8-K
S&T BANCORP INC (STBA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
April 20, 2023
Date of Report (date of earliest event reported)
S&T BANCORP, INC
(Exact name of registrant as specified in its charter)
| Pennsylvania | 0-12508 | 25-1434426 | |
|---|---|---|---|
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | |
| 800 Philadelphia Street | Indiana | PA | 15701 |
| (Address of Principal Executive Offices) | (Zip Code) |
(800) 325-2265
Registrant's telephone number, including area code
(Not applicable)
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $2.50 par value | STBA | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On April 20, 2023 S&T announced by press release its earnings for the three months ended March 31, 2023. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference in this Item 2.02. The information contained in this Item 2.02 of this Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Exchange Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 7.01 Regulation FD Disclosure.
In connection with the issuance of its earnings for the three months ended March 31, 2023, S&T has also made available on its website materials that contain supplemental information about S&T’s financial results (“Supplemental Information”). A copy of the supplemental information is attached hereto asExhibit 99.2 and is incorporated by reference in this Item 7.01. The information contained in this Item 7.01 of this Report on Form 8-K, including Exhibit 99.2, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Exchange Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description of Exhibit |
|---|---|
| 99.1 | Press Release |
| 99.2 | Supplemental Information |
| 104 | Cover Page Interactive Data File (embedded in the cover page formatted in Inline XBRL) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed by the undersigned thereunto duly authorized.
| S&T Bancorp, Inc. | |
|---|---|
| /s/ Mark Kochvar | |
| April 20, 2023 | Mark Kochvar<br>Senior Executive Vice President,<br>Chief Financial Officer |
Document
| INVESTOR CONTACT:<br><br>Mark Kochvar<br><br>S&T Bancorp, Inc.<br><br>Chief Financial Officer<br><br>724.465.4826<br><br>mark.kochvar@stbank.com |
|---|
FOR IMMEDIATE RELEASE
S&T Bancorp, Inc. Announces First Quarter 2023 Net Income
INDIANA, Pa. - April 20, 2023 - S&T Bancorp, Inc. (S&T) (NASDAQ: STBA), the holding company for S&T Bank, announced net income of $39.8 million, or $1.02 per diluted share, for the first quarter of 2023 compared to net income of $40.3 million, or $1.03 per diluted share, for the fourth quarter of 2022 and net income of $29.1 million, or $0.74 per diluted share, for the first quarter of 2022.
First Quarter of 2023 Highlights:
•Solid return metrics with return on average assets (ROA) of 1.77%, return on average equity (ROE) of 13.38% and return on average tangible equity (ROTE) (non-GAAP) of 19.61% compared to ROA of 1.78%, ROE of 13.68% and ROTE (non-GAAP) of 20.36% for the fourth quarter of 2022.
•Pre-provision net revenue to average assets (PPNR) (non-GAAP) of 2.23% compared to 2.36% for the fourth quarter of 2022.
•Net interest margin (NIM) (FTE) (non-GAAP) was relatively unchanged at 4.32% compared to 4.33% in the fourth quarter of 2022.
•Total portfolio loans increased $67.1 million, or 3.8% annualized, compared to December 31, 2022.
•Deposits decreased $66.9 million, or 3.8% annualized, compared to December 31, 2022 with a decline in January, stability in February and growth in March.
•Net recovery of $5.1 million, or 0.29% of average loans (annualized), primarily related to a $9.3 million recovery from a customer fraud in 2020.
"We delivered solid net interest margin and return metrics for the first quarter. Our balance sheet is a source of strength with a stable, well-diversified deposit base and a strong capital position," said Chris McComish, chief executive officer. "As the economic landscape continues to evolve, we remain committed to our purpose of People-Forward Banking. I am proud of the results from our team's proactive customer outreach and engagement during the quarter."
Net Interest Income
Net interest income was $88.8 million for the first quarter of 2023 compared to $89.1 million for the fourth quarter of 2022. The decrease of $0.3 million in net interest income was driven by higher funding costs and two fewer days in the first quarter, partially offset by higher yields on interest-earning assets. Net interest margin on a fully taxable equivalent basis (NIM) (FTE) (non-GAAP) decreased 1 basis point to 4.32% compared to 4.33% in the prior quarter. The yield on total average loans increased 43 basis points to 5.81% compared to 5.38% in the fourth quarter of 2022 due to higher interest rates. Total interest-bearing deposit costs increased 37 basis points to
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1.30% compared to 0.93% in the fourth quarter of 2022. Higher interest-bearing deposit costs primarily related to a change in the mix of deposits with higher balances in certificates of deposit. Average certificate of deposit balances increased $110.7 million compared to the fourth quarter of 2022. Total borrowing costs increased 53 basis points to 5.13% compared to 4.60% in the fourth quarter of 2022. Average borrowings increased $303.2 million to $520.8 million compared to $217.6 million in the fourth quarter of 2022 due to loan growth and deposit balance declines.
Asset Quality
Net loan recoveries were $5.1 million for the first quarter of 2023 compared to net loan charge-offs of $0.9 million in the fourth quarter of 2022. The net recovery primarily related to a $9.3 million recovery from a customer fraud in 2020. Total charge-offs of $4.5 million primarily related to a $3.4 million charge from a strategic exit of a C&I credit through a note sale . Total nonperforming assets increased $5.6 million to $27.7 million at March 31, 2023 compared to $22.1 million at December 31, 2022. Nonperforming assets to total loans plus OREO increased 7 basis points to 0.38% at March 31, 2023 compared to 0.31% at December 31, 2022. The provision for credit losses was $0.9 million for the first quarter of 2023 compared to $3.2 million in the fourth quarter of 2022. The allowance for credit losses was 1.49% of total portfolio loans as of March 31, 2023 compared to 1.41% at December 31, 2022. The increase in the allowance for credit losses related to a $4.2 million specific reserve and additional qualitative reserve due to the uncertainty in the macroeconomic environment.
Noninterest Income and Expense
Noninterest income decreased $2.4 million to $13.2 million in the first quarter of 2023 compared to $15.6 million in the fourth quarter of 2022. The decrease mainly related to a decline in other income of $2.1 million primarily related to a net gain on the sale of OREO of $2.0 million in the fourth quarter of 2022. Noninterest expense was $51.7 million compared to $51.3 million in the fourth quarter of 2022. FDIC insurance increased $0.6 million primarily related to an increase in the assessment rate schedule effective January 1, 2023. Marketing increased $0.5 million due to the timing of various marketing promotions. Salaries and employee benefits decreased $0.4 million due to lower incentives and pension costs.
Financial Condition
Total assets were $9.2 billion at March 31, 2023 compared to $9.1 billion at December 31, 2022. Total portfolio loans increased by $67.1 million, or 3.8% annualized, compared to December 31, 2022. The consumer loan portfolio increased $65.3 million with growth in residential mortgages of $72.7 million compared to December 31, 2022.
Total deposits decreased $66.9 million, or 3.8% annualized, compared to December 31, 2022. Deposit balances declined early in the quarter for the month of January followed by stability in February and growth in March. Certificates of deposit increased $240.6 million compared to December 31, 2022 mainly due to migration from other deposit categories. Our deposit base is stable and well-diversified with 59% personal deposits and 41% business deposits. Total borrowings increased $124.9 million to $564.1 million compared to December 31, 2022 related to loan growth and deposit declines.
S&T continues to maintain a strong regulatory capital position with all capital ratios above the well-capitalized thresholds of federal bank regulatory agencies.
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Conference Call
S&T will host its first quarter 2023 earnings conference call live over the Internet at 1:00 p.m. ET on Thursday, April 20, 2023. To access the webcast, go to S&T Bancorp, Inc.’s Investor Relations webpage www.stbancorp.com. After the live presentation, the webcast will be archived at www.stbancorp.com for 12 months.
About S&T Bancorp, Inc. and S&T Bank
S&T Bancorp, Inc. is a $9.2 billion bank holding company that is headquartered in Indiana, Pennsylvania and trades on the NASDAQ Global Select Market under the symbol STBA. Its principal subsidiary, S&T Bank, was established in 1902 and operates in Pennsylvania and Ohio. S&T Bank was named by Forbes as a 2022 Best-in-State Bank. For more information visit stbancorp.com or stbank.com. Follow us on Facebook, Instagram and LinkedIn.
Forward-Looking Statements
This information contains or incorporates statements that we believe are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to our financial condition, results of operations, plans, objectives, outlook for earnings, revenues, expenses, capital and liquidity levels and ratios, asset levels, asset quality, financial position and other matters regarding or affecting S&T and its future business and operations. Forward-looking statements are typically identified by words or phrases such as “will likely result,” “expect,” “anticipate,” “estimate,” “forecast,” “project,” “intend,” “believe,” “assume,” “strategy,” “trend,” “plan,” “outlook,” “outcome,” “continue,” “remain,” “potential,” “opportunity,” “comfortable,” “current,” “position,” “maintain,” “sustain,” “seek,” “achieve,” and variations of such words and similar expressions, or future or conditional verbs such as will, would, should, could or may. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. The matters discussed in these forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results and trends to differ materially from those made, projected, or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors including, but not limited to: credit losses and the credit risk of our commercial and consumer loan products; changes in the level of charge-offs and changes in estimates of the adequacy of the allowance for credit losses, or ACL; cyber-security concerns; rapid technological developments and changes; operational risks or risk management failures by us or critical third parties, including fraud risk; our ability to manage our reputational risks; sensitivity to the interest rate environment, a rapid increase in interest rates or a change in the shape of the yield curve; a change in spreads on interest-earning assets and interest-bearing liabilities; the transition from LIBOR as a reference rate; regulatory supervision and oversight, including changes in regulatory capital requirements and our ability to address those requirements; unanticipated changes in our liquidity position; unanticipated changes in regulatory and governmental policies impacting interest rates and financial markets; changes in accounting policies, practices or guidance; legislation affecting the financial services industry as a whole, and S&T, in particular; developments affecting the industry and the soundness of financial institutions and further disruption to the economy and U.S. banking system may adversely affect our business, results of operations, liquidity and stock price; the outcome of pending and future litigation and governmental proceedings; increasing price and product/service competition; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; managing our internal growth and acquisitions; the possibility that the anticipated benefits from acquisitions cannot be fully realized in a timely manner or at all, or that integrating the acquired
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operations will be more difficult, disruptive or costly than anticipated; containing costs and expenses; reliance on significant customer relationships; an interruption or cessation of an important service by a third-party provider; our ability to attract and retain talented executives and employees; general economic or business conditions, including the strength of regional economic conditions in our market area; environmental, social and governance practices and disclosures, including climate change, hiring practices, the diversity of the work force, and racial and social justice issues; deterioration of the housing market and reduced demand for mortgages; deterioration in the overall macroeconomic conditions or the state of the banking industry that could warrant further analysis of the carrying value of goodwill and could result in an adjustment to its carrying value resulting in a non-cash charge to net income; the stability of our core deposit base and access to contingency funding; re-emergence of turbulence in significant portions of the global financial and real estate markets that could impact our performance, both directly, by affecting our revenues and the value of our assets and liabilities, and indirectly, by affecting the economy generally and access to capital in the amounts, at the times and on the terms required to support our future businesses.
Many of these factors, as well as other factors, are described in our Annual Report on Form 10-K for the year ended December 31, 2022, including Part I, Item 1A-"Risk Factors" and any of our subsequent filings with the SEC. Forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. We caution you not to unduly rely on forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. Any forward-looking statement speaks only as to the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.
Non-GAAP Financial Measures
In addition to traditional measures presented in accordance with GAAP, our management uses, and this information contains or references, certain non-GAAP financial measures, such as tangible book value, return of average tangible shareholder's equity, PPNR to average assets, efficiency ratio, tangible common equity to tangible assets and net interest margin on an FTE basis. We believe these non-GAAP financial measures provide information useful to investors in understanding our underlying operational performance and our business and performance trends as they facilitate comparisons with the performance of other companies in the financial services industry. Although we believe that these non-GAAP financial measures enhance investors’ understanding of our business and performance, these non-GAAP financial measures should not be considered alternatives to GAAP or considered to be more important than financial results determined in accordance with GAAP, nor are they necessarily comparable with non-GAAP measures which may be presented by other companies. See Definitions and Reconciliation of GAAP to Non-GAAP Financial Measures for more information related to these financial measures.
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| S&T Bancorp, Inc.<br><br>Consolidated Selected Financial Data<br><br>Unaudited | S&T Earnings Release - | 5 | |
|---|---|---|---|
| 2023 | 2022 | 2022 | |
| --- | --- | --- | --- |
| First | Fourth | First | |
| (dollars in thousands, except per share data) | Quarter | Quarter | Quarter |
| INTEREST AND DIVIDEND INCOME | |||
| Loans, including fees | 102,724 | 96,220 | 64,593 |
| Investment Securities: | |||
| Taxable | 7,457 | 6,507 | 4,936 |
| Tax-exempt | 214 | 233 | 482 |
| Dividends | 508 | 248 | 98 |
| Total Interest and Dividend Income | 110,903 | 103,208 | 70,109 |
| INTEREST EXPENSE | |||
| Deposits | 14,903 | 11,067 | 1,853 |
| Borrowings, junior subordinated debt securities and other | 7,209 | 3,083 | 523 |
| Total Interest Expense | 22,112 | 14,150 | 2,376 |
| NET INTEREST INCOME | 88,791 | 89,058 | 67,733 |
| Provision for credit losses | 922 | 3,176 | (512) |
| Net Interest Income After Provision for Credit Losses | 87,869 | 85,882 | 68,245 |
| NONINTEREST INCOME | |||
| Net gain on sale of securities | — | — | — |
| Debit and credit card | 4,373 | 4,421 | 5,063 |
| Service charges on deposit accounts | 4,076 | 4,341 | 3,974 |
| Wealth management | 2,948 | 3,016 | 3,242 |
| Mortgage banking | 301 | 309 | 1,015 |
| Other | 1,492 | 3,556 | 1,932 |
| Total Noninterest Income | 13,190 | 15,643 | 15,226 |
| NONINTEREST EXPENSE | |||
| Salaries and employee benefits | 27,601 | 27,998 | 23,712 |
| Data processing and information technology | 4,258 | 4,159 | 4,435 |
| Occupancy | 3,835 | 3,806 | 3,882 |
| Furniture, equipment and software | 2,861 | 2,975 | 2,777 |
| Marketing | 1,853 | 1,348 | 1,361 |
| Professional services and legal | 1,821 | 2,138 | 1,949 |
| Other taxes | 1,790 | 1,842 | 1,537 |
| FDIC insurance | 1,012 | 437 | 937 |
| Other | 6,668 | 6,572 | 6,824 |
| Total Noninterest Expense | 51,699 | 51,275 | 47,414 |
| Income Before Taxes | 49,360 | 50,250 | 36,057 |
| Income tax expense | 9,561 | 9,980 | 6,914 |
| Net Income | 39,799 | 40,270 | 29,143 |
| Per Share Data | |||
| Shares outstanding at end of period | 38,998,156 | 38,999,733 | 39,351,688 |
| Average shares outstanding - diluted | 39,032,062 | 38,944,575 | 39,089,933 |
| Diluted earnings per share | 1.02 | 1.03 | 0.74 |
| Dividends declared per share | 0.32 | 0.31 | 0.29 |
| Dividend yield (annualized) | 4.07 | 3.63 | 3.92 |
| Dividends paid to net income | 31.10 | 29.85 | 39.06 |
| Book value | 31.48 | 30.38 | 30.11 |
| Tangible book value (1) | 21.81 | 20.69 | 20.49 |
| Market value | 31.45 | 34.18 | 29.58 |
| Profitability Ratios (Annualized) | |||
| Return on average assets | 1.77 | 1.78 | 1.25 |
| Return on average shareholders' equity | 13.38 | 13.68 | 9.88 |
| Return on average tangible shareholders' equity(2) | 19.61 | 20.36 | 14.61 |
| Pre-provision net revenue / average assets(3) | 2.23 | 2.36 | 1.52 |
| Efficiency ratio (FTE)(4) | 50.42 | 48.73 | 56.82 |
All values are in US Dollars.
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| S&T Bancorp, Inc.<br><br>Consolidated Selected Financial Data<br><br>Unaudited | S&T Earnings Release - | 6 | |
|---|---|---|---|
| 2023 | 2022 | 2022 | |
| --- | --- | --- | --- |
| First | Fourth | First | |
| (dollars in thousands) | Quarter | Quarter | Quarter |
| ASSETS | |||
| Cash and due from banks, including interest-bearing deposits | 244,152 | 210,009 | 823,757 |
| Securities, at fair value | 998,708 | 1,002,778 | 1,028,218 |
| Loans held for sale | 81 | 16 | 1,346 |
| Commercial loans: | |||
| Commercial real estate | 3,145,079 | 3,128,187 | 3,257,955 |
| Commercial and industrial | 1,709,612 | 1,718,976 | 1,675,316 |
| Commercial construction | 393,658 | 399,371 | 398,592 |
| Total Commercial Loans | 5,248,349 | 5,246,534 | 5,331,863 |
| Consumer loans: | |||
| Residential mortgage | 1,189,220 | 1,116,528 | 912,531 |
| Home equity | 649,590 | 652,066 | 581,821 |
| Installment and other consumer | 119,843 | 124,896 | 112,297 |
| Consumer construction | 44,062 | 43,945 | 25,399 |
| Total Consumer Loans | 2,002,715 | 1,937,435 | 1,632,048 |
| Total Portfolio Loans | 7,251,064 | 7,183,969 | 6,963,911 |
