FDIC deposit insurance protection provided by the Dodd-Frank Act.
Noninterest income increased $4.4 million to $14.7 million in the third quarter of 2012 compared to the third quarter of 2011, and $7.9 million to $40.3 million in the year to date period as compared to the same period in 2011, with increases for both periods in almost all noninterest income categories. The primary drivers were gains on sales of securities, and increases in mortgage banking and wealth management fees in both the three and nine month periods ending September 30, 2012. The $2.3 million and $3.1 million increase in securities gains for the quarter and year to date ending September 30, 2012 relates to the sales of one equity position during the first quarter and one equity position during the third quarter as a result of increases in value after merger announcements. Mortgage interest rates remain at very attractive levels and strong customer demand resulted in increases in mortgage banking activity of $1.2 million and $1.8 million respectively in both the three months and nine months ended September 30, 2012, as compared with the same periods in the prior year. Wealth management fees increased $0.4 million and $1.2 million for the three and nine month periods respectively. Our wealth management fees have increased as a result of adding resources and increased volume in our brokerage business. Other noninterest income has increased $0.2 million for the three months ended September 30, 2012 and $1.2 million for the nine months ended September 30, 2012 primarily as a result of fees associated with derivatives and interest rate swap agreements with our customers, as well as a valuation increase in our rabbi trust.
Management believes the downturn we experienced in the local residential real estate market and the impact of declining values on the real estate loan portfolio will be mitigated because of our conservative mortgage lending policies for portfolio loans, which require a maximum term of 20 years for fixed rate mortgages. Balloon mortgages are also offered in the portfolio. The maximum balloon term is 15 years with a maximum amortization term of 30 years. Balloon mortgages with terms of 10 years or less may have a maximum amortization term for up to 40 years. Combo mortgage loans consisting of a residential first mortgage and a home equity second mortgage are also available to creditworthy borrowers. Our residential mortgage portfolio has grown by $51.1 million since December 31, 2011, including $18.1 million of residential loans we acquired from Mainline in March. We designate specific loan originations, generally longer-term, lower-yielding 1-4 family mortgages, as held for sale and sell them to Fannie Mae. The rationale for these sales is to mitigate interest-rate risk associated with holding lower rate, long-term residential mortgages in the loan portfolio, generate fee revenue from sales and servicing and maintain the primary customer relationship. During the first half of 2011, we began to retain within the loan portfolio 10 and 15 year mortgages that had been priced and underwritten for sale in the secondary market. During the nine months ended September 30, 2012 and 2011, we sold $62.0 million and $52.3 million, respectively, of 1-4 family mortgages and currently service $330.5 million of secondary market mortgage loans sold to Fannie Mae at September 30, 2012. We intend to continue to sell longer-term loans to Fannie Mae. However, management recently decided that, in an effort to grow the loan portfolio, starting in the fourth quarter 2012, we will retain 20 year mortgages as well, selling only 30 year mortgages to Fannie Mae.
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S&t Bancorp Inc has a market cap of $511.6 million; its shares were traded at around $17.53 with a P/E ratio of 13.6 and P/S ratio of 2.4. The dividend yield of S&t Bancorp Inc stocks is 3.4%.
Highlight of Business Operations:
Net income available to common shareholders for the quarter ended September 30, 2012 was $12.6 million resulting in diluted earnings per common share of $0.43 compared to net income of $12.2 million and $0.44 diluted earnings per common share in the third quarter of 2011. Net income available to common shareholders for the nine months ended September 30, 2012 was $24.7 million resulting in diluted earnings per common share of $0.85 compared to net income of $30.3 million and $1.08 diluted earnings per common share for the same period in 2011.Our performance continues to be significantly impacted by our asset quality and the related provision for loan losses. For the three months ended September 30, 2012, our provision for losses increased $0.8 million to $2.3 million compared to $1.5 million for the three months ended September 30, 2011. The provision for the nine months ended September 30, 2012 was $18.6 million compared to $13.3 million for the nine months ended September 30, 2011. Our net interest income declined $0.1 million to $33.8 million compared to $33.9 million in the third quarter of 2011 and by $2.4 million to $100.9 million for the nine months ended September 30, 2012 compared to $103.3 million for the nine months ended September 30, 2011. Total interest-earning assets increased in 2012 compared to 2011, however, we experienced an unfavorable shift in our asset mix from loans to lower yielding securities and interest-bearing deposits. Noninterest income increased $4.4 million compared to the third quarter of 2011, and increased by $7.9 million compared to the nine month period ending September 30, 2011. Higher fee income is primarily due to increased fees in our mortgage banking and wealth management businesses. Our mortgage banking business has benefited from attractive interest rates and customer demand, and our wealth management business is seeing results from increased sales efforts. Further increasing noninterest income were realized gains on equity positions of $2.2 million for the three months ended September 30, 2012 and $3.0 million for the nine months ended September 30, 2012. Noninterest expense increased $6.8 million for the quarter ended September 30, 2012 and $15.9 million for the nine month period ended September 30, 2012, related to $0.8 million and $5.3 million in one-time merger related expenses incurred with the acquisitions of Gateway and Mainline, and higher employee costs.
