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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the fiscal year ended December 31, 1995
Commission file number 0-12508
S&T BANCORP, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1434426
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
800 Philadelphia Street,Indiana, PA 15701
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (412)-349-2900
Securities registered pursuant to
Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $2.50 per share
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
requirements for the past 90 days Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ($229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this form 10-K or any amendment to this for 10-K. { }
The aggregate market value of the voting stock held by nonaffiliates
of the registrant as of February 20, 1996:
Common Stock, $2.50 par value - $287,736,904
The number of shares outstanding of the issuer's classes of common
stock as of February 20, 1996:
Common Stock, $2.50 par value - 11,213,977 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual shareholders report for the year ended
December 31, 1995 are incorporated by reference into Part II.
Portions of the proxy statement for the annual shareholders meeting
to be held April 15, 1996 are incorporated by reference into Part III.
PART I
ITEM 1. BUSINESS
General
S&T Bancorp, Inc. (Company) was incorporated on March 17, 1983 under
the laws of the Commonwealth of Pennsylvania as a bank holding company
and has two wholly owned subsidiaries, S&T Bank and S&T Investment
Company, Inc. The Company is registered as a bank holding company with
the Board of Governors of the Federal Reserve System under the Bank Holding
Company Act, as amended.
As of December 31, 1995, the Company had $1.4 billion in total assets,
$167 million in total shareholders' equity and $980 million in total deposits.
Deposits are insured by the Federal Deposit Insurance Corporation to the
full extent provided by law.
Total trust assets were approximately $416 million at December 31, 1995.
Trust services include services as executor and trustee under wills and deeds,
and as guardian and custodian of employee benefit trusts.
S&T Bank is a full service bank with its main office at 800 Philadelphia
Street, Indiana, Pennsylvania, providing service to its customers through
a branch network of thirty-four offices located in Armstrong, Allegheny,
Indiana, Jefferson, Clearfield and Westmoreland counties.
S&T Bank's services include accepting time and demand deposit accounts,
making secured and unsecured commercial and consumer loans, providing
letters of credit, and offering discount brokerage services, personal financial
planning and credit card services. S&T Bank has a relatively stable deposit
base and no material amount of deposits is obtained from a single depositor
or group of depositors (including federal, state and local governments). S&T
Bank does not experience significant fluctuations in deposits.
Employees
As of December 31, 1995, S&T Bank had a total of 572 full-time
equivalent employees. S&T provides a variety of employment benefits
and considers its relationship with its employees to be good.
Supervision and Regulation
The Company is under the jurisdiction of the Securities and Exchange
Commission and of state securities commissions for matters relating to
the offering and sale of its securities. The Company is subject to the
Securities and Exchange Commission's rules and regulations relating to
periodic reporting to its shareholders, insider trading and proxy solicitation.
The Company is also subject to the provisions of the Bank Holding
Company Act of 1956 (the Act), as amended and to supervision by the
Federal Reserve Board. The Act requires the company to secure the prior
approval of the Federal Reserve Board before it can acquire more than 5%
of the voting shares of any bank other than its existing subsidiary. The
Act also prohibits acquisition by the Company of more than 5% of the
voting shares of, or interest in, or all or substantially all of the assets
of any bank located outside Pennsylvania unless such an acquisition is
specifically authorized by the laws of the state in which such bank is located.
BUSINESS --Continued
A bank holding company is prohibited under the Act from engaging in,
or acquiring direct or indirect control of more than 5% of the voting shares
of any company engaged in nonbanking activities unless the Federal Reserve
Board, by order or regulation, has found such activities to be so closely
related to banking or managing or controlling banks as to be a proper
incident thereto. In making determinations, the Federal Reserve Board
considers whether the performance of these activities by a bank holding
company would offer benefits to the public which outweigh possible
adverse effects. See Permitted NonBanking Activities.
As a bank holding company, the Company is required to file with the
Federal Reserve Board annual reports or any additional information as
the Federal Reserve Board may require pursuant to the Act. The Federal
Reserve Board also makes regular examinations of the Company and its
subsidiaries.
Subsidiary banks of a bank holding company are subject to certain
restrictions imposed by the Act on any extension of credit to the bank
holding company or any of its subsidiaries, on investments in the stock or
other securities of the bank holding company or its subsidiaries, and on the
taking of such stock or securities as collateral for loans to any borrower.
Permitted NonBanking Activities
The Federal Reserve Board permits bank holding companies to engage in
nonbanking activities so closely related to banking or managing or controlling
banks so as to be a proper incident thereto. The types of permissible
activities are subject to change by the Federal Reserve Board.
The Company is presently engaged in two nonbanking activities. The first
one is S&T Investment Company, Inc., which is an investment holding
company incorporated in the state of Delaware. S&T Investment Company, Inc.
was formed in June 1988 for the purpose of holding and managing a group
of investments which were previously owned by S&T and to give the Company
additional latitude to purchase other investments, such as corporate
preferred stocks. The second is Commonwealth Trust Credit Life Insurance
Company which is located in Phoenix, Arizona. The company, which is a joint
venture with a local financial institution, acts as a reinsurer for credit
life, accident and health insurance policies sold by the respective banks.