| Allowance for credit losses | (108,113) | (101,340) | (99,915) |
| Total Portfolio Loans, Net | 7,142,951 | 7,082,629 | 6,863,996 |
| Federal Home Loan Bank and other restricted stock, at cost | 30,262 | 23,035 | 9,349 |
| Goodwill | 373,424 | 373,424 | 373,424 |
| Other assets | 403,864 | 418,676 | 332,191 |
| Total Assets | 9,193,442 | 9,110,567 | 9,432,281 |
| LIABILITIES | |||
| Deposits: | |||
| Noninterest-bearing demand | 2,468,638 | 2,588,692 | 2,740,315 |
| Interest-bearing demand | 841,130 | 846,653 | 1,070,656 |
| Money market | 1,599,814 | 1,731,521 | 1,992,916 |
| Savings | 1,068,274 | 1,118,511 | 1,117,985 |
| Certificates of deposit | 1,175,238 | 934,593 | 1,038,586 |
| Total Deposits | 7,153,094 | 7,219,970 | 7,960,458 |
| Borrowings: | |||
| Short-term borrowings | 495,000 | 370,000 | 70,112 |
| Long-term borrowings | 14,628 | 14,741 | 22,171 |
| Junior subordinated debt securities | 54,468 | 54,453 | 54,408 |
| Total Borrowings | 564,096 | 439,194 | 146,691 |
| Other liabilities | 248,457 | 266,744 | 140,182 |
| Total Liabilities | 7,965,647 | 7,925,908 | 8,247,331 |
| SHAREHOLDERS' EQUITY | |||
| Total Shareholders' Equity | 1,227,795 | 1,184,659 | 1,184,950 |
| Total Liabilities and Shareholders' Equity | 9,193,442 | 9,110,567 | 9,432,281 |
| Capitalization Ratios | |||
| Shareholders' equity / assets | 13.36 | 13.00 | 12.56 |
| Tangible common equity / tangible assets(5) | 9.65 | 9.24 | 8.91 |
| Tier 1 leverage ratio | 11.15 | 11.06 | 9.85 |
| Common equity tier 1 capital | 13.10 | 12.81 | 12.26 |
| Risk-based capital - tier 1 | 13.50 | 13.21 | 12.67 |
| Risk-based capital - total | 15.09 | 14.73 | 14.18 |
All values are in US Dollars.
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| S&T Bancorp, Inc.<br><br>Consolidated Selected Financial Data<br><br>Unaudited | S&T Earnings Release - | 7 | |
|---|---|---|---|
| 2023 | 2022 | 2022 | |
| --- | --- | --- | --- |
| First | Fourth | First | |
| (dollars in thousands) | Quarter | Quarter | Quarter |
| Net Interest Margin (FTE) (QTD Averages) | |||
| ASSETS | |||
| Interest-bearing deposits with banks | 140,499 | 79,881 | 756,141 |
| Securities, at fair value | 1,000,609 | 991,774 | 1,002,212 |
| Loans held for sale | 126 | 491 | 1,545 |
| Commercial real estate | 3,132,382 | 3,118,874 | 3,257,238 |
| Commercial and industrial | 1,711,113 | 1,724,480 | 1,712,865 |
| Commercial construction | 388,795 | 387,737 | 409,264 |
| Total Commercial Loans | 5,232,290 | 5,231,091 | 5,379,367 |
| Residential mortgage | 1,144,821 | 1,077,114 | 896,268 |
| Home equity | 650,385 | 648,340 | 570,781 |
| Installment and other consumer | 122,873 | 126,570 | 109,972 |
| Consumer construction | 45,870 | 41,385 | 21,833 |
| Total Consumer Loans | 1,963,949 | 1,893,409 | 1,598,854 |
| Total Portfolio Loans | 7,196,239 | 7,124,500 | 6,978,221 |
| Total Loans | 7,196,365 | 7,124,991 | 6,979,765 |
| Federal Home Loan Bank and other restricted stock | 34,720 | 24,043 | 9,280 |
| Total Interest-earning Assets | 8,372,193 | 8,220,689 | 8,747,398 |
| Noninterest-earning assets | 754,677 | 763,927 | 709,246 |
| Total Assets | 9,126,870 | 8,984,616 | 9,456,644 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||
| Interest-bearing demand | 824,623 | 836,585 | 986,639 |
| Money market | 1,670,988 | 1,792,162 | 2,055,857 |
| Savings | 1,090,137 | 1,127,987 | 1,109,048 |
| Certificates of deposit | 1,052,460 | 941,774 | 1,070,189 |
| Total Interest-bearing Deposits | 4,638,208 | 4,698,508 | 5,221,733 |
| Securities sold under repurchase agreements | — | — | 81,790 |
| Short-term borrowings | 451,668 | 148,370 | — |
| Long-term borrowings | 14,689 | 14,801 | 22,310 |
| Junior subordinated debt securities | 54,458 | 54,443 | 54,398 |
| Total Borrowings | 520,815 | 217,614 | 158,498 |
| Total Other Costing Liabilities | 54,669 | 60,156 | — |
| Total Interest-bearing Liabilities | 5,213,692 | 4,976,278 | 5,380,231 |
| Noninterest-bearing liabilities | 2,706,820 | 2,840,315 | 2,879,718 |
| Shareholders' equity | 1,206,358 | 1,168,023 | 1,196,694 |
| Total Liabilities and Shareholders' Equity | 9,126,870 | 8,984,616 | 9,456,644 |
| Net Interest Margin(6) |
All values are in US Dollars.
