SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-12508
S&T BANCORP, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1434426
(State or other jurisdiction of (I.R.S.EMPLOYER
incorporation or organization) Identification No.)
800 Philadelphia Street, Indiana, PA 15701
(Address of principal executive offices) (Zip Code)
(412) 349-2900
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange
Act of 1934 during the preceding 12 months (or for such shorter periods
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES X NO
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date.
Common Stock, $2.50 Par Value - 11,235,668 shares as of October 20, 1995
<PAGE>
INDEX
S&T BANCORP, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Condensed consolidated balance sheets -
September 30, 1995 and December 31, 1994 3
Condensed consolidated statements of income -
Three months and nine months ended September 30, 1995 4
Condensed consolidated statements of cash flows -
nine months ended September 30, 1995 and 1994 5
Notes to condensed consolidated financial statements 6-9
Item 2. Management's discussion and analysis of financial
condition and results of operations 10-16
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 18
<PAGE>
<TABLE>
<CAPTION>
S&T BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1995 1994
<S> (000's omitted except share data)
ASSETS <C> <C>
Cash and due from banks $33,791 $38,791
Interest-earning deposits
with banks 425 3,824
Securities available for sale 149,019 118,904
Investment securities 194,784 187,220
Total loans 964,280 924,408
Less allowance for loan losses (15,518) (14,331)
Net Loans 948,761 910,077
Premises and equipment 14,831 14,690
Other assets 18,799 20,231
TOTAL ASSETS $1,360,410 $1,293,737
LIABILITIES
Deposits:
Noninterest-bearing demand $107,483 $111,345
Interest-bearing demand 93,611 97,970
Money market 115,633 104,296
Savings 129,498 139,648
Time 501,322 449,981
Total Deposits 947,546 903,240
Securities sold under repurchase 142,611 169,871
agreements
Federal funds purchased 12,075 19,590
Other borrowed funds 360 430
Long-term borrowing 85,606 43,405
Other liabilities 13,988 15,614
TOTAL LIABILITIES 1,202,186 1,152,150
SHAREHOLDERS' EQUITY
Common stock $2.50 par value,
25,000,000 shares authorized 29,552 29,552
and 11,820,944 issued
Additional paid in capital 10,809 10,217
Retained earnings 109,077 99,824
Net unrealized holding gains on 16,323 8,406
securities available for sale
Treasury stock (585,741 shares at
September 30, 1995 and 555,223 (7,177) (5,982)
at December 31, 1994)
Deferred compensation (360) (430)
TOTAL SHAREHOLDER'S EQUITY 158,224 141,587
TOTAL LIABILITIES AND
SHAREHOLDER'S EQUITY $1,360,410 $1,293,737
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
S&T BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For Three Months Ended For Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> (000's omitted except per share data)
INTEREST INCOME <C> <C> <C> <C>
Loans, including fees $21,694 $18,144 $63,626 $51,596
Deposits with banks 5 71 136 210
Federal funds sold 18 3 32 10
Investment securities:
Taxable 4,399 4,237 12,512 12,920
Tax-exempt 442 522 1,359 1,645
Dividends 619 591 1,880 1,730
Total Interest Income 27,177 23,568 79,545 68,111
INTEREST EXPENSE
Deposits
Interest-bearing demand 378 408 1,127 1,246
Money market 1,134 872 3,330 2,312
Savings 794 890 2,420 2,604
Time 7,159 5,706 20,121 16,985
Securities sold under 2,164 1,596 6,872 4,157
repurchase agreements
Federal funds purchased 56 181 430 374
Long term borrowing 1,129 276 2,764 927
Other borrowed funds 7 13 23 36
Total Interest Expense 12,821 9,942 37,087 28,641
NET INTEREST INCOME 14,356 13,626 42,458 39,470
Provision for loan losses 1,100 800 2,600 2,100
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 13,256 12,826 39,858 37,370
NONINTEREST INCOME:
Trust fees 541 486 1,753 1,548
Service charges on deposit 781 623 2,151 1,809
accounts
Net securities/nonrecurring
gains 317 (17) 676 447
Other 460 529 1,452 1,587
Total Noninterest Income 2,099 1,621 6,032 5,391
NONINTEREST EXPENSE
Salaries and employee benefits 4,449 4,188 13,236 12,655
Occupancy expense, net 538 476 1,582 1,557
Equipment expense, net 404 417 1,506 1,485
Data processing 368 347 1,082 1,047
FDIC assessment 55 509 1,076 1,520
Other 2,347 1,963 6,601 5,805
Total Noninterest Expense 8,161 7,900 25,083 24,069
INCOME BEFORE INCOME TAXES 7,194 6,547 20,807 18,692
