S&T Bancorp (NASDAQ:STBA) reported first-quarter 2026 net income of $35 million, or $0.94 per share, with management emphasizing strong deposit growth, stable profitability metrics, and improved asset quality. Executives also discussed the impact of competitive lending conditions on loan balances, the role of share repurchases in capital deployment, and continued openness to M&A opportunities.
Quarterly performance and profitability metrics
Chief Executive Officer Chris McComish said first-quarter earnings per share increased nearly 6% from the fourth quarter of 2025 and 8% from the prior-year period. He highlighted a return on assets of 1.44%, up seven basis points from the prior quarter, and a return on tangible common equity (ROTCE) of 13.22%, up nearly 1% from the fourth quarter of 2025.
Record deposit growth and funding mix shift
McComish called deposit performance a key highlight of the quarter. Customer deposits increased by more than $300 million, which he said was the highest level of customer deposit growth in the company’s 125-year history and pushed total customer deposits above $8 billion.
He said the growth was “broad-based,” with all lines of business and product categories contributing, and with more than 80% of branches showing growth. The deposit gains enabled S&T to reduce wholesale funding by almost $200 million during the quarter.
Management also pointed to an improvement in deposit mix, with demand deposit accounts (DDA) rising to 28% of total deposits, up 1% from the fourth quarter of 2025.
While McComish said the bank does not expect to repeat 16% annualized deposit growth in the second quarter, he said the company’s analysis suggests that $150 million to $200 million of the quarter’s increase represented “solid core growth,” with the remainder tied to seasonal or temporary factors. In response to a question from KBW’s Kelly Motta, McComish added that higher tax refund receipts contributed to deposit balances, estimating year-over-year growth from tax receipt deposits of about $30 million.
Loan balances declined amid competition and payoffs
President Dave Antolik said loan balances declined $113 million in the first quarter, citing a reduced commercial pipeline entering the year after strong fourth-quarter activity, “increased competition for new commercial deals,” and higher-than-expected commercial real estate payoffs driven by more aggressive non-bank and insurance-company offerings.
Antolik also noted a slight reduction in utilization rates on revolving commitments. He said construction fundings were affected by poor February weather, but the bank expects increased construction draw activity in the second quarter as projects progress. Unfunded construction commitments were steady versus year-end levels.
In consumer categories, Antolik said residential mortgage balances, including construction, declined and that reduced activity is expected to continue into the second quarter. He said home equity balances are expected to show increased growth in the second quarter, and management continues to treat mortgage and home equity products as important to customer engagement.
Given first-quarter trends, Antolik said the bank is adjusting its loan growth guidance to “low single digits for the second quarter.” He also said S&T plans to add talent, with the goal of expanding the commercial banking team in 2026, primarily through C&I additions and some geographic CRE expansion. Antolik said the bank hired four new commercial bankers during the quarter and saw “a modest increase” in pipelines.
On the competitive environment, Antolik told Piper Sandler’s Justin Crowley that early-stage pipeline fallout was higher than expected due primarily to pricing competition, while the overall pipeline ended the quarter up “modestly,” around 10% to 15% over year-end.
Net interest income, margin outlook, and expenses
Chief Financial Officer Mark Kochvar said first-quarter net interest income declined $2.6 million, primarily due to two fewer days in the quarter (approximately $1.4 million impact) and a $900,000 interest recovery recorded in the fourth quarter of 2025. Kochvar also said strong deposit growth and loan declines increased cash balances as the company adjusted wholesale borrowing levels.
Net interest margin declined seven basis points from the prior quarter to 3.92%. Kochvar said the fourth-quarter interest recovery and higher first-quarter cash balances were the primary drivers of the decline. Looking ahead, he said S&T expects “relative NIM stability” in 2026 given muted expectations for Federal Reserve moves, and cited tailwinds from maturing received fixed swaps and repricing dynamics in securities, fixed-rate loans, and CDs.
Addressing questions about competitive pressures, Kochvar said management expects that “natural improvement in margin” could be absorbed by loan pricing competition, resulting in a flatter margin profile. He said spreads have been “in the mid 225 range,” slipping by roughly five to 10 basis points over the past quarter or two.
Non-interest income declined $0.7 million, which Kochvar attributed to seasonally slower debit and credit card activity and the timing of letter-of-credit fees and SBIC investment distributions that occurred in the fourth quarter. He reiterated expectations for quarterly fees in 2026 of approximately $13 million to $14 million.
Non-interest expense declined about $500,000 from the fourth quarter, with Kochvar pointing to lower medical costs due to deductible resets and fewer days affecting salaries, while occupancy costs rose due to seasonal snow removal and utilities. Other taxes increased due to Pennsylvania shares tax tied to equity levels. Kochvar said management expects to keep 2026 non-interest expense growth to about 3% year over year, implying a quarterly run rate around $58 million.
Asset quality, credit trends, and capital deployment
On credit, Antolik said results were in line with expectations. Non-performing assets fell $5.7 million to $50 million, or 63 basis points, which he attributed to execution on resolution strategies, “primarily related to one C&I credit” discussed last quarter. Net charge-offs were $1.7 million, or nine basis points.
Antolik noted criticized and classified assets increased versus year-end 2025, when levels were “historically low,” but said C&I loans remained manageable and the allowance for credit losses was stable at 1.17%. He added that for full-year 2026, management expects credit results similar to 2025, with modest reductions in non-performing loans, while acknowledging that as a commercial-focused bank, negative credit events can be larger than at more consumer-oriented institutions. McComish also referenced broader economic variables such as gas and oil price increases as external factors the bank continues to monitor.
On capital, Kochvar said the CET1 ratio decreased 43 basis points during the quarter, primarily due to share repurchases. S&T repurchased more than 1.146 million shares at an average price of $43.30, totaling just under $50 million. Over the last two quarters, total repurchases reached $85.8 million, representing more than 2 million shares and about 5.5% of outstanding shares.
Kochvar said regulatory ratios remain “very strong” and that the company has just over $50 million remaining under its authorized repurchase program. In response to Raymond James’ Daniel Tamayo, Kochvar said the company will evaluate the remaining authorization before considering an extension, and that future buyback activity could depend on growth trajectory and capital usage. McComish added that maintaining financial flexibility is important for both organic growth and potential inorganic opportunities.
McComish told KBW’s Motta that the bank continues to have active M&A discussions and sees a market “window” that could make sense, while emphasizing discipline. In response to a question from Stephens’ Tyler Cacciatori about target criteria, McComish said S&T focuses on core and adjacent markets and generally considers banks in the roughly $1 billion to $6 billion or $7 billion range, prioritizing core deposit quality, cultural fit, and the ability to accelerate growth.
About S&T Bancorp (NASDAQ:STBA)
S&T Bancorp, Inc is a bank holding company headquartered in Indiana, Pennsylvania, serving as the parent of S&T Bank. Established as a banking organization in 1902 with the holding company formation following in the early 1980s, S&T Bancorp has built its reputation on delivering community-oriented financial services. The company operates under the NASDAQ ticker STBA, maintaining a focus on personalized banking solutions and local decision-making.
The company’s main business activities encompass a full suite of retail and commercial banking products.