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| S&T Bancorp, Inc.<br><br>Consolidated Selected Financial Data<br><br>Unaudited | S&T Earnings Release - | 8 | | --- | --- | --- || | 2023 | | 2022 | | 2022 | | | --- | --- | --- | --- | --- | --- | --- | | | First | | Fourth | | First | | | (dollars in thousands) | Quarter | | Quarter | | Quarter | | | Nonaccrual Loans | | | | | | | | Commercial loans: | | % Loans | | % Loans | | % Loans | | Commercial real estate | $7,932 | 0.25% | $7,323 | 0.23% | $26,699 | 0.82% | | Commercial and industrial | 9,348 | 0.55% | 2,974 | 0.17% | 14,673 | 0.90% | | Commercial construction | 384 | 0.10% | 384 | 0.10% | 864 | 0.22% | | Total Nonaccrual Commercial Loans | 17,664 | 0.34% | 10,681 | 0.20% | 42,236 | 0.79% | | Consumer loans: | | | | | | | | Residential mortgage | 4,749 | 0.40% | 6,063 | 0.54% | 7,450 | 0.82% | | Home equity | 1,915 | 0.29% | 2,031 | 0.31% | 2,713 | 0.47% | | Installment and other consumer | 316 | 0.26% | 277 | 0.22% | 125 | 0.11% | | Total Nonaccrual Consumer Loans | 6,980 | 0.35% | 8,371 | 0.43% | 10,287 | 0.63% | | Total Nonaccrual Loans | $24,644 | 0.34% | $19,052 | 0.27% | $52,524 | 0.75% || | 2023 | 2022 | 2022 | | --- | --- | --- | --- | | | First | Fourth | First | | (dollars in thousands) | Quarter | Quarter | Quarter | | Loan (Recoveries) Charge-offs | | | | | Charge-offs | $4,459 | $1,718 | $982 | | Recoveries | (9,574) | (808) | (3,019) | | Net Loan (Recoveries) Charge-offs | ($5,115) | $910 | ($2,037) | | Net Loan (Recoveries) Charge-offs | | | | | Commercial loans: | | | | | Customer fraud | ($9,329) | $— | $— | | Commercial real estate | (25) | $412 | $178 | | Commercial and industrial | 3,948 | 150 | (2,507) | | Commercial construction | (2) | — | (1) | | Total Commercial Loan (Recoveries) Charge-offs | (5,408) | 562 | (2,330) | | Consumer loans: | | | | | Residential mortgage | 9 | 51 | 81 | | Home equity | 31 | 136 | (20) | | Installment and other consumer | 253 | 161 | 232 | | Total Consumer Loan Charge-offs (Recoveries) | 293 | 348 | 293 | | Total Net Loan (Recoveries) Charge-offs | ($5,115) | $910 | ($2,037) | | | 2023 | 2022 | 2022 | | --- | --- | --- | --- | | | First | Fourth | First | | (dollars in thousands) | Quarter | Quarter | Quarter | | Asset Quality Data | | | | | Nonaccrual loans | 24,644 | 19,052 | 52,524 | | OREO | 3,076 | 3,065 | 7,028 | | Total nonperforming assets | 27,720 | 22,117 | 59,552 | | Troubled debt restructurings (nonaccruing)* | — | 2,894 | 15,389 | | Troubled debt restructurings (accruing)* | — | 8,891 | 10,739 | | Total troubled debt restructurings* | — | 11,785 | 26,128 | | Nonaccrual loans / total loans | 0.34 | 0.27 | 0.75 | | Nonperforming assets / total loans plus OREO | 0.38 | 0.31 | 0.85 | | Allowance for credit losses / total portfolio loans | 1.49 | 1.41 | 1.43 | | Allowance for credit losses / nonaccrual loans | 439 | 532 | 190 | | Net loan (recoveries) charge-offs | (5,115) | 910 | (2,037) | | Net loan (recoveries) charge-offs (annualized) / average loans | (0.29 | 0.05 | (0.12 | | *TDR's were eliminated as of January 1, 2023 as part of implementing ASU 2022-02, Financial Instruments Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. | | | |
All values are in US Dollars.
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| S&T Bancorp, Inc.<br><br>Consolidated Selected Financial Data<br><br>Unaudited | S&T Earnings Release - | 9 |
|---|
Definitions and Reconciliation of GAAP to Non-GAAP Financial Measures:
| 2023 | 2022 | 2022 | |
|---|---|---|---|
| First | Fourth | First | |
| (dollars and shares in thousands) | Quarter | Quarter | Quarter |
| (1) Tangible Book Value (non-GAAP) | |||
| Total shareholders' equity | 1,227,795 | 1,184,659 | 1,184,950 |
| Less: goodwill and other intangible assets, net of deferred tax liability | (377,405) | (377,673) | (378,557) |
| Tangible common equity (non-GAAP) | 850,390 | 806,986 | 806,393 |
| Common shares outstanding | 38,998 | 39,000 | 39,352 |
| Tangible book value (non-GAAP) | 21.81 | 20.69 | 20.49 |
| Tangible book value is a preferred industry metric used to measure our company's value and commonly used by investors and analysts. | |||
| (2) Return on Average Tangible Shareholders' Equity (non-GAAP) | |||
| Net income (annualized) | 161,407 | 159,765 | 118,192 |
| Plus: amortization of intangibles (annualized), net of tax | 1,085 | 1,144 | 1,276 |
| Net income before amortization of intangibles (annualized) | 162,492 | 160,909 | 119,468 |
| Average total shareholders' equity | 1,206,358 | 1,168,023 | 1,196,694 |
| Less: average goodwill and other intangible assets, net of deferred tax liability | (377,576) | (377,857) | (378,761) |
| Average tangible equity (non-GAAP) | 828,782 | 790,166 | 817,933 |
| Return on average tangible shareholders' equity (non-GAAP) | 19.61 | 20.36 | 14.61 |
| Return on average tangible shareholders' equity is a key profitability metric used by management to measure financial performance. | |||
| (3) PPNR / Average Assets (non-GAAP) | |||
| Income before taxes | 49,360 | 50,250 | 36,057 |
| Plus: Provision for credit losses | 922 | 3,176 | (512) |
| Total | 50,282 | 53,426 | 35,545 |
| Total (annualized) (non-GAAP) | 203,921 | 211,961 | 144,155 |
| Average assets | 9,126,981 | 8,984,616 | 9,456,644 |
| PPNR / Average Assets (non-GAAP) | 2.23 | 2.36 | 1.52 |
| Pre-provision net revenue to average assets is income before taxes adjusted to exclude provision for credit losses. We believe this to be a preferred industry measurement to help evaluate our ability to fund credit losses or build capital. | |||
| (4) Efficiency Ratio (non-GAAP) | |||
| Noninterest expense | 51,699 | 51,275 | 47,414 |
| Net interest income per consolidated statements of net income | 88,791 | 89,058 | 67,733 |
| Plus: taxable equivalent adjustment | 555 | 532 | 493 |
| Net interest income (FTE) (non-GAAP) | 89,346 | 89,590 | 68,226 |
| Noninterest income | 13,190 | 15,643 | 15,226 |
| Net interest income (FTE) (non-GAAP) plus noninterest income | 102,536 | 105,233 | 83,452 |
| Efficiency ratio (non-GAAP) | 50.42 | 48.73 | 56.82 |
| The efficiency ratio is noninterest expense divided by noninterest income plus net interest income, on an FTE basis (non-GAAP), which ensures comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice. |
All values are in US Dollars.