Applicable income taxes 1,986 1,816 5,601 4,869
NET INCOME $5,208 $4,731 $15,206 $13,823
PER COMMON SHARE
Net Income $0.46 $0.42 $1.35 $1.21
Dividends 0.18 0.15 0.53 0.44
Average Common Shares Outstanding 11,233 11,279 11,244 11,281
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
S&T BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended September 30
1995 1994
<S> (000's omitted)
Operating Activities <S> <S>
Net Income $15,206 $13,823
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 2,600 2,100
Provision for depreciation and amortization 1,016 960
Net amortizaton of investment security premiums 613 981
Net accretion of loan and deposit discounts (762) (768)
Net gains on sales of securities available for (447) (441)
sale
Net investment security gains (6)
(Decrease) increase in deferred income taxes (254) 186
Increase in interest receivable (1,693) (1,384)
Increase in interest payable 3,376 1,823
Increase in other assets (627) (681)
(Decrease) increase in other liabilities (5,109) 178
Net Cash Provided by Operating Activities 13,919 16,771
Investing Activities
Net redemption (increase) of interest-earning
deposits with banks 3,399 (168)
Proceeds from sales of investment securities 356
Proceeds from maturities of investment securities 18,224 31,758
Proceeds from maturities of securities available 8,000 14,000
for sale
Proceeds from sales of securities available 14,163 22,224
for sale
Purchases of investment securities (25,713) (14,800)
Purchases of securities available for sale (40,338) (25,148)
Net increase in loans (75,262) (80,648)
Proceeds from the sale of loans 34,739
Purchases of premises and equipment (1,442) (1,620)
Proceeds from the sale of premises and equipment 28 18
Net Cash Used by Investing Activities (64,202) (54,028)
Financing Activities
Net (decrease) increase in demand, NOW and
savings deposits (7,035) 14,824
Net increase in certificates of deposit 51,341 2,467
Net (decrease)increase in repurchase agreements (27,260) 25,351
Net(decrease)increase in federal funds purchased (7,515) 2,025
Increase in long-term borrowing 42,201 3,429
Acquisition of treasury stock (1,878) (567)
Sale of treasury stock 1,275 1044
Cash dividends paid to shareholders (5,846) (4,733)
Net Cash Provided by Financing Activities 45,283 43,840
(Decrease) Increase in Cash and Cash Equivalents (5,000) 6,583
Cash and Cash Equivalents at Beginning of Period 38,791 32,936
Cash and Cash Equivalents at End of Period $33,791 $39,519
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results
for the nine month period ended September 30, 1995 are not necessarily
indicative of theresults that may be expected for the year ending
December 31, 1995. For further information, refer to the consolidated
financial statements and footnotes thereto included in the annual report
on Form 10-K for the year ended December 31, 1994.
NOTE B--SECURITIES
<TABLE>
<CAPTION>
The amortized cost and estimated market value of securities as of September 30
are as follows:
1995 Available for Sale
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> (000's omitted)
Marketable equity <C> <C> <C> <C>
securities $32,982 $24,242 ($196) $57,028
Obligations of U.S. government
corporations and agencies 35,532 387 35,919
Collateralized mortgage
obligations of U.S.
government corporations
and agencies 5,127 (127) 5,000
U.S. Treasury securities 50,266 806 51,072
$123,907 $25,435 ($323) $149,019
<CAPTION>
1995 Investment Securities
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> (000's omitted)
U.S. Treasury bonds and
obligations of U.S.
government corporations <C> <C> <C> <C>
and agencies $138,058 $3,702 ($446) $141,314
Collateralized mortgage
obligations of U.S.
government corporations
and agencies 12,103 178 12,281
Obligations of states and
political subdivisions 30,345 885 (17) 31,213
Corporate securities 2,682 305 2,987
183,188 5,070 (463) 187,795
Other securities 11,596 0 0 11,596
Total $194,784 $5,070 ($463) $199,391
</TABLE>
<PAGE>
S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Continued
<TABLE>
<CAPTION>
NOTE B-SECURITIES
The amortized cost and estimated market value of securities as of December 31
are as follows:
1994 Available for Sale
Gross Gross Estimated
Amortized UnrealizedUnrealized Market
Cost Gains Losses Value
(000's omitted)
<S> <C> <C> <C> <C>
Marketable equity
securities $32,122 $15,864 ($1,568) $46,418
Collateralized mortgage
obligations of U.S.
