S&T Bancorp Q2 2026 Earnings Report

S&T Bancorp EPS Results

• Actual EPS: $1.02
• Consensus EPS: $0.92
• Beat/Miss: Beat by +$0.10
• One Year Ago EPS: N/A

S&T Bancorp Revenue Results

• Actual Revenue: $105.24 million
• Expected Revenue: $104.43 million
• Beat/Miss: Beat by +$812.00 thousand
• YoY Revenue Growth: N/A

S&T Bancorp Announcement Details

• Quarter: Q2 2026
• Date: 7/23/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, July 23, 2026
• Conference Call Time: 1:00PM ET

S&T Bancorp (NASDAQ:STBA) is the bank holding company for S&T Bank, a full-service community bank headquartered in Indiana, Pennsylvania. Founded in 1902, the company provides banking and financial services to individuals, businesses and institutions.

S&T Bank offers consumer and commercial deposit accounts, residential and commercial real estate lending, business loans, personal loans, treasury management and other financial services. Through related businesses and banking divisions, the company also provides wealth management, investment, trust and insurance services.

The company primarily serves communities throughout western Pennsylvania and eastern Ohio through a network of banking offices and digital banking channels. S&T Bancorp is led by Todd D. Brice, who serves as chairman and chief executive officer.

S&T Bancorp Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: S&T Bancorp reported a strong second quarter, with net income of $36.6 million and EPS of $1.02, up 8.5% sequentially and 22.9% year over year.
• Positive Sentiment: Net interest margin expanded to 3.99% and net interest income rose to $90.4 million, supported by higher loan yields, lower funding costs, and a better deposit mix.
• Positive Sentiment: Loan growth remained solid, with balances up $99 million in the quarter, led by C&I and construction lending, and management reiterated mid-single-digit loan growth expectations for the rest of 2026.
• Positive Sentiment: Asset quality improved meaningfully as non-performing assets fell to 0.5% of loans plus OREO and net charge-offs were only $1 million, while the allowance for credit losses stayed essentially flat at 1.16% of loans.
• Neutral Sentiment: The bank continued aggressive share repurchases, buying back 1.1 million shares in the quarter and authorizing another $100 million, though management said future buybacks may slow if the stock price stays elevated.

Presentation

[Operator]

Welcome to the S&T Bancorp second 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, CFO at S&T Bancorp]

Great. Thank you, and good afternoon, everyone, and 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 and risk factors. The statement provides cautionary language required by the Securities and Exchange Commission for forward-looking statements that may be included in this presentation. A copy of the second 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 stbancorp.com. With me today are Chris McComish, S&T's CEO, and Dave Antolik, S&T's President. I'd now like to turn the call over to Chris. Chris?

[Chris McComish, CEO at S&T Bancorp]

Mark, thank you, and good afternoon, everyone, and thank you for joining us today. We appreciate the analysts and investors being with us and as always, we look forward to your questions. Before I get into the quarter, I did want to take a minute to recognize the broader momentum we are seeing across S&T. Our financial performance is one important measure of that momentum, but we also continue to see it reflected in the strength of our customer relationships and the trust customers place in our company. That was reinforced this quarter when S&T was named to the Forbes America's Best in State Banks 2026 list. This is a recognition based upon direct customer feedback across areas such as trust, customer service, financial advice, digital experiences, and overall satisfaction. Also during the quarter, we celebrated our 124th year, which means we begin celebrating S&T's 125th year legacy this quarter.

[Chris McComish, CEO at S&T Bancorp]

This recognition is a timely reminder that our long-term success has been built on those same fundamentals, serving customers well, investing in our communities, and delivering value for our shareholders over time. These commitments have helped us navigate change, strengthen our culture, and position the bank to thrive for the next 125 years and beyond. Now turning to our financial results. I'll start on slide three. Turning to the quarter, we delivered a very strong performance. Net income was $36.6 million, or $1.02 per diluted share, up 8.5% from the first quarter of 2026, and 22.9% from the second quarter of last year. Return metrics were also solid. We reported ROA of 149, ROE of 10.375%, and a ROTCE of over 14%. These results reflected the benefit of higher earnings, continued discipline across the company, and the impact of our share repurchase activity. Our operating performance was also strong.

[Chris McComish, CEO at S&T Bancorp]

Net interest margin expanded seven basis points from the linked quarter to 399, supported by both higher loan yields and a better funding mix. Net interest income increased to $90.4 million compared to $88.4 million in the first quarter and $86.6 million a year ago. Importantly, we're seeing positive year-to-date operating leverage. Through the first six months of the year, revenue growth has outpaced expense growth meaningfully, and our efficiency ratio improved to 55.38% compared to 57% for the first six months of 2025. As is noted, asset quality showed improvement during the quarter with low net charge-offs of just $1 million and non-performing assets decreased by almost $10 million to 0.5% of total loans in OREO. On page four, loan growth was $99 million, or 5% annualized. On the deposit side, customer deposits were stable in the second quarter after very strong growth in the first quarter.

[Chris McComish, CEO at S&T Bancorp]

Year-to-date deposits are up approximately 8% annualized. At the same time, we reduced broker deposits $100 million during the quarter and $180 million year-to-date, which again improved the quality of our funding mix. DDA levels remain at an industry-leading 28% of total deposits, highlighting the value of our relationship-based model and the quality of our core deposit base. We continue to actively manage capital also. As you know, over the past three quarters, we've repurchased almost 3.2 million shares, representing 8% of outstanding shares, for a total of $133 million. We also got board approval yesterday for a reauthorization of another $100 million opportunity. Our strong capital position gives us the flexibility to continue to support organic growth, remain disciplined around capital returns, and evaluating strategic opportunities as they arise. In summary, this was a very good quarter for our bank.

[Chris McComish, CEO at S&T Bancorp]

We delivered meaningful EPS growth, solid returns, favorable asset quality, positive year-to-date operating leverage, and continued capital management through share repurchases. I'm going to stop right there and turn it over to Dave, who can talk about asset growth, pipelines, and asset quality.

[Dave Antolik, President at S&T Bancorp]

Great. Thank you, Chris. As Chris mentioned in referring to page four, total loans increased by $99 million during Q2, representing approximately 5% annualized growth, driving balances to over $8 billion. We're encouraged by both the composition and the quality of this growth. As discussed on previous calls, we are strategically focused on building our C&I capabilities, and our investment in talent is beginning to pay off. During the quarter, we increased our C&I banker count and have increased our total commercial banking team by approximately 20% year-to-date, with a goal of reaching 30% by year-end.

[Dave Antolik, President at S&T Bancorp]

These hires strengthen our ability to deepen customer relationships, expand our presence in attractive markets, and support long-term loan and deposit growth. The results can be seen in our C&I portfolio. During the quarter, C&I balances increased by $79 million. We saw encouraging signs from our C&I customer base, with revolving line utilization increasing from 41% to 44% quarter-over-quarter. At the same time, total C&I revolving commitments grew at 6% annualized, demonstrating continued demand from our customers along with increased banker productivity.

[Dave Antolik, President at S&T Bancorp]

Permanent commercial real estate balances declined by $46 million, primarily driven by loans that were paid off by non-bank lenders. While this created a headwind to the portfolio growth, it also reflects the continued quality of our borrower base and the attractiveness of these projects to the permanent market. Importantly, we remain committed to supporting well-capitalized developers within our footprint. As a result, commercial construction balances increased by $71 million during the quarter. Additionally, total construction commitments increased by $65 million, and the total number of commitments increased by nearly 19% in Q2, providing further evidence of solid customer activity. Looking ahead, our CRE and C&I pipeline activities remain solid and support our expectation for annualized mid-single-digit loan growth for the balance of 2026.