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| S&T Bancorp, Inc.<br><br>Consolidated Selected Financial Data<br><br>Unaudited | S&T Earnings Release - | 10 |
|---|
Definitions and Reconciliation of GAAP to Non-GAAP Financial Measures:
| 2023 | 2022 | 2022 | |
|---|---|---|---|
| First | Fourth | First | |
| (dollars in thousands) | Quarter | Quarter | Quarter |
| (5) Tangible Common Equity / Tangible Assets (non-GAAP) | |||
| Total shareholders' equity | 1,227,795 | 1,184,659 | 1,184,950 |
| Less: goodwill and other intangible assets, net of deferred tax liability | (377,405) | (377,673) | (378,557) |
| Tangible common equity (non-GAAP) | 850,390 | 806,986 | 806,393 |
| Total assets | 9,194,034 | 9,110,567 | 9,432,281 |
| Less: goodwill and other intangible assets, net of deferred tax liability | (377,405) | (377,673) | (378,557) |
| Tangible assets (non-GAAP) | 8,816,629 | 8,732,894 | 9,053,724 |
| Tangible common equity to tangible assets (non-GAAP) | 9.65 | 9.24 | 8.91 |
| Tangible common equity to tangible assets is a preferred industry measurement to evaluate capital adequacy. | |||
| (6) Net Interest Margin Rate (FTE) (non-GAAP) | |||
| Interest income and dividend income | 110,903 | 103,208 | 70,109 |
| Less: interest expense | (22,112) | (14,150) | (2,376) |
| Net interest income per consolidated statements of net income | 88,791 | 89,058 | 67,733 |
| Plus: taxable equivalent adjustment | 555 | 532 | 493 |
| Net interest income (FTE) (non-GAAP) | 89,346 | 89,590 | 68,226 |
| Net interest income (FTE) (annualized) | 362,348 | 355,438 | 276,694 |
| Average interest-earning assets | 8,372,193 | 8,220,689 | 8,747,398 |
| Net interest margin (FTE) (non-GAAP) | 4.32 | 4.33 | 3.16 |
| The interest income on interest-earning assets, net interest income and net interest margin are presented on an FTE basis (non-GAAP). The FTE basis (non-GAAP) adjusts for the tax benefit of income on certain tax-exempt loans and securities and the dividend-received deduction for equity securities using the federal statutory tax rate of 21 percent for each period. We believe this to be the preferred industry measurement of net interest income that provides a relevant comparison between taxable and non-taxable sources of interest income. |
All values are in US Dollars.
a1q23investordeck
First Quarter 2023 Earnings Supplement
Forward Looking Statements and Risk Factors This information contains or incorporates statements that we believe are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to our financial condition, results of operations, plans, objectives, outlook for earnings, revenues, expenses, capital and liquidity levels and ratios, asset levels, asset quality, financial position and other matters regarding or affecting S&T and its future business and operations. Forward-looking statements are typically identified by words or phrases such as “will likely result,” “expect,” “anticipate,” “estimate,” “forecast,” “project,” “intend,” “believe,” “assume,” “strategy,” “trend,” “plan,” “outlook,” “outcome,” “continue,” “remain,” “potential,” “opportunity,” “comfortable,” “current,” “position,” “maintain,” “sustain,” “seek,” “achieve,” and variations of such words and similar expressions, or future or conditional verbs such as will, would, should, could or may. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. The matters discussed in these forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results and trends to differ materially from those made, projected, or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors including, but not limited to: credit losses and the credit risk of our commercial and consumer loan products; changes in the level of charge-offs and changes in estimates of the adequacy of the allowance for credit losses, or ACL; cyber-security concerns; rapid technological developments and changes; operational risks or risk management failures by us or critical third parties, including fraud risk; our ability to manage our reputational risks; sensitivity to the interest rate environment, a rapid increase in interest rates or a change in the shape of the yield curve; a change in spreads on interest-earning assets and interest-bearing liabilities; the transition from LIBOR as a reference rate; regulatory supervision and oversight, including changes in regulatory capital requirements and our ability to address those requirements; unanticipated changes in our liquidity position; unanticipated changes in regulatory and governmental policies impacting interest rates and financial markets; changes in accounting policies, practices or guidance; legislation affecting the financial services industry as a whole, and S&T, in particular; developments affecting the industry and the soundness of financial institutions and further disruption to the economy and U.S. banking system may adversely affect our business, results of operations, liquidity and stock price; the outcome of pending and future litigation and governmental proceedings; increasing price and product/service competition; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; managing our internal growth and acquisitions; the possibility that the anticipated benefits from acquisitions cannot be fully realized in a timely manner or at all, or that integrating the acquired operations will be more difficult, disruptive or costly than anticipated; containing costs and expenses; reliance on significant customer relationships; an interruption or cessation of an important service by a third-party provider; our ability to attract and retain talented executives and employees; general economic or business conditions, including the strength of regional economic conditions in our market area; environmental, social and governance practices and disclosures, including climate change, hiring practices, the diversity of the work force, and racial and social justice issues; deterioration of the housing market and reduced demand for