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S&T BANCORP INC (STBA)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 EPS was $0.87, up from $0.86 in Q4 2024 and $0.81 in Q1 2024; EPS and “total revenue” (S&P Global framework) were above consensus, driven by a 4 bp NIM expansion to 3.81%, lower cost of funds, and excellent asset quality including net recoveries and a negative $3.0M provision .
  • Loans grew $93.4M (4.89% annualized) and deposits rose $109.8M (5.72% annualized), with customer deposits up $134.7M (7.23% annualized) and reductions in brokered deposits and borrowings, reinforcing funding mix improvement .
  • Management expects margin stability over the next several quarters and net interest income improvement, supported by securities repositioning ($193.6M cumulative) that should add ~$5.0M to 2025 NII, CD repricing, and swap ladder roll-offs .
  • Strategic narrative remains growth-oriented: pipelines up ~40% since year-end, hiring C&I bankers, and expected asset crossover above $10B in 2H 2025; dividend maintained at $0.34 per share (up $0.01 YoY) .

What Went Well and What Went Wrong

What Went Well

  • “Strong customer deposit and loan growth” with customer deposits +$134.7M and loans +$93.4M; NIM rose 4 bps to 3.81% and asset quality was “excellent,” per CEO Chris McComish .
  • Cost of funds fell 12 bps QoQ (2.87% vs 3.03%) while NIM improved; CFO highlighted margin stability supported by repricing levers (fixed/ARM loans, securities, swap ladder, short-duration CDs) .
  • Securities repositioning cumulative $193.6M expected to increase 2025 NII by ~$5.0M; capital strengthened with TCE/TA at 11.16% (up QoQ) .

What Went Wrong

  • Noninterest income fell $0.7M QoQ to $10.4M, reflecting seasonally lower debit/NSF activity and a $2.3M realized securities loss in the quarter (though aligned with the repositioning strategy) .
  • Efficiency ratio ticked up to 56.99% (from 56.93% in Q4), and management guided a higher opex run rate of ~$55.5–$57.0M for the remainder of 2025 (vs ~$54–55M prior) to support growth investments .
  • C&I balances declined by ~$19.9M QoQ amid customer hesitancy and macro/trade uncertainty; spreads in CRE faced competitive pressure from larger banks .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Diluted EPS ($)$0.81 $0.86 $0.87
“Total Revenue” (S&P Global, $USD Millions)$93.68*$99.69*$96.79*
Net Interest Income ($USD Millions)$83.48 $83.26 $83.32
Net Interest Margin (FTE, %)3.84% 3.77% 3.81%
Noninterest Income ($USD Millions)$12.83 $11.07 $10.43
Efficiency Ratio (non-GAAP, %)56.21% 56.93% 56.99%
ROA (Annualized, %)1.32% 1.37% 1.41%
ROE (Annualized, %)9.74% 9.57% 9.67%

Values with * retrieved from S&P Global.

KPIs and balance sheet:

KPIQ1 2024Q4 2024Q1 2025
Total Portfolio Loans ($USD Millions)$7,656.03 $7,742.96 $7,836.35
Total Deposits ($USD Millions)$7,600.35 $7,783.12 $7,892.93
Total Borrowings ($USD Millions)$373.53 $250.31 $195.31
ACL / Total Loans (%)1.37% 1.31% 1.26%
NPA / Loans + OREO (%)0.44% 0.36% 0.29%
Net Loan (Recoveries) Charge-offs (Annualized / Avg Loans, %)0.35% 0.00% (0.00%)

Loan composition and changes:

Category ($USD Millions)Q4 2024 LevelQ1 2025 LevelChange vs Q4 2024
Commercial Real Estate$3,388.02 $3,462.25 +$74.2
Commercial & Industrial$1,540.40 $1,520.48 −$19.9
Commercial Construction$352.89 $380.13 +$27.3
Residential Mortgage$1,649.64 $1,670.75 +$21.1
Home Equity$653.76 $660.59 +$6.83
Installment & Other Consumer$104.76 $98.17 −$6.59
Consumer Construction$53.51 $43.99 −$9.52

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Margin (FTE)2025 near termStabilization in low 3.70s early 2025 (post cuts) Maintain relatively stable margin over next several quarters; potential slight expansion if Fed on hold Maintained/Improved confidence
Net Interest Income2025Not explicitly quantifiedShould improve going forward Raised (directional)
Noninterest Expense Run Rate2025~$54–$55M/quarter ~$55.5–$57.0M/quarter for remainder of year Raised
Fee Income Run Rate2025~$13–$14M/quarter ~$13–$14M/quarter (ex security losses) Maintained
Loan Growth2025Mid-single-digit for 2025 Mid-single-digit near term rising to high mid-single-digit in 2H 2025 Raised for 2H
Asset Crossover >$10B2H 2025Discussed for 2025 Anticipated in second half 2025; prepared for Durbin impact Affirmed timing
DividendQ1/Q2 2025$0.33 in prior year$0.34 declared (Jan 29 and Apr 30, 2025) Increased YoY