[Dave Antolik, President at S&T Bancorp]

Turning to asset quality on page five, our portfolio continues to perform in line with our expectations, demonstrating our disciplined underwriting approach and ongoing portfolio management efforts. Non-performing assets declined by $9.7 million during the quarter to $40.2 million or 0.5% of total loans plus OREO. Criticized and classified assets remained stable during the quarter, while losses were very low. Net charge-offs totaled just $1 million during Q2, resulting in a modest provision expense of $1.1 million. Given the continued stability of the loan portfolio, the allowance for credit losses remained essentially unchanged at 1.16% of total loans compared to 1.17% at the end of Q1. I'll now turn the program over to Mark.

[Mark Kochvar, CFO at S&T Bancorp]

Hey, thanks Dave. Second quarter net interest income increased by $2 million due to an additional day, combined with improvements on both the yield on earning assets, which were up four basis points with better commercial performance, and the cost of funding, which was down four basis points due to lower interest-bearing deposit rates and also a better funding mix. We expect relative net interest margin stability around the current high 390s level to continue for the next several quarters and believe we are well-positioned should interest rate conditions change. Tailwinds from our maturing received fixed swaps, along with some remaining security fixed rate loan and CD repricing all contribute to stability in the face of heightened loan and deposit pricing competition. Net interest income growth will be supported by improved loan growth.

[Mark Kochvar, CFO at S&T Bancorp]

Average loan balances were actually down in the second quarter due to the timing of the growth in the first half, but we expect average loan balance growth going forward. Customer deposit growth momentum remains good even in the face of this increased competition, which should contribute to maintaining spreads and net interest margin rates. Next, on non-interest income, we saw an increase of $1.3 million in the second quarter. Increases were broad-based with improvements in really every category. Debit and credit card activity was higher after a seasonally slower first quarter. Investment services is up with better customer activity and market improvements. The gain on sale is a net of a $1.9 million gain on the conversion of Visa Class B-2 shares. We offset that for the most part with a $1.7 million loss on a small $34 million bond portfolio repositioning.

[Mark Kochvar, CFO at S&T Bancorp]

The bond repositioning has an earn back of about 1.4 years. It will add $300,000 per quarter to net interest income for the next several quarters. The other category variance is due to one-time items. We had some partnership income and an unrealized gain on some equities that we own. Our expectations for fees in the second half of 2026 is approximately $14 million per quarter. On to non-interest expenses, which increased by $2 million in Q2. The largest variance was in salaries and benefits, and within that, salaries were up due to merit increases going into effect in April. We also had some higher medical costs as deductibles were met during the first part of the year. Occupancy improvement was impacted by higher seasonal snow removal and utility costs in the first quarter. Marketing reflects just the timing of various promotional efforts.

[Mark Kochvar, CFO at S&T Bancorp]

Other variances include tax-related contributions, which are offset by a favorable variance in other taxes. We had some higher T&E and employee recognitions, along with some recruiting fees. We expect to manage our 2026 non-interest expense year-over-year to around 3% increase, which implies a quarterly run rate of around $58 million. For capital, the TCE ratio decreased by 28 basis points this quarter, primarily due to the share repurchases we completed in the second quarter. Again, for the quarter, we repurchased about 1.1 million shares, average price of $44.24, with a total of $47.6 million. Our regulatory ratios continue to be very strong with significant excess capital. We are evaluating next steps with respect to our capital management strategy and further buybacks.

[Mark Kochvar, CFO at S&T Bancorp]

We're comfortable that even considering additional repurchases that were recently authorized by the board, we have more than sufficient capital currently, and the generation capabilities that will position us well for the environment and enable us to take advantage of organic or inorganic growth opportunities should they arise. 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]

The floor is now open for questions. If you have a question, please press star one on your device. We ask that while asking your question, please pick up your phone and turn off speakerphone for enhanced audio quality. Please remember to unmute your device. Please hold while we poll for questions. Your first question comes from the line of Daniel Tamayo with Raymond James. Your line is now open. Please go ahead.

