S&T Bancorp Q2 2025 Earnings Report

S&T Bancorp EPS Results

• Actual EPS: $0.83
• Consensus EPS: $0.80
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: N/A

S&T Bancorp Revenue Results

• Actual Revenue: $100.07 million
• Expected Revenue: $99.30 million
• Beat/Miss: Beat by +$776.00 thousand
• YoY Revenue Growth: N/A

S&T Bancorp Announcement Details

• Quarter: Q2 2025
• Date: 7/24/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, July 24, 2025
• Conference Call Time: 1:00PM ET

S&T Bancorp (NASDAQ:STBA) is a bank holding company, which engages in the provision of consumer, commercial, and small business banking services. It operates through the following segments: Commercial Real Estate, Commercial and Industrial, Commercial Construction, Business Banking, Consumer Real Estate, and Other Consumer. The Commercial Real Estate segment includes both owner-occupied properties and investment properties for various purposes such as hotels, retail, multifamily and health care. The Commercial and Industrial segment focuses on the companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing. The Commercial Construction segment refers to the finance construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes. The Business Banking segment is made to small businesses that are standard, non-complex products evaluated through a streamlined credit approval process that has been designed to maximize efficiency while maintaining high credit quality standards. The Consumer Real Estate segment offers first and second liens such as 1-4 family residential mortgages, home equity loans and home equity lines of credit. The Other Consumer segment consists of individuals that may be secured by assets other than 1-4 family residences, as well as unsecured loans. The company was founded on March 17, 1983 and is headquartered in Indiana, PA.

S&T Bancorp Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Net interest income rose 3.9% QoQ while NIM expanded 7 bps to 3.88%, driving EPS of $0.83 and net income of $32 M.
• Positive Sentiment: Loans grew 5% sequentially to support total assets topping $9.8 B, with management confident in a clear path to $10 B through organic growth.
• Positive Sentiment: Deposits increased for the eighth straight quarter as noninterest-bearing balances reached 28% of total, underpinned by disciplined pricing and customer relationships.
• Positive Sentiment: Asset quality remains strong with ACL at 1.24% of loans, minimal net charge-offs, and stable nonperforming assets, reflecting several quarters of improvement.
• Neutral Sentiment: Operating expenses are expected at a $57–58 M quarterly run rate in H2, driven by merit increases, incentive accruals, and seasonal medical costs.

Presentation

[Operator]

Welcome to the S and T Bancorp Second Quarter twenty twenty five 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, Senior EVP & CFO at S&T Bancorp]

All right. Thank you. Good afternoon, everyone, and thank you for participating in today's earnings call. Before we begin the presentation, I want to take time to refer you to our statement about forward looking statements and risk factors. This statement provides cautionary language required by the Securities and Exchange Commission for forward looking statements that may be included in this presentation.

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

A copy of the second quarter twenty twenty five 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 stbancorp.com. With me today are Chris McCamish, S and T's CEO and Dave Antillic, S and T's President. I'd now like to turn the program over to Chris. Chris?

[Chris McComish, CEO at S&T Bancorp]

Mark, thank you, and good afternoon, everybody, and thank you for being on the call. I'm going to begin my comments on Page three, and we look forward to your questions as we get to the wrapping up our comments. Before I get started, I do want to thank our employees and shareholders and others listening on to the call. And to our leadership team as always, thank you for your great work. These results are yours and you should certainly be very proud. Over the past several years, we've made significant strides in positioning our company for long term success.

[Chris McComish, CEO at S&T Bancorp]

You will see that focus in the numbers we discuss today, including first by strategically repositioning our balance sheet to reduce asset sensitivity. We've enhanced our ability to drive consistent net interest income growth throughout the interest rate cycle. Second, our focus on improving asset quality has laid a strong foundation for growth, enabling our shift and our intentions to that growth. And finally, our continued investment in our deposit franchise has resulted in a solid deposit mix with non interest bearing deposits representing 28% of our total deposits and eight straight quarters of deposit growth while maintaining a very healthy net interest margin. Together, these strategic initiatives have created a solid platform for current strong performance and our confidence in our future.

