S&T BANCORP INC. (STBA): what the price requires
At today's price, S&T BANCORP INC. (STBA) is priced for 10.6% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/STBA
Headline
| Field | Value |
|---|---|
| Ticker | STBA |
| Company | S&T BANCORP INC. |
| Sector / Industry | Financial Services |
| Current price | $48.96/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | financials |
| Return on equity needed | 10.6% |
| Return on equity now | 9.2% |
| ROE gap | +1.4pp |
| Price-to-book | 1.23x |
Solve inputs: computed at a 9.4% cost of equity with 4% terminal growth over a 5-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~1.2pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.91σ |
| cohort percentile (of 119 peers) | 35 |
| sustained it ~10 years at this level | 74% |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power value, while growth-DCF lands below the price. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.22x | 3 | expensive |
| Earnings | 1.23x | 2 | expensive |
| Relative | 1.26x | 3 | expensive |
| Growth | 1.66x | 2 | expensive |
Families that justify the price: Asset, Earnings Families that call it expensive: Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.4%); the inversion above states its own rate.
Per-Model Detail (n=10)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | — | — | no | — |
| Bank Fair Value (P/TBV) | — | $27.94 | 1.75x | yes | TBVPS $28.38 × 0.98x (ROE (TTM) 9.5% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption), credit 1.19% allowance/loans → ×0.93, NPL 0.63% → ×0.99) |
| Relative Valuation | Relative | $38.80 | 1.26x | yes | P/E 10x (static sector reference · 2026-04), scenarios: 8.4x / 10.0x / 11.6x (bear / base = reference held flat / bull), EV/EBITDA N/Ax |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $24.95 | 1.96x | yes | Stage 1: 3% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $39.52 | 1.24x | yes | BV/sh $38.48, ROE (TTM) 9.5%, ke 9.3% |
| Two-Stage Excess Return | Asset | $40.04 | 1.22x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $35.99 | 1.36x | yes | Rev $0.4B, growth 6% (input: historical growth; tapered), Terminal P/S: 4.3x / 5.1x / 5.9x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $42.72 | 1.15x | yes | EPS $3.56, growth 3% (input: historical EPS growth), PEG=5.01 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | $55.52 | 0.88x | yes | √(22.5 × EPS $3.56 × BVPS $38.48) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | — | — | no | — |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $41.31 | 1.19x | yes | EPS $3.56 × (8.5 + 2×2.7%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | — | — | no | — |
| PEG Fair Value | Relative | $17.80 | 2.75x | yes | EPS $3.56 × (PEG 1.5 × growth 2.7% (input: historical EPS growth)) → PE 4.0x |
| Earnings Yield | Earnings | $38.49 | 1.27x | yes | EPS $3.56 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Share count CAGR (buyback) | -1.3% |
Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).
Bullet Takeaways
- S&T Bancorp is a mature Pennsylvania regional bank with a wide net interest margin near 3.92% and a record first-quarter deposit inflow that pushed total deposits past $8 billion while cutting reliance on wholesale funding.
- The biggest risk is rate and margin sensitivity in a no-growth franchise: the margin already slipped seven basis points, management was cautious about repeating the deposit quarter, and the growth-DCF method flags the roughly $48.74 price as expensive absent real loan growth.
- Watch whether the net interest margin holds near current levels, whether management can resume loan growth without loosening credit, and commercial real estate credit migration; the bank returns about 66% of earnings and has shrunk its share count about 1.3% a year.
Bull Case
S&T Bancorp is a mature Pennsylvania-based regional bank, and the way to read it is exactly as that: a slow-growing, well-capitalized deposit franchise rather than a growth story. Read on those terms, the recent numbers are strong. The bank posted first-quarter 2026 net income of about $35.1 million, adjusted EPS of $0.94 that beat consensus by roughly 8%, and a net interest margin of about 3.92% on a tax-equivalent basis. A near-4% margin is wide for a bank this size and reflects a low-cost deposit base rather than reaching for yield on the asset side.
The deposit franchise did something notable. CEO Christopher McComish highlighted that every business segment contributed to pushing total deposits past $8 billion, which the company called the largest quarterly deposit increase in its history, with deposits growing about 11.5% annualized while wholesale funding declined. For a mature bank, growing core deposits and reducing reliance on expensive wholesale funding is the single best thing management can do, because it lowers the cost of the raw material and protects the margin. The 10-K underlines the discipline behind the balance sheet, describing a "General Lending Policy to maintain the quality of our loan portfolio" that governs credit.
Capital return and credit are the two proofs of a healthy mature bank, and both check out. S&T returns about 66% of earnings as dividends and buybacks, and the share count has actually fallen about 1.3% a year over four years, so buybacks are real. Credit is conservatively provisioned, with the 10-K detailing an allowance framework that recognizes losses when a loan "otherwise becomes well secured and in the process of collection" has cleared. Management is also positioned for consolidation, signaling readiness for mergers targeting franchises in the $1 billion to $7 billion range with strong deposit bases. A mature bank with a widening margin, record deposit growth, a falling share count, and clean credit is compounding book value quietly, which is all you should ask of it.
