S&T Bancorp (NASDAQ:STBA) held its first-quarter earnings conference call on Thursday. Below is the complete transcript from the call.
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The full earnings call is available at https://events.q4inc.com/attendee/396351925
Summary
S&T Bancorp reported a net income of $35 million for Q1 2026, equating to $0.94 per share, marking a 6% increase from Q4 2025.
The company achieved record-high customer deposit growth, surpassing $8 billion, with a significant reduction in wholesale funding.
Loan balances declined by $113 million in Q1 due to competitive pricing and higher commercial real estate payoffs.
The company is expanding its commercial banking team and expects low single-digit loan growth in Q2.
Net interest margin (NIM) declined slightly to 3.92%, but the company expects stability in NIM for the rest of 2026.
The company executed share repurchases totaling $50 million in Q1, with plans to continue repurchases depending on capital levels.
S&T Bancorp is actively exploring M&A opportunities and geographic expansion in Ohio and Eastern Pennsylvania.
Credit quality remained stable with low loan charge-offs and a manageable level of non-performing assets.
Full Transcript
OPERATOR
Welcome to the S&T Bancorp first quarter 2026 earnings conference call. After the management's remarks there will be a question and answer session. Now I would like to turn the call over to Chief Financial Officer Mark Kochvar. Please go ahead.
Mark Kochvar (Chief Financial Officer)
Thank you. Good afternoon everyone. Thank you for participating in today's earnings call. Before beginning the presentation, I want to take time to refer you to our statement about forward looking statements, statements and risk factors. This statement provides the cautionary language required by the Securities and Exchange Commission for forward looking statements that may be included in this presentation. A copy of the first quarter 2026 earnings release, as well as this earnings Supplement slide deck can be obtained by clicking on the Materials button in the lower right section of your screen. This will open up a panel on the right where you can download these items. You can also obtain a copy of these materials by visiting our investor Relations website at With me today are Chris McComish S&T Bancorp's CEO and Dave Van Tolik, S&T Bancorp's President. I'd now like to turn the program
Chris McComish (Chief Executive Officer)
over to Chris Mark, thank you and I want to welcome everybody to the call. Good afternoon. We appreciate the analysts being here with us and we look forward to your questions. I'm going to begin my comments on Page 3. Before I do that though, I want to just reflect on the busy week that it's been here in Western Pennsylvania and in Pittsburgh as Pittsburgh is the center of the sporting universe with the NFL Draft taking place starting today. Mark, Dave and I are actually coming to you from the S&T Bank Draft headquarters in downtown Pittsburgh where there's been quite a buzz. We have significant customer engagement events going on which actually started last yesterday evening and it's very gratifying to see the impact our bank has on the markets we serve and the customer relationships that we've built. A big thank you to our employees and teammates who are leading the charge building our People Forward Bank. We're seeing it firsthand this week with all of these interactions. Turning to the quarter, our $35 million in net income equates to $0.94 per share, up almost 6% from Q4 2025 and 8% from the first quarter a year ago. Return metrics were strong again this quarter highlighted by a 144 return on assets (ROA), up 7 basis points in an return on tangible common equity (ROTCE) of 1322, which was up almost 1% over Q4 2025. Almost $50 million in buybacks in the quarter played a key role in this return on tangible common equity (ROTCE) improvement. Our net interest margin (NIM) and efficiency ratios remain solid at 392 and 55.3% and Mark will provide more details here. Asset quality showed good improvement over the last quarter and Dave will provide more color on both asset quality and loan growth Turning to page four, I'd like to focus on our strong deposit growth for the quarter. Our customer deposit growth was up over $300 million. We achieved the highest level of customer deposit growth in the 125 year history of our company, surpassing $8 billion. This growth was broad based, with all lines of business contributing and all product categories showing growth. In fact, we showed growth in more than 80% of our branches in the market, which is a real testament to the great work our employees are doing with customers every day and the disciplined customer engagement processes that we've built. It really is a strong reflection of the customer relationships that we have. This deposit growth allowed us to reduce wholesale fundings by almost $200 million in the quarter and the quality of the growth was quite strong as our DDA levels relative to total deposits increased to 28% in the quarter, up 1% from Q4 2025. While I'd love to be able to tell you that we'll be able to repeat another 16% annualized growth in Q2, we do want to make sure that we're realistic as there are always temporary fluctuations in deposit balances. We've done an analysis and we do see some seasonal or temporary growth in these balances. However, our analysis would tell you that 150 to 200 million dollars of this growth is what we define as solid core growth in our customer deposit base. Again, even at this level, would be one of the best quarters we've had in our history. So I'll stop right there and turn it over to Dave and he can touch on asset quality and loan growth.
