ITEM 1. BUSINESS
General
S&T Bancorp, Inc. ("S&T") 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. S&T 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, 1997, S&T had $1.9 billion in total assets, $260 million in total shareholders' equity and $1.3 billion in total deposits. Deposits are insured by the Federal Deposit Insurance Corporation to the full extent provided by law.
Total trust assets were approximately $579 million at December 31, 1997. 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-seven 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 plan- ning 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, 1997, S&T Bank had a total of 664 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
General
S&T and S&T Bank are each extensively regulated under both federal and state law. The following information describes certain aspects of that regulation applicable to S&T and S&T Bank and does not purport to be complete. To the extent statutory or regulatory provisions or proposals are described, the description is qualified in its entirety by reference to the particular statutory of regulatory provisions or proposals.
S&T
As a bank holding company, S&T is subject to regulation under the Bank Holding Company Act of 1956 ("BHCA") and the examination and reporting requirements of the Federal Reserve Board. Under the BHCA, a bank holding company may not directly or indirectly acquire ownership or control of more than five percent of the voting shares or substantially all of the assets of any additional bank, or merge or consolidate with another bank holding company, without the prior approval of the Federal Reserve Board.
ITEM 1. BUSINESS- continued
The BHCA also generally limits the activities of a bank holding company to that of banking, managing or controlling banks, or any other activity which is determined to be so closely related to banking or to managing or controlling banks as to be a proper incident thereto. S&T is presently engaged in two nonbanking activities: S&T Investment Company, Inc., which is an investment holding company, and Commonwealth Trust Credit Life Insurance Company ("CTCLIC"). S&T Investment Company, Inc. was formed in June 1988 to hold and manage a group of investments previously owned by S&T Bank and to give S&T additional latitude to purchase other investments. CTCLIC, which is a joint venture with another financial institution, acts as a reinsurer of credit life, accident and health insurance policies sold by S&T Bank and the other institution.
There are a number of obligations and restrictions imposed on bank holding companies and their depository institution subsidiaries by federal law and regulatory policy that are designed to reduce potential loss exposure to the depositors of such depository institutions and to the FDIC insurance funds in the event the depository institution becomes in danger of default or in default. For example, under a policy of the Federal Reserve Board with respect to bank holding company operations, a bank holding company is required to serve as a source of financial strength to its subsidiary depository institutions and to commit resources to support such institutions in circumstances where it might not do so otherwise.
S&T Bank
As a state-chartered commercial bank, the deposits of which are insured by the Bank Insurance Fund ("BIF") of the Federal Deposit Insurance Corpor- ation ("FDIC"), S&T Bank is subject to the supervision and regulation of the Pennsylvania Department of Banking ("PADB") and the FDIC. S&T Bank also is subject to various requirements and restrictions under federal and state law, including requirements to maintain reserves against deposits, restrictions on the types, amount and terms and conditions of loans that may be granted, and limits on the type of other activities in which S&T Bank may engage and the investments it may make. Various consumer and compliance laws and regul- ations also affect S&T Bank's operations.
S&T Bank also is subject to federal laws that limit the amount of transactions between itself and S&T or S&T's nonbank subsidiaries. Under these provisions, transactions by a bank subsidiary to any one of its parent company or any nonbank affiliate generally are limited to ten percent of the bank subsidiary's capital and surplus, or twenty percent in the aggregate. Further, loans and extensions of credit generally are required to be secured by eligible collateral in specified amounts. A bank, such as S&T Bank, is prohibited from purchasing any "low quality" asset from an affiliate. S&T Bank is in compliance with these provisions.
As an FDIC-insured bank, S&T Bank also is subject to FDIC insurance assessments. Currently, the amount of FDIC assessments paid by individual insured depository institutions ranges from zero to $.27 per $100 of insured deposits, based on their relative risk to the deposit insurance funds, as measured by the institutions' regulatory capital position and other supervisory factors. S&T Bank currently pays the lowest premium rate based upon this risk assessment. However, because legislation enacted in 1996 requires that all insured deposits pay a pro rata portion of the interest due on the obligations issued by the Financing Corporation, the FDIC is assessing BIF-insured deposits an additional $.013 per $100 of deposits to cover those obligations.
