S&T Bancorp Inc. in Indiana, Pa., said Monday that it swung to a $10.2 million loss in the second quarter, from a $13.9 million profit a year earlier, mostly because chargeoffs spiked to $34.6 million, or 3.91% of average loans.

Its loss of 37 cents a share took analysts by surprise. On average they had expected the $4.2 billion-asset S&T to earn 16 cents a share for the quarter, according to Thomson Reuters.

The chargeoffs exceeded its loan-loss provision of $32.2 million, so the company's allowance declined 3 basis points from the first quarter, to 1.67% of total loans.

In a press release, Todd D. Brice, the president and chief executive officer, called the chargeoffs "prudent." They included $26.5 million on a loan to an energy exploration and drilling company; $5.3 million on three Florida lot development projects; and $1.1 million for a regional restaurant that entered bankruptcy.

Nonperforming loans totaled $71.4 million at June 30, making up 2.06% of total loans. Because of the aggressive chargeoffs, the nonperformers shrunk 30% from the first quarter, but still were up 350% from a year earlier.

The company also took a $1.3 million other-than-temporary impairment charge on its investment securities during the quarter.

Brice emphasized that S&T's capital is strong. Given that, he called taking $108.7 million from the Treasury Department's Troubled Asset Relief Program in January "a difficult decision" and said the company would like to repay it. "While the additional capital is comforting during these times, our intention is to obtain regulatory approval for returning these funds once a positive direction in the economy becomes more clear," he said.

S&T's stock slipped 3% Monday, to close at $11.77.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.