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Item 8. Financial Statements and Supplementary Data

2022-02-28 compared with 2021-03-01 · 438 added, 755 removed, 1795 unchanged (40% of the section changed)

7 unchanged sentences

Notes to Consolidated Financial Statements

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm, on Effectiveness of Internal Control Over Financial Reporting

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm, on Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements (PCAOB ID:

Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting

CONSOLIDATED BALANCE SHEETS

2 unchanged sentences

( in thousands, except share and per share data) 2021 2020

Cash and due from banks, including interest-bearing deposits of $ 158,903 and $ 124,491 at December 31, 2020 and 2019

Cash and due from banks, including interest-bearing deposits of $ 857,192 and $ 158,903 at December 31, 2021 and December 31, 2020

$ 922,215 $ 229,666

26 unchanged sentences

Authorized— 50,000,000 shares

Issued— 41,449,444 shares at December 31, 2020 and 2019

Issued— 41,449,444 shares at December 31, 2021 and December 31, 2020

Outstanding— 39,351,194 shares at December 31, 2021 and 39,298,007 shares at December 31, 2020

2 unchanged sentences

Retained earnings 773,659 710,061

Accumulated other comprehensive income (loss) 8,971 ( 11,670 )

Accumulated other comprehensive (loss) income ( 7,090 ) 8,971

Treasury stock — 2,098,250 shares at December 31, 2021 and 2,151,437 shares at December 31, 2020, at cost

21 unchanged sentences

Provision for credit losses (1)

16,215 131,424 14,873

Net Interest Income After Provision for Credit Losses 259,897 147,964 231,918

3 unchanged sentences

Service charges on deposit accounts 15,040 13,597 13,316

Mortgage banking 10,923 2,491 2,762

Wealth management 12,889 9,957 8,623

Mortgage banking 9,734 10,923 2,491

Commercial loan swap income 1,146 4,740 5,503

Gain on sale of majority interest of insurance business — — 1,873

Other 7,820 5,267 9,246

3 unchanged sentences

Data processing and information technology 16,681 15,499 14,468

Net occupancy 14,529 12,103 11,097

Occupancy 14,544 14,529 12,103

Furniture, equipment and software 10,684 11,050 8,958

12 unchanged sentences

Dividends declared per common share $ 1.13 $ 1.12 $ 1.09

(1) Beginning January 1, 2020, provision for credit losses is based on current expected credit loss methodology due to the adoption of CECL.

Prior to January 1, 2020, it was based on incurred loss methodology.

See Notes to Consolidated Financial Statements

6 unchanged sentences

Other Comprehensive Income (Loss), Before Tax:

Net change in unrealized gains (losses) on available-for-sale securities (1)

22,683 15,793 ( 6,794 )

Net change in unrealized (losses) gains on debt securities available-for-sale ( 23,972 ) 22,683 15,793

Net available-for-sale securities losses reclassified into earnings (1)

Adjustment to funded status of employee benefit plans 3,561 3,549 ( 1,282 )

Other Comprehensive Income (Loss), Before Tax 26,232 14,537 ( 497 )

Income tax (expense) benefit related to items of other comprehensive income ( 5,591 ) ( 3,100 ) 106

Other Comprehensive Income (Loss), After Tax 20,641 11,437 ( 391 )

Other Comprehensive (Loss) Income, Before Tax ( 20,411 ) 26,232 14,537

Income tax benefit (expense) related to items of other comprehensive income 4,350 ( 5,591 ) ( 3,100 )

Other Comprehensive (Loss) Income, After Tax ( 16,061 ) 20,641 11,437

Comprehensive Income $ 94,282 $ 41,681 $ 109,671

(1) Due to the adoption of ASU No.

2016-01, net unrealized gains on marketable equity securities were reclassified from accumulated other comprehensive income to retained earnings during the three months ended March 31, 2018.

(1) Reclassification adjustments are comprised of realized security gains or losses.

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Net Income for 2019 — — 98,234 — — 98,234

Other comprehensive (loss) income, net of tax — — — ( 391 ) — ( 391 )

Reclassification of certain tax effects from accumulated other comprehensive income (1)

— — 3,427 ( 3,427 ) — —

Reclassification of unrealized gains on equity securities (2)

— — 862 ( 862 ) — —

Repurchase of warrant — ( 7,652 ) — — — ( 7,652 )

Other comprehensive income, net of tax — — — 11,437 — 11,437

Impact of new lease standard — — 167 — — 167

Cash dividends declared ($ 1.09 per share)

— — ( 37,360 ) — — ( 37,360 )

Common stock issuance cost — ( 176 ) — — — ( 176 )

Common stock issued in acquisition ( 5,318,962 shares)

13,297 187,334 — — — 200,631

Treasury stock repurchased ( 470,708 shares)

5 unchanged sentences

Net income for 2020 — — 21,040 — — 21,040

Other comprehensive income (loss), net of tax — — — 11,437 — 11,437

Impact of new lease standard — — 167 — — 167

Other comprehensive income, net of tax — — — 20,641 — 20,641

Impact of adoption of CECL — — ( 22,590 ) — ( 22,590 )

Cash dividends declared ($ 1.12 per share)

— — ( 43,949 ) — — ( 43,949 )

Common stock issuance cost — ( 176 ) — — — ( 176 )

Common stock issued in acquisition ( 5,318,962 shares)

13,297 187,334 — — — 200,631

Treasury stock repurchased ( 411,430 shares)

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Net income for 2021 — — 110,343 — — 110,343

Other comprehensive income (loss), net of tax — — — 20,641 — 20,641

Impact of adoption of CECL — — ( 22,590 ) — ( 22,590 )

Other comprehensive loss, net of tax — — — ( 16,061 ) — ( 16,061 )

Cash dividends declared ($ 1.13 per share)

— — ( 44,336 ) — — ( 44,336 )

Treasury stock repurchased ( 411,430 shares)

— — — — ( 12,559 ) ( 12,559 )

Treasury stock repurchased ( no shares)

Treasury stock issued ( 53,187 shares, net)

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Balance at December 31, 2021 $ 103,623 $ 403,095 $ 773,659 $ ( 7,090 ) $ ( 66,833 ) $ 1,206,454

(1) Reclassification of tax effects due to the adoption of ASU No.

2018-02, relating to $( 3,660 ) relates to funded status of pension and $ 233 relates to net unrealized gains on available-for-sale securities.

(2) Reclassification due to the adoption of ASU No.

2016-01, related to changes in fair value for equity securities reclassified out of accumulated other comprehensive income.

See Notes to Consolidated Financial Statements

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Deferred income taxes 2,383 ( 4,402 ) ( 381 )

(Gain) Loss on sale of fixed assets ( 23 ) 37 ( 81 )

Loss (gain) on sale of fixed assets 30 ( 23 ) 37

Gain on the sale of loans, net ( 8,856 ) ( 8,998 ) ( 1,887 )

Gain on the sale of majority interest of insurance business — — ( 1,873 )

Pension contribution — ( 115 ) —

2 unchanged sentences

Proceeds from sale of mortgage loans 311,479 357,613 109,082

Net increase in interest receivable ( 2,560 ) ( 3,768 ) ( 1,635 )

Net (decrease) increase in interest payable ( 3,178 ) ( 2,223 ) 2,353

Net (increase) decrease in other assets ( 138,470 ) ( 4,973 ) 7,247

Net increase in other liabilities 50,392 24,496 4,157

Net decrease (increase) in interest receivable 3,561 ( 2,560 ) ( 3,768 )

Net decrease in interest payable ( 2,087 ) ( 3,178 ) ( 2,223 )

Net decrease (increase) in other assets 85,509 ( 142,891 ) ( 8,286 )

Net (decrease) increase in other liabilities ( 35,569 ) 50,392 24,496

Net Cash Provided by Operating Activities 216,111 53,451 138,423

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Proceeds from sales of securities available-for-sale 1,917 1,349 59,934

Net proceeds from (purchases of) the redemption of Federal Home Loan Bank stock 9,947 6,615 ( 165 )

Net increase in loans ( 194,768 ) ( 298,741 ) ( 207,233 )

Purchases of Federal Home Loan Bank stock ( 22,515 ) ( 33,755 ) ( 61,852 )

Proceeds from redemption of Federal Home Loan Bank stock 26,026 43,702 68,467

Net decrease (increase) in loans 173,401 ( 194,768 ) ( 298,741 )

Proceeds from the sale of loans not originated for resale 5,107 547 520

2 unchanged sentences

Net cash acquired from bank acquisitions — — 63,759

Proceeds from the sale of majority interest of insurance business — — 4,540

Net Cash Used in Investing Activities ( 161,101 ) ( 210,556 ) ( 201,964 )

Proceeds from settlement of bank owned life insurance 353 — —

Net Cash Provided by (Used in) Investing Activities 11,980 ( 161,101 ) ( 210,556 )

FINANCING ACTIVITIES

Net increase in core deposits 875,378 591,932 423,203

Net (decrease) increase in certificates of deposit ( 207,106 ) ( 27,632 ) 14,397

Net increase (decrease) in securities sold under repurchase agreements 45,275 1,505 ( 31,778 )

Net decrease in certificates of deposit ( 299,292 ) ( 207,106 ) ( 27,632 )

Net increase in securities sold under repurchase agreements 19,328 45,275 1,505

Net decrease in short-term borrowings ( 75,000 ) ( 206,319 ) ( 200,000 )

2 unchanged sentences

Treasury shares issued - net ( 630 ) ( 594 ) ( 915 )

Sale of treasury shares ( 12,559 ) ( 18,222 ) ( 12,256 )

Repurchase common stock — ( 12,559 ) ( 18,222 )

Costs to issue equity securities — — ( 176 )

Cash dividends paid to common shareholders ( 44,325 ) ( 43,949 ) ( 37,360 )

Repurchase warrant — — ( 7,652 )

Net Cash Provided by Financing Activities 464,458 139,493 114,467

11 unchanged sentences

Loans transferred to held for sale $ 4,467 $ 640 $ 456

Loans transferred to portfolio from held for sale $ — $ — $ 7,695

Leased right-of-use operating assets and lease liabilities added to Balance Sheet $ 2,987 $ 91 $ 49,490

Transfer net asset to investment in insurance company partnership $ — $ — $ 1,917

Net assets (liabilities) from acquisitions, excluding cash and cash equivalents $ — $ — $ 43,637

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We own a 50 percent interest in Commonwealth Trust Credit Life Insurance Company, or CTCLIC.

We are presently engaged in non-banking activities through the following eight entities:

We are presently engaged in non-banking activities through the following six entities:

9th Street Holdings, Inc.;

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DN Acquisition, Inc.

and DNB Financial Services, Inc.

9th Street Holdings, Inc.

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Stewart Capital Advisors, LLC is a registered investment advisor that manages private investment accounts for individuals and institutions.

and DN Acquisition Company, Inc.

were acquired with the DNB merger and were incorporated for the purpose of acquiring and holding Other Real Estate Owned acquired through foreclosure or deed in-lieu-of foreclosure, as well as Bank-occupied real estate.

DNB Financial Services was also acquired with the DNB merger and is a Pennsylvania licensed insurance agency, which, through a third-party marketing agreement with Cetera Investment Services, LLC, sells a variety of insurance and investment products.

DN Acquisition Company, Inc.

was acquired with the DNB merger and was incorporated for the purpose of acquiring and holding Other Real Estate Owned acquired through foreclosure or deed in-lieu-of foreclosure, as well as Bank-occupied real estate.

On June 5, 2019, we entered into an agreement to acquire DNB Financial Corporation, or DNB, and the transaction was completed on November 30, 2019.

The transaction was valued at $ 201.0 million and added total assets of $ 1.1 billion, including $ 909.0 million in loans, $ 84.2 million in goodwill and $ 967.3 million in deposits.

On January 1, 2018, we sold a 70 percent majority interest in the assets of our wholly-owned subsidiary S&T Evergreen Insurance, LLC.

We transferred our remaining 30 percent ownership interest in the net assets of S&T Evergreen Insurance, LLC to a new entity for a 30 percent ownership interest in a new insurance entity.

Refer to Note 28 Sale of a Majority Interest of Insurance Business.

We use the equity method of accounting to recognize our partial ownership interest in the new entity.

Accounting Policies

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We record goodwill for the excess of the purchase price over the fair value of net assets acquired.

Results of operations of the acquired entities are included in the consolidated statement of income from the date of acquisition.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

Results of operations of the acquired entities are included in the Consolidated Statement of Net Income from the date of acquisition.

Acquired loans are recorded at fair value on the date of acquisition with no carryover of the related allowance for credit losses, or ACL.

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There is no provision for credit losses, or PCL, recognized upon acquisition of a PCD loan since the initial allowance is established through the purchase accounting.

After initial recognition, the accounting for a PCD loan follows the credit loss model that applies to that type of asset.

After initial recognition, the accounting for a PCD

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

loan follows the credit loss model that applies to that type of asset.

Purchased financial loans that do not have a more-than-significant deterioration in credit quality since origination are accounted for in a manner consistent with originated loans.

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The following are descriptions of the valuation methodologies that we use for financial instruments recorded at fair value on either a recurring or nonrecurring basis.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

Recurring Basis

2 unchanged sentences

We validate prices received from our pricing service through comparison to a secondary pricing service and broker quotes.

We review the methodologies of the pricing service which provide us with a sufficient understanding of the valuation models, assumptions, inputs and pricing to reasonably measure the fair value of our debt securities.

The market valuation sources for debt securities include observable inputs and are classified as Level 2.

We review the methodologies of the pricing services which provide us with a sufficient understanding of the valuation models, assumptions, inputs and pricing to reasonably measure the fair value of our debt securities.

The fair value of U.S.

treasury securities are based on quoted market prices in active markets and are classified as Level 1.

The market valuation sources for other debt securities include observable inputs rather than significant unobservable inputs and are classified as Level 2.

The service provider utilizes pricing models that vary by asset class and include available trade, bid and other market information.

Generally, the methodologies include broker quotes, proprietary models, vast descriptive terms and condition databases, and extensive quality control programs.

Generally, the methodologies include broker quotes, proprietary models and extensive quality control programs.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

Equity Securities

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Marketable equity securities in markets that are not active and are based on other observable information for comparable assets are classified as Level 2.

Marketable equity securities that are not traded in active markets and use unobservable assumptions in the market are classified as Level 3.

Securities Held in a Deferred Compensation Plan

We use quoted market prices to determine the fair value of our equity security assets.

These securities are reported at fair value with the gains and losses included in noninterest income in our Consolidated Statements of Net Income.

These assets are held in a Rabbi Trust under a deferred compensation plan and are invested in readily quoted mutual funds.

These securities are reported at fair value with the gains and losses included in other noninterest income in our Consolidated Statements of Net Income.

These assets are held in a deferred compensation plan and are invested in readily quoted mutual funds.

Accordingly, these assets are classified as Level 1.

Rabbi Trust assets are reported in other assets in the Consolidated Balance Sheets.

Deferred compensation plan assets are reported in other assets in the Consolidated Balance Sheets.

Derivative Financial Instruments

We use derivative instruments, including interest rate swaps for commercial loans with our customers, interest rate lock commitments and the sale of mortgage loans in the secondary market.

We use derivative instruments, including interest rate swaps for commercial loans with our customers, interest rate lock commitments and forward commitments related to the sale of mortgage loans in the secondary market.

We calculate the fair value for derivatives using accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative.

Each valuation considers the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, such as interest rate curves and implied volatilities.

Accordingly, derivatives are classified as Level 2.

We incorporate credit valuation adjustments into the valuation models to appropriately reflect both our own nonperformance risk and the respective counterparties’ nonperformance risk in calculating fair value measurements.

In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements and collateral postings.

Interest rate swaps for commercial loans are classified as Level 2.

Interest rate lock commitments and forward commitments related to mortgage loans are classified as Level 3 due to significant unobservable inputs.

Nonrecurring Basis

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The fair value of the loans transferred from the loan portfolio is based on the amounts offered for these loans in currently pending sales transactions.