government corporations
and agencies 5,147 (597) 4,550
U.S. Treasury
securities 68,704 67 (835) 67,936
$105,973 $15,931 ($3,000) $118,904
1994 Investment Securities
Gross Gross Estimated
Amortized UnrealizedUnrealized Market
Cost Gains Losses Value
<S> (000's omitted)
U.S. Treasury bonds
and obligations of U.S.
government corporations<C> <C> <C> <C>
and agencies $130,456 $99 ($4,508) $126,047
Collateralized mortgage
obligations of U.S.
government corporations
and agencies 14,451 30 (68) 14,413
Obligations of states
and political
subdivisions 32,816 295 (542) 32,569
Corporate securities 4,038 129 4,167
181,761 553 (5,118) 177,196
Other securities 5,459 5,459
Total $187,220 $553 ($5,118) $182,655
During the period ended September 30, 1995, there were $1,073,582 in realized gains
and $626,386 in realized lossed relative to securities available for sale.
The amortized cost and estimated market value of debt securities at
September 30, 1995, by contractual maturity, are shown below:
</TABLE>
<TABLE>
<CAPTION>
Estimated
Amortized Market
Available for Sale Cost Value
<S> <C> (000's omitted)<C>
Due in one year or less $22,051 $22,195
Due after one year through 41,090 41,889
five years 22,657 22,907
Due after five years through 5,127 5,000
ten years
Total $90,925 $91,991
</TABLE>
<PAGE>
S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Continued
<TABLE>
<CAPTION>
NOTE B-SECURITIES
Estimated
<S> Amortized Market
Investment Securities Cost Value
<C> (000's omitted)<C>
Due in one year or less $7,995 $8,062
Due after one year through
five years 83,285 84,837
Due after five years through
ten years 78,549 81,398
Due after ten years 13,359 13,498
Total $183,188 $187,795
</TABLE>
At September 30, 1995 and December 31, 1994 investment securities with a
principal amount of $211,491,000 and $230,171,000 respectively, were
pledged to secure repurchase agreements and public and trust fund
deposits.
NOTE C--LOANS AND ALLOWANCE FOR LOAN LOSSES
The composition of the loan portfolio was as follows:
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
(000's omitted)
<S> <C> <C>
Real estate - construction $32,296 $32,714
Real estate - mortgages:
Residential 369,543 343,935
Commercial 193,909 199,959
Commercial - industrial
and agricultural 222,047 197,028
Consumer installment 146,485 150,772
Total Loans $964,280 $924,408
</TABLE>
Changes in the allowance for loan losses for the nine months ended September 30
were as follows:
<TABLE>
<CAPTION>
1995 1994
(000's omitted)
<S>
Balance at beginning <C> <C>
of period $14,331 $13,480
Charge-offs (2,001) (1,840)
Recoveries 588 676
Net charge-offs (1,413) (1,164)
Provision for loan losses 2,600 2,100
Balance at end of period $15,518 $14,416
</TABLE>
Financial Accounting Standards Board Statement No. 114, "Accounting by
Creditors for Impairment of a Loan" (Statement No. 114) requires certain
loan impairments to be measured using a present value of expected cash
flows method. S&T implemented Statement No. 114 in the first quarter of
1995. Statement No. 114 had no effects on S&T's financial position or
results of operations.
<PAGE>
S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Continued
NOTE D--FINANCIAL INSTRUMENTS
S&T, in the normal course of business, commits to extend credit and issue
standby letters of credit. The obligations are not recorded in S&T's
financial statements. Loan commitments and standby letters of credit
are subject to S&T's normal credit underwriting policies and procedures and
generally require collateral based upon management's evaluation of each
customer's financial condition and ability to satisfy completely the terms
of the agreement. S&T's exposure to credit loss in the event the customer
does not satisify the terms of agreement equals the notional amount of the
obligation less the value of any collateral. Unfunded loan commitments
totaled $163,387,000 and obligations under standby letters of credit totaled
$49,715,000 at September 30, 1995.
At September 30, 1995, S&T had no securities that were subject to covered
option contracts.