Dave Van Tolik (President)
Great. Thank you Chris and good afternoon everyone. Continuing on page 4 of the presentation, loan balances declined in first quarter by $113 million. Several factors impacted this outcome. First, we entered the new year with a reduced commercial pipeline as a result of solid activity in Q4 of last year. This, along with increased competition for new commercial deals, especially related to pricing, contributed to lower than anticipated new fundings in the first quarter. Second, commercial real estate payoffs were higher than anticipated, primarily as a result of permanent market offerings from insurance companies and other non bank lenders who offer more aggressive pricing and structure. Third, we did see a slight reduction in utilization rates on our revolving credit commitments. first quarter construction fundings were negatively impacted by poor weather, particularly in February, but We anticipate increased draw activity in Q2 as projects move forward. Our unfunded commitments construction commitments remained at similar levels to year end. In our consumer loan categories, we saw reductions in our residential mortgage balances including construction. We anticipate this level of reduced activity in Q2 based on current pipeline and activity. We expect increased growth in our home equity balances for Q2 and we continue to focus on mortgage and home equity products as key components to enhancing customer engagement. Looking forward, we're adjusting our loan growth guidance to low single digits for the second quarter in response to growth pressures. We're focused on adding talent and building for the long term with the goal of increasing our commercial banking team in 2026 primarily focused on commercial and industrial (C&I) additions and some geographic expansion in the commercial real estate (CRE) space. During the first quarter we hired four new commercial bankers and saw a modest increase in our pipelines. Turning to page five, credit results for the quarter were in line with expectations. Non performing assets were down $5.7 million and remain at a manageable level of $50 million or 63 basis points. This reduction was a result of our ability to execute on well defined asset resolution strategies primarily related to one commercial and industrial (C&I) credit that was mentioned last quarter. Loan charge offs were low at $1.7 million or 9 basis points. We saw criticized and classified assets increase during the quarter as compared to year end 2025 when we were at historically low levels. CNC loans remain at a very manageable level and when factored into our reserve methodology, our allowance for credit losses remains stable at 1.17%. Now I'll turn the call over to Mark.
Mark Kochvar (Chief Financial Officer)
Mark, great. Thanks Dave. First quarter net interest income declined by 2.6 million due primarily to 2 fewer days which accounts for 1.4 million and we also had an interest recovery in fourth quarter 2025 that was for 900,000. In addition, strong deposit growth and loan declines led to a higher cash balance as we adjusted our wholesale borrowing levels. The interest recovery in fourth quarter 2025 and higher cash levels in the first quarter were the main reasons behind the net interest margin rate decline in 1Q7 basis points to still a very strong 3.92% with muted expectations for Fed moves in 2026. We expect relative net interest margin (NIM) stability to continue and believe we are well positioned for the remainder of this year should interest rate conditions change. Tailwinds from our maturing receipt fixed swaps along with security, fixed rate loan and certificate of deposit (CD) repricing all contribute to stability in the face of somewhat heightened loan and Deposit pricing competition as you look into 2026 again, we expect relative stability in the net interest margin around the current level with net interest income growth coming from a return of loan growth. Next non interest income it decreased by 0.7 million in the first quarter. Debit credit card activity was seasonally slower and other includes timing related to some letter of credit fees and distributions from some SIDC investments that happened in the fourth quarter. Our expectations for fees in 2026 remained at approximately 13 to 14 million per quarter. On the expense side, they were in line in the first quarter down about 500,000 compared to the fourth quarter. Largest variance was in salaries and benefits and within that medical costs were lower with the reset of deductibles and salaries were lower due to a number of days occupancy was impacted by higher seasonal snow removal costs and utilities. Other taxes also a little bit higher did the Pennsylvania shares tax which is based on equity levels. We expect to manage our 2026 non interest expense year over year increase to around 3% which implies a quarterly run rate of right around $58 million with capital to tangible common equity (TCE) ratio decreased by 43 basis points this quarter primarily due to the share repurchases that we completed in the first quarter. Over 1,146,000 shares. The average price was $43.30 total just under $50 million. That brings our total repurchases over the last two quarters to 85.8 million over 2 million shares to approximately 5.5% of outstanding shares. Our regulatory ratios continue to be very strong with significant excess capital. We have just over 50 million remaining in our authorized repurchase program. We're comfortable with these levels even considering additional repurchases. We have more than sufficient capital, current capital and generation capability to position us well for the environment and enable us to take advantage of organic or inorganic organic or inorganic growth opportunities. Thanks very much. At this time I'd like to turn the call back over to the operator to provide instructions for asking questions.