ITEM 1. BUSINESS- continued
Capital
The Federal Reserve Board and the FDIC have issued substantially similar risk-based and leverage capital guidelines applicable to banking organizatons they supervise. Under the risk-based capital requirements, S&T and S&T Bank each generally is required to maintain a minimum ratio of total capital to risk-weighted assets (including certain off-balance sheet activities, such as standby letters of credit), of eight percent. At least half of the total capital is to be composed of common equity, retained earnings and qualifying perpetual preferred stock, less certain intangibles ("Tier 1 capital"). The remainder may consist of certain subordinated debt, certain hybrid capital instruments and other qualifying preferred stock, and a limited amount of the loan loss allowance ("Tier 2 capital") and, together with Tier 1 capital, ("Total capital"). At December 31, 1997, S&T's Tier 1 and Total capital ratios were 16.97 percent and 18.22 percent, respectively, and the ratios of Tier 1 capital and Total capital to total risk-adjusted assets for S&T Bank were 13.12 percent and 14.37 percent, respectively.
In addition, each of the federal bank regulatory agencies has established minimum leverage capital ratio requirements for banking organizations. These requirements provide for a minimum leverage ratio of Tier 1 capital to adjusted average quarterly assets equal to three percent for bank and bank holding companies that meet certain specified criteria, including that they have the highest regulatory rating and are not experiencing significant growth or expansion. All other banks and bank holding companies will generally be required to maintain a leverage ratio of at least 100 to 200 basis points above the stated minimum. S&T's leverage ratio at December 31, 1997 was 11.70 percent, and S&T Bank's leverage ratio was 9.24 percent.
Both the Federal Reserve Board's and the FDIC's risk-based capital standards explicitly identify concentrations of credit risk and the risk arising from non-traditional activities, as well as an institution's ability to manage these risks, as important factors to be taken into account by the agency in assessing an institution's overall capital adequacy. The capital guidelines also provide that an institution's exposure to a decline in the economic value of its capital due to changes in interest rates be considered by the agency as a factor in evaluating a bank's capital adequacy. The Federal Reserve Board also has recently issued additional capital guidelines for certain bank holding companies that engage in trading activities. S&T does not believe that consideration of these additional factors will affect the regulators' assessment of S&T's or S&T Bank's capital position.
Payment of Dividends
S&T is a legal entity separate and distinct from its banking and other subsidiaries. A major portion of the revenues of S&T result from amounts paid as dividends to S&T by S&T Bank. S&T Bank, in turn, is subject to state laws and regulations that limit the amount of dividends it can pay to S&T. In addition, both S&T and S&T Bank are subject to various general regulatory policies relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums. The Federal Reserve Board has indicated that banking organizations should generally pay dividends only if (1) the organization's net income available to common shareholders over the past year has been sufficient to fund fully the dividends and (2) the prospective rate of earnings retention appears consistent with the organization's capital needs, asset quality and overall financial condition. S&T does not expect that any of these laws, regulations or policies will materially impact its ability or the ability of S&T Bank to pay dividends. During the year ended December 31, 1997, S&T Bank paid $14.2 million in cash dividends to S&T.
ITEM 1. BUSINESS- continued
Other Safety and Soundness Regulations
The federal banking agencies possess broad powers under current federal law to take prompt corrective action to resolve problems of insured depository institutions. The extent of these powers depends upon whether the institution in question is "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized," or "critically undercapitalized," as defined by the law. As of December 31, 1997, S&T Bank was classified as "well capitalized." The classification of depository institutions is primarily for the purpose of applying the federal banking agencies' prompt corrective action provisions and is not intended to be, and should not be interpreted as, a representation of overall financial condition or prospects of any financial institution.
The agencies' prompt corrective action powers can include, among other things, requiring an insured depository institution to adopt a capital restoration plan which cannot be approved unless guaranteed by the institution's parent company; placing limits on asset growth and restrictions on activities, including restrictions on transactions with affiliates; restricting the interest rates the institution may pay on deposits; prohibiting the payment of principal or interest on subordinated debt; prohibiting the holding company from making capital distributions without prior regulatory approval and, ultimately, appointing a receiver for the institution. Among other things, only a "well capitalized" depository institution may accept brokered deposits without prior regulatory approval.