Net interest income was positively impacted during the third quarter by an increase of $23.3 million and negatively impacted for the year to date by a decrease of $16.6 million in average net free funds, when compared to the same periods in the prior year. Average net free funds are the excess of noninterest-bearing demand deposits, other noninterest-bearing liabilities and shareholders equity over noninterest-earning assets. The increase in net free funds in the third quarter was due to the net impact of a $104.7 million increase in noninterest-bearing demand deposits, the redemption of $108.7 million of preferred stock from the CPP in the fourth quarter of 2011 and various changes to the balance sheet resulting from the recent acquisitions of Gateway and Mainline. The year to date decrease in net free funds was due to the net impact of the $108.7 million redemption of preferred stock from the CPP, as well as a $69.0 million increase in noninterest-bearing demand deposits and other changes to assets, liabilities and equity resulting from both acquisitions. Noninterest-bearing demand deposits increased as a result of the low interest rate environment, marketing efforts for new demand accounts, corporate cash management services and the unlimited FDIC deposit insurance protection provided by the Dodd-Frank Act.
Noninterest income increased $4.4 million to $14.7 million in the third quarter of 2012 compared to the third quarter of 2011, and $7.9 million to $40.3 million in the year to date period as compared to the same period in 2011, with increases for both periods in almost all noninterest income categories. The primary drivers were gains on sales of securities, and increases in mortgage banking and wealth management fees in both the three and nine month periods ending September 30, 2012. The $2.3 million and $3.1 million increase in securities gains for the quarter and year to date ending September 30, 2012 relates to the sales of one equity position during the first quarter and one equity position during the third quarter as a result of increases in value after merger announcements. Mortgage interest rates remain at very attractive levels and strong customer demand resulted in increases in mortgage banking activity of $1.2 million and $1.8 million respectively in both the three months and nine months ended September 30, 2012, as compared with the same periods in the prior year. Wealth management fees increased $0.4 million and $1.2 million for the three and nine month periods respectively. Our wealth management fees have increased as a result of adding resources and increased volume in our brokerage business. Other noninterest income has increased $0.2 million for the three months ended September 30, 2012 and $1.2 million for the nine months ended September 30, 2012 primarily as a result of fees associated with derivatives and interest rate swap agreements with our customers, as well as a valuation increase in our rabbi trust.
Management believes the downturn we experienced in the local residential real estate market and the impact of declining values on the real estate loan portfolio will be mitigated because of our conservative mortgage lending policies for portfolio loans, which require a maximum term of 20 years for fixed rate mortgages. Balloon mortgages are also offered in the portfolio. The maximum balloon term is 15 years with a maximum amortization term of 30 years. Balloon mortgages with terms of 10 years or less may have a maximum amortization term for up to 40 years. Combo mortgage loans consisting of a residential first mortgage and a home equity second mortgage are also available to creditworthy borrowers. Our residential mortgage portfolio has grown by $51.1 million since December 31, 2011, including $18.1 million of residential loans we acquired from Mainline in March. We designate specific loan originations, generally longer-term, lower-yielding 1-4 family mortgages, as held for sale and sell them to Fannie Mae. The rationale for these sales is to mitigate interest-rate risk associated with holding lower rate, long-term residential mortgages in the loan portfolio, generate fee revenue from sales and servicing and maintain the primary customer relationship. During the first half of 2011, we began to retain within the loan portfolio 10 and 15 year mortgages that had been priced and underwritten for sale in the secondary market. During the nine months ended September 30, 2012 and 2011, we sold $62.0 million and $52.3 million, respectively, of 1-4 family mortgages and currently service $330.5 million of secondary market mortgage loans sold to Fannie Mae at September 30, 2012. We intend to continue to sell longer-term loans to Fannie Mae. However, management recently decided that, in an effort to grow the loan portfolio, starting in the fourth quarter 2012, we will retain 20 year mortgages as well, selling only 30 year mortgages to Fannie Mae.
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