S&T Bancorp, Inc. (STBA) | Investment Case

1. Company Snapshot

1.a. Company Description

S&T Bancorp, Inc.operates as the bank holding company for S&T Bank that provides retail and commercial banking products and services.The company operates through six segments: Commercial Real Estate, Commercial and Industrial, Business Banking, Commercial Construction, Consumer Real Estate, and Other Consumer.

The company accepts time and demand deposits; and offers commercial and consumer loans, cash management services, and brokerage and trust services, as well as acts as guardian and custodian of employee benefits.It also manages private investment accounts for individuals and institutions.In addition, the company distributes life insurance and long-term disability income insurance products, as well as offers title insurance agency services to commercial customers; and acts as a reinsurer of credit life, accident, and health insurance policies.

As of December 31, 2021, it operated 73 banking branches and 5 loan production offices located in Western Pennsylvania, Eastern Pennsylvania, Northeast Ohio, Central Ohio, and Upstate New York.S&T Bancorp, Inc.was founded in 1902 and is headquartered in Indiana, Pennsylvania.

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1.b. Last Insights on STBA

S&T Bancorp's recent performance was positively driven by its in-line Q4 earnings of $0.89 per share, compared to $0.86 per share a year ago. The company's announcement of a $100 million share repurchase program, authorized by its board of directors, also boosted investor sentiment. Additionally, the company's rating upgrade to Buy by Zacks, citing growing optimism about its earnings prospects, contributed to the positive momentum. Institutional investors, such as Edgestream Partners L.P., also showed confidence in the company by purchasing a new stake.

1.c. Company Highlights

Last Price	39.92
Change Percentage	-0.55%
Open	40.16
Previous Close	40.14
Market Cap ( Millions)	1526
Volume	911212
Year High	44.91
Year Low	30.84
M A 50	42.01
M A 200	39.27

FCF Yield	8.73%
Dividend Yield	3.51%
ROE	9.25%
Debt / Equity	21.24%
Net Debt / EBIDTA	87.84%
Price To Book	1.05
Price Earnings Ratio	11.48
Price To FCF	11.45
Price To sales	2.68
EV / EBITDA	9.96

2. S&T Bancorp's Q4 Earnings: A Closer Look

S&T Bancorp reported a net income of $34 million, or $0.89 per share, for the fourth quarter, slightly below analysts' estimates of $0.89 per share. For the full year, the company produced $135 million in net income, or $3.49 per share, with a net interest margin of 3.9%. The company's return on assets (ROA) was 1.37%, and its return on equity (ROE) was 9.25%. Revenue growth is expected to be 4.1% next year. The actual EPS for the quarter came in at $0.86.

Publication Date: Mar -06

                                    📋 Highlights
                                    Net Income and EPS::
                                                Generated $135 million net income ($3.49/share), with ROA at 1.37% for the quarter.
Loan and Deposit Growth::
                                                Loan growth exceeded 4%, deposit growth near 3%, driven by commercial C&I/CRE and consumer home equity.
Margin Expansion::
                                                NIM rose 6 bps to 3.99%, fueled by 11 bps lower funding costs offset by 3 bps lower earning asset yields.
Asset Quality::
                                                Net charge-offs at 18 bps annually; ACL declined 16 bps YoY, with 50% reduction in CNC assets over three years.
2026 Guidance::
                                                Aims for mid-single-digit loan growth, prioritizing C&I and CRE, with $1.5–1.7 billion annual loan origination target.

                                

Loan Growth and Asset Quality

The company's loan growth was driven primarily by commercial loans, with C&I and CRE balances growing by $53 million and $34 million, respectively. S&T Bancorp continues to see demand for construction facilities for multifamily, warehouse, storage, and industrial asset classes. The company's asset quality was mixed due to higher charge-offs associated with some NPA resolutions, but the allowance for credit losses (ACL) declined eight basis points due to specific reserve releases and an overall reduction in criticized and classified assets. As David Antolik noted, "We're not necessarily on the demand side; it's making sure that the asset quality of the onboarded new customers meet our criteria to maintain the lower levels of CNCs."

Net Interest Margin and Funding

The company's net interest margin (NIM) rose to 3.99%, up six basis points on a linked quarter basis. The margin improvement came from an 11 basis point decrease in the cost of funds, which was offset by a modest decrease in earning asset yields of about three basis points. S&T Bancorp's funding costs are expected to decline as rate cuts occur, with CD costs currently elevated at 3.86%. The company's strong core deposit franchise is expected to continue to support its asset growth.

Valuation and Dividend Yield

With a Price-to-Tangible Book Value (P/TBV) ratio of 1.1, S&T Bancorp's valuation appears reasonable compared to its peers. The company's Dividend Yield is 3.37%, which is attractive to income investors. The company's net interest margin and asset quality will be key factors to watch in the coming quarters.

3. NewsRoom

Analysts Set S&T Bancorp, Inc. (NASDAQ:STBA) PT at $44.40

Mar -20

Source: defenseworld.net

S&T Bancorp (NASDAQ:STBA) Shares Cross Above Two Hundred Day Moving Average – What’s Next?