The PADB also has broad enforcement powers over S&T Bank, including the power to impose fines and other civil and criminal penalties, and to appoint a conservator or receiver.
Interstate Banking and Branching
The BHCA currently permits bank holding companies from any state to acquire banks and bank holding companies located in any other state, subject to certain conditions, including certain nation-wide and state-imposed concentration limits. Effective June 1, 1997, S&T Bank will have the ability, subject to certain restrictions, including state opt-out provisions, to acquire by acquisition or merger, branches of banks located outside of Pennsylvania, its home state. States may affirmatively opt-in to permit these transactions earlier, which Pennsylvania, among other states, has done. The establishment of de novo interstate branches also will be possible in those states that expressly permit it. Once a bank has established branches in a state through an interstate merger transaction, the bank may establish and and acquire additional branches at any location in the state where a bank headquartered in that state could have established or acquired branches under applicable federal or state law.
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 First Commonwealth Bank headquartered in Indiana, Pennsylvania; People's Bank headquartered in Ford City, Pennsylvania; Indiana First Savings Bank headquartered in Indiana, 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, such as Mellon Bank, National City Bank and PNC Bank.
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. 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 balance 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 obligaions 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 1997, 1996 and 1995. The following table demonstrates the amount that has been added to interest income per the summary of operations. [CAPTION]
BUSINESS - Continued
Average Balance Sheet and Net Interest Income Analysis [CAPTION]
(1) For the purpose of these computations, nonaccruing loans are included in the daily average loan amounts outstanding. (2) Tax-exempt income is on an FTE basis, including the dividend received deduction for equity securities, using the statutory federal income tax rate of 35% for 1997, 1996 and 1995. (3) Yields are calculated using historical cost basis.
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: [CAPTION]
(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. (2) Tax-exempt income is on an FTE basis using the statutory federal income tax rate of 35% for 1997, 1996 and 1995.
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 committee ("ALCO"), S&T is positioned to cope with changing interest rates and inflationary trends. ALCO monitors and manages interest rate sensitivity through gap, simulation and duration analysis.
The schedule below presents S&T's interest rate sensitivity at December 31, 1997 using gap analysis. The gap and cumulative gap represents the net position of assets and liabilities subject to repricing in specified time periods, as measured by a ratio of rate sensitive assets to rate sensitive liabilities. ALCO policy guidelines for cumulative gap in the six and twelve month time frames, annually approved by the S&T Board of Directors, is currently a .85 to 1.15 range. Management believes this range provides an acceptable and manageable level of interest rate risk for S&T. Significant to gap analysis is the expected rate of asset prepayment, calls on securities and the behavior of depositors during periods of changing interest rates. For example, in periods of declining interest rates, borrowers can be expected to accelerate loan prepayments and refinancings; depositors will tend to hold those certificates of deposits with rates currently higher than the market. Conversely, in a rising interest rate scenario, borrower refinancings and prepayments typically decrease, while deposit shifting and early withdrawals tend to accelerate as depositors position funds to earn higher yields.
ALCO continually monitors these historical behavior patterns through periods of changing interest rates, and uses this information to develop loan prepayments and decay rates for Core Deposits (demand, NOW, savings). The gap analysis below incorporates a flat rate scenario, and the following significant assumptions: [CAPTION]
Swaps
Reflects that portion of borrowings whose interest rate risk is reduced due to the effects of interest rate swaps.
Interest Rate Sensitivity December 1997 (thousands of dollars) [CAPTION]
S&T's six month gap position at December 31, 1997 is liability sensitive; the one year gap is asset sensitive. Liability sensitive means that more liabilities than assets of S&T will reprice during the measured time frames; asset sensitivety has the opposite meaning. The implications of a liability sensitive position, or an asset sensitive position, will differ depending upon the current trend of market interest rates.
For example, a liability sensitive position in a declining interest rate environment, the cost of S&T repricing liabilities can theoretically be expected to decline more quickly than the yields on repricing assets. This situation would cause an increase to S&T's interest rate spreads, net interest income and to operating income. Liquidity impacts would not be material in the short-term; in the long-term, improved operating income is always beneficial to liquidity issues.
