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S&T three years ago, as the bank was celebrating
better understand customer behavior and deposit
its 120th anniversary. It was a good time to revisit
flow trends. As depositors began to pursue yield in
the bank’s vision, he says, renewing S&T’s empha-
2023, some — but not all — of their dollars left
sis on customer loyalty and employee engagement.
the bank. “We found a group of customers that
“Our people are here to build relationships, and
moved some of their money out of the bank, but
long-term relationships can translate into strong
not all of their money out,” he says. S&T’s bank-
financial performance over time,” he says. He be-
ers wanted to win the full relationship back. “We
lieves S&T can offer the same products and ser-
believe we do a better job of serving customers
vices as any of the big banks. But S&T — like
than others; let’s put our money where our mouth
many smaller banks across the country — has an
is,” he says. “We had great success.”
advantage over larger competitors. “100% of my
But winning those clients back meant S&T paid
1,300 employees live and work in the communities
a higher rate to depositors. Cost of funds rose from
that we serve,” McComish says.
0.3% at year-end 2022 to 1.6% a year later. But
it helped that S&T was asset sensitive. In contrast
to most of the industry, S&T’s net interest margin
improved, from 3.8% to 4.1%, due to higher asset
yields as loans and securities repriced, according
to Cardenas. More than 40% of S&T’s loans have
a floating rate, says McComish.
“We run the company today like we’re a much
bigger company. I’m not doing my job if I’m not
recognizing what the future looks like.”
Meanwhile, Mercantile relied on wholesale deposits in its early days as a commercial bank. The
bank has strengthened its core deposit franchise
over the past decade, but with a loan-to-deposit
ratio of 107%, there’s still room to grow deposits.
Cost of funds grew from 0.5% in 2022 to 1.7%
Chris McComish / S&T Bancorp
in 2023. Like S&T, its net interest margin grew
despite this, from 3.3% to 4.1%, due to an asset sensitive balance sheet. The bank’s investment
portfolio improved through 2023, with unrealized
losses totaling $64 million compared to $83 mil-
S&T operates 73 locations, and McComish
lion at the end of 2022. CFO Christmas attributes
and his executives regularly meet with bank staff
this improvement in part to maturities on some
across the bank’s Pennsylvania and Ohio footprint.
of the bank’s investments, which are all held as
The CEO has also recruited staff from other banks,
available for sale.
says Dan Cardenas, a director and equity research
“It’s a matter of execution and getting the full
analyst at Janney Montgomery Scott who covers
relationship in the bank as we undertake the asset
S&T. “Chris has done a good job of bringing in
side growth,” says Rietsma. “Our goal is to grow
people with bigger bank experience and improving
the floating rate assets and the floating rate liabil-
areas within the organization that should get the
ities at the same rate and proportion, and on the
company ready to grow.”
fixed side, match the duration of our fixed rate as-
McComish has also been willing to try new ap-
sets and liabilities. If we do an appropriate job of
proaches to deposit growth, using data analytics to
pricing on both sides and match up the proportions