[Daniel Tamayo, Analyst at Raymond James]

Thank you. Good afternoon, everybody.

[Mark Kochvar, CFO at S&T Bancorp]

Good afternoon.

[Daniel Tamayo, Analyst at Raymond James]

How's it going? I apologize if you gave this already. The loan growth guide, was it mid-single digit again that we're looking for?

[Dave Antolik, President at S&T Bancorp]

Yeah

[Daniel Tamayo, Analyst at Raymond James]

rest of the year?

[Dave Antolik, President at S&T Bancorp]

Exactly, Dan. Mid-single digit.

[Daniel Tamayo, Analyst at Raymond James]

Okay. All right, great. In terms of the deposits, I know you called out it's been strong year to date. Still thinking that kind of full year will fund the loan growth, or how are you thinking through the deposit trajectory?

[Dave Antolik, President at S&T Bancorp]

Yeah, based on pipelines activity we've seen year to date, we'll be able to self-fund through deposit growth.

[Daniel Tamayo, Analyst at Raymond James]

Okay, great. I appreciate the commentary on the buybacks. Maybe if you could just put a little more clarity around how you're thinking about that other than opportunistic. You got the $100 million re-up there. Assuming kind of a stable stock price or stable growth in the stock price, you think that's something that you expect to use on a somewhat regular basis over the next several quarters? Obviously, it's dependent in part on the loan growth that comes through, I get that, just your thoughts on your intention to use that over the next year, I guess, as the authorization.

[Mark Kochvar, CFO at S&T Bancorp]

Yeah, it does last for a while. With the stock price moving higher, the calculus does change. We are taking a closer look at that. I think it is something that we'll have opportunity to use over the next year. Again, the dynamics have changed as the prices moved higher.

[Daniel Tamayo, Analyst at Raymond James]

Based on today's price, do you think that's something you're still interested in utilizing?

[Mark Kochvar, CFO at S&T Bancorp]

Probably not to the same degree as we've been. We've been pretty active the last three quarters. We would consider or look more closely at potentially stepping that back somewhat at current levels.

[Daniel Tamayo, Analyst at Raymond James]

Okay. If that happens and maybe the stock goes higher and it becomes less attractive, what do you think you would do with the capital at that point, absent kind of looking for other M&A opportunities?

[Mark Kochvar, CFO at S&T Bancorp]

Yeah. We haven't stopped looking for M&A opportunities and other things to do, both organically, we would continue on that. With the buybacks that we've made, the improvements to the returns are meaningful. Again, the kind of incremental improvement that we get from the buybacks begins to get a little bit more constrained. I think that's one of the things as we go into our planning process for the year, that's something that we'll have to look a lot closer at over the next quarter or so.

[Daniel Tamayo, Analyst at Raymond James]

All right. Understood. Well, thanks for the call, guys. Appreciate it. Nice quarter.

[Mark Kochvar, CFO at S&T Bancorp]

Okay. Thank you.

[Operator]

Your next call comes from the line of David Bishop with Hovde Group. Your line is now open. Please go ahead.

[David Bishop, Analyst at Hovde Group]

Yeah, good afternoon. Hey, Chris, you mentioned the ability to attract new commercial bankers, and you called out the C&I growth. Just maybe some color on the increase there, how much represented maybe new client penetration versus existing customers getting more aggressive and utilizing lines and getting more optimistic on lending. Thanks.

[Dave Antolik, President at S&T Bancorp]

Yeah. Hey, Dave. It's Dave Antolik. The majority of the growth was related to utilization rates increasing. As I mentioned, we've seen the total revolving commitment grow as well, which would represent additional credit extended to existing clients as well as new customers. It's a good mix. The growth in C&I was outsized and a little more than what we'd expected from the quarter because of the increased utilization rates. Which was interesting because utilization had dropped a little bit in Q1, and then it came back some in 2Q and pushed a little bit higher.