Loans held for sale carried at fair value are classified as Level 3.

Loans held for sale marked to fair value are classified as Level 3.

Loans Individually Evaluated

Loans that are individually evaluated to determine whether a specific allocation of ACL is needed are reported at fair value.

Loans that are individually evaluated to determine whether a specific allocation of ACL is needed are reported at the lower of amortized cost or fair value.

Fair value is determined using the following methods:

1) the present value of expected future cash flows discounted at the

loan’s original effective interest rate;

1) the present value of expected future cash flows discounted at the loan’s original effective interest rate;

2) the loan’s observable market price;

or 3) the fair value of the collateral less estimated

selling costs when the loan is collateral dependent and we expect to liquidate the collateral.

However, if repayment is expected

to come from the operation of the collateral, rather than liquidation, then we do not consider estimated selling costs in

determining the fair value of the collateral.

Collateral values are generally based upon appraisals by approved, independent state

certified appraisers.

Appraisals may be discounted based on our historical knowledge, changes in market conditions from the

time of appraisal or our knowledge of the borrower and the borrower’s business.

Loans carried at fair value are classified as

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

or 3) the fair value of the collateral less estimated selling costs when the loan is collateral dependent and we expect to liquidate the collateral.

However, if repayment is expected to come from the operation of the collateral, rather than liquidation, then we do not consider estimated selling costs in determining the fair value of the collateral.

Collateral values are generally based upon appraisals by approved, independent state certified appraisers.

Appraisals may be discounted based on our historical knowledge, changes in market conditions from the time of appraisal or our knowledge of the borrower and the borrower’s business.

Loans individually evaluated that are market to fair value are classified as Level 3.

OREO and Other Repossessed Assets

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OREO and other repossessed assets carried at fair value are classified as Level 3.

OREO and other repossessed assets are reported in other assets in the Consolidated Balance Sheets.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

Mortgage Servicing Rights

MSRs are reported pursuant to the amortization method are evaluated for impairment quarterly by comparing the carrying value to the fair value of the MSRs.

The fair value of MSRs is determined by calculating the present value of estimated future net servicing cash flows, considering expected mortgage loan prepayment rates, discount rates, servicing costs and other economic factors, which are determined based on current market conditions.

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MSRs are reported in other assets in the Consolidated Balance Sheets and are amortized into mortgage banking in noninterest income in the Consolidated Statements of Net Income.

We measure certain other assets at fair value on a nonrecurring basis.

Fair value is based on the application of lower of cost or fair value accounting, or write-downs of individual assets.

Valuation methodologies used to measure fair value are consistent with overall principles of fair value accounting and consistent with those described above.

Financial Instruments

6 unchanged sentences

Cash and Cash Equivalents

The carrying amounts reported in the Consolidated Balance Sheets for cash and due from banks, including interest-bearing deposits and federal funds sold approximate fair value.

The carrying amounts reported in the Consolidated Balance Sheets for cash and due from banks, including interest-bearing deposits approximate fair value.

Our methodology to fair value loans includes an exit price notion.

2 unchanged sentences

The fair value of fixed rate loans is estimated using a discounted cash flow analysis that utilizes interest rates currently being offered for similar loans adjusted for liquidity and credit risk.

Bank Owned Life Insurance

Fair value approximates net cash surrender value of bank owned life insurance, or BOLI.

Federal Home Loan Bank, or FHLB, and Other Restricted Stock

1 unchanged sentence

it is presented at carrying value.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

Collateral Receivable

Collateral receivable is cash that is made available to counterparties as collateral for our interest rate swaps.

The carrying amount included in other assets on our Consolidated Balance Sheets approximates fair value.

5 unchanged sentences

The carrying amounts of securities sold under repurchase agreements, or REPOs, and other short-term borrowings approximate their fair values.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

Long-Term Borrowings

4 unchanged sentences

therefore, the carrying values approximate their fair values.

Loan Commitments and Standby Letters of Credit

Off-balance sheet financial instruments consist of commitments to extend credit and letters of credit.

Except for interest rate lock commitments, estimates of the fair value of these off-balance sheet items are not made because of the short-term nature of these arrangements and the credit standing of the counterparties.

Estimates of fair value are not made for items that are not defined as financial instruments, including such items as our core deposit intangibles and the value of our trust operations.

Cash and Cash Equivalents

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Any impairment that is not credit related is recognized in Other Comprehensive Income, or OCI, net of applicable taxes.

Credit-related impairment is recognized as an ACL on the balance sheet with a corresponding adjustment in noninterest income in the Consolidated Statements of Net Income.

Credit-related impairment is recognized as an ACL on the balance sheet with a corresponding adjustment to provision for credit losses in the Consolidated Statements of Net Income.

Both the allowance and the adjustment to net income can be reversed if conditions change.

2 unchanged sentences

Bond premiums are amortized to the call date and bond discounts are accreted to the maturity date, both on a level yield basis.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

Equity securities are measured at fair value with net unrealized gains and losses recognized in noninterest income in the Consolidated Statements of Net Income.

Equity securities are measured at fair value with net unrealized gains and losses recognized in other noninterest income in the Consolidated Statements of Net Income.

Loans Held for Sale

1 unchanged sentence

If a loan is transferred from the loan portfolio to the held for sale category, any write-down in the carrying amount of the loan at the date of transfer is recorded as a charge-off against the ACL.

Subsequent declines in fair value are recognized as a charge to noninterest income.

Subsequent declines in fair value are recognized as a charge to other noninterest income.

When a loan is placed in the held for sale category, we stop amortizing the related deferred fees and costs.

The remaining unamortized fees and costs are recognized as part of the cost basis of the loan at the time it is sold.

Gains and losses on sales of loans held for sale are included in other noninterest income in the Consolidated Statements of Net Income.

Gains and losses on sales of mortgage loans held for sale are included in mortgage banking in noninterest income in the Consolidated Statements of Net Income.

Loans are reported at the principal amount outstanding net of unearned income, unamortized premiums or discounts and deferred origination fees and costs.

6 unchanged sentences

Determining the fair value of the acquired loans involves estimating the principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest.

In estimating the fair value of our acquired loans, we consider a number of factors including the loan term, internal risk rating, delinquency status, prepayment rates, recovery periods, estimated value of the underlying collateral and the current interest rate environment.

In estimating the fair value of our acquired loans, we consider a number of factors including the loan term, internal risk rating, delinquency status, prepayment rates, recovery periods, estimated

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

value of the underlying collateral and the current interest rate environment.

Closed-end installment loans, amortizing loans secured by real estate and any other loans with payments scheduled monthly are reported past due when the borrower is in arrears two or more monthly payments.

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When the interest accrual is discontinued, all unpaid accrued interest is reversed against interest income.

Interest income is recognized on nonaccrual loans on a cash basis if recovery of the remaining principal is reasonably assured.

As a general rule, a nonaccrual loan may be restored to accrual status when its principal and interest is paid current and the bank expects repayment of the remaining contractual principal and interest, or when the loan otherwise becomes well secured and in the process of collection.

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We individually evaluate all substandard commercial loans that have experienced a forbearance or change in terms agreement, and all substandard consumer and residential mortgage loans that entered into an agreement to modify their existing loan, to determine if they should be designated as TDRs.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

TDRs can be returned to accruing status if the ultimate collectability of all contractual amounts due, according to the restructured agreement, is not in doubt and there is a period of a minimum of six months of satisfactory payment performance by the borrower either immediately before or after the restructuring.

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The methodology for determining the ACL has two main components:

evaluation of expected credit losses for certain groups of homogeneous loans that share similar risk characteristics and evaluation of loans that do not share risk characteristics

with other loans.

The ACL for homogeneous loans is calculated using a life-time loss rate methodology with both a quantitative and a

qualitative analysis that is applied on a quarterly basis.

evaluation of expected credit losses for certain groups of homogeneous loans that share similar risk characteristics and evaluation of loans that do not share risk characteristics with other loans.

The ACL for homogeneous loans is calculated using a life-time loss rate methodology with both a quantitative and a qualitative analysis that is applied on a quarterly basis.

The ACL model is comprised of six distinct portfolio segments:

Construction, 2) Commercial Real Estate, or CRE, 3) Commercial and Industrial, or C&I, 4) Business Banking, 5) Consumer

Real Estate and 6) Other Consumer.

1) Construction, 2) Commercial Real Estate, or CRE, 3) Commercial and Industrial, or C&I, 4) Business Banking, 5) Consumer Real Estate and 6) Other Consumer.

Each segment has a distinct set of risk characteristics monitored by management.

further evaluate the ACL at a disaggregated level which includes type of collateral and our internal risk rating system for the

commercial segments and type of collateral, lien position, and FICO score, for the consumer segments.

Historical credit loss

experience is the basis for the estimation of expected credit losses.

We further evaluate the ACL at a disaggregated level which includes type of collateral and our internal risk rating system for the commercial segments and type of collateral, lien position, and FICO score, for the consumer segments.

Historical credit loss experience is the basis for the estimation of expected credit losses.

Our quantitative model uses historic data back to the second quarter of 2009.

3 unchanged sentences

For periods beyond our two year reasonable and supportable forecast, we revert to historical loss rates utilizing a straight-line method over a one year reversion period.

The qualitative adjustments for current conditions are based upon changes in lending policies and practices, experience and ability of lending staff, quality of the bank’s loan review system, value of underlying collateral, the existence of and changes in concentrations and other external factors.

The qualitative adjustments for current conditions are based upon changes in lending policies and practices,

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

experience and ability of lending staff, quality of the bank’s loan review system, value of underlying collateral, the existence of and changes in concentrations, other external factors and segment specific risks.

These modified historical loss rates are multiplied by the outstanding principal balance of each loan to calculate a required reserve.

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Specific reserves are established based on the following three acceptable methods for measuring the ACL:

1) the present value of expected future cash flows discounted at the loan’s original effective

interest rate;

1) the present value of expected future cash flows discounted at the loan’s original effective interest rate;

2) the loan’s observable market price;

2 unchanged sentences

Collateral values are discounted to consider disposition costs when appropriate.

A specific reserve is established or

a charge-off is taken if the fair value of the loan is less than the loan balance.

A specific reserve is established or a charge-off is taken if the fair value of the loan is less than the loan balance.

Our ACL Committee meets quarterly to verify the overall appropriateness of the ACL.

2 unchanged sentences

As a result of this ongoing monitoring process, we may make changes to our ACL to be responsive to the economic environment.

Although we believe our process for determining the ACL appropriately considers all the factors that would likely result in credit losses, the process includes subjective elements and may be susceptible to significant change.

To the extent actual losses are higher than management estimates, additional provision for credit losses could be required and could adversely affect our

earnings or financial position in future periods.

Allowance for Loan Losses

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Measurement of Credit Losses on Financial Instruments, we calculated our ALL using an incurred loan loss methodology.

The following policy related to the

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

ALL in prior periods.

The ALL reflects our estimates of probable credit losses inherent within the loan portfolio as of the balance sheet date, and it is presented as a reserve against loans in the Consolidated Balance Sheets.

Determination of an appropriate ALL is inherently subjective and may be subject to significant changes from period to period.

The methodology for determining the ALL has two main components:

evaluation and impairment tests of individual loans and evaluation and impairment tests of certain groups of homogeneous loans with similar risk characteristics.

Loans are considered to be impaired when based upon current information and events it is probable that we will be unable to collect all principal and interest payments due according to the original contractual terms of the loan agreement.

We individually evaluate all substandard and nonaccrual commercial loans greater than $ 0.5 million for impairment.

A TDR will be reported as an impaired loan for the remaining life of the loan, unless the restructuring agreement specifies an interest rate equal to or greater than the rate that would be accepted at the time of the restructuring for a new loan with comparable risk and it is expected that the remaining principal and interest will be fully collected according to the restructured agreement.

For each TDR or other impaired loan, we conduct further analysis to determine the probable loss and assign a specific reserve to the loan if deemed appropriate.

Specific reserves are established based on the following three impairment methods:

1) the present value of expected future cash flows discounted at the loan’s original effective interest rate;

2) the loan’s observable market price;

or 3) the fair value of the collateral less estimated selling costs when the loan is collateral dependent and we expect to liquidate the collateral.

Our impairment evaluations consist primarily of the fair value of collateral method because most of our loans are collateral dependent.

Collateral values are discounted to consider disposition costs when appropriate.

A specific reserve is established or a charge-off is taken if the fair value of the impaired loan is less than the recorded investment in the loan balance.

The ALL for homogeneous loans is calculated using a systematic methodology with both a quantitative and a qualitative analysis that is applied on a quarterly basis.

The ALL model is comprised of five distinct portfolio segments:

1) CRE, 2) C&I, 3) Commercial Construction, 4) Consumer Real Estate and 5) Other Consumer.

Each segment has a distinct set of risk characteristics monitored by management.

We further assess and monitor risk and performance at a more disaggregated level which includes our internal risk rating system for the commercial segments and type of collateral, lien position and loan-to-value, or LTV, for the consumer segments.

We first apply historical loss rates to pools of loans with similar risk characteristics.

Loss rates are calculated by historical charge-offs that have occurred within each pool of loans over the loss emergence period, or LEP.

The LEP is an estimate of the average amount of time from when an event happens that causes the borrower to be unable to pay on a loan until the loss is confirmed through a loan charge-off.

In conjunction with our annual review of the ALL assumptions for 2019, we have updated our analysis of LEPs for our Commercial and Consumer loan portfolio segments using our loan charge-off history.

Based on our updated analysis, we shortened our LEP over the construction portfolio from 4 years to 3 years and made no other changes.

We estimate an LEP of 3 years for CRE, 3 years for construction and 1.25 years for C&I.

We estimate an LEP of 2.75 years for Consumer Real Estate and 1.25 years for Other Consumer.

Another key assumption is the look-back period, or LBP, which represents the historical data period utilized to calculate loss rates.

We used 10.5 years for our LBP for all portfolio segments which encompasses our loss experience during the Financial Crisis, and our more recent improved loss experience.

After consideration of the historic loss calculations, management applies qualitative adjustments so that the ALL is reflective of the inherent losses that exist in the loan portfolio at the balance sheet date.

Qualitative adjustments are made based upon changes in lending policies and practices, economic conditions, changes in the loan portfolio, changes in lending management, results of internal loan reviews, asset quality trends, collateral values, concentrations of credit risk and other external factors.

The evaluation of the various components of the ALL requires considerable judgment in order to estimate inherent loss exposures.

Acquired loans are recorded at fair value on the date of acquisition with no carryover of the related ALL.

Determining the fair value of acquired loans involves estimating the principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest.

In estimating the fair value of our acquired loans, we considered a number of factors including the loan term, internal risk rating, delinquency status, prepayment rates, recovery periods, estimated value of the underlying collateral and the current interest rate environment.

Loans acquired with evidence of credit deterioration were evaluated and not considered to be significant.

The premium or discount estimated through the loan fair value calculation is recognized into interest income on a level yield or straight-line basis over the remaining contractual life of the loans.

Additional credit deterioration on acquired loans, in excess of the original

credit discount embedded in the fair value determination on the date of acquisition, will be recognized in the ALL through the provision for loan losses.

Our ALL Committee meets quarterly to verify the overall appropriateness of the ALL.

Additionally, on an annual basis, the ALL Committee meets to validate our ALL methodology.

This validation includes reviewing the loan segmentation, LEP, LBP and the qualitative framework.

As a result of this ongoing monitoring process, we may make changes to our ALL to be responsive to the economic environment.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

Although we believe our process for determining the ALL appropriately considers all of the factors that would likely result in credit losses, the process includes subjective elements and may be susceptible to significant change.

To the extent actual losses are higher than management estimates, additional provisions for loan losses could be required and could adversely affect our earnings or financial position in future periods.

Refer to our Annual Report on Form 10-K for the year ended December 31, 2020 for our Allowance for Loan Losses policy.

Bank Owned Life Insurance

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We receive the cash surrender value of each policy upon its termination or benefits are payable to us upon the death of the insured.

Changes in net cash surrender value are recognized in noninterest income or expense in the Consolidated Statements of Net Income.