At December 31, 1995, S&T's share of the company's total assets and net
income for the year was $2,346,223 and $346,532, respectively.
Federal Reserve Board approval is required before the Company or
a nonbank subsidiary of the Company may begin to engage in any of the
above activities and before any such business may be acquired. The Federal
Reserve Board is empowered to differentiate between activities which are
initiated by a bank holding company or a subsidiary and activities commenced
by acquisition of a going concern.
Legislation
As a state chartered bank, S&T is subject to regulations of
the Federal Deposit Insurance Corporation (FDIC) and the Pennsylvania
Department of Banking (PADB). As an insured bank under the Federal Deposit
Insurance Act, S&T is also regulated by the FDIC. Some of the aspects of
the lending and deposit business of S&T which are regulated include personal
lending, mortgage lending, and interest rates, both as they relate to lending
and interest paid on deposits and reserve requirements. Representatives
of the FDIC and PADB regularly conduct examinations of S&T's affairs and
records, and S&T must furnish quarterly reports to the FDIC and the PADB.
BUSINESS--Continued
Competition
All phases of S&T Bank's business are highly competitive. S&T Bank's market
area is western Pennsylvania, with a representation in Indiana, Armstrong,
Allegheny, Jefferson, Clearfield and Westmoreland counties. S&T Bank
competes with those local commercial banks which have branches and customer
calling programs in its market area. S&T Bank considers its major
competitors to be National Bank of the Commonwealth, headquartered in
Indiana, Pennsylvania; PNC Bank, N.A. headquartered in Pittsburgh,
Pennsylvania; Laurel Bank, headquartered in Johnstown, Pennsylvania; People's
Bank, headquartered in Ford City, Pennsylvania; Indiana First Savings Bank
headquartered in Indiana, Pennsylvania; Deposit Bank, headquartered
in DuBois, Pennsylvania; Clearfield Bank and Trust Company,
headquartered in Clearfield, Pennsylvania and Marion Center National Bank,
headquartered in Marion Center, Pennsylvania. The proximity of Indiana
to metropolitan Pittsburgh results in a significant impact on the S&T
market because of media influence and penetration by larger financial
institutions.
Under the Community Reinvestment Act of 1977, the FDIC is required to
assess the records of all financial institutions regulated by it to
determine if these institutions meet the credit needs of the community
(including low and moderate income neighborhoods) served by them and to
take this record into account in its evaluation of any application made
by any such institution for, among other things, approval of a branch or
other deposit facility, office relocation, or the merger with or acquisition
of assets of another bank.
As a consequence of the extensive regulation of commercial banking
activities in the United States, S&T's business is particularly susceptible
to being affected by federal and state legislation and regulations which
may have the effect of increasing the costs of doing business.
A subsidiary bank of a bank holding company, such as S&T, is subject to
certain restrictions imposed by the Federal Reserve Act on any extensions
of credit to the bank holding company or any of its subsidiaries, on
investment in the stock or other securities of the bank holding company
or its subsidiaries, and on the taking of such stock or securities
as collateral for loans to any borrower. Federal Reserve Board regulations
also place certain limitations and reporting requirements on extensions
of credit by a bank to principal shareholders of its parent holding company,
among others, and to related interests of such principal shareholders. In
addition, such legislation and regulations may affect the terms upon which
any person becoming a principal shareholder of a bank holding company may
obtain credit from banks with which the subsidiary bank maintains a
correspondent relationship. Furthermore, federal legislation prohibits
acquisition of control of a bank holding company without prior notice
to the Federal Reserve Board.
Monetary Policy
The earnings of S&T are affected by the policies of regulatory authorities
including the Board of Governors of the Federal Reserve System, the FDIC
and PADB. An important function of the Federal Reserve System is to provide
an environment that is conducive to stable economic growth. Among the
instruments used to implement these objectives are open market operations
in U.S. Government securities, changes in reserve requirements against bank
deposits and limitations on interest rates that banks may pay on time and
savings deposits. These instruments are used in varying combinations to
influence overall growth and distribution of bank loans, investments and
deposits, and their use may also affect interest rates charged on loans
or paid deposits.
The policies and regulations of the Federal Reserve Board have had and
will probably continue to have a significant effect on S&T's deposits,
loans and investment growth, as well as the rate of interest earned and
paid, and are expected to affect S&T's operations in the future. The effect
of such policies and regulations upon the future business and earnings
of S&T cannot accurately be predicted.
BUSINESS--Continued
Distribution of Assets, Liabilities and Shareholders' Equity;
Interest Rates and Interest Differential.
The following discussion and analysis is presented so that shareholders
may review in further detail the financial condition and results of
operations of S&T Bancorp, Inc. and subsidiaries (S&T). This discussion
and analysis should be read in conjunction with the consolidated financial
statements, selected financial data and management's discussion and
analysis incorporated by reference. References to assets and liabilities
and changes thereto represent daily average balances for the periods
discussed, unless otherwise noted.