[Chris McComish, CEO at S&T Bancorp]

Additionally, this quarter's loan growth has driven total assets to over $9,800,000,000 As we've shared on previous calls, we remain very optimistic about our ability to pursue future inorganic growth opportunities. Our robust capital level certainly gives us a lot of flexibility. At the same time, we are committed to a disciplined approach that aligns with our long term strategic objectives. And we have a clear path to $10,000,000,000 through organic growth in the coming quarters. In summary, I'm very excited about how we're executing, delivering for our customers and building our company for the future.

[Chris McComish, CEO at S&T Bancorp]

Turning to Page three, looking at the quarter. Q2 was another quarter of strong earnings and returns. EPS of

[Chris McComish, CEO at S&T Bancorp]

$0.83 and net income of $32,000,000 while ROA came in at 1.32%. And our PPNR remained very solid at 1.73%. Our PPNR was aided by both NIM expansion increasing to a robust 3.88, up seven basis points linked quarter, while net interest income rose almost 4%. Asset quality and asset growth were both solid as loans increased 5%, while the ACL dropped two basis points linked quarter. While customer deposit growth was somewhat muted, as I said earlier, DDA balances remained very impressive at 28%, while contributing almost two thirds of our overall deposit growth in the quarter.

[Chris McComish, CEO at S&T Bancorp]

Expenses were a little bit higher this quarter due primarily to some incentive accrual catch up because of our performance and Mark is going to get into that detail. I'm going to stop right now, turn it over to both Dave and Mark. Don't want to steal their thunder. Dave is going to talk a little bit more about the balance sheet as well as asset quality. Dave?

[Dave Antolik, President & Director at S&T Bancorp]

Great. Thank you, Chris, and good afternoon, everyone. Referring to Page four of the earnings supplement, you'll see the continuation of our organic growth trends evidenced by annualized loan growth of just over 5% or $98,000,000 in Q2. This growth was driven in large part by our commercial real estate balances, which experienced another solid quarter increasing by $58,000,000 Categories of commercial real estate growth include multifamily and our retail segments. We also saw solid performance from our mortgage and home equity businesses, which combined for $26,000,000 in net growth.

[Dave Antolik, President & Director at S&T Bancorp]

Although C and I balances were flat for the quarter, we've seen an increase in calling efforts and pipelines in this category. The total commercial pipeline is now approximately 60% CRE and 40% C and I and overall remains robust. We believe that we can consistently deliver loan growth in the high mid single digit range for the 2025 by maintaining CRE mortgage and home equity activities and by executing on a strong pipeline of C and I opportunities. In support of these activities, we've added four new commercial bankers since the beginning of Q2, including a new C and I team leader in Central Ohio. Turning to deposits.

[Dave Antolik, President & Director at S&T Bancorp]

As Chris mentioned, Q2 yielded our eighth consecutive quarter of customer deposit growth as we continue to leverage our banker driven customer relationship sales process, which is supported by a maturing and robust deposit exception pricing platform that focuses on delivering first class customer experience while maintaining our pricing discipline. In total, deposit balances grew by $28,000,000 or 1.42% annualized in Q2. As Chris mentioned, from a mix perspective, our growth in Q2 was largely driven by CD and money market activities, but we're very proud of our ability to track and maintain non interest bearing DD balances, and those balances represent 28% of total deposits and grew by $18,000,000 in the quarter. Turning to Page five, which provides an update on our asset quality. Our allowance for credit losses declined by two basis points from 1.26% to 1.24% of total loans.

[Dave Antolik, President & Director at S&T Bancorp]

This reduction is an outcome of our team's focus on maintaining reduced levels of NPAs as depicted on the slide as well as maintaining a lower level of C and Cs. In total, C and Cs remained stable for the quarter. Charges were modest and in line with our expectations at $1,200,000 for the quarter. As mentioned last quarter, we continue to monitor the potential impact of tariffs and a changing economic landscape. To date, these issues have had no impact on our growth, including pull through rates from our pipelines, and we've heard little concern from our customer base.