[Dave Antolik, President at S&T Bancorp]

The math becomes keep the utilization rate because it's now at a level where it was prior to Q1. Keep that consistent, grow the overall customer base, which is the purpose behind hiring these new C&I bankers.

[David Bishop, Analyst at Hovde Group]

Got it. I'm not sure if I missed it during the preamble, positioning for potential rate hikes here in terms of the margin. Just curious thoughts on the sort of the puts and takes there as we head into the second half of the year. Thanks.

[Mark Kochvar, CFO at S&T Bancorp]

Yeah, I think with respect to our rate sensitivity, we feel like within 25, 50 basis points, or even a little bit more either way, that we're fairly neutrally positioned right now. We still have those tailwinds that I mentioned with the swaps and some of the back book repricing that should support us over the next several quarters. It's hard to know what the Fed's going to do, we think that we can hold on the margin for the next several quarters at least, in spite of any rate changes that might happen.

[David Bishop, Analyst at Hovde Group]

Great. Thank you.

[Operator]

Your next call comes from the line of Kelly Motta with KBW. Your line is now open. Please go ahead.

[Kelly Motta, Analyst at KBW]

Hi, good afternoon. Maybe sticking on the point of the margin. It was really nice to see deposit costs come down in the quarter, including the rate on CDs. I'm wondering, as you look out from here, is that tailwind kind of leveling off with the upcoming maturities coming up? Can you provide any spot color on deposit costs or what the incremental cost of new funding is coming in at? Thank you.

[Mark Kochvar, CFO at S&T Bancorp]

Yeah. I mean, you're right. We still got some repricing benefit on the CD book that has maybe a couple more months to run, so we might see a little bit more benefit in Q3. After that, we're pretty much leveled off and repricing at the same cost because that book is fairly short. We're still highly concentrated in that six-month timeframe. That's why we'll start to see some uptick potentially after Q3 in deposit costs. As you know, there's still some repricing and some exception pricing being made. To the extent we can hold onto the good mix that we have, we shouldn't see it move too much going forward.

[Kelly Motta, Analyst at KBW]

Got it. That's helpful. Maybe one last question from me, just refreshing Durbin. It looks like your $9.94 billion in assets, very flat quarter-over-quarter. It seems like given your kind of mid-single digit growth outlook on loans, you will potentially run through that. Is that still a good assumption, or do you have some levers here that if you don't get a deal you can plan to navigate on an organic basis? Thank you.

[Mark Kochvar, CFO at S&T Bancorp]

Given the trajectory that Dave described on the loan side, if we're successful with that, we would anticipate a cross here in the second half. As long as that comes true, we will go. In the first half of the year, we saw a decrease in loan balances in the first quarter. That sat in cash for the most part at the end of the first quarter. In the second quarter, even though we had loan growth, we got a right size to the cash balance. It looked like we were flat, but it was really back to the balance sheet actually being probably down under the hood in the first quarter, and it's just kind of bounced back here in the second quarter. Our trajectory should take us over $10 billion in the second half.

[Kelly Motta, Analyst at KBW]

Got it. Thank you so much.

[Operator]

Your next-

[Chris McComish, CEO at S&T Bancorp]

Yeah. Kelly, it's Chris. As we've talked about before, we're talking about a little over $6 million annualized. Doesn't impact us. Assuming we went over at 1231, it wouldn't impact. Half of that would hit in 2027. The other full amount of that would hit in 2028. Our job is to lead the company through that, and we feel very confident that we can.

[Operator]

Your next call comes from the line of Daniel Cardenas with Brean Capital. Your line is now open. Please go ahead.

[Daniel Cardenas, Analyst at Brean Capital]

Hey, good afternoon, guys.

[Chris McComish, CEO at S&T Bancorp]

Hey, Dan.

[Mark Kochvar, CFO at S&T Bancorp]

Hey, Dan.

[Daniel Cardenas, Analyst at Brean Capital]

Just kind of following up on Kelly's question with the crossing of the $10 billion threshold and the $6 million gap that would be created there? How long do you think it would take your new hires to kind of fill that gap? Do you think that can happen in 2028, or is that going to take a little bit longer for that to really occur?

[Chris McComish, CEO at S&T Bancorp]

Well, yeah, I mean, the new hires and the growth of the balance sheet is just one lever that we would pull. We're not going to take on additional risk from an asset growth standpoint to have that overcome. We're going to remain disciplined. We'll continue to look at expense-saving opportunities that could make up some of that and generating other forms of fee income. If you think about an $8 billion balance sheet on either side of the loan and deposit makeup, you're talking about a basis point or two to make up $6 million annualized in net interest income. We just feel confident that we're going to be able to pull any number of levers in order to overcome that kind of number. We've made $36 million this quarter.

[Chris McComish, CEO at S&T Bancorp]

It's quite consistent in the growth that we're seeing. We don't want to do anything that is overly aggressive to make up that number. We believe we can do it through what we've shown over time, and that's the effective running of the company. You look at the operating leverage that we have right now, where we grew revenue, net interest income, close around 5% first six months of the year. Expenses were closer to 1%. That operating leverage is pretty significant, and that can translate to making up those kinds of savings.

[Dave Antolik, President at S&T Bancorp]

Just to clarify that, we had a question come in on the timing of the impact. If we crossed here in the second half, that would start in the second half of 2027.

[Chris McComish, CEO at S&T Bancorp]

Right.

[Daniel Cardenas, Analyst at Brean Capital]

Okay. Got it, perfect. Just returning to loan growth in the quarter, what was the impact from paydowns and payoffs in the quarter?

[Dave Antolik, President at S&T Bancorp]

Well, we did see that commercial real estate permanent loan bucket decline. As you may know, the CMBS market is relatively active in the permanent insurance market. We continue to fund through on our construction loans in support of those same borrowers. Based on what we see from existing commitments and demand in the market, we believe that that kind of pace can be continued. That pressure, that headwind from the permanent market is going to continue to be something that we're going to face throughout the balance of the year and certainly in the next year. The paydowns were a little bit lighter than typical in the quarter. We did get a little bit of a benefit there in terms of the net growth by having slightly lighter. Looking ahead, we don't see that as being a trend.

[Daniel Cardenas, Analyst at Brean Capital]

Okay. Got it. Perfect. All right. All my other questions have been asked and answered. Thank you, guys.

[Dave Antolik, President at S&T Bancorp]

Thanks. Thanks, Dan.

[Operator]

Your next question comes from the line of Matthew Breese with Stephens Inc. Your line is now open. Please go ahead.

[Matthew Breese, Analyst at Stephens Inc]

Hey, good afternoon, guys.

[Dave Antolik, President at S&T Bancorp]

Hi, Matt.

[Chris McComish, CEO at S&T Bancorp]

Hi, Matt.

[Matthew Breese, Analyst at Stephens Inc]

Maybe we could just touch on pipeline yields, spreads between C&I and commercial real estate, and curious how competitive dynamics are playing out in your markets. It just sounds like elsewhere in the mid-Atlantic things are heating up competition-wise. I'm curious what you're experiencing.

[Dave Antolik, President at S&T Bancorp]

Yes, if I look at just strictly pipeline approved pipeline from first quarter versus second quarter, we're up modestly in both CRE and C&I. More so in the CRE space as a recognition of those hirings that we've made. We have some pretty decent ABL pipeline activity that's headed our way that could help us with incremental growth. Turn to consumer, mortgages similar to where it was Q1, I would expect mortgage activity to look in Q2 similar to how it did in Q1. Looking at consumer home equity, I would expect Q3, based on pipelines today, to show similar growth, maybe a little higher in Q3 than we saw in Q2. All those things combined give us that outlook to our guidance of mid-single digit total loan growth for the balance of the year.