Changes in net cash surrender value are recognized in noninterest income in the Consolidated Statements of Net Income.

Premises and Equipment

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Depreciation expense is computed by the straight-line method for financial reporting purposes and accelerated methods for income tax purposes over the estimated useful lives of the particular assets.

Depreciation expense is included in net occupancy on the Consolidated Statements of Net Income.

Depreciation expense is included in occupancy on the Consolidated Statements of Net Income.

Management reviews long-lived assets using events and circumstances to determine if and when an asset is evaluated for recoverability.

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Finance ROU assets are included in property and equipment and related finance lease liabilities are included in long-term borrowings.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

Operating lease ROU assets are included in other assets and related operating lease liabilities are included in other liabilities.

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Interest and amortization expenses are recognized for finance leases over the lease term.

Leases with an initial term of 12 months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the lease term in net occupancy on our Consolidated Statements of Net Income.

Leases with an initial term of 12 months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the lease term in occupancy on our Consolidated Statements of Net Income.

Refer to Note 10 Right-of-Use Assets and Lease Liabilities for more details.

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FHLB stock is evaluated for impairment when events and circumstance indicate that impairment could exist.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

Atlantic Community Bankers’ Bank, or ACBB, stock is carried at cost and evaluated for impairment based on the ultimate recoverability of the carrying value.

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No such events or changes in circumstances occurred during the years ended December 31, 2021 and 2020.

The financial services industry and securities markets can be adversely affected by declining values.

If economic conditions result in a prolonged period of economic weakness in the future, our business may be adversely affected.

In the event that we determine that our goodwill is impaired, recognition of an impairment charge could have a significant adverse impact on our financial position or results of operations in the period in which the impairment occurs.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

Variable Interest Entities

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However, the junior subordinated debt securities issued by S&T are included in our Consolidated Balance Sheets.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

Joint Ventures

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Subsequently, these assets are carried at the lower of carrying value or current fair value less cost to sell.

Gains or losses realized upon disposition of these assets are recorded in other expenses in the Consolidated Statements of Net Income.

Gains or losses realized upon disposition of these assets are recorded in other noninterest income or expenses in the Consolidated Statements of Net Income.

Mortgage Servicing Rights

MSRs are recognized as separate assets when commitments to fund a loan to be sold are made.

Upon commitment, the MSR is established, which represents the then current estimated fair value of future net cash flows expected to be realized for performing the servicing activities.

The estimated fair value of the MSRs is estimated by calculating the present value of estimated future net servicing cash flows, considering expected mortgage loan prepayment rates, discount rates, servicing costs and other economic factors, which are determined based on current market conditions.

Mortgage servicing rights, or MSRs, are recognized as separate assets when a mortgage loan is sold.

MSRs represents the estimated fair value of future net cash flows expected to be realized for performing the servicing activities.

The fair value of the MSRs is estimated by calculating the present value of estimated future net servicing cash flows, considering expected mortgage loan prepayment rates, discount rates, servicing costs and other economic factors, which are determined based on current market conditions.

The expected rate of mortgage loan prepayments is the most significant factor driving the value of MSRs.

Increases in mortgage loan prepayments reduce estimated future net servicing cash flows because the life of the underlying loan is reduced.

In determining the estimated fair value of MSRs, mortgage interest rates, which are used to determine prepayment rates, are held constant over the estimated life of the portfolio.

MSRs are reported in other assets in the Consolidated Balance Sheets and are amortized into noninterest income in the Consolidated Statements of Net Income in proportion to, and over the period of, the estimated future net servicing income of the underlying mortgage loans.

MSRs are reported in other assets in the Consolidated Balance Sheets and are amortized into mortgage banking in noninterest income in the Consolidated Statements of Net Income in proportion to, and over the period of, the estimated future net servicing income of the underlying mortgage loans.

MSRs are regularly evaluated for impairment based on the estimated fair value of those rights.

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If it is later determined that all or a portion of the temporary impairment no longer exists for a particular tranche, the valuation allowance is reduced.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

Derivative Financial Instruments

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Based upon our current positions and related future collateral requirements relating to them, we believe any effect on our cash flow or liquidity position to be immaterial.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

Derivatives contain an element of credit risk, the possibility that we will incur a loss because a counterparty, which may be a financial institution or a customer, fails to meet its contractual obligations.

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The reserve is calculated by applying historical loss rates and qualitative adjustments to our unfunded commitments.

The provision for unfunded commitments is included in the provision for credit losses on the Consolidated Statement of Net Income.

The provision for unfunded commitments is included in the provision for credit losses on the Consolidated Statements of Net Income.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

Treasury Stock

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Debit and credit card services - Interchange fees are earned whenever debit and credit cards are processed through third-party card payment networks.

ATM fees are based on transactions by our customers' and other customers' use of our ATMs or

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

ATM fees are based on transactions by our customers' and other customers' use of our ATMs or other ATMs.

Debit and credit card revenue is recognized at a point in time when the transaction is settled.

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We estimate expected forfeitures when stock-based awards are granted and record compensation expense only for awards that are expected to vest.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

The expense for S&T Bank’s qualified and nonqualified defined benefit pension plans is actuarially determined using the projected unit credit actuarial cost method.

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To the extent that such gains or losses exceed 10 percent of the greater of the projected benefit obligation or plan assets, they are recognized as a component of pension costs over the future service periods of actively employed plan participants.

The funding policy for the qualified plan is to contribute an amount each year that is at least equal to the minimum required contribution as determined under the Pension Protection Act of 2006 and the Bipartisan Budget Act of 2015, but not more than the maximum amount permissible for taxable plan sponsors.

The funding policy for the qualified plan is to contribute an amount each year that is at least equal to the minimum required contribution, but not more than the maximum amount permissible for taxable plan sponsors.

Our nonqualified plans are unfunded.

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We expense all marketing-related costs, including advertising costs, as incurred.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

We estimate income tax expense based on amounts expected to be owed to the tax jurisdictions where we conduct business.

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Potentially dilutive common shares are related to restricted stock.

Recently Adopted Accounting Standards Updates, or ASU or Update

Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

In August 2018, the Financial Accounting Standards Board, or FASB, issued ASU No.

2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.

The amendments in this ASU apply to an entity that is a customer in a hosting arrangement that is a service contract.

These amendments relate to accounting for implementation costs (e.g., implementation, setup and other upfront costs).

These amendments require an entity in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which costs to capitalize and which costs to expense.

These amendments require the entity to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement.

This ASU is effective for annual and interim periods beginning after December 15, 2019.

We adopted this ASU on January 1, 2020.

The amendments in this ASU did not materially impact our Consolidated Balance Sheets or Consolidated Statements of Net Income.

Fair Value Measurement - Changes to the Disclosure Requirements for Fair Value Measurement

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement - Changes to the Disclosure Requirements for Fair Value Measurement.

The amendments in this ASU remove certain disclosures from Topic 820, modify disclosures and/or require additional disclosures.

We adopted this ASU on January 1, 2020.

The amendments in this Update required us to change our Fair Value disclosures beginning with the disclosures included in Form 10-Q for the period ended March 31, 2020.

The amendments in this ASU did not materially impact our Consolidated Balance Sheets or Consolidated Statements of Net Income.

Refer to Note 4 Fair Value Measurements.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

Intangibles - Goodwill and Other - Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued ASU No.

2017-04, Intangibles - Goodwill and Other - Simplifying the Test for Goodwill Impairment (Topic 350).

The main objective of this ASU is to simplify the current requirements for testing goodwill for impairment by eliminating step two from the goodwill impairment test.

The amendments are expected to reduce the complexity and costs associated with performing the goodwill impairment test, which could result in recording impairment charges sooner.

This Update is effective for any interim and annual impairment tests in reporting periods in fiscal years beginning after December 15, 2019.

We adopted the amendments of this ASU on January 1, 2020.

The amendments in this ASU did not have any impact on our Consolidated Balance Sheets or Consolidated Statements of Net Income.

Financial Instruments - Credit Losses

On January 1, 2020, we adopted ASU 2016-13 Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology for determining our provision for credit losses, and ACL, with an expected loss methodology that is referred to as the CECL model.

The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including our loans and off-balance sheet credit exposures.

In addition, ASU 2016-13 made changes to the accounting for available-for-sale debt securities.

Credit losses related to available-for-sale debt securities will be measured in a manner similar to the present guidance, except that such losses will be recorded as allowances rather than as reductions in the amortized cost of the related securities.

We adopted ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures.

Results for reporting periods beginning after January 1, 2020 are presented under ASU 2016-13 while prior period amounts continue to be reported in accordance with previously applicable GAAP.

We made the accounting policy election to not measure an ACL for accrued interest receivables for loans and securities.

Accrued interest deemed uncollectible will be written off through interest income.

The majority of our available-for-sale debt securities are government agency-backed securities for which the risk of loss is minimal, and accordingly the ACL is immaterial.

In connection with our adoption of ASU 2016-13, we made changes to our loan portfolio segments to align with the methodology applied in determining the allowance under CECL.

Refer to Note 9 Allowance for Credit Losses for further discussion of these portfolio segments.

Our new segmentation breaks out business banking loans from our other loan segments:

CRE, C&I, Commercial Construction, Consumer Real Estate and Other Consumer.

Business banking loans are commercial loans made to small businesses that are standard, non-complex products and evaluated through a streamlined credit approval process that has been designed to maximize efficiency while maintaining high credit quality standards.

The following table details the impact of ASU 2016-13 and the reclassification of loans for the identification of new portfolio loan segments under CECL:

January 1, 2020

(dollars in thousands) As Reported Under ASU 2016-13 Pre-ASU 2016-13 Impact of ASU 2016-13 Adoption

Loans held for investment (outstanding balance)

Commercial real estate $ 2,946,319 $ 3,416,518 $ ( 470,199 )

Commercial and industrial 1,458,541 1,720,833 ( 262,292 )

Commercial construction 345,263 375,445 ( 30,182 )

Business banking 1,092,908 — 1,092,908

Consumer real estate 1,235,352 1,545,323 ( 309,971 )

Other consumer 58,769 79,033 ( 20,264 )

Allowance for credit losses on loans ( 89,577 ) ( 62,224 ) ( 27,353 )

Total loans held for investment, net $ 7,047,575 $ 7,074,928 $ ( 27,353 )

Net deferred tax asset $ 19,317 $ 13,206 $ 6,111

Allowance for credit losses on unfunded loan commitments $ 4,462 $ 3,113 $ 1,349

Retained earnings $ 738,493 $ 761,083 $ ( 22,590 )

The adoption of ASU 2016-13 resulted in an increase to our ACL of $ 27.4 million on January 1, 2020.

The increase included $ 8.2 million for S&T legacy loans and $ 9.3 million for acquired loans from the DNB merger.

Under the previously applicable accounting guidance, a credit reserve was not recorded for acquired loans upon acquisition, however, ASU 2016-13 requires an ACL to be recognized for acquired loans similar to originated loans.

We also recorded a day one adjustment of $ 9.9 million primarily related to a C&I relationship that was charged off in the first quarter of 2020.

We obtained information

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

on the relationship subsequent to filing our December 31, 2019 Form 10-K, but before the end of the first quarter of 2020.

The updated information supported a loss existed at January 1, 2020.

As of January 1, 2020, we recorded a cumulative-effect adjustment of $ 22.6 million to decrease retained earnings related to the adoption of ASU 2016-13.

Accounting Standards Issued But Not Yet Adopted

Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20):

Changes to the Disclosure Requirements for Defined Benefit Plans

In August 2018, the FASB issued ASU No.

2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20):

Changes to the Disclosure Requirements for Defined Benefit Plans.

The amendments in this ASU apply to all employers that sponsor defined benefit pension or other postretirement plans.

These amendments remove certain disclosures from Topic 715-20 and require additional disclosures.

The amendments in this ASU will require S&T to update our employee benefits disclosures beginning with our Form 10-Q for the period ended March 31, 2021.

The amendments in this ASU will have no impact on our Consolidated Financial Statements.

Recently Adopted Accounting Standards Updates, or ASU or Update

Income Taxes (Topic 740):

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Simplifying the Accounting for Income Taxes.

The amendments in this ASU simplifies the accounting for income taxes by removing certain exceptions and improves the consistent application of GAAP by clarifying and amending other existing guidance.

The amendments in this ASU were effective on January 1, 2021 and will have no impact on our Consolidated Financial Statements.

The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions and improve the consistent application of GAAP by clarifying and amending other existing guidance.

We adopted this ASU on January 1, 2021.

The amendments in this ASU did not impact our Consolidated Financial Statements.

Accounting Standards Issued But Not Yet Adopted

Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting

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The optional guidance generally allows for the modified contract to be accounted for as a continuation of the existing contract and does not require contract remeasurement at the modification date or reassessment of a previous accounting determination.

In January 2021, the FASB issued ASU No.

2021-01, Reference Rate Reform (Topic 848):

The amendments in this ASU are elective and apply to all entities that have derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of the reference rate reform.

The amendments also optionally apply to all entities that designate receive-variable-rate, pay-variable-rate cross-currency interest rate swaps as hedging instruments in net investment hedges that are modified as a result of reference rate reform.

The amendments in these ASUs are effective as of March 12, 2020 through December 31, 2022.

We are evaluating the impact of these ASUs and we expect LIBOR transition to impact our business operations, but we have not yet determined the impact to our Consolidated Financial Statements.

Codification Improvements to Subtopic 310-20, Receivables--Nonrefundable Fees and Other Costs

In October 2020, the FASB issued ASU No.

2020-08, Codification Improvements to Subtopic 310-20, Receivables--Nonrefundable Fees and Other Costs.

The amendments in this ASU affect the guidance in ASU No.

2017-08, relating to Premium Amortization of Purchased Callable Debt Securities and clarify the Board's intent that an entity should reevaluate whether a callable debt security that has multiple call dates is within scope of paragraph 310-20-35-33 for each reporting period.

For each reporting period, to the extent that the amortized cost basis of an individual callable debt security exceeds the amount repayable by the issuer at the next call date, the excess shall be amortized to the next call date.

If there is no remaining premium or if there are no further call dates, the entity shall reset the effective yield using the payment terms of the debt security.

The amendments in this ASU were effective on January 1, 2021 and did not materially impact our Consolidated Financial Statements.

The amendments in this ASU are effective as of March 12, 2020 through December 31, 2022.

We have established a committee to guide our transition from LIBOR and have begun efforts to transition to alternative rates consistent with industry timelines.

We have identified products that utilize LIBOR and are revising fallback language to facilitate the transition to alternative reference rates.

ASU 2020-04 is not expected to have a material impact on our Consolidated Financial Statements.

BUSINESS COMBINATIONS

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The total purchase price was approximately $ 201.0 million, which included $ 0.4 million of cash and 5,318,964 S&T common shares at a fair value of $ 37.72 per share.

The fair value of $ 37.72 per share of S&T common stock was based on the November 30, 2019 closing price.

The fair value of $ 37.72 per share of S&T common stock was based on the

November 30, 2019 closing price.

The Merger was accounted for under the acquisition method of accounting and our Consolidated Financial Statements include all DNB Bank transactions beginning on December 1, 2019.

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EARNINGS PER SHARE

Diluted earnings per share is calculated using both the two-class and the treasury stock methods with the more dilutive

method used to determine reported diluted earnings per share.

The two-class method was more dilutive in 2020 and 2019 and was used to determine reported diluted earnings per share.

In 2018, the treasury stock method was more dilutive and was used to determine reported diluted earnings per share.

Earnings per share is calculated using both the two-class and the treasury stock methods with the more dilutive

method used to determine reported basic and diluted earnings per share.

The two-class method was more dilutive in 2021, 2020 and 2019 and was used to determine reported earnings per share.