OPERATOR
Thank you. The floor is now open for questions. If you have any questions, please press star1 on your telephone keypad to remove yourself from the queue. Press Star one again. We ask that while asking your question. Please pick up your phone and turn off speakerphone for enhanced audio quality. We'll go first to Justin Crowley at Piper Sandler.
Chris McComish (Chief Executive Officer)
Hey, good afternoon, everyone. Hi, Justin.
Justin Crowley (Equity Analyst)
Just wanted to start out on the loan growth. I think you touched on it, Dave, but can you give a little more detail just on how origination versus payoff activity fared in the quarter, and and then just a sense of where the pipeline ended, the period at.
Dave Van Tolik (President)
Yeah, sure. So relative to origination activity in first quarter, as I mentioned, we entered the quarter with a little lower pipeline. We built pipeline, but the fallout from the early stage pipeline was a little higher than what we anticipated. And that was primarily a result of increased competition relative to pricing in the space. We had some lower utilization that impacted balance growth and as I mentioned, some construction draws were delayed due to weather. So we know those will happen. We anticipate utilization to improve as we move throughout Q2. It was lower than what we had expected and there's no specific reason for that other than some specific pay downs that were the result of large straws that happened in Q4 and then repaid in first quarter. Overall, the pipeline is up modestly and when I say modestly, 10 to 15% over year end. So as we onboard, new bankers continue to be disciplined around pricing. That all kind of boils down to a little lighter loan growth than what we had expected in Q4.
Justin Crowley (Equity Analyst)
Okay. And then, you know, you mentioned some of the hires and adding bankers. You know, is that coming across the board or you know, is it more weighted towards C&I? I know that's been an area you've talked a lot about in terms of just the investments that you've made there.
Dave Van Tolik (President)
Yeah, the hiring in Q1 was more CNI focused, but we're hiring both CNI and CRE bankers. We still feel really good about our ability to grow cre. We're good at it. We have historically been able to build a brand in that space. So we're adding to that staff as well. Just based on our geographies, there are significant opportunities in the CNI space for us. The CRE space, as I mentioned in the prepared comments, might include some geographic expansion, particularly a combination of the two. We're also adding business bankers, treasury management officers, really growth focused positions to the organization.
Justin Crowley (Equity Analyst)
Okay, great. And then just one last one pivoting a little just, you know, on the margin guide calling for stability here, you know, we think this higher for a longer environment that I suppose is beneficial. So just trying to square some of the puts and takes as far as, you know, loan repricing. I'm not sure if there's, you know, anything that offsets that as far as funding costs. You know, perhaps, you know, maybe moving in the other direction and starting to see upward pressure. You know, what are some of the some of the underlying assumptions there?
Mark Kochvar (Chief Financial Officer)
Yeah, I think, I mean, we're Kind of back to thinking that there's not going to be a lot of rate increase. And given that we would have some natural improvement in margin. But as Dave mentioned, we have seen some higher competitive pressures, particularly on the loan side. So factoring that in that kind of gets us to more a flatter net interest margin (NIM) as we move throughout the year. So we still have those tailwinds, but we think that a lot of that might get absorbed by the more competitive loan environment. Okay, and what does that, you know, I guess is spread tightening. I mean, where is new production coming on the book set and how does that compare to, you know, what's repricing or rolling off? If you have that detail on the spread side, I think we're kind of in the mid like a 2.25 range and we see that slip by 5 or 10 basis points over the last quarter or two.
Dave Van Tolik (President)
Yeah. In the bank competition we saw two deals that I'm thinking of right now that were sub two that we decided not to move forward with or we lost the competition. So for us, it's about getting more looks which leads to adding more bankers and that will allow us to accelerate growth. But we also want to be cognizant of the impact that that growth has on the NIM and net interest income.
Justin Crowley (Equity Analyst)
Understood. Great. I will leave it there. Thank you guys so much.
Dave Van Tolik (President)
Thank you, Justin. Thank you, Justin.
OPERATOR
We'll move next to Daniel Tameo at Raymond James.
Daniel Tameo (Equity Analyst)
Thank you. Good afternoon, everyone. Maybe starting first on the capital and the buyback side, you've got. You did about 50 million in the first quarter. You've got a similar amount remaining in the authorization. I think you just said capital's still really strong. CET1 over 14%. Really, by any measure you look at, do you think that it's in the cards to re up that authorization and continue the repurchase, you know, further out than just the second quarter or how are you guys thinking about the trajectory of buybacks given the level of capital you have and the growth expected?
Mark Kochvar (Chief Financial Officer)
Yeah, I think we would definitely take a very hard look at the remaining authorization. I think we'll see how that goes before we look at the next leg of that. I mean, our internal target ratios, the next 50 will put us quite a bit closer to that. So we may enter more of a maintenance phase in terms of target capital ratios at that point. And so then going forward, it might be more dependent on that growth trajectory from there and how much capital that uses up. Okay. And remind me what the target capital ratio is. If you don't, Mark. Well, we're looking to be approximate, I mean, across the different ratios above kind of median peer levels, between median and 75th percentile. So they vary for the different ratios. But we want to make sure that we have enough to grow and enough to take advantage of a merger that might arise or that might present itself.
Chris McComish (Chief Executive Officer)
Yeah. Danny, this is Chris. That's what I want to reemphasize. Given us the financial flexibility that we have is, is a, you know, is a real benefit for us. So as Mark described that being able to think about this in an and organic growth while at the same time having the financial flexibility should an inorganic opportunity present itself is important to us. But by the same token, we knew as we were getting north of 14% and so we were, it made sense to dial that back, as Mark said, that those ratios closer from 50 to 75th percentile make a lot more sense to us long term.
Daniel Tameo (Equity Analyst)
Understood. And then maybe just diving in a little bit on the, on the hirings. The last question talked about it a little bit, but you said that the new geographic expansion. I think you mentioned Ohio. Just curious if you could provide a little more detail on the markets where you're hiring.
Chris McComish (Chief Executive Officer)
Sure, sure. Well, we've got a group of bankers in Columbus and we're looking westward, like Cincinnati market perhaps, and then in Northeast Ohio expanding more towards Cleveland. So there are opportunities in those two markets that we think we can take advantage of as we grow. We've also in our Eastern Pennsylvania franchise, done a lot of work into Maryland and Delaware, particularly around in the CRE space. So we think there's more opportunity there
Daniel Tameo (Equity Analyst)
for us to grow as well. Okay, great. All right, I'll step back. Thanks for the answers.
Kelly Mata (Equity Analyst)
We'll take our next question from Kelly Mata at kbw. Hey, good afternoon. Thanks for the question. You know, I would love to follow up on that capital question. Since you mentioned M and A, I'll bite on A. If you could. Maybe, Chris, give us an update on, you know, the pace of conversations. Clearly there's a M and A window open at this time and how things
Chris McComish (Chief Executive Officer)
are going, what I would describe them. You know, we're consistently having discussions and we look at opportunities. We're disciplined, as you can tell, and we're going to remain so. But, you know, I think you're right, Kelly. There's a window here that seems to make sense and we would like to capitalize on the right opportunity should it present itself. So we have not, haven't slowed down at all in the number of conversations that we've had and quite honestly the financial performance, the returns that we're able to deliver, that opens up windows for conversations for us. So that's what we want to be able to capitalize on those things.
Kelly Mata (Equity Analyst)
Great. That's great. Color. I would like to switch back to the deposit growth because clearly that was a major highlight of the quarter and something you guys have been working really diligently on. Just wondering if there was one or a couple things that really drove that outsized growth. It was just things moving in the right direction and just all clicking here. Any sort of market dynamics. I'm just trying to get a sense of. It clearly was a remarkable quarter for
Chris McComish (Chief Executive Officer)
you, that recognition Kelly, and it's a real point of pride for our employees. I'm coming up on my fifth year here at the company in another couple of months and we've been pretty unrelenting on our focus on the importance of building on a high quality core deposit deposit franchise. And we've seen positive momentum over the, I would really call it over the last 18 plus months in the consumer side of our business. We've talked a lot about the rigor and discipline of the process that we our customer engagement process that we define as care. And you think well how do you know it's working? And I'll go back to that anecdote that I provided to you when we saw broad based growth in 80% of our branches in the quarter that tells me that the right kind of customer interactions are taking place. We've also talked a lot about the way that we manage exception pricing and the need to be dynamic with that at the same time responsive. And that's a process that was built over the past couple of years and it continues to work in this environment or a rising or declining rate environment. On the commercial side of the business and business banking side, we've spent the past few years working on enhancing our treasury management capabilities, the number of teammates both in commercial banking as well as business banking. We're seeing good momentum there and we know that a portion of this on the commercial space was true new customer acquisition that added to it as I did say we wanted to analyze it. One of the other things that we looked at, I don't know if you've seen this in other calls that you've had was well what was the impact of. You talk about the tax law changes and what we saw were tax receipt, so deposits, tax receipts, deposits into our accounts a year over year growth was about $30 million so higher tax return receipts coming in, tax refunds did contribute to some of this. And so that's why we were guiding toward all $300 million probably isn't going to stick forever. There's some fluctuation in it, but what we can tell, we feel really good about that $150 to $200 million, which by itself would have been a really, really strong quarter.
Kelly Mata (Equity Analyst)
Great. That's really helpful. Thanks for the caller. I'll step back.
OPERATOR
We'll move next to Tyler Cacciatore at Stevens Inc.
Tyler Cacciatore (Equity Analyst)
Good afternoon, this is Tyler on from Abbrece. Hi Tyler, maybe just a follow up on the M and A commentary. Can you just update us on what the ideal target would look like and if there's any ideal size or whether you want to dive into new markets or maybe complement existing ones?
Chris McComish (Chief Executive Officer)
Yeah, I'll be consistent, Tyler, with what we've talked about in the past. We look geographically at the core markets we're in and adjacent markets and we're active in building relationships throughout that geography. If you think about a pure acquisition, given our size, you're talking about banks probably in the 1 to 6, $7 billion range. Makes sense from a size standpoint. And that's, you know, that's been our focus very, very focused on quality of the core deposit franchise. Cultural Fed ability to, you know, accelerate growth in the company are kind of the criteria that we look through.
Tyler Cacciatore (Equity Analyst)
Understood. Thank you for the color. And then just moving to credit. Nice to see the charge offs move much, much lower. Led to quite a bit of a lower provision than what I was expecting. Maybe just talk about what you're seeing from a credit perspective going forward and what levels of charge offs you're comfortable running the bank at. Just trying to get a sense of how to model the provision from here.
Dave Van Tolik (President)
Yeah, I think in total for 2026 we expect similar total results relative to 2025. Level of charge offs kind of NPLs we're targeting to reduce from where we are now. Modestly, as I mentioned in the comments, we did see a slight uptick in our criticized and classified assets. It didn't have a significant impact on provisioning or large increase in the acl. There's nothing outside that we anticipate, just normal movements. And you know, we're a commercial focused bank. So when something happens negatively from a credit perspective, it tends to be a little larger than a bank that might have a larger consumer base. So we acknowledge that. But we have really fine tuned our methodology and spent a lot of time obviously internally as a management Team talking about the impact of asset quality and how we can get ahead of things and forecast better. Obviously, in addition to that, it's just the external environment. Right. I mean, you see the run up in gas prices and oil prices and things like that. And we believe that that has not really impacted the economy dramatically right now in the short term, but it continues this way. You could see things impacting it for all of us down the road. And we're not, you know, we're not outsized one way or another, but there's, you know, there's a lot that we also don't control that we have to pay attention to.