[Matthew Breese, Analyst at Stephens Inc]

How are yields and spreads holding up?

[Dave Antolik, President at S&T Bancorp]

Yeah, yields, they're holding up. There's still competitive pressure, but so far so good. We're disciplined relative to how we price and the market, particularly in the areas where we see the most activity, construction, there's still a reasonable return based on the risk that we take in that book. The market's willing to accept that pricing. We haven't seen any significant pressure there. We've seen some additional pressure in the deposit book. You're seeing CD pricing and money market pricing competition become more aggressive, particularly from smaller banks. Our larger bank brethren aren't as aggressive when it comes to deposit rates, but there are some smaller bank competition who tend to be a little peskier when it comes to pricing deposits.

[Matthew Breese, Analyst at Stephens Inc]

Yeah. Maybe to put a finer point on it, educated guess, are your pipeline yields still better than 650?

[Dave Antolik, President at S&T Bancorp]

No.

[Matthew Breese, Analyst at Stephens Inc]

Okay.

[Dave Antolik, President at S&T Bancorp]

Overall, the new loan rate over the quarter was just over 6%. I anticipate that the pipeline probably reflects a very similar sort of rate.

[Matthew Breese, Analyst at Stephens Inc]

Got it. Okay. Chris, I know this comes up every quarter now, especially as you kind of inch towards $10 billion, how are M&A discussions coming along?

[Chris McComish, CEO at S&T Bancorp]

Yeah

[Matthew Breese, Analyst at Stephens Inc]

Are conversation activities mimicking overall deal volumes that we're seeing in the space, which is pretty slow?

[Chris McComish, CEO at S&T Bancorp]

Yeah, I would say conversation activities haven't slowed down from the standpoint of thinking strategically about partnerships. I think those activities continue to be at an acceptable pace, I haven't seen any significant decline in those sorts of things. We continue to remain in the market and proactive with potential partners as we do believe it's an opportunity for us down the road.

[Matthew Breese, Analyst at Stephens Inc]

Are there a number of deals that, since you stepped into the seat, that you've passed on? Maybe elaborate on whether or not that makes you a more selective buyer than we might normally see.

[Chris McComish, CEO at S&T Bancorp]

Yeah. I'm not going to go there comparing myself with others or ourselves with others. Yeah, there are a number of deals that we've chosen not to move forward with. It may be we think about what is important to our company, cultural fit, business mix, the makeup of the company. One of the things that we've been working on are over the past few years is continuing to grow and enhance and build that deposit franchise. Some of the targets that we'd look at may be more of a asset play than a customer deposit play, and that something like that may not be as appealing to us as it would be to somebody else.

[Chris McComish, CEO at S&T Bancorp]

We also, as we've talked about in other quarters, Matt, we think about geographic expansion and those contiguous markets south and east of us and through the state of Ohio are all very attractive to us. We're not slowing down in the number of conversations and that remains active. Yeah, we've looked at a number of things that we've chosen not to pursue.

[Matthew Breese, Analyst at Stephens Inc]

Great. I really appreciate that. I'll leave it there. Thank you.

[Chris McComish, CEO at S&T Bancorp]

Sure thing.

[Operator]

Your next call comes from the line of Justin Crowley with Piper Sandler. Your line is now open. Please go ahead.

[Justin Crowley, Analyst at Piper Sandler]

Hey, good afternoon, guys. On the loan growth, in particular C&I know you folks have been talking about that as a focus for a while and, of course, for this quarter. I know it can be a lumpy area, but can you talk about expectations there going forward and perhaps just any comments on are there any specialty groups or certain geographies driving that growth?

