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DATE
Thursday, April 23, 2026 at 1 p.m. ET
CALL PARTICIPANTS
- Chief Executive Officer — Christopher J. McComish
- President — David G. Antolik
- Chief Financial Officer — Mark Kochvar
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TAKEAWAYS
- Net Income -- $35 million, or $0.94 per share, up nearly 6% sequentially from Q4 2025 and 8% year over year.
- Return on Tangible Common Equity (ROTCE) -- 13.22%, an increase of almost 1% from Q4 2025, attributed in part to nearly $50 million in share buybacks during the quarter.
- Customer Deposit Growth -- Surpassed $8 billion, with over $300 million in quarterly inflows, marking a record in the company’s 125-year history; core deposit growth estimated at $150 million to $200 million after accounting for seasonal factors.
- Wholesale Funding -- Reduced by approximately $200 million following deposit growth, improving funding mix.
- DDA Mix -- Demand deposit accounts rose to 28% of total deposits, up 1% from Q4 2025.
- Loan Balances -- Decreased by $113 million due to reduced commercial pipelines, higher CRE payouts, and lower revolving credit utilization; construction fundings were adversely affected by weather.
- Loan Growth Guidance -- Revised to low single digits for Q2, supported by the hiring of four new commercial bankers and a modest 10%-15% increase in pipeline over year-end levels.
- Nonperforming Assets -- Declined by $5.7 million to $50 million, or 63 basis points of assets; improvement tied to resolution of a previously identified C&I credit.
- Loan Charge-Offs -- $1.7 million, or 9 basis points, remaining at a low level.
- Allowance for Credit Losses -- Stable at 1.17% of loans, despite an uptick in criticized and classified assets.
- Net Interest Income -- Down $2.6 million due to fewer days in the quarter and a prior year interest recovery; net interest margin decreased by 7 basis points to 3.92%.
- Noninterest Income -- Fell by $700,000 as a result of seasonal debit and credit card activity declines and nonrecurring fee timing.
- Noninterest Expense -- Declined $500,000 sequentially, primarily reflecting lower salaries and benefits offset by higher snow removal, utilities, and state tax costs.
- Share Repurchases -- 1.146 million shares repurchased at an average price of $43.30, totaling just under $50 million; $85.8 million repurchased over two quarters, amounting to about 5.5% of outstanding shares.
- TCE Ratio -- Decreased by 43 basis points due to buybacks, yet regulatory capital remains described as "very strong" with CET1 above 14% and over $50 million remaining in the repurchase authorization.
- Deposit Cost -- Reported at 2.47% for March.
- Guidance -- Net interest margin expected to remain stable around current levels, with noninterest expense targeted to increase about 3% for the year, implying a $58 million quarterly run rate.
- M&A Positioning -- Management confirmed ongoing discussions, emphasizing readiness for both organic growth and potential mergers, particularly targets in the $1 billion to $7 billion range with a strong deposit franchise and cultural fit.
- Fee Income Outlook -- Quarterly noninterest income expected to be $13 million to $14 million, with treasury management and small business services highlighted as areas of recent improvement.
SUMMARY
S&T Bancorp (STBA +0.30%) reported historical customer deposit inflows topping $8 billion, enabling a significant reduction in wholesale funding and driving a more favorable deposit mix. Loan balances declined for the quarter due to a combination of lower origination activity, elevated paydowns, and adverse weather affecting construction draws, prompting the company to moderate its loan growth forecast and expand its commercial banking staff. Regulatory capital ratios remain robust despite substantial share repurchases, with management affirming capacity for both continued buybacks and potential M&A. Fee income outlook remains steady, underpinned by recent enhancements in treasury management offerings directed at small business clients.
- Management outlined that roughly half of the record deposit inflows are considered sustainable, isolating $150 million to $200 million as “solid core growth.”
- The company’s strategic capital plan envisions buybacks approaching authorized limits while maintaining capital above peer medians to preserve acquisition optionality.
- Geographic expansion is underway in Columbus, Cincinnati, Cleveland, Maryland, and Delaware, with a dual focus on commercial, industrial, and real estate lending staff additions.
- “deposit fees on the treasury management side probably offer some potential,” CFO Kochvar said, referencing improved business banking fee capture.
- March spot deposit costs were specified at 2.47%, with further detail provided on competitive loan pricing spreads ranging from 2.00% to 2.25%, declining modestly in the quarter.