The following table reconciles the numerators and denominators of basic and diluted EPS:

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(dollars in thousands, except share and per share data) 2021 2020 2019

Numerator for Earnings per Common Share—Basic:

Numerators for Earnings per Common Share—Basic and Diluted:

Net income $ 110,343 $ 21,040 $ 98,234

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Net Income Allocated to Common Shareholders $ 109,851 $ 20,972 $ 97,974

Numerator for Earnings per Common Share—Diluted:

Net income $ 21,040 $ 98,234 $ 105,334

Denominators:

Weighted Average Common Shares Outstanding—Basic 39,050,241 39,070,439 34,628,191

Dilutive potential common shares 43,193 94,763 199,625

Denominator for Treasury Stock Method—Diluted 39,113,632 34,722,954 34,975,409

Weighted Average Common Shares Outstanding—Basic 39,070,439 34,628,191 34,775,784

Average participating shares outstanding 2,720 2,780 51,287

Denominator for Two-Class Method—Diluted 39,073,219 34,679,478 34,876,517

Denominator for Diluted 39,052,961 39,073,219 34,679,478

Earnings per common share—basic $ 2.81 $ 0.54 $ 2.84

Earnings per common share—diluted $ 2.81 $ 0.53 $ 2.82

Warrants considered anti-dilutive excluded from dilutive potential common shares - exercise price $ 31.53 per share, expires January 2019 (1)

Restricted stock considered anti-dilutive excluded from dilutive potential common shares 793 1,242 12,686

(1) We repurchased our outstanding warrant on September 11, 2018 for $ 7.7 million.

Prior to the repurchase, the warrant provided the holder the right to 517,012 shares of common stock at a strike price of $ 31.53 per share via cashless exercise.

FAIR VALUE MEASUREMENTS

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Interest rate lock commitments to borrowers were transferred from Level 2 to Level 3 during the year ended December 31, 2020 due to pull-through factors being a significant unobservable input.

There were no transfers between levels for items measured at fair value on a recurring basis at December 31, 2019.

December 31, 2021

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Interest rate lock commitments — — 401 401

Forward sale contracts — — 4 4

Total Assets $ 106,618 $ 847,933 $ 405 $ 954,956

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Interest rate swaps $ — $ 33,631 $ — $ 33,631

Forward sale contracts — 385 — 385

Total Liabilities $ — $ 33,631 $ — $ 33,631

FAIR VALUE MEASUREMENTS -- continued

December 31, 2020

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Interest rate lock commitments — — 2,900 2,900

Forward sale contracts — 1 — 1

Total Assets $ 20,304 $ 838,502 $ 2,900 $ 861,706

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Interest rate swaps $ — $ 79,033 $ — $ 79,033

Forward sale contracts — 385 — 385

Total Liabilities $ — $ 79,418 $ — $ 79,418

FAIR VALUE MEASUREMENTS -- continued

Assets Recorded at Fair Value on a Nonrecurring Basis

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Loans individually evaluated $ 16,004 Collateral method Appraisal adjustment 0 % - 20 % 4.48 %

Other real estate owned 1,953 Collateral method Costs to sell 4 % - 7.00 % 4.92 %

Mortgage servicing rights 4,976 Discounted cash flow method Discount rate 9.24 % - 12.55 % 9.42 %

Constant prepayment rates 8.82 % - 14.58 % 13.37 %

Loans held for sale 586 Collateral method none NA NA

Discounted cash flow method Discount rate 10 % 19 % 10.46 %

Other real estate owned 1,011 Collateral method Appraisal adjustment 2.53 % 2.53 %

Mortgage servicing rights — Discounted cash flow method NA NA NA

Loans held for sale — Collateral method NA NA NA

Total Assets $ 17,015

NA - not applicable

(1) Weighted averages for loans individually evaluated were weighted by loan amounts.

(2) Weighted averages for other real estate owned were weighted by OREO balances.

FAIR VALUE MEASUREMENTS -- continued

December 31, 2020 Valuation Technique Significant Unobservable Inputs Range Weighted Average

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Discounted cash flow method Discount rate — % - — % — %

Other real estate owned 3,231 Collateral method Costs to sell 7.00 % 7.00 %

Other real estate owned 600 Collateral method Appraisal adjustment 21.80 % 21.80 %

Mortgage servicing rights 4,976 Discounted cash flow method Discount rate 9.24 % - 12.55 % 9.42 %

Constant prepayment rates 8.82 % - 14.58 % 13.37 %

Loans held for sale 586 Collateral method NA NA NA

Total Assets $ 70,448

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(3) Weighted averages for mortgage services rights discount rate and prepayment rates were weighted based on note rate tranches.

FAIR VALUE MEASUREMENTS -- continued

The carrying values and fair values of our financial instruments at December 31, 2021 and 2020 are presented in the following tables:

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Portfolio loans, net 6,901,414 6,815,468 — — 6,815,468

Bank owned life insurance 82,303 82,303 — 82,303 —

FHLB and other restricted stock 13,030 13,030 — — 13,030

Collateral receivable 37,363 37,363 37,363 — —

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Interest rate lock commitments 401 401 — — 401

Forward sale contracts 4 4 — — 4

Deposits $ 7,996,524 $ 7,992,942 $ 6,908,453 $ 1,084,489 —

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Interest rate swaps 33,631 33,631 — 33,631 —

Forward sale contracts 385 385 — 385 —

(1) As reported in the Consolidated Balance Sheets

FAIR VALUE MEASUREMENTS -- continued

Fair Value Measurements at December 31, 2020

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Portfolio loans, net 7,108,248 7,028,446 — — 7,028,446

Bank owned life insurance 80,473 80,473 — 80,473 —

FHLB and other restricted stock 22,977 22,977 — — 22,977

Securities held in a deferred compensation plan 77,936 77,936 77,936 — —

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Interest rate swaps 79,033 79,033 — 79,033 —

Forward sale contracts 385 385 — 385 —

(1) As reported in the Consolidated Balance Sheets

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The required reserves averaged $ 0.0 million for 2021, $ 15.5 million for 2020 and $ 43.9 million for 2019.

The decrease in the required reserve average from 2019 to 2020 was due to the Federal Reserve reducing the reserve requirement ratio to zero percent effective on March 26, 2020.

The Federal Reserve maintained this reserve requirement ratio for the remainder of 2020.

The decrease in the required reserve average from 2020 to 2021 was due to the Federal Reserve reducing the reserve requirement ratio to zero percent effective March 26, 2020.

DIVIDEND AND LOAN RESTRICTIONS

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The Federal Reserve has indicated that banking organizations should generally pay dividends only if (i) the organization’s net income available to common shareholders over the past year has been sufficient to fully fund the dividends and (ii) the prospective rate of earnings retention appears consistent with the organization’s capital needs, asset quality and overall financial condition.

In connection with our reduced net income and our inability to fully fund the dividend from earnings over the prior year, due in substantial part to the customer fraud that occurred in the second quarter of 2020, we received non-objection letters from the Federal Reserve to continue to pay our dividends declared in the third and fourth quarter of 2020.

In connection with our reduced net income in 2020 and our inability to fully fund the dividend from earnings over the prior year, due in substantial part to the customer fraud that occurred in the second quarter of 2020, we received non-objection letters from the Federal Reserve to continue to pay our dividends declared in the third and fourth quarter of 2020 and the first and second quarter of 2021.

Thus, under certain circumstances based upon our financial condition, our ability to declare and pay quarterly dividends may require consultation with the Federal Reserve and may be prohibited by applicable Federal Reserve Board guidance.

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Treasury securities 8 $ 85,221 $ ( 742 ) — $ — $ — 8 $ 85,221 $ ( 742 )

Obligations of U.S.

government corporations and agencies — — — — — — — — —

Collateralized mortgage obligations of U.S.

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Corporate Obligations — — — — — — — — —

Obligations of states and political subdivisions — — — — — — — — —

Total 30 $ 372,499 $ ( 5,393 ) 1 $ 8,933 $ ( 374 ) 31 $ 381,432 $ ( 5,767 )

SECURITIES AVAILABLE-FOR-SALE -- continued

December 31, 2020

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Treasury securities — $ — $ — — $ — $ — — $ — $ —

Obligations of U.S.

government corporations and agencies 3 22,638 ( 45 ) — — — 3 22,638 ( 45 )

Collateralized mortgage obligations of U.S.

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Corporate Obligations 1 499 ( 1 ) — — — 1 499 ( 1 )

1 79 — — — — 1 79 —

Obligations of states and political subdivisions — — — — — — — — —

Total 3 $ 36,196 $ ( 90 ) — $ — $ — 3 $ 36,196 $ ( 90 )

(1) Unrealized loss on Corporate Obligations rounded to less than one thousand dollars.

We evaluate securities with unrealized losses quarterly to determine if the decline in fair value has resulted from credit loss or other factors.

4 unchanged sentences

We do not intend to sell and it is more likely than not that we will not be required to sell any of the securities in an unrealized loss position before recovery of their amortized cost.

concluded that the ACL for debt securities was immaterial at December 31, 2020.

SECURITIES AVAILABLE-FOR-SALE -- continued

We concluded that the ACL for debt securities was immaterial at December 31, 2021.

Prior to the adoption of ASU 2016-13 there was no other than temporary impairment, or OTTI, recorded during the year ended December 31, 2020.

7 unchanged sentences

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

SECURITIES AVAILABLE-FOR-SALE -- continued

December 31, 2021

23 unchanged sentences

Marketable Equity Securities

Net market (losses)/gains recognized $ ( 500 ) $ 334 $ ( 328 )

Net market gains (losses) recognized $ 189 $ ( 500 ) $ 334

Net gains recognized for equity securities sold 29 142 —

Unrealized (Losses)/Gains on Equity Securities Still Held $ ( 642 ) $ 334 $ ( 328 )

Unrealized Gains (Losses) on Equity Securities Still Held $ 160 $ ( 642 ) $ 334

LOANS AND LOANS HELD FOR SALE

1 unchanged sentence

The following table summarizes the composition of originated and acquired loans as of the dates presented:

(dollars in thousands) 2020 2019

(dollars in thousands) December 31, 2021 December 31, 2020

Commercial real estate $ 3,236,653 $ 3,244,974

1 unchanged sentence

Commercial construction 440,962 474,280

Business banking 1,160,067 846,790

Total Commercial Loans 5,406,584 5,673,707

Consumer real estate 1,485,478 1,471,238

Other Consumer 80,885 84,974

Installment and other consumer 107,928 80,915

Total Consumer Loans 1,593,406 1,552,153

5 unchanged sentences

Interest receivable is included in other assets in the Consolidated Balance Sheets.

Commercial and industrial loans, or C&I, included $ 465 million of loans originated under the Paycheck Protection Program, or PPP, at December 31, 2020.

Commercial and industrial loans, or C&I, included $ 88.3 million of loans originated under the Paycheck Protection Program, or PPP, at December 31, 2021 compared to $ 465.0 million at December 31, 2020.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security, or CARES Act was signed into law.

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The SBA pays us a processing fee ranging from 1 percent to 5 percent based on the size of the loan.

Interest is accrued as earned and loan origination fees and direct costs are deferred and accreted or amortized into interest income over the contractual life of the loan using the level yield method.

Interest is accrued as earned and loan origination fees and direct costs are deferred and accreted or amortized into interest income over the life of the loan using the level yield method.

When a PPP loan is paid off or forgiven by the SBA, the remaining unaccreted or unamortized net origination fees or costs will be immediately recognized into income.

At December 31, 2021, our business banking segment was $ 1.1 billion compared to $ 1.2 billion at December 31, 2020.

Business banking consists of commercial loans made to small businesses that are standard, non-complex products evaluated through a streamlined credit approval process that has been designed to maximize efficiency while maintaining high credit quality standards that meet small business market customers’ needs.

Business banking consisted of $ 546.1 million of commercial real estate loans, $ 215.4 million of C&I loans of which $ 39.7 million are PPP loans, $ 16.2 million of commercial construction loans and $ 357.9 million of consumer real estate loans at December 31, 2021.

At December 31, 2020 business banking consisted of $ 453.0 million of commercial real estate loans, $ 394.9 million of C&I loans of which $ 178.4 million are PPP Loans, $ 8.2 million of commercial construction loans and $ 303.9 million of consumer real estate loans that have a commercial purpose.

We attempt to limit our exposure to credit risk by diversifying our loan portfolio by segment, geography, collateral and industry and actively managing concentrations.

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Within our commercial portfolio, the CRE and Commercial Construction portfolios combined comprised $ 3.7 billion or 68.0 percent of total commercial loans and 52.5 percent of total portfolio loans at December 31, 2021 and comprised $ 3.7 billion or 65.6 percent of total commercial loans and 51.5 percent of total portfolio loans at December 31, 2020.

Further segmentation of the CRE and Commercial Construction portfolios by collateral type reveals no concentration in excess of 15 percent of both total CRE and Commercial Construction loans at December 31, 2020 and 11 percent at December 31, 2019.

LOANS AND LOANS HELD FOR SALE -- continued

We lend primarily in Pennsylvania and the contiguous states of Ohio, New York, West Virginia and Maryland.

4 unchanged sentences

Our CRE and Commercial Construction portfolios have exposure outside this geography of 5.7 percent of the combined portfolios at December 31, 2021 and 5.9 percent at December 31, 2020.

Exposure of total portfolio loans was 3.0 percent at December 31, 2020 compared to 2.9 percent of total portfolio loans at December 31, 2019.

LOANS AND LOANS HELD FOR SALE -- continued

Exposure of total portfolio loans was 3.0 percent at December 31, 2021and December 31, 2020.

The following table summarizes our restructured loans as of the dates presented:

December 31, 2020

December 31, 2021 December 31, 2020

(dollars in thousands) Performing

TDRs Nonperforming

TDRs Performing

TDRs Nonperforming

Commercial real estate $ — $ 1,697 $ 1,697 $ 14 $ 16,654 $ 16,668

4 unchanged sentences

Other consumer 3 — 3 5 — 5

$ 17,460 $ 29,289 $ 46,748

(1) Refer to Note 1, Basis of Presentation for details of reclassification of our portfolio segments related to the adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

Total $ 9,921 $ 21,774 $ 31,695 $ 17,460 $ 29,289 $ 46,748

The following tables present the restructured loans by loan segment and by type of concession for the years ended:

December 31, 2021

(dollars in thousands) Performing

TDRs Nonperforming

Contracts Type of Modification Total

Post-Modification Outstanding Recorded Investment (2)

Pre-Modification Outstanding Recorded Investment (2)

(dollars in thousands) Bankruptcy (1)

Maturity Modify

Commercial real estate 1 $ — $ — $ — $ — $ 1,300 $ 1,300 $ 1,824

Commercial and industrial 6,909 695 7,604

Commercial industrial 3 — — 2,039 — 9,182 11,221 21,297

Commercial construction 1 — — 2,087 — — 2,087 5,279

Residential mortgage 2,013 822 2,835

Home equity 4,371 678 5,049

Other consumer 9 4 13

Total $ 36,960 $ 8,912 $ 45,872

The significant increase in nonperforming TDRs at December 31, 2020 compared to December 31, 2019 was primarily related to a $ 21.3 million CRE relationship that went nonaccrual in the first quarter of 2020 and was charged down by $ 10.0 million in the third quarter of 2020, leaving a remaining outstanding balance of $ 11.3 million and an $ 11.2 million C&I relationship that went nonaccrual and was charged down by $ 1.6 million during the fourth quarter of 2020 leaving a remaining outstanding balance of $ 9.6 million.

Both relationships experienced continued deterioration as a result of the COVID-19 pandemic.

LOANS AND LOANS HELD FOR SALE -- continued

The following tables present the restructured loans by loan segment and by type of concession for the years ended December 31:

(dollars in thousands) Number of

Loans Pre-Modification

Investment (1)

Post-Modification

Investment (1)

Totals by Loan Segment

Commercial Real Estate

Payment deferral 1 5,292 4,791 ( 501 )

Total Commercial Real Estate 1 5,292 4,791 ( 501 )

Business banking 9 8 — 558 — 1,155 1,721 1,792

Maturity date extension 1 333 165 ( 168 )

Total Business Banking 1 333 165 ( 168 )

Commercial and Industrial

Maturity date extension 1 11,195 9,605 ( 1,590 )

Maturity date extension and interest rate reduction 1 3,735 3,735 —

Payment delay and below market interest rate 2 362 354 ( 8 )

Payment deferral 1 93 22 ( 71 )

Total Commercial and Industrial 5 15,385 13,716 ( 1,669 )

Commercial Construction

Maturity date extension 3 2,592 2,329 ( 263 )

Total Commercial Construction 3 2,592 2,329 ( 263 )

Consumer real estate 26 1,099 — — — 147 1,246 1,280

Consumer bankruptcy (2)

22 988 956 ( 32 )

Maturity date extension and reduction in payment 6 670 660 ( 10 )

Payment deferral 1 30 29 ( 1 )

Total Consumer Real Estate 29 1,688 1,645 ( 43 )

Other consumer — — — — — — — —

Consumer bankruptcy (2)

Total Other Consumer 1 $ 5 $ 4 $ ( 1 )

Totals by Concession Type

Payment deferral 3 5,415 4,842 ( 573 )

Maturity date extension 5 14,120 12,099 ( 2,021 )

Maturity date extension and interest rate reduction 1 3,735 3,735 —

Payment delay and below market interest rate 2 362 354 ( 8 )

Consumer bankruptcy (2)

23 993 960 ( 33 )

Maturity date extension and reduction in payment 6 670 660 ( 10 )

40 $ 25,295 $ 22,650 $ ( 2,645 )

Total 40 $ 1,107 $ — $ 4,684 $ — $ 11,784 $ 17,575 $ 31,472

(1) Bankruptcy is consumer bankruptcy loans where the debt has been legally discharged through the bankruptcy court and not reaffirmed.

(2) Excludes loans that were fully paid off or fully charged-off by period end.

1 unchanged sentence

The post-modification balance represents the outstanding balance at period end.

(2) Consumer bankruptcy loans where the debt has been legally discharged through the bankruptcy court and not reaffirmed.

(3) Refer to Note 1, Basis of Presentation for details of reclassification of our portfolio segments related to the adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

LOANS AND LOANS HELD FOR SALE -- continued

(dollars in thousands) Number of

Loans Pre-Modification

Investment (1)

Post-Modification

Investment (1)

Totals by Loan Segment

December 31, 2020

Contracts Type of Modification Total

Post-Modification Outstanding Recorded Investment (2)

Pre-Modification Outstanding Recorded Investment (2)

(dollars in thousands) Bankruptcy (1)

Maturity Modify

Commercial real estate 1 $ — $ — $ — $ — $ 4,791 $ 4,791 $ 5,292

Maturity date extension and interest rate reduction 1 150 145 ( 6 )

Principal deferral 3 23,517 23,059 ( 458 )

Principal deferral and maturity date extension 1 436 436 —

Below market interest rate 2 569 1,519 950

Total Commercial Real Estate 7 24,672 25,159 486

Commercial and Industrial

Maturity date extension and interest rate reduction 1 4,751 4,136 ( 616 )

Principal deferral 1 1,250 1,250 —

Principal deferral and maturity date extension 1 292 275 ( 17 )

Total Commercial and Industrial 3 6,294 5,661 ( 633 )

Residential Mortgage

Principal deferral and maturity date extension 3 183 183 —

Consumer bankruptcy (2)

3 165 157 ( 9 )

Total Residential Mortgage 6 348 340 ( 9 )

Principal deferral and maturity date extension 2 39 39 —

Interest rate reduction 2 190 188 ( 2 )

Consumer bankruptcy (2)

29 886 810 ( 77 )

Total Home Equity 33 1,116 1,037 ( 79 )

Installment and Other Consumer

Consumer bankruptcy (2)

4 16 11 ( 5 )

Total Installment and Other Consumer 4 $ 16 $ 11 $ ( 5 )

Totals by Concession Type

Maturity date extension and interest rate reduction 2 4,902 4,280 ( 622 )

Principal deferral 4 24,767 24,309 ( 458 )

Principal deferral and Maturity date extension 7 950 933 ( 17 )

Interest rate reduction 2 190 188 ( 2 )

Below market interest rate 2 569 1,519 950

Consumer bankruptcy (2)

36 1,068 977 ( 91 )

53 $ 32,446 $ 32,206 $ ( 240 )

Commercial industrial 3 — — 13,339 — 281 13,620 15,217

Commercial construction 3 — — 2,330 — — 2,330 2,592

Business banking 3 — — 165 — 95 260 501

Consumer real estate 29 956 — 690 — — 1,646 1,688

Other consumer 1 4 — — — — 4 5

Total 40 $ 960 $ — $ 16,524 $ — $ 5,167 $ 22,651 $ 25,295

(1) Bankruptcy is consumer bankruptcy loans where the debt has been legally discharged through the bankruptcy court and not reaffirmed.

(2) Excludes loans that were fully paid off or fully charged-off by period end.

1 unchanged sentence

The post-modification balance represents the outstanding balance at period end.

(2) Consumer bankruptcy loans where the debt has been legally discharged through the bankruptcy court and not reaffirmed.

(3) Refer to Note 1, Basis of Presentation for details of reclassification of our portfolio segments related to the adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

In response to the coronavirus, or COVID-19, pandemic and its economic impact on our customers, we implemented a short-term modification program that complies with the CARES Act to provide temporary payment relief to those borrowers directly impacted by COVID-19 who were not more than 30 days past due as of December 31, 2019.

LOANS AND LOANS HELD FOR SALE -- continued

In response to the coronavirus, or COVID-19 pandemic, and its economic impact on our customers, we implemented a short-term modification program that complies with the CARES Act to provide temporary payment relief to those borrowers directly impacted by COVID-19 pandemic who were not more than 30 days past due as of December 31, 2019.

This program allows for a deferral of payments for 90 days and up to a maximum of 180 days for our commercial customers.

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Under the applicable guidance, none of these loans were considered restructured during 2021.

We had 52 loans that were modified totaling $ 195.6 million at December 31, 2020.

LOANS AND LOANS HELD FOR SALE -- continued

We had eight loans that were modified totaling $ 28.8 million at December 31, 2021 compared to 52 loans that were modified totaling $ 195.6 million at December 31, 2020.

We had 12 commitments for $ 2.6 million to lend additional funds on TDRs at December 31, 2021 compared to 20 commitments for $ 0.8 million at December 31, 2020.

We had one TDR with a total loan balance of $ 0.1 million that returned to accruing status during 2020.

We returned six TDRs totaling $ 0.5 million to accruing status during 2019.

We had no TDR's that returned to accruing status during 2021.

We returned one TDR totaling $ 0.1 million to accruing status during 2020.

Defaulted TDRs are defined as loans having a payment default of 90 days or more after the restructuring takes place that were restructured within the last 12 months prior to defaulting.

There were six TDRs totaling $ 11.8 million that defaulted during the year ended December 31, 2020 compared to no TDRs that defaulted during 2019.

The increase in defaulted TDRs was primarily related to a $ 21.3 million CRE relationship that went nonaccrual in the first quarter of 2020 and charged down by $ 10.0 million in the third quarter of 2020, leaving a remaining outstanding balance of $ 11.3 million.

The relationship experienced continued deterioration as a result of the COVID-19 pandemic.

There were no TDRs that defaulted during the year ended December 31, 2021 and there were six TDRs totaling $ 11.8 million that defaulted during the year ended 2020.

The following table is a summary of nonperforming assets as of the dates presented:

6 unchanged sentences

Total Nonperforming Assets $ 79,604 $ 148,929

NPAs increased $ 91.3 million to $ 148.9 million during 2020 compared to $ 57.6 million at December 31, 2019.

The significant increase in nonperforming loans primarily related to the addition of $ 56.3 million of hotel loans that moved to nonperforming during the fourth quarter of 2020 as a result of continued deterioration due to the COVID-19 pandemic.

Also moving to nonperforming during 2020 were $ 11.3 million and $ 6.7 million CRE relationships that experienced financial deterioration that led to cash flow shortfalls, a $ 5.9 million CRE relationship that was associated with the customer fraud and a $ 15.1 million C&I relationship that experienced financial deterioration that led to cash flow shortfalls.

The following table presents a summary of the aggregate amount of loans to certain officers, directors of S&T or any affiliates of such persons as of December 31:

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Collateral for these types of loans often does not have sufficient value in a distressed or liquidation scenario to satisfy the outstanding debt.

Commercial Construction —Loans made to finance construction of buildings or other structures, as well as to finance the

ALLOWANCE FOR CREDIT LOSSES - continued

acquisition and development of raw land for various purposes.

Commercial Construction —Loans made to finance construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes.

While the risk of these loans is generally confined to the construction period, if there are problems, the project may not be completed, and as such, may not provide sufficient cash flow on its own to service the debt or have sufficient value in a liquidation to cover the outstanding principal.

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Doubtful —Loans classified doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable.

ALLOWANCE FOR CREDIT LOSSES - continued

The following table presents loan balances by year of origination and internally assigned risk rating for our portfolio segments as of December 31, 2020:

The following tables present loan balances by year of origination and internally assigned risk rating for our portfolio segments as of the dates presented:

December 31, 2021

(dollars in thousands) 2021 2020 2019 2018 2017 2016 and Prior Revolving Revolving-Term Total

36 unchanged sentences

Total Loan Balance $ 1,380,130 $ 772,783 $ 961,071 $ 606,970 $ 431,724 $ 1,591,979 $ 1,226,925 $ 28,408 $ 6,999,990

December 31, 2020

(dollars in thousands) 2020 2019 2018 2017 2016 2015 and Prior Revolving Revolving-Term Total

Commercial Real Estate

Pass $ 334,086 $ 422,800 $ 394,963 $ 277,724 $ 307,321 $ 615,217 $ 46,330 — $ 2,398,441

Special Mention — 35,499 10,200 22,502 55,174 75,022 — — 198,397

Substandard — 17,259 12,781 19,914 50,700 83,792 1,500 — 185,946

Doubtful — 645 — — 1,989 6,529 — — 9,163

Total Commercial Real Estate 334,086 476,203 417,944 320,140 415,184 780,560 47,830 — 2,791,947

Commercial and Industrial

Pass 454,131 199,453 140,049 68,607 27,645 206,782 383,082 — 1,479,749

Special Mention 3,697 8,211 2,628 697 768 1,046 23,527 — 40,574

Substandard — 7,793 2,613 8,544 75 13,781 2,022 — 34,828

Doubtful — — — 4,401 — — — — 4,401

Total Commercial and Industrial 457,828 215,457 145,290 82,249 28,488 221,609 408,631 — 1,559,552

Commercial Construction

Pass 131,235 224,794 59,649 2,420 6,346 4,555 12,778 — 441,777

Special Mention 1,578 2,533 3,886 — — 8,593 — — 16,590

Substandard — 3,580 — 501 — 3,629 — — 7,710

Doubtful — — — — — — — — —

Total Commercial Construction 132,813 230,907 63,535 2,921 6,346 16,777 12,778 — 466,077

Business Banking

Pass 296,254 154,335 123,207 86,552 77,238 266,042 103,571 291 1,107,490

Special Mention — 1,060 1,147 1,602 1,084 6,866 637 123 12,519

Substandard 103 1,078 3,896 3,209 3,880 25,871 1,341 680 40,058

Doubtful — — — — — — — — —

Total Business Banking 296,357 156,473 128,250 91,363 82,202 298,779 105,549 1,094 1,160,067

Consumer Real Estate

Pass 120,736 122,171 67,700 63,653 73,805 243,939 438,888 22,667 1,153,559

Special Mention — — 1,489 — — 150 132 — 1,771

Substandard — 373 742 1,480 2,449 6,958 — — 12,002

Doubtful — — — — — — — — —

Total Consumer Real Estate 120,736 122,544 69,931 65,133 76,254 251,047 439,020 22,667 1,167,332

Other consumer

Pass 18,849 13,162 6,784 3,395 2,082 687 26,647 2,767 74,373

Special Mention — — — — — — — — —

Substandard 15 — — — — 3,367 744 2,386 6,512

Doubtful — — — — — — — — —

Total Other Consumer 18,864 13,162 6,784 3,395 2,082 4,054 27,391 5,153 80,885

Total Loan Balance $ 1,360,684 $ 1,214,746 $ 831,734 $ 565,201 $ 610,556 $ 1,572,826 $ 1,041,199 $ 28,914 $ 7,225,860

We monitor the delinquent status of the commercial and consumer portfolios on a monthly basis.

2 unchanged sentences

ALLOWANCE FOR CREDIT LOSSES - continued

The following table presents loan balances by year of origination and performing and nonperforming status for our portfolio segments as of December 31, 2020:

The following tables present loan balances by year of origination and performing and nonperforming status for our portfolio segments as of the dates presented:

December 31, 2021

(dollars in thousands) 2021 2020 2019 2018 2017 2016 and Prior Revolving Revolving-Term Total

26 unchanged sentences

Total Loan Balance $ 1,380,130 $ 772,783 $ 961,071 $ 606,970 $ 431,724 $ 1,591,979 $ 1,226,925 $ 28,408 $ 6,999,990

December 31, 2020

(dollars in thousands) 2020 2019 2018 2017 2016 2015 and Prior Revolving Revolving-Term Total

Commercial Real Estate

Performing $ 334,086 $ 459,799 $ 417,944 $ 313,465 $ 394,972 $ 722,782 $ 47,830 $ — $ 2,690,879

Nonperforming — 16,404 — 6,675 20,212 57,778 — — 101,070

Total Commercial Real Estate 334,086 476,203 417,944 320,140 415,184 780,560 47,830 — 2,791,947

Commercial and Industrial

Performing 457,828 214,144 143,706 69,411 28,426 220,701 408,350 — 1,542,566

Nonperforming — 1,313 1,584 12,838 62 908 281 — 16,985

Total Commercial and Industrial 457,828 215,457 145,290 82,249 28,488 221,609 408,631 — 1,559,552

Commercial Construction

Performing 132,813 230,907 63,535 2,921 6,346 16,393 12,778 — 465,692

Nonperforming — — — — — 384 — — 384

Total Commercial Construction 132,813 230,907 63,535 2,921 6,346 16,777 12,778 — 466,077

Business Banking

Performing 296,327 156,164 126,432 90,414 80,106 286,970 105,494 1,037 1,142,944

Nonperforming 30 309 1,818 949 2,096 11,809 55 57 17,123

Total Business Banking 296,357 156,473 128,250 91,363 82,202 298,779 105,549 1,094 1,160,067

Consumer Real Estate

Performing 120,736 122,315 69,225 63,647 74,690 245,331 438,702 21,572 1,156,216

Nonperforming — 229 706 1,486 1,564 5,716 318 1,096 11,116

Total Consumer Real Estate 120,736 122,544 69,931 65,133 76,254 251,047 439,020 22,667 1,167,332

Other Consumer

Performing 18,864 13,162 6,784 3,395 2,082 3,958 27,391 5,153 80,789

Nonperforming — — — — — 96 — — 96

Total Other Consumer 18,864 13,162 6,784 3,395 2,082 4,054 27,391 5,153 80,885

Performing 1,360,654 1,196,491 827,625 543,253 586,622 1,496,135 1,040,544 27,762 7,079,086

Nonperforming 30 18,254 4,108 21,948 23,934 76,691 654 1,153 146,774

Total Loan Balance $ 1,360,684 $ 1,214,746 $ 831,734 $ 565,201 $ 610,556 $ 1,572,826 $ 1,041,199 $ 28,914 $ 7,225,860

The following tables present the age analysis of past due loans segregated by class of loans as of the dates presented:

2 unchanged sentences

Past Due 60-89 Days

Past Due 90 Days + Past Due (1)

Past Due Non-

performing Total

7 unchanged sentences

Total $ 6,927,943 $ 3,085 $ 2,672 $ 66,291 $ 72,048 $ 6,999,990

(1) Represents acquired loans that were recorded at fair value at the acquisition date and remain performing at December 31, 2020.

(2) We had 52 loans that were modified totaling $ 195.6 million under the CARES Act at December 31, 2020.