Tyler Cacciatore (Equity Analyst)
Understood, thank you. And then just a real quick one on deposit costs. If you have the detail, do you have the spot cost of deposits at quarter end or in the month of March?
Mark Kochvar (Chief Financial Officer)
I have a. The margin was for the. March was at where we did for the. We ended for that quarter on the deposit. On the overall deposit number for the month. That would have been right around. I have it right for my total deposits right around 2. This is costing only 2.47%.
Tyler Cacciatore (Equity Analyst)
Great. Thank you. I'll stand back here.
Mark Kochvar (Chief Financial Officer)
Okay, Tyler, thank you.
David Bishop (Equity Analyst)
And as a reminder, if you'd like to ask a question, press Star One. We'll go next to David Bishop at Humpdee Group.
Chris McComish (Chief Executive Officer)
Hey, good afternoon, Chris. Excited for the draft as well down here. Excited for the draft down here. We're not gonna say anything about Baltimore, Dave. Come on. You got it. You got it. I'm sure you're waving your terrible towel out there. That's right. Well, Dave Van Tullik has his eye black on right now. Exactly.
David Bishop (Equity Analyst)
He's locked in. I'm wearing a Steelers helmet as well. I love it. Love it. Hey, a lot of my questions have been asked and answered, but curious, you know, you had the good growth in deposits and maybe some cash flows from the loan portfolio sitting in cash at the end of the quarter. Is that sort of earmarked for funding, expected loan growth? I don't know if you see any line of sight. So maybe, you know, temporary deposits outflowing. Just curious about how we should think about cash levels moving into the back half of the year.
Mark Kochvar (Chief Financial Officer)
We do expect those to decrease. We still have some wholesale borrowings that we have an opportunity to reduce. So that would be the first priority. And then as Chris mentioned, we do expect some of that to potentially roll off during the second, at least temporarily in the second quarter. So we'll keep some cash powder dry for that. And then the return of some loan growth in the second quarter but then perhaps more in the back half of the year. So we think that cash will not stay at those levels for a combination of all those things. Reducing wholesale and then the natural deposit fluctuation and then return to loan growth.
David Bishop (Equity Analyst)
Got it. And then I guess final question as you look across your fee income segments and categories, any areas with all the changes you've implemented here, you're most bulled up about for, for augmentation as you look out into the rest of the year.
Mark Kochvar (Chief Financial Officer)
We have seen some, it's sometimes hard to see in numbers but we have seen some encouraging pickup on the treasury management side that we talked about. There's a group within that kind of a non-account analysis group that we've seen some improvement on especially in the last couple of quarters and there's a renewed emphasis for that in the bank and especially in our business banking group. So that's something that we have higher expectations for, And then on the just on the basic treasury management side on the account analysis we did some price adjustments that have that helped in the first quarter and that group is making some headway in the market as well. So I think the deposit fee on the treasury management AA side probably offers some potential. And then financial services has been solid for us as well.
Chris McComish (Chief Executive Officer)
Dave, the non analyzed treasury management services, that's really the result of work that we started a couple of years ago. We built a product for the small business business banking space that provided a combination of, call it six to eight important treasury management products. Anything from information reporting to collection and disbursement services, fraud protection, those kinds of things, packaged them into basically one price. And so what we've seen and then we rolled that out a couple of years ago, trained our teams, put it in the market. We believed at the time it was a differentiating factor and we're seeing balance growth come from it as well as some treasury management fee income and the annuity nature of that. So it's nice to see something going from concept to reality and starting to see some results.
OPERATOR
Got it. That's great. Color. That was all I had. Thanks.
Chris McComish (Chief Executive Officer)
And that concludes the question and answer session. I would like to turn the call back over to Chief executive officer Chris McCommish for closing remarks.
OPERATOR
Well, as we always say, thank you for your interest in our company and your good questions and the relationships that you've built with us. It's really, really important to us. We're again really proud of the performance that we're showing. Looking for continued growth and impact in the marketplace. And spring is here, so the weather has turned and there's a lot of optimism in the air. So thanks all for your time and have a great rest of the day. And that concludes today's conference. Thank you for your participation. You may now disconnect.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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