S&T Bancorp (STBA) Stock Forecast & Price Target

S&T Bancorp demonstrated a notable expansion in net interest margin (NIM), which increased by 4 basis points quarter-over-quarter to 3.81%, exceeding expectations due to a decline in costs of funds as a result of lower deposit costs and reduced wholesale funding. The company's management expressed confidence in achieving mid-single-digit growth in the near term, with an anticipated acceleration to high-single-digit growth in the latter half of 2025 as new teams begin to realize their potential. Additionally, solid growth in loans and deposits, with increases of 5% and 6% respectively, indicates robust performance driven by core customer account growth, further enhancing the bank's financial stability and outlook.

S&T Bancorp is facing significant risks that could hinder its earnings outlook, particularly due to a material slowdown in loan growth and negative credit trends within the Mid-Atlantic region, compounded by volatile interest rates and a potentially flattening yield curve. Additionally, the upcoming $10 billion cross poses a threat to near- to intermediate-term profitability, particularly in the absence of increased scalability. The company's recent financial performance showcases a negative provision of $3.0 million, influenced by a decline in specific reserves, indicating potential concerns in asset quality and financial stability.