Conversely, a liability sensitive gap position in a rising interest rate scenario would theoretically have a negative impact to interest rate spreads, net income and to operating income. Liquidity impacts in this scenario, other than increased costs, would not be material unless serious ongoing declines in operating results caused depositors, lenders and investors to lose confidence.
Gap analysis usefulness as a measurement of interest rate risk is limited because the time period measured is static. Simulation provides a more dynamic modeling tool for interest rate risk since this technique can incorporate future assumptions about interest rates, volume fluctuations and customer behaviors. ALCO uses simulation to measure changes in net interest income during a 2%, plus or minus, change in current market interest rates (Rate Shock Analysis). Current ALCO policy guidelines require that declines in forecasted net interest income do not exceed 3% as a result of Rate Shock Analysis.
Duration techniques are a relatively new addition to S&T's interest rate risk monitoring tools. Duration modeling is primarily used to assist in match fundings for large commercial loans, security purchases and segments of the installment loan portfolios.
Item 1. BUSINESS-- Continued
Securities
S&T invests in various securities in order to provide a source of liquidity, increase net interest income and as an ALCO tool to quickly reposition the balance sheet for interest rate risk purposes. Securities are subject to similar interest rate and credit risks as loans. In addition, by their nature, securities classified as available for sale are also subject to market value risks that could negatively affect the level of liquidity available to S&T, as well as equity.
Risks associated with various securities portfolio are managed and monitored by investment policies annually approved by the S&T Board of Directors, and administered through ALCO and the Chief Investment Officer. As of December 31, 1997, management is not aware of any risk associated with securities that would be expected to have a significant, negative effect to S&T's statement of condition or statement of operations.
The following table sets forth the carrying amount of securities at the dates indicated: [CAPTION]
Item 1. BUSINESS-- Continued
The following table sets forth the maturities of securities at December 31, 1997, 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 1997 have been made in calculating yields on obligations of state and political subdivisions. [CAPTION]
Item 1. BUSINESS-- Continued
Loan Portfolio
The following table shows S&T's loan distribution at the end of each of the last five years: [CAPTION]
The following table shows the maturity of loans (excluding residential mortgages of 1-4 family residences and installment loans) outstanding as of December 31, 1997. Also provided are the amounts due after one year classified according to the sensitivity to changes in interest rates. [CAPTION]
Item 1. BUSINESS--Continued
Nonaccrual, Past Due and Restructured Loans
The following table summarizes S&T's nonaccrual, past due and restructured loans: [CAPTION]
At December 31, 1997, $3,602,000 of nonaccrual loans were secured. Interest income that would have been recorded under original terms totaled $368,000. No interest income was recorded on these loans. It is S&T's policy to place loans on nonaccrual status when the interest and principal is 90 days or more past due. The accrual of interest on impaired loans is discontinued when, in management's opinion, the borrower may be unable to meet payments as they become due. At December 31, 1997, there were no impaired loans that were on nonaccrual. There are no foreign loan amounts required to be included in this table. There were no restructured loans in the periods presented.
Summary of Loan Loss Experience
Management evaluates the degree of loss exposure for loans on a continuous basis through a formal loan policy as administered by the Loan Administration Department and various management and director committees. Problem loans are identified and continually monitored through detailed reviews of specific large dollar loans, and the analysis of delinquency and charge-off levels of consumer loan portfolios. Quarterly updates are presented to the S&T Board of Directors as to the status of loan quality.
Charged-off and recovered loan amounts are applied to the allowance for loan losses. Additional amounts are added through a charge to current earnings through the provision for loan losses, based upon management's assessment about the adequacy of the allowance for loan losses for probable loan losses. In addition to the identification and monitoring of problem loans, management also assesses other subjective factors such as economic conditions and business trends, concentrations, growth and composition of the loan portfolio and effect- iveness of the Loan Administration Department. This assessment results in an allowance for loan losses consisting of two components, allocated and unallocated.
The allocated component of the allowance for loan losses reflects expected losses resulting from the analysis of individual loans developed through specific ratings and allocations, and historical loss experience for categories of loans. The specific allocations are based upon regular analysis of loans and commitments over a fixed dollar amount and the internal credit rating for the loan or commitment. Categories of smaller individual loans are allocated based upon historical losses and current delinquency levels.