<PAGE>
NOTE E - LITIGATION
S&T, in the normal course of business, is subject to various legal
proceedings in which claims for monetary damages are asserted. No
material losses are anticipated by management as a result of these
legal proceedings.
<PAGE>
S&T BANCORP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Equity purchases of preferred and common stocks were
made in order to take advantage of the higher yields
and the dividends received deduction for corporations;
the FHLB stock is a membership and borrowing
requirement. The equities portfolio is currently
yielding 10.6% on a fully taxable equivalent basis
and has $24.0 million of unrealized gains net of
nominal unrealized loss.
Allowance for Loan Losses
The allowance for loan losses increased to $15.5
million or 1.61% of total loans at September 30, 1995
as compared to $14.3 million or 1.55% of total loans
at December 31, 1994. The adequacy of the allowance
for loan losses is determined by management through
evaluation of the loss potential on individual
nonperforming, delinquent and high-dollar loans,
review of economic conditions and business trends,
historical loss experience, growth and composition of
the loan portfolio as well as other relevant factors.
The balance of nonperforming loans, which includes
nonaccrual loans past due 90 days or more, at
September 30, 1995 was $3.4 million or 0.35% of total
loans. This compares to nonperforming loans of $1.9
million or 0.21% of total loans at December 31, 1994.
Asset quality is the major corporate objective at S&T
and management believes that the total allowance for
loan losses is adequate to absorb probable loan
losses.
Deposits
Average total deposits increased by $14.5 million for
the nine months ended September 30, 1995 compared to
the 1994 average. Changes in the average deposit mix
include a $30.4 million increase in time deposits and
$1.5 million in demand deposits, offset by a $17.4
million decrease in NOW's, money market and savings
accounts, as compared to the annual 1994 average.
These changes can be partially explained by customer
preferences for higher-yielding, longer-term
certificates of deposits in a rising interest rate
environment and the withdrawal of some temporary
corporate funds deposited in December 1994.
Special rate deposits of $100 thousand and over were
6% of total deposits at September 30, 1995 and
December 31, 1994 and primarily represent deposit
relationships with local customers in our market area.
Management believes that the S&T deposit base is
stable and that S&T has the ability to attract new
deposits, mitigating a funding dependency on volatile
liabilities. In addition, S&T has the ability to
access both public and private markets to raise
long-term funding if necessary. During 1995, S&T
<PAGE>
S&T BANCORP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
issued $25 million of retail certificates of deposits
through two brokerage firms, further broadening the
availability of reasonably priced funding sources.
Borrowings
Average borrowings increased $53.2 million for the
nine months ended September 30, 1995 compared to the
1994 annual average and were comprised of retail
repurchase agreements (REPO's), wholesale REPO's,
federal funds purchased and long-term borrowings.
During the first nine months of 1995, S&T obtained
long-term borrowings of $37.5 million at an adjustable
rate and $4.7 million at a fixed rate with the FHLB in
order to mitigate the funding risks associated with
short-term borrowings. S&T defines repurchase
agreements with its local, retail customers as retail
REPOS; wholesale REPOS are those transacted with other banks
and brokerage firms with terms normally ranging
from 1 to 14 days.
The average balance in retail REPOS increased
approximately $23.3 million for the first nine months
of 1995 compared to the full year 1994 average. The
customer preference for this type of account is due to
collateralization feature and the slightly higher
rates that S&T could make available because of the
lack of FDIC insurance premiums. Average wholesale
REPO's, long-term borrowings and federal funds
purchased averaged $141.3 million for the first nine
months of 1995, an increase of $29.9 million over the
1994 average balances. This increase is primarily
related to the funding requirements of an increase in
loan demand, and to take advantage of the relatively
low costs as compared to attracting new deposits
locally.
Capital Resources
Average shareholders' equity increased $10.6 million
at September 30,1995, compared to December 31, 1994.
Net income was $15.2 million for the nine months ended
September 30, 1995 and dividends paid to shareholders
were $6.0 million for the nine months ended September
30, 1995. During the first nine months of 1995, S&T
paid 39% of 1995 net income in dividends, equating to
an annual dividend rate of $0.72 per share.
The book value of S&T's common stock increased 12%
from $12.57 at December 31, 1994 to $14.08 at
September 30, 1995 due to an increase in shareholders'
equity from retained earnings and the positive effect
of Financial Accounting Standards Board Statement No.
115, "Statement on Accounting for Certain Investments
in Debt and Equity Securities." The market price of
S&T's common stock increased 22.0% to $25.00 per share
<PAGE>
S&T BANCORP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
at September 30, 1995 as compared to $20.50 per share
at December 31, 1994.
