Shares of S&T Bancorp (STBA) fell sharply Monday after the Indiana, Pa., company reported first-quarter earnings that missed estimates by a wide margin.
The $4.3 billion-asset company said its net income for the quarter was 12 cents per share, or $3.5 million, 27 cents below estimates of analysts polled by Thomson Reuters. Excluding a one-time charge related to its first-quarter acquisition of Mainline Bancorp, S&T earned 23 cents, still 16 cents below consensus estimates.
S&T earned $9.3 million in the fourth quarter and $4.7 million in the first quarter of 2011.
S&T's shares were trading at $20.06 midday Monday, down nearly 6% from Friday's closing price.
Aside from acquisition expenses, the decline in earnings was driven primarily by weakening asset quality. Net chargeoffs more than doubled from the prior quarter, to $10.3 million, as appraisals related to construction loans were lowered.
The spike in chargeoffs, combined with an uptick in nonperforming assets, led S&T to more than quadruple its its loan-loss provision from three months earlier, to $9.3 million.
Earnings — as well as the stock price — were also affected by a 10-basis-point drop in the net interest margin from three months earlier, to 3.69%. Net interest income fell 2.3% from the prior quarter, to $34.5 million, due to declining loan yields on new business and and a continued shift in the asset mix from loans to lower-yielding securities. Overall loan volume increased due to the Mainline acquisition, but absent that deal, total loan balances declined during the quarter.
The company continues to count on acquisitions to help grow the loan book. In late March it announced that it was acquiring Gateway Bank of Pennsylvania for about $22 million in cash and stock. That deal is expected to close next quarter.