Item 1.BUSINESS--Continued
The unallocated component is primarily subjective based upon management's assessment of nonquantifiable factors that make historical trend analyses difficult:
Loan concentration in western Pennsylvania. Significant commercial loan volume increases in the last three years in new markets with new customers. The introduction of several new consumer products. Increased commercial real estate lending. Recent increases in charged-off, nonperforming and delinquent loans. Peer analysis.
The provision for loan losses in each of the years presented below considered management's assessment of the factors noted above along with the growth in the loan portfolio. The additions to the allowance charged to operating expense has maintained the allowance as a percent of loans at the following levels at the end of each year presented.
Year Ended December 31 1997 1996 1995 1994 1993
1.60% 1.56% 1.55% 1.48% 1.60%
The Company has considered impaired loans in its determination of the allowance for loan losses. The allowance for loan losses for all impaired loans totaled $914,000 and $2,605,000 at December 31, 1997 and 1996, respectively, and is included in the allowance allocated specifically to commercial loans.
Based on the evaluation of loan quality and assessment of risk characteristics, management believes that the allowance for loan losses is adequate to absorb probable loan losses.
This table summarizes S&T's loan loss experience for each of the five years ended December 31: [CAPTION]
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: [CAPTION]
In 1995, S&T adopted Financial Accounting Standards Board Statement No. 114, "Accounting by Creditors for Impairment of a Loan," (as amended by Financial Accounting Standards Board Statement No. 118 "Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosures"). The adoption of these accounting pronouncements did not have a material impact on the comparability for the table of loan loss experience or the table for allocation of the allowance for loan losses presented above.
Deposits
The daily average amount of deposits and rates paid on such deposits is summarized for the periods indicated in the following table: [CAPTION]
Maturities of time certificates of deposit of $100,000 or more outstanding at December 31, 1997, are summarized as follows: [CAPTION]
Return on Equity and Assets
The table below shows consolidated operating and capital ratios of S&T for each of the last three years: [CAPTION]
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. [CAPTION]
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 2.
Item 2. PROPERTIES
The Company operates thirty-seven 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 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 Brockway; Route 28 & Carrier Street in Summerville; 602 Salt Street in Saltsburg; 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; 109 Grant Avenue in Vandergrift; 100 South Fourth Street in Youngwood; 701 East Pittsburgh Street in Greensburg; 2190 Hulton Road in East Oakmont; 4385 Old William Penn Highway in Monroeville; 7660 Saltsburg Road in Plum; 12262 Frankstown Road in Penn Hills; and 301 Unity Center Road in Unity. Land is leased where the Company owns the banking offices at 1107 Wayne Avenue and remote ATM buildings 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 Indiana; the Mall Office in DuBois; 229 Westmoreland Mall; 2388 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.
Item 3. LEGAL PROCEEDINGS
The nature of the Company's business generates a certain amount of litigation involving matters arising in the ordinary cource 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 determined 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.
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.
Item 5. MARKET TO REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
Stock Prices and Dividend Information on page 54 and Dividend and Loan Restrictions on page 44 of the Annual Report for the year ended December 31, 1997, incorporated herein by reference.
Item 6.
Item 6. SELECTED FINANCIAL DATA
Selected Financial Data on pages 54 and 55 of the Annual Report for the year ended December 31, 1997, incorporated herein by reference.
Item 7.
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 21 through 29 of the Annual Report for the year ended December 31, 1997, incorporated herein by reference.
Item 7(A) QUANITATIVE and QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quanitative and Qualitative Disclosures about Market Risk on page 28 of the Annual Report for the year ended December 31, 1997, incorporated herein by reference
Item 8.
Item 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements, Report of Independent Auditors and Quarterly Selected Financial Data on pages 30 through 53 and 55 of the Annual Report for the year ended December 31, 1997, incorporated herein by reference.
Item 9.
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.
Item 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Election of Directors on pages 4 through 5 of the proxy statement for the April 20, 1998, annual meeting of share- holders are incorporated herein by reference. [CAPTION]
Executive Officers (continued)
(1) On January 2, 1998 Mr. Duggan retired as President and Chief Executive Officer. He will continue as chairman and director of S&T. Mr. Miller, previously Executive Vice President and Chief Operating Officer, was appointed President and Chief Executive Officer.