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
NIM outlook & driversGuide to stabilization low ~3.70s in early 2025 post cuts; cost of funds peak, deposits repriced NIM 3.77%, cost of funds −11 bps QoQ NIM 3.81%, cost of funds 2.87% (−16 bps); stable margin outlook with swaps/CDs, repricing Improving stability
Deposit franchise growth+$100M customer deposits; reduce brokered/wholesale +$78.3M customer deposits; brokered CDs +$50M +$134.7M customer deposits; brokered deposits −$24.9M; borrowings −$55.0M Strong, consistent
Asset qualityACL down to 1.36%; criticized/classified down; NCOs $2.1M NPA 0.36%; negative provision; net recoveries NPA 0.29%; negative $3.0M provision; net recoveries Strengthening
Securities repositioning~$49M loss; offset absent vs Q2 Loss $2.6M; continued repositioning $2.3M loss; cumulative $193.6M; adds ~$5M to 2025 NII Executed; accretive
Macro/trade & tariffsPreparing for Durbin; loan payoff dynamics and competition Capital strong; dividend up Added underwriting focus on foreign trade exposure; monthly AR/AP monitoring for $750M exposure; observed C&I hesitancy Heightened monitoring
Growth hiring & pipelinesPipelines +50%; expect Q4 loan growth Momentum; strong customer conversations Pipelines up ~40% since year-end; recruiting C&I bankers; hiring supports H2 growth Building capacity
M&A / crossing $10BTargeted geographies (PA, OH, MD/VA/DC); $6–$7M Durbin headwind —Active conversations; crossing $10B anticipated 2H 2025; ready for oversight Ongoing; execution readiness

Management Commentary

  • CEO: “We are pleased to report a strong first quarter driven by solid customer deposit and loan growth, an increase in net interest margin and excellent asset quality.”
  • CFO: “The first quarter net interest margin rate increased 4 basis points to 3.81%…our balance sheet interest rate risk position is close to neutral, and we believe that we can maintain a relatively stable margin over the next several quarters…A more stable net interest margin, combined with our growth outlook, should translate into net interest income improvement going forward.”
  • President: “Customer deposit growth of $135 million or 7.23% annualized…total loan growth of $93 million or 4.89% annualized…pipelines are up nearly 40% since year-end…we expect growth acceleration in the back half of 2025.”
  • Risk/Trade: “We’ve added additional underwriting focus on foreign trade exposure…our C&I portfolio includes ~$750 million of exposure with monthly AR/AP reporting, enabling us to extract international exposure and manage credit risk.”

Q&A Highlights

  • M&A and $10B asset crossover: Crossing above $10B expected in 2H 2025; company is prepared for added regulatory requirements; ongoing inorganic and organic conversations .
  • Pricing/spreads: C&I spreads flat amid borrower hesitancy; CRE spreads pressured by larger/regional banks; competitive landscape acknowledged .
  • Tariffs and credit: Active monitoring of borrower international exposure; observed floorplan paydowns in anticipation of tariff impacts on retail auto prices .
  • Reserves: Q1 reserve decline tied to specific reserve release; absent that, reserve would have increased ~$1.5M; current ACL near bottom given environment .
  • Loan yields/securities cash flows: New loan yields ~6.75% (about +25 bps vs paid); securities maturities $50–75M/quarter, pickup 100–150 bps; swap ladder ~$50M/quarter, ~200 bps pickup; supports margin stability .

Estimates Context

MetricQ1 2024Q4 2024Q1 2025
EPS Consensus Mean ($)0.784*0.7725*0.748*
EPS Actual ($)0.81 0.86 0.87
Revenue Consensus Mean ($USD Millions)98.02*96.90*96.40*
Revenue Actual ($USD Millions)93.68*99.69*96.79*

Values with * retrieved from S&P Global.

  • Q1 2025: EPS beat by $0.12 and revenue slightly above consensus; beats driven by margin expansion and lower funding costs, plus negative provision and net recoveries supporting profitability .
  • Prior quarters: Q4 2024 showed both EPS and revenue above consensus; Q1 2024 EPS slightly above, revenue below consensus (pressure from higher funding costs at that time) .

Key Takeaways for Investors

  • Strong quality beat: EPS $0.87 and a modest revenue beat on margin expansion and cost-of-funds declines; asset quality continues to be a differentiator with net recoveries and lower NPAs supporting negative provision .
  • Funding mix tailwind: Customer deposit growth and reductions in brokered deposits/borrowings are supporting NIM; expect stable-to-slightly improving margin if the Fed remains on hold .
  • NII visibility: ~$5M uplift from securities repositioning in 2025, plus repricing levers (CDs, swaps, fixed/ARM loans/securities) should underpin NII growth .
  • Growth acceleration potential: Pipelines +~40% since year-end and added banker capacity point to mid-single-digit loan growth near term, rising to high mid-single-digit in 2H 2025 .
  • Watch macro/trade dynamics: Management is actively monitoring tariff impacts and international exposure; C&I hesitancy could persist, but underwriting approach and data visibility mitigate risk .
  • Capital and dividend: Capital levels robust (TCE/TA 11.16%); dividend $0.34/share maintained with YoY increase, providing attractive carry .
  • Catalysts: Continued NIM stability, organic loan growth in H2, $10B asset crossover readiness, and any incremental fee upside (mortgage sales) can support estimate revisions and sentiment .