S&T continues to maintain a strong capital position
with a leverage ratio of 10.4% as compared to the 1993
minimum regulatory guideline of 3.0%. S&T's
risk-based capital Tier I and Total ratios were 13.7%
and 15.0% respectively, at September 30, 1995, which
places S&T well above the Federal Reserve Board's
risk-based capital guidelines of 4.0% and 8.0% for
Tier I and Total, respectively.
RESULTS OF OPERATIONS
Nine months ended September 30, 1995 compared to
Nine months ended September 30, 1994
Net Income
Net income increased to $15.2 million or $1.35 per
share in the first nine months of 1995 from $13.8
million or $1.21 per share for the same period of
1994. The significant improvement during the first
nine months of 1995 was primarily the result of higher
net interest income and noninterest income partially
offset by higher provision and operating expense.
Net Interest Income
On a fully taxable equivalent basis, net interest
income increased $3.1 million or 7% in the first nine
months of 1995 compared to the same period of 1994.
The net yield on interest-earning assets deceased
slightly by 2 basis points to 4.77%. Net interest
income was positively affected by a $79.1 million or
7% increase in average earning assets.
Active management by the Asset Liability Committee
(ALCO) during a period of substantial and
unprecedented rate changes in 1994 and 1995 enabled
S&T to maintain consistent spreads. The earning asset
increase is primarily attributable to a $87 million or
10% loan growth over the past 12 months. New market
penetration in the Allegheny and Westmoreland counties
has been particularly successful.
Provision for Loan Losses
The provision for loan losses increased to $2.6
million for the first nine months of 1995 compared to
$2.1 million in the same period of 1994. The
increase was the result of management's assessment of
economic conditions, credit quality statistics, loan
administration effectiveness and other factors that
would have an impact on future probable losses in the
loan portfolio. Net loan charge-offs totaled $1.4
<PAGE>
S&T BANCORP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
million for the first nine months of 1995 and 1994.
S&T's allowance for loan losses at September 30, 1995
was $15.5 million, or 1.61% of total loans compared to
$14.4 million, or 1.64% of total loans at September
30, 1994. Nonperforming loans to total loans at
September 30, 1995 was 0.35% which is essentially
unchanged from the previous year period.
Noninterest Income
Noninterest income increased 12% in the first nine
months of 1995 compared to the same period of 1994.
Increases included $0.2 million or 13% in trust income
and $0.3 million or 19% in service charges and fees,
offset by a $0.1 million or 9% decrease in other
income.
The increase in trust income was attributable to a
bank wide incentive program and expanded marketing
efforts designed to develop new trust business. The
increase in service charges on deposit accounts was
primarily the result of management's continual effort
to implement reasonable fees for services performed
and to manage closely the collection of these fees.
The decrease in other income was attributable to
decreased performance for the relatively new fee based
businesses of mutual funds and annuities sales in the
first nine months of 1995.
Security/nonrecurring gains increased $0.2 million in
the first nine months of 1995 as compared to the same
period of 1994. Security losses were taken on
available for sale securities in the first nine months
of 1995 in order to reinvest in higher-yielding
investment securities. These losses were offset by
gains from the sale of various equity securities that
were made in order to take advantage of market
opportunities. Included in this category is a $0.2
million gain from the aforementioned sale of student
loans
Noninterest Expense
Noninterest expense increased $1.0 million or 4% at
September 30, 1995 compared to September 30, 1994.
The increase is primarily attributable to employment
costs which increased 5% or $0.6 million, and a $0.3
million contribution to the S&T charitable Foundation.
Offsetting these increases was a $0.4 million decrease
to Federal Deposit Insurance Corporation (FDIC)
premiums. The staff expense increase resulted from
normal merit increases and higher incentive payouts
relative to commercial loan volume, offset by higher
deferral of loan origination costs, also resulting
from commercial loan activity. Average full-time
<PAGE>
S&T BANCORP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
equivalent staff increased from 554 to 567 as compared
to the same period of 1994.
In the third quarter of 1995, FDIC premiums were
reduced from 23bp to 4bp resulting in expense savings
for S&T estimated at $1.4 million annually.
Federal Income Taxes
Federal income tax expense increased $0.7 million or
15% at September 30, 1995 as compared to September 30,
1994 as a result of higher pre-tax income in 1995.