(1) We had 8 loans that were modified totaling $ 28.8 million under the CARES Act at December 31, 2021 compared to 52 loans that were modified totaling $ 195.6 million at December 31, 2020.

These customers were not considered past due as a result of their delayed payments.

5 unchanged sentences

Past Due 60-89 Days

Past Due 90 Days + Past Due Non-

Past Due 90 Days + Past Due (1)

performing Total

7 unchanged sentences

Total $ 7,069,730 $ 2,888 $ 5,965 $ 503 $ 146,774 $ 156,130 $ 7,225,860

The following table presents loans on nonaccrual status and loans past due 90 days or more and still accruing by class of loan:

(1) Represents acquired loans that were recorded at fair value at the acquisition date and remain performing at December 31, 2020.

(2) We had 52 loans that were modified totaling $ 195.6 million at December 31, 2020.

These customers were not considered past due as a result of their delayed payments.

Upon exiting the loan modification deferral program, the measurement of loan delinquency will resume where it left off upon entry into the program.

Due to the modification program, this delinquency table may not accurately reflect the credit risk associated with these loans.

ALLOWANCE FOR CREDIT LOSSES - continued

The following tables present loans on nonaccrual status and loans past due 90 days or more and still accruing by class of loan:

December 31, 2021

December 31, 2021 For the twelve months ended

(dollars in thousands) Beginning of Period Nonaccrual End of Period Nonaccrual Nonaccrual With No Related Allowance Interest Income Recognized on Nonaccrual (1)

Commercial real estate $ 101,070 $ 31,488 $ 28,046 $ 158

Commercial and industrial 16,985 15,239 5,707 74

Commercial construction 384 2,471 2,020 ( 28 )

Business banking 17,122 9,641 1,696 427

Consumer real estate 11,117 7,294 — 496

Other consumer 96 158 — 1

Total $ 146,774 $ 66,291 $ 37,469 $ 1,128

(1) Represents only cash payments received and applied to interest on nonaccrual loans.

December 31, 2020

December 31, 2020 For the twelve months ended

(dollars in thousands) Beginning of Period Nonaccrual End of Period Nonaccrual Nonaccrual With No Related Allowance Past Due 90+ Days Still Accruing Interest Income Recognized on Nonaccrual (1)

7 unchanged sentences

(1) Represents only cash payments received and applied to interest on nonaccrual loans.

The following table presents collateral-dependent loans by class of loan:

The following tables present collateral-dependent loans by class of loan:

December 31, 2021

7 unchanged sentences

Total $ 34,456 $ 6,541 $ — $ 10,473

The following table presents activity in the ACL for year ended December 31, 2020:

December 31, 2020

Type of Collateral

(dollars in thousands) Real Estate Blanket Lien Investment/Cash Other

Commercial real estate $ 100,450 $ — $ — $ —

Commercial and industrial 1,040 15,080 — —

Commercial construction 3,552 — — —

Business banking 3,085 1,619 — 689

Consumer real estate 398 — — —

Total $ 108,525 $ 16,699 $ — $ 689

ALLOWANCE FOR CREDIT LOSSES - continued

The following tables present activity in the ACL for years ended:

Twelve Months Ended December 31, 2021

1 unchanged sentence

Real Estate Commercial and

Industrial (2)

Construction Business Banking (1)

Industrial Commercial

Construction Business Banking Consumer

Real Estate Other

2 unchanged sentences

Balance at beginning of period $ 65,656 $ 16,100 $ 7,239 $ 15,917 $ 10,014 $ 2,686 $ 117,612

Impact of CECL adoption 4,810 7,853 ( 3,376 ) 12,898 4,525 636 27,346

Provision for credit losses on loans (2)

( 2,569 ) 23,746 ( 1,842 ) ( 3,159 ) ( 1,020 ) 338 15,494

Charge-offs ( 13,444 ) ( 20,923 ) ( 56 ) ( 1,580 ) ( 569 ) ( 952 ) ( 37,524 )

2 unchanged sentences

Balance at End of Period $ 50,700 $ 19,727 $ 5,355 $ 11,338 $ 8,733 $ 2,723 $ 98,576

(1) In connection with our adoption of ASU 2016-13, we made changes to our loan portfolio segments to align with the methodology applied in determining the

ALLOWANCE FOR CREDIT LOSSES - continued

allowance under CECL.

Our new segmentation breaks out business banking loans from our other loan segments:

CRE, C&I, commercial construction, consumer real estate and other consumer.

The business banking allowance balance at the beginning of period is included in the other segments and reclassified to business banking through the impact of CECL adoption line.

(2) During the three months ended June 30, 2020, we experienced a pre-tax loss of $ 58.7 million related to a customer fraud resulting from a check kiting scheme.

The adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments resulted in an increase to our ACL of $ 27.4 million on January 1, 2020.

The increase included $ 8.2 million for S&T legacy loans and $ 9.3 million for acquired loans from the DNB merger.

We also recorded a day one adjustment of $ 9.9 million primarily related to a C&I relationship that was charged off in the first quarter of 2020.

We obtained information on the relationship subsequent to filing our December 31, 2019 10-K, but before the end of the first quarter of 2020.

The updated information supported a loss existed at January 1, 2020.

We recognized a charge-off of $ 58.7 million related to a customer fraud from a check kiting scheme during the second quarter of 2020.

The fraud was perpetrated by a single business customer and the customer has plead guilty in an ongoing criminal investigation.

We continue to pursue all available sources of recovery to mitigate the loss.

The customer also had a lending relationship of $ 14.8 million, including a $ 14.0 million commercial real estate loan and an $ 0.8 million line of credit which resulted in an additional $ 8.9 million charge-off in 2020.

At December 31, 2020, $ 5.9 million remains outstanding as a nonperforming loan that has been fully charged down to the estimated sale price of the collateral.

The impact of COVID-19 was captured in our quantitative reserve as certain impacted loans were downgraded to special mention and substandard and in our qualitative reserve through our economic forecast and other qualitative adjustments.

Commercial special mention, substandard and doubtful loans increased $ 281 million to $ 571 million compared to $ 290 million at December 31, 2019, with an increase of $ 162 million in substandard loans, $ 113 million in special mention loans and $ 11.4 million in doubtful loans.

The increase in both special mention and substandard loans was mainly due to downgrades in our hotel portfolio.

Specific reserves on loans individually assessed increased $ 11.3 million to $ 13.5 million compared to $ 2.2 million in 2019.

Included in the $ 13.5 million of specific reserves was $ 6.7 million for loans in our hotel portfolio.

Specific reserves for hotels were based on liquidation values from appraisals received in the fourth quarter of 2020.

Our qualitative reserve increased $ 14.1 million in 2020 which included $ 8.6 million for the economic forecast, $ 3.2 million for portfolio allocations made in our hotel, business banking and C&I portfolios due to the COVID-19 pandemic, and $ 2.3 million for current conditions.

The change in reserve attributed to the economic forecast reflected reductions in the second and third quarters due to an improved economic forecast.

Our forecast covers a period of two years and is driven primarily by national unemployment data.

The change attributed to the portfolio allocations was primarily due to $ 3.0 million of ACL added for our business banking portfolio.

The C&I portfolio included $ 465.0 million of loans originated under the PPP at December 31, 2020.

The loans are 100 percent guaranteed by the SBA, therefore, we have not assigned any ACL to these loans at December 31, 2020.

Prior to the adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, we calculated our allowance for loan losses using an incurred loan loss methodology.

The following tables are disclosures related to the allowance for loan losses in prior periods.

The following table presents the recorded investment in commercial loan classes by internally assigned risk ratings as of the date presented:

December 31, 2019

(dollars in thousands) Commercial

Real Estate % of

Total Commercial

and Industrial % of

Total Commercial

Construction % of

Total Total % of

Pass $ 3,270,437 95.7 % $ 1,636,314 95.1 % $ 347,324 92.5 % $ 5,254,056 95.3 %

Special mention 57,285 1.7 % 36,484 2.1 % 10,109 2.7 % 103,878 1.9 %

Substandard 86,772 2.5 % 47,980 2.8 % 17,899 4.8 % 152,651 2.8 %

Doubtful 2,023 0.1 % 55 — % 133 — % 2,211 — %

Total $ 3,416,518 100.0 % $ 1,720,833 100.0 % $ 375,445 100.0 % $ 5,512,796 100.0 %

ALLOWANCE FOR CREDIT LOSSES - continued

The following table presents the recorded investment in consumer loan classes by performing and nonperforming status as of the date presented:

December 31, 2019

thousands) Residential

Mortgage % of

Total Installment

consumer % of

Total Consumer

Construction % of

Total Total % of

Performing $ 991,066 99.2 % $ 535,709 99.5 % $ 78,993 99.9 % $ 8,390 100.0 % $ 1,614,158 99.4 %

Nonperforming 7,519 0.8 % 2,639 0.5 % 40 0.1 % — — % 10,198 0.6 %

Total $ 998,585 100.0 % $ 538,348 100.0 % $ 79,033 100.0 % $ 8,390 100.0 % $ 1,624,356 100.0 %

The following table presents investments in loans considered to be impaired and related information on those impaired loans as of December 31, 2019:

December 31, 2019

(dollars in thousands) Recorded

Investment Unpaid

Balance Related

With a related allowance recorded:

Commercial real estate $ 13,011 $ 14,322 $ 2,023

Commercial and industrial 10,001 10,001 55

Commercial construction 489 489 113

Consumer real estate — — —

Other consumer 9 9 9

Total with a Related Allowance Recorded 23,510 24,821 2,200

Without a related allowance recorded:

Commercial real estate 34,909 40,201 —

Commercial and industrial 7,605 10,358 —

Commercial construction 1,425 2,935 —

Consumer real estate 7,884 8,445 —

Other consumer 4 11 —

Total without a Related Allowance Recorded 51,827 61,950 —

Commercial real estate 47,920 54,523 2,023

Commercial and industrial 17,606 20,359 55

Commercial construction 1,914 3,424 113

Consumer real estate 7,884 8,445 —

Other consumer 13 20 9

Total $ 75,337 $ 86,771 $ 2,200

ALLOWANCE FOR CREDIT LOSSES - continued

The following table summarizes average recorded investment and interest income recognized on loans considered to be impaired for the year presented:

For the Year Ended

December 31, 2019

(dollars in thousands) Average

Investment Interest

With a related allowance recorded:

Commercial real estate $ 14,018 $ —

Commercial and industrial 10,135 576

Commercial construction 489 —

Consumer real estate — —

Other consumer 13 1

Total with a Related Allowance Recorded 24,655 577

Without a related allowance recorded:

Commercial real estate 35,739 943

Commercial and industrial 5,565 368

Commercial construction 1,831 131

Consumer real estate 8,190 397

Other consumer 7 —

Total without a Related Allowance Recorded 51,332 1,839

Commercial real estate 49,757 943

Commercial and industrial 15,700 944

Commercial construction 2,320 131

Consumer real estate 8,190 397

Other consumer 20 1

Total $ 75,987 $ 2,416

The following table details activity in the ALL for the period presented:

Twelve Months Ended December 31, 2020

(dollars in thousands) Commercial

Real Estate Commercial

and Industrial Commercial

Construction Consumer

Real Estate Commercial and

Industrial (1)

Construction Business Banking Consumer

Real Estate Other

Consumer Total

Balance at beginning of year $ 33,707 $ 11,596 $ 7,983 $ 6,187 $ 1,523 $ 60,996

Allowance for credit losses on loans:

Balance at beginning of period $ 30,577 $ 15,681 $ 7,900 $ — $ 6,337 $ 1,729 $ 62,224

Impact of CECL adoption 4,810 7,853 ( 3,376 ) 12,898 4,525 636 27,346

Provision for credit losses on loans (2)

56,489 65,288 2,986 5,303 ( 368 ) 1,723 131,421

Charge-offs ( 26,460 ) ( 74,282 ) ( 454 ) ( 2,612 ) ( 667 ) ( 1,890 ) ( 106,365 )

Recoveries 240 1,560 183 328 187 488 2,986

Net (Charge-offs) ( 3,527 ) ( 7,540 ) ( 401 ) ( 716 ) ( 1,461 ) ( 13,645 )

Provision for loan losses 397 11,625 318 866 1,667 14,873

Balance at End of Year $ 30,577 $ 15,681 $ 7,900 $ 6,337 $ 1,729 $ 62,224

Loans acquired in the DNB merger were recorded at fair value of $ 909.0 million with no carryover of the related ALL.

The following table presents the ALL and recorded investments in loans by category as of December 31:

Allowance for Loan Losses Portfolio Loans

(dollars in thousands) Individually

Evaluated for

Impairment Collectively

Evaluated for

Impairment Total Individually

Evaluated for

Impairment Collectively

Evaluated for

Impairment Total

Commercial real estate $ 2,023 $ 28,554 $ 30,577 $ 47,920 $ 3,368,598 $ 3,416,518

Commercial and industrial 55 15,626 15,681 17,606 1,703,227 1,720,833

Commercial construction 113 7,787 7,900 1,914 373,531 375,445

Consumer real estate — 6,337 6,337 7,884 1,537,439 1,545,323

Other consumer 9 1,720 1,729 13 79,020 79,033

Total $ 2,200 $ 60,024 $ 62,224 $ 75,337 $ 7,061,815 $ 7,137,152

Net (Charge-offs)/Recoveries ( 26,220 ) ( 72,722 ) ( 271 ) ( 2,284 ) ( 480 ) ( 1,402 ) ( 103,379 )

Balance at End of Period $ 65,656 $ 16,100 $ 7,239 $ 15,917 $ 10,014 $ 2,686 $ 117,612

(1) During the three months ended June 30, 2020, we experienced a pre-tax loss of $ 58.7 million related to a customer fraud resulting from a check kiting scheme.

(2) Excludes the provision for credit losses for unfunded commitments.

The provision for credit losses, which includes a provision for losses on loans and on unfunded loan commitments, is a charge to earnings to maintain the ACL at a level consistent with management's assessment of expected losses in the loan portfolio at the balance sheet date.

The provision for credit losses decreased $ 115.9 million to $ 15.5 million for 2021 compared to $ 131.4 million for 2020.

The significant decrease in the provision for credit losses during 2021 was mainly due to the customer fraud in 2020 and an improved outlook for the economy and our loan portfolio.

The C&I portfolio included $ 88.3 million of loans originated under the PPP at December 31, 2021 compared to $ 465.0 million at December 31, 2020.

The loans are 100 percent guaranteed by the SBA, therefore, we have not assigned any ACL to these loans at December 31, 2021.

ALLOWANCE FOR CREDIT LOSSES - continued

RIGHT-OF-USE ASSETS AND LEASE LIABILITIES

We have 51 lease contracts, including 48 operating leases and three finance leases.

We have 48 lease contracts, including 45 operating leases and three finance leases at December 31, 2021.

These leases are for our branch, loan production and support services facilities.

3 unchanged sentences

Operating lease expense (1)

$ 5,135 $ 5,711 $ 4,221

Amortization of ROU assets - finance leases (1)

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Total Lease Expense $ 5,433 $ 6,019 $ 4,396

(1) Included in occupancy expense in our Consolidated Statements of Net Income.

(2) Included in borrowings interest expense in our Consolidated Statements of Net Income.

All other lease costs in this table are included in net occupancy expense.

The following table presents our ROU assets, weighted average term and the discount rates for finance and operating leases as of December 31:

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Finance leases 5.91 % 5.81 %

Leases acquired from the DNB merger were remeasured at the acquisition date resulting in a ROU asset of $ 10.9 million at December 31, 2019.

As of December 31, 2020, two operating leases were considered abandoned due to branch closures and the right-of-use asset values were reduced by $ 0.5 million to zero and the related liabilities were reduced by $ 0.2 million.

We recognized additional expense of $ 0.3 million at the date of abandonment for these two leases.

During 2021, we entered into one new operating lease increasing the right-of-use asset and the related liability values by $ 3.0 million.

During 2020, two operating leases were considered abandoned due to branch closures and the right-of-use asset values were reduced by $ 0.5 million to zero and the related liabilities were reduced by $ 0.2 million.