INDUSTRY GLOSSARY
- DDA: Demand Deposit Account, a type of bank deposit that can be withdrawn on demand, typically used for checking accounts.
- TCE: Tangible Common Equity, representing common equity capital (excluding intangible assets) used to assess a bank’s capital adequacy.
- ROTCE: Return on Tangible Common Equity, a measure of profitability calculated as net income divided by average tangible common equity.
- CET1: Common Equity Tier 1, a key regulatory capital ratio that assesses core equity capital compared to total risk-weighted assets.
- CRE: Commercial Real Estate, referring to loans secured by income-producing property used for business purposes.
- C&I: Commercial and Industrial, a category for loans to businesses that are not secured by real estate.
- ACL: Allowance for Credit Losses, a balance sheet reserve reflecting potential loan losses.
- NIM: Net Interest Margin, the difference between interest income generated and interest paid out, relative to interest-earning assets.
- SBIC: Small Business Investment Company, a private investment firm licensed by the SBA to supply equity and loans to small businesses.
- NPLs: Nonperforming Loans, loans on which the borrower is not making interest payments or repaying any principal.
Full Conference Call Transcript
Christopher J. McComish: 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 am going to begin my comments on page three. Before I do that, I want to reflect on the busy week that it has 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, David, and I are actually coming to you from the S&T Bancorp, Inc. draft headquarters in downtown Pittsburgh. There has been quite a buzz.
We have significant customer engagement events going on, which started yesterday evening, and it is very gratifying to see the impact S&T Bancorp, Inc. has on the markets we serve and the customer relationships that we have built. A big thank you to our employees and teammates who are leading the charge building our People Forward bank. We are 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 [inaudible] ROA, up seven basis points, and an ROTCE of 13.22%, which was up almost 1% over Q4 2025. Almost $50 million in buybacks in the quarter played a key role in this ROTCE improvement. Our NIM and efficiency ratios remained solid at [inaudible], and Mark will provide more color here. Asset quality showed good improvement over the last quarter, and David will provide more color on both asset quality and loan growth. Turning to page four, I would 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 S&T Bancorp, Inc., 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 have built. It really is a strong reflection of the customer relationships that we have.
This deposit growth allowed us to reduce wholesale funding by almost $200 million in the quarter, and the quality of the growth was quite strong, with our DDA levels relative to total deposits increased to 28% in the quarter, up 1% from Q4 2025. While I would love to be able to tell you that we will be able to repeat another 16% annualized growth in Q2, we want to make sure that we are realistic, as there are always temporary fluctuations in deposit balances. We have done an analysis, and we do see some seasonal or temporary growth in these balances.
However, our analysis would tell you that $150 million to $200 million of this growth is what we define as solid core growth in our customer deposit base. Again, even at this level, it would be one of the best quarters we have had in our history. I will stop there and turn it over to David, and he can cover asset quality and loan growth.
David G. Antolik: Great. Thank you, Christopher, and good afternoon, everyone. Continuing on page four of the presentation, loan balances declined in Q1 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 payouts were higher than anticipated, primarily as a result of permanent market offerings from insurance companies and other nonbank lenders who offer more aggressive pricing and structure. Third, we did see a slight reduction in utilization rates on our revolving credit commitments.
Q1 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 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 in Q2, and we continue to focus on mortgage and home equity products as key components to enhancing customer engagement. Looking forward, we are adjusting our loan growth guidance to low single digits for the second quarter.
In response to growth pressures, we are focused on adding talent and building for the long term, with the goal of increasing our commercial banking team in 2026, primarily focused on C&I additions and some geographic expansion in the CRE space. During the first quarter, we hired four new commercial bankers and saw a modest increase in our pipeline. Turning to page five, credit results for the quarter were in line with expectations. Nonperforming 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 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. Criticized and classified loans remain at a very manageable level, and when factored into our reserve methodology, our allowance for credit losses remained stable at 1.17%. I will turn the call over to Mark. Mark?
Mark Kochvar: Thanks, David. First-quarter net interest income declined by $2.6 million, due primarily to fewer days, which accounts for about $1.4 million, and we also had an interest recovery in 2025 that was $0.9 million. In addition, strong deposit growth and loan decline led to a higher cash balance as we adjusted our wholesale borrowing levels. The interest recovery in 2025 and higher cash flow in the first quarter were the main reasons behind the net interest margin rate decline in the first quarter of seven basis points, to a still very strong 3.92%.