Net interest income represents the difference between the interest
and fees earned on interest-earning assets and the interest paid on
interest-bearing liabilities. Net interest income is affected by changes
in the volume of interest-earning assets and interest-bearing liabilities
and changes in interest yields and rates. Interest on loans to and
obligations of state, municipalities and other public entities is not
subject to federal income tax. As such, the stated (pre-tax) yield on these
assets is lower than the yields on taxable assets of similar risk and
maturity. In order to make the pre-tax income and resultant yields
comparable to taxable loans and investments, a taxable equivalent
adjustment was added to interest income in the tables below. This
adjustment has been calculated using the U.S. federal statutory income
tax rate of 35% for 1995, 1994 and 1993. The following table demonstrates
the amount that has been added to interest income per the
summary of operations.
Year Ended December 31
1995 1994 1993
(In thousands of dollars)
Interest income per consolidated
statements of income $107,017 $92,654 $86,923
Adjustment to fully taxable
equivalent basis 2,871 2,740 2,829
Interest income adjusted to fully
taxable equivalent basis 109,888 95,394 89,752
Interest expense 49,998 39,346 36,965
Net interest income adjusted to fully
taxable equivalent basis $59,890 $56,048 $52,787
BUSINESS - Continued
Average Balance Sheet and Net Interest Income Analysis
December 31,
1995 1994 1993
Average Yield Average Yield Average Yield/
Balance Interest Rate Balance Interest Rate Balance Interest Rate
(In thousands of dollars)
ASSETS
Interest-earning assets:
Loans (1) $949,896 $86,428 9.10% $844,222 $71,575 8.48% $732,255 $62,628 8.55%
Taxable investment securities 294,575 20,483 6.95% 302,663 20,189 6.67% 314,566 23,061 7.33%
Tax-exempt investment securities 31,132 2,784 8.94% 35,715 3,335 9.34% 39,153 3,734 9.41%
Interest-earning deposits with banks 1,744 143 8.20% 3,267 281 8.60% 3,420 297 8.68%
Federal funds sold 847 50 5.90% 295 13 4.41% 1,032 32 3.10%
Total interest-earning assets 1,278,194 109,888 8.60%1,186,162 95,393 8.04%1,090,426 89,752 8.23%
Noninterest-earning assets:
Cash and due from banks 31,651 32,940 28,716
Premises and equipment, net 14,719 15,033 13,053
Other assets 21,423 17,244 20,338
Less allowance for loan losses (15,028) (13,914) (13,032)
$1,330,959 $1,237,465 $1,139,501
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Demand deposits $94,332 $1,502 1.59% $100,336 $1,650 1.64% $98,714 $2,121 2.15%
Money market accounts 112,230 4,516 4.02% 110,491 3,346 3.03% 109,252 2,929 2.68%
Savings deposits 133,056 3,173 2.38% 146,284 3,452 2.36% 141,178 3,749 2.66%
Time deposits 484,314 27,494 5.68% 444,521 22,793 5.13% 455,355 23,968 5.26%
Federal funds purchased 7,851 474 6.04% 11,952 524 4.38% 9,294 290 3.12%
Securities sold under agreements
to repurchase 88,485 4,978 5.63% 69,141 2,893 4.18% 41,468 1,450 3.50%
Other borrowed funds 135,278 7,861 5.81% 99,453 4,687 4.71% 66,094 2,458 3.72%
Total interest-bearing liabilities 1,055,546 49,998 4.74% 982,178 39,345 4.01% 921,355 36,965 4.01%
Noninterest-bearing liabilities:
Demand deposits 105,209 102,779 91,339
Other 15,248 11,001 11,257
Shareholders' equity 154,956 141,507 115,550
$1,330,959 $1,237,465 $1,139,501
Net interest income $59,890 $56,048 $52,787
Net yield on interest-earning assets 4.77% 4.79% 4.84%
(1) For the purpose of these computations, nonaccruing loans are included
in the daily average loan amounts outstanding. Loan fees are included
in the interest amounts and are not material.
Item 1. BUSINESS--Continued
The following tables set forth for the periods indicated
a summary of the changes in interest earned and interest paid
resulting from changes in volume and changes in rates:
1995 Compared to 1994 1994 Compared to 1993
Increase (Decrease) Due to (1) Increase (Decrease) Due to (1)
Volume Rate Net Volume Rate Net
(In thousands of dollars)
Interest earned on:
Loans $8,959 $656 $9,615 $9,576 ($83) $9,493
Taxable investment securities (790) (44) (834) (2,225) 69 (2,156)
Tax-exempt investment securities (428) 18 (410) (328) 7 (321)
Interest-earning deposits (131) 6 (125) (13) 0 (13)
Federal funds sold 24 8 32 (23) (10) (33)
Total interest-earning assets $7,634 $644 $8,278 $6,987 ($17) $6,970
Interest paid on:
Demand deposits ($99) $3 ($96) $35 ($8) $27
Money market accounts 53 17 70 33 4 37
Savings Deposits (312) (3) (315) 136 (15) 121
Time deposits 2,040 219 2,259 (570) 15 (555)
Securities sold under agreements
to repurchase 809 279 1,088 968 190 1,158
Other borrowed funds 1,484 364 1,848 1,313 372 1,685
Total interest-bearing $3,975 $879 4,854 $1,915 $558 2,473
liabilities
Change in net interest income $3,424 $4,497
(1) The change in interest due to both volume and rate has been
allocated to volume and rate changes in proportion to the relationship
of the absolute dollar amounts of the change in each.
