Sterling Bancorp, Inc. (NASDAQ:SBT) Financial Performance Analysis

• Sterling Bancorp's ROIC is 6.34%, slightly below its WACC of 6.51%, indicating limited value creation for shareholders.
• Among its peers, Merchants Bancorp stands out with a ROIC of 8.83% and a WACC of 7.55%, showcasing strong value creation for its shareholders.
• Sterling Bancorp and other regional banks like RBB Bancorp and Western New England Bancorp are not generating returns above their cost of capital.

Sterling Bancorp, Inc. (NASDAQ:SBT) is a financial institution based in Southfield, Michigan. It provides a range of banking services, including loans and deposit products, primarily to individuals and small businesses. In the competitive banking sector, Sterling Bancorp competes with other regional banks like RBB Bancorp, Western New England Bancorp, Merchants Bancorp, Luther Burbank Corporation, and SmartFinancial, Inc.

In evaluating Sterling Bancorp's financial performance, the Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC) are crucial metrics. Sterling Bancorp's ROIC is 6.34%, slightly below its WACC of 6.51%. This results in a ROIC to WACC ratio of 0.97, indicating that the company is not currently generating returns that exceed its cost of capital, which may imply limited value creation for shareholders.

When comparing Sterling Bancorp to its peers, RBB Bancorp has a ROIC of 4.33% and a WACC of 6.37%, resulting in a ROIC to WACC ratio of 0.68. Western New England Bancorp shows a ROIC of 3.07% against a WACC of 11.12%, with a ratio of 0.28. Both companies, like Sterling Bancorp, are not generating returns above their cost of capital.

Merchants Bancorp, however, stands out with a ROIC of 8.83% and a WACC of 7.55%, leading to a ROIC to WACC ratio of 1.17. This indicates that Merchants Bancorp is effectively using its capital to generate returns that significantly exceed its cost, suggesting strong value creation for its shareholders. This makes it the most efficient in capital utilization among the peers listed.

Luther Burbank Corporation and SmartFinancial, Inc. also show ROIC to WACC ratios below 1, with 0.74 and 0.28, respectively. This further highlights Merchants Bancorp's superior performance in capital efficiency. Sterling Bancorp, while close to breaking even, lags behind Merchants Bancorp in terms of generating returns above its cost of capital.