[Dave Antolik, President & Director at S&T Bancorp]

Customer conversations relative to this issue have quieted recently and businesses continue to focus on managing the variables that they can directly control. Finally, our credit risk management practices rely heavily upon the collection of data and analysis of pertinent industry and customer specific information. That data informs these banker led conversations that I spoke of. And we use that data and those conversations to aggregate a segment specific and overall credit risk. I'll now turn it over to Mark.

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

Thanks, Dave. Second quarter net interest income improved by $3,300,000 3.9% compared to the first quarter. The net interest margin expanded by seven basis points and combined with loan growth of 5% to produce the best quarterly growth we have seen in this revenue item since 2022. The net interest margin improvement came from earning asset repricing in both loans and securities combined with a stable cost of funds. On the asset side, we saw additional benefits in the securities book with the restructuring we executed at the very end of the first quarter.

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

And with loans, we saw overall positive repricing of about 16 basis points. On the funding side, favorable CD pricing was offset by deposit and funding exchanges along with some but more limited deposit exception pricing. We expect net interest margin to stay fairly stable if the Fed cuts rates twice this year as expected. There's some limited upside for us in a higher for longer scenario. Next slide on non interest income increased by $3,100,000 in the second quarter primarily due to the securities repositioning related loss of 2,300,000 in the first quarter that I referenced.

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

Second quarter also saw a rebound in consumer activity from the first quarter, which is typically seasonally low for us. Our expectations for fees going forward remains at approximately 13,000,000 to $14,000,000 per quarter. Expenses on the next slide increased by $3,000,000 in the second quarter compared to the first variances were concentrated in salaries and benefits. Base salaries were up about $900,000 about two thirds of that was related to the annual merit increases which became effective in the second quarter. And the rest with the new hires primarily in our production areas that Dave referenced.

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

Incentives were up about $1,200,000 with most of that being performance related in both our long term and annual plans. And finally, self funded medical expense increased by about 1,200,000 While we typically see an increase in medical expense in the second quarter compared to the first, the first quarter is typically lower due to resetting of annual deductibles. The increase this year in the second quarter was about double what we typically see. Moving on to other expense categories, the quarterly variances in other taxes and other offset and are related to Pennsylvania shares tax credit program. And finally, professional service in services increased by about 500,000 mostly due to the timing of various projects.

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

While some of the expense increase we had in the second quarter is temporary, the base salary increase and some of the medical we do expect to recur. Our quarterly expense run rate, we now expect to be approximately 57 to $58,000,000 for the second half of the year. Next in capital, the TCE ratio increased by 18 basis points this quarter with AOCI improvement contributing eight basis points of that. Strong retained earnings was offset by asset growth for the remainder. Most regulatory ratios declined slightly due to risk weighted asset growth, which also included an increase of over $80,000,000 in loan commitments.

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

Our TCE and regulatory capital levels position us well for the environment and will enable us to take advantage of 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. And the floor is now open for and It looks like our first question comes from the line of Justin Crowley with Piper Sandler. Justin, please go ahead.

[Justin Crowley, Senior Research Analyst at Piper Sandler Companies]

Hey, good afternoon, everyone.

[Chris McComish, CEO at S&T Bancorp]

Hi, Justin.

[Dave Antolik, President & Director at S&T Bancorp]

Hi, Justin.

[Justin Crowley, Senior Research Analyst at Piper Sandler Companies]

Just wanted to start on some of the margin inputs here and in particular looking at funding costs where you saw things stabilize in the quarter. How do you see the progression there or from here with the idea being to ramp up the pace of loan growth? Maybe just thinking about a flat rate environment for a second, could we see some upward pressure on deposit costs just given the need to fund the forward loan growth?

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

Well, to the extent that we're successful in our deposit raising efforts over and above, we should be able to offset some of that with a decrease in borrowings which are similarly priced. But the incremental margin that we're getting, you know, might be a little bit lower than the the 3.88%. So there could be a little bit of pressure on growth on the margins.

[Justin Crowley, Senior Research Analyst at Piper Sandler Companies]

Okay. Got it. And then you just to clarify, you've mentioned perhaps in a higher for longer, environment, there being potential upside. Could you just quantify that a little further and just talk about the drivers, in the event that unfolds?

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

Since the the benefits that we've been seeing just in the in the repricing on the on the both the security side and the and the and the loans along with the the swap book that it is maturing for us to receive fixed swap, but we have about 50,000,000 maturing each time. So we'll we'll get a little bit more of those benefits in in in a flat in a flat environment versus having to be more aggressive on the deposit repricing side should rates drop down. But it'll probably be in in a couple basis point range. It's not it's not it's not that significant. It's probably a couple maybe a basis point or two per cut or as time goes on if they don't cut.

[Justin Crowley, Senior Research Analyst at Piper Sandler Companies]

Okay. Got it. That's helpful. And then it sounds like there's still a lot of confidence in hitting that mid to high single digit loan growth, pace of growth in the back half of the year, which would seem to put you over $10,000,000,000 by December 31. Is that kind of what you're planning on?

[Justin Crowley, Senior Research Analyst at Piper Sandler Companies]

Is that the most likely scenario? Or are you giving much thought to managing below that level? How do you think about that?

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

It'll be I mean, if we hit our the numbers that we expect, it it will be close. So we'll we'll we'll just play it play it by here and see how how that goes at the end if it's close. Yeah. There's a few things we can do to to to stay under to maintain the the under 10,000,000,000 for another year. But we're not going to do that for very long. It'd just be a one time thing.

[Justin Crowley, Senior Research Analyst at Piper Sandler Companies]

Okay. Got it. And then if I could just maybe sneak one last one. And just on M and A, seems like we're seeing more deals get announced. Just curious to pace the conversations from your standpoint.

[Justin Crowley, Senior Research Analyst at Piper Sandler Companies]

I know you mentioned in the prepared remarks, Chris, that remains a critical part of the strategy. But just curious how, things might be developing on that side just as we've seen bank share prices do better here. I'm not sure how that's informed discussions and just the likelihood of getting something penned.

[Chris McComish, CEO at S&T Bancorp]

Yes. These are Justin, thanks for that question. And these are all long term relationship building exercises and we're very diligent about that with those companies that we have potential interest in. So the relationships continue to be built. I would agree with you that the lots of lot less uncertainty today in the market than there was back three or four months ago.

[Chris McComish, CEO at S&T Bancorp]

So people are looking to move forward and we would expect to be a participant. So overall positive conversations.

[Justin Crowley, Senior Research Analyst at Piper Sandler Companies]

Okay. Got it. And then maybe just geographically speaking and I know you discussed it before, but is there any reason to think the focus has shifted at all? Are there certain areas of your footprint or contiguous markets that look more favorable today? What's the thinking there?

[Chris McComish, CEO at S&T Bancorp]

We're still very focused on how we define our core markets of today Pennsylvania and Ohio and then stretching a little further south and east into the Virginia, Maryland, D. C. Markets. All of that are all of those are attractive to us. Okay, great. I will leave it there.

[Justin Crowley, Senior Research Analyst at Piper Sandler Companies]

Thanks so much for taking the question.

[Chris McComish, CEO at S&T Bancorp]

Thank you. Appreciate it.

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

Thanks, Justin.

[Operator]

Thanks, Justin. And our next question comes from the line of Daniel Tamayo with Raymond James. Daniel, please go ahead.

[Daniel Tamayo, Vice President at Raymond James Financial]

Thanks. Good afternoon, guys.

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

Daniel.

[Daniel Tamayo, Vice President at Raymond James Financial]

Hey,

[Daniel Tamayo, Vice President at Raymond James Financial]

Maybe first on credit. That's been a very good story for you guys for the last several quarters as they kind of the early stage stuff has come down and then that really the net charge offs have been almost nothing. Curious kind of where you guys see it going from here with reserves down to 124 of loans and net charge offs bouncing around kind of at the near zero levels, if you've got thoughts on kind of a more normalized rate now that you're down at these levels?