Item 1. BUSINESS--Continued
INFLATION AND CHANGING INTEREST RATES
The majority of assets and liabilities of a financial institution are
monetary in nature and therefore differ greatly from most commercial and
industrial companies that have significant investments in fixed assets or
inventory. Fluctuations in interest rates and the efforts of the
Federal Reserve Board to regulate money and credit conditions have a greater
effect on a financial institution's profitability than do the effects of
higher costs for goods and services. Through its asset/liability management
function, S&T is positioned to cope with changing interest rates and
inflationary trends.
Interest rate risk at a given point in time is portrayed by the interest
rate sensitivity position ("gap"). The cumulative gap represents the net
position of assets and liabiities subject to repricing in specified time
periods. The gap presented at any point in time is one measure of the
risk inherent in the existing balance sheet structure as it relates to
potential changes in net interest income. Gap alone does not accurately
measure the magnitude of changes in net interest income since changes
in interest rates do not affect all categories of assets and liabilities
equally or simultaneously. The following table shows the Company's gap
position at December 31, 1995.
Interest Rate Sensitivity
Rate Sensitive
(In thousands of dollars)
1 to 90 91 to 180 181 to 365 1 to 2 Beyond
Days Days Days Years 2 Years Total
Loans $380,702 $45,733 $102,242 $102,415 $329,789 $960,881
Interest-earning deposits 51 51
Investment securities 17,191 29,857 26,204 64,898 212,190 350,340
Other assets 89,430 89,430
Total Assets $397,944 $75,590 $128,446 $167,313 $631,409 $1,400,702
Demand deposits $116,054 $116,054
Interest-bearing deposits $109,629 $192,032 $95,928 $204,125 261,857 863,571
Wholesale repurchase agreements 48,420 48,420
Retail repurchase agreements 74,059 315 74,374
Federal Funds Purchased 325 325
Long-term Borrowing 15,327 36,000 45,618 96,945
Other Liabilities 2,361 31,705 34,066
Shareholders' equity 166,947 166,947 Liabilities and
Shareholders' Equity $250,121 $192,347 $95,928 $240,125 $622,181 $1,400,702
Interest Rate Sensitivity $147,823 ($116,757) $32,518 ($72,812) $9,228
Cumulative gap ($147,823) ($31,066)($63,584) $9,228
Item 1. BUSINESS-- Continued
Securities
The following table sets forth the carrying amount of securities
at the dates indicated: December 31
1995 1994 1993
Available for Sale (In thousands of dollars)
Marketable equity securities $64,223 $46,418 $30,184
Obligations of U.S. government corporations
and agencies 177,582
Collateralized mortgage obligations of
U.S. government corporations and agencies 11,035 4,550 5,165
U.S. Treasury securities 53,198 67,936 107,385
Corporate securities 190
Other securities 9,115
TOTAL $315,343 $118,904 $142,734
Investment Securities
U.S. Treasury bonds and obligations of
U.S. government corporations and agencies $130,456 $126,435
Collateralized mortgage obligations of
U.S. government corporations and agencies 14,451 23,317
Obligations of states and political subdivision 31,412 32,816 38,513
Corporate securities 2,493 4,038 3,937
Other securities 1,092 5,459 4,193
TOTAL $34,997 $187,220 $196,395
During the fourth quarter of 1995, management reclassified the securities
portfolio allowed by the "one time" amnesty per Financial Accounting
Standards Board Statement No. 115. The reclassified securities were
from the held to maturity category to the available for sale category. The
transfered securities had an amortized cost of $154.2 million and a market
value of $159.5 million. The resulting net of tax effect of the
reclassification to S&T's equity was $3.4 million.
The following table sets forth the maturities of securities at
December 31, 1995, and the weighted average yields of such securities
(calculated on the basis of the cost and effective yields weighted for
the scheduled maturity of each security). Tax-equivalent adjustments
(using a 35% federal income tax rate) for 1995 have been made in
calculating yields on obligations of state and political subdivisions.