With muted expectations for Fed moves in 2026, we expect relative 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 receive-fixed swaps, along with securities, fixed-rate loan, and CD repricing, all contribute to stability in the face of somewhat heightened loan and deposit pricing competition. As we look into 2026, 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, noninterest income decreased by $700,000 in the first quarter.
Debit and credit card activity was seasonally slower, and “other” includes timing related to letter-of-credit fees and distributions from some SBIC investments that happened in the fourth quarter. Our expectations for fees in 2026 remain at approximately $13 million 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. The largest change was in salaries and benefits. Within that, medical costs were lower with the reset of deductibles, and salaries were lower due to the number of days. Occupancy was impacted by higher seasonal snow removal costs and utilities.
Other taxes were also a little bit higher due to Pennsylvania shares tax, which is based on equity levels. We expect to manage our 2026 noninterest expense year-over-year increase to around 3%, which implies a quarterly run rate of right around $58 million. With capital, the 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 million shares at an average price of $43.30, totaling just under $50 million. That brings our total repurchases over the last two quarters to $85.8 million over 2 million shares, 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 are comfortable with these levels, even considering additional repurchases. We have more than sufficient current capital and generation capabilities to position us well for the environment and enable us to take advantage of organic or inorganic growth opportunities. Thanks very much. We will now open the call for questions.
Operator: The floor is now open for questions. If you have any questions, please press 1 on your telephone keypad. To remove yourself from the queue, press 1 again. We ask that while asking your question, please pick up your phone and turn off speakerphone for enhanced audio quality. We will go first to Justin Frank Crowley at Piper Sandler.
Justin Frank Crowley: Hey. Good afternoon, everyone. Just wanted to start out on the loan growth. I think you touched on it, David, but can you give a little more detail on how origination versus payout activity fared in the quarter, and then a sense of where the pipeline ended the period?
David G. Antolik: Yeah, sure. Relative to origination activity in Q1, as I mentioned, we entered the year with a lower pipeline. We built pipelines, but the fallout from the early-stage pipeline was a little higher than what we anticipated, primarily as a result of increased competition relative to pricing. We had some lower utilization that impacted balance growth, and some construction draws were delayed due to weather. We know those will happen, and we anticipate utilization to improve as we move throughout Q2. Payouts were lower than what we had expected overall, and there is no specific reason for that other than some specific paydowns, including large draws that happened in Q4 and then repaid in Q1.
The pipeline is up modestly—when I say modestly, 10% to 15% over year-end. As we onboard new bankers and continue to be disciplined around pricing, that all boils down to a little lighter loan growth than what we had expected back in Q4.
Justin Frank Crowley: And then you mentioned some of the hires and adding bankers. Is that coming across the board, or is it more weighted towards C&I?
David G. Antolik: The hiring in Q1 was more C&I-focused, but we are hiring both C&I and CRE bankers. We still feel really good about our ability to grow CRE—we are good at it, and we have historically built a brand in that space—so we are adding to that staff as well. Based on our geographies, there are significant opportunities in the C&I space for us. The CRE space, as I mentioned in the prepared comments, might include some geographic expansion, particularly in Ohio. So it is a combination of the two. We are also adding business bankers and treasury management officers—really growth-focused positions—to the organization.
Justin Frank Crowley: Okay, great. One last one, pivoting a little. On the margin guide calling for stability here, we think a higher-for-longer environment is beneficial, but trying to square some of the puts and takes as far as loan repricing and anything that offsets that on the funding side—maybe starting to see upward pressure. What are some of the underlying assumptions there? And where are new production spreads versus what is repricing or rolling off?
Mark Kochvar: I think we are back to thinking that there is not going to be a lot of rate increase. Given that, we would have some natural improvement in margin, but as David mentioned, we have seen some higher competitive pressures, particularly on the loan side. Factoring that in gets us to more of a flatter NIM as we move throughout the year. We still have those tailwinds, but a lot of that might get absorbed by the more competitive loan environment.
David G. Antolik: On spreads, we are kind of in the mid—like a 2.00% to 2.25%—range, and we saw that slip probably 5 or 10 basis points over the last quarter. In the bank competition, we saw two deals that were sub-2% that we decided not to move forward with, so we lost those to the competition. For us, it is 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 growth has on the NIM and net interest income.
Justin Frank Crowley: Understood. Great. I will leave it there. Thank you so much.
Christopher J. McComish: Thank you, Justin.
Operator: We will move next to Daniel Tamayo at Raymond James.