Bear Case
The variable with the most leverage on a bank like S&T is the one it cannot control: interest rates, and through them the shape of the deposit base. Net interest margin slipped seven basis points to 3.92% in the first quarter on fewer calendar days and elevated cash holdings, and management expects it to hold near current levels rather than expand. A mature regional bank earns most of its money on the spread between what it pays for deposits and what it earns on loans, so if funding costs rise, or if the record deposit inflow proves hard to repeat, the margin that drives earnings compresses. Management itself was cautious about replicating the exceptional deposit quarter, which is a tell that the tailwind may not persist.
Growth is the structural limit. S&T is a mature bank in a slow-growing Northeastern market, with trailing EPS growth in the low single digits, and its loan book has been roughly flat as management prioritized deposit gathering over lending. A bank that is not growing loans depends on margin and cost control for earnings growth, and both have natural ceilings. The strategy of resuming loan growth while preserving margin stability is a balancing act, and pushing loan growth in a mature market often means either accepting weaker credit or competing on price, each of which erodes the very margin the bank is trying to protect.
The price already reflects a fair amount of that quality. At about $48.74 (July 10, 2026), the asset and earnings-power methods land near the price, around $39 to $42, while the growth-DCF method flags the stock as expensive because the growth simply is not there to justify a growth multiple. Book value is about $38.48 per share and tangible book near $28.38, so the stock trades near 1.25 times book and roughly 1.7 times tangible book for a bank earning about 9.5% on equity against a roughly 9% cost, a thin excess-return spread. Commercial real estate concentration is the credit tail to watch, the 10-K's lending policy notwithstanding, and regional banks with CRE exposure carry the risk that a single sector's stress shows up in the allowance. The bet the price makes is that the wide margin and clean credit persist in a no-growth franchise, with little upside if they merely hold and real downside if rates or credit turn.
Valuation
S&T Bancorp prices as a mature bank the value methods support and the growth methods do not. At $48.74 (July 10, 2026), the asset-based excess-return methods land near $39 to $40 and the earnings-power methods near $38 to $41, close to the price, while the growth-DCF and PEG methods flag it as expensive because trailing EPS growth is low-single-digit and there is no growth engine to capitalize. The characterization is a value-and-asset-supported name, not a growth bet: the price is roughly what the bank's book value and earnings power justify, with no meaningful discount and no growth premium warranted.
The most concrete anchor is the return versus the multiple. S&T earns a trailing return on equity near 9.5% against a roughly 9% cost of equity, a slim excess-return spread, on book value of about $38.48 and tangible book of about $28.38 per share. At $48.74 that is roughly 1.25 times book and about 1.7 times tangible book, and trailing EPS of about $3.56 puts the stock near 13.7 times earnings. For a bank growing earnings in the low single digits, that multiple is neither cheap nor stretched; it is the market pricing a well-run, slow-growing deposit franchise at close to fair value. The near-4% net interest margin is the reason the earnings-power methods reach the price at all.
Solvency for a bank is capital and payout, not corporate leverage. Deposits fund the balance sheet, so net-debt and coverage math does not apply; what matters is that S&T returns about 66% of earnings as dividends and buybacks while retaining enough to support its modest growth, and that the share count has fallen about 1.3% a year, direct evidence the buyback is real. The record deposit quarter that pushed total deposits past $8 billion strengthens the funding base. A buyer at today's price is underwriting the persistence of the wide margin and clean credit in a no-growth market, with the value methods sitting right at the price and the growth methods below as the reminder that this is a hold-quality compounder, not a re-rating candidate.
Catalysts
The first-quarter 2026 report on April 23 was the key recent print: net income of about $35.1 million, adjusted EPS of $0.94 beating the roughly $0.87 consensus by about 8%, and a tax-equivalent net interest margin of about 3.92% on net interest income of roughly $88.4 million. The headline was deposits: total deposits crossed $8 billion on the largest quarterly increase in company history, with deposit growth about 11.5% annualized and customer deposits up about 16% annualized as wholesale funding declined. The next quarterly report is the test of whether the margin holds and whether loan growth resumes.
Management framed the forward strategy around resuming loan growth while preserving margin stability, and was explicit about openness to mergers, targeting franchises in the $1 billion to $7 billion range with strong deposit bases and cultural fit. A deal at that scale would be the largest potential catalyst, though none is announced. The variables to watch into the back half of 2026 are the net interest margin against funding costs, the pace of loan growth, and credit metrics in the commercial book, the three forces that move a mature bank's earnings.
Peer Cohorts (Per Segment, With Filing Citations)
Community Banking (reported)
- MCHB (MECHANICS BANCORP)
- (no filing in the citation store)
- TCBK (TriCo Bancshares)
- (no filing in the citation store)
- CATY (Cathay General Bancorp)
- (no filing in the citation store)
- FULT (FULTON FINANCIAL CORP)
- (no filing in the citation store)
- FRME (FIRST MERCHANTS CORP)
- (no filing in the citation store)
- TRMK (Trustmark Corporation)
- (no filing in the citation store)
- PFS (PROVIDENT FINANCIAL SERVICES, INC.)
- (no filing in the citation store)
- RBCAA (REPUBLIC BANCORP, INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q1 2026 earnings release, April 2026 · Q1 2026 earnings call, April 2026 · Q1 2026 earnings call · Q1 2026 earnings release