Mar -11

Source: defenseworld.net

S&T Bancorp (NASDAQ:STBA) Hits New 1-Year High – Still a Buy?

Feb -22

Source: defenseworld.net

Public Sector Pension Investment Board Acquires 42,015 Shares of S&T Bancorp, Inc. $STBA

Feb -19

Source: defenseworld.net

S&T BANK LAUNCHES BRANCH REFRESH INITIATIVE TO CREATE A MORE MODERN, PEOPLE-FORWARD BANKING EXPERIENCE

Feb -12

Source: prnewswire.com

S&T BANK NAMED A FORBES AMERICA'S BEST BANK FOR THE THIRD CONSECUTIVE YEAR

Feb -10

Source: prnewswire.com

Critical Review: F & M Bank (OTCMKTS:FMBM) vs. S&T Bancorp (NASDAQ:STBA)

Feb -10

Source: defenseworld.net

S&T Bancorp (STBA) Upgraded to Strong Buy: Here's What You Should Know

Feb -03

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.00%)

6. Segments

Community Banking

Expected Growth: 1.0%

S&T Bancorp's Community Banking segment growth is driven by strategic branch expansion, increased commercial lending, and a focus on customer relationships. Additionally, investments in digital banking platforms and treasury management services have enhanced customer experience, contributing to the 1.0% growth rate.

7. Detailed Products

Personal Banking

S&T Bancorp, Inc. offers a range of personal banking services, including checking and savings accounts, credit cards, loans, and investment products.

Business Banking

S&T Bancorp, Inc. provides business banking services, including commercial loans, cash management, and treasury management solutions.

Wealth Management

S&T Bancorp, Inc. offers wealth management services, including investment management, trust services, and retirement planning.

Mortgage Banking

S&T Bancorp, Inc. provides mortgage banking services, including residential and commercial mortgage lending.

Insurance

S&T Bancorp, Inc. offers insurance services, including life insurance, disability insurance, and long-term care insurance.

Investment Services

S&T Bancorp, Inc. provides investment services, including brokerage services, investment advice, and portfolio management.

8. S&T Bancorp, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for S&T Bancorp, Inc. is moderate due to the presence of alternative financial institutions and digital payment platforms.

Bargaining Power Of Customers

The bargaining power of customers is low due to the lack of concentration in the banking industry and the high switching costs for customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate due to the presence of a few large suppliers of technology and services, but the bank has some negotiating power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the banking industry, including regulatory hurdles and capital requirements.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of many competitors in the banking industry, leading to a highly competitive market.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	28.34%
Debt Cost	7.79%
Equity Weight	71.66%
Equity Cost	7.79%
WACC	7.79%
Leverage	39.55%

11. Quality Control: S&T Bancorp, Inc. passed 4 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

S&T Bancorp

A-Score: 6.6/10

Value: 7.0

Growth: 5.6

Quality: 8.1

Yield: 7.0

Momentum: 4.0

Volatility: 8.0

1-Year Total Return ->

Northrim Bank

A-Score: 6.6/10

Value: 6.1

Growth: 5.1

Quality: 8.1

Yield: 7.0

Momentum: 7.0

Volatility: 6.3

1-Year Total Return ->

First United

A-Score: 6.6/10

Value: 6.5

Growth: 6.3

Quality: 7.3

Yield: 6.0

Momentum: 6.5

Volatility: 7.0

1-Year Total Return ->

Central Pacific Financial

A-Score: 6.4/10

Value: 6.6

Growth: 4.9

Quality: 7.0

Yield: 7.0

Momentum: 5.0

Volatility: 7.7

1-Year Total Return ->

Peoples Bancorp of North Carolina

A-Score: 6.1/10

Value: 6.7

Growth: 6.4

Quality: 6.6

Yield: 6.0

Momentum: 4.5

Volatility: 6.3

1-Year Total Return ->

Hope Bancorp

A-Score: 5.5/10

Value: 6.5

Growth: 3.6

Quality: 6.2

Yield: 8.0

Momentum: 2.0

Volatility: 7.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-2.52%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.79%

S&T Bancorp, Inc. - US7838591011

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on STBA

1.c. Company Highlights

Better Quality

Average Yield

Average Growth

Earnings Beats

Revenues Beats

Average Quality

Stable Momentum

Strong Momentum

Revenues Miss

Fairly Valued

Medium Volatility

Weak Momentum

2. S&T Bancorp's Q4 Earnings: A Closer Look

Loan Growth and Asset Quality

Net Interest Margin and Funding

Valuation and Dividend Yield

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.00%)

6. Segments

Community Banking

Expected Growth: 1.0%

7. Detailed Products

Personal Banking

Business Banking

Wealth Management

Mortgage Banking

Insurance

Investment Services

8. S&T Bancorp, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: S&T Bancorp, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

39.92$

Current Price

39.92$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA