S&T Bancorp Inc. Reports Operating Results (10-Q)
S&t Bancorp Inc. has a market cap of $624.2 million; its shares were traded at around $22.49 with a P/E ratio of 41.7 and P/S ratio of 2.6. The dividend yield of S&t Bancorp Inc. stocks is 2.7%.
Highlight of Business Operations: Net income available to common shareholders for the first quarter of 2010 was $9.8 million resulting in diluted earnings per common share of $0.35 compared to a $3.1 million net loss and $(0.11) diluted earnings per share in the first quarter of 2009. The increase in net income was primarily driven by a reduction in the provision for loan losses. During the first quarter of 2010, a provision of $4.4 million was recorded compared to $21.4 million in the first quarter of 2009. The decrease in provision was a result of minimal net charge-offs of $1.0 million and minor increases in nonperforming assets and delinquent loans during the first quarter of 2010.
The area of problem commercial loans has been and continues to be the subject of considerable management focus and review. S&T had nonperforming assets of $99.9 million as of March 31, 2010 compared to $95.4 million at December 31, 2009. S&T continues to focus on monitoring these assets with a focus on fundings, risk ratings, stress testing and compliance for the area of commercial loans.
No significant investment impairment charges were recorded during the first quarter of 2010 compared to $0.6 million in the first quarter of 2009. The equity securities portfolio currently has an estimated fair value of $12.1 million at March 31, 2010, as compared to $12.2 million at March 31, 2009. During the past two years, S&T has implemented a strategy to methodically sell holdings in this portfolio and only retain strategic positions in banks within our market area.
Net income available to common shareholders was $9.8 million or $0.35 diluted earnings per share for the first three months of 2010 as compared to a net loss available to common shareholders of $3.1 million or $(0.11) diluted earnings per share for the same period of 2009. The increase in net income was primarily the result of a significantly lower provision for loan losses and no significant security impairments offset by an increase in noninterest expenses and taxes. The return on average assets was 0.96 percent for the three months ended March 31, 2010, as compared to (0.29) percent for the three months ended March 31, 2009. The return on average equity was 7.12 percent for the three months ended March 31, 2010 compared to (2.34) percent for the same period of 2009.
For the first three months of 2010, balances of average interest-bearing deposits and average REPOs and other borrowed funds decreased $89.9 million and $214.7 million, respectively as compared to the same period of 2009. The cost of deposits decreased from the three months ended March 31, 2009 due to repricing core deposits and certificates of deposit maturities that renewed at lower rates. Further, interest rates on borrowings decreased substantially from the three months ended March 31, 2009. Overall funding costs decreased 50 basis points to 1.33 percent for the three months ended March 31, 2010 as compared to the three months ended March 31, 2009. Positively affecting net interest income was an $81.3 million increase in average net free funds during the first three months of 2010 as compared to the same period of 2009. Average net free funds are the excess of demand deposits, other noninterest-bearing liabilities and shareholders equity over nonearning assets. The increase is primarily due to the marketing efforts for new demand accounts and corporate cash management services.
Credit quality is the most important factor in determining the amount of the allowance for loan losses and the resulting provision. During the first quarter of 2010, S&T had a slight increase in delinquencies and nonperforming loan levels. Nonperforming loans increased from December 31, 2009 primarily due to the addition of one customer, a $15.4 million multi-family residential apartment complex that has been experiencing a high vacancy rate and declining cash flow. For the first quarter of 2010, S&T experienced minimal net loan charge-offs of $1.0 million compared to net loan charge-offs of $4.2 million for the first three months of 2009. The most significant charge-off in the first quarter of 2010 was a $0.6 million charge-off for a commercial relationship that resulted in the write-down of collateral of residential property to current market value supported by a recent appraisal.
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