Indiana, Pennsylvania-based S&T Bancorp Inc. is prepared to cross the crucial $10 billion asset threshold, whether it's through M&A or via organic growth, CEO Christopher McComish said.
S&T Bancorp had total assets of $9.72 billion at the end of the first quarter, according to S&P Global Market Intelligence data. Banks with more than $10 billion in assets are subject to Consumer Financial Protection Bureau supervision and the Durbin amendment, which limits banks' fee interchange income.
Banks often try to leapfrog the threshold with an acquisition to deal with the additional regulatory costs associated with crossing $10 billion. While S&T Bancorp is considering acquisition prospects, the company's M&A ambitions are not linked to its expectation of crossing $10 billion in the second half of this year, McComish said May 19 during the S&P Global Market Intelligence Community Bankers Conference.
"If we cross over organically, that will be fine because we've done the work that we needed to be prepared for that," McComish said in an interview. "If an acquisition ... comes about, that will be nothing but a benefit to us, but we're not going to make an acquisition to go over $10 billion."
Acting Federal Deposit Insurance Corp. Chairman Travis Hill has alluded to adjusting asset thresholds for discretionary oversight to account for inflation, but raising the statutory $10 billion threshold under the Durbin amendment would require an act of Congress. While Congress may revisit the Durbin amendment and there is "certainly" an argument for doing so, whether that ultimately happens is outside of S&T Bancorp's control, McComish said.
"I think they'll do some work to kind of right-size the oversight in alignment with the current environment, but I don't control that either," the CEO said.
McComish noted that the company is focused on things it can control, such as delivering strong performance and building capital to prepare for growth. For example, S&T Bancorp is working to generate organic growth by hiring commercial and business banking teams, and the company currently has 15% more bankers than it did a year ago, he added.
"We'll continue on that strategy because we believe there's market share to be gained, and we've been successful with that," the CEO said.
At the same time, the company expects bank industry consolidation to continue and is ready to make an acquisition should the right opportunity arise, McComish said. Should S&T Bancorp make an acquisition this year, it would be the first since the company acquired DNB Financial Corp. in 2019. In preparation for a possible deal, the company has worked to align itself with regulatory expectations and continues to build relationships with potential sellers, the CEO said.
In terms of geography, S&T Bancorp is looking for acquisition targets in markets that are contiguous to its existing footprint, which encompasses parts of Pennsylvania and Ohio, McComish said. In particular, the company is interested in expanding into Maryland, Washington, D.C. and Virginia, he added.
"We think kind of south and east of us and then west into Ohio and contiguous areas," McComish said. "When that happens, we don't know, and so it's all around being prepared for that potential opportunity."