We recognized additional expense of $ 0.3 million at the date of abandonment for these leases.

The following table presents the maturity analysis of lease liabilities for finance and operating leases as of December 31, 2021:

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Lease Liabilities $ 1,200 $ 50,066 $ 51,266

ALLOWANCE FOR CREDIT LOSSES - continued

PREMISES AND EQUIPMENT

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Depreciation expense related to premises and equipment was $ 6.6 million in 2021, $ 6.7 million in 2020 and $ 5.4 million in 2019.

ALLOWANCE FOR CREDIT LOSSES - continued

GOODWILL AND OTHER INTANGIBLE ASSETS

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Goodwill represents the excess of the purchase price over the fair value of net assets acquired.

Additional goodwill of $ 1.8 million and $ 84.2 million was recorded during 2020 and 2019 related to our acquisition of DNB.

Additional goodwill of $ 1.8 million was recorded during 2020 related to our acquisition of DNB.

Refer to Note 2 Business Combinations for further details on the DNB merger.

Goodwill is reviewed for impairment annually or more frequently if it is determined that a triggering event has occurred.

In response to the current economic environment as a result of the COVID-19 pandemic, we completed an interim quantitative goodwill impairment analysis as of August 31, 2020 and updated this analysis as of October 1, 2020, our annual goodwill impairment evaluation date.

Additionally, we completed an interim quantitative goodwill impairment analysis as of November 30, 2020 and updated this analysis as of December 31, 2020.

Based upon our impairment analysis, we determined that our goodwill of $ 373.4 million was not impaired at December 31, 2020.

Based upon our qualitative assessment performed for our annual impairment analysis as of October 1, 2021, we concluded that it is more likely than not that the fair value of the reporting units exceeds the carrying value.

In general, the overall macroeconomic conditions and more specifically the economic conditions of the banking industry have improved throughout 2021.

No events or circumstances since the November 1, 2021 annual impairment test were noted that would indicate it was more likely than not that goodwill impairment exists.

The following table presents a summary of intangible assets as of the dates presented:

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Amortization ( 1,206 ) — ( 1,206 )

Temporary recapture — ( 223 ) ( 223 )

Temporary impairment — ( 1,354 ) ( 1,354 )

Balance at December 31, 2020 $ 6,620 $ ( 1,631 ) $ 4,989

1 unchanged sentence

Amortization ( 1,707 ) — ( 1,707 )

Temporary (impairment) — ( 1,354 ) ( 1,354 )

Temporary recapture — 1,421 1,421

Balance at December 31, 2021 $ 7,887 $ ( 210 ) $ 7,677

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As a limited partner in these operating partnerships, we receive tax credits and tax deductions for losses incurred by the underlying properties.

We use the cost method to account for these partnerships.

These investments are recorded in other assets on our balance sheet.

Our maximum exposure to loss associated with these investments consists of the investments' fair value plus any unfunded commitments as well as the denial of the tax credits if the project is deemed non-compliant.

We do not have any loss reserves recorded related to these investments because we believe the likelihood of any loss to be remote.

Our investments in LIHPs represent unconsolidated variable interest entities, or VIEs, and the assets and liabilities of the partnerships are not recorded on our Consolidated Balance Sheets.

We have determined that we are not the primary beneficiary of these VIEs because we do not have the power to direct the activities that most significantly impact the economic performance of the partnership and have both the obligation to absorb expected losses and the right to receive benefits.

Our investments in LIHPs represent unconsolidated variable interest entities, or VIEs, and the assets and liabilities of the partnerships are not recorded on our balance sheet.

We have determined that we are not the primary beneficiary of these VIEs because we do not have the power to direct the activities that most significantly impact their economic performance.

Our total investment in qualified affordable housing projects was $ 12.6 million at December 31, 2021 and $ 8.4 million at December 31, 2020.

Amortization expense was $ 3.2 million, $ 2.6 million and $ 2.7 million as of December 31, 2020, 2019 and 2018.

The amortization expense was offset by tax credits of $ 2.2 million, $ 4.2 million and $ 3.4 million as of December 31, 2020, 2019 and 2018 as a reduction to our federal tax provision.

On September 11, 2019, we entered into a new qualified affordable housing project and committed to an investment of $ 10.2 million.

As of December 31, 2020, we have invested $ 7.1 million in this new project.

No amortization expense or tax credits will be recognized for this new project until it is complete.

Amortization expense, included in other noninterest expense in the Consolidated Statements of Net Income (Loss), was $ 1.2 million, $ 3.2 million and $ 2.6 million for the twelve months ended December 31, 2021, 2020 and 2019.

The amortization expense was offset by tax credits of $ 2.0 million, $ 2.2 million and $ 4.2 million for the twelve months ended December 31, 2021, 2020, and 2019 as a reduction to our federal tax provision.

In 2021, we entered into two new qualified affordable housing projects and committed to a total investment of $ 19.4 million for these new projects.

As of December 31, 2021, $ 2.3 million of funds were invested into one of these new projects.

No amortization expense or tax credits will be recognized for these new projects until complete.

The following table presents the composition of deposits at December 31 and interest expense for the years ended December 31:

9 unchanged sentences

Total $ 7,996,524 $ 10,757 $ 7,420,538 $ 35,986 $ 7,036,576 $ 63,026

The aggregate of all certificates of deposits over $100,000, including brokered CDs, was $ 688.4 million and $ 754.8 million at December 31, 2020 and 2019.

Certificates of deposits over $250,000, including brokered CDs, were $ 329.7 million and $ 347.5 million at December 31, 2020 and 2019.

The aggregate of all certificates of deposits over $250,000, including brokered CDs, were $ 243.4 million and $ 329.7 million at December 31, 2021 and 2020.

The following table indicates the scheduled maturities of certificates of deposit at December 31, 2021:

24 unchanged sentences

LONG-TERM BORROWINGS AND SUBORDINATED DEBT

Long-term borrowings are for original terms greater than one year and are comprised of FHLB advances, capital leases and junior subordinated debt securities.

Our long-term borrowings at the Pittsburgh FHLB were $ 22.3 million as of December 31, 2020 and $ 49.3 million as of December 31, 2019.

Long-term borrowings are for original terms greater than one year and are comprised of FHLB advances, finance leases and junior subordinated debt securities.

Our long-term borrowings were $ 22.4 million as of December 31, 2021 and $ 23.7 million as of December 31, 2020.

Long-term FHLB advances are secured by the same loans as short-term FHLB advances.

28 unchanged sentences

Preferred Securities 2006 Junior

Subordinated Debt 2006 Junior

Subordinated Debt 2008 Trust

3 unchanged sentences

Stated Maturity Date 7/25/2031 5/23/2035 12/15/2036 3/15/2038

Optional redemption date at par Any time after 7/25/2011 Any time after 5/23/2010 Quarterly after 4/1/2020 Any time after 9/15/2011 Any time after 3/15/2013

Regulatory Capital Tier 1 Tier 1 Tier 2 Tier 2 Tier 1

Optional redemption date at par Any time after 7/25/2011 Any time after 5/23/2010 Any time after 9/15/2011 Any time after 3/15/2013

Regulatory Capital Tier 1 Tier 1 Tier 2 Tier 1

Interest Rate 6 Month LIBOR plus 375 bps

3 Month LIBOR plus 177 bps

fixed at 4.25 % until 4/1/2020 then prime plus 100 bps

3 month LIBOR plus 160 bps

1 unchanged sentence

Interest Rate at December 31, 2021 3.90 % 1.93 % 1.80 % 3.70 %

LONG-TERM BORROWINGS AND SUBORDINATED DEBT - continued

We have completed three private placements of trust preferred securities to financial institutions.

28 unchanged sentences

Total $ 5,189 $ 4,467

The increase in the reserve for unfunded commitments at December 31, 2020 was primarily related to the adoption of ASU 2016-13 on January 1, 2020.

Contractual Obligations

Contractual obligations represent future cash commitments and liabilities under agreements with third parties and exclude contingent contractual liabilities for which we cannot reasonably predict future payments.

We have various financial obligations, including contractual obligations and commitments that may require future cash payments.

The following table presents as of December 31, 2021 significant fixed and determinable contractual obligations to third parties by payment date:

Payments Due In

(dollars in thousands) 2022 2023-2024 2025-2026 Later Years Total

Deposits without a stated maturity (1)

$ 6,908,453 $ — $ — $ — $ 6,908,453

Certificates of deposit (1)

961,578 62,334 60,820 3,339 1,088,071

Securities sold under repurchase agreements (1)

84,491 — — — 84,491

Short-term borrowings (1)

Long-term borrowings (1)

7,689 13,845 168 728 22,430

Junior subordinated debt securities (1)

— — — 54,393 54,393

Operating and capital leases 4,932 9,290 9,383 65,052 88,657

Purchase obligations 19,823 42,432 46,492 — 108,747

Total $ 7,986,966 $ 127,901 $ 116,863 $ 123,512 $ 8,355,242

(1) Excludes interest

Operating lease obligations represent short and long-term lease arrangements as described in Note 11 Premises and Equipment, to the Consolidated Financial Statements.

Purchase obligations primarily represent obligations under agreement with our third party data processing servicer and communications charges.

In the normal course of business, we are subject to various legal and administrative proceedings and claims.

While any type of litigation contains a level of uncertainty, we believe that the outcome of such proceedings or claims pending will not have a material adverse effect on our consolidated financial position or results of operations.

LONG-TERM BORROWINGS AND SUBORDINATED DEBT - continued

REVENUE FROM CONTRACTS WITH CUSTOMERS

17 unchanged sentences

(1) Refer to Note 1 Summary of Significant Accounting Policies for the types of revenue streams that are included within each category.

The following table presents the composition of income tax (benefit) expense for the years ended December 31:

The following table presents the composition of income tax expense (benefit) for the years ended December 31:

(dollars in thousands) 2021 2020 2019

9 unchanged sentences

The state tax provision is due to taxable business activities conducted at our loan production office in New York.

On December 22, 2017, H.R.1, originally known as the Tax Cuts and Jobs Act, or Tax Act, was signed into law.

The Tax Act resulted in significant changes to the U.S.

corporate tax system including a federal corporate rate reduction from 35 percent to 21 percent.

The Tax Act also established new tax laws that became effective January 1, 2018.

GAAP requires us to record the effects of a tax law change in the period of enactment.

As a result, in 2017 we re-measured our deferred tax assets and liabilities and recorded a provisional adjustment of $ 13.4 million.

This re-measurement adjustment was recognized as an increase to our income tax expense in the fourth quarter of 2017.

The calculation over the income tax effects of the Tax Act was completed in the third quarter of 2018.

We recognized a $ 3.0 million income tax benefit as a result of finalizing the calculation.

The following table presents a reconciliation of the statutory tax rate to the effective tax rate for the years ended December 31:

4 unchanged sentences

Bank owned life insurance ( 0.3 ) % ( 1.8 ) % ( 0.4 ) %

Gain on sale of a majority interest of insurance business — % — % 0.7 %

Merger related expenses — % — % 0.3 %

Other 0.8 % 3.8 % 0.8 %

Impact of the Tax Act — % — % ( 2.5 ) %

Effective Tax Rate 18.7 % — % 16.3 %

INCOME TAXES -- continued

The following table presents significant components of our temporary differences as of the dates presented:

24 unchanged sentences

The valuation allowance is reviewed quarterly and adjusted based on management’s assessments of realizable deferred tax assets.

Gross deferred tax assets were reduced by a valuation allowance of $ 5.5 million in 2020 and $ 5.1 million in 2019 related to Pennsylvania income tax NOLs.

Gross deferred tax assets were reduced by a valuation allowance of $ 5.5 million in 2021 and in 2020 related to Pennsylvania income tax NOLs.

The Pennsylvania NOL carryforwards total $ 55.7 million and will expire in the years 2021-2041.

12 unchanged sentences

As of December 31, 2021, all income tax returns filed for the tax years 2017 - 2020 remain subject to examination by the Internal Revenue Service.

The Bank's income tax returns for the audit years, January 1, 2016 through December 31, 2018 are currently under audit by the New York Department of Taxation.

This audit has remained open as of December 31, 2020.

TAX EFFECTS ON OTHER COMPREHENSIVE INCOME (LOSS)

The following tables present the tax effects of the components of other comprehensive income (loss) for the years ended December 31:

In 2021, an audit of our New York State tax returns for the period January 1, 2016 through December 31, 2018 concluded with a final tax assessment of $ 0.1 million primarily related to the qualified loans exemption and Metropolitan Commuter Transportation District tax.

TAX EFFECTS ON OTHER COMPREHENSIVE (LOSS) INCOME

The following tables present the tax effects of the components of other comprehensive (loss) income for the years ended December 31:

(dollars in thousands) Pre-Tax

Amount Tax (Expense)

Benefit Net of Tax

Amount Tax Benefit (Expense) Net of Tax

Net change in unrealized gains on debt securities available-for sale $ ( 23,972 ) $ 5,115 $ ( 18,857 )

1 unchanged sentence

Adjustment to funded status of employee benefit plans 3,561 ( 765 ) 2,796

Other Comprehensive Income $ 26,232 $ ( 5,591 ) $ 20,641

Net change in unrealized gains on securities available-for-sale $ 15,793 $ ( 3,367 ) $ 12,426

Other Comprehensive Loss $ ( 20,411 ) $ 4,350 $ ( 16,061 )

Net change in unrealized gains on debt securities available-for-sale $ 22,683 $ ( 4,827 ) $ 17,856

Net available-for-sale securities (gains) losses reclassified into earnings — — —

1 unchanged sentence

Other Comprehensive Income $ 26,232 $ ( 5,591 ) $ 20,641

Net change in unrealized losses on securities available-for-sale (1)

$ ( 6,794 ) $ 1,449 $ ( 5,345 )

Net available-for-sale securities (gains) losses reclassified into earnings — — —

Net change in unrealized gains on debt securities available-for-sale $ 15,793 $ ( 3,367 ) $ 12,426

Net available-for-sale securities losses (gains) reclassified into earnings 26 ( 6 ) 20

Adjustment to funded status of employee benefit plans ( 1,282 ) 273 ( 1,009 )

Other Comprehensive Loss $ ( 497 ) $ 106 $ ( 391 )

(1) Due to the adoption of ASU No.

2016-01, net unrealized gains on marketable equity securities were reclassified from accumulated other comprehensive income to retained earnings during the three months ended March 31, 2018.

Other Comprehensive Income $ 14,537 $ ( 3,100 ) $ 11,437

EMPLOYEE BENEFITS

12 unchanged sentences

Actuarial gain/(loss) ( 2,136 ) 10,525

Acquisitions - DNB merger — 6,778

Benefits paid ( 14,223 ) ( 10,154 )

4 unchanged sentences

Employer contributions — 115

Acquisitions - DNB merger — 4,811

Benefits paid ( 14,223 ) ( 10,154 )

6 unchanged sentences

$ ( 18,029 ) $ ( 19,572 )

EMPLOYEE BENEFITS -- continued

INCOME TAXES -- continued

Below are the actuarial weighted average assumptions used in determining the benefit obligation:

33 unchanged sentences

At this time, S&T Bank is not required to make a cash contribution to the Plan in 2022.

EMPLOYEE BENEFITS -- continued

The following table provides information regarding estimated future benefit payments to be paid in each of the next five years and in the aggregate for the five years thereafter:

6 unchanged sentences

Net periodic benefit costs for the SERPs were $ 0.6 million for the year ended December 31, 2021 and $ 0.7 million for the year ended December 31, 2020 and $ 0.4 million for the year ended December 31, 2019.

Additionally, $ 2.4 million before tax was reflected in accumulated other comprehensive income (loss) at December 31, 2020 and 2019 and $ 1.9 million at December 31, 2018, in relation to the SERPs.

Additionally, $ 0.4 million before tax was reflected in accumulated other comprehensive income (loss) at December 31, 2021 and $ 2.4 million at December 31,2020 in relation to the SERPs.

Net periodic benefit cost of $ 0.6 million for the year ended December 31, 2021 included a settlement charge of $ 0.3 million.

2 unchanged sentences

We make matching contributions to the Thrift Plan up to 3.5 percent of participants’ eligible compensation and may make additional profit-sharing contributions as provided by the Thrift Plan.

Expense related to these contributions amounted to $ 2.4 million in 2020, $ 2.0 million in 2019 and $ 1.7 million in 2018.

Expense related to these contributions amounted to $ 2.4 million in 2021 and 2020 and $ 2.0 million in 2019.

Fair Value Measurements

22 unchanged sentences

It may also include convertible bonds.

EMPLOYEE BENEFITS -- continued

December 31, 2020

19 unchanged sentences

INCENTIVE AND RESTRICTED STOCK PLAN AND DIVIDEND REINVESTMENT PLAN

We adopted an Incentive Stock Plan in 2014 that provides for cash performance awards and for granting incentive stock options, nonstatutory stock options, restricted stock, restricted stock units and appreciation rights.

A maximum of 750,000 shares of our common stock are available for awards granted under the 2014 Incentive Plan and the plan expires ten years from the date of board approval.

On May 17, 2021 shareholders approved the adoption of the 2021 Incentive Plan that provides for cash performance awards and for granting incentive stock options, nonstatutory stock options, restricted stock, restricted stock units and appreciation rights.

The 2021 Plan replaces and supersedes the S&T Bancorp, Inc.

2014 Incentive Plan.

Since the 2021 Plan has been approved by our shareholders, no new awards will be granted under the 2014 Plan.

The 2014 Plan will continue to govern all awards granted under that plan.

A maximum of 1,000,000 shares of our common stock were available for awards granted under the 2021 Incentive Plan and the plan expires ten years from the date of board approval.

Previously granted but forfeited shares are added to the shares available for issuance.

As of December 31, 2020, 760,636 restricted shares have been granted of which 136,896 were forfeited shares for a total of 623,740 restricted shares granted under the 2014 Incentive Plan.

As of December 31, 2020, no nonstatutory stock options were outstanding under the 2014 Stock Plan.

The 2014 Incentive Stock Plan also provided for cash performance awards and for granting incentive stock options, nonstatutory stock options, restricted stock, restricted stock units and appreciation rights.

A maximum of 750,000 shares of our common stock were available for awards granted under the 2014 Incentive Plan and the plan expires ten years from the date of board approval.

Previously granted but forfeited shares are added to the shares available for issuance.

Restricted Stock

We periodically issue restricted stock to employees and directors pursuant to our 2014 Stock Plan.

During 2020, 2019 and 2018, we granted 23,153 , 11,231 and 9,264 restricted shares of common stock to outside directors under the 2014 Stock Plan.

The grants are part of the compensation arrangement approved by the Compensation and Benefits Committee whereby the directors receive compensation in the form of both cash and restricted shares of common stock.

These shares fully vest one year after the date of grant.

During 2020, 2019 and 2018, we granted 207,550 , 73,651 and 66,733 restricted shares of common stock to senior management under our Long Term Incentive Plan, or LTIP, within the 2014 Stock Plan.

The restricted shares granted under the LTIP consist of both time and performance-based awards.

The awards were granted in accordance with performance levels set by the Compensation and Benefits Committee.

Vesting for the time-based awards is 50 percent after two years and the remaining 50 percent at the end of the third year.

The performance-based awards vest at the end of the three-year period.

During the vesting period, if the recipient leaves S&T before the end of the vesting period, shares will be forfeited except in the case of retirement, disability or death where accelerated vesting provisions are defined within the awards agreement.

Included in the 2020 grant of 207,550 restricted shares were 83,669 shares of common stock to three Senior Executive Officers.

On October 2, 2020, The 2014 Incentive Stock Plan was modified in connection with the announcement that our Chief Executive Officer will retire on March 31, 2021.

Upon retirement, he will transition to an advisory service role for a three year period.

According to the terms of the Letter Agreement, any unvested equity awards held at retirement will vest according to the original terms during the consulting period and subject to the terms of Letter Agreement.

Original awards of 20,916 restricted shares were forfeited and new awards were granted and revalued.

Compensation expense decreased $ 0.3 million as a result of the modification agreement.

Also in 2020, 62,753 restricted shares of common stock were granted to two other Senior Executive Officers with an increase to compensation expense of $ 1.3 million.

Pursuant to the restricted stock award agreements, these awards will vest 33 percent on October 12, 2021, 33 percent on October 12, 2022 and 34 percent on

October 12, 2023.

We periodically issue restricted stock to employees and directors pursuant to our 2021 and 2014 Stock Plans.

Restricted stock awards are part of the compensation arrangements approved by the Compensation and Benefits Committee.

Restricted shares granted under the plans consist of both time and performance-based awards.

The awards are granted in accordance with performance levels set by the Compensation and Benefits Committee.

During 2021, we granted 30,959 restricted shares of common stock under the 2021 Stock Plan.

In 2021, 2020 and 2019, we granted 99,711 , 230,703 and 84,882 restricted shares of common stock under the 2014 Stock Plan.

The following table provides information about restricted stock awards granted under the plans for the periods presented:

Vesting Period 2021 2020 2019

2021 Stock Plan

Directors One year 14,650 — —

Chief Executive Officer One year 8,309 — —

Other Awards Three years 8,000 — —

2014 Stock Plan

Directors One year — 23,153 13,057

Senior Management Three years 78,769 123,881 71,825

Other Awards Three years 20,942 83,669 —

Total Restricted Stock Grants 130,670 230,703 84,882

Common stock is issued as vesting restrictions lapse, which varies according to the terms of the vesting schedules in the award agreements.

Restricted stock grants are forfeited if a grantee leaves S&T before the end of the vesting period except where accelerated vesting provisions are defined with the award agreements.

EMPLOYEE BENEFITS -- continued

During 2021, 2020 and 2019, we recognized compensation expense of $ 2.4 million, $ 0.7 million and $ 2.4 million and realized a tax benefit of $ 0.5 million, $ 0.2 million and $ 0.5 million related to restricted stock grants.

INCENTIVE AND RESTRICTED STOCK PLAN AND DIVIDEND REINVESTMENT PLAN -- continued

The following table provides information about restricted stock granted under the 2014 Stock Plan for the years ended December 31:

The following table provides information about restricted stock granted under the Plans for the years ended December 31:

Stock Weighted Average

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The plan administrator and transfer agent may purchase shares directly from us from shares held in treasury or purchase shares in the open market to fulfill the Dividend Plan’s needs.

EMPLOYEE BENEFITS -- continued

PARENT COMPANY CONDENSED FINANCIAL INFORMATION

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Net Income $ 110,343 $ 21,040 $ 98,234

PARENT COMPANY CONDENSED FINANCIAL INFORMATION -- continued

EMPLOYEE BENEFITS -- continued

STATEMENTS OF CASH FLOWS

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FINANCING ACTIVITIES

Repayment of long term debt ( 9,750 ) — —

Sale of treasury shares, net ( 629 ) ( 594 ) ( 915 )

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As of December 31, 2021 and 2020, we met all capital adequacy requirements to which we are subject.

REGULATORY MATTERS -- continued

INCENTIVE AND RESTRICTED STOCK PLAN AND DIVIDEND REINVESTMENT PLAN -- continued

The following table summarizes risk-based capital amounts and ratios for S&T and S&T Bank:

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S&T Bank 922,007 13.14 % 561,408 8.00 % 701,760 10.00 %

SELECTED FINANCIAL DATA

The following table presents selected financial data for the most recent eight quarters.

(dollars in thousands, except per

share data) (unaudited) Fourth

Quarter Second

Quarter First

Quarter Fourth

Quarter Second

Quarter First

SUMMARY OF OPERATIONS

Interest income $ 75,548 $ 76,848 $ 80,479 $ 87,589 $ 82,457 $ 79,813 $ 79,624 $ 78,590

Interest expense 5,620 7,572 10,331 17,553 18,045 18,617 18,797 18,234

Provision for credit losses 7,130 17,485 86,759 20,050 2,105 4,913 2,205 5,649

Net Interest Income After Provision For Credit Losses 62,798 51,791 ( 16,611 ) 49,986 62,307 56,283 58,622 54,707

Security gains (losses), net — — 142 — ( 26 ) — — —

Noninterest income 15,609 16,483 15,082 12,403 15,257 13,063 12,901 11,363

Noninterest expense 48,529 48,246 43,478 46,391 50,178 37,667 40,352 38,919

Income Before Taxes 29,878 20,028 ( 44,865 ) 15,998 27,360 31,679 31,171 27,151

Provision for income taxes 5,702 3,323 ( 11,793 ) 2,767 5,091 4,743 5,070 4,222

Net Income $ 24,176 $ 16,705 $ ( 33,072 ) $ 13,231 $ 22,269 $ 26,936 $ 26,101 $ 22,929

Per Share Data

Common earnings per share—diluted $ 0.62 $ 0.43 $ ( 0.85 ) $ 0.34 $ 0.62 $ 0.79 $ 0.76 $ 0.66

Dividends declared per common share 0.28 0.28 0.28 0.28 0.28 0.27 0.27 0.27

Common book value 29.38 29.10 28.93 30.06 30.13 28.69 28.11 27.47

(1) The DNB Merger is included in our Consolidated Financial Statements beginning on December 1, 2019.

SALE OF A MAJORITY INTEREST OF INSURANCE BUSINESS

On November 9, 2017, we entered into an asset purchase agreement to sell a 70 percent ownership interest in the assets of our subsidiary, S&T Evergreen Insurance, LLC.

The partial sale was accounted for as the sale of a business.

At the date of the sale, January 1, 2018, we ceased to have a controlling financial interest, deconsolidated the subsidiary and recognized a gain of $ 1.9 million.

We transferred our remaining 30 percent share of net assets from S&T Evergreen Insurance, LLC to a new entity for a 30 percent partnership interest in a new insurance entity.

We use the equity method of accounting to recognize changes in the value of our investment in the new insurance entity for our proportional share of income and losses of the new insurance entity.

SHARE REPURCHASE PLAN

On March 19, 2018, our Board of Directors authorized a $ 50 million share repurchase plan.

This repurchase authorization, which was effective through August 31, 2019, permitted us to repurchase from time to time up to $ 50 million in aggregate value of shares of our common stock through a combination of open market and privately negotiated repurchases.

As of December 31, 2018, we repurchased 321,731 common shares at a total cost of $ 12.3 million, or an average of $ 38.10 per share.

In 2019, we repurchased 470,708 common shares at a total cost of $ 18.2 million, or an average of $ 38.71 per share.

Under the March 19, 2018 plan, we repurchased 792,439 common shares at a total cost of $ 30.5 million, or an average of $ 38.46 per share.

On September 16, 2019, our Board of Directors authorized a new $ 50 million share repurchase plan.

This repurchase authorization, which is effective through March 31, 2021, permits S&T to repurchase from time to time up to $ 50 million in aggregate value of shares of S&T's common stock through a combination of open market and privately negotiated repurchases.

No common shares were repurchased under the new repurchase plan as of December 31, 2019.

As of December 31, 2020, we repurchased 411,430 common shares at a total cost of $ 12.6 million, or an average of $ 30.52 per share under the September 16, 2019 plan.

Repurchase activity was suspended in March of 2020 due to the impact of the COVID-19 pandemic.

The specific timing, price and quantity of repurchases will be at our discretion and will depend on a variety of factors, including general market conditions, the trading price of common stock, legal and contractual requirements, applicable securities laws and S&T's financial performance.

On March 15, 2021, our Board of Directors authorized an extension of its $ 50 million share repurchase plan, which was set to expire March 31, 2021.

This authorization extended the expiration date of the repurchase plan through March 31, 2022.

The plan permits S&T to repurchase from time to time up to the previously authorized $ 50 million in aggregate value of shares of S&T's common stock, with $ 37.4 million of capacity remaining at December 31, 2021, through a combination of open market and privately negotiated repurchases.

The specific timing, price and quantity of repurchases will be at the discretion of S&T and will depend on a variety of factors, including general market conditions, the trading price of common stock, legal and contractual requirements, applicable securities laws and S&T's financial performance.

The repurchase plan does not obligate us to repurchase any particular number of shares.

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

We expect to fund any repurchases from cash on hand and internally generated funds.

Any share repurchases will not begin until permissible under applicable laws.

During the twelve months ended December 31, 2021, we had no repurchases.

Repurchase activity was suspended in March of 2020 due to the impact of the COVID-19 pandemic.

PARENT COMPANY CONDENSED FINANCIAL INFORMATION -- continued

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of S&T Bancorp, Inc.

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 28, 2022 expressed an unqualified opinion thereon.

Adoption of ASU No.

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for credit losses in 2020 due to the adoption of ASU No.

2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments .

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Adoption of New Accounting Standard

As discussed in Notes 1 and 9 to the consolidated financial statements, the Company changed its method of accounting for credit losses in 2020.

As explained below, auditing the Company’s allowance for credit losses was a critical audit matter.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the account or disclosures to which it relates.

REGULATORY MATTERS -- continued

Allowance for Credit Losses (“ACL”)

Description of the Matter On January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses (ASC 326):

Measurement of Credit Losses on Financial Instruments, which resulted in an increase to the allowance for credit losses (ACL) from retained earnings of $22.6 million.

At December 31, 2020, the Company’s gross portfolio of loans was $7.2 billion with an associated ACL of $117.6 million.

Description of the Matter At December 31, 2021, the Company’s gross portfolio of loans was $7.0 billion with an associated ACL of $98.6 million.

As discussed in Note 1 to the consolidated financial statements, the ACL is an estimate of expected credit losses, measured over the contractual life of a loan, that considers historical loss experience, current conditions and forecasts of future economic conditions.

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Management applies qualitative adjustments to reflect the current conditions and reasonable and supportable forecasts not already reflected in the historical loss information at the balance sheet date.

The reasonable and supportable forecast adjustment is based on forecasted unemployment.

The qualitative adjustments for current conditions are based upon value of underlying collateral for collateral dependent loans and the existence of and changes in concentrations for the commercial loan portfolios.

Auditing the ACL involves a high degree of subjectivity due to the qualitative adjustments.

Management’s identification and measurement of the qualitative adjustments is highly judgmental and could have a significant effect on the ACL.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over the ACL process, which include, among others, management’s review and approval controls designed to assess the need for and level of qualitative adjustments and the reliability of the data utilized to support management’s assessment.

To test the qualitative adjustments, we evaluated the appropriateness of management’s methodology and assessed the basis for the adjustments and whether all relevant risks were reflected in the ACL.

Regarding the measurement of the qualitative adjustments, we evaluated the completeness, accuracy and relevance of the underlying internal and external data utilized in management’s estimate and considered the existence of additional or contrary information.

Judgment was required by management to determine the segment specific risk portion of the qualitative allowance.

Auditing the ACL involves a high degree of subjectivity due to the segment specific risk portion of the qualitative allowance.

Management’s identification and measurement of the segment specific risk is highly judgmental and could have a significant effect on the ACL.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over the ACL process, which include, among others, management’s review and approval controls designed to assess the need for and level of the segment specific risk portion of the qualitative allowance and the reliability of the data utilized to support management’s assessment.

To test the segment specific risk portion of the qualitative allowance, we evaluated the appropriateness of management’s methodology and assessed the basis for the adjustments and whether all relevant risks were reflected in the ACL.

Regarding the measurement of the segment specific risk portion of the qualitative allowance, we evaluated the completeness, accuracy and relevance of the underlying internal and external data utilized in management’s estimate and considered the existence of additional or contrary information.

We evaluated the overall ACL, inclusive of the qualitative adjustments, and whether the amount appropriately reflects a reasonable estimate of lifetime losses by comparing the overall ACL to historical losses and ACL reserves established by peer banking institutions.

/s/ Ernst & Young LLP

We have served as the Company’s auditors since 2018.

We have served as the Company’s auditor since 2018.

Pittsburgh, Pennsylvania

February 28, 2022

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of S&T Bancorp, Inc.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data