Maturing
Within After One But After Five But After No Fixed
One Year Within Five Years Within Ten Years Ten Years Maturity
Amount Yield Amount Yield Amount Yield Amount Yield Amount
Available for Sale (In thousands of dollars)
Marketable equity securities $64,223
Obligations of U.S. government
corporations and agencies $15,249 6.90% $87,520 7.21% $74,813 7.57%
Collateralized mortgage obligations
of U.S. goverment corporations
and agencies 11,035 8.38%
U.S. Treasury securities 21,223 7.09% 25,101 8.28% 6,874 7.81%
Corporate securities 100 8.10% 90 8.25%
Other securities 9,115
TOTAL $36,472 $123,756 $81,777 $0 $73,338
Investment Securities
Obligations of states and political
subdivisions 930 6.47% 8,256 5.87% $16,915 5.79% 5,311 5.59%
Corporate securities 496 9.00% 1,997 9.90%
Other securities $1,092
TOTAL $1,426 $8,256 $18,912 $5,311 $1,092
Item 1. BUSINESS-- Continued
Loan Portfolio
The following table shows the Company's loan distribution at the
end of each of the last five years:
December 31
1995 1994 1993 1992 1991
(In thousands of dollars)
Domestic Loans:
Commercial, financial
and agricultural $234,779 $197,028 $178,723 $175,475 $192,991
Real estate-construction 23,712 32,714 23,705 9,400 2,768
Real estate-mortgage 569,143 543,894 457,462 374,055 298,570
Installment 149,185 150,772 136,819 133,124 124,001
TOTAL LOANS $976,819 $924,408 $796,709 $692,054 $618,330
The following table shows the maturity of loans (excluding residential
mortgages of 1-4 family residences and installment loans) outstanding
as of December 31, 1995. Also provided are the amounts due after one
year classified according to the sensitivity to changes in interest rates.
Maturing
Within After One But After
One Year Within Five Years Five Years Total
(In thousands of dollars)
Commercial, financial
and agricultural $153,174 $58,394 $23,211 $234,779
Real estate-construction 7,889 6,028 9,795 23,712
Real estate-mortgage 23,762 59,464 108,659 191,885
TOTAL $184,825 $123,886 $141,665 $450,376
Fixed interest rates $44,210 $44,266
Variable interest rates 79,676 97,399
TOTAL $123,886 $141,665
Item 1. Business - Continued
The following table summarizes the Company's nonaccrual, past due and
restructured loans:
December 31
1995 1994 1993 1992 1991
(In thousands of dollars)
Nonaccrual loans $2,844 $1,922 $2,481 $2,983 $3,915
Accruing loans past
due 90 days or more $0 $0 $323 $605 $1,178
At December 31, 1995, $2,844,000 of nonaccrual loans were secured.
Interest income that would have been recorded under original terms totaled
$242,000. No interest income was recorded on these loans. It is the
Company's policy to place loans on nonaccrual status when the interest and
principal is 90 days or more past due. There are no foreign loan amounts
required to be included in this table. There were no restructured loans
in the periods presented.
Potential Problem Loans
At December 31, 1995, the Company had no known mataerial loans where
payments were presently current or less than 90 days past due, yet the
borrowers were experiencing severe financial difficulties. Management
continues to review and evaluate all loans with Senior Loan Committee
on an ongoing basis so that potential problems can be addressed
immediately.
BUSINESS--Continued
Summary of Loan Loss Experience
This table summarizes the Company's loan loss experience for each of
the five years ended December 31:
Year Ended December 31
1995 1994 1993 1992 1991
(In thousands of dollars)
Balance at January 1: $14,331 $13,480 $12,029 $9,321 $8,878
Charge-offs:
Commercial, financial
and agricultural 1,054 2,287 1,185 1,469 2,613
Real estate-mortgage 325 239 644 553 590
Installment 1,510 1,201 835 1,349 1,517
2,889 3,727 2,664 3,371 4,720
Recoveries:
Commercial, financial
and agricultural 288 505 241 51 52
Real estate-mortgage 104 156 171 19 20
Installment 304 417 103 231 158
696 1,078 515 301 230
Net charge-offs 2,193 2,649 2,149 3,070 4,490
Provision for loan losses 3,800 3,500 3,600 5,778 4,333
Reserve on acquired loans 0 0 0 0 600
Balance at December 31: $15,938 $14,331 $13,480 $12,029 $9,321
Ratio of net charge-offs
to average loans outstanding 0.23% 0.31% 0.29% 0.48% 0.76%
Management evaluates the degree of loss exposure based on continuous
detailed reviews of commercial and real estate loans. Problem loans
which are identified are monitored very closely by S&T management.
Installment and mortgage loans are monitored using delinquency levels,
nonaccrual loan balances and current charge-offs. These analyses and
continuous monitoring of other risk elements such as nonaccrual and past
due loans are factors considered in determining the amount of the
allowance for loan losses.
Management completes the aforementioned review and analysis to
determine the adequacy of the allowance for loan losses on a quarterly
basis. The provision for loan losses represents an amount that is
sufficient to maintain the reserve at a level necessary to meet present
and potential risk characteristics of the loan portfolio. Based on
continual evaluation of loan quality and assessment of risk
characteristics, management believes that the allowance for loan losses
is adequate to absorb probable loan losses.