Daniel Tamayo: Thank you. Good afternoon, everyone. Maybe starting first on the capital and the buyback side. You did about $50 million in the first quarter, and you have a similar amount remaining in the authorization. Capital is still really strong—CET1 over 14%, really by any measure. Do you think it is in the cards to re-up that authorization and continue the repurchase further out than just the second quarter? How are you thinking about the trajectory of buybacks given the level of capital you have and the growth expected?
Mark Kochvar: Yes, we would definitely take a very hard look at the remaining authorization. I think we will see how that goes before we look at the next leg. Our internal target ratios—the next $50 million 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. Going forward, it might be more dependent on the growth trajectory from there and how much capital that uses.
Daniel Tamayo: Okay. And remind me what the target capital ratio is?
Mark Kochvar: We are looking to be approximately—across the different ratios—above median peer level, between median and 75th percentile. 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 present itself.
Christopher J. McComish: Daniel, this is Christopher. I want to reemphasize that having financial flexibility is a real benefit for us. Being able to think about this in an organic growth lens while at the same time having the financial flexibility should an inorganic opportunity present itself is important. As we were getting north of 14%, it made sense to dial that back and, as Mark said, bring those ratios closer to the 50th to 75th percentile, which makes more sense to us long term.
Daniel Tamayo: Understood. And then, diving in a little on the hirings—you mentioned new geographic expansion, including Ohio. Could you provide a little more detail on the markets where you are hiring?
David G. Antolik: Sure. We have a group of bankers in Columbus, and we are looking westward, like the Cincinnati market perhaps, and then in Northeast Ohio, expanding more towards Cleveland. There are opportunities in those two markets that we think we can take advantage of as we grow. Also, in our Eastern Pennsylvania franchise, we have done a lot of work into Maryland and Delaware, particularly in the CRE space, and we think there is more opportunity there for us to grow as well.
Operator: We will take our next question from Kelly Ann Motta at KBW.
Kelly Ann Motta: I would love to follow up on that capital question since you mentioned M&A. If you could, Christopher, give us an update on the pace of conversations. Clearly, there is an M&A window open at this time. How is this going?
Christopher J. McComish: I would describe that we are consistently having discussions, and we look at opportunities. We are disciplined, as you can tell, and we are going to remain so. But I think you are right, Kelly; there is a window here that seems to make sense, and we would like to capitalize on the right opportunity should it present itself. We have not slowed down at all in the number of conversations that we have had. Quite honestly, the financial performance and the returns that we are able to deliver open up windows for conversations for us, and we want to be able to capitalize on those.
Kelly Ann Motta: Great. I would like to switch back to the deposit growth because that was a major highlight of the quarter and something you have been working diligently on. Was there one or a couple of things that really drove that outsized growth? Any market dynamics? It clearly was a remarkable quarter for you.
Christopher J. McComish: Thanks for that recognition, Kelly. It is a real point of pride for our employees. I am coming up on my fifth year here at S&T Bancorp, Inc. in another couple of months, and we have been unrelenting in our focus on the importance of building a high-quality core deposit franchise. We have seen positive momentum over the last 18-plus months on the consumer side. We have talked a lot about the rigor and discipline of the customer engagement process we define as CARE.
If you think, how do you know it is working, I go back to the anecdote I provided: broad-based growth in 80% of our branches in the quarter tells me the right customer interactions are taking place. We have also talked a lot about the way that we manage exception pricing and the need to be dynamic while responsive. That is a process built over the past couple of years that continues to work in a rising or declining rate environment. On the commercial and business banking side, we have spent the past few years enhancing our treasury management capabilities and the number of teammates, both in commercial banking as well as business banking.
We are seeing good momentum there, and we know a portion of this in the commercial space was true new customer acquisition. We also analyzed the impact of tax law changes. Tax receipt deposits into our accounts showed year-over-year growth of about $30 million, and higher tax refunds contributed to some of this. That is why we guided that all $300 million probably is not going to stick forever—there is some fluctuation in it. But we feel really good about that $150 million to $200 million, which by itself would have been a really strong quarter.
Operator: We will move next to Tyler Cacciatore at Stephens Inc.
Tyler Cacciatore: Good afternoon. This is Tyler on for Matt Breese. Maybe just a follow-up on the M&A commentary. Can you update us on what the ideal target would look like, and if there is any ideal size or whether you want to dive into new markets or complement existing ones?