[Dave Antolik, President & Director at S&T Bancorp]

Yes. I think at this point, Dan, we've focused on stabilizing. So if we can keep NPLs at these levels, they're exceptionally low, as you know. And if we can continue to keep CNC and new formation of NPL, you know, if we wore that off. We saw a little bit of rotation in and out of CNC during the quarter.

[Dave Antolik, President & Director at S&T Bancorp]

And of course, as we grow, we're gonna need to provision for that growth. So I think those are the variables that are going to drive provisioning. I don't anticipate significant charge offs. There may still be some room for improvement in C and Cs, but really we're looking at trying to stabilize and maintain our asset quality at this point.

[Chris McComish, CEO at S&T Bancorp]

And Dan, you were right on. I mean, this is good three years worth of work on our team's behalf and it was rotation of assets that just didn't fit our long term strategy. And the team has done really, really good work there. And we've as I said in my earlier remarks, since about midpoint last year our focus has been very much on growth versus replacement of that which we were which was running off.

[Daniel Tamayo, Vice President at Raymond James Financial]

Great. So I guess at the end of the day the reserves feel like we've hit kind of a stabilization point at this point? Or you think that there may be still a little bit left?

[Chris McComish, CEO at S&T Bancorp]

There may be a little bit of room for improvement, but not a lot. Yes, I mean, we were in the mid-140s. Now we're at 124. So we're getting closer to the stabilization point.

[Chris McComish, CEO at S&T Bancorp]

Got it. Okay. And then maybe just a cleanup question related to the $10,000,000,000 crossing that was asked earlier. The just if you could remind us what the Durbin hit is. I think I have just over $6,000,000 as an annualized number in my notes, but if that's changed at all and if there's any other kind of impact from crossing $10,000,000,000 that you would expect?

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

It's between 6,000,000 and $7,000,000 the Durbin. We feel like we've done a lot of the infrastructure building. So we don't anticipate a lot of expense tied directly to the $10,000,000,000 There's always expenses we grow, but nothing else meaningful that's specific to the cross.

[Daniel Tamayo, Vice President at Raymond James Financial]

Great. All right. That's all I had. Appreciate the color.

[Chris McComish, CEO at S&T Bancorp]

Thank you.

[Operator]

Thanks, Dan. And our next question comes from the line of Kelly Mata with KBW. Kelly, please go ahead.

[Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)]

Hey, good afternoon. Thanks for the question. Maybe kicking back to loan growth, Chris, if I caught in the prepared remarks, it sounded like you're more optimistic for growth to potentially bump up here in the back half of the year. You've had a really strong start to the first half. Just wondering if you could go into a bit more detail as to where you're seeing the most opportunities, whether by market or specific categories, which of those would be the primary drivers of growth?

[Chris McComish, CEO at S&T Bancorp]

I'll I'll let Dave take that one.

[Dave Antolik, President & Director at S&T Bancorp]

Yeah. Thanks, Kelly, for the question. So we saw CRE growth kind of year to date in the 7% range. If we can continue to maintain that growth, our pipelines would tell us that we can, As well as the home equity and mortgage growth, which has been kind of five percent ish, maintain that growth. We've seen essentially no growth in C and I.

[Dave Antolik, President & Director at S&T Bancorp]

So that C and I growth that will come from the pipeline that I spoke of would augment total growth and get us to number that is above what we saw in the first two quarters. We've seen commercial construction commitments increase during the past two quarters. So there'll be some definite funding that comes in from that book. We've seen overall commitments rise as well, including C and I. So if we can maintain an existing utilization rate from those two books, we'll see supplemental loan growth there as well.

[Dave Antolik, President & Director at S&T Bancorp]

So if you kind of blend all those things together, it's not one specific concentrated area of outsized growth. It's good consistent growth throughout all of our business lines in each of the categories.

[Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)]

Great. And I believe you've added some commercial producers or teams here. Wondering how if that's something you're looking to do here or you feel like at this stage near term you have the team in place. Just any color around that as a driver would be helpful.

[Dave Antolik, President & Director at S&T Bancorp]

Yes. So we added four bankers since the beginning of Q2, primarily focused on C and I. We will continue to recruit and add bankers to the Commercial Banking and Business Banking teams. That's where we see the most opportunity. They're largely focused on balancing their efforts between improving deposits, raising deposits and booking loans as well.

[Dave Antolik, President & Director at S&T Bancorp]

So we think of them as bankers and in a well rounded way, we know we need to balance that deposit growth along with the loan growth. So we believe that those additions are benefiting us by improving our pipeline. That's really what we saw in Q2, particularly in the C and I pipeline. It takes a little bit of time. Those calling processes and calling time frames take a little while.

[Dave Antolik, President & Director at S&T Bancorp]

So we expect those to bear fruit in Q3 and Q4.

[Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)]

Got it. Thanks. Last question to me, not to beat a dead horse on M and A, but obviously it's becoming more of the discussion so that

[Chris McComish, CEO at S&T Bancorp]

picking Hopefully, we'll be the live horse.

[Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)]

But can you just refresh us on kind of the size you feel you need to be to absorb the $10,000,000,000 cost? And how would that be for potential partners? And how large you would go?

[Chris McComish, CEO at S&T Bancorp]

Yes. So Mark touched on it a little while ago from the standpoint of the real hit to the 10,000,000,000 cross is the revenue hit with Durbin. We have built the team out from infrastructure standpoint to and we worked closely with our regulators in preparation for all of this. So there's nothing from an infrastructure standpoint, nothing meaningful from a staff standpoint that would cause any increase in expenses and how we run the company because we're over $10,000,000,000 So the revenue hit of 6,000,000,000 or $7,000,000,000 you could say replacing that would be a driver from an M and A standpoint. But hopefully, an M and A transaction contributes a lot more than just the 6,000,000 or $7,000,000 We're looking at our geography.

[Chris McComish, CEO at S&T Bancorp]

We're looking at from a size standpoint, we've talked about in that $1,000,000,000 to $5,000,000,000 range seems to make a lot of sense for us and that's how we're looking at it and considering it. Got it. And that's the asset size.

[Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)]

Yes. Got it. Thanks for all the color there. Nice quarter. I'll step back.

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

Thanks, Kelly.

[Operator]

All right. Thank you, Kelly. And our next question comes from the line of Manuel Navas with D. A. Davidson. Manuel, please go ahead.

[Sharanjit Cheema, Equity Research Associate at D.A. Davidson]

Hey, everyone. This is Sharon Gee on for Manuel. Thank you for taking my questions. For my first question, I was wondering seasonally weaker on deposits this quarter. Could you talk a little bit about what the pipeline for deposit growth looks like going into the second half of this year?

[Dave Antolik, President & Director at S&T Bancorp]

Yes. The pipeline at this point is similar to what we saw in Q2. We're focusing activities on particularly in the business space. So the the bankers that I spoke about and some of the treasury management officers that that we've added recently are are really focused on that space. And historically, Q3 has always been boosted by public funds deposits, particularly in the municipal space as fall taxes hit.

[Dave Antolik, President & Director at S&T Bancorp]

So we'll have some tailwind in Q3 relative to the seasonal activities. But our focus is really on building that pipeline and driving more growth. The deposit growth in Q2 was mainly driven by consumer activities. So I'm really proud of the job that we did there. The overwhelming majority of that balance growth came out of those activities.

[Dave Antolik, President & Director at S&T Bancorp]

So more focus on business and treasury management and a continuation with what we saw in in the consumer bank.

[Sharanjit Cheema, Equity Research Associate at D.A. Davidson]

Great. Thank you. And then could you speak a little bit about to like what the competitive landscape looks like right now and potentially also what new loan yields are coming on at right now versus what's coming off?

[Dave Antolik, President & Director at S&T Bancorp]

Yeah. I'll just speak to the competitive landscape. You know, it's it's continues to be an interesting conversation and geographically different. Right? So we've got an Eastern Pennsylvania presence.

[Dave Antolik, President & Director at S&T Bancorp]

We've got the presence here in Western Pennsylvania where we've got our core markets where we have significant market share. And in Ohio, we're more of a of a disruptor. So for us, it's it's about our ability to balance the customer conversation with the exception pricing process that we've put in place that allows us to be competitive. All that being said, we're really happy that we were able to drive some deposit growth this quarter where many others haven't. But we know we can do better and we've got some big bars set for ourselves in terms of goals for the balance of the year.

[Dave Antolik, President & Director at S&T Bancorp]

Mark, I don't know if you want to take the yield question.

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

Yes. So overall weighted average new loans coming on were about six fifty two versus a payment or payoff rate of six thirty six. So we picked up about 16 basis points The kind of best replacement spreads are still coming out of the mortgage area where we're picking up over a basis or over 100 basis points. The commercial since a lot of that's floating, that's pretty flat. So the replacement is pretty close because a of the activity happens on the on the floating side.

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

And then business side, we're still picking up about 50 basis points on the on the turnover. But overall, it's about 16 for the quarter.

[Sharanjit Cheema, Equity Research Associate at D.A. Davidson]

That's great. Thank you so much for taking my questions. I'll step back.

[Operator]

Thank you. Thank you, Sharon. And our next question comes from the line of Matthew Breese with Stephens. Matt, please go ahead.

[Chris McComish, CEO at S&T Bancorp]

Hey, good afternoon, everybody. Hey, Matt.

[Dave Antolik, President & Director at S&T Bancorp]

Hey, Matt.

[Matt Breese, Managing Director at Stephens Inc]

I'm sorry if I missed this. I think you touched on it at least once you've placed in a different way. What was the back half of the year NIM guide, assuming we follow the curve and there's a couple of cuts?

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

Yeah. So if it if we with a couple of cuts, we expect the NIM to stay pretty pretty stable to where it's at right now. So in that kind of mid mid March, should hold.

[Matt Breese, Managing Director at Stephens Inc]

Got it.

[Matt Breese, Managing Director at Stephens Inc]

Okay. And then on the securities front, you'd mentioned the increase in yields this quarter was tied to the restructuring at the end of the first quarter. Could you help me out? What are incremental securities being purchased at yield wise today? What types of securities are interesting to you?

[Matt Breese, Managing Director at Stephens Inc]

And then if you take away the restructuring, what is kind of the the normal pace of yield increase to be expected there?

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

Yes. So the new stuff we're putting on is right between four and a half and 5%. We run a pretty conservative securities portfolio. So we stick with primarily agency backed CMOs. We prefer to have get pretty good structure with those trying to get some some lockout to help us on the we still think there's there's a we're a little bit tilted toward rate down risk, so we'll still buy some structure and a little bit of term on security side. And so we're right now in that kind of 4.5% to 5% we're putting things on.

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

Without the restructuring, I think we're getting around probably 50,000,000 of maturities and cash flow back per quarter. So that's our replacement opportunity going forward. That's still most of that is coming off So there's still some pickup opportunity, but it's getting thinner.

[Matt Breese, Managing Director at Stephens Inc]

Okay. And then I wanted to talk about excess capital. Your tangible common ratio, I think, is over 11%. Curious what you think is, you know, kind of the normal place you should be or our ideal target. And and how do you lever up? Because it doesn't feel like, you know, mid single digit growth or mid to high single digit growth leverage you up very quick?

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

Yes. I mean, that's one of reasons we talk a lot about the opportunity on the inorganic side. We think that that capital we have at over 11% is well more than we need to run the bank. So we are actively looking for for ways to play that. We, at this juncture, don't have the internal growth opportunities to be able to to use that effectively.

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

So that that that is, you know, part part of the of the focus on the on the m and a. Okay.

