S&T BANCORP INC Q1 FY2025 earnings call

• Executives wrapped up the third annual road trip with employees, showing high engagement and embodying the PeopleForward purpose. - Received recognition from organizations like Forbes, S&P, and USA Today for strong financial performance and superior employee engagement. - First quarter financial results were strong with EPS of 87¢ and net income of $33 million, ahead of estimates; return metrics were strong and balance sheet growth was solid. - Customer deposits grew for the seventh consecutive quarter, net interest margin expanded due to lower funding costs and balance sheet positioning, and asset quality was good allowing more funds to be put towards bond portfolio restructure.

In the first quarter, customer deposit growth was $135 million or 7.23% annualized, the seventh straight quarter of customer deposit growth. Total loan growth was $93 million or 4.89% annualized. The net interest margin rate increased four basis points to 3.81%, with flat net interest income despite two fewer days in the quarter. The allowance for credit losses declined by approximately $2.5 million and ended the quarter at 1.26% of total loans.

• Anticipates loan growth of mid-single digits in the first half and high mid-single digits in the second half of 2025, driven in part by newly hired bankers. - Believes net interest margin can remain relatively stable over the next several quarters even if the Fed cuts rates more. - Core non-interest income run rate, excluding security losses, is flat year over year at about $12.7 million, with fees expected to be approximately $13 to $14 million per quarter.

• Macroeconomic uncertainty impacts loan pull-through rates. - Hesitancy in the C&I space due to economic outlook uncertainty. - Credit risk related to international trade factors, including impacts on construction costs, inventory levels, raw material sourcing, etc.

Q: Thoughts on deals in the environment and timing on crossing $10 billion without a deal A: There are still many conversations in the marketplace. Anticipate crossing $10 billion sometime in the second half of the year and are fully prepared for regulatory requirements Q: Spreads on C&I and CRE and competitiveness A: Spreads in C&I space haven't expanded or contracted in Q1, with hesitancy due to economic outlook uncertainty; on CRE side, some regional banks are more aggressive, putting pressure on spreads Q: Impact of tariffs on borrower base from credit perspective and reserves A: Manage risk through data gathering and deep customer conversations; reserves are closer to the bottom given current environment but contingent on better economic outlook Q: Loan yields, new loan yields, and securities cash flow expectations A: New loan yields in the 6.75% range, beating paid level by about 25 basis points; securities mature about $50 to $75 million every quarter, still picking up at least 150 basis points Q: Hiring expectations and pipeline growth A: Currently recruiting C&I bankers, supporting pipeline expansion, with上半年 mid-single digit loan growth expected and second half high mid-single digit growth, affected by macroeconomic factors