On Friday, S&T Bancorp Inc. (NASDAQ:STBA) shares saw its price target raised to $41.00 from $32.00 by DA Davidson, while the firm kept a Neutral stance on the stock. The increase follows a report highlighting the bank's unexpected net interest margin (NIM) expansion, solid deposit and loan growth, and strong asset quality.
The NIM for S&T Bancorp edged up by one basis point quarter over quarter to 3.85%. Additionally, the bank experienced a 4% quarter over quarter annualized increase in deposits and a 3% growth in loans. Net charge-offs (NCOs) improved significantly, dropping 36 basis points to -2 basis points.
The positive developments were attributed to a broad performance beat driven by stronger net interest income (NII), fees, and operating expenses. The bank's core deposit growth facilitated the payoff of brokered deposits and borrowings. A restructuring of securities is expected to contribute to maintaining a stable and surprisingly still-elevated NIM into the third quarter of 2024.
DA Davidson forecasts that S&T Bancorp will continue to outperform peers with a projected pre-provision net revenue (PPNR) return on assets (ROA) of 1.75% in 2025. Despite this strong performance forecast and the fact that shares have risen 16% relative to the KBW Regional Banking Index (KRX) year-to-date, including a 1% increase since the last earnings report, the firm reiterated its Neutral rating due to the limited upside to the new price target.
In other recent news, S&T Bancorp Inc. has declared a quarterly cash dividend of $0.33 per share, marking a $0.01 or 3.13 percent increase from the $0.32 dividend distributed in the corresponding period last year. This decision by the board of directors continues the company's track record of delivering consistent shareholder value.
On a different note, the financial services firm Keefe, Bruyette & Woods has adjusted its price target for S&T Bancorp, decreasing it to $34 from the previous $35, while maintaining a Market Perform rating on the stock. The revision follows S&T Bancorp's recent earnings report, which indicated a lower provision and improved net interest income, contributing to the earnings beat.
However, Keefe, Bruyette & Woods has also revised its earnings estimates for S&T Bancorp for the years 2024 and 2025, reducing them by 1% and 6%, respectively. This adjustment reflects the company's sensitivity to interest rate changes and a more conservative view of the net interest margin. These are among the recent developments affecting S&T Bancorp.
InvestingPro Insights
Following DA Davidson's updated price target for S&T Bancorp Inc. (NASDAQ:STBA), InvestingPro data and insights offer additional context for investors considering the bank's stock. With a market capitalization of $1.51 billion and a price-to-earnings (P/E) ratio of 10.98, reflecting stability in earnings, S&T Bancorp presents a value-oriented profile in the banking sector. The slight uptick in the adjusted P/E ratio to 11.11 in the last twelve months as of Q1 2024 suggests a consistent valuation in the eyes of investors.
InvestingPro Tips highlight the company's robust shareholder yield and a commendable track record of raising its dividend for 11 consecutive years, underscoring a commitment to returning value to shareholders. Furthermore, the stock's impressive one-month and three-month price total returns of 26.69% and 31.13%, respectively, signal a strong recent performance that investors may find encouraging. For those looking to delve deeper into S&T Bancorp's investment potential, there are additional InvestingPro Tips available, which could offer further insights into the bank's financial health and stock performance.
Investors may also note the bank's dividend yield of 3.34%, which, combined with a history of 36 consecutive years of dividend payments, positions S&T Bancorp as a potentially attractive option for income-focused portfolios. To explore more about S&T Bancorp and benefit from the full suite of analysis, interested parties can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at InvestingPro.
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