[Matt Breese, Managing Director at Stephens Inc]

But we've got More

[Mark Kochvar, Senior EVP & CFO at S&T Bancorp]

comfortable with that, you know, something in the in the nine area or or even lower in terms of tangible.

[Matt Breese, Managing Director at Stephens Inc]

Okay. Last one for me.

[Matt Breese, Managing Director at Stephens Inc]

You know, the good senator Dave McCormick was out last week, held an energy and innovation summit, right in your backyard in Pittsburgh.

[Chris McComish, CEO at S&T Bancorp]

Talk about I was there, Matt.

[Matt Breese, Managing Director at Stephens Inc]

Yes. I mean, very cool. $90,000,000,000 of infrastructure investments, data centers, energy, power, a lot of which is across your footprint. Tell me about what you learned and how good it could be for Pennsylvania.

[Chris McComish, CEO at S&T Bancorp]

Well, it's generating a lot of enthusiasm and optimism here, particularly here in Western Pennsylvania. And then also very close to our headquarters here in Indiana, one of the biggest projects in the state is the power plant the power generation facility that's being built in Homer City, Pennsylvania, which is just down the street. It's a home market to S and T Bank where we've been a long time. We have meetings with lots of officials talking about everything that's going on and a number of customers that are involved in various aspects of things. So it's generated a heck of a lot of enthusiasm here throughout all of Western Pennsylvania.

[Chris McComish, CEO at S&T Bancorp]

Obviously, Pittsburgh is important, but right here in the more community markets in Western Pennsylvania critically important. So we're very involved and working hard to be engaged. I was there the entire time last week at the event and it was neat to see it. And Dave did a great job putting it on.

[Matt Breese, Managing Director at Stephens Inc]

Great. I'll leave it there. Thanks for taking my questions.

[Chris McComish, CEO at S&T Bancorp]

Thanks, Matt.

[Operator]

And our final question today comes from the line of David Bishop with Hubby Group. Dave, please go ahead.

[David Bishop, Director - Research at Hovde Group]

Yes, thanks. Good afternoon, gentlemen. Most of my questions have been asked and answered. I'm curious, just in terms of overall loan originations production this quarter versus payoff this quarter versus last. I'm not sure if you have that number handy.

[David Bishop, Director - Research at Hovde Group]

I would be curious to hear how that trended. Thanks.

[Dave Antolik, President & Director at S&T Bancorp]

Yeah. I I I know the payouts were down slightly, but very similar to to last quarter, just down very slightly.

[David Bishop, Director - Research at Hovde Group]

Got it. Do you have the production originations? Just curious how that compares as well.

[Dave Antolik, President & Director at S&T Bancorp]

Yeah. Production was up quarter over quarter similar to to q Q4 of last year, but Q4 of last year we saw higher payoff levels. So it's slightly lower payoffs, better production resulting in the nearly $100,000,000 in growth that we saw.

[Chris McComish, CEO at S&T Bancorp]

And the good news is the pipeline was effectively replaced as well.

[David Bishop, Director - Research at Hovde Group]

Got it. Appreciate the color.

[Chris McComish, CEO at S&T Bancorp]

Sure thing. Thanks for joining the call.

[Operator]

Thanks, Dave. And that does conclude today's Q and A session. I would now like to turn the call over to Chief Executive Officer, Chris McCamish for closing remarks. Chris?

[Chris McComish, CEO at S&T Bancorp]

Okay. Well, thank you all for your engagement and the great dialogue. We really appreciate your interest in our company and we look forward to we don't talk or see you before next quarter's call, we'll talk to you then. Thanks so much. Bye bye.

Participants

Executives

• Mark Kochvar, Senior EVP & CFO
• Chris McComish, CEO
• Dave Antolik, President & Director

Analysts

• Justin Crowley, Senior Research Analyst at Piper Sandler Companies
• Daniel Tamayo, Vice President at Raymond James Financial
• Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)
• Sharanjit Cheema, Equity Research Associate at D.A. Davidson
• Matt Breese, Managing Director at Stephens Inc
• David Bishop, Director - Research at Hovde Group