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S&T Bancorp Inc. Reports Operating Results (10-Q)

August 06, 2009 | About:

S&T Bancorp Inc. (STBA) filed Quarterly Report for the period ended 2009-06-30.

S & T BANCORP INC. is a bank holding company which is engaged in general banking business. The Bank is a full service bank with its main office in Indiana Pennsylvania providing service to its customers through a branch of 34 offices located in Armstrong Allegheny Indiana Jefferson Clearfield and Westmoreland counties. The Bank\'s services include accepting time and demand deposit accounts making secured and unsecured commercial and consumer loans providing letters of credit and offering discount brokerage services personal financial planning and credit card services. S&T Bancorp Inc. has a market cap of $406.5 million; its shares were traded at around $14.7 with a P/E ratio of 22.3 and P/S ratio of 1.6. The dividend yield of S&T Bancorp Inc. stocks is 4.1%. S&T Bancorp Inc. had an annual average earning growth of 4.5% over the past 10 years. GuruFocus rated S&T Bancorp Inc. the business predictability rank of 3-star.

Highlight of Business Operations:

Shareholders equity increased $84.4 million at June 30, 2009, compared to December 31, 2008. The increase is primarily due to a $108.7 million capital raise as a participant in the U. S. Treasury Capital Purchase Program. S&T had a net loss available to common shareholders of $13.3 million and dividends declared to common shareholders were $12.7 million for the six months ended June 30, 2009. Also affecting capital was an increase of $0.5 million in the funded status of pension and $0.4 million in unrealized gains on securities available for sale, net of tax, which is included in other comprehensive income.

S&T had a net loss of $13.3 million or a negative $0.48 diluted earnings per share for the six months ended June 30, 2009 as compared to net income of $28.7 million or a positive $1.14 diluted earnings per share for the same period of 2008. The net loss during the six months ended June 30, 2009 was primarily the result of higher provision for loan losses which was necessitated by the significant increase in loan charge-offs and the general deterioration of the credit quality in the loan portfolio, increased Federal Deposit Insurance Corporation (FDIC) premiums and surcharges and other-than-temporary impairments compared to the same periods of 2008. The common return on average assets was a negative 0.62 percent for the six months ended June 30, 2009, as compared to a positive 1.62 percent for the six months ended June 30, 2008. The common return on average equity was a negative 4.92 percent for the six months ended June 30, 2009 compared to a positive 15.97 percent for the same period of 2008.

Net interest income on a fully taxable equivalent basis was $75.3 million, an $8.8 million or 13 percent increase for the six months ended June 30, 2009 as compared to $66.6 million for the same period of 2008. The increase in net interest income in the first six months of 2009 as compared to the same period of 2008 was primarily the result of a $641.4 million increase in average interest-earning assets, primarily driven by $749.3 million acquired through the IBT acquisition in the second quarter of 2008. The net interest margin on a fully taxable equivalent basis was 3.84 percent in the six months ended June 30, 2009 as compared to 4.04 percent in the same period of 2008. The net interest margin was negatively affected in the first half of 2009 by higher delinquent interest and the inability to reduce core deposit rates by the same dramatic level of reduction in other short-term rates.

For the six months ended June 30, 2009, average loans increased $582.6 million, and average securities and federal funds sold increased $58.8 million as compared to the same period of 2008. S&T acquired $490.1 million of loans and $259.3 million of securities with the IBT acquisition. The yields on average loans decreased by 116 basis points from the comparable period in 2008 and the yield on average securities decreased by 20 basis points. Overall yields on interest-earning assets were 5.21 percent and 6.26 percent for the six months ended June 30, 2009 and 2008, respectively.

For the six months ended June 30, 2009, balances of average interest-bearing deposits increased by $448.0 million as compared to the same period of 2008. S&T acquired $573.6 million of deposits with the IBT acquisition. The cost of deposits totaled 1.60 percent, a decrease of 91 basis points from the comparable period in 2008 due to lower rates paid on both core and time deposits. The cost of REPOs and other borrowed funds decreased 128 basis points to 2.50 percent as a result of lower short-term rates as compared to the same period of 2008. Overall funding costs decreased 101 basis points to 1.75 percent at June 30, 2009 as compared to the same period of 2008. Positively affecting net interest income was a $209.3 million increase in average net free funds during the six months ended June 30, 2009 as compared to the same period of 2008. Average net free funds are the excess of demand deposits, other non-interest bearing liabilities and shareholders equity over nonearning assets. The increase is primarily due to successful marketing of new demand accounts and corporate cash management services and increased equity.

The provision for loan losses was $53.6 million for the six months ended June 30, 2009 and $1.2 million for the same period of 2008. The $53.6 million provision for the first six months of 2009 is primarily a result of net charge-offs of $38.4 million, a $7.9 million increase in specific reserves and a $7.3 million increase in general reserves.

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Rating: 3.3/5 (4 votes)

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