Item 1. BUSINESS--Continued
This table shows allocation of the allowance for loan losses
as of the end of each of the last five years:
December 31,1995 December 31,1994 December 31,1993 December 31,1992 December 31, 1991
Percent of Percent of Percent of Percent of Percent of
Loans in Loans in Loans in Loans in Loans in
Each Each Each Each Each
Category to Category to Category to Category to Category to
Amount Total Loans Amount Total Loans Amount Total Loans Amount Total Loan Amount Total Loans
(In thousands of dollars)
Commercial, financial
and agricultural $8,335 24% $9,376 21% $9,304 23% $7,249 25% $5,155 31%
Real estate-constructi 0 3% 0 4% 0 3% 0 1% 0 0%
Real estate-mortgage 701 58% 732 59% 678 57% 606 54% 464 49%
Installment 1,627 15% 1,381 16% 1,193 17% 1,125 19% 868 20%
Unallocated 5,275 0% 2,842 0% 2,305 0% 3,049 1% 2,834 0%
TOTAL $15,938 100% $14,331 100% $13,480 100% $12,029 100% $9,321 100%
Deposits
The daily average amount of deposits and rates paid on such
deposits is summarized for the periods indicated in the following
table:
Year Ended December 31
1995 1994 1993
Amount Rate Amount Rate Amount Rate
(In thousands of dollars)
Noninterest-bearing
demand deposits $105,209 $102,779 $91,339
Interest-bearing
demand deposits 94,332 1.59% 100,336 1.64% 98,714 2.15%
Money market accounts 112,230 4.02% 110,491 3.03% 109,252 2.68%
Savings deposits 133,056 2.38% 146,284 2.36% 141,178 2.66%
Time deposits 484,314 5.68% 444,521 5.13% 455,355 5.26%
TOTAL $929,141 $904,411 $895,838
Maturities of time certificates of deposit of $100,000
or more outstanding at December 31, 1995, are summarized
as follows:(In thousands of dollars)
3 Months or less $31,200
Over 3 through 6 months 4,847
Over 6 through 12 months 7,274
Over 12 months 28,700
TOTAL $72,021
Item 1. BUSINESS--Continued
Return on Equity and Assets
The table below shows consolidated operating and capital ratios
of the Company for each of the last three years:
Year Ended December 31
1995 1994 1993
Return on average assets 1.54% 1.49% 1.43%
Return on average equity 13.21% 13.03% 14.14%
Dividend payout ratio 38.43% 34.85% 32.28%
Equity to asset ratio 11.92% 10.94% 10.00%
Short-Term Borrowings
The following table shows the distribution of the Company's short-term
borrowings and the weighted average interest rates thereon at the end
of each of the last three years. Also provided are the maximum
amount of borrowings and the average amounts of borrowings as well
as weighted average interest rates for the last three years.
Federal Funds
Purchased and
Securities
Sold Under
Agreements
to Repurchase
(In thousands of dollars)
Balance at December 31:
1995 $123,119
1994 189,461
1993 149,931
Weighted average interest rate at year end:
1995 5.57%
1994 5.58%
1993 3.26%
Maximum amount outstanding at any month's end:
1995 $195,811
1994 219,614
1993 169,391
Average amount outstanding during the year:
1995 $158,072
1994 160,539
1993 102,862
Weighted average interest rate during the year:
1995 5.79%
1994 4.25%
1993 3.27%
S&T defines repurchase agreements with its retail customers as retail
REPOs; wholesale REPOs are those transacted with other banks and
brokerage firms with terms normally ranging from 1 to 14 days.
Item 1. BUSINESS-Continued
CAPITAL
The leverage ratio of total equity to total assets and allowance
for loan losses, one measure of capital adequacy, was 10.4% in 1995 and
10.2% in 1994. The 1995 regulatory minimum guideline leverage ratio
is 3.0%. S&T's risk based capital Tier I and Tier II ratios were 13.7%
and 15.0%, respectively, at December 31, 1995, which places S&T well
above the Federal Reserve Board's risk-based capital guidelines of
4.0% and 8.0% for Tier I and Tier II, respectively. In addition,
management believes that S&T has the ability to raise additional
capital if necessary.
S&T sponsors an Employee Stock Ownership Plan (ESOP). The ESOP
shares are allocated to employees as part of S&T's contribution to its
employee thrift and profit sharing plans. At December 31, 1995,
34,000 unallocated shares were held by the ESOP. During the fourth quarter of
1994, S&T announced a program to annually acquire up to 3% of its
common stock as treasury shares. In 1995, S&T acquired 97,689 treasury
shares on the open market and used 74,820 treasury shares to fund the
employee stock option plan, its dividend reinvestment plan for
shareholders and other general corporate purposes. The stock
repurchase program was also reaffirmed in the fourth quarter of 1995 for 1996.
S&T adopted an Incentive Stock Plan in 1992 (Stock Plan) that provides for
for granting incentive stock options, nonstatutory stock options and stock
appreciation rights (SARs). On October 17, 1994, the Stock Plan was amended
to include outside directors. The Stock Plan covers a maximum of 600,000
shares of S&T stock and expires ten years from the date of board approval.
The following table summarizes the changes in nonstatutory stock options
outstanding during 1995, 1994, 1993 and 1992:
12/31/95
Nonstatutory
Stock Options Excercise
Date Issued Excercised Outstanding Price/Share
1992 58,000 4,000 54,000 $13.62
1993 70,000 70,000 17.25
1994 122,500 122,500 19.00
1995 165,000 165,000 26.25
Total 415,500 4,000 411,500
As of December 31, 1995, 165,000 nonstatutory stock options are not
excercisable.
