S&T Bancorp Beats Expectations Despite Merger Costs

S&T Bancorp in Indiana, Pa., reported better-than-expected earnings in the first quarter as income from loans it inherited in its acquisition of Integrity Bancshares helped to offset higher merger-related expenses.

The $6 billion-asset company reported earnings of $12.8 million, approximately 8.6% lower than the first quarter of 2014. Earnings per share came to 41 cents, or 6 cents above the average estimates of analysts polled by Bloomberg.

Net interest income increased 13%, to $40.3 million, thanks mostly the merger with Integrity. Through the deal, which closed March 4, S&T acquired $789 million of loans and $722 million of deposits. The net interest margin dropped 3 basis points, to 3.48%, but was nonetheless buoyed by a dividend received from the Federal Home Loan Bank of Pittsburgh.

The merger also added to noninterest income, which rose 6% to $12.1 million. S&T raked in an additional $400,000 in fees from the Integrity deal, mostly in mortgage banking. Debit and credit card fees and income from service charges also increased, helping to offset declines in insurance and wealth management fees.

Expenses increased 16% year over year, to $33.6 million, due mainly to higher costs for salaries and benefits, occupancy, data processing, marketing and deposit insurance.

S&T’s shares were trading $27.64 late Tuesday, down 2.8% from Monday’s close.