Christopher J. McComish: I will be consistent with what we have talked about in the past. We look geographically at the core markets we are in and adjacent markets, and we are active in building relationships throughout that geography. From a pure acquisition standpoint, given our size, you are talking about banks probably in the $1 billion to $6 billion–$7 billion range—it makes sense from a size standpoint. Our focus is on the quality of the core deposit franchise, cultural fit, and the ability to accelerate growth in the company—those are the criteria we look through.
Tyler Cacciatore: Thank you for the color. Moving to credit—nice to see the charge-offs move much lower, which led to a lower provision than expected. What are you seeing from a credit perspective going forward, and what levels of charge-offs are you comfortable running at, to help model the provision from here? And a quick one on deposit costs—do you have the spot cost of deposits at quarter end or in the month of March?
David G. Antolik: In total for 2026, we would expect similar total results relative to 2025. We are targeting to reduce NPLs from where we are now, modestly. As I mentioned, we did see a slight uptick in our criticized and classified assets; it did not have a significant impact on provisioning or a large increase in the ACL. There is nothing outside of normal movements that we anticipate. We are a commercial-focused bank; when something happens negatively from a credit perspective, it tends to be a little larger than a bank with a bigger consumer base, and we acknowledge that.
We have fine-tuned our methodology and spend a lot of time internally discussing how we can get ahead of things and forecast better. Externally, we are watching the environment—gas and oil prices have run up. That has not really impacted the economy dramatically in the short term, but if it continues, it could have impacts down the road. We are not outsized one way or another, but there is a lot we do not control that we have to pay attention to.
Mark Kochvar: On deposit costs, for the month of March, our total deposit cost was right around 2.47%.
Tyler Cacciatore: Thank you. I will step back here.
Operator: As a reminder, if you would like to ask a question, press 1. We will go next to David Jason Bishop at Hovde Group.
David Jason Bishop: Hey. Good afternoon, Chris. Excited for the draft as well down here.
Christopher J. McComish: We are excited for the draft down here. We are not going to say anything about Baltimore, David. I am sure you are waving your terrible towel up there. David G. Antolik has his eye black on right now. He is locked in. I am wearing a Steelers helmet as well.
David Jason Bishop: A lot of my questions have been asked, but I would be curious: 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? Do you see any line of sight to maybe temporary deposits outflowing? How should we think about cash levels moving into the back half of the year?
Mark Kochvar: We do expect that to decrease. We still have some wholesale borrowings that we have an opportunity to reduce, so that would be the first priority. As Christopher mentioned, we do expect some of that to potentially roll off, at least temporarily, in the second quarter. We will keep some cash powder dry for that and then for the return to loan growth—some in the second quarter, but perhaps more in the back half of the year. So that cash level will not stay where it is, for a combination of reducing wholesale, natural deposit fluctuation, and a return to loan growth.
David Jason Bishop: Got it. Final question: as you look across your fee income segments and categories, any areas you are most bullish about for augmentation as you look out into the rest of the year?
Mark Kochvar: We have seen some encouraging pickup on the treasury management side. There is a group within that—kind of the non–account analysis group—where we have seen improvement in the last couple of quarters, and there is a renewed emphasis in the bank, especially in our business banking group. On the basic treasury management side, in account analysis, we did some price adjustments that helped in the first quarter, and that group is making headway in the market as well. So deposit fees on the treasury management side probably offer some potential. Financial services has been solid for us as well.
Christopher J. McComish: On the non-analyzed treasury management services, that is really the result of work we started a couple of years ago. We built a product for the small 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—packaged into basically one price. We rolled that out a couple of years ago, trained our teams, and put it in the market. We believe it was a differentiating factor, and we are seeing balance growth come from it as well as some treasury management fee income and the annuity nature of that.
It is nice to see something go from concept to reality and start to produce results.
David Jason Bishop: Got it. That is great color. That was all I had. Thanks.
Operator: That concludes the question and answer session. I would like to turn the call back over to Chief Executive Officer, Christopher J. McComish, for closing remarks.
Christopher J. McComish: Thank you for your interest in S&T Bancorp, Inc., your good questions, and the relationships you have built with us. They are really important to us. We are proud of the performance we are showing and are looking for continued growth and impact in the marketplace. Spring is here, so the weather has turned and there is a lot of optimism in the air. Thanks for your time, and have a great rest of the day.
Operator: That concludes today’s conference. Thank you for your participation. You may now disconnect.