Risk-Based Capital and Leverage Ratios (as defined by federal regulators)
(In thousands of dollars)
December 31:
CAPITAL COMPONENTS 1995 1994
Tier I $144,704 $132,666
Total risk-based 157,882 145,361
ASSETS
Risk Weighted assets $1,054,204 1,015,630
Average tangible assets 1,330,464 1,236,595
CAPITAL RATIOS
Tier I risk-based capital 13.73% 13.05%
Total risk-based capital 14.98% 14.30%
Leverage 10.38% 10.21%
MINIMUM REGULATORY GUIDELINES
Tier I risk-based capital 4.00% 4.00%
Total risk-based capital 8.00% 8.00%
Leverage 3.00% 3.00%
Item 2. PROPERTIES
The Company operates thirty-four banking offices in Indiana,
Armstrong, Allegheny, Jefferson, Clearfield, Westmoreland and
surrounding counties in Pennsylvania. The Company owns land
and banking offices at the following locations: 800 Philadelphia
Street, 645 Philadelphia Street and 2175 Route 286, South in Indiana;
Route 119 South & Lucerne Road and 34 North Main Street in Homer City; 539
West Mahoning Street, 100 West Mahoning Street and 232 North Hampton Avenue in
Punxsutawney; 133 Philadelphia Street in Armagh; Route 119 South in Black Lick;
256 Main Street and Route 36 & I-80 in Brookville; 456 Main Street
in Brookway; Route 28 & Carrier Street in Summerville; 602 Salt
Street in Saltsburg; 12-14 West Long Avenue, 35 West Scribner Avenue,
Treasure Lake and 614 Liberty Boulevard in DuBois; 418 Main Street in
Reynoldsville; 205 East Market Street in Blairsville; 85 Greensburg Street in
Delmont; 100 Chestnut Street in Derry; Second Avenue and Hicks Street in
Leechburg; 109 Grant Avenue in Vandergrift and 100 South Fourth Street
in Youngwood. Land is leased where the Company owns the banking office at
1107 Wayne Avenue and remote ATM building at 435 South Seventh Street
and 1176 Grant Street, all in Indiana. In addition, the Company
leases land and banking offices at the following locations: Chestnut
Ridge Plaza in Blairsville; 324 North Fourth Street and 2850 Route 286 South in
Indiana; the Mall Office in DuBois, 229 Westmoreland Mall; 2320 Route 286 in
Holiday Park; Route 268 Hilltop Plaza in Kittanning and a remote ATM location
at the Main Street Mall in DuBois.
Item 3. LEGAL PROCEEDINGS
The nature of the Company's business generates a certain
amount of litigation involving matters arising in the ordinary
course of business. However, in the opinion of management, there
are no proceedings pending to which the Company is a party or to
which its property is subject, which, if detemined adverse, would
be material in relation to its shareholders' equity or financial
condition. In addition,no material proceedings are pending nor
are known to be threatened or contemplated against the Company
by governmental authorities or other parties.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters during the fourth quarter of the fiscal
year covered by this report that were submitted to a vote of the
security holders through solicitation of proxies of otherwise.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
MATTERS
Stock Prices and Dividend Information on page 47 and Dividend
and Loan Restrictions on page 40 of the Annual Report for the
year ended December 31, 1995, are incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
Selected Financial Data on page 47 of the Annual Report for
the year ended December 31, 1995, is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition
and Results of Operations on pages 49 through 58 of the Annual
Report for the year ended December 31, 1995, is incorporated
herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements, Report of Independent
Auditors and Quarterly Selected Financial Data on pages 28 through
46 and 48 of the Annual Report for the year ended December 31, 1995,
are incorporated herein by reference.
Item 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
There have been no changes in accountants or disagreements with
accountants on accounting and financial disclosures.
PART III
Item 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Election of Directors on pages 12 through 13 of the proxy statement for
the April 15, 1996 annual meeting of shareholders are incorporated herein by
reference.
Executive Officers
Number of
Shares
For the Officer Beneficially
Name Corporation Since Owned * Age
Robert D. Duggan Chairman, 1983 76,886 63
President, Chief
Executive Officer
and Director
James C. Miller Executive Vice 1983 48,464 50
President and
Director
James G. Barone Secretary 1992 20,578 48
and Treasurer
Robert E. Rout Chief Financial 1993 13,922 43
Officer
Bruce W. Salome Vice 1991 20,491 49
President
Edward C. Hauck Vice 1991 16,761 43
President
Executive Officers (continued)
Number of
Shares
For the Officer Beneficially
Name Corporation Since Owned * Age
David L. Krieger Vice 1984 22,625 52
President
Edward A. Onderick Vice 1989 15,328 51
President
J. Jeffrey Smead Vice 1992 17,075 44
President, Formerly
Executive Vice
President of First
National Bank of
Pennsylvania
William H. Klumpp Vice 1994 12,015 52
President, Formerly
Senior Vice President
of Huntington National
Bank
*Includes vested stock options
Item 11.EXECUTIVE COMPENSATION
Remuneration of Executive Officers on pages 6 through 9 of
the proxy statement for the April 15, 1996, annual meeting of
shareholders is incorporated herein by reference.