mortgages; deterioration in the overall macroeconomic conditions or the state of the banking industry that could warrant further analysis of the carrying value of goodwill and could result in an adjustment to its carrying value resulting in a non-cash charge to net income; the stability of our core deposit base and access to contingency funding; re-emergence of turbulence in significant portions of the global financial and real estate markets that could impact our performance, both directly, by affecting our revenues and the value of our assets and liabilities, and indirectly, by affecting the economy generally and access to capital in the amounts, at the times and on the terms required to support our future businesses. Many of these factors, as well as other factors, are described in our Annual Report on Form 10-K for the year ended December 31, 2022, including Part I, Item 1A-"Risk Factors" and any of our subsequent filings with the SEC. Forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. We caution you not to unduly rely on forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. Any forward-looking statement speaks only as to the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made. Non-GAAP Financial Measures In addition to the traditional measures presented in accordance with Generally Accepted Accounting Principles (GAAP), S&T management uses and this presentation contains or references certain non-GAAP financial measures, such as net interest income on a fully taxable equivalent basis. S&T believes these non-GAAP financial measures provide information useful to investors in understanding our underlying business, operational performance and performance trends which facilitate comparisons with the performance of others in the financial services industry. Although S&T believes that these non-GAAP financial measures enhance investors’ understanding of S&T’s business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP or considered to be more important than financial results determined in accordance with GAAP, nor are they necessary comparable with non-GAAP measures which may be presented by other companies. The non-GAAP financial measures contained within this presentation should be read in conjunction with the audited financial statements and analysis as presented in the Annual Report on Form 10-K as well as the unaudited financial statements and analyses as presented in the respective Quarterly Reports in Exhibit 99.1 of Form 8-K for S&T Bancorp, Inc. and subsidiaries. 2
3 First Quarter Overview RETURNS EARNINGS *Refer to appendix for reconciliation of non-GAAP financial measures EPS $1.02 Net Income $39.8 million ROA 1.77% ROE 13.38% ROTE* 19.61% PPNR* 2.23% HIGHLIGHTS • Solid return metrics • NIM relatively unchanged from prior quarter • Net recovery of $5.1 million, or 0.29%, of average loans • Expenses well controlled with an efficiency ratio of 50.42% NIM* 4.32% NCO (0.29%) OTHER Efficiency Ratio* 50.42%
Balance Sheet • Loans increased $67.1 million, or 3.8% annualized, since December 31, 2022 • Consumer growth of $65.3 million, or 13.7% annualized • Deposits of $7.2 billion decreased $66.9 million since December 31, 2022; declines early in the quarter followed by stability Dollars in millions 4 1Q23 4Q22 Var $244 $210 $34 999 1,003 (4) 7,251 7,184 67 7,153 7,220 (67) Cash & Int Bear Bal Securities Loans Deposits ($75) ($50) ($25) $0 $25 $50 $75 1Q23 VS 4Q22:
Deposits • Strong, well-diversified deposit base of 230,000 customers • Balance mix 59% personal and 41% business • Uninsured deposits include $323 million of collateralized municipal deposits • Deposits declined $66.9 million from 4Q22; January decline followed by stability in February and growth in March Dollars in millions 5 INSURED/UNINSURED DEPOSITS Business 33% MONTHLY DEPOSIT TRENDS 3/10
• Net interest income and NIM relatively unchanged to prior quarter • Deposit balance migration and exception pricing increased funding costs • $500 million notional receive-fixed swaps for rates down protection Net Interest Income Dollars in millions; *Refer to appendix for reconciliation of non-GAAP financial measures 6 1Q23 Mar23 Earning Assets FTE 5.39 % 5.38 % Costing Liabilities 1.72 % 1.89 % NIM FTE 4.32 % 4.21 % 1Q23 VS SPOT NIM:
• 1Q23 interest-bearing deposit costs increased 37 basis points to 1.30% due to a change in mix of deposits • CD increase mostly due to migration; $88 million of net new money • $23 million of DDA decline is due to migration to IntraFi (NOW product) Funding Costs Dollars in millions 7 1Q23 DEPOSIT CHANGES DEPOSIT MIGRATION FROM/TO DECREASES/INCREASES
FUNDING SOURCES Funding Capacity • Strong liquidity position with well-diversified deposit base • Significant funding availability through FHLB and Federal Reserve • Funding availability meets liquidity needs in both normal and stress environments Dollars in millions 8 Capacity Used Available FHLB $2,965 $624 $2,341 Federal Reserve Window 794 0 794 Federal Reserve BTLF 731 0 731 Total Funding Sources $4,490 $624 $3,866 $3,866 $2,363 Available Funding Uninsured Deposits 164%
Asset Quality ACL 1Q23 VS 4Q22: Dollars in millions 9 ASSET QUALITY TRENDS • ACL increased mainly due to a $4.2 million specific reserve and higher qualitative reserve for macro environment • Net recovery of $5.1 million due to a $9.3 million recovery from a customer fraud in 2020 – Strategic note sale resulted in $3.4 million charge-off
Office CRE Dollars in millions 10 CRE comprises 43% of our total loans CRE 43% Consumer 27% Const 6% C&I 24% Office comprises 7% of our total loans TOTAL LOANS $7,251 CRE LOANS $3,145 OFFICE $479 83% of our office loans are non-CBD CBD 17% $84 Non-CBD 83% $395 OFFICE LOANS BY SIZE: Size Total # Loans Avg Size Orig LTV 10mm+ $56.0 4 $14.0 68 % 5mm-10mm 157.0 23 6.8 59 % 1mm-5mm 179.6 85 2.1 66 % Under 1mm 86.1 317 0.3 61 % Total $478.7 429 $1.1 63 % OFFICE SPACE MATURITIES BY QUARTER: Orig LTV: 65% 66% 60% 43% 53% 74% 48% 77% 7% total loans; 83% non-CBD; granular; minimal maturities over next 24 months