(2) May include shares held by family members, as trustee and nonstatutory stock options vesting within 60 days of the date of this 10-K Report.
Item 11.
Item 11. EXECUTIVE COMPENSATION
Remuneration of Executive Officers on pages 7 through 9 of the proxy statement for the April 20, 1998, annual meeting of share- holders, incorporated herein by reference.
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Beneficial Owners of Common Stock on page 3 of the proxy statement for the April 20, 1998, annual meeting of share- holders, incorporated herein by reference.
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others on page 11 and 12 of the proxy statement for April 20, 1998, annual meeting with shareholders, incorporated herein by reference.
PART IV
Item 14.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
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, 1997, are incorporated by reference in Part II, Item 8:
Page Reference Report of Ernst & Young LLP, Independent Auditors 53
Consolidated Balance Sheets December 31, 1997 and 1996 30
Consolidated Statements of Income Years ended December 31, 1997, 1996, and 1995 31
Consolidated Statements of Changes in Shareholders' Equity Years ended December 31, 1997, 1996, and 1995 32
Consolidated Statements of Cash Flows Years ended December 31, 1997, 1996, and 1995 33
Notes to Consolidated Financial Statements December 31, 1997 34-52
Quarterly Selected Financial Data 55
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
Reports on Form 8-K
Form 8-K dated May 2, 1997 was filed as S&T Bancorp, Inc. (S&T) completed the merger of Peoples Bank of Unity into its principal subsidiary, S&T Bank. Peoples Bank of Unity, had assets of $288 million and operated six offices in the eastern suburbs of Pittsburgh.
Form 8-K dated September 12, 1997 was filed as S&T Bancorp, Inc. (S&T) announcing Robert D. Duggan's retirement and James C. Miller's appointment as President and Chief Executive Officer. The Form 8-K also included the announcement of two new directors, Jeffrey D. Grube and Alan Papernick.
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., 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, 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, 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, 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, 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, incorporated herein by reference.
(13) Annual Report for the year ended December 31, 1997, 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.
(23.2) Consent of S.R. Snodgrass, A.C., Independent Auditors - filed herewith.
Financial Statement Schedules None
(99) Report of S.R. Snodgrass, A.C., Independent Auditors - filed herewith.
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/ James C. Miller 03/16/98 James C. Miller, Date President and Chief Executive Officer (Principal Executive Officer)
/s/ Robert E. Rout 03/16/98 Robert E. Rout, Date Senior Vice President and Chief Financial Officer (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/Thomas A. Brice 03/16/98 /s/Herbert L. Hanna 03/16/98 Thomas A. Brice, Herbert L. Hanna, Director Date Director Date
/s/ Forrest L. Brubaker 03/16/98 /s/Frank W. Jones 03/16/98 Forrest L. Brubaker, Frank W. Jones, Director Date Director Date
/s/ James L. Carino 03/16/98 /s/Joseph A. Kirk 03/16/98 James L. Carino, Joseph A. Kirk, Director Date Director Date
/s/ John J. Delaney 03/16/98 03/16/98 John J. Delaney, Samuel Levy, Director Date Director Date
/s/Robert D. Duggan 03/16/98 /s/James C. Miller 03/16/98 Robert D. Duggan, James C. Miller, Chairman Date President, Chief Executive Officer and Director Date
/s/ Thomas W. Garges,Jr.03/16/98 /s/ Alan Papernick 03/16/98 Thomas W. Garges, Jr., Alan Papernick, Director Date Director Date
/s/William J. Gatti 03/16/98 03/16/98 William J. Gatti, W. Parker Ruddock, Director Date Director Date
/s/ Ruth M. Grant 03/16/98 /s/ Myles D. Sampson 03/16/98 Ruth M. Grant, Myles D. Sampson, Director Date Director Date
/s/Jeffrey D. Grube 03/16/98 /s/Charles A. Spadafora 03/16/98 Jeffrey D. Grube, Charles A. Spadafora, Director Date Director Date
/s/Christine J. Torretti 03/16/98 Christine J. Toretti, Director Date