Item 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Principal Beneficial Owners of Common Stock on page 4 of the
proxy statement for the April 15, 1996, annual meeting of
shareholders is incorporated herein by reference.
Item 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others on page 10 and 11 of the
proxy statement for April 15, 1996, annual meeting with shareholders
is incorporated herein by reference.
PART IV
Item 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) List of financial statements and financial statement schedules
(1) The following Consolidated Financial Statements and Report of
Independent Auditors of S&T Bancorp, Inc. and subsidiaries included
in the annual report of the registrant to its shareholders for
the year ended December 31, 1995, are incorporated by reference
in Part II, Item 8:
Page
Reference
Report of Ernst & Young LLP, Independent Auditors 46
Consolidated Balance Sheets
December 31, 1995 and 1994 28
Consolidated Statements of Income
Years ended December 31, 1995, 1994 and 1993 29
Consolidated Statements of Changes in Shareholders' Equity
Years ended December 31, 1995, 1994 and 1993 30
Consolidated Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993 31
Notes to Consolidated Financial Statements
December 31, 1995 32-45
Quarterly Selected Financial Data 48
Item 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(Continued)
(2) Schedules to the consolidated financial statements required
by Article 9 of Regulation S-X are not required under the related
instructions or are inapplicable, and therefore have been omitted.
(3) Listings of Exhibits - See Item 14 (c) below
(b) Reports on Form 8-K
None
(c) Exhibits
(3.1) Articles of Incorporation of S&T Bancorp, Inc. filed as
Exhibit B to Registration Statement (No. 2-83565) on Form S-4 of
S&T Bancorp, Inc. and incorporated herein by reference.
(3.2) Amendment to Articles of Incorporation of S&T Bancorp, Inc.
filed as Exhibit 3.2 to Form S-4 Registration Statement dated January
15, 1986 and incorporated herein by reference.
(3.3) By-laws of S&T Bancorp, Inc., as amended, filed as Exhibit
3.3 to Form S-4 Registration Statement dated January 15, 1986 and
incorporated herein by reference.
(10.1) Deferred compensation arrangement with former director
filed as Exhibit 10.1 to Form 10-K dated December 31, 1983
and incorporated herein by reference.
(10.3) Employment Agreement dated December 9, 1985 between S&T Bancorp,
Inc. and Waid H. Nevins filed as Exhibit 10.1 to Form S-4 Registration
Statement dated January 15, 1986 and incorporated herein by reference.
(10.5) Sixth amendment to the Thrift Plan for Employees of S&T
Bank to be effective December 31, 1988, approved by the Board of
Directors at the November 21, 1988 meeting and incorporated
herein by reference.
(13) Annual Report for the year ended December 31, 1995 -
incorporated herein by reference.
(22) Subsidiaries of the Registrant - filed herewith
S&T Bank, a bank incorporated under the laws of Pennsylvania.
S&T Investment Company, Inc., an investment holding company
incorporated under the laws of Delaware.
(23.1) Consent of Ernst & Young LLP, Independent Auditors - filed herewith.
(d) Financial Statement Schedules
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
S&T BANCORP, INC.
(Registrant)
/s/ Robert D. Duggan 03/18/96
Robert D. Duggan, Chairman, Date
President and Chief Executive Officer
(Principal Executive Officer)
/s/ James C. Miller 03/18/96
James C. Miller, Executive Vice President Date
(Executive Officer)
/s/ Robert E. Rout 03/18/96
Robert E. Rout, Chief Financial Officer Date
(Principal Financial and Accounting Officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
/s/ Raymond C. Bachelier 03/18/96 /s/ Paul B. Johnston 03/18/96
Raymond C. Bachelier, Director Date Paul B. Johnston, Director Date
/s/ Thomas A. Brice 03/18/96 /s/ Joseph A. Kirk 03/18/96
Thomas A. Brice, Director Date Joseph A. Kirk, Director Date
/s/ Forrest L. Brubaker 03/18/96 03/18/96
Forrest L. Brubaker, Director Date Samuel Levy, Director Date
/s/ James L. Carino 03/18/96 /s/ James C. Miller 03/18/96
James L. Carino, Director Date James C. Miller, Executive Date
Vice President and Director
/s/ John J. Delaney 03/18/96 03/18/96
John J. Delaney, Director Date W. Parker Ruddock, Director Date
/s/ Robert D. Duggan 03/18/96
Robert D. Duggan, Chairman, Pres Date /s/ Charles A. Spadafora 03/18/96
Chief Executive Officer and Director Charles A. Spadafora, Director Date
/s/ Thomas W. Garges, Jr. 03/18/96 /s/ Christine J. Toretti 03/18/96
Thomas W. Garges, Jr., Director Date Christine J. Toretti, Director Date
/s/ William J. Gatti 03/18/96 /s/ Harold W. Widdowson 03/18/96
William J. Gatti, Director Date Harold W. Widdowson, Director Date
/s/ Herbert L. Hanna 03/18/96
Herbert L. Hanna, Director Date