The effective tax rate of 27% was below the 35%
statutory tax rate due to the tax benefits resulting
from tax exempt interest, excludable dividend income
and low income housing tax credits (LIHTC).
Three months ended September 30, 1995 compared to
Three months ended September 30, 1994
Net Income
Net income was $5.2 million or $0.46 per share for the
third quarter of 1995 compared to $4.7 million or
$0.42 per share in the third quarter of 1994, a 10%
improvement.
Net Interest Income
On a fully taxable equivalent basis, net interest
income for the third quarter of 1995 increased $0.8
million from the third quarter of 1994. This
improvement in net interest income resulted from a
higher level of earning assets while maintaining
fairly consistent spreads.
Average earning assets increased by $99.4 million as
compared to the third quarter of 1994, primarily as a
result of a $102.5 million or 12% increase in average
loans. The bulk of funding for this loan growth came
from increased borrowings and slightly higher
deposits.
Net interest margin on a fully taxable equivalent
basis was 4.74% for the third quarter of 1995, as
compared to 4.85% for the same period of 1994.
Provision for Loan Losses
The provision for loan losses was $1.1 million in the
third quarter of 1995 compared to $0.8 million in the
same period of 1994. The increase was the result of
management's assessment of economic conditions, credit
quality statistics, loan administration effectiveness
and other factors that would have an impact on
probable losses in the loan portfolio.
<PAGE>
S&T BANCORP, INC, AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Noninterest Income
Noninterest income increased 29% or $0.5 million to
$2.1 million for the third quarter of 1995 compared to
the same period of 1994. The increase is primarily
attributable to an increase in service charges on
deposit accounts, trust income and security gains,
offset by a slight decrease in other income.
The $0.2 million increase in service charges and fees
on deposit accounts are attributable to pricing and
product changes for fee based services. Management
continually reviews pricing, product enhancements,
collections and market conditions in order to
effectively increase service revenues. Trust income
increased $0.1 million for the third quarter of 1995
compared to the same period of 1994. The increase was
attributable to a bank wide incentive program and
expanded marketing efforts to develop new trust
business. The $0.3 million increase in security gains
resulted from the sale of various equity securities.
Selected bank stocks were sold in order to take
advantage of market opportunities and to reduce the
over concentrations created from recently announced
bank mergers. The decrease of $0.1 million in other
income is attributable to lower letter of credit
origination's during the third quarter of 1995.
Noninterest Expense
Noninterest expense increased 6% or $0.3 million at
September 30, 1995 as compared to the same period of
1994. The increase is primarily attributable to
increases in employment costs, occupancy, and other
noninterest expenses offset by the $0.5 million FDIC
premium refund.
Employment costs increased 6% or $0.3 million in the
third quarter of 1995 compared to the third quarter of
1994. The increase resulted from normal merit
increases, partially offset by a higher deferral of
loan origination costs resulting from commercial loan
activity.
Occupancy, furniture and equipment expenses increased
5% or $0.1 million in the third quarter of 1995
compared to the same period of 1994. The increase is
a result of recent renovations, higher utility costs
and the addition of a new branch office located in a
Wal*Mart Super Center.
Other expenses increased 20% or $0.4 million in the
third quarter of 1995 as compared to the same period
of 1994. The increase is attributable to a $0.3
million funding of S&T's Charitable Foundation and
partnership losses from LIHTC investments. The
<PAGE>
S&T BANCORP, INC, AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
funding of the Charitable Foundation will allow us to
fund community contributions well into the future from
the Foundation and help us to control future costs.
The LIHTC partnership losses are offset by tax
credits. Other expenses were also positively affected
by the aforementioned $0.5 million reduction in FDIC
premiums.
Federal income Taxes
S&T recognized federal income tax expense of $2.0
million for the quarter ending September 30, 1995 and
$1.8 million for the quarter ending September 30,
1994. The third quarter effective tax rate of 28% was
below the 35% statutory tax rate due to the tax
benefits resulting from tax exempt interest,
excludable dividend income and LIHTC.
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereto duly authorized.
S&T Bancorp, Inc.
(REGISTRANT)
/s/ Robert E. Rout
Date: October 31, 1995 Robert E. Rout
Principal Accounting Officer
<TABLE> <S> <C>
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<LEGEND>
This schedule contains summary financial information extracted from SEC
Form 10-Q and is qualified in its entirety by reference to such financial
statements.
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<MULTIPLIER> 1000
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1995
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