CRE Maturities Dollars in millions 11 CRE MATURITIES BY SIZE: CRE MATURITIES BY INDUSTRY: Only 15% of our CRE loans mature in the next 24 months Size Total # Loans Avg Size 10mm+ $81.6 6 $13.6 5mm-10mm 169.6 23 7.4 1mm-5mm 175.5 81 2.2 Under 1mm 54.5 173 0.3 Total $481.2 283 $1.7 CRE MATURITIES BY QUARTER: in next 24 months
1Q23 1Q23 vs 4Q22 1Q23 vs 1Q22 Debit and Credit Card $4.4 $0.0 ($0.7) Service Charges 4.1 (0.2) 0.1 Wealth 2.9 (0.1) (0.3) Mortgage 0.3 0.0 (0.7) Security Gain 0.0 0.0 0.0 Other 1.5 (2.1) (0.4) Noninterest Income $13.2 ($2.4) ($2.0) Noninterest Income 12Dollars in millions Decrease mainly related to a $2.0 million gain on OREO in 4Q22
1Q23 1Q23 vs 4Q22 1Q23 vs 1Q22 Salaries & Benefits $27.6 ($0.4) $3.9 Data Processing 4.3 0.1 (0.1) Occupancy 3.8 — (0.1) FF&E 2.9 (0.1) 0.1 Marketing 1.9 0.6 0.5 Professional Services 1.8 (0.3) (0.1) Other Taxes 1.8 — 0.3 FDIC 1.0 0.6 0.1 Other 6.6 — (0.2) Noninterest Expense $51.7 $0.5 $4.4 Noninterest Expense Dollars in millions; *Refer to appendix for reconciliation of non-GAAP financial measures 13 FDIC higher due to increase in insurance assessment rate; marketing higher due to timing of marketing promotions
Securities Dollars in millions; *Refer to appendix for reconciliation of non-GAAP financial measures 14 • Securities portfolio is only 11% of total assets • 100% of securities portfolio is classified as available-for-sale • Average duration of 3.9 years at 1Q23 compared to 3.7 years at 4Q21 • AOCI of $69.4 million related to securities portfolio, if realized, would decrease CET1 ratio by 94 basis points from 13.10% to 12.16% SECURITIES MIX
Capital Dollars in millions; *Refer to appendix for reconciliation of non-GAAP financial measures 15 TCE / TA* • Capital levels remain strong • TCE / TA has increased despite AOCI adjustments
1Q23 Return on Average Tangible Shareholders' Equity (ROTE) (non-GAAP) Net income (annualized) $161,407 Plus: amortization of intangibles (annualized), net of tax 1,085 Net income before amortization of intangibles (annualized) $162,492 Average total shareholders' equity $1,206,358 Less: average goodwill and other intangible assets, net of deferred tax liability (377,576) Average tangible equity (non-GAAP) $828,782 Return on average tangible shareholders' equity (non-GAAP) 19.61 % Return on average tangible shareholders' equity is a key profitability metric used by management to measure financial performance. Pre-provision Net Revenue/Average Assets (PPNR)(non-GAAP) Income before taxes $49,360 Plus: Provision for credit losses 922 Total $50,282 Total (annualized) (non-GAAP) $203,921 Average assets $9,126,981 PPNR/Average Assets (non-GAAP) 2.23 % Pre-provision net revenue to average assets is income before taxes adjusted to exclude provision for credit losses. We believe this to be a preferred industry measurement to help evaluate our ability to fund credit losses or build capital. Appendix Definitions of GAAP to Non-GAAP Financial Measures 16
1Q23 4Q22 3Q22 2Q22 1Q22 Tangible Common Equity/Tangible Assets (TCE) (non-GAAP) Total shareholders' equity $1,227,795 $1,184,659 $1,153,181 $1,178,358 $1,184,950 Less: goodwill and other intangible assets, net of deferred tax liability (377,405) (377,673) (377,961) (378,259) (378,557) Tangible common equity (non-GAAP) $850,390 $806,986 $775,220 $800,099 $806,393 Total assets $9,194,034 $9,110,567 $8,935,969 $9,103,814 $9,432,281 Less: goodwill and other intangible assets, net of deferred tax liability (377,405) (377,673) (377,961) (378,259) (378,557) Tangible assets (non-GAAP) $8,816,629 $8,732,894 $8,558,008 $8,725,555 $9,053,724 Tangible common equity to tangible assets (non-GAAP) 9.65 % 9.24 % 9.06 % 9.17 % 8.91 % Tangible common equity to tangible assets is a preferred industry measurement to evaluate capital adequacy. Efficiency Ratio (non-GAAP) Noninterest expense $51,699 $51,275 $49,633 $48,424 $47,414 Net interest income per consolidated statements of net income 88,791 89,058 83,798 75,194 67,733 Plus: taxable equivalent adjustment 555 532 521 506 493 Net interest income (FTE) (non-GAAP) $89,346 $89,590 $84,319 $75,700 $68,226 Noninterest income 13,190 15,643 14,760 12,630 15,226 Less: net gains on sale of securities — — (198) — — Net interest income (FTE) (non-GAAP) plus noninterest income $102,536 $105,233 $98,881 $88,330 $83,452 Efficiency ratio (non-GAAP) 50.42 % 48.73 % 50.19 % 54.82 % 56.82 % The efficiency ratio is noninterest divided by noninterest income plus net interest income, on an FTE basis (non-GAAP), which ensures comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice. Net Interest Margin Rate (NIM) (FTE) (non-GAAP) Interest income and dividend income $110,903 $103,208 $89,835 $77,599 $70,109 Less: interest expense (22,112) (14,150) (6,037) (2,405) (2,376) Net interest income per consolidated statements of net income $88,791 $89,058 $83,798 $75,194 $67,733 Plus: taxable equivalent adjustment 555 532 521 506 493 Net interest income (FTE) (non-GAAP) $89,346 $89,590 $84,319 $75,700 $68,226 Net interest income (FTE) (annualized) $362,348 $355,438 $334,526 $303,633 $276,694 Average interest-earning assets $8,372,193 $8,220,689 $8,287,889 $8,535,384 $8,747,398 Net interest margin (FTE) (non-GAAP) 4.32 % 4.33 % 4.04 % 3.56 % 3.16 % The interest income on interest-earning assets, net interest income and net interest margin are presented on an FTE basis (non-GAAP). The FTE basis (non-GAAP) adjusts for the tax benefit of income on certain tax-exempt loans and securities and the dividend-received deduction for equity securities using the federal statutory tax rate of 21 percent for each period. We believe this to be the preferred industry measurement of net interest income that provides a relevant comparison between taxable and non-taxable sources of interest income. Appendix Definitions of GAAP to Non-GAAP Financial Measures 17
First Quarter 2023 Earnings Supplement