[Dave Antolik, President at S&T Bancorp]

Justin, if you look at where we've hired, if I think about this more geographically than because we're pretty well diversified when it comes to industry. Geographically, the majority of the hires were in Western Pennsylvania, so that's where we're seeing activity. We've also made a number of hires in Northeast Ohio, where we're seeing some increase to pipeline. We also added one C&I banker in Eastern P.A. It's pretty well diversified both geographically and, again, looking at industry and concentration, there's nothing meaningfully that's moved, nor do we anticipate that. We're relatively opportunistic, making sure that we have the right people in place, disciplined on your writers and portfolio managers.

[Chris McComish, CEO at S&T Bancorp]

One area that Dave touched on earlier was our asset-based lending group that is seeing nice activity and the pipeline looks solid there and is part of the growth equation as we move forward.

[Justin Crowley, Analyst at Piper Sandler]

Okay, got it. I guess just pivoting a little, just sort of related to the conversation on buybacks. What are sort of your broader thoughts on capital levels, where they are? Certainly still very strong, but of course, down from the peak. Is there a certain ratio or ratios where you're look at targeting a certain threshold? What does that thought process look like?

[Mark Kochvar, CFO at S&T Bancorp]

Yeah, we take a combined sort of bottoms-up approach to try to build at least some levels above which we're comfortable at based on regulatory environment plus our internal capital stress testing that we do to see how much capital we need as a cushion and then making sure that we have that plus. We still think we have some room to reduce that. The decision really becomes how do we manage that better? It was so large that buybacks, I think made sense for that first round of it. As we're starting to utilize that more, some other avenues like different types of asset growth and certainly the M&A piece comes into play. We have some internal targets, but we still feel like we have space above that to maneuver.

[Justin Crowley, Analyst at Piper Sandler]

Okay. I don't know if you're really able to quantify that much further, but do you look at regulatory ratios in terms of staying above a certain level?

[Mark Kochvar, CFO at S&T Bancorp]

Yes. That's the part of the building blocks. We would start with the regulatory definitions and then add a cushion to that, then build upon that with what our stress testing is telling us that we would need to cover an extreme event in the market. That becomes kind of the floor of the target range for us.

[Justin Crowley, Analyst at Piper Sandler]

Okay, got it. Then one just quick last one, kind of like a modeling question. Just on expenses, if I heard it correctly, I think you threw out the $58 million number in terms of kind of the right way to think about the base going forward. Just kind of curious what kind of, I guess, is going to drive that lower from where you were in the second quarter, just as we kind of think about the next few periods modeling ahead.

[Mark Kochvar, CFO at S&T Bancorp]

Yeah. Quarter to quarter, there's always a little bit of lumpiness on the margin. This particular quarter, there were a couple things that don't necessarily repeat that were slightly higher. The main drivers are expense, the amount of people that we have and how much we spend. We anticipate that to be fairly consistent. We think just given the kind of the minor lumpiness of expenses just generally that that $58 million level is something we should be able to manage to for at least the rest of this year.

[Justin Crowley, Analyst at Piper Sandler]

Okay, got it. Great. I will leave it there. Thank you guys so much.

[Mark Kochvar, CFO at S&T Bancorp]

Thank you.

[Chris McComish, CEO at S&T Bancorp]

Thank you.

[Operator]

There are no further questions at this time. I would now like to turn the call over to Chief Executive Officer, Chris McComish, for closing remarks.

[Chris McComish, CEO at S&T Bancorp]

Well, listen, thanks everybody for being on the call. I know these are busy days for all of you with the number of earnings announcements, we certainly appreciate your engagement with our company and your very good questions. Have a great rest of the day, and we look forward to talking to you soon. Thanks.

[Operator]

This concludes today's call. Thank you for attending. You may now disconnect.

Participants

Executives

• Mark Kochvar, CFO
• Chris McComish, CEO
• Dave Antolik, President

Analysts

• Daniel Tamayo, Analyst at Raymond James
• David Bishop, Analyst at Hovde Group
• Kelly Motta, Analyst at KBW
• Daniel Cardenas, Analyst at Brean Capital
• Matthew Breese, Analyst at Stephens Inc
• Justin Crowley, Analyst at Piper Sandler