S&T Bancorp signals mid-single-digit loan growth outlook as balance sheet shifts continue

Earnings Call Insights: S&T Bancorp, Inc. (STBA) Q3 2025

MANAGEMENT VIEW

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CEO Christopher McComish opened by acknowledging recent management changes, stating, "I want to take a moment to congratulate and thank Christine Toretti, our former Board Chair... I also want to welcome and congratulate Jeff Grube... as he takes on the role of Lead Independent Director of our Board." McComish emphasized the company’s strategic repositioning to reduce asset sensitivity, noting, "by strategically repositioning our balance sheet over the past couple of years to reduce asset sensitivity, we've enhanced our ability to drive consistent net interest income growth through the interest rate cycle."

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McComish highlighted deposit franchise stability: "our continued investment in our deposit franchise delivered a solid deposit mix with noninterest-bearing deposits representing 28% of total deposits. Additionally, average DDA growth in the quarter was over $50 million versus Q2."

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The CEO noted a manageable increase in NPAs and reaffirmed growth ambitions, stating, "we have a very clear path to $10 billion and above through organic growth in the coming quarters."

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President Dave Antolik detailed loan growth, reporting, "Total loan balances grew by $47 million or 2.3% annually during the quarter," primarily from CRE activity. He further mentioned, "unfunded construction commitments grew by $37 million during the quarter, pointing towards continued growth in CRE for the balance of the year and beyond."

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CFO Mark Kochvar stated, "Third quarter net interest income improved by $2.6 million or 3% compared to the second quarter, and net interest margin expanded by 5 basis points, and combined with loan growth, that's a pretty good quarterly revenue growth."

OUTLOOK

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Management guided to mid-single-digit loan growth in Q4, with Antolik explaining, "Given our experience in Q3, and anticipated new loan and payoff activity in Q4, we are guiding to mid-single-digit loan growth in Q4."

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On net interest margin, Kochvar said, "for the next several quarters, probably into -- through the first half of next year, I feel like we're pretty well positioned to handle any of the potential rate cuts just because of the funding mix that we have."

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McComish reaffirmed confidence in ROA sustainability: "I think in that range is certainly the way we're targeting things... that's certainly a reasonable number and is something that we are staying focused on."

FINANCIAL RESULTS

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S&T Bancorp reported Q3 EPS of $0.91 and net income of $35 million. ROA was 1.42%, up 10 basis points from Q2, and PPNR was 1.89%, up 16 basis points. Net interest margin rose to 3.93%, up 5 basis points from the prior quarter.

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The company cited over 3% tangible book value growth, and expenses were described as "well managed," with the efficiency ratio at 54.4%. Noninterest income increased by $0.3 million, while expenses declined by $1.7 million quarter-over-quarter.

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Asset growth was "a little lighter than Q2 due to some higher payoffs" and NPAs increased, attributed to "2 CRE credits and 1 C&I credit that migrated during the quarter."

Q&A

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Justin Crowley, Piper Sandler: Asked about loan growth drivers and paydowns. Antolik responded that paydowns were higher than expected and CRE activity remains strong, with growth expected to continue in mid-single digits. He cited "uncertainty" from state and federal budget impasses as tempering growth outlook.

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Crowley: Inquired about margin outlook amid potential rate cuts. Kochvar explained, "for the next 3 quarters or so, we think we're in a pretty good spot to handle the rates down should it come." Crowley also questioned M&A activity; McComish said, "The conversations in the market is still active" and expressed interest in Mid-Atlantic and Ohio expansion.

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Daniel Tamayo, Raymond James: Sought clarity on deposit competition and margin betas. Kochvar noted, "after the first cut here in September, we did see a little bit more competitive pressure than we had expected particularly on the CD side."

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Tamayo: Queried on $10 billion asset threshold timing. McComish confirmed, "That's correct," for crossing in 2026. On profitability, McComish said maintaining ROA above 1.40% remains a target.

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David Bishop, Hovde Group: Asked about hiring plans. Antolik stated, "We certainly expect to add bankers and the expectation is that those bankers pay for themselves." On share repurchases, Kochvar said, "we certainly think that, that's something that we're going to look a lot closer at here as we get into the rest of the quarter."

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Kelly Motta, KBW: Asked about credit risks. Antolik responded, "We do not have concern with any particular asset class, geography or industry." Motta also probed funding sources, to which McComish highlighted ongoing focus on deposit franchise growth.

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Matthew Breese, Stephens: Asked about $10 billion threshold and NIM outlook. Kochvar confirmed passage in the first half of 2026 and described floating rate loans as closer to 30% net, stating, "We think we can still maintain that fairly quickly with the Fed changes."

SENTIMENT ANALYSIS

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Analysts conveyed a neutral to slightly positive tone, with questions focusing on growth sustainability, margin resilience, M&A strategy, and risk management. They expressed interest in management’s confidence in sustaining profitability and navigating competitive deposit trends.

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Management’s tone in prepared remarks was confident, emphasizing strategic execution and a solid foundation for future growth. During Q&A, responses were measured and transparent, addressing uncertainties and competitive pressures, such as "there's still enough uncertainty out there that mid-single-digit growth feels more appropriate for us from both a credit and funding perspective."

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Compared to the previous quarter, both management and analysts maintained a similar tone, though management displayed increased caution regarding paydowns and competitive deposit pressures.

QUARTER-OVER-QUARTER COMPARISON

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Management shifted loan growth guidance from "high mid-single-digit" in Q2 to "mid-single-digit" for Q4, reflecting increased paydowns and market uncertainty.

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Strategic focus remains on deposit franchise and organic growth, but M&A interest and readiness for the $10 billion threshold were reiterated.

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Key metrics improved, with higher EPS, net income, ROA, and efficiency ratio, though asset growth was lighter and NPAs increased from a low base.

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Analysts’ focus remained on margin sustainability, loan growth, credit quality, and competitive landscape, similar to the prior quarter.

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Management’s confidence was steady, with slightly more caution regarding funding and NIM outlook.

RISKS AND CONCERNS

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Management cited increased paydowns, competitive deposit environment, and macroeconomic uncertainty from state and federal budget impasses as influencing growth outlook.

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Exposure to NDFIs was addressed, with Antolik stating, "No," and Kochvar clarifying, "nothing material... That's a space we don't play in."

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Asset quality risks were described as manageable, with asset resolution strategies in place for new nonperforming loans and no specific sectoral concern.

FINAL TAKEAWAY

S&T Bancorp’s third quarter showcased strong profitability, disciplined expense management, and resilience in net interest margin, with management guiding to mid-single-digit loan growth for Q4. Strategic focus on deposit franchise stability and readiness to cross the $10 billion asset mark positions the company for continued organic and potential inorganic growth, while vigilance remains on competitive deposit and credit environments amid broader economic uncertainty.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/stba/earnings/transcripts]

MORE ON S&T BANCORP

* S&T Bancorp, Inc. (STBA) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4832734-s-and-t-bancorp-inc-stba-q3-2025-earnings-call-transcript]
* S&T Bancorp, Inc. 2025 Q3 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4832667-s-and-t-bancorp-inc-2025-q3-results-earnings-call-presentation]
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