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S&T BANCORP INC (STBA)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 EPS was $0.86 and net income $33.1M; sequentially up from $0.85/$32.6M in Q3, but down from $0.96/$37.0M in Q4’23 as lower rates and a $2.6M securities loss weighed on revenue lines . NIM (FTE) slipped 5 bps q/q to 3.77% but remains robust; ROA/ROE held at 1.37%/9.57% .
  • Balance sheet trends were positive: loans +$53.9M (2.8% annualized), deposits +$128.3M (customer +$78.3M), and borrowings −$88.1M q/q, aided by deposit inflows; DDA balances reached ~29% of total per management .
  • Asset quality improved: provision was −$2.5M, net recoveries of ~$0.1M, ACL/loans fell 5 bps q/q to 1.31%, and NPAs declined to 0.36% of loans+OREO .
  • 2025 outlook: management expects NIM to hold in the mid‑3.70% area even if cuts occur; NII to be flat in Q1 then grow from Q2; expense run‑rate ~$55–56M in 1H25 and ~$57M in 2H25; loan growth mid‑single‑digit 1H25 and high mid‑single‑digit for FY25 .
  • Dividend raised to $0.34 (3.56% annualized yield at $38.16 close) payable Feb 27, 2025; capital levels remain strong (CET1 14.58%, TCE/TA 10.82%), supporting organic growth and potential M&A optionality .

What Went Well and What Went Wrong

  • What Went Well

    • Deposit franchise momentum: sixth consecutive quarter of meaningful customer deposit growth; total deposits +$128.3M q/q and customer deposits +$78.3M, enabling $88.1M reduction in borrowings .
    • Credit beat: negative provision (−$2.5M) and net recoveries (~$0.1M) as NPAs fell to 0.36% and ACL/loans decreased to 1.31% .
    • Constructive 2025 setup: “We believe…within a couple of basis points at the bottom for the net interest margin…mid‑3.70% area will hold even if rate cuts materialize,” with NII growth resuming from Q2’25 and pipelines doubling y/y, strongest commercial production in 3 years .

  • What Went Wrong

    • Spread pressure: NIM (FTE) declined 5 bps q/q to 3.77% and NII fell by $1.2M q/q as earning asset yields fell 15 bps with lower fed funds; deposit and borrowing costs improved but only partially offset .
    • Noninterest income headwind: $2.6M realized securities loss related to portfolio repositioning; total noninterest income declined to $11.1M (down $0.8M q/q; down $7.0M y/y) .
    • Efficiency drifted higher: efficiency ratio (FTE) rose to 56.93% vs 55.88% in Q3; full‑year 2024 efficiency at 55.99% vs 51.35% in 2023; management guided expenses higher in 2H25 as investments continue .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Net Income ($mm)$37.047 $32.590 $33.065
Diluted EPS ($)$0.96 $0.85 $0.86
Net Interest Income ($mm)$85.109 $84.477 $83.258
Noninterest Income ($mm)$18.061 $11.877 $11.071
Provision for Credit Losses ($mm)$0.943 $(0.454) $(2.462)
Noninterest Expense ($mm)$56.203 $55.365 $55.445
NIM (FTE) (%)3.92% 3.82% 3.77%
ROA (annualized) (%)1.55% 1.35% 1.37%
ROE (annualized) (%)11.79% 9.58% 9.57%
PPNR / Avg Assets (%)1.97% 1.78% 1.72%

KPIs and Balance Sheet

KPIQ4 2023Q3 2024Q4 2024
Total Portfolio Loans (EOP, $mm)$7,653.341 $7,689.054 $7,742.958
Total Deposits (EOP, $mm)$7,521.769 $7,654.841 $7,783.117
Total Borrowings (EOP, $mm)$503.635 $338.418 $250.314
Nonperforming Assets ($mm)$23.022 $31.889 $27.945
NPA / Loans+OREO (%)0.30% 0.41% 0.36%
ACL / Loans (%)1.41% 1.36% 1.31%
Net Loan (Recov.)/Charge‑offs ($mm)$3.620 $2.137 $(0.058)
CET1 Capital Ratio (%)13.37% 14.37% 14.58%
TCE / Tangible Assets (%)9.88% 10.86% 10.82%

Notes:

  • Q4’24 deposit growth included $50M higher brokered CDs; customer deposits were up $78.3M (4.15% annualized) .
  • Yield on average earning assets fell 15 bps q/q to 5.78%; interest‑bearing liability costs fell 14 bps to 3.03% .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
NIM (FTE) level2025Stabilize in low 3.70s early 2025 Hold in mid‑3.70s even with cuts Maintained/slightly higher tone
Net Interest Income2025Not explicit in Q3Flat Q1; growth resumes from Q2; low single‑digit YoY for 2025 Introduced
Expenses (run‑rate)2025~$54–55M per quarter ~$55–56M (1H25); ~ $57M (2H25) per quarter Raised
Loan growth2025Mid‑single digits Mid‑single digits 1H25; high mid‑single digits FY25 Raised
Funding repricing1H25Short‑duration CDs repricing; non‑maturity cuts ahead Repricing >$100M/month in CDs; additional deposit cuts as rates fall Maintained/updated cadence
ACL/Provision2025ACL need moderating; provision to support growth Reserve % could drift modestly lower; provision to fund growth Maintained
DividendQ1’25$0.33 (prior) $0.34 declared; 3.56% yield at $38.16 close Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2’24 and Q3’24)Current Period (Q4’24)Trend
NIM trajectory & rate sensitivityQ2: Near bottom; 2–3 bps NIM compression per initial cuts . Q3: Expect 10–12 bps more compression; stabilize low 3.70s early ’25 .Within a couple bps of bottom; mid‑3.70s should hold even if cuts occur .Stabilizing
Deposit franchiseQ2: Strong growth; DDA increased . Q3: Fifth consecutive customer deposit growth; reduced wholesale/brokered .Sixth consecutive deposit growth; +$128.3M total; customer +$78.3M; DDA ~29% of balances .Improving
Asset qualityQ2: C&C down 12% q/q; net recovery; ACL 1.38% . Q3: NPA 0.41%; negative provision; ACL 1.36% .Negative provision (−$2.5M); net recoveries; ACL 1.31%; NPA 0.36% .Improving
Loan growth pipelinesQ2: Pipelines strengthening; more C&I . Q3: Pipeline +50% q/q; expect Q4 growth .Strongest commercial production in 3 years; pipelines doubled y/y; plan to continue hiring; 2025 mid to high mid‑single‑digit growth .Improving
Securities repositioningQ2: ~$49M trade; +370 bps pickup . Q3: ~$48–49M; $2.2M loss .~$45M; $2.6M loss; cumulative ~$143M repositioned; ~$1M/quarter NII benefit into 2025 .Tactical; benefit building
M&A optionalityQ3: Preparing; strong capital; geography focus .Conversations “thawing”; opportunistic given record capital .More active
Durbin threshold >$10BQ3: Likely in 2025; $6–7M initial impact; built infrastructure .Not a Q4 focus on call.Neutral

Management Commentary

  • CEO: “I’m incredibly proud of our results…Our performance was driven through…growth in our customer deposit franchise and ongoing improvement in asset quality…record levels of capital…enter 2025 with…momentum and optimism about S&T’s growth prospects.” .
  • CFO: “We believe that we are within a couple of basis points at the bottom for the net interest margin rate…mid‑3.70% area will hold even if rate cuts materialize…NII growth as we move into the second quarter of ’25…quarterly [expenses] ~$55–56M in 1H and ~$57M in the back half.” .
  • President: “Q4 was our strongest loan production quarter in 3 years…pipelines…doubling year‑over‑year…anticipate mid‑single‑digit growth in the first half of 2025 and high mid‑single‑digit growth for the full year.” .
  • Funding dynamics: “Repricing well over $100 million per month” in CDs in early 2025; additional deposit repricing expected if rates fall .

Q&A Highlights

  • Loan growth cadence: Analysts pressed for 2025 run‑rate; management targeting mid‑single‑digits 1H and high mid‑single‑digits for full‑year; pipelines doubled y/y with continued banker hiring (~15% team growth in 2024; plan to recruit through 2025) .
  • Credit/Reserves: C&C assets down to ~2.75% of loans; reserve % could drift lower, though dollars could rise with growth; no segment causing outsized concern .
  • NIM under further cuts: Margin expected stable even with additional cuts as deposit repricing deepens and swaps/CDs reprice; deposit cost benefits from December cut expected to flow in Q1 .
  • Deposit competition/funding: Will balance growth and pricing; may need to be “a little more aggressive” on deposits to fund higher loan growth if competitive intensity rises .
  • M&A: Management sees more active dialogue and believes S&T is a strong partner given capital and franchise, but remains opportunistic .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4’24 EPS and revenue was unavailable due to data access limits at time of analysis, so we cannot assess beat/miss versus consensus. As a result, estimate-based comparisons are omitted. (We attempted to retrieve S&P Global estimates but encountered a request limit error.)
  • Internally reported “core” run‑rate commentary: management indicated core noninterest income runs ~$13–14M/quarter and expects NII growth to resume from Q2’25 .

Key Takeaways for Investors

  • Credit tailwind: Negative provision, net recoveries, and lower ACL/loans position S&T to support growth without outsized credit costs near term; watch for provisioning to track loan growth, not stress .
  • Spread resilience: NIM appears near a bottom and is guided to hold mid‑3.70s in 2025 even with cuts; combined with loan growth, this sets up NII inflection from Q2 .
  • Funding lever: Six consecutive quarters of customer deposit growth, DDA near 29% and >$100M/month CD repricing create room to manage funding costs as the curve evolves .
  • Operating leverage watch: Securities losses masked core trends; expense guide steps up into 2H25, so delivery on NII growth and fee initiatives (e.g., mortgage sales) will be key to protecting efficiency .
  • Capital and dividend: Robust CET1/TCE/TA support dividend growth (to $0.34) and optionality for inorganic moves; any M&A could be a catalyst if accretive and complementary to geography .
  • 2025 playbook: Expect mid‑single‑digit loan growth early, accelerating later; stable margin; modest NII growth in low single digits; focus on deposit franchise and selective securities optimization .
  • Risk checks: Monitor deposit pricing competition, pace of Fed cuts versus asset repricing, and any re‑emergence of credit normalization, though current tone is constructive .

Additional Details and References

  • Press Release and 8‑K: financial tables, highlights, and dividend declaration -.
  • Q4’24 Earnings Call: prepared remarks and Q&A on NIM, NII, expenses, loan pipelines, deposit strategy, and M&A - -.
  • Prior quarters used for trend analysis: Q3’24 press release and